Delivering on
our strategy
Annual Report 2017

CONTENTS

About this report2017 Annual review

Our 2017 Annual Report consists of the following documents,
which can be downloaded in pdf format:

Delivering on our strategy

1

Horizon 2020 progress2

CEO & Chairman’s review

4

Umicore at a glance

8

Global trends

11

Business model

14

Performance

18

Risk management and internal control

36

Key risks and opportunities

38

Board of directors

44

Executive committee48

Key figures

50

2017 ANNUAL REVIEWThe report tells Umicore’s story of the year. It explains who
we are and what we do, the context in which we operate,
including the risks and opportunities, and outlines our strategy
and the progress we have made towards achieving our goals.
2017 GOVERNANCE AND STATEMENTS
The report covers Umicore’s approach to corporate governance.
It also includes financial results for the year as well as detailed
environmental and social performance data for the group.
The report is externally verified and has been prepared inaccordance with the GRI Standards: Core option. Find the full
GRI Index on pages 211-214.
WEB-BASED CONTENT
To access the full web-based report including our case studies
please visit our dedicated reporting centre via the link below.

VISIT ANNUALREPORT.UMICORE.COM

Front cover image: Employee working in our
Automotive Catalysts plant in Tokoname, Japan, 2017
Inside back cover: Employer branding advertisement

Umicore Annual Report 2017

1

As a materials technology and recycling group, we develop products
and processes that are essential to address key societal challenges
such as the need for cleaner mobility and the growing scarcity of
raw materials. Our drive to be a leader in sustainability is not justabout minimizing the impact of our industrial operations.
Our aim is to have a positive impact on society at large.
In 2017, we made significant strides towards the ambitious targets
that we had set ourselves as part of the Horizon 2020 strategy.
We accelerated growth investments in rechargeable battery
materials, simplified the portfolio of activities and made further
progress in terms of environmental performance and sustainablesupply. All of that while achieving record results.
Looking forward, Umicore will be stepping up growthinvestments and research & development efforts to strengthen
its market positions and amplify the revenues and profit growth.

Umicore Annual Report 2017

2

Horizon 2020 progress

LAST YEAR WE SET OUT OUR NEW STRATEGY FOR SUSTAINABLE SUCCESS.
THIS GIVES A SNAPSHOT OF WHY OUR OBJECTIVES ARE IMPORTANT AND OUR PROGRESS IN THE YEAR.

ECONOMIC PERFORMANCEOUR OBJECTIVESVALUE CHAIN AND SOCIETY

x2
STRENGTHEN LEADERSHIPDOUBLE THE EARNINGS

WHY THEY AREIMPORTANTTo position Umicore to thrive
faced with the accelerating global
megatrends of stringent emissions
control, transport electrification
and resource scarcity.

To secure Umicore’s future successand sustainability by consistently
investing in R&D to develop andmarket innovative products andservices, and to ramp-up capacity
to meet growing market demandfor Umicore products and services.

To sharpen Umicore’s focus on
the ambitious growth initiatives
in clean mobility materials
and recycling.

To provide environmental andethical sourcing benefits forcomparatively scarce raw materials
in order to foster sustainablesuccess and growth.

To develop products and services
that create sustainable value forour customers and society andincrease resource security.

KEY ACHIEVEMENTS

GROUP REVENUESANNUAL GROWTH

2017 REBIT INCREASE

38% CATALYSISFULLY ALIGNED WITH OECD
DUE DILIGENCE GUIDANCEFOR RESPONSIBLE SUPPLYCHAINS OF MINERALS FROM
CONFLICT-AFFECTED AND
HIGH-RISK AREAS

64.6%

+9%

+24% VS 2016+56% VS 2014

REBALANCE PORTFOLIONERGY & SURFACE
32% ETECHNOLOGIES

30% RECYCLINGSUSTAINABLE SUPPLYSUSTAINABLE PRODUCTS & SERVICESOF TOTALREVENUES FROM
CLEAN MOBILITY
AND RECYCLING

SOCIETALALIGNMENTREAD MORE ABOUT ECONOMICPERFORMANCE ON PAGE 18

READ MORE ABOUT VALUE CHAIN
AND SOCIETY ON PAGE 25

Umicore Annual Report 2017

3

ECO-EFFICIENCYGREAT PLACE TO WORKOUR OBJECTIVESEFFICIENT OPERATIONS

WHY THEY AREIMPORTANTKEY ACHIEVEMENTS

To make sustainability anirrefutable competitive advantage
for Umicore.

ENERGY CONSUMPTION-21%

vs 2015 benchmark,adjusted for intensity

SAFETY

To offer a safe workplace andembed a safety culture in
our workforce.

NUMBER OF
ACCIDENTS

51

To monitor, manage and protectfrom exposure risks.

EXCESS READINGS*

2.7%* based on internal target values

PEOPLE ENGAGEMENTTo ensure Umicore’s status asan employer of choice in all theregions where we operate.
To manage talent as a driverfor reaching our desired
business growth.

TOTAL EMPLOYED9,769

RETENTION RATE

94.97%

SOCIETALALIGNMENTREAD MORE ABOUT ECOEFFICIENCY ON PAGE 28

HEALTHREAD MORE ABOUT GREAT PLACETO WORK ON PAGE 31

OUR MATERIALISSUES ANDSTAKEHOLDERENGAGEMENTThe Horizon 2020 strategy
represents a strong focus onmaterially important topics for
Umicore in the coming years:
Economic performance, Value
Chain and Society, Eco-Efficiency,
and Great Place to Work.
Umicore applies a localised
approach to stakeholder
engagement and manages
stakeholder relationships in linewith our decentralised approachto unit management.

READ MORE ABOUT THIS ON PAGES
53-62

Umicore Annual Report 2017

4

CEO & CHAIRMAN’S REVIEWCEO & Chairman’s review
MARC GRYNBERG AND THOMAS LEYSEN LOOK BACKON 2017 AND EVALUATE THE OUTLOOK FOR UMICOREMARC GRYNBERG CEO& THOMAS LEYSEN CHAIRMAN
Umicore set a record performance in 2017 on
the back of strong growth in Energy & Surface
Technologies. Recurring EBIT grew by 17% to€ 410 million (or by 24% to € 398 million excluding
discontinued operations). Return on Capital Employed
grew from 14.6% in 2016 to 15.1% in 2017, reaching
the value creation level that we set ourselves as along-term goal.
Our progress is measured against the Horizon 2020
strategic plan which we launched in 2015, aiming
to make Umicore a clear leader in clean mobility
materials and recycling, while doubling company
earnings, balancing the contribution from thethree business groups, and turning our leadershipin sustainability into a greater competitive edge.
Such has been the progress against these goals
that we anticipate approaching our Horizon 2020
target of doubling recurring EBIT to € 500 million
in 2018, having established an equitable balance incontribution amongst Recycling, Catalysis and Energy& Surface Technology in 2017.

Contribution by business group showed wellbalanced contributions to the overall result.
Revenues in Energy & Surface Technologies increasedby 46%, reflecting strong volume growth and fast
ramp-up of new production capacity in Rechargeable
Battery Materials and – to a lesser extent – volume
growth in Cobalt & Specialty Materials. Revenues andrecurring EBIT for Catalysis increased by 8% and
9% respectively, reflecting higher sales of heavyduty diesel catalysts, the positive impact of thefull consolidation of Ordeg and higher volumes
in the Precious Metals Chemistry business unit.
Revenues and recurring EBIT for Recycling wereslightly higher year-on-year, with the positive impactof higher processed volumes and more supportive
metal prices partly offset by lower commercial
terms in the second half of the year. Profitability in
Recycling remains very strong and will be further
supported by the gradual ramp-up of additional
capacity in Hoboken.

Umicore Annual Report 2017

5

CEO & CHAIRMAN’S REVIEWGROUP FINANCIALHIGHLIGHTSREVENUES€ 2,916m
RECURRING EBIT

€ 410mR&D EXPENDITURE

6%of revenues
CAPEX€ 365mNon–recurring charges had a negative impactof € 46 million on EBIT and were primarily due tothe divestment or closure of selected businesses
and sites.
We continued to make substantial investments
in our strategic growth areas, with 2017 capital
expenditure amounting to € 365 million mainly
as a result of the continuing expansion in plant
capacity for cathode materials in China and Korea.
These organic investments were supplemented by
selected acquisitions that will extend the customer
base and product portfolio: Umicore has acquired
the remaining 50% of Ordeg in Korea, Materia’s
Metathesis catalyst business, Eurotungstène in France
as well as the heavy-duty diesel and stationary
catalyst businesses of Haldor Topsoe.
2017 was a decisive year in bringing more focus toour portfolio of activities. We completed the saleof our Building Products business unit to Fedrus
International in September, thereby turning a pagein the long history of Umicore. We also completed
the sale of the large area coating business to First
Rare Materials at the end of the year. Following thisdivestment, we will close the production site inProvidence, Rhode Island, and integrate the remaining
activities of the former Thin Film Products business
unit into Electro Optic Materials. An agreement wasreached on 1 December to sell the European activities
of Technical Materials to Saxonia Edelmetalle andthe deal was completed at the end of January 2018.
We integrated the North American and Brazilian
operations of Technical Materials into the Jewellery& Industrial Metals unit, pending the examinationof further strategic options for the former while theChinese operations had been closed in early 2017.
New ownership of the divested activities will position
them better for the future, while our organisational

simplification will sharpen Umicore’s focus on
the ambitious growth initiatives in clean mobility
materials and recycling. Other internal simplification
steps included the move of the Battery Recycling
business line to Cobalt & Specialty Materials andthe merger of Platinum Engineered Materials into
Jewellery & Industrial Metals. With these moves,
we have completed the portfolio realignment that
was announced early 2015 and which has brought
the number of business units down from fifteen tonine and the number of production sites down from64 to 51.
Our cash flows and capital structure remained
strong in 2017, although the cash-out for acquisitions
was only partially offset by divestment proceeds.
The Board of Directors will propose a gross annual
dividend of € 0.70 per share and this will bepresented to the shareholders for approval at theAnnual General Meeting in April 2018.
Our Horizon 2020 strategy includes the continued
pursuit of sustainability goals such as zero accidents
in the workplace and demonstrable sustainability ofsupply, aiming to make sustainability an irrefutablecompetitive argument in favour of Umicore.
Progress towards these objectives was varied in 2017.
Our 2017 safety performance did not show sufficient
improvements in our pursuit of accident-freeworkplaces. Excluding the Building Products business
unit which was divested in September, the total
number of lost time accidents was 51 (compared to
54 in 2016) with a frequency rate of 3.01 (3.37 in 2016)
and a severity rate of 0.09 (0.58 in 2016). Our efforts
to improve these results will continue in 2018, withnew awareness campaigns and specific programmes
aimed at changing mindset and creating a more
prominent safety culture. Occupational exposure

Umicore Annual Report 2017

6

CEO & CHAIRMAN’S REVIEWGROUP NON-FINANCIALHIGHLIGHTS

levels have decreased, with Rechargeable Battery
Materials making the most significant improvements
in 2017.

ECO-EFFICIENCY

We measure our eco-efficiency against our Horizon
2020 goal of performing equally well or better than in
2015, with values adjusted for activity levels. All themain indicators showed significant improvementin 2017. Metal emissions to water were 69% down
on 2015 values, compared to only 1% improvementin 2016, as the new biological water treatment
plant became fully operational in Hoboken with an
improved management system to deal with the riskof flooding. Metal emissions to air were 41% down
on 2015, compared with 30% in 2016; in particular
thanks to further work in Hoboken to reduce lead
dust emissions (see page 28). In terms of energy
efficiency, our energy consumption was down 21%
compared to 2015 (compared with a 7% improvementin 2016).

21%

improvement in energy consumption
vs 2015 benchmark adjusted for intensity
SAFETY

51

accidents in 2017vs 59 in 2016
PEOPLE ENGAGEMENT

5.03%

of voluntary leavers in 2017

In 2017, our efforts to make Umicore a great place
to work included a number of diversity initiatives:the “Focus on Women” project (see page 31),
the appointment of non-Europeans to senior
management positions and to the Board of Directors.
With a significant part of Umicore’s expansion taking
place in Asia, where the labour market is both fluidand competitive, we are deploying new initiatives tosupport recruitment and retention of talent, including
a new worldwide Employer Branding programme
which was launched in November 2017.
Customers in the automotive and electronics
sectors are increasingly demanding that wedemonstrate sustainability of supply. We haveused our expertise in cobalt and gold supply chain
due diligence to establish a practice of responsible
sourcing of platinum group metals as well as for

raw materials used in cathode materials. This is wellreceived by customers and, together with our uniqueability to recycle end-of-life products in a closed loop,
illustrates how we turn sustainability into a greater
competitive advantage. We also initiated life cycle
analyses of various products and services including
the manufacturing of cathode materials, battery
recycling and services from Precious Metals Refining
in line with our Horizon 2020 sustainability objectives.
We see clear evidence that the three megatrends
identified as business drivers for Umicore are, once
again, ever-more pronounced. The most remarkable
has been the rise in electrified vehicles adoption
which, combined with the successful qualificationof our materials for several of these new vehicle
models, creates the need for an accelerated additionof production capacity for cathode materials.
Against this backdrop, Umicore launched in early2018 a new € 660 million investment programme
which will strengthen our position at the forefrontof this industry. The need for cleaner mobility
continues to be a concern and we still see a growing
need for emission control catalysts where fullelectric solutions are not yet an option, such as light
petrol-engine passenger cars or heavy-duty diesel
applications. The growth in emission control catalysts
is set to be amplified by the upcoming introductionof tighter emission norms in several regions
including Europe, China and India. Resource scarcity
continues to be a concern especially for metals vitalto clean mobility and communications technologies.
Here too, Umicore maintains a technological edge inan area that generates our highest return on capital
employed. We already have an industrial pilot line
for the recycling of electrical vehicle batteries andwill ensure that larger scale recycling facilities areready to come on stream in the mid-2020s, when thecurrent generation of electrified vehicles reach the

Umicore Annual Report 20177

CEO & CHAIRMAN’S REVIEW“Umicore set a record
performance in 2017…
reaching the value creationlevel that we set ourselves
as a long-term goal…
and bringing more balance
to our portfolio of activities.”

end of their working lives. Meanwhile, much of thebattery recycling volume will depend on ensuring
smaller batteries from domestic appliances, including
mobile telephones, are collected efficiently so that
we can recover the metal contents to supply further
development in the battery industry.
Our geo-political environment remains as volatile
as it was a year ago and we will continue to strive tobuild coherency in an unpredictable environment byfocusing on our strategic goals and remaining agile
in tailoring Umicore’s market approach and in ourability to ramp up new production activities quickly
and effectively.
The two-volume format of our Annual Reportintroduced in 2016 was a new step in our reporting
journey, reaffirming our commitment to fully
integrated reporting. While keeping the sameclear structure in the 2017 edition, including thecomprehensive overview of our business model,
value creation and value chain, we have brought
further clarity on the material elements that drive
our business. We have sought to align with the latest
Global Reporting Initiative and to facilitate access tothe texts through indexing and iconography. We hope
you will find this report clear and informative.

As we close this review, we would like to express
great thanks to all our stakeholders for theircontribution to our success over the course of 2017.
We see the very successful equity offering madein early 2018 and through which we raised closeto € 900 million as a clear vote of confidence from
our investors in Umicore’s strategy and positioning.
We are looking forward to further successes in 2018
and we firmly believe that Umicore is in a great
position to ensure shared success for all stakeholders,
whether customers, suppliers, employees, business
partners or shareholders.

MARC GRYNBERG CEO& THOMAS LEYSEN CHAIRMAN

Umicore Annual Report 2017

8

UMICORE AT A GLANCE

Enabling a more sustainable world
WE ARE A GLOBAL GROUP FOCUSED ON MATERIALS TECHNOLOGY AND RECYCLING. OUR WORKHELPS IMPROVE AIR QUALITY, MAKES ELECTRIFIED TRANSPORT POSSIBLE AND TACKLES RESOURCE SCARCITYREVENUES

R&D EXPENDITURE€ 2,916m 6%of revenues

RECURRING EBIT

€ 410mREVENUES BY GEOGRAPHY

9,769

PRODUCTION SITES

51

R&D | TECHNICAL CENTRES

14

RECURRING EPS€ 1.22
per share

RESOURCE EFFICIENCY

49% EUROPE

38% PRIMARY MATERIALS

15% NORTH AMERICA

49% SECONDARY MATERIALS

6% SOUTH AMERICA

13% END-OF-LIFE MATERIALS

28% ASIA-PACIFICCOLLEAGUES

5,782
19
5

858
12
2
685
5
1

2,182
14
6
262
1

2% AFRICA

Umicore Annual Report 2017

9

UMICORE AT A GLANCE

Three complementary business groups
OUR THREE BUSINESS GROUPS ADDRESS SPECIFIC CUSTOMER NEEDS.
TOGETHER, THEY COMPLEMENT EACH OTHER, SHARING KNOWLEDGE AND EXPERTISE
BUSINESS GROUP

MAIN INDUSTRIES SERVED MAIN END USESKEY ACHIEVEMENTSKEY FIGURESCATALYSIS

Automotive, chemicals,
construction, shipping,pharmaceuticals, power
generation– Earnings growth of 9%– Full ownership of Ordeg Co.
Ltd, Korea– Acquisition of the heavy-duty
diesel (HDD) and stationary
catalyst businesses
Haldor Topsoe– Agreement to acquire Materia´smetathesis catalyst business

REVENUES

Umicore provides automotive catalysts for gasoline anddiesel light and heavy duty diesel applications, including
on-road and non-road vehicles. The business group alsooffers stationary catalysis for industrial emissions control andproduces precious metals-based compounds and catalysts foruse in the pharmaceutical and fine chemicals industries.

ENERGY & SURFACE TECHNOLOGIES Electronics, automotive,

Umicore’s products are found in applications used in the
production and storage of clean energy and in a range ofapplications for surface technologies that bring specificproperties and functionalities to end products. All our
activities offer a closed loop service for our customers.

RECYCLING

Umicore treats complex waste streams containing preciousand other specialty metals. Our operations can recover
20 of these metals from a wide range of input materials
ranging from industrial residues to end-of-life materials.
Other activities include production of precious metals-basedmaterials that are essential for applications as diverse as
high-tech glass production, electrics and electronics.

rechargeable batteries,
aerospaceNon-ferrous metals mining
and refining, automotive,
electronics, energy,
chemicals, optics and displays,
precious metals

Emission control for industry
and for light and heavy-duty, on
and non-road vehicles, catalysts
for life science and chemicals,
pharmaceutical ingredients forcancer treatment

Portable electronics, electrified
vehicles, photovoltaics,
semiconductors, machining anddrilling tools, tyres, fibre optics,
LED, flat screensJewellery, high-quality
glass, investment bars,
power distribution, heating,ventilation and coolinginstallations, nitricacid production– Earnings growth of 72%– € 300 million further
expansion of our battery
materials production capacity
in China and Korea– Divestment of the large area
coatings activity of Thin
Film Products and mergerof remaining activity with
Electro-Optic Materials– ROCE of 26%– Ramp-up of the additional
capacity in Hoboken, Belgium– Precious Metals Refining
reached a higher overalllevel of processed volumes
than in 2016
– Continued conflict-free smelter
certification of all Umicore
smelters for gold
– Ongoing divestment ofTechnical Materials in Europe€ 1,253m
RECURRING EBIT

€ 166m

COLLEAGUES

2,952

REVENUES€ 894mRECURRING EBIT

€ 141m

COLLEAGUES

2,716

REVENUES€ 650mRECURRING EBIT€ 128m

COLLEAGUES

3,092

Umicore Annual Report 2017

10

UMICORE AT A GLANCE

Our group structure
UMICORE HAS BROUGHT MORE FOCUS TO OUR PORTFOLIO OF ACTIVITIES.
OUR THREE BUSINESS GROUPS ARE NOW COMPOSED OF NINE BUSINESS UNITSCATALYSISENERGY & SURFACETECHNOLOGIESRECYCLING

AUTOMOTIVE CATALYSTSCOBALT & SPECIALTY MATERIALSPRECIOUS METALS REFINING

A world leader in emission control catalysts for lightduty and heavy-duty vehicles for all fuel types. Now
also including non-road heavy-duty diesel catalysts andstationary catalysts for industrial plant emissions control.

Producer of cobalt and nickel specialty chemicals for a wide
range of applications, including tyres, pigments, catalysts
and surface treatment. Now also responsible for proprietarylithium-ion rechargeable battery recycling technology.

Operator of the world’s most sophisticated precious metals
recycling facility able to recover 17 precious and othervaluable metals from complex waste streams.

PRECIOUS METALS CHEMISTRY

RECHARGEABLE BATTERY MATERIALS

Developer and producer of metal-based catalysts used inchemistry, life sciences and pharmaceutical applications.

A leading cathode material supplier for lithium-ion
rechargeable batteries used in portable electronics andelectrified vehicles.

Services for hedging, leasing, purchasing and sale ofprecious metals to internal and external customers.

PRECIOUS METALS MANAGEMENTELECTROPLATING
Supplier of precious metal electrolytes & processes fortechnical, functional and decorative applications.

JEWELLERY & INDUSTRIAL METALSSupplier of precious metals creating products for thejewellery and industrial sector and specialist in the
manufacturing of platinum group metals components
for the special glass and chemical industries, offering
recycling solutions.

ELECTRO-OPTIC MATERIALSSupplier of products for thermal imaging and wafers forspace solar cells and high brightness LEDs and chemicals forfibre optics. Now also producer of evaporation material andsputter targets for optics and microelectronics industry.

Umicore Annual Report 2017

11

GLOBAL TRENDS

Taking on the big challenges
OUR BUSINESS MODEL AND HORIZON 2020 STRATEGY ARE FOCUSEDON MAKING A DIFFERENCE IN THE WORLD’S MOST PRESSING ISSUES
CLEAN AIR
While regulation has gradually led to reduced air pollution over the past 30 years, many opportunities remain for further
emissions reduction given the major challenges to human health from poor air quality.
WHAT IS THE POTENTIAL IMPACT?
Combustion engines produce toxic emissions such as
nitrogen oxides (NO x), hydrocarbons and particulatematter, making road transport a major source of air
pollution. According to 2016 data analysis publishedby the World Bank, air pollution is the fourth
deadliest health risk worldwide, triggering one in ten
premature deaths. A 2016 UNICEF study revealed thataround 300 million children live in areas where theair is toxic – exceeding international limits by at least
six times.
WHAT IS UMICORE’S CONTRIBUTION?
We are one of the world’s leading producers ofcatalysts and catalytic filters used in emission
abatement systems for light and heavy-duty vehicles,
on-road and off-road. Our catalysts and particulate
filters convert fossil fuel pollutant emissions into
harmless gases and trap the particulate matter,enabling our customers to meet present andfuture environmental standards. Our products have
prevented hundreds of million tonnes of harmful
pollutants from being emitted into the air.

In 2017, we opened a new production plant foremission control catalysts in Rayong, Thailand,
serving the hub of Southeast Asia’s automotive
industry. To better address the global needs of our
Korean automotive catalyst customers, we acquired
full ownership of Korean automotive catalyst joint
venture, Ordeg Co. Ltd. We also expanded catalytic
solutions for on-road and non-road heavy-duty diesel
by integrating Haldor Topsoe’s DeNOx technology.
WHAT IS THE STORY IN 2017?
Worldwide, the trend towards more stringent
automotive emission legislation and targets has
continued. In Europe, building on the 2015 Euro 6
norm which limits the permitted level of NO x fordiesel cars, cities are leading on action for clean air.

UN SUSTAINABLE DEVELOPMENT GOALS (SDG S)

Umicore is working to meet the growing demand forclean mobility and clean air and striving to ensure
resource efficiency, resilience and sustainability inindustry’s supply chain.

The automation and electrification of transport has
dominated the public debate on closing the global
emissions gap, while new measures on driving
emissions push industry for innovation in emission
control system design, including catalysts andcatalytic filters.

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12

GLOBAL TRENDS

Taking on the big challenges
VEHICLE ELECTRIFICATION
The transport sector is responsible for over 14% of global anthropogenic greenhouse gas emissions. Electrified mobility willplay a key role in reducing both CO2 and NOx emissions, improving air quality and reducing dependence on fossil fuels.
WHAT IS THE POTENTIAL IMPACT?
The transport sector is the fastest growing source of
global greenhouse gases, the largest share of whichcome from road transport. Electrified transport isessential for meeting global ambition of reduced
emissions and clean air by combining energy
efficient systems with renewable energy sources tooffer clean, quiet, powerful transport.
WHAT IS UMICORE’S CONTRIBUTION?
Umicore is one of the world’s leading producers
of cathode materials for lithium-ion batteries.
Cathode materials are key in determining the powerand energy density of rechargeable batteries, andhence the maximum driving distance in the caseof electrified vehicles. Our nickel-manganesecobalt (NMC) cathode materials are a reference in
the industry.
To meet the growing market demand, we announced
an investment programme of € 300 million between
2017 and 2019 to further increase our production of
NMC cathode materials for lithium-ion rechargeable
batteries.
This
programme
entails
further

investments in Cheonan (Korea) and Jiangmen(China). Combined with the € 160 million investment
announced in 2016, this will result in over a sixfold increase in total capacity by 2020 compared to2015 levels.
WHAT IS THE STORY IN 2017?
In 2017, the number of electrified vehicles (EV)continued to grow, with over two million EVs on
the road. This number is expected to increase
exponentially in the coming years.
Several countries and regions have drafted ambitious
vehicle emissions reduction targets. In Europe, EU
legislation requires fleet average to be achieved by
all new cars of 95 grammes of CO 2 per kilometerby 2021. As part of the 2016 European Strategy
for Low-Emission Mobility, in the fourth quarter of2017 the European Commission released its second
clean mobility package which included a legislative
proposal with new targets for the EU fleet-wide
average on CO 2 emissions of new passenger cars
and light commercial vehicles from 2025 and 2030.

The package includes a flagship initiative to support
European battery development and innovation.
Incentives favouring electric vehicles are increasingaround the world. In 2017, China – the global leader
in electric car and bus sales – announced a fossilfuel car manufacturing phase-out that starts at a
10% production minimum of “new energy vehicles”
in 2019 and increases targets for following years.
UN SUSTAINABLE DEVELOPMENT GOALS (SDG S)

Umicore is working to optimise resource use andreduce pollution, and provide solutions for a cleaner
and more resilient future.

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13

GLOBAL TRENDS

Taking on the big challenges
RESOURCE SCARCITY
Trends such as continued population growth, urbanisation and more affluent lifestyles are driving ever-higher demand
for resources. This poses the question – how will we meet future demand?
WHAT IS THE POTENTIAL IMPACT?
Demand for specialty and precious metals will also
be driven by reducing the environmental impacts ofsociety, through the development of technologies
such as rechargeable batteries. On the one hand,mining metals from primary sources has significant
environmental impacts, including a high CO 2
footprint per tonne of recovered metal. Easy-to-mine
deposits are becoming increasingly scarce and ore
bodies poorer. On the other hand, many specialty
metals required for new, environmentally-friendly
technologies can only be produced as a by-productof other metals.
WHAT IS UMICORE’S CONTRIBUTION?
Our facility in Hoboken is the world’s largest andmost complex precious metals recycling operation,
processing over 200 types of raw material andrecovering over 20 different metals. These raw
materials range from mining and industrial residues
to “End-of-life” materials, such as electronic scrap
and spent rechargeable batteries. Treating complex
materials from these above-ground sources isincreasingly important and Umicore is growing its

capacity to cater to rising demand. As part of ourclosed-loop business model, most of our business
units also recycle industrial residues from customers.
Umicore’s recycling not only offers environmental
and ethical sourcing benefits, but also increased
resource security.

UN SUSTAINABLE DEVELOPMENT GOALS (SDG S)

WHAT IS THE STORY IN 2017?
Eco-innovation and circular economy were key
2017 considerations while globally, the UN SDGs
became the benchmark reference for both politicaland industrial strategies. The European Commission
mobilised circular economy stakeholders in addition
to delivering options for the improved legislativeinterface of chemicals, products, and waste anda monitoring framework for circular economy.
Additionally, the G7 committed to an alliance on
Resource Efficiency and the mission of the B20, in
support of the G20 business community, was initiatedwith resource efficiency as a concrete priority action.

Umicore is determined to foster sustainable growthand champion its circular business model.

Umicore Annual Report 2017

14

BUSINESS MODEL

Creating a competitive advantage
WE BELIEVE THE CIRCULAR USE OF RESOURCES IS ESSENTIAL FOR SUSTAINABLE GROWTH.
OUR BUSINESS MODEL CENTRES ON A SHIFT AWAY FROM A LINEAR ‘TAKE, MAKE, WASTE’ ECONOMY

We produce and recycle metalrelated materials.

Our integrated approach tobusiness means we believe
in delivering value for all
stakeholders through:

RO
TU
DR
UICNTGIOCAONRUEFPAC
N
UMMI

Our closed loop operational model
ensures that we extract thevaluable metals from industrial
residues and “end-of-life” materials
for reuse.

c t,
du
Pro

We combine our metallurgy,
chemistry and materials science
competences with a thoroughunderstanding of our customers’
needs.

We aim for a high degree of focus
and to simplify the way we dothings. This supports us in realising
our ambitions.

GLOBAL TRENDS & THE
CIRCULAR ECONOMYMETALS

CLEAN
AIR

VEHICLEELECTRIFICATIONRESOURCESCARCITY

BY-P
RO D U C TSIO N SCR APSThe Umicore Way outlines ourvalues, our commitment to
the principles of sustainable
development and the way inwhich we wish to achieve ourbusiness goals.

– Enhanced quality of life throughall of our products– High quality employment– Shareholder returns– Societal contribution

ess and market kn
proc
ow
-ho
w

SUSTAINABLE
PRODUCTS& SERVICES

UCT– Metal-containing raw materials– Energy and auxiliary materials– Skills and expertise– Investment and funding

THE CONTRIBUTION
WE MAKEOD

We need critical resources andrelationships to run effectively
and sustainably:

WHAT WE DO& HOW WE DO IT

PR

WHAT WE NEEDUSEDPRODUCTSUMIC
GROERCEYRC LEICNYGC L I N

READ MORE ABOUT RESOURCES &RELATIONSHIPS ON PAGE 15

READ MORE ABOUT OUR PRODUCTS& SERVICES ON PAGE 16

READ MORE ABOUT THE VALUEWE CREATE ON PAGE 17

Umicore Annual Report 2017

15

BUSINESS MODELManaging resources and relationships
MANY FACTORS – FROM RAW MATERIALS SUPPLY TO TALENT RETENTION – COULD AFFECT OUR ABILITY TO DO
BUSINESS. WE MANAGE THESE RESOURCES AND RELATIONSHIPS IN A RESPONSIBLE AND ETHICAL WAY
M ANU

FAC TURI N G

R E C YCL I N GMETAL-CONTAINING MATERIALS
Our activities are focused on products and services
containing precious and specialty metals. Our closed
loop business model ensures that a high volume
of our metals come from recycled sources –production scraps and residues from customers andother industries as well as “End-of-life” materials.
Metals are unique in that they can be recycled
infinitely without losing any of their chemical or
physical properties. This creates an outstanding
ingredient for sustainable materials production and is
one of the foundations of our business model.
Overall, we can recover 28 metals from these closedloop activities, 20 of which from our Recycling
business group alone. The remainder of our metal
supplies come from primary sources, for which
Umicore has a mix of long-term and shorter-term
procurement arrangements.
We buy sustainably and ethically sourced
materials using our Sustainable Procurement
Charter and/or, where necessary, procurement
frameworks specific to certain metals.

ENERGY AND AUXILIARY MATERIALS
Input materials such as fuels and chemicals are
essential to Umicore operations and are purchasedusing our Sustainable Procurement Charter
framework. In most of the countries where we
operate, and given the specific nature of many of ouroperations, there is limited choice in terms of energy
sourcing. For this reason, our priority is to maximise
energy and auxiliary materials efficiency.
SKILLS AND EXPERTISE
Umicore operates 51 industrial sites and several
offices and research centres, located in 30 countries.
For Umicore to be successful, we must attract talentfor positions that range from production operators,
engineers, research scientists, to commercial andadministrative functions. In turn, our colleagues
contribute to Umicore through their expertise andcommitment. Metallurgy, chemistry, engineeringand materials science skills are criticallyimportant in our key growth areas: recycling
and materials for clean mobility. We anticipate
that much of our growth will take place in Asia andthis will mean a greater focus on attracting talent inthis region.

INVESTMENT AND FUNDING
Investing in Umicore is an investment in producing
materials for a better life – our mission – andsupporting our strategy. Umicore has a proventrack record of funding strategic growth
initiatives from the capital generated from ourown operations. Indebtedness is kept at low levels,
as we aim to retain the equivalent of an investment
grade credit status.

“Our priority is tomaximise energy
and auxiliarymaterials efficiency.”

Umicore Annual Report 2017

16

BUSINESS MODEL

Delivering industry-leading solutions
WE HARNESS OUR KNOWLEDGE OF METALLURGY, CHEMISTRY AND MATERIALSSCIENCE TO DELIVER PRODUCTS AND SERVICES THAT ENHANCE PEOPLE’S LIVES
M ANU

FAC TURI N G

UMICORE OPERATIONS
Our operations are carried out in 51 productionindustrial sites, ranging from large-scale recycling
plants to specialised chemicals and materials
production facilities.

R E C YCL I N G

We currently run two types of recycling operations.
Our precious metals recycling operation in Hoboken,
Belgium, is built to recycle and refine the mostcomplex materials and to recover a broad spectrumof metals. Our other recycling operations, incollaboration with customers, seek to recover one or
two metals from production residues.
Umicore specialised materials production facilities
tend to be located close to our customers in orderto support close collaboration and to meet their very
specific product requirements.

Umicore aims for excellence in environmental andsocial performance in all its operations. We seek,for example, to minimise the impact of metal
emissions and to generate improved material andenergy efficiency. We also strive to achieve a safeand healthy work place. Operational excellence isimportant both in securing our license to operate andin helping to make Umicore more competitive.
UMICORE TECHNOLOGYTechnology is at the core of our success.
From production and process technology, to deep
knowledge of metallurgy and materials science, wedevelop a significant part of our technology using
Umicore research and development (R&D) findings.
We invest 6% of our revenues in R&D every year.
Umicore also develops technology in collaboration
with industrial or academic partners and, whereappropriate, we protect our intellectual property
with patents.

SUSTAINABLE PRODUCTS AND SERVICES
Our materials are integrated into products by ourcustomers, usually industrial companies that makeproducts for consumer or industrial use. By working
in close collaboration with these customers, wedevelop custom materials or processes that take
into account health and safety, recyclability, cost
efficiency, waste reduction and energy efficiency
both in our own facilities and in the value chain.
We aim to anticipate developing trends – for example,
the push towards substituting potentially hazardous
materials in products – to provide additional value toour customers.

“Umicore aims
for excellence inenvironmental andsocial performancein all its operations.”

Umicore Annual Report 2017

17

BUSINESS MODEL

Creating shared value
THROUGH OUR CLOSED-LOOP BUSINESS MODEL, WE CREATE VALUE FOR
ALL OUR STAKEHOLDERS ECONOMICALLY, SOCIALLY AND ENVIRONMENTALLY
M ANU

FAC TURI N G

R E C YCL I N G

ENHANCING QUALITY OF LIFE THROUGH OURPRODUCTS & SERVICES
Our ambition is to produce materials for abetter life. Our main contributions are in theareas of recycling and materials for clean mobility.
Our recycling services address growing resource
scarcity and reduce waste and CO 2 emissions.
Our automotive catalysts help reduce air pollution
from internal combustion engines, while ourrechargeable battery materials help make electrified
transportation a reality.
Umicore products can be found in a host of applications
that make day-to-day life more comfortable, often
contributing to a cleaner environment. For example,
Umicore materials are in television screens, incomputer motherboards, in domestic light switches
and in the fibre optics and satellites that keep
you connected.

HIGH QUALITY EMPLOYMENT
Umicore offers high quality employment to9,769 colleagues in 30 countries – positions range fromscientific researchers to production engineers andfrom supply chain experts to administrative support
functions. We offer competitive salaries, training
and development opportunities and long-term
employment prospects to our employees. Each of
our sites aims to be considered as a preferred
employer in its specific context. Umicore supports
the principle of collective bargaining and has signeda Global Framework Agreement on Sustainable
Development with the IndustriALL Global Union.

SOCIETAL CONTRIBUTION
Our operations, products and services contributeto addressing many societal and environmental
challenges as defined by the United Nations
Sustainable
Development
Goals(SDG).
We contribute to several SDGs, namely: Sustainable
Cities & Communities, Responsible Consumption& Production, Affordable & Clean Energy, Decent
Work & Economic Growth, Good Health & Wellbeing
and Gender Equality. You can find out more about
this overarching contribution on pages 11 to 13 andexplore our approach to stakeholder engagement inmore detail on pages 53 to 58.

SHAREHOLDER RETURNS
Umicore aims to provide superior growth and returns
to its shareholders. Our aim – across the economic
cycle – is to generate a return on capital employed ofmore than 15%. One of our Horizon 2020 ambitions
is to double the earnings of the company, mainly
through growth in recycling and materials for clean
mobility. While the primary focus of Umicore is onorganic growth, acquisitions are also considered
provided they fit the strategy and have the potential
to add value for shareholders. Our dividend policy is
to pay out a stable or gradually increasing dividend.
We have a track record of returning excess cash toshareholders in the form of share buybacks.

Umicore Annual Report 2017

18

Driving economic performancex2

STRENGTHENLEADERSHIPDOUBLETHE EARNINGSREBALANCEPORTFOLIOKEY RISKS & OPPORTUNITIES2020 TARGET– Regulatory and legal context– Sustainable and ethical supply– Technology and substitution– Market– Metal price– Confirm our strong position and unique offer in clean
mobility materials and recycling processes– At least double the size of recurring EBIT compared
to 2014 excluding the discontinued operations– Ensure a more balanced distribution of earnings
among the three business groups

SDGs

CASE STUDYPowering towards a future
in Electric Vehicles
Battery technology will need to evolve to do more with less: more power density and longer
range with less weight and material. Umicore is exploring iterative improvements to NMC
technology and the use of high-density composite anodes.

VISIT ANNUALREPORT.UMICORE.COM

Umicore Annual Report 2017

19

PERFORMANCE

Economic review
WE AIM TO ENHANCE OUR LEADERSHIP IN CLEAN MOBILITY MATERIALS AND RECYCLING.
THE 2017 RESULTS WERE WELL AHEAD OF PLAN COMPARED TO OUR HORIZON 2020 GOALS
Revenues€ 2.9 billion (+9%) € 2.8 billion (+16%)*
Recurring EBITDA€ 599 million (+14%) € 587 million (+18%)*
Recurring EBIT
€ 410 million (+17%) € 398 million (+24%)*
ROCE
15.1% (vs. 14.6% in 2016)
Recurring net profit (Group share)€ 267 million (+15%)
Recurring EPS€ 1.22 (+14%)
Net debt€ 840 million (€690 million long-term private debt)
Capital expenditures€ 365 million*excluding discontinued operations

OVERVIEW
Umicore recorded strong growth in 2017 withrevenues from continued operations increasing by
16% and recurring EBIT by 24% from 2016 levels.
Including
discontinued
operations,revenues
increased by 9% and recurring EBIT by 17%. This islargely due to the outstanding growth in Energy &Surface Technologies and the gradual ramp-up of
new production capacity for cathode materials.
The Catalysis and Recycling business groups also

contributed to overall growth in revenues andearnings. Return on Capital Employed is now above
our target of 15%, thereby confirming that growth isnot being pursued to the detriment of margins.

REVENUES (EXCLUDING METAL)
Million of Euros
3,500
3,000
2,500

2,363.4

2,366.5

2,629.0

2,667.5

2,915.6

the organisation and sharpened the focus on thestrategic growth priorities in clean mobility materials
and recycling.
With our global presence and unique competences,
Umicore is well positioned to take advantageof accelerating global megatrends: stringent
emissions control, transport electrification andresource scarcity.

2,000

RECURRING EBIT

1,500

Million of Euros

1,000

600

500
0

500

2013

2014

2015

2016

2017

300

The portfolio realignment announced in 2015 wascompleted: Umicore divested the Building Products
business, the large area coating activity of Thin
Film Products and sold the European operationsof Technical Materials. At the same time, Umicore
completed selected acquisitions that strengthen
our position in Catalysis and in Energy & Surface
Technologies with the heavy duty and stationary
emission control catalyst activities of Haldor Topsoe,
the metathesis catalyst business of Materia and byacquiring Eurotungstene and the remaining interest
for full ownership of Korean automotive catalyst
maker Ordeg. This portfolio realignment has simplified

397.9

400
254.6

299.3

320.1

2015

2016

200
100
0

2014
base

2017

2020
targetUmicore Annual Report 2017

20

PERFORMANCE

Economic review
GROUP PERFORMANCECATALYSISRevenues and recurring EBIT for Catalysis increased
8% and 9% respectively, reflecting higher sales ofheavy-duty diesel catalysts and the positive impactof the full consolidation of Ordeg in Automotive
Catalysts as well as higher volumes in the smaller
Precious Metals Chemistry business unit.
Revenues for Automotive Catalysts increased
compared to the previous year mainly due to thefull consolidation of Ordeg in Korea since the second
quarter, as well as strong demand for our heavy-duty
diesel catalysts in Europe and in China. The acquisitionof the heavy-duty diesel and stationary emission
control catalyst activities from Haldor Topsoe wascompleted in December 2017.
Global light-duty vehicle production grew 2% in 2017,with a decline in car production in North America
being offset by solid growth in Europe and China
and the recovering car market in Japan and SouthAmerica. Umicore’s sales volumes were below themarket growth primarily due to lower demand from
Korean car manufacturers which faced subdued car
sales in China, as well as an unfavourable platform
and customer mix in North America.
In Europe, Umicore’s revenues were impacted by theless favourable engine mix with a smaller share ofdiesel car production. Demand for Umicore’s gasoline
catalysts remained strong, in particular for the more
efficient direct injection engines to which Umicore iswell exposed.

has decided to substantially increase its catalyst
production capacity in China and double capacity inIndia. The new capacity will come on stream at theend of 2019.

In North America, Umicore’s revenues decreased
somewhat more than the market. This was due toa delayed platform introduction along with a lessfavourable customer mix, as Umicore is relatively
less exposed to the growing Asian car brands in theregion. There was a strong recovery of the SouthAmerican market and Umicore’s revenues were inline with the market growth.

Revenues for Precious Metals Chemistry increased
significantly compared to the previous year as aresult of higher volumes across product groups.
The acquisition of Materia’s metathesis catalyst
IP and business portfolio, which was completed
in January 2018, will enable the business unit tobroaden its homogenous catalysts offer and expand
its customer base.

In China, Umicore’s revenues grew well above themarket as a result of a strong positioning with bothglobal and domestic brands and in spite of the drop
in demand for Korean car brands in the region.
Umicore’s revenues continued to grow with JapaneseOEMs globally and locally, supported by the strong
recovery of the Japanese car market. In Korea,
Umicore’s revenues were subdued in an overall
stagnating market, while in India and Thailand,
revenues outperformed the market growth.

ENERGY & SURFACE TECHNOLOGIESIn Energy & Surface Technologies, revenues grew by
46% year-on-year and recurring EBIT by 72% withstrong performance across businesses. The volume
growth in cathode materials was the largest growth
driver and the swift ramp-up of new capacity has
supported the volume growth in the second part of
the year, while delivering the first scale effects.

Demand is set to grow significantly in China
and India due to the market expansion and theintroduction of more complex catalyst systems tomeet the upcoming China VI and Bharat Stage 6
emission standards. Against this backdrop, Umicore

Revenues and volumes for Rechargeable Battery
Materials were significantly higher year-on-year,
driven by strong demand for Umicore’s cathodematerials used in Li-ion batteries across the main
applications (transportation, portables and energy
storage). The fast ramp-up of additional production
capacity in China and Korea supported this rapid

Umicore Annual Report 2017

21

PERFORMANCE

Economic review
growth over the year and allowed for an accelerationin the second half of the year.
The main driver for the continued strong demandfor Umicore’s proprietary Cellcore® NMC (nickel
manganese cobalt) cathode materials was theincrease in demand for electrified cars with sales offull electric and plug-in hybrid cars growing 65% tosome 1.3 million units in 2017.
Global demand for Li-ion rechargeable batteries
used in electrified vehicles will continue togrow fast as automotive original equipment
manufacturers (OEMs) roll out their electrification
strategy. Further strengthening of emission targets,particularly in China and Europe, is pushing OEMs
to put more electrified models with longer driving
ranges on the road. NMC is the chemistry of choice
for batteries used in plug-in hybrid and full electricvehicles and demand for this chemistry is growing
rapidly. Umicore is benefiting disproportionatelyfrom this trend due to its competitive offer of awide range of high-quality transportation grade
NMC products, a unique ability to scale up fast, andthe early qualification with a large number of cellmanufacturers and automotive OEMs.
Umicore is expanding production capacity to caterfor this buoyant demand and has managed to add
somewhat more capacity than originally planned aspart of the current € 460 million investment program.
The fast ramp-up of the new production lines has
been showing benefits in the second half of 2017 andthese effects will be more pronounced in 2018.
Revenues for Cobalt & Specialty Materials weresignificantly higher year-on-year driven by volume
growth and favourable market conditions acrossactivities, particularly for the refining, recycling anddistribution activities. Demand for nickel chemicals,
precursors for battery applications and metal
carboxylates was also strong. Higher revenues werealso recorded for tool materials, partly reflecting
the successful integration of the recently acquired
activities in France.
Construction work to upgrade and expand the cobalt
and nickel refinery in Olen, Belgium is well underway
and the facility is expected to be commissioned in
the second half of 2018.
Revenues for Electroplating increased materiallycompared to the previous year reflecting volume
growth across activities. Sales of precious metal
based electrolytes and platinised compounds
for electro catalytic applications benefited fromstrong demand from the portable electronics andelectrochemical industries.

Revenues from Electro-Optics Materials were stablecompared to the previous year, with higher revenues
for finished infrared optics and substrates offset by asmaller contribution from the refining and recycling
activities. Revenues for germanium tetrachloride
remained stable.
Revenues from Thin Film Products increased yearon-year reflecting higher demand in both the large
area coatings and the optics and electronics activities.
On 20 October 2017, Umicore announced the sale of its
large area coatings activity to its joint venture partner
First Rare Materials Co., Ltd., the parent company of
the Vital Group. The optics and electronics activities
have been integrated into the Electro-Optic Materials
business unit as of January 2018.
RECYCLING
In Recycling, revenues grew by 1% year-on-year andrecurring EBIT by 2%.
Revenues for Precious Metals Refining werestable, with volume growth and a more supportive
metal price environment offset by somewhat lower
commercial terms in the second half of the year.
The ramp-up of the additional capacity in Hoboken
over the course of the year resulted in an increased
throughput rate and higher processed volumes
compared to the previous year. The regularUmicore Annual Report 2017

22

PERFORMANCE

Economic review
maintenance shutdown of the smelter in the lastquarter was completed successfully and operations
restarted smoothly thereafter.
While the availability of industrial by-products
and end-of-life materials was supportive of thecapacity ramp-up, the commercial terms were
negatively impacted by increasing competition insome segments.
In the beginning of 2017 Umicore announced aseries of projects with a view to further enhancing
the Hoboken plant’s environmental performance.
In this respect, the revamping of the lead refinery,
which will further reduce the risk of emissions, isprogressing well.
Revenues for Jewellery & Industrial Metals were
impacted by subdued demand in the productbusinesses, particularly for silver investment coins.
Production at Schöne Edelmetaal, located in the
Netherlands, was discontinued in November 2017
and the company will henceforth focus exclusively
on the sales and distribution of precious metals

commissioned in the second half of 2018. In line with
Umicore’s drive for greater organisational simplicity
and considering the operational and commercial fit,
the business unit was integrated into Jewellery &Industrials Metals as of January 2018.
Revenues for Technical Materials were in line withthe previous year, reflecting stable revenues for both
brazing and contact and power technology materials.
Margins increased materially due to the impact of
cost reduction measures and a more supportive
product mix. The sale of the European TechnicalMaterials business to Saxonia Edelmetalle GmbH wascompleted on 31 January 2018. Umicore is assessing
strategic options for its Technical Materials activities
in other regions. These remaining activities have also
been integrated into the Jewellery & Industrial Metals
business unit as of January 2018.
The contribution from the trading activity in Precious
Metals Management was higher year-on-yearreflecting improved trading conditions. The demand
picture for the physical delivery of metals was mixed:
investor interest for gold investment bars declined
while order levels for industrial metals were higher.

RECURRING EBIT
PER BUSINESS GROUP

30%
38%

32%

Catalysis
Energy & Surface
Technologies
Recycling

Corporate not included.

CORPORATE
The increase in corporate costs includes one-off
project costs related to acquisitions and divestitures.
Revenues for Element Six Abrasives increasedmaterially compared to the previous year reflecting
primarily improved market conditions and market
share gains for its oil and gas drilling products as wellas its precision tooling products used in automotive
and aerospace applications. The impact of previously
implemented cost reduction and efficiency measures
had a further positive effect on earnings.

Revenues for Platinum Engineered Materials
increased slightly on the back of higher demand for
Umicore’s performance catalysts in a flat market.
The construction of the facility in China to serve
customers in the display market is on track to be

Umicore Annual Report 2017

23

PERFORMANCE

Economic review
DISCONTINUED ACTIVITIES
Umicore completed the sale of Building Products to
Fedrus International effective 29 September 2017.
The activities contributed 9 months in 2017.
NON-RECURRING ITEMS
Non–recurring items had a negative impact of€ 46 million on EBIT. Restructuring charges accountedfor € 20 million and were primarily related to thesale of Thin Film Products large area coatings activity
and the closure of its production site in Providence
as well as the discontinuation of production activities
at Schöne Edelmetaal in the business unit Jewellery& Industrial Metals. Other items consisted of a
€ 13 million capital loss on the sale of Building
Products (no depreciation charges on its assets
were recognized as from the second half of 2015
in accordance with IFRS 5), an impairment ofUmicore’s shareholding in Nyrstar of € 7 million
and environmental provision charges of € 7 million.
The impact of non-recurring charges on the net result(Group share) amounted to € 42 million.
FINANCIAL RESULT AND TAXATIONNet recurring financial charges totalled € 42 million,
up compared to the previous year. Higher net financial
debt, the drawdown of long-term private debt and ahigher amount of funding in local currency resulted
in an increase of net interest costs.

The recurring tax charge for the period amounted to€ 87 million corresponding to a recurring effective
tax rate of 25.7% (vs 25.0% last year).
CASH FLOWSCash flow from operations was € 218 million,
including a € 284 million increase in working capital
related to the business expansion, in particular in the
Energy & Surface Technologies business group.

CAPITAL EXPENDITURE
PER BUSINESS GROUP
12%
22%

3%

Catalysis
Energy & Surface
Technologies
Recycling
Corporate &Unallocated62%

Capital expenditures totalled € 365 million, most ofwhich is related to Umicore’s growth investments inclean mobility and recycling. The Energy & Surface
Technologies business group accounted for over 60%of this amount, reflecting the ongoing investment
programmes to increase production capacity incathode materials.
Acquisitions accounted for a cash out of € 212 million
and include the acquisition of the remaining 50%
stake in Ordeg and of the stationary emission control
and heavy-duty diesel catalyst business of Haldor
Topsoe in the Automotive Catalyst business unit aswell as the acquisition of Eurotungstene in the Cobalt& Specialty Materials business unit. This cash out was
only partly offset by divestment proceeds.

FINANCIAL DEBTNet financial debt on 31 December 2017 stood at€ 840 million, up from € 296 million at the startof the year, largely driven by Umicore’s capital
expenditures and net working capital spending, as
well as the acquisitions in Automotive Catalysts andCobalt & Specialty Materials. The amount includes€ 690 million long-term private debt placements in
Europe and the United States. The average net debt
to recurring EBITDA ratio corresponded to 93.8%.
Group shareholders’ equity stood at € 1,803 million
resulting in a net gearing ratio (net debt / net debt +equity) of 31.1%.

Umicore Annual Report 2017

24

PERFORMANCE

Economic review
RESEARCH, DEVELOPMENT & INNOVATION
Umicore is committed to innovation to maintainour competitive lead. R&D expenditure in fully
consolidated companies, including discontinued
operations, amounted to € 175 million, up from€ 156 million in 2016. The year-on-year increasereflects a higher level of R&D in Catalysis and Energy& Surface Technologies. The R&D spend represented
6.0% of revenues and capitalised development costs
accounted for € 15 million of the total amount.
A total of 48 new patent families were filed in2017, compared to 50 in 2016. Most of theseconcern automotive catalysts and rechargeable
battery materials.
Umicore has prioritised its R&D programmes tosupport our Horizon 2020 ambitions with a focus
on the development of innovative materials andprocesses. 80% of R&D investments go towards clean
mobility and recycling.

THE UMICORE SHARE
Umicore’s share price was 46% higher at the end of
the year compared to the end of 2016, (€ 39.46 vs€ 27.08). This was compared to an 11% increase in
the Euronext 100 Index of the largest 100 companies
quoted on the Euronext stock exchange and anincrease of 10% of the BEL20 Index of the largest
Belgian companies. This performance won Umicore
the award for the best performing stock in the BEL20
index. During the year, we retained our place in the
FTSE4Good sustainability index and a number ofother sustainability oriented funds.
At the end of 2017, 4 investment companies hadholdings in Umicore that were above the declarationthreshold of 3%. These companies had combined
declared holdings of 25.88% Umicore bought back828,730 own shares in 2017. In the course of the year,
1,597,551 shares were used in the context of exercised
stock options. On 31 December 2017 Umicore held
4,505,567 shares in treasury, representing 2.01% of
the Group’s outstanding shares.

DIVIDEND
Considering the strong results in 2017 and thepromising prospects, the board of directors willpropose a gross annual dividend of € 0.70 per shareat the annual general meeting on 26 April 2018.
This represents a payout ratio of 57% based on therecurring EPS of € 1.22 per share and a yield of 2%
based on the average share price of 2017. Given theinterim dividend of € 0.325 per share paid out on
29 August 2017 and subject to shareholder approval,a gross amount of € 0.375 per share would be paidout on 3 May 2018.

GROSS DIVIDEND
Euros
0.8
0.7
0.6
0.5

0.60
0.50

0.50

2013

2014

0.65

0.70

0.4
0.3
0.2
0.1
0

2015

2016

2017

Umicore Annual Report 2017

25

Value chain and society
SUSTAINABLE
SUPPLYSUSTAINABLE PRODUCTS& SERVICESKEY RISKS & OPPORTUNITIES2020 TARGET

SDGs– Regulatory and legal context– Sustainable and ethical supply– Technology and substitution– Market– Secure materials supply and promote our closed loop
business offer– Develop products that create sustainable value forour customers or society

CASE STUDY

Smooth integration of Haldor
Topsoe’s DeNOx technology
Our acquisition of Haldor Topsoe’s heavy-duty diesel (HDD) and stationary catalyst businesses of
the Danish company further enhanced Umicore’s leadership in products for clean mobility andclean air. The acquisition and integration processes demonstrated a very strong fit between theorganisations as both businesses are technology-driven with a strong focus on sustainability
and operational excellence.

VISIT ANNUALREPORT.UMICORE.COM

Umicore Annual Report 2017

26

PERFORMANCE

Value chain and society

WE AIM TO LEVERAGE OUR SUSTAINABILITY APPROACH IN THE VALUE CHAIN,
BOTH UPSTREAM WITH OUR SUPPLIERS AND DOWNSTREAM WITH OUR CUSTOMERS
Umicore’s Horizon 2020 objectives reflect a
proactive view of our role in the overall value chain.
They cover Umicore’s presence and impact upstream,
through the interaction with suppliers or in our own
operations for example, as well as the downstream
impact of our products and services.
Upstream, we have placed greater emphasison the management of key raw materials
supply requirements. We have also sought toensure that Umicore’s efforts in the field of ethicalsourcing can generate a competitive edge for thecompany. Downstream, we have a strong portfolio
of products and services that offer specificsustainability advantages to our customers
and society.
SUSTAINABLE SUPPLYFor our operations to function, we need raw materials,
transportation, energy and other goods and services.
Overall, we have more than 10,000 suppliers
worldwide to which we paid over € 10.32 billion(including the metal content of raw materials) in2017. Umicore’s Purchasing & Transportation teams
worldwide take care of the energy and othergoods and services (which is referred to as indirect
procurement and accounts for 10% of our spend)
while the metal-bearing raw materials are purchased
directly by the business units (direct procurement,
accounting for 90% of our spend). In the scope ofthe Horizon 2020 sustainable supply objective, we
focus on raw materials as they are the largest shareof spending and risks.
Securing adequate volumes of raw materials is an
essential factor in our operations and service offeringand in meeting our Horizon 2020 growth objectives.
The risks and opportunities vary considerably fromone business unit to another, and consequently
we have a decentralised approach to risk andopportunity management. We are determined to
ethically and sustainably secure a competitive edgein our approach to critical raw materials.
Umicore continues to ensure that its operations
are certified as conflict-free through various
certification schemes such as the “conflict-freesmelter” initiative of the London Bullion Market
Association (LBMA) and the Responsible Jewellery
Council’s (RJC) Chain of Custody programme.
Sustainable procurement is a key driver in Umicore’s
Horizon 2020 aspiration to make sustainability into
a competitive edge. After publishing its Sustainable
Procurement Framework for Cobalt in 2016, Umicore
further optimised the due diligence practices for
its cobalt supply chain in 2017, in line with therecommendations for improvement made during the2016 audit. A significant improvement was Umicore’s
full alignment with the OECD Due Diligence Guidance

For Responsible Supply Chains Of Minerals From
Conflict-Affected And High-Risk Areas. The company’s
yearly reporting on its due diligence activities is not
only unique to Umicore, but also reflects a high levelof pro-active transparency.
Over the year, Umicore performed due diligence
activities for all its purchased cobalt materials usedin rechargeable batteries, tools, catalysts and several
other applications. Risks that were identified included
bribery, health and safety issues, high priority topics
for Umicore. When needed, additional information
was requested from suppliers. While most cases
were closed in the course of the year, some cases
still remain open for further assessment.
In order to address some of the most severerisks, Umicore acknowledges the needfor collaboration along the supply chain,including its own suppliers and those of its
customers. That is why Umicore engages with
its industry peers, suppliers and customers
in several initiatives and projects including
our commitment to developing the Cobalt
Industry Risk Assessment Framework within
the Cobalt Institute, and our contribution
toestablishing
the
World
Economic
Forum’s Global Battery Alliance.

Umicore Annual Report 2017

27

PERFORMANCE

Value chain and society
PwC
Bedrijfsrevisoren
bcvba/PwC
Reviseursd’Entreprises sccrl provided their independent limited
assurance report on Umicore’s Compliance Reportin respect of the activities undertaken by Umicore
during the year 2017 to demonstrate compliance with
Umicore’s Sustainable Procurement Framework for
Cobalt. The compliance report for the reporting yearof 2017 can be downloaded here.
More details on the conflict-free status of ouroperations can be found in the statements section
on page 199. Umicore’s “Responsible global supply
chain of minerals from conflict-affected and high-riskareas” policy can be accessed here.
In 2017, EcoVadis continued to assess indirect
procurement streams (i.e. suppliers of energy andother goods and services) for Umicore. The Purchasing& Transportation team developed a “quick scan”
based on criteria such as size, geographicallocation and type of product or service provided
and systematically applied the tool to review new
suppliers. This tool determines the need for an
EcoVadis assessment.

SUSTAINABLE PRODUCTS AND SERVICES
Umicore’s Horizon 2020 objective is to generate further
competitive advantage through the development of
products that have specific sustainability benefits.
This has a strong link with our economic objective of
being a clear leader in clean mobility and recycling.
Our primary focus in terms of sustainable products
and services is on those activities that provide
solutions to the megatrends of clean mobility
and resource scarcity. We developed an indicator tounderline our focus on clean mobility and recycling.
In 2017, the revenues of those activities that deliverproducts or services that are directly linked to oneof these two megatrends was 64.6% of 2017 Grouprevenues, up from 62% in 2016. The increase is theresult of higher activity both in recycling and clean
mobility. As we work towards the Horizon 2020
goals and bring even more focus to our business,
we expect this percentage to continue to increase.
It should be noted that many of the materials andservices making up the remaining 35.4% of revenues
provide answers to specific societal needs such as
improved connectivity (materials for high quality
glass, displays) or reduced energy consumption(materials for use in energy-efficient lighting suchas LEDs).

See more about our efforts in this area, including ourapproach to international regulatory compliance (i.e.
REACH) on pages 197 to 203.

“We are determined
to ethically andsustainably secure
a competitiveedge in our
approach to criticalraw materials.”
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28

Eco-efficiency
KEY RISKS & OPPORTUNITIES2020 TARGET

SDGs– Regulatory and legal context– Technology and substitution– Increase value through efficient use of metals,
energy and other substances

EFFICIENTOPERATIONSCASE STUDY

Environment as a catalyst
for improvement
We systematically review processes and behaviour in Hoboken, but we were surprised byincreased levels of lead in blood of a small number of children when we renovated ourlead refinery roof. We immediately mobilised the entire factory to identify improvement
opportunities and average concentration of lead in fine dust (PM10) has once again decreased
to acceptable levels. We are working hard toward further improvements with our research
department and external consultants.
VISIT ANNUALREPORT.UMICORE.COM

Umicore Annual Report 2017

29

PERFORMANCE

Eco-efficiency
WE AIM TO OPTIMISE THE SUSTAINABILITY PERFORMANCE OFOUR OWN OPERATIONS, FOCUSING ON ENERGY EFFICIENCY
As part of our Horizon 2020 objectives, we continue topursue selective eco-efficiency initiatives in business
units and sites where these can generate compelling
value and a competitive edge, for example throughreduced costs or a strengthened license to operate.
ENERGY EFFICIENCY
While we already play a key role in the transition
to a low-carbon society, for example through ourmaterials for rechargeable batteries for electrified
transport, we focus in our own operations onachieving further energy efficiency.
In the scope of Horizon 2020, greater emphasis isplaced on sites that are contributing the most to
Umicore’s total energy consumption. Monitoring andreporting of the energy consumption continues
to be done at all sites. The bigger contributors are
additionally encouraged to develop, and required toreport on, energy efficiency projects.

in absolute numbers reduced by 4% in comparison
with 2016, a combination of a significant increase inactivity levels at some sites and the divestment ofother sites. For more, see pages 176 to 179.
Several Umicore sites have implemented theISO 50001 energy efficiency standard and the twolargest sites in Belgium have been part of the energy
efficiency covenant with the Flemish government
since 2004.

NORMALISED ENERGY CONSUMPTION
%
100

94
79

80
60
40
20
0

In 2017, 23 sites accounted for 95% of the Group’s
energy consumption. At these sites, 38 energy
efficiency projects were implemented over thecourse of the year. By the end of the year, Umicore
had achieved a 21% reduction in energy consumption
compared to the 2015 benchmark year, correcting for
production intensity. This result is the combination of
improvements in productivity and the implementationof energy efficiency projects. The total CO 2 e emissions

100

2015

2016(1)

2017(1) Baseline 2015 in relation to 2016 was 6,664 TJ, leading toa reduction of 6% in 2016 in comparison with 2015.

METAL EMISSIONSFor many years, as part of our environmental
management approach, we have monitored andtaken steps to reduce the impact of metals emissions
on the environment – both to water and air. Each of
the different metals that we emit has a very different
level of potential toxicity for the environment andhuman health. For this reason, we focus on reducing
the impact of our emissions.
A specific methodology is used to establish theenvironmental impact of metals both to air and towater. 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 impact factors as
they relate to human health. For water emissions,
impact factors are based on the predicted no-effectconcentrations (PNEC) that are used, among others,in the EU’s REACH regulation.
The aim for 2020 is to reduce metal emissions impacts
while considering growing volumes of production.
Reporting focuses on sites that contribute to 95%
of the emissions expressed in impact and given
their activity level. Monitoring continues at all sites.
Over 95% of the impact of metal emissions to waterand air is the result of production activities at fewer
than 10 sites. This clearly indicates that most of oursites do not have a significant metal emissions impact.

Umicore Annual Report 2017

30

PERFORMANCE

Eco-efficiency
METAL EMISSIONS TO WATER
Compared to 2015, after correction for activity
levels, the impact of emissions to water fell by
69%, largely due to the increased efficiency of thewastewater treatment facility at our Hoboken site.

METAL EMISSIONS TO AIR
Regarding impact of metal emissions to air,considering activity levels, we achieved a reductionof 41% in 2017 compared to 2015, despite an increasein load, mainly due to improved filter and process
efficiency with a focus on metals with high impact.

METAL EMISSION REDUCTIONPERFORMANCE (TO WATER)METAL EMISSION REDUCTIONPERFORMANCE (TO AIR)

%

%

100

100

99

100

80

80

60

60

40

31

70
59

40
20

20
0

100

2015

2016(1)

2017(1) Baseline 2015 in relation to 2016 was 343,649, leading toa reduction of 1% in 2016 in comparison with 2015

0

2015

2016(2)

2017(2) Baseline 2015 in relation to 2016 was 123,831, leading toa reduction of 30% in 2016 in comparison with 2015.

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31

Great place to work
HEALTHSAFETYKEY RISKS & OPPORTUNITIES2020 TARGET– Talent attraction and retention– Become a zero-accident workplace– Reduce employee exposure to specific metals– Further improve people engagement with specificfocus on talent attraction & retention, diversity
management and employability

PEOPLEENGAGEMENT

SDGs

CASE STUDY

Improving gender diversity
in senior management
The bottom-up initiative ‘Focus on Women’ was started by six female managers. Combined with
our Coaching Circles – coaching, training, mentoring, and networking for female leadership –it seeks to increase awareness about the huge pool of female talent and to inspire female
colleagues. Gender diversity is a win-win for Umicore.

VISIT ANNUALREPORT.UMICORE.COM

UmicoreUmicore Annual
Annual Reportreport 2017

32

PERFORMANCEGreat place to work
THE LONG-TERM SUCCESS OF UMICORE DEPENDS ON OUR
BEING A SAFE, HEALTHY AND ENGAGING PLACE TO WORKZERO ACCIDENTS
As part of the Horizon 2020 environmental andsocial objectives, Umicore aims to be a greatplace to work and all business units are expected
to contribute. The priority continues to be driving
towards zero accidents and reaching the occupational
metals exposure target of zero excess readings.

training, with first training sessions already given in
Brazil and Belgium. In addition, Group-wide leading
and lagging process safety indicators have been
defined for future reporting.

LOST TIME ACCIDENTS
5

In terms of year-on-year safety performance, a
total number of 51 lost time accidents was recorded
in 2017, compared to 59 in 2016. This resulted in afrequency rate of 3.01, down from 3.34 in 2016, andin a severity rate of 0.09, down from 0.56 in 2016
and 0.12 in 2015. While these results are far fromsatisfactory, the percentage of sites that operated
with no lost-time accidents remained high at 84%,
as in 2016. Despite the slight decrease in accidents,
Umicore feels there is no real change in performance.
To address this, significant changes are being madeto improve safety, such as importing best practices
from sites performing well and creating a change
agent position for the cultural management of safetyin Hoboken, Belgium.
In 2017, Umicore’s Group-wide process safety project
was finalised. Process safety has become a structuralGroup EHS management activity. New initiatives
in this context are the full integration of process
safety into the EHS compliance audit program andthe development of a dedicated 3-day HAZOP leader

1.0

0.94

4
3
2

0.8

3.34

3.01

0.56

2.08
2.16

2.66

0.4
0.2

1
0

0.6

0.10

2013

2014

0.12

2015

2016

0.09

2017

0

Frequency rate
Severity rate

OCCUPATIONAL EXPOSURE
Umicore makes continuous 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 andphysical hazards (mainly noise).

Umicore is leading the industry by setting
voluntary, science-based targets for potentiallyhazardous exposure that are more stringent
than legal requirements, where they exist.
All employees with a potential workplace exposure
to any of the target metals (arsenic, cadmium, cobalt,
indium, nickel, lead and platinum salts) or other metals
are monitored by an occupational health programme.
The Horizon 2020 objective for occupational exposure
is to reduce to zero the number of individual readingsthat indicate an exposure for an employee that ishigher than the internal target levels. While theseexcess readings do not necessarily indicate a risk forthe person concerned, they are important indicatorsof recent or lifetime exposure and are used as thebasis for further improvements on specific sites.
In 2017, a total of 5,389 biological samples were takenfrom employees with occupational exposure to atleast one of the metals mentioned above (platinum
salts excluded). 145 readings showed a result inexcess of the internal target value, reducing thetotal excess rate to 2.7% in 2017 from 3.2% in 2016.
All occupationally exposed employees are regularly
monitored by an occupational health physician.

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33

PERFORMANCEGreat place to work
EXPOSURE RATIO‘ALL BIOMARKERS AGGREGATED’
5
4
3

2.6%

3.2%
1.8%

2

2.7%

2013

2014

Attracting and retaining talent is a challenge in
Asia – the region where much of Umicore’s growthis expected in the coming years. The Asian labour
markets tend to be much more fluid and competitive
with higher turnover rates.

VOLUNTARY LEAVERS RATIO
5
5.03
4

3.33

3.42

3.35

4.10

2013

2014

2015

2016

3
2

2.3%

1
0

ambitions in the sectors and geographical areas
where we are active.

2015

2016

2017

PEOPLE ENGAGEMENT
Horizon 2020 is designed to consider the evolution of
Umicore, the labour market and societal expectations.
Our objectives are centred on talent management,
diversity and employability – three aspects thatwill have the greatest impact on reaching Horizon
2020 goals.
TALENT MANAGEMENT
Talent management involves finding and retaining
the right people at all levels of the organisation andin a wide variety of functions. These can range fromequipment operators to laboratory analysts and fromoffice staff to production engineers. For Umicore themain drivers are linked to the Horizon 2020 growth

In the course of 2017, Umicore recruited about 10%of its total workforce. We estimate that a little lessthan half of these hires are linked to growth and alittle over half are to replace retiring employees andvoluntary leavers.
As was the case in previous years, significant
regional differences can be observed, with Asia
Pacific reporting the highest turnover rate at 10.94%.
This is not unique to Umicore and is due to a highly
competitive and fluid labour market in the region.
In the last two years the percentage of voluntary
leavers increased and is somewhat more pronounced
in our newer sites, demonstrating the challenge inattracting and retaining the right people in thesegrowth areas. It is worth noting that the average
service record at Umicore is 13 years.

1
0

2017

It is of key importance that Umicore is able toattract, develop and retain high calibre leaders byoffering attractive and challenging leadership roles,
supported by suitable development opportunities.
Umicore conducts a Talent Review of its managers
every 2 years. In 2017, over 1,700 employees
underwent performance and potential growthassessments, with feedback provided to eachmanager to develop a dialogue on talentdevelopment for access to different assignments andmobility opportunities. The outcome of this talentreview is used to feed leadership and development
programmes that, in time, can fill the internal
pipeline to senior management.

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34

PERFORMANCEGreat place to work
The Junior Management Programme (JUMP) is
offered to a selected group of junior managers using
a “twin-coaching” format, bringing together twoparticipants from different regions and business
units, but within the same function family, to developinternational thinking, shadow best practices andprovide exposure to other business units.
Leading for Excellence (L4E) is offered to a selectedgroup of managers in the Asia Pacific region to drive
performance in the region by fostering collaborationand engagement across sites and sharpening
leadership skills.
Entrepreneurs for Tomorrow (E4T) is offered toa selected group of mid– to senior managers todevelop corporate culture with highly competentmanagers and promote cross-functional integration
within Umicore.
The Strategic Leadership Programme is offered toa selected group of senior managers, organised incollaboration with INSEAD. Participants move from
exploration of the economic ‘macro-environment’,through doing business in Asia, to the challenges ofcreating an agile strategy and an aligned organisation,and developing their personal leadership style.

In addition, Umicore provides managers with a
training curriculum aligned across all regions.
Other initiatives to promote career development
within Umicore include:– The Coaching Circles training programme
for female managers in Belgium that offers a
combination of mentoring, coaching, training andnetworking. This programme was developed by the
Focus on Women platform, in support of Umicore’s
diversity and inclusion policy. The purpose is tomake women more aware of their capacities andstimulate them to actively take their career into
their own hands. In 2017, 20 managers participatedin the programme. It will be repeated in 2018 andextended to Germany.
– An internal online tool making all vacancies
accessible to current employees, thereby promoting
greater possibilities for internal mobility. In 2017,
the first full year of use, over half of all vacancies
filled were handled via our global recruitment tool.
Training at Umicore encompasses traditionalclassroom-type modules, e-learning, as well as onthe-job instruction. In 2017, the average training
hours per employee reached 45.33 hours. This is anincrease from 2016 and a return towards the average
number of the previous years. This increase ispartially attributed to higher training efforts for thesites that are expanding and that need to make extra
onboarding efforts for newly hired employees.
Data shows that managers’ training hours(38.54 hours) are lower than for other employees(46.44 hours). This reflects the strong efforts devoted
to on-the-job training for newly hired operators.
DIVERSITY
Umicore seeks to benefit as much as possible fromdiversity, for example in gender, culture and ethnicity.
Umicore believes that more diverse management
teams improve the quality of decision-making.
Umicore developed a group policy on diversity overthe course of 2017. The purpose of this policy is tosupport an inclusive work culture that offers equal
opportunities, leading to a high level of employee
engagement for all employees, irrespective of
their diverse backgrounds. Diversity includes
gender, religion, race, national or ethnic origin,
cultural background, social group, disability, sexual
orientation, marital status, age or political opinion.
Umicore is especially seeking broader culturalrepresentation in its management teams. Currently,
18.05% of the top 130 management positions in
Umicore are filled by non-Europeans. Considering that
51% of our revenues are generated outside Europe –a figure that is likely to grow in the coming years

Umicore Annual Report 2017

35

PERFORMANCEGreat place to work
– we decided to act to ensure that non-Europeans
are better represented in our senior management.
A better balance in this regard will enable us to makebusiness decisions that are better aligned with themarkets we serve. While we have chosen not to
implement any specific target we will report annuallyon the evolution of this metric.
Women are underrepresented at senior managementlevel at Umicore. While this can be partly ascribed to
the fact that chemical companies tend to attract fewer
women (only 21.92% of Umicore’s total workforce isfemale), it is evident that more needs to be done
to improve the career prospects for talented women
within Umicore. One indicator indicates that we areheading in the right direction. The percentage ofwomen managers has shown a steady increase from18.65% in 2010 to 22.37% in 2017. The percentageof women in ‘business operations’ management
functions increased from 14.27% in 2016 to 15.55% in
2017. These are the functions that tend to provide themost candidates for all senior leadership positions.
In 2017, women were 6.77% of senior management.
We have set the ambition to reach 15% of women insenior management functions by 2020.

EMPLOYABILITY
We seek to ensure career-long learning anddevelopment opportunities for our employees and topromote the transferability of skills and knowledge
across Umicore.

OTHER RELEVANT DEVELOPMENTS
In 2017, Umicore received Top Employer recognition
for its sites in Belgium and Pforzheim, Germany, andmaintained its “Beruf und Familie” certification in
Hanau und Rheinfelden, Germany.

A key strand within the theme of employability is
to seek to address the societal trend that people
work longer before retiring, particularly in Europe.
Umicore wants to ensure that people who are working
well into their sixties are provided with suitable,
motivating and rewarding work and can transfer theirskills and knowledge to younger colleagues. This isaccomplished by training, maintaining their mental
flexibility to carry out new tasks, managing work-life
issues, and providing support in the transition from
employee to retiree.

Umicore also conducted site visits as part of the Global
Framework Agreement on Sustainable Development
between Umicore and the IndustriALL Global Union.
This agreement covers the areas of human rights,
working conditions and environment.

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36

RISK MANAGEMENT AND INTERNAL CONTROLManaging risk effectively
WE TAKE A BALANCED APPROACH TO MANAGING RISK AND SEIZINGOPPORTUNITIES TO DELIVER ON OUR STRATEGIC GOALS
The aim of our risk management system is to enable the company to identify risks in a proactive and dynamic way; and manage or mitigate risks to an acceptable level wherever possible.

BUSINESS UNITSEXECUTIVE COMMITTEE MEMBEREXECUTIVE COMMITTEE

BOARD OF DIRECTORS

Carry out a risk scan to identify all significant
risks (financial and non-financial)

Identify, evaluate and mitigate risks

Successfully exploit business opportunities

Assesses the risk profile of the company
within the context of the Company strategy
and external factors

Detail each risk on an “uncertainty sheet”
outlining potential impact, likelihood,status of management action or mitigation,and ownership

Assess market conditions, competitor
positioning, technology developments or
regulatory changes against the businessstrategy execution

Ensure adequate risk management andinternal control processes are in place

Manage and mitigate possible business risks
Report bottom up to the Executive
Committee member responsible
for that business unit

AUDIT COMMITTEE (ON BEHALF OF THE BOARD)
Monitor and review internal control and risk management system, investigating specific aspects on an ongoing basis

EXTERNAL AUDIT
Independent assurance

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37

RISK MANAGEMENT AND INTERNAL CONTROLManaging risk effectively
Each business unit operates in an environment
which carries specific growth expectations anddiffering degrees of market and technologicaluncertainty that could impact strategic
objectives. As such, the primary source of risk
and opportunity identification lies within thebusiness units.
Similarly, each business unit is responsible for
mitigation of its own risks. Mitigating actions
are systematically reported corresponding to therespective strategic objectives and identified risks.
Specific corporate departments are also tasked withmanaging and mitigating certain risks under the
auspices of the Executive Committee. These risks
cover Group-wide elements that extend beyond thepurview of individual business units. These include
environmental risks, financial risks etc.
OUR INTERNAL CONTROL SYSTEM
Internal control mechanisms exist throughout
Umicore to provide management with reasonableassurance of our ability to achieve our objectives.
They cover:Umicore adopted the COSO framework for its
Enterprise Risk Management and has adapted its
various controls constituents within its organizationand processes. “The Umicore Way” and the “Codeof Conduct” are the cornerstones of the Internal
Control environment; together with the concept ofmanagement by objectives and through the settingof clear roles and responsibilities they establish theoperating framework for the company.
Specific internal control mechanisms have beendeveloped by business units at their level ofoperations, while shared operational functions
and corporate services provide guidance andset controls for cross-organisational activities.
These give rise to specific 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 specifically address
the mitigation of financial risks and to enhance thereliability of financial reporting. Umicore’s MICR
framework requires all Group entities to comply witha uniform set of internal controls in 12 processes.
Within the Internal Control framework, specificattention is paid to the segregation of duties andthe definition of clear roles and responsibilities.
MICR compliance is monitored by means of selfassessments to be signed off by senior management.
The outcome is reported to the Executive Committee
and the Audit Committee.
Out of the 12 control cycles 3 cycles (order tocash, treasury and fixed assets) were assessed
during 2017 by the 92 control entities currently inscope. Risk assessments and actions taken by local
management to mitigate potential internal control
weaknesses identified through prior assessments
are monitored continuously. The Internal Audit
department reviews the compliance assessments
during its missions.

– Effectiveness and efficiency of operations– Reliability of financial processes and reporting– Compliance with laws and regulations; and– Mitigation of errors and fraud risks

Umicore Annual Report 2017

38

KEY RISKS AND OPPORTUNITIES

Identifying the main issues that could impact our business
WE UNDERSTAND THAT KEY RISKS TO OUR BUSINESS MIGHT ALSO OFFERUNIQUE OPPORTUNITIES FOR US TO GROW AND CREATE VALUE

1

REGULATORY AND LEGAL CONTEXTSTRATEGIC FOCUS AREAECONOMIC PERFORMANCEVALUE CHAIN AND SOCIETY
ECO-EFFICIENCYPOTENTIAL IMPACT
Umicore is exposed to the evolution of the regulatory environment in
the countries or regions in which it operates. Umicore’s businesses standto benefit from certain regulatory trends, notably those regarding more
stringent emission controls for vehicles, low carbon mobility and enforced
recycling of end-of-life products.
Some regulations, such as environmental or product-related laws, canpresent operational challenges, higher costs and a potentially unevencompetitive environment.
Active management and remediation of risks that have resulted from
historical operations is an integral part of the Umicore Way.
The growth in technology driven businesses results in an even greater
importance of IP and IP protection-related matters.

CHANGE IN RISK PROFILE

Increase
CHANGE IN
OPPORTUNITY PROFILE

Increase

CHANGE IN CONTEXTWorldwide, changes to existing product-related legislation and theintroduction of new legislation might impact our business. Although theEuropean REACH regulation is still the most relevant one for Umicore, theKorean-REACH is gaining importance. For more information, see page 202.
The trend towards more stringent emission legislation and targets continued,
while new measures on vehicle emissions push industry to innovate inemission control system design, including catalysts and catalytic filters.
In terms of legal risk please refer to the contingencies section (see page 161
for the note F36). This relates primarily to cases brought against Umicore
in the domain of cathode materials for rechargeable battery materials.

MEASURES TAKEN BY UMICORE
Umicore manages its historical environmental legacy, ensuring
adequate financial provisions that are reviewed twice a year.
For more information, see page 149.
To ensure ongoing compliance with environmental legislation
at our industrial sites, Umicore has a well-established EHS
compliance audit programme and constantly monitors changes
in legal requirements where we operate. For more information,
see page 182.
Umicore continues to play an active role in informing European
legislators of various emission control technologies for both diesel
and gasoline powered vehicles, to help legislators make informed
decisions about future emission and testing norms.
In 2017, Umicore took steps to ensure its ability to meet thesurging demand for cathode materials for rechargeable batteries
used in electrified transportation. This involves continued
investment on production capacity of cathode materials in
China and Korea.
In 2017, as part of regular maintenance, 14 REACH dossiers were
updated for reasons that included increasing the tonnage band,
replying to ECHA requests and including new information oncomposition, uses or Chemical Safety Reports. In preparation of
the third phase of the EU REACH regulation, 115 new registrations
were submitted.
The patent case brought by BASF and Argonne National Laboratory
in the United States was settled to the satisfaction of all parties.

Umicore Annual Report 2017

39

KEY RISKS AND OPPORTUNITIES

Identifying the main issues that could impact our business
2

SUSTAINABLE AND ETHICAL SUPPLYSTRATEGIC FOCUS AREAECONOMIC PERFORMANCEVALUE CHAIN AND SOCIETY

POTENTIAL IMPACT
Umicore requires certain metals or metal-containing raw materials to
manufacture its products and feed its recycling activities. Some of these
raw materials are comparatively scarce and require very specific sourcing
strategies. Obtaining adequate supplies of these materials is important forthe ongoing success and growth of our business.
Some metals are also found in regions facing social challenges. Trading inprecious metals and minerals can be used to finance armed conflict,cause human rights abuses, draw upon forced or child labour and support
corruption and money laundering. It is important that we ensure that the
procurement of ‘conflict minerals’ is in line with Umicore’s values, whileproviding an advantage to our customers.

CHANGE IN RISK PROFILE

Increase
CHANGE IN
OPPORTUNITY PROFILE

Increase

MEASURES TAKEN BY UMICORE
Umicore has implemented policies and measures covering humanrights, the right for workers to organise and collective bargaining,equal opportunities and non-discrimination, banning of childlabour, banning of forced labour, consistent with International
Labour Organisation (ILO) standards. These commitments
are supported through a Global Framework Agreement on
Sustainable Development with IndustriALL Global Union.
In addition to existing policies and charters such as the Umicore
Code of Conduct, Human Rights Policy and Sustainable Procurement
Charter, Umicore also has a specific policy for “Responsible global
supply chain of minerals from conflict-affected and high-risk areas”.

Given the scarcity of resources, treating complex materials from aboveground sources, such as industrial residues and “End-of-life” materials, isincreasingly important. Our facility in Hoboken is the world’s largest andmost complex precious metals recycling operation, processing over 200
types of raw material and recovering over 20 different metals.

Umicore’s Sustainable Procurement Framework for Cobalt, which
covers Umicore’s cobalt purchases worldwide, was adapted in2017 to be fully aligned with the OECD ‘Due Diligence Guidancefor Responsible Supply Chains from Conflict-Affected and HighRisk Areas’.

CHANGE IN CONTEXT
Adopted in 2017, the European Union’s Conflict Minerals Regulation will
come into full force 1 January 2021. This law aims to drive responsible
sourcing of tin, tantalum, tungsten and gold, which are sometimes
extracted from conflict regions or mined under abusive conditions, inorder to meet international responsible sourcing standards as set by theOECD in the ‘Due Diligence Guidance for Responsible Supply Chains from
Conflict-Affected and High-Risk Areas.’ The conditions in the US DoddFrank Wall Street Reform and Consumer Act of 2010 legislation, which
covers the same four minerals, will also be met by this new law.

Umicore is growing its capacity to cater to rising recycling demand.
Umicore’s recycling not only offers environmental and ethicalsourcing benefits, but also increased resource security.
Increasingly Umicore customers request a guarantee and thenecessary documentation to assure the conflict-free statusof our products. The Umicore internal ‘Metals and Minerals’
working group, which includes procurement and raw material
experts, streamlines and optimises the efforts required for thisgrowing customer demand by sharing best practices.

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40

KEY RISKS AND OPPORTUNITIES

Identifying the main issues that could impact our business
3

TECHNOLOGY AND SUBSTITUTIONSTRATEGIC FOCUS AREAECONOMIC PERFORMANCEVALUE CHAIN AND SOCIETY
ECO-EFFICIENCYPOTENTIAL IMPACT
Umicore is a materials technology group with a strong focus on the developmentof innovative materials and processes. The choice and development of thesetechnologies represents the single biggest opportunity and risk for Umicore.
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 for their products should those of Umicore not provide
this optimum balance. The risk is especially present in businesses producing
materials containing expensive metals (especially those with historically volatile
pricing characteristics).
CHANGE IN CONTEXT
Trends in rechargeable battery materials for automotive applications haveunderscored that NMC materials with increasing Nickel content are the technology
of choice for customers in current and upcoming electrified vehicle platforms.

CHANGE IN RISK PROFILE

In vehicle emission control, regulatory debates have reinforced the need to have abroad spectrum of technologies available for both gasoline and diesel applications.

MEASURES TAKEN BY UMICORE
Every year, the Executive Committee identifies
innovation projects (“Top 10”) which are key to achieving
Horizon 2020 (and beyond) growth ambitions and coverproduct and process developments. A selection of theseprojects is reviewed during the year either throughdedicated technology reviews or as part of strategic
business reviews.
Previous years’ R&D investments have brought great
success and created a space to shift R&D positioning.
Umicore invested selectively in new fields relevant tocore activities in 2017. Overall spend was equivalent to
6% of revenues.
Umicore patents disruptive technologies. In 2017,
Umicore registered 48 new patent families.
For more information on Umicore’s approach to
managing its innovation and technology portfolio see
pages 64-65.

No change
CHANGE IN
OPPORTUNITY PROFILE

Increase

Umicore Annual Report 2017

41

KEY RISKS AND OPPORTUNITIES

Identifying the main issues that could impact our business4

MARKETSTRATEGIC FOCUS AREAECONOMIC PERFORMANCEVALUE CHAIN AND SOCIETY

POTENTIAL IMPACT
The main end markets served by Umicore are automotive (for clean mobility products) and non-ferrous
metal mining and refining industries (recycling activities). Umicore is sensitive to any major growth or
global reduction in activity levels in these sectors.
Activity levels in other areas of the economy such as consumer electronics are also relevant to Umicore as
are the levels of activity in specific industries or with specific customers where Umicore provides closedloop recycling services.
In the longer term, market disruptions such as new models of consumption have the possibility to significantly
alter the landscape of the markets that Umicore serves, posing risks as well as creating new opportunities.
CHANGE IN CONTEXT
Overall, the global economic outlook remained stable in 2017. Market forecasts continue to point to asupportive economy with global growth expected to be driven by Asian markets, in particular China.

CHANGE IN RISK PROFILE

The automotive industry performed well with higher levels of demand in several regions and a remarkable
acceleration in demand for electrified vehicles.
In all important markets, more stringent vehicle emission legislation has come into force or has beenannounced for the coming years.

Change in perimeter(see Change in context)

CHANGE IN
OPPORTUNITY PROFILE

Increase

MEASURES TAKEN
BY UMICORE
Umicore’s increasing presence
in fast-growing market segmentsthat are driven by global
megatrends meant that our
economic performance in 2017
again far outstripped that of
the economy in general andthat of most of our competitors.
The
Executive
Committee
undertookareviewofpotentially disruptive market
and technology trends inautomotive and discussed
its findings with the Boardof Directors.

The risk profile of Umicore reflects a growing exposure to the automotive industry and, from a geographicalpoint of view, to Asia, in both cases driven by the fast growing sales of cathode materials for use inelectrified vehicles. Following the divestment of its Building Products business, Umicore is no longer
materially exposed to the construction industry.
The early positioning of Umicore in the market of cathode materials for rechargeable batteries andqualification for several automotive platforms mean that Umicore should benefit from the accelerating
demand for electrified vehicles. This trend may be amplified by the decreasing sales of diesel-engine
passenger cars.

Umicore Annual Report 2017

42

KEY RISKS AND OPPORTUNITIES

Identifying the main issues that could impact our business
5

METAL PRICESTRATEGIC FOCUS AREAECONOMIC PERFORMANCEPOTENTIAL IMPACT
Umicore’s earnings are exposed to risks relating to the prices of the metals which
we process or recycle. The structural metal price risk relates mainly to the impactthat metal prices have on the surplus metals recovered from materials supplied
for recycling. It concerns platinum, palladium, rhodium, gold and silver as well asa wide range of base and specialty metals. For some metals quoted on futures
markets, Umicore hedges a proportion of its forward metal exposure to cover partof the future price risks.

MEASURES TAKEN BY UMICOREOver the course of 2017, Umicore entered into forward
contracts securing a portion of its structural priceexposure for certain precious metals and base metals in2018 and 2019, thereby increasing earnings predictability.

For more information on the structural risk, as well as on the transactional andinventory risk related to the metal prices, see pages 107-109.
CHANGE IN CONTEXT
Prices for precious metals strengthened in 2017. Prices for gold, palladium andrhodium increased significantly, while silver and platinum prices faced a volatileenvironment in which gains were often completely offset by subsequent losses,leaving a small increase over the full year cycle.
CHANGE IN RISK PROFILENo change
CHANGE IN
OPPORTUNITY PROFILENo change

Umicore Annual Report 2017

43

KEY RISKS AND OPPORTUNITIES

Identifying the main issues that could impact our business
6

TALENT ATTRACTION AND RETENTIONSTRATEGIC FOCUS AREA
GREAT PLACE TO WORKPOTENTIAL IMPACT
The attraction and retention of skilled people are important factors in enabling
Umicore to fulfil its strategic ambitions and to build further expertise, knowledge
and capabilities in the business. Being unable to do so would compromise ourability to deliver on our goals.

MEASURES TAKEN BY UMICORETo enhance our recruitment pool, we developed a global
employer brand with a special focus on challenging
labour markets in Europe and Asia. This branding
supports our specific recruitment initiatives.

Horizon 2020 is predicated on disproportionate growth for Umicore in Asia – aregion characterised by highly competitive and fluid labour markets. Umicore’s
challenge is to attract and retain talent in the region on a sufficient scale and at
an appropriate pace.

In 2017, Umicore developed a group policy on diversity
to support an inclusive work culture that offers equal
opportunities, leading to a high level of employee
engagement for all employees, irrespective of theirdiverse backgrounds.

CHANGE IN CONTEXT
Our accelerated expansion combined with competitive labour markets havecreated even greater recruitment needs.

CHANGE IN RISK PROFILE

Increase
CHANGE IN
OPPORTUNITY PROFILE

Increase

Umicore Annual Report 2017

44

BOARD OF DIRECTORSTHOMAS LEYSEN

57 | Belgian– Chairman, Non-Executive Director– First appointment: 19 November 2008
(Director since 10 May 2000)– Expiry of mandate: Annual general
meeting of 2018
– Chair, Nomination & Remuneration
Committee (19 November 2008)
EXPERIENCE
Thomas Leysen became Chairman of
Umicore in November 2008 after serving
as Chief Executive Officer of Umicore since
2000. He has been Chairman of the board of
KBC, a banking and insurance group, since
October 2011.
CURRENT EXTERNAL APPOINTMENTS– Chair, KBC Group, Belgium– Chair, Mediahuis, a Belgian media
company– Chair, King Baudouin Foundation, Belgium– Chair, The Shift, the leading Belgian CSR
network
Standing left to right: Eric Meurice, Marc Grynberg, Rudi Thomaes, Françoise Chombar and Colin Hall
Sitting left to right: Mark Garrett, Liat Ben-Zur, Thomas Leysen, Ines Kolmsee and Gérard Lamarche

Umicore Annual Report 2017

45

BOARD OF DIRECTORSMARC GRYNBERG

INES KOLMSEERUDI THOMAESERIC MEURICE

52 | Belgian

47 | German

65 | Belgian

60 | French– Chief Executive Officer, Executive Director– First appointment: 19 November 2008
– Expiry of mandate: Annual general
meeting of 2018
– Chief Executive Officer (19 November
2008)– Independent, Non-Executive Director– First appointment: 26 April 2011
– Expiry of mandate: Annual general
meeting of 2017
– Chair, Audit Committee (28 April 2015 –member since 26 April 2011)– Independent, Non-Executive Director– First appointment: 24 April 2012
– Expiry of mandate: Annual general
meeting of 2018
– Member, Audit Committee (30 April 2013)– Member, Nomination & Remuneration
Committee (24 April 2012)– Independent, Non-Executive Director– First appointment: 28 April 2015
– Expiry of mandate: Annual general
meeting of 2018

EXPERIENCE
Marc Grynberg was appointed Chief Executive
Officer of Umicore in November 2008 after
heading the Automotive Catalysts business
unit from 2006 to 2008, and serving as CFO
of Umicore from 2000 until 2006. He joined
Umicore in 1996 as Group Controller. Prior tojoining Umicore, Marc worked for DuPontde Nemours in Brussels and Geneva.
He holds a Commercial Engineering degreefrom Solvay Brussels School of Economics
and Management.

EXPERIENCE
Ines Kolmsee has been Chief Executive
Officer of Services & Solutions at Aperam
since October 2017. She previously served
as CEO of SKW Stahl-Metallurgie Group, a
specialty chemicals company with operations
worldwide, COO and CTO at German utility
EWE AG and CFO at Arques Industries AG.
Ines holds a Master’s degrees in Process
and Energy Engineering and in Industrial
Engineering from Technische Universität
Berlin and Ecole nationale supérieure desMines de St Etienne, respectively, and a
Master of Business Administration from the
INSEAD Business School.

CURRENT EXTERNAL APPOINTMENTS– Non-Executive Director, Nexans SA, France

CURRENT EXTERNAL APPOINTMENTS– Member, Supervisory Board, Suez
Environnement SA, France

EXPERIENCE
Rudi Thomaes was the Chief Executive
Officer of the Belgian employers’ federation(FEB-VBO) and Regent of the National Bankof Belgium (2004-2012). He previously
served as Managing Director and Chair of the
management committee of Alcatel Bell NV.
He holds Bachelor of Laws and Master in Law
degrees from the University of Antwerp.
CURRENT EXTERNAL APPOINTMENTS– Honorary President, International Chamberof Commerce, Belgian Chapter– Chair, Restore NV, Belgium– Chair, Armonea NV, Belgium

EXPERIENCE
Eric Meurice was formerly President andChief Executive Officer of Netherlands-based
ASML Holding, a major provider of advanced
technology systems for the semiconductor
industry. He was previously EVP in chargeof Thomson Multimedia TV Division andheld senior positions in several technology
groups such as Intel, ITT, and Dell Computer.
He holds Master’s degrees in Economics andMechanical Engineering from the Sorbonne
and Ecole Centrale de Paris, respectively,
and a Master of Business Administrationfrom Stanford University’s Graduate Schoolof Business.
CURRENT EXTERNAL APPOINTMENTS– Non-Executive Director, NXP
Semiconductors, The Netherlands– Non-Executive Director, IPG Photonics, USA

Umicore Annual Report 2017

46

BOARD OF DIRECTORSMARK GARRETTFRANÇOISE CHOMBAR

LIAT BEN-ZUR

COLIN HALL

54 | Australian/Swiss

55 | Belgian

41 | American

47 | American– Independent, Non-Executive Director– First appointment: 28 April 2015
– Expiry of mandate: Annual general
meeting of 2018
– Member, Audit Committee (28 April 2015)– Member, Nomination and Remuneration
Committees (29 July 2017)– Independent, Non-Executive Director– First appointment: 26 April 2016
– Expiry of mandate: Annual general
meeting of 2019

– Independent, non-executive Director– First appointment: 25 April 2017
– Expiration of mandate: Annual general
meeting of 2020

– Non-Executive Director– First appointment: 26 April 2016
– Expiry of mandate: Annual general
meeting of 2019
– Member, Audit Committee (29 July 2017)

EXPERIENCE
Françoise Chombar is co-Founder, Chief
Executive Officer and Managing Directorof Melexis, a producer of integrated
semiconductor
sensor,driverandcommunication circuits for automotive
applications. She served previously asplanning manager at Elmos GmbH andoperations manager and director atseveral companies within the Elex group.
Françoise was a mentor in the Belgian
women’s network Sofia for 17 years and iscommitted to STEM and gender balanceadvocacy. She holds a Master’s degree in
Dutch, English and Spanish Interpretation andan Honorary Ambassadorship for Applied
Language Studies from Ghent University.

EXPERIENCE
Liat Ben-Zur is Senior Vice President andDigital Technology Leader at Royal Philips
where she is responsible for driving theconnectivity and digital strategy. Prior tojoining Philips in 2014, she served in several
leadership positions at Qualcomm, a US
wireless telecommunications company, andwas co-founder and Chairwoman of the
AllSeen Alliance, a consortium for an open
source, common language for the Internetof Things. Liat holds a Bachelor’s degree
in electrical engineering from University ofCalifornia Davis and a Master of Business
Administration from UCLA’s Anderson Schoolof Management.

EXPERIENCE
Mark Garrett has been Chief Executive Officer
and Chair of the Borealis AG Executive Board
since 2007, a leading provider of innovative
polyolefins, base chemicals and fertilizers,
based in Austria. Prior to joining Borealis,he built an extensive career in the chemicalindustry working with companies such as
Ciba-Geigy and DuPont. Mark graduated in
Economics and Applied Information Systems
from the University of Melbourne and theRoyal Melbourne Institute of Technology,
respectively.
CURRENT EXTERNAL APPOINTMENTS– CEO and Chair, Executive Board, Borealis
AG, Austria– Member, Board of Directors, Abu Dhabi
Polymers Company Ltd., UAE– Member, Board of Directors, NOVA
Chemicals, Canada– Member, Board of Directors, Axalta Coating
System, USA

CURRENT EXTERNAL APPOINTMENTS– CEO and Director, Melexis, Belgium– President, Flemish STEM Platform, an
independent advisory group to thegovernment of Flanders

EXPERIENCE
Colin Hall has been the Head of Investments
at Groupe Bruxelles Lambert (GBL) since2016. He built an extensive career, startingin the merchant banking group of Morgan
Stanley, then in New York and London at
the Rhône Group, a private equity firm, andlater co-founding a hedge fund sponsoredby Tiger Management. In 2012, he became
CEO of Sienna Capital, a 100% subsidiary of
GBL that manages alternative investments(private equity, credit and specific thematic
funds). Colin holds a Bachelor’s degree fromAmherst College and a Master of Business
Administration from Stanford University’s
Graduate School of Business.
CURRENT EXTERNAL APPOINTMENTS– Director and Member, Audit Committee,
Imerys SA, France– Director, Supervisory Board, Kartesia
Management, Luxembourg– Director, Ergon Capital Partners, Belgium– Director, Parques Reunidos, Spain

Umicore Annual Report 2017

47

BOARD OF DIRECTORSGÉRARD LAMARCHE

KAREL VINCK

56 | Belgian

Belgian– Non-Executive Director– First appointment: 25 April 2017
– Expiration of mandate: Annual general
meeting of 2020

– Honorary Chairman

EXPERIENCE
Gérard Lamarche has been Co-Chief
Executive Officer of Groupe Bruxelles
Lambert (GBL) since 2012, overseeing thetransformation of its investment strategy
and portfolio. He built an extensive
career, starting at Deloitte Haskins & Sells
in Belgium, then Société Générale deBelgique as Investment Manager, Controller
and Advisor to the Strategy and Planning
Department, and Suez, as Secretary of the
Executive Committee, then SVP in charge ofPlanning, Control and Accounting and CFO.
Gérard holds an Economic Sciences degreefrom the University of Louvain-la-Neuve anda Master of Business Administration from the
INSEAD Business School.
CURRENT EXTERNAL APPOINTMENTS– Non-Executive Director, LafargeHolcim,
France– Non-Executive Director, Total, France– Non-Executive Director, SGS, France– General Managing Director, NALCO, USA

Umicore Annual Report 2017

48

EXECUTIVE COMMITTEE

From left to right: Pascal Reymondet, Géraldine Nolens, Marc Grynberg, Marc Van Sande, Stephan Csoma, Filip Platteeuw and Denis Goffaux

MARC GRYNBERG

52
CHIEF EXECUTIVE OFFICER
Marc Grynberg was appointed Chief
Executive Officer in November 2008 after
heading the Automotive Catalysts business
unit from 2006 to 2008, and serving as CFO
of Umicore from 2000 until 2006. He joined
Umicore in 1996 as Group Controller. Prior tojoining Umicore, Marc worked for DuPontde Nemours in Brussels and Geneva.

He holds a Commercial Engineering degreefrom Solvay Brussels School of Economics
and Management.
He is responsible for Human Resources,
Information
SystemsandGroup
Communications.

FILIP PLATTEEUW45
CHIEF FINANCIAL OFFICER
Filip Platteeuw was appointed Chief Financial
Officer in November 2012, after serving as
VP of Corporate Development from 2010
to 2012. He joined Umicore in 2004 andwas instrumental in the Cumerio spin-off
in 2005, and then led the project team forthe creation of Nyrstar and its successful
IPO in 2007. Filip has extensive experience

in investment banking, corporate banking
and equity research with KBC Bank. He holds
Master’s degree in Applied Economics andFinancial Management from the Universityof Ghent the Vlerick Management School,
respectively.
He is responsible for Corporate Development
and Procurement & Transportation.

Umicore Annual Report 2017

49

EXECUTIVE COMMITTEEDENIS GOFFAUX

50
CHIEF TECHNOLOGY OFFICER
Denis Goffaux was appointed Chief
Technology Officer in July 2010, after
heading the Rechargeable Battery Materials
business line and successfully developing
the business into a world leader in cathodematerials for lithium ion rechargeable
batteries. As Country Manager Japan, he laidstrong foundations for Umicore to grow its
industrial presence and commercial activities
in Japan. Denis joined Umicore Research in1995 and has lived and worked in Belgium,
Chile, China and Korea. He holds a degreein mining engineering from the Universityof Liège.
He is responsible for the Precious Metals
Refining business unit and Japan.

PASCAL REYMONDET58
EXECUTIVE VICE-PRESIDENT CATALYSIS
Pascal Reymondet was appointed Executive
Vice-President Catalysis in November
2012, after serving as EVP of Performance
Materials from 2010 to 2012 and EVP of Zinc
Specialties from 2007 to 2010. He joined
the Umicore Executive Committee in 2003
to oversee the Precious Metals Products
group. Prior to joining Umicore, Pascal held

management positions within the Degussa
group. He holds a Master’s of Science from
Stanford University and an Engineering
degree from the Ecole Centrale in Paris.
He is responsible for the Catalysis businessgroup and Germany, North America and India.

MARC VAN SANDE

65
EXECUTIVE VICE-PRESIDENT ENERGY& SURFACE TECHNOLOGIESMarc Van Sande was appointed Executive
Vice-President Energy & Surface Technologies
in June 2010, after serving as CTO from 2005
to 2010 and as EVP Advanced Materials from1999 to 2005. Marc joined Umicore in 1980, andheld several positions in research, marketingand production. He holds a doctorate in
Physics from the University of Antwerp anda Master of Business Administration from the
Antwerp Management School.

STEPHAN CSOMA53
EXECUTIVE VICE-PRESIDENT RECYCLING
Stephan Csoma was appointed Executive
Vice-President Recycling in 2015, after serving
as EVP of the former Performance Materials
from 2012 to 2015, SVP Government Affairs
from 2009 to 2012, and SVP South America
from 2005 to 2009. Stephan joined Umicore
in 1992 and set up Umicore’s first industrial
operations in China in the mid-1990s andwent on to lead the Zinc Chemicals business
unit. He holds degrees in Economics fromthe UCL University of Louvain and Chinese/
Mandarin from Fudan University in Shanghai.
He is responsible for the Recycling businessgroup,
Government
Affairs,
UmicoreMarketing Services and South America.

GÉRALDINE NOLENS

46
EXECUTIVE VICE-PRESIDENT
Géraldine Nolens was appointed ChiefCounsel for the Group in 2009 and joined the
Executive Committee in 2015. She started
her career at the international law firm
Cleary Gottlieb Steen & Hamilton before
joining GDF Suez (now Engie) in 2001, where
she was Electrabel’s Chief Legal Officer forSouthern Europe, France and new European
markets. Géraldine’s career includes periods
working and living in the US, Germany, Italy
and Belgium. She studied law in Belgium
and Germany before obtaining her Master ofLaws at the University of Chicago.
She is Chief Counsel and is responsible forEnvironment Health & Safety, Corporate
Security and Internal Audit.

He is responsible for the Energy & Surface
Technologies business group and China.

Umicore Annual Report 2017

50

Key figures(in millions of Euros unless stated otherwise)

2013

2014

2015

2016

2017

ECONOMIC PERFORMANCE
Turnover*9,819.3

8,828.5

10,441.9

11,085.9

12,277.2

Revenues (excluding metal)

2,363.4

2,366.5

2,629.0

2,667.5

2,915.6

Recurring EBIT

304.0

273.7

330.3

350.7

410.3

Return on Capital Employed (ROCE) (in %)

13.6

12.2

13.7

14.6

15.1

R&D expenditure

140.6

143.3

144.5

155.9

175.2

Capital expenditure

279.6

202.4

240.3

287.3

365.3

Recurring EPS (in €/share)

0.98

0.89

1.13

1.07

1.22

Gross dividend (in €/share)

0.50

0.50

0.60

0.65

0.70

–

–

–

62

65

SOCIAL AND ENVIRONMENTAL PERFORMANCE
Revenues from clean mobility and recycling (in %)Total donations (in thousands of Euros)

1,612.80

1,409.35

1,219.38

1,289.68

1,299.34

CO 2 e emissions (scope 1+2) – Market based (in tonne)

690,767

664,568

710,143

662,059

633,704

CO 2 e emissions (scope 1+2) – Location based (in tonne)

–

–

–

735,065

663,307

Energy consumption (in terajoules)

7,557

7,304

7,742

6,737

6,532

Workforce (fully consolidated companies)

10,19010,368

10,429

9,921

9,769

35

37

47

59

51

LTA frequency rate

2.08

2.16

2.66

3.34

3.01

LTA severity rate

0.10

0.94

0.12

0.56

0.09

Exposure ratio ‘all biomarkers aggregated’ (in %)

2.6

1.8

2.3

3.2

2.7

Average number of training hours per employee

45.18

45.59

45.06

41.49

45.33

Voluntary leavers ratio

3.33

3.42

3.35

4.10

5.03

Lost Time Accidents (LTA)* Including the elimination of the transactions between continued and discontinued operations.

Umicore Annual Report 2017

IF OUR
PIONEERINGAPPROACH CAN
MAKE USA LEADER INSUSTAINABILITY

UMICORE.COM/CAREERS

For enquiries and additional information please contact
UmicoreRue du Marais 31 Broekstraat
B-1000 Brussels
Belgium
Phone: +32 2 227 71 11
www.umicore.com/en/contact

umicore.com

53

Governance andstatements

Annual Report 2017

Umicore Annual Report 2017

52

GOVERNANCE AND STATEMENTS

Governance and statements
Stakeholder engagement

53

Materiality

59

Management approach

63

Corporate governance report69

Remuneration report

76

Economic statements

86

Financial statements

92

Environmental statements

172

Social statements

183

Value chain statements

197

Assurance reports

204

GRI content index

211

References & key links

215

About this report

216

Umicore Annual Report 2017

53

STAKEHOLDER ENGAGEMENT

Stakeholder engagement

Umicore is a publicly listed company. As such, we interact with many parties who have an interest in the way we conduct business.
The relationship that we foster with these parties or stakeholders has a direct impact on our success.
Stakeholder engagement at Umicore is based on a localised approach whereby all sites are required to identify their respective
stakeholders and establish suitable ways of engaging with them. In many cases, such as the dialogue with customers and suppliers,
the stakeholder relationships are primarily managed by the business units themselves, in line with our decentralised approach tounit management. The executive committee receives feedback from stakeholders in several ways, ranging from direct feedback
from visits to customers, suppliers, employees and investors, to information provided by the business units, departments or workers’
representatives during their regular briefings to senior management. Other forms of input include periodic employee survey results.
The Horizon 2020 strategy represents a strong focus on what is of material importance for Umicore in the coming years. The developmentof the strategy has involved a specific stakeholder approach, described in the materiality assessment process in the next chapter.
Umicore is an active participant in various industry associations through which we engage with policy makers to contribute to abetter 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 our senior management are often called uponor volunteer to participate in public forums to discuss our business strategy and sustainable development approach. Such events
provide the opportunity to interact with various groups including business leaders, academics and civil society.
Umicore’s main stakeholder groups are highlighted below and have been categorised in broad terms, using generic stakeholder
categories that apply to most industrial organisations. Also shown are the nature of the transactions that occur and a brief descriptionof the dialogue between Umicore and the stakeholders.

SUPPLIERS
Raw materials
Transportation

SUPPLIERS

EnergyRevenues

UMICORE

Other goods
and services

Umicore operates through three business groups on five continents. These business groups not only require materials to maketheir products but also energy, transportation and a range of other services. Overall, Umicore has over 10,000 suppliers worldwide.
These suppliers benefit from our presence as a customer: in 2017, Umicore paid these suppliers € 10.3 billion (including the metal
content of raw materials).
Umicore is engaged in a constant dialogue with its suppliers to define technical specifications and to ensure mutually acceptableterms and conditions for continued partnership, such as prompt and uninterrupted delivery of materials/services and timely payment.
The business units are responsible for the purchase of raw materials while the corporate Purchasing and Transportation department
works to ensure that transportation, energy and other provisioning needs are met.
Our approach is shaped by our Sustainable Procurement Charter. This charter is complemented by specific approaches or frameworks
for some critical raw materials. Our Horizon 2020 strategy includes an objective on sustainable supply that builds on the experience
gained through our previous objective on sustainable procurement. For information on the level of achievement against this objective
see pages 26-27 of this report.

Umicore Annual Report 2017

54

STAKEHOLDER ENGAGEMENTCUSTOMERSCUSTOMERS

Revenues

Materials
and services

UMICOREOur ambition is to produce “materials for a better life”. Our materials can be found in a wide variety of applications that make day-to-day
life more comfortable and help contribute to a cleaner environment.
Umicore has an international customer base, with 51% of 2017 revenues being generated outside Europe.
The business units are responsible for providing support to their customers to improve their understanding of the hazards and risks ofany products either on the market or under development. Interaction with customers is ongoing and is managed by the business units.
All business units have a customer feedback process through which they periodically gauge the level of customer satisfaction with theirproducts 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.

EMPLOYEESSkillsEMPLOYEES

Competences
Productivity

Remuneration
Training
Learning
opportunities

UMICORE

Umicore employs 9,769 people around the world. We invest significant resources in ensuring our status as an employer of choice in all
the regions where we operate. In 2017, Umicore paid a total of € 602 million in salaries and other benefits to the employees of the
fully consolidated companies. Social security payments totalled € 99 million.
Umicore is committed not only to providing competitive salaries and working conditions to its employees, but also to providing thenecessary occupational and professional training opportunities. Employees are expected to adhere to the principles and policies
outlined in The Umicore Way and our Code of Conduct. Open dialogue is promoted within the company with our employees andincludes an opinion survey every three years.
Umicore respects the principle of collective bargaining wherever it is requested. While such practice is commonplace in Europe, inother locations collective bargaining mechanisms and trade unions may be less common or face local legal restrictions. Umicore hasa sustainable development agreement with the international union IndustriALL on the global implementation of its policies on humanrights, equal opportunities, labour conditions, ethical conduct and environmental protection. The agreement allows trade unions toparticipate constructively in the pursuit of these objectives. A joint monitoring committee composed of both parties oversees theimplementation of the agreement.
Supplementary channels of company-wide communication include the intranet and company and business unit newsletters.
Umicore operates a Group-wide learning management platform called “MyCampus”. This platform also incorporates a social
collaboration tool that facilitates knowledge sharing through the company.

Umicore Annual Report 2017

55

STAKEHOLDER ENGAGEMENTSHAREHOLDERS AND INVESTORSSHAREHOLDERS ANDINVESTORSCapitalFunds

Return on
investment

UMICORE

Umicore strives to provide timely and accurate company information to its various shareholders and investors. These communication
efforts include worldwide roadshows, site visits, conferences, investor fairs, webcasts and conference calls by management and theinvestor relations team.
Umicore has a broad base of international shareholders which at the end of 2017 were primarily situated in Europe and North America.
For the latest information on the shareholder base please consult our website. During 2017, 22 brokerage firms published equity
research notes on Umicore, reflecting the growing and global investor interest in Umicore.
Over the course of 2017, Umicore issued private debt placements with debt investors in Europe and North America. Next to this Umicore
has also credit lines with numerous banks, both in Belgium and elsewhere. Dialogue with the banks is primarily the responsibilityof the corporate Finance Department although each legal entity within Umicore maintains business relationships with its local
banking community.

SOCIETY
WealthSOCIETY

Licenceto operate

Innovative
products&processes

UMICORE

Through employment, Umicore participates in the generation of wealth in the areas where it operates. Although wealth generation
is an obvious benefit, the way 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. To maintain this licence, Umicore does the utmost to operate in a way that
promotes sustainable development. This goes beyond operating within the legally defined boundaries set for all companies. We set
our own standards, applicable across the Group, frequently surpassing the legislative demands in many areas where we operate.
In addition to this commitment to sound operating practices, Umicore also strives to develop materials that enhance quality of life
and, in particular, contribute to addressing certain critical environmental or societal challenges.
Contact with the communities where Umicore operates is the most direct way that we interact with society. Open and transparent
dialogue with such communities is an integral part of our stakeholder engagement. Certain civil society groups (non-governmentalorganisations) also periodically declare a stake in our operations and the way we do business. Umicore welcomes such interest andattempts to engage with such groups in an open and constructive manner.
Umicore makes voluntary contributions at site and Group-level to a range of charitable causes in line with an internal policy andguidelines. We manage Group-level engagement efforts through a Group Donations Committee that has the mandate of engaging withcivil society groups and determining the extent of partnerships at Group level. For information on these initiatives in 2017 see pages
202-203 of this report.

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STAKEHOLDER ENGAGEMENTASSOCIATE AND JOINT VENTURE COMPANIESASSOCIATE AND JOINTVENTURE COMPANIESContribution
to Umicore profits
Technologicalcomplementaries

Investment
Guidance

UMICORE

Market accessUmicore has investments in various business activities over which it does not exercise full management control. Associate companies
are those where Umicore has a significant influence over financial and operating policies, but no control. Typically, this is evidenced
by ownership of between 20% and 50% of the voting rights, while joint ventures usually entail a 50:50 split in ownership and control.
Joining forces is a way to speed up technological developments or gain access to specific markets. Umicore has management control
in half of the four associate and joint venture companies in which we hold a stake. Where management control is not exercised by
Umicore, representation on the board of directors is the way in which we are able to guide and control the management and monitor
business developments. Although we cannot impose our own policies and procedures on any associate (or indeed any joint venture
where we do not possess majority voting rights), there is a clear communication of our expectations that the operations be run inaccordance with the principles of the Umicore Way.
Umicore is rigorous in safeguarding any intellectual property that is shared with associate or joint venture partners. A full list of
associate and joint venture companies can be found on pages 112-113.

PUBLIC SECTOR AND AUTHORITIESPUBLIC SECTOR
AND AUTHORITIESServices
Formal licenceto operate

Taxes

UMICORE

Umicore paid a total of € 95 million in taxes on our 2017 operations. Umicore and our employees also contributed a total of€ 99 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 contractedwith public organisations. In 2017, Umicore was awarded a total of € 5.6 million in grants, relating primarily to planned R&D projects.
Umicore does not make donations to political parties or organisations as a matter of policy.
In 2017, we continued our efforts to inform public policy and foster contacts with public authorities worldwide. These efforts arecoordinated through the Government Affairs department and focus primarily on Europe, North America and China. Umicore aims toraise the profile and understanding of our technologies and contribute to the discourse on materials-related issues. In Europe, this has
centred on three main topics: resource efficiency, with policies dealing with waste and raw materials, and the ongoing developments
for a Circular Economy in the EU; advanced materials as a key enabling technology for low carbon technologies; and material
technologies for the purification of exhaust gases from automobiles and trucks with combustion engines. Our initiatives also include
access to EU and national government funding and innovation networks, particularly in the context of programmes that support thedevelopment of breakthrough technologies with environmental benefits.
Umicore experts are often invited as members of working groups and panels initiated by European or national authorities. We are partof the European Innovation Partnership (EIP) on Raw Materials, B20-G20, the High-Level Group (HLG) on Key Enabling Technologies(KET), the Steering Committee of Energy Materials Industrial Research Initiative (EMIRI) and the ERA-MIN network on industrial handlingof raw materials for European Industries, to name a few. In addition, Umicore is part of the Knowledge and Innovation Community on
Raw Materials, a consortium of over 100 partners to address the accessibility, availability and efficient use of raw materials in Europe.
When specific issues of interest arise, we communicate our position through the industry groups to which we are affiliated. Umicore ismindful of the sensitivity of taking positions on issues of public interest and has developed guidelines for doing so responsibly.
Umicore is currently a member (both at corporate and business unit level) of the organisations listed below.

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STAKEHOLDER ENGAGEMENTCORPORATE–– A3M (L’Alliance des Minerais, Minéraux et Métaux)–– Agoria (Belgian multi-sector federation for the technology industry)–– American European Community Association (AECA)–– Bebat–– Belgian Indian Chamber of Commerce and Industry (BICC&I)–– Belgian industrial Research and Development (BiR&D)–– Belgium-Japan Association & Chamber of Commerce (BJA)–– Eurometaux (European Non-Ferrous Metals Association)–– European Industrial Research Management Association (EIRMA)–– European Round Table of Industrialists (ERT)–– ETION–– Federation of Belgian Industrial Energy Consumers (FEBELIEC)–– Flemish Aerospace Group (FLAG)–– Flemish Network of Enterprises (Voka)–– Flanders-China Chamber of Commerce–– Metalle pro Klima (a WirtschaftsVereinigung Metalle initiative)–– TransAtlantic Business Council–– Vlamnse Technische Kring (VTK)–– World Economic ForumCATALYSIS–– Associacao dos Fabricantes de Equipamentos para Controle de Emissoes Veiculares da América do Sul (AFEEVAS)–– Association for Emissions Control by Catalyst (AECC)–– Catalyst Manufacturers Association, Japan (CMAJ)–– Committee of Vehicle Emission Control in China (CVEC)–– Emission Controls Manufacturers Association, India (ECMA)–– European Precious Metals Association (EPMF)–– German Automotive Industry Association (VDA)–– German Chemical Federation (VCI)–– International Platinum Group Metals Association (IPA)–– Manufacturers of Emission Controls Association (MECA)–– Verband der Automobilindustrie (VDA)–– Verband der Chemischen Industrie e.V. (VCI)
ENERGY & SURFACE TECHNOLOGIES–– Cobalt Development Institute–– Cobalt REACH consortium–– Deutsche Gesellschaft für Galvano- und Oberflaechentechnik (DGO)–– Energy Materials Industrial Research Initiative (EMIRI)
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STAKEHOLDER ENGAGEMENT–– European Association for Battery, Hybrid and Fuel Cell Electric Vehicles (AVERE)–– Nickel Institute–– Nickel REACH consortium
RECYCLING–– European Battery Recycling Association (EBRA)–– European Electronics Recyclers Association (EERA)–– European Precious Metals Federation–– Fachvereinigung Edelmetalle (German Precious Metals Association)–– International Platinum Group Metals Association–– International Precious Metals Institute–– Minor Metals Trade Association–– Responsible Jewellery Council (RJC)–– The European Association of Advanced Rechargeable Batteries (RECHARGE)–– The International Platinum Group Metals Association (IPA)–– The London Bullion Market Association (LBMA)–– The London Platinum and Palladium Market (LPPM)–– Vereniging Nederlandse Metallurgische Industrie (VNMI)

DISTRIBUTION OF ECONOMIC BENEFITS

The most significant portion of Umicore’s total income was used to secure the metal component of raw materials (the cost of which ispassed on to the customer). After subtracting other raw materials costs, energy-related costs and depreciation, the remaining economic
benefits available for distribution stood at € 1,043 million.
The biggest portion (€ 701 million) was distributed to employees. The bulk of employee benefits was in the form of salaries, with thebalance going to national insurance contributions, pensions and other benefits.
Net interest to creditors totalled € 20 million, while taxes to the governments and authorities in the places where we operate, totalled€ 95 million. The earnings attributed to minority shareholders were € 14 million.
Subject to approval by shareholders at the AGM in April 2018, a gross dividend of € 0.70 per share will be distributed for the year 2017,
resulting in a total provisional payout of € 154 million (using the number of outstanding shares at the end of 2017). A portion of thistotal was paid out in August 2017 as an interim dividend, and the remainder will be paid out in 2018. This is in line with Umicore’s
policy of paying a steady or gradually-increasing dividend.
Umicore made charitable donations totalling € 1.2 million.

TOTAL INCOME (INCLUDINGCONTRIBUTION FROM ASSOCIATES)

4%

8%

2%
1%
85%

Raw materials cost(excluding water,gas & electricity)
Water, gas &electricity cost
Depreciation &impairments
Other costs (net)Economic benefits

ECONOMIC BENEFITS
9%
2%
1%

0%
67%

15%
6%

Total taxes
Creditors
Minority shareholders
Shareholders(dividends only)
Retained by
the company
Charitable donations
Employeecompensation& benefits

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MATERIALITY

Materiality

Umicore strives to plan for the best possible future by remaining in a healthy and competitive position whilst considering global
economic, social and environmental megatrends. Our Vision 2015 strategy built on existing competencies, market positions and ourlong-standing expertise in metallurgy, materials science, application know-how and recycling, and combined them with our closed-loopbusiness model to give us strong growth potential in clean air, clean energy, vehicle electrification and addressing resource scarcity.
Our Vision 2015 objectives covered the following ambitions and challenging performance goals:
ECONOMICPERFORMANCEGREAT PLACETO WORK

Zero lost time accidents
Double digit revenues growth
Become a preferred employer

15-20% average returnon capital long term

Reduce employee bodyconcentrations of specific metals(Cd, Pb, Co, Ni, As, Pt)

Assess and discuss individual
employee development annually

ECO-EFFICIENCYSTAKEHOLDERENGAGEMENT

Reduce our CO2 emissions by 20%

Implement our new sustainableprocurement charter(based on 2006 industrial scope)

Reduce metal emissions to waterand air by 20%(based on 2009 industrial scope)

Invest in tools to understandand measure our productlife cycles and impacts

Identify key stakeholders andengage with the local community
at all our sites

Horizon 2020, launched in 2015, represents continuity in Umicore’s strategic choices over the past decade and sets out further
economic, environmental, value chain and society challenges. The definition of the environmental, value chain and society objectives
for the Horizon 2020 strategy involved a materiality assessment to identify areas with the potential to turn sustainability into a greater
competitive edge, as follows:

1

2

3

4

VALIDATING GLOBALMEGATRENDS AND
ASSESSING VISION 2015
ACHIEVEMENTS AND
SHORTFALLSIDENTIFYINGAND CHOOSING
MATERIAL TOPICS
FOR HORIZON 2020

DEFINITION
OF OBJECTIVESANDREPORTING SCOPE

VALIDATION BY
THE EXECUTIVE COMMITTEE

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MATERIALITY

1. VALIDATING GLOBAL MEGATRENDS AND ASSESSING VISION 2015 ACHIEVEMENTS AND SHORTFALLS
A. VALIDATING GLOBAL MEGATRENDS
In 2014-15, the executive committee scanned in detail the four megatrends that underpin Umicore’s growth ambitions. The results
clearly showed that three of the four megatrends were strengthening: resource scarcity, the need for clean air and vehicle electrification(see pages 11-13 for more on these megatrends). The landscape had shifted significantly in photovoltaics, the fourth megatrend, wherea combination of economic and technology choices led to a less favourable market for Umicore’s higher-end solutions. Based on the
results, the executive committee elected to focus Umicore’s Horizon 2020 growth ambitions on activities that are linked to clean air(automotive catalysts), vehicle electrification (rechargeable battery materials) and resource efficiency, ensuring precious and specialty
metals recycling through our closed-loop business model. These activities are therefore at the heart of our ambition to double Umicore
earnings by 2020.
B. ASSESSING VISION 2015 ACHIEVEMENTS AND SHORTFALLSIn terms of sustainability performance, Vision 2015 yielded positive results. On the environmental front, we achieved a significant
reduction in CO2 and metal emissions to water and air, surpassing our targets in all three cases.
We also made strides in personnel development and stakeholder engagement. By 2015, the vast majority of Umicore employees hadreceived an annual appraisal and development plan and we had further reduced exposure levels of our employees to various metals.
Our next People Survey is planned for 2018.
In sustainable procurement, we built on our reputation as a pioneer in the field by deploying our Sustainable Procurement Charter andsought out conflict-free certifications for our smelters.
Safety was the sole area where performance was less than satisfactory. We set ourselves the target of becoming an accident-freecompany by 2015 and, while our safety performance improved, we fell short of this objective.
The challenge for Horizon 2020 is to maintain the progress made, continue focusing on topics such as safety where we fell short of ourgoals and to develop goals that enhance Umicore’s competitive positioning, as follows:
MAINTAIN ACHIEVEMENTS in carbon and metal emissions, preferred employer and stakeholder engagement. Although we will not
set further objectives for these themes, we will continue to measure and report on the impact and performance when relevant froma materiality point of view.
IMPROVE safety and occupational exposure. We will continue to pursue the zero accident and zero excess readings goals.
SECURE COMPETITIVE ADVANTAGE through sustainable sourcing. Thanks to the implementation of the Umicore Sustainable Procurement
Charter, we have developed a reputation for ethical sourcing. This approach is aligned with Umicore’s values and ethics but comes ata cost that is only gradually accepted by customers. Horizon 2020 seeks to leverage this sustainable sourcing approach to generate
an enhanced competitive edge.

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MATERIALITY

2. IDENTIFYING AND CHOOSING MATERIAL TOPICS FOR HORIZON 2020
A. MATERIALITY SCREENING
With the activities linked to clean air, vehicle electrification and recycling defined as the main levers for Umicore’s growth, we screened
for other topics of material importance to our business units and to our main stakeholder groups (see pages 53-56).
In addition to producing the initial list of material topics, based on the learning from Vision 2015, other potential topics were identified
through direct feedback from stakeholders, including the findings of the annual internal business risk assessment, the results fromthe 2014 People Survey for all employees, the data from the implementation of Umicore’s APS (Assessment of Product and services
Sustainability) tool from 2012 to 2015 and direct questions submitted to Umicore or its business units by customers.
At corporate level, we screened material issues at peer companies and customers, as well as potentially relevant topics discussed byinternational business groups, research groups and media.
B. MATRIX SET-UP AND TESTING
All topics identified in the materiality screening phase were used to produce a draft materiality matrix. The relevance of these topics
for Umicore was assessed by a project team and discussed with the Environment, Health and Safety (EHS) and Human Resources(HR) corporate teams. The starting matrix, containing about 65 topics, was submitted for further refining with the business unit
management teams.
Based on the feedback received, a revised version of the Umicore Group materiality matrix was compiled consisting of top quartile
topics. These 25 topics were the basis of the materiality testing and for ease of reference were clustered into five categories: Supply,
Products, Operational Excellence, Human Resources, Health and Safety.
The list of material topics was then tested using an online survey that was sent to 48 stakeholders. These stakeholders – investors,
customers and employees – ranked the topics.
3. DEFINITION OF OBJECTIVES AND REPORTING SCOPE
Based on the results of the first two phases, we established the scope of the objectives for Horizon 2020. We clustered our objectives
in four main themes. Three of the Vision 2015 themes were kept – Economic Performance, Eco-Efficiency and Great Place to Work – but“Stakeholder Engagement” was replaced by “Value Chain and Society” to highlight our ambition of adopting a more holistic view of
Umicore’s presence in and impact on the overall value chain. This constitutes Umicore’s main focus through 2020.
The process for defining the environmental, value chain and society objectives within Horizon 2020 involved a structured dialogue withthe management of each business unit to determine the social and environmental topics that could generate a greater competitiveedge. To ensure a degree of alignment with external expectations, we also conducted an online stakeholder survey. The objectives
were debated and ratified by the executive committee in February 2016.
We also identified a range of issues that Umicore and our stakeholders identified as important for management purposes, which should
remain part of the report, albeit not part of any specific Horizon 2020 objective. One example is CO2 emissions: in our Vision 2015 review,
we assessed that the absolute level of our CO2 emissions was dependent on the energy mix of the countries in which we operate,a roadblock to pursuing a specific CO2 emission reduction objective. We therefore chose to pursue energy, operational and materials
efficiency instead. However, many stakeholders expect Umicore to report CO2 emission and this data remains part of the reporting scope.

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MATERIALITY

Our Horizon 2020 targets are as follows:
ECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY

ECO-EFFICIENCYGREAT PLACETO WORKSTRENGTHEN LEADERSHIPSUSTAINABLE SUPPLYEFFICIENT OPERATIONSSAFETY

Confirm our strong position and uniqueoffer in clean mobility materials andrecycling processes

Secure materials supply and promote
our closed-loop business offer

Increase value through efficient use of
metals, energy and other substances

Become a zero-accident workplace

Main material topics: Criticalityof raw materials, Recyclability andpotential to close the loop, Recycled
input materials use, Resource scarcity,
Supplier screening, Supply disruptions,Sustainability of supply chain/
responsible sourcing

Main material topics: Energy
consumption and efficiency,
Opportunities and risk fromtechnologies and products, Resource
efficient products and production

DOUBLE EARNINGSAt least double the size of recurring
EBIT compared to 2014 and excluding
the discontinued operations

REBALANCE OUR PORTFOLIO
Ensure a more balanced distributionof earnings among the threebusiness groups

SUSTAINABLE PRODUCTS
AND SERVICES
Develop products that create
sustainable value for ourcustomers or society
Main material topics: Life cycle
thinking, Opportunities and risk fromtechnologies and products, Productstewardship, Public health andsafety, Resource efficient products
and production, Toxic substances andphase out or ban
Main stakeholders: Customers,
Investors and funders, Public sector& authorities, Society, Suppliers

Main stakeholders: Customers,
Investors and funders, Public sector& authorities, Society, Suppliers

Main material topics: Occupationalsafety, Process safety

HEALTH
Reduce employee exposure
to specific metals
Main material topics:
Occupational health

PEOPLE ENGAGEMENT
Further improve people engagementwith specific focus on talent attraction& retention, diversity management
and employability
Main material topics: Diversity
and inclusion, Employee training
and development, Talentattraction and retention
Main stakeholders: Customers,
Employees, Investors and funders,Public sector & authorities,
Society, Suppliers

Other topics that were defined as material by at least one stakeholder group during the materiality assessment but are not a specific
Horizon 2020 objective (i.e. CO2 or metal emissions) are reported in the statements section of the report.
4. VALIDATION BY THE EXECUTIVE COMMITTEE
The matrix and its translation into specific environmental, value chain and society objectives were validated by the executive
committee in February 2016. The economic objectives and growth ambitions had been previously validated in 2015. As a result, we
believe that our Horizon 2020 objectives and the information that we report in this document represent a balanced reflection of
external requirements and our own internal needs, and enable a balanced appreciation of our performance.
5. 2017 UPDATESFollowing the 2017 review, the board of directors confirmed that Operational Excellence, Supply, Products, Human Resources and Healthand Safety remain Umicore’s material issues. We continue to follow our Horizon 2020 objectives and the associated materiality indetermining the content and disclosure in this report.

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MANAGEMENT APPROACH

Management approach

GENERAL MANAGEMENT APPROACH

The Umicore Way is the cornerstone of everything we do at Umicore. We believe that materials have been a key element in furthering
the progress of mankind, that they are at the core of today’s life and will continue to be enablers for future wealth creation. We believethat metal-related materials have a vital role to play, as they can be efficiently and infinitely recycled, which makes them the basis forsustainable products and services. We want Umicore to be a leader in providing and creating material-based solutions to contribute to
fundamental improvements in the quality of life. The overarching principles guiding our “Materials for a better life” mission are:

VALUESENVIRONMENT AND SOCIETYEMPLOYEES

BUSINESS INTEGRITY

We hold the values of openness,
respect, innovation, teamwork
and commitment tobe crucial to our success.

We recognise that our commitment
to financial success must also take
into account the broader economic,
environmental and social impactof our operations.

We strive to be a preferred
employer of both current andpotential employees.

Wherever we operate, our reputation
is a most valuable asset, and it isdetermined by how we act. We avoid
any action that would jeopardise
our reputation.

GOALS AND PERFORMANCE 2016-2020
The Umicore Way outlines our values, the way in which we wish to achieve our strategic goals and our overall commitment to theprinciples of sustainable development. Our Horizon 2020 economic growth ambitions are tied to the megatrends of resource scarcity,
clean air and vehicle electrification. The social and environmental objectives are clustered in three themes: Great Place to Work,
Eco-efficiency and Value Chain and society. These objectives reflect our operational excellence and the aspects of our products andservices that we can further improve to turn sustainability into a greater competitive edge.
The supporting components of our Horizon 2020 strategy (see Materiality page 62) described in this chapter, including policies,
responsibilities and evaluation, ensure a close monitoring of our economic, environmental and social performance.
POLICIESThe Umicore Way is supplemented by detailed company codes including:–– Code of Conduct, a comprehensive framework for ethical business practice;–– Corporate Governance Charter, which sets out our management philosophy and governance principles;–– Sustainable Procurement Charter, which outlines our commitment to align our supply chain to our own values and practices; and–– Many internal policies developed in support of our vision and values such as Safety, Human Rights and Working Conditions, Training& Development and Donations & Sponsorship.
RESPONSIBILITIES
Final accountability for all aspects of Umicore’s business lies with the executive committee. The broad sustainability approach is guided
by an interdepartmental team with representatives from Environment, Health and Safety (EHS), Human Resources (HR), Finance andProcurement & Transportation. This team is responsible for developing and obtaining approval for sustainability objectives and guiding
business units in their efforts to contribute to these objectives. At business group level, the economic/financial, environmental andsocial performance is owned by the Executive Vice-President of that entity. At business unit level, these aspects are owned by the headof the business unit. At site level, the site manager is responsible for the economic, social and environmental performance of the site.

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MANAGEMENT APPROACH

MONITORING, EVALUATION AND CONTINUOUS IMPROVEMENT
Corporate EHS and Corporate HR have developed detailed technical guidance notes to assist the business units and sites, ensuring acollective understanding of concepts, definitions, roles and responsibilities. Regular workshops and meetings are organised each year
at various levels of the organisation to share best practices.
Progress towards our objectives is measured annually against a set of KPIs reported through a group data management system.
The data is collected and reported at the relevant entity level: site, business unit or business group. Social and environmental
performance indicators that are relevant and material to Umicore’s operations are also measured and reported. Corporate EHS,
Corporate HR and Corporate Finance aggregate the performance of the business units to evaluate Umicore’s overall progress towards
the Horizon 2020 objectives.
On-site data verification relating to social and environmental performance and progress towards objectives is carried out internally.
In addition, Umicore uses an assurance provider to check its social and environmental data. This assurance has been carried out
by PricewaterhouseCoopers (PwC) since 2011. PwC evaluates the completeness and reliability of the reported data as well as therobustness of the associated data management system. Wherever necessary, performance indicators and reporting processes arereviewed and updated after every assurance cycle, as part of a continuous improvement process.

MANAGEMENT APPROACH TO ECONOMIC AND FINANCIAL PERFORMANCEGOALS AND PERFORMANCE 2016-2020
Based on the validity analysis of the megatrends relevant for Umicore’s Vision 2015 strategy, we identified specific growth areas where
Umicore can contribute to solve certain societal and environmental problems. These growth areas form the basis of the Horizon 2020
strategy and are expected to enable Umicore to double its recurring EBIT between 2014 and 2020.
OPERATIONAL RETURNS
Umicore seeks to generate economic value through our existing businesses and any acquisitions or organic growth initiatives that weundertake, in line with our Horizon 2020 strategy. This entails generating a return on capital employed (recurring pre-tax operating
profit/average capital employed for the period) in excess of our overall pre-tax cost of capital. This cost of capital can vary over time infunction of our risk profile and the state of the world’s debt and equity markets. The return on capital employed (ROCE) targeted in our
Horizon 2020 strategy is over 15%.
Investments are assessed on a case-by-case basis: acquisitions are expected to be earnings-enhancing in the early phase of theirintegration and value-enhancing shortly thereafter. Similar criteria exist for organic investments, although the pursuit of longer-term
growth projects invariably requires a longer view on expected returns.
In terms of operational performance, emphasis is placed on ROCE. We deal with precious and other rare metals and we therefore
have a relatively high working capital intensity. Management is therefore incentivised to optimise performance both from an earnings
perspective and by minimising capital employed.
SHAREHOLDER RETURNS
Umicore aims to create value for its shareholders. This is achieved through the development of a compelling strategy and a strong
track record of delivering a solid performance against the strategic objectives. We seek to grow our existing businesses while
maintaining or establishing strong leadership positions on the back of innovative technologies (see below). Shareholder returns
depend on the valuation of the Umicore stock and are supported by the payment of dividends. Umicore has a policy of paying a stableor gradually increasing dividend (for a history of the dividend payout, click here). We may also, from time to time, return cash toshareholders by other means, for example through share buybacks and cancellations.
FINANCIAL STRENGTH
Umicore aims to safeguard the business through sound financial management and by maintaining a strong balance sheet. While wehave no fixed target regarding debt levels, we aim to maintain an investment grade status at all times. We also seek to maintain ahealthy balance between short and longer-term debt and between debt secured at fixed and floating interest rates. This approach,coupled with strong cash flow generation, allows us to self-fund the majority of our growth initiatives.

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MANAGEMENT APPROACHRESEARCH AND DEVELOPMENT
As a materials technology company, the future success and sustainability of our business depend on our ability to develop and market
innovative products and services. We invest consistently in research and development (R&D), with the equivalent of 5% to 7% ofrevenues typically dedicated to R&D every year.
MARKET PRESENCE
As part of our Horizon 2020 strategy, Umicore seeks to maintain market leadership positions in recycling and clean mobility materials.
The nature of our business, which consists of products for highly specific applications, means that we do not have a presence inany country or region which makes up a significant part of that country or region’s economy. Our business is global in nature with
51 production sites in 22 countries.
ECONOMIC AND FINANCIAL PERFORMANCE POLICY
Our approach to financial and economic management derives from our vision, values and organisational principles as describedin The Umicore Way. Specific internal policies have been developed to frame the company’s approach to specific financial andeconomic aspects including: Dividend, Financing and Funding, Transfer Pricing, Credit Management, Hedging, Capital Expenditure andMergers & Acquisitions.
ECONOMIC AND FINANCIAL PERFORMANCE RESPONSIBILITY
Accountability for the overall economic and financial performance of Umicore lies with the Chief Executive Officer while each Executive
Vice-President is responsible for the financial performance of his/her business group. The Chief Technology Officer and his/herorganisation has oversight for the technology portfolio of the group and the overall research and development activities. At business
unit level, the head of the business unit is responsible for the operational and financial performance of the business unit. The Chief
Financial Officer has overall oversight of Umicore’s financial and economic performance and is supported by a Corporate Financeteam that includes specific expertise centres covering aspects such as tax, treasury, accounting & control, and the internal control
environment. At business unit level, financial controllers are responsible for managing the financial and reporting aspects of thebusiness unit.

MANAGEMENT APPROACH TO ENVIRONMENTAL PERFORMANCEGOALS AND PERFORMANCE 2016-2020
In The Umicore Way, Umicore commits to continually improve its environmental performance. As a materials technology company,
we have defined energy efficiency and the reduction of metal emissions as core environment-related objectives in our Horizon 2020
strategy. These objectives represent what we believe to be the most material environmental aspect of our business and the ones thatare most important to our various stakeholders (see Materiality, page 62). The performance review of energy efficiency is reported in
the Eco-Efficiency section on page 29.
While Umicore’s environmental objectives through 2020 focus on energy efficiency and the reduction of metal emissions, we believe it
is equally important to continuously monitor, control and report the performance of our organisation in relation to other environmental
aspects. We do that using the same measurement tools indicated in our General Management Approach. These indicators monitor how
we are building on the Vision 2015 achievements in terms of environmental performance. These underlying performance indicators,
detailed in the Environmental Statements, include:–– Emission to water and air, pages 174-176–– Greenhouse gases, pages 176-177–– Water consumption, pages 179-180–– Waste volumes, page 180–– Control and remediation of historical pollution, page 181–– Regulatory compliance and management systems, page 182
The following specific management approach applies to both material topics and the underlying performance indicators.

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MANAGEMENT APPROACH

ENVIRONMENTAL PERFORMANCE POLICY
Our approach to environmental management derives from the vision, values and organisational principles found in The Umicore Way.
An internal Group EHS Guidance Note details the approach to measuring and reporting on each relevant environmental indicator.
A specific internal policy on energy efficiency was rolled out throughout the group from 2011 to 2015 and created a high level ofawareness and commitment at sites and within business units to strive for continual energy efficiency improvement. In addition,
Umicore encouraged all business unit initiatives that increased recycling potential. On a global scale, metals recycling reduces theenvironmental impact related to the acquisition and transformation of metals into products.
ENVIRONMENTAL PERFORMANCE RESPONSIBILITY
Umicore’s environmental performance and impact accountability lies with the executive committee. In the executive committee, theChief Counsel is Executive Vice-President for Environment, Health and Safety, Corporate Security and Internal Audit and responsible forall environmental matters and is supported by the Senior Vice President Environment, Health & Safety. The Executive Vice-Presidents
are responsible for the overall environmental performance of their business group. At business unit level, the head of the business unit
is responsible for the overall environmental performance. The general manager of each site has a similar responsibility at site level.
ENVIRONMENTAL PERFORMANCE BOUNDARYEnergy efficiency performance and underlying performance indicators contribute to reducing our impact on the environment, forexample through an expected reduction of our carbon footprint of lower impact or the metal emissions on air and water.

MANAGEMENT APPROACH TO SOCIAL PERFORMANCEGOALS AND PERFORMANCE 2016-2020
As set out in The Umicore Way, we strive to be a preferred employer for both current and potential employees and to act and operate
in line with the expectations of society. We have defined three social objectives within the context of our Horizon 2020 strategy:
reducing lost-time accidents to zero, further reducing occupational exposure to specific metals and increasing our diversity, talentattraction and retention and employability. We also have objectives which relate to our broader social impact and these can be foundin our Management Approach to Value Chain and Society, page 67.
These objectives were defined as material topics in the materiality assessment both by internal and external stakeholders.
Talent management is key to reaching our desired business growth. Attracting, developing and retaining talent in competitive labour
markets support the business units in their growth plans. In addition, increasing the diversity of our workforce is not only in line withexpectations from society, it should also increase our chance of success. Given the ageing population and the need for longer careers,
we are also putting programmes in place to increase the employability of our workforce. The performance review of these material
topics, including zero accident and reducing occupational exposure, is reported in the Great Place to Work section, pages 31-33.
While Umicore’s social objectives determine a special focus through 2020, we believe it is equally important to continuously monitor,
control and report our social performance in other areas. We do that using the same measurement tools indicated in our General
Management Approach. These underlying performance indicators, detailed in the Social Statements section, include:–– Monitoring of workforce demographics, pages 185-187–– Monitoring of human rights, compliance and risk, page 190–– Monitoring of employee health aspects beyond metal exposure, pages 191-193–– Monitoring of contractor safety, page 194
The following specific management approach applies to both materials topics and the underlying performance indicators.
SOCIAL PERFORMANCE POLICY
Our approach to social performance derives from the vision, values and organisational principles found in The Umicore Way. An internalGroup Social Reporting Guidance Note provides detailed guidance on measuring and reporting on social performance. Specific internal
policies have been developed to frame specific elements of our social management approach including Safety, Human Rights andWorking Conditions and Training & Development. In addition, Umicore has a Global Framework Agreement on Sustainable Developmentin place with international trade unions.

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MANAGEMENT APPROACH

SOCIAL PERFORMANCE RESPONSIBILITY
Umicore’s social performance and impact accountability lies with the executive committee. In the executive committee, the CEO has
oversight responsibilities for Umicore’s Human Resources issues and is supported by the Senior Vice President Human Resources.
The Executive Vice-Presidents are responsible for the social aspects of their business group. At business unit level, the head of thebusiness unit is responsible for the overall social performance. The general manager of each site has a similar responsibility at site
level. A regional Human Resources organisation exists to manage social aspects at regional and country level, and to provide structural
support to the business units in all aspects of human resources management.
SOCIAL PERFORMANCE BOUNDARYSocial performance and the underlying performance indicators have a direct impact on Umicore’s workforce (enhanced engagement
and well-being at all levels and attracting and retaining the right skills).

MANAGEMENT APPROACH TO VALUE CHAIN AND SOCIETY PERFORMANCEGOALS AND PERFORMANCE 2016-2020
The relationship between customers and suppliers is an essential element to building financial and economic value and plays
a key role in the promotion of social and environmental best practices. The Umicore Way also covers the relationships with ourvarious stakeholders.
The value chain and society objectives cover Umicore’s presence and impact upstream with suppliers, and downstream contribution of
our products and services to a better life. The performance review of these material topics is reported in the Value Chain and Society
section, pages 26-27.
While Umicore’s value chain and society objectives determine a special focus through 2020, we believe it is equally important tocontinuously monitor, control and report our relationship with all the other stakeholders. Information on our stakeholder groups
is listed in the Stakeholder Engagement section, pages 53-56. In addition, we report on the following topics in the Value Chain
Statements section:–– Monitoring of the supplier assessment for indirect procurement, page 200–– Product regulatory compliance, pages 201-202–– Monitoring of our donations, pages 202-203
The following specific management approach applies to both materials topics and the underlying performance indicators.
VALUE CHAIN AND SOCIETY PERFORMANCE POLICY
Our approach to stakeholder engagement derives from the vision, values and organisational principles found in The Umicore Way.
Specific charters/policies have been developed to frame specific elements of our approach to stakeholder engagement, including the
Sustainable Procurement Charter, Responsible global supply chain of minerals from conflict-affected and high risk areas, Policy, Human
Rights & Working Conditions Policy and External Communications Policy.
VALUE CHAIN AND SOCIETY PERFORMANCE RESPONSIBILITY
Our presence and impact both upstream and downstream is based on a business-specific approach whereby all business units are
required to identify and engage with their respective suppliers, customers and stakeholders. In addition, a team comprising membersof various departments, including Corporate EHS, Corporate HR, Group Communications, Corporate Finance and Procurement &Transportation, meets regularly to map the overall stakeholder expectations and to convene, whenever necessary, internal or external
stakeholder dialogue sessions.
VALUE CHAIN AND SOCIETY PERFORMANCE BOUNDARY
The value chain and society theme focuses on potential impacts on society incurred through our activities, products and services.
For reporting, all entities are considered. While we focus primarily on those of our activities that are directly linked to clean mobility
and recycling, other initiatives targeting suppliers, customers or society are tracked and appropriately reported, whether throughcommunications such as this annual report or through other specific communication channels.

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CORPORATE GOVERNANCE REPORTContents

CORPORATE GOVERNANCE REPORT
G1

Corporate governance framework

69

G2

Corporate structure

69

G3

Shareholders

69

G4

Board of Directors

70

G5

Executive committee

72

G6

Relevant information in the event of a takeover bid

73

G7

Conflicts of interests (Art. 523 – 524ter Companies Code)

74
75

G8

Statutory auditor

G9

Code of Conduct

75

G10

Market Manipulation and Insider Trading

75

G11

Compliance with the 2009 Belgian Code on Corporate Governance

75

REMUNERATION REPORTG12Board of Directors’ remuneration

76

G13

CEO and Executive Committee remuneration

79

G14

Share and share option ownership and transactions 2017

83

G15

Changes to Remuneration since the end of 201785

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CORPORATE GOVERNANCE REPORT

Corporate governance report

G1 CORPORATE GOVERNANCE FRAMEWORK

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.
The Corporate Governance Charter describes in detail the governance structure of the Company, as well as the policies and proceduresof the Umicore group. The Charter is available on the Umicore website) and may be obtained on request from Umicore’s group
Communications Department.
Umicore has articulated its mission, values and basic organisational philosophy in a document called “The Umicore Way”. This document
spells out how Umicore views its relationship with its customers, shareholders, employees and society. It is supplemented by detailed
company codes and policies, the most significant of which is the Code of Conduct (see G9).
In terms of organisational philosophy, Umicore believes in decentralisation 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 togroup strategies, policies, standards and sustainable development approach.
In this context, Umicore is convinced that a sound corporate governance structure constitutes a necessary condition to ensure its
long-term success. This implies an effective decision-making process based on a clear allocation of responsibilities. This approach
must ensure an optimal balance between a culture of entrepreneurship at the level of the business units and effective steeringand oversight processes. The Corporate Governance Charter deals in more detail with the responsibilities of the shareholders, theboard of directors, the CEO and the executive committee and also the specific role of the audit committee and of the nomination& remuneration committee. The present statements provide information on governance issues which relate primarily to the financial
year 2017.

G2 CORPORATE STRUCTURE

The board of directors is the ultimate decision-making body of Umicore, subject to all matters specifically reserved to the shareholders’meeting by the Belgian Companies Code or Umicore’s articles of association. The board is assisted in its role by an audit committee anda nomination & remuneration committee. The day-to-day management of Umicore has been delegated to the CEO, who also chairs
the executive committee. The executive committee is responsible for devising the overall strategy of Umicore and for submitting itto the board for review and approval. It is also entrusted with the implementation of this strategy and with the effective oversight ofthe business units and corporate functions. The executive committee is furthermore responsible for screening the various risks andopportunities that Umicore may encounter in the short, medium or longer term (see Risk Management section) and for ensuring that
adequate systems are in place in order to address these. The executive committee is responsible for defining and applying Umicore’s
approach to sustainable development.
Umicore is organised in business groups which in turn comprise business units that share common characteristics in terms of products,
technologies and end-user 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 China, North America, Japan and South America.
Umicore’s corporate headquarters are based in Belgium. This centre provides a number of corporate and support functions in the areasof finance, human resources, internal audit, legal and tax, as well as public and investor relations.

G3 SHAREHOLDERS

3.1 ISSUED SHARES – CAPITAL STRUCTURE
On 31 December 2017 there were 224,000,000 Umicore shares in issue, compared to 112,000,000 on 31 December 2016. This increase
resulted from the share split approved by the extraordinary shareholders’ meeting held on 7 September 2017, whereby each old share
was split into two new shares effective as from 16 October 2017. All the below numbers of shares are mentioned on a post-share
split basis.
The identity of shareholders having declared a participation of 3% or more as of 31 December 2017 can be found in the chapter “parent
company separate summarised financial statements” (p. 170).

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CORPORATE GOVERNANCE REPORT

Also on 31 December 2017 Umicore owned 4,505,567 of its own shares representing 2.01% of its capital. Information concerning theshareholders’ authorisation 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.
During the year, 1,507,676 own shares were used in the context of the exercise of employee stock options and 71,912 shares were used
for share grants, of which 10,312 to the board members, 54,800 to the executive committee members and 6,800 following a partial
conversion into shares of the bonus of the CEO.
3.2 DIVIDEND POLICY AND PAYMENT
Umicore’s policy is to pay a stable or gradually increasing dividend. There is no fixed pay-out ratio. The dividend is proposed by
the board at the ordinary (or annual) shareholders’ meeting. No dividend will be paid which would endanger the financial stabilityof Umicore.
In 2017 Umicore paid a gross dividend of € 1.30 (€ 0.65 on a post-share split basis) per share relating to the financial year 2016.
This was an increase by € 0.10 (€ 0.05 on a post-share split basis) compared to the gross dividend paid in 2016 in respect of thefinancial year 2015.
In July 2017 the board, in line with the Umicore dividend policy, decided to pay an interim dividend, equalling 50% of the total dividend
declared for the previous financial year. Therefore a gross interim dividend of € 0.65 (€ 0.325 on a post-share split basis) per share waspaid on 29 August 2017.
3.3 SHAREHOLDERS’ MEETINGS 2017
The annual shareholders’ meeting was held on 25 April 2017. On this occasion 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 2016 mandates. At the same general meeting, the shareholders appointed Mrs Liat Ben-Zur and Mr Gérard
Lamarche respectively as new, independent director and as new director, both for a period of three years. Furthermore, the mandateof Mrs Ines Kolmsee as independent director was renewed for three years. The annual shareholders’ meeting also approved the
remuneration of the board for 2017. Details of the fees paid to the directors in 2017 are disclosed in the remuneration report.
Also on 25 April 2017 an extraordinary shareholders’ meeting renewed the authorisation conferred to the Company and its direct
subsidiaries to acquire Umicore shares on a regulated market within a limit of 10% of the subscribed capital, at a price per sharebetween € 2 and € 37.50 (amounts adapted on a post-share split basis). This authorisation is valid until 31 May 2021 (included).
Finally, a special and an extraordinary shareholders’ meeting were held on 7 September 2017, which approved two change of control
clauses and the split of each then existing share into two new shares effective as from 16 October 2017, as well as the cancellationof a temporary provision in the bylaws on fraction of shares and a modification to the date of the annual shareholders’ meeting.

G4 BOARD OF DIRECTORS

4.1 COMPOSITION
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 office may 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 theboard to appoint directors in the event of a vacancy. The next general meeting must decide on the definitive appointment of the above
director. The new director completes the term of office of his or her predecessor.
On 31 December 2017, the board of directors was composed of ten members: nine non-executive directors and one executive director.
On the same date six 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.
Three of the 10 board members in office on 31 December 2017 are women. As a result, Umicore fully meets the minimum
representation threshold of one third, as imposed by the Belgian Companies Code.
The directors on the board possess a diversity of skills, backgrounds and experience that help ensure that it is an effective governancebody for Umicore.
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CORPORATE GOVERNANCE REPORTIn terms of gender and cultural diversity, the Board counts three women and six different nationalities among its 10 members.
Diversity also arises from the board’s members educational backgrounds that includes engineering, law, economics, finance andapplied languages. The Board’s cumulative industry experience is broad, covering automotive, electronics, chemicals, metals, energy,
finance and jewellery sectors. It also includes people experienced in the public and private sector and members with experience inthe different regions in which Umicore is active. Collectively the board possesses strong experience of managing industrial operations
and counts nine active or former Chief Executive Officers in its ranks. The board also has collective experience in disciplines that are
specifically relevant to Umicore’s non-financial Horizon 2020 goals such as health and safety, talent attraction and retention and supply
chain sustainability.
The composition of the board of directors underwent the following changes in 2017:–– Mrs Liat Ben-Zur was appointed independent director for a period of three years at the annual shareholders’ meeting held on
25 April 2017;–– Mr Gérard Lamarche was appointed director for a period of three years at the above annual shareholders’ meeting;–– The mandate of Mr Jonathan Oppenheimer as director expired on 25 April 2017;–– The mandate of Mrs Barbara Kux as independent director expired on 25 April 2017;–– Mr Ian Gallienne resigned as director with effective date 25 April 2017.
4.2 MEETINGS AND TOPICS
The board of directors held seven regular meetings in 2017, two of which were held via conference call. On one occasion the board also
took decisions by unanimous written consent.
During 2017 the matters reviewed by the board included:–– financial performance of the Umicore group;–– approval of the annual and half-year financial statements;–– adoption of the statutory and consolidated annual accounts and approval of the statutory and consolidated annual reports;–– approval of the agenda of the ordinary, special and extraordinary shareholders’ meetings and calling of these meetings;–– investment and divestment projects;–– funding mandates;–– EHS review, including sustainable development;–– audit committee reports;–– strategic opportunities and operational challenges;–– business reviews and market updates;–– mergers & acquisitions projects;–– annual performance review of the CEO and the other members of the executive committee;–– succession planning at the level of the board and the executive committee;–– litigation updates;–– interim dividend distribution.
The board also visited the Umicore Automotive Catalyst site in Onsan (South Korea) and the Rechargeable Battery Materials plant in
Cheonan (Korea).

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4.3 PERFORMANCE REVIEW OF THE BOARD AND ITS COMMITTEES
The chairman regularly conducts a performance review of the board and its committees.
The next performance review will take place in the first half of 2018 on the basis of assessment forms and/or Board discussions.
4.4 AUDIT COMMITTEE
The audit committee’s composition and the qualifications of its members are fully in line with the requirements of Article 526bis of theBelgian Companies Code and the 2009 Belgian Code on Corporate Governance.
The audit committee is composed of three non-executive directors, two of them being independent. It is chaired by Mrs Ines Kolmsee.
The composition of the audit committee underwent one change in 2017: Mr Mark Garrett was replaced by Mr Colin Hall with effective
date 29 July 2017.
All the members of the Audit committee have extensive experience in accounting and audit matters as demonstrated bytheir curriculum.
The committee met four times in 2017. Apart from the review of the 2016 full year and the 2017 half year accounts, the audit committee
discussed matters related to internal audit, risk management, internal controls, IT strategy and non-audit services provided by theCompany’s statutory auditor. The 2018 internal audit plan was validated. Finally, the audit committee also reviewed the proposed audit
plan 2017-2019 of the renewed statutory auditor mandate assignment.
4.5 NOMINATION & REMUNERATION COMMITTEE
The nomination & remuneration committee is composed of three members who are all non-executive directors, two of them being
independent. It is chaired by the chairman of the board.
The composition of the nomination & remuneration committee underwent one change in 2017: Mrs Barbara Kux was replaced by
Mr Mark Garrett with effective date 25 April 2017.
Two nomination & remuneration committee meetings were held in 2017. During the same period the committee discussed the
remuneration policy for the board members, the board committee members and executive committee members, and the rules of thestock grant and option plans offered in 2017. The committee also discussed the succession planning at the level of the board and theexecutive committee.

G5 EXECUTIVE COMMITTEE

5.1 COMPOSITION
The executive committee has the form of a “comité de direction”/directiecomité” as defined under Article 524bis of the Belgian
Companies Code.
The executive committee is composed of at least four members. It is chaired by the CEO, 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 CEO and uponrecommendation of the nomination & remuneration committee.
The composition of the executive committee remained unchanged in 2017.
On 31 December 2017 the executive committee was composed of seven members including the CEO.
5.2 PERFORMANCE REVIEWA review of the performance of each executive committee member is conducted annually by the CEO and discussed with thenomination & remuneration committee. The results are presented and discussed to/by the board of directors.
The board also meets annually in a non-executive session (i.e. without the CEO being present) in order to discuss and review theperformance of the CEO.
The above performance reviews took place on 9 February 2017.

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CORPORATE GOVERNANCE REPORTG6 RELEVANT INFORMATION IN THE EVENT OF A TAKEOVER BID

6.1 RESTRICTIONS ON TRANSFERRING SECURITIES
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 the market abuse legislation andof the lock-up requirements imposed on some share grants by the Belgian Companies Code.
The options on Umicore shares as granted to the CEO, to the members of the executive committee and to designated Umicore
employees in execution of various Umicore incentive programmes may not be transferred inter vivos.
6.2 HOLDERS OF SECURITIES WITH SPECIAL CONTROL RIGHTS
There are no such holders.
6.3 VOTING RIGHT RESTRICTIONS
Umicore’s articles of association do not contain any restriction on the exercise of voting rights by shareholders, providing theshareholders concerned are admitted to the shareholders’ meeting and their rights are not suspended. The admission rules toshareholders’ meetings are articulated 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 bylaw on 31 December 2017, save for the 4,505,567 shares held by the Company itself on that date (Article 622 §1 of the Belgian
Companies Code).
6.4 EMPLOYEE STOCK PLANS WHERE THE CONTROL RIGHTS ARE NOT EXERCISED DIRECTLY BY THE EMPLOYEES
Umicore has not issued any such employee stock plans.
6.5 SHAREHOLDERS’ AGREEMENTS
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.
6.6 AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Save for capital increases decided by the board of directors within the limits of the authorised capital, only an extraordinary
shareholders’ meeting is authorised to amend Umicore’s articles of association. A shareholders’ meeting may only deliberate onamendments to the articles of association – including capital increases or reductions, as well as mergers, de-mergers and a windingup – 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 ageneral 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 specific instances, such as the modification of the corporate object or thecompany form.
The Company’s articles of association were amended once in 2017, following the extraordinary shareholders’ meeting held on
7 September 2017, which approved a share split, the cancellation of a temporary provision on fraction of shares and a modification
to the date of the annual shareholders’ meeting.
6.7 AUTHORISED CAPITAL – BUY-BACK OF SHARESThe Company’s share capital may be increased following a decision of the board within the limits of the so-called “authorised capital”.
The authorisation must be granted by an extraordinary shareholders’ meeting; it is limited in time and amount and is subject tospecific justification and purpose requirements. The extraordinary shareholders’ meeting held on 26 April 2016 (resolutions publishedon 13 May 2016) has renewed the authorisation granted to 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 2017 this authorisation had not been used. It will lapse on 12 May 2021.
Following a resolution of the extraordinary shareholders’ meeting held on 25 April 2017 the Company is authorised to buy back own
shares on a regulated market within a limit of 10% of the subscribed capital, at a price per share comprised between € 2.00 and€ 37.50 (amounts adapted following the share split approved on 7 September 2017) and until 31 May 2021 (included). The sameauthorisation was also granted to the Company’s direct subsidiaries. The Company acquired 828,730 own shares in 2017 in
implementation of the above authorisation.

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6.8 AGREEMENTS BETWEEN THE COMPANY AND ITS BOARD MEMBERS OR EMPLOYEES PROVIDING FOR COMPENSATION IF THEYRESIGN, OR ARE MADE REDUNDANT WITHOUT VALID REASON, OR IF THEIR EMPLOYMENT CEASES BECAUSE OF A TAKEOVER BID
All the senior vice-presidents of the Umicore group are entitled to a compensation equivalent to 36 months base salary in the eventof a dismissal within twelve months after a change of control of the Company. As far as the members of the executive committee areconcerned, reference is made to the remuneration report (pages 76-85).

G7 CONFLICTS OF INTERESTS (ART. 523 – 524TER COMPANIES CODE)

On 9 February 2017, prior to the board discussing or taking any decision, Marc Grynberg declared that he had a direct conflicting interestof 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 he did not take part in the voting.
The above decisions had/will have the following financial consequences:
A) CASH REMUNERATIONThe CEO received a fixed gross remuneration of € 680,000 in 2017. Also in 2017, he received a gross variable cash remuneration
totalling € 210,000 as non-deferred part of his variable cash remuneration for the reference year 2016.
Furthermore, he received in 2017 a gross amount of € 90,450 as first half of the deferred payment of his variable cash remuneration
for the reference year 2015 based on (1) the two year average Umicore group profitability criterion, i.e. the average return on capital
employed (ROCE) for the reference years 2015 and 2016 (i.e. 14.2% giving rise to a percentage pay-out of 67%) and (2) the degreeof meeting the plan performance, as approved by the board, for the same reference years 2015 and 2016 (no adjustment applied
based on the degree of meeting the plan performance at group level). Also in 2017 he received a gross amount of € 81,000 as thesecond half of the deferred payment of his variable cash remuneration for the reference year 2014 based on (1) the three year average
Umicore group ROCE for the reference years 2014, 2015 and 2016 (i.e. 13.5% giving rise to a percentage pay-out of 60%) and (2) the
degree of meeting the plan performance, as approved by the board, for the same reference years 2014, 2015 and 2016 (no adjustment
applied based on the degree of meeting the plan performance at group level).
In 2018 he will receive the first half of the deferred payment of his annual variable cash remuneration for the reference year 2016
based on (1) the two year average Umicore group ROCE for the reference years 2016 and 2017 and (2) the two year average Umicore
EBIT growth for the same reference years 2016 and 2017. Also in 2018 he will receive the second half of the deferred payment of
his annual variable cash remuneration for the reference year 2015 based on (1) the three year average Umicore group ROCE for thereference years 2015, 2016 and 2017 and (2) the three year average Umicore EBIT growth for the same reference years 2015, 2016 and2017. The ROCE and EBIT-based deferred payments will be applicable for pay-outs from 2018 onwards.
The ROCE range is set between 7.5% (= pay-out of 0%) and a maximum of 17.5% (= pay-out of 100% at plan performance). When theachieved ROCE percentage falls between the above targets, the pay-out will be pro-rated. The impact of the EBIT growth is calculated
by multiplying the average percentage of the EBIT growth for the reference years by two.
B) GRANT OF SHARES AND STOCK OPTIONS
The financial consequences for Umicore consist of: either 1) as long as Umicore decides to keep the shares it holds today: the financing
and opportunity cost of maintaining such shares in its portfolio until the delivery date of the shares granted or the option’s exercise
date, or 2) if and to the extent that Umicore sells such shares at a later date: the difference on the date of exercise of the options
between the exercise price and the market value of the shares that Umicore would have to buy on that date.
During 2017, no specific transactions or contractual commitments occurred between a member of the board or of the executive
committee on the one hand, and Umicore or one of its affiliated companies on the other hand.

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CORPORATE GOVERNANCE REPORTG8 STATUTORY AUDITORAt the annual shareholders’ meeting held on 25 April 2017 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 represented
by Mr Kurt Cappoen for the exercise of this mandate.
Following the new applicable legislation on auditing services, the mandate of the current statutory auditor, who was initially appointed
in 1993, will only be renewable once, i.e. in 2020 (the latter provided it occurs before 17 June 2020).
The Umicore policy detailing the independence criteria for the statutory auditor may be requested from Umicore.

G9 CODE OF CONDUCT

Umicore operates a Code of Conduct for all its 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 inan 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 specific section on complaints and expressions of concern by employeesand “whistle-blower” protection.
The Code of Conduct is published in Appendix 4 to Umicore’s Corporate Governance Charter.

G10 MARKET MANIPULATION AND INSIDER TRADING

Umicore’s policy related to market abuse including insider trading is spelled out in the Umicore Dealing Code, which can be foundunder Appendix 5 to the Corporate Governance Charter.

G11 COMPLIANCE WITH THE 2009 BELGIAN CODE ON CORPORATE GOVERNANCE

Umicore’s corporate governance systems and procedures are in line with the 2009 Belgian Code on Corporate Governance.

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REMUNERATION REPORT

Remuneration report

G12 BOARD OF DIRECTORS’ REMUNERATIONREMUNERATION POLICY FOR THE BOARD OF DIRECTORSAs a principle, the remuneration of the non-executive members of the board should be sufficient to attract, retain and motivate
individuals who have the profile determined by the board. The remuneration level should take into account the responsibilities andthe 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 thepolicy 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 BEL20 index as well as other European companies ofsimilar 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 members
to be proposed to the annual shareholders’ meeting.
NON-EXECUTIVE DIRECTORS’ REMUNERATION
In order to determine adequate remuneration levels for its non-executive directors, at the end of 2016 Umicore conducted a surveyof Umicore directors’ fees against those of quoted companies on the BEL20 index as well as other European companies of similar size
operating in the Chemicals, Metals and Materials sectors. The results of the survey were reviewed by the nomination & remunerationcommittee on 20 January 2017.
Based on the review of the overall compensation of the board members and of each element of the compensation, thenomination & remuneration committee concluded that the annual fixed fee requires adjustment. The nomination & remunerationcommittee proposed to the board an increase of the annual fixed fee by € 7,000, the annual fixed fee of the chairman of the board
remaining unchanged.
The board of directors of 9 February 2017 followed this recommendation and the annual shareholders’ meeting of 25 April 2017
approved the non-executive directors’ remuneration.
The remuneration of the non-executive board members was as follows in 2017:–– Chairman: annual ﬁxed fee: € 40,000 + € 5,000 per meeting attended + 2,000 Umicore shares (after the split of each share into
two new shares on 16 October 2017).
–– Director: annual ﬁxed fee: € 27,000 + € 2,500 per meeting attended + € 1,000 per meeting attended for foreign-based board
members + 1,000 Umicore shares (after the split of each share into two new shares on 16 October 2017).
The remuneration of the board Committee members was as follows in 2017:
AUDIT COMMITTEE–– Chairman: annual ﬁxed fee: € 10,000 + € 5,000 per meeting attended.
–– Member: annual ﬁxed fee: € 5,000 + € 3,000 per meeting attended.
NOMINATION & REMUNERATION COMMITTEE–– Chairman: € 5,000 per meeting attended.
–– Member: € 3,000 per meeting attended.

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REMUNERATION REPORT2017 BOARD REMUNERATION OVERVIEW(IN EUROS)
Thomas Leysen (chairman)(non-executive director)

MEETINGSATTENDED

Board
Fixed annual fee

40,000Fee per attended meeting

5,000

Value of 2,000 granted shares

62,5407/7

Nomination & remuneration committee
Fee per attended meeting
Total remuneration
Benefits in kind company car
Marc Grynberg(executive director)

Board

Liat Ben-Zur(independent, non-executive director)
Appointed by the AGM of 25 April 2017

Board

Françoise Chombar(independent, non-executive director)

Ian Gallienne(non-executive director)
End of mandate: 25 April 2017Mark Garrett(independent, non-executive director)

5,000

2/2

147,5402,767

No remuneration as a Director (see hereafter 2017 CEO remuneration)

7/7

Fixed annual fee

18,567

Fee per attended meeting

3,500

Value of 688 granted shares

21,514

Total remuneration

54,081

4/4

Board
Fixed annual fee

27,000Fee per attended meeting

2,500

Value of 1,000 granted shares

31,270Total remuneration

75,770

7/7

Board
Fixed annual fee

8,433

Fee per attended meeting

2,500

Value of 312 granted shares retroceded to GBL

9,756

Total remuneration

23,1892/3

Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares

31,270

6/7

Audit committee
Fixed annual fee

5,000

Fee per attended meeting

3,000

3/3

Fee per attended meeting

3,000

1/1

Total remuneration

96,270Nomination & remuneration committee

Colin Hall
(non-executive director)

Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares retroceded to GBL

31,270

7/7

Audit committee
Fixed annual fee

5,000

Fee per attended meeting

3,000

Total remuneration

90,7701/1

Umicore Annual Report 2017

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REMUNERATION REPORT(IN EUROS)
Ines Kolmsee(independent, non-executive director)

MEETINGSATTENDED

Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares

31,270

7/7

Audit committee
Fixed annual fee
Fee per attended meeting
Total remuneration
Barbara Kux(independent, non-executive director)
End of mandate: 25 April 2017

10,0005,000

4/4

112,770

Board
Fixed annual fee

8,433

Fee per attended meeting

3,500

Value of 312 granted shares

9,756

3/3

Nomination & remuneration committeeGérard Lamarche(non-executive director)
Appointed by the AGM of 25 April 2017

Eric Meurice(independent, non-executive director)

Jonathan Oppenheimer(non-executive director)
End of mandate: 25 April 2017

Fee per attended meeting

3,000

Total remuneration

31,689Board
Fixed annual fee

18,567

Fee per attended meeting

3,500

Value of 688 granted shares retroceded to GBL

21,514

Total remuneration

54,081

4/4

Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares

31,270Total remuneration

82,770

7/7

Board
Fixed annual fee

8,433

Fee per attended meeting

3,500

Value of 312 granted shares

9,756

Total remuneration
Rudi Thomaes(independent, non-executive director)

1/1

1/3

21,689Board
Fixed annual fee

27,000Fee per attended meeting

2,500

Value of 1,000 granted shares

31,270

6/7

Audit committee
Fixed annual fee

5,000

Fee per attended meeting

3,000

4/4

Fee per attended meeting

3,000

2/2

Total remuneration

96,270Nomination & remuneration committee

Umicore Annual Report 2017

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REMUNERATION REPORTG13 CEO AND EXECUTIVE COMMITTEE REMUNERATIONREMUNERATION POLICY FOR THE CEO AND EXECUTIVE COMMITEE
The nomination & remuneration committee defines the remuneration policy principles for the CEO and the executive committee
members and submits them to the board of directors for approval. It strives to have a fixed remuneration to reflect the level of
responsibility and in line with market practices, as well as an attractive variable remuneration to reward the performance of thecompany against financial and sustainability criteria.
The compensation & benefits package for the CEO and executive committee members includes the following components: fixed
remuneration, variable remuneration, share-based incentives (share grant and incentive stock option plans) subject to a three year
lock-up period, pension plans and other benefits.
The inclusion of Umicore shares and stock options as part of the remuneration of the CEO and the executive committee members
reflects the commitment of the company to create shareholder value. Shares are granted each year to the CEO and executive
committee members in respect of the prior year and are subject to a three year lock-up period. As stock options are irrevocably
taxable upon grant according to Belgian law, they vest at the time of granting and are therefore not linked to individual or businessperformance criteria. As a result, the share-based incentives should not be considered as a variable remuneration as meant under theBelgian 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 & remunerationcommittee . A survey is conducted every year to assess the competitiveness of the remuneration packages. Umicore benchmarks thetotal remuneration of the CEO and the executive committee members against BEL20 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 andsubject to multi-year targets or criteria.
SYNTHETIC SUMMARY OF THE REMUNERATION OF THE CEO AND THE EXECUTIVE COMMITTEE MEMBERS

TIME TO CASH CONVERSION
Current year

Fixed

Annual review based on market practices BEL 20 and European peer companies

15 months

Undeferred variable 50%

Fixed discretionary based on individual objectives

27 months

Deferred variable 25%

Based on the two year average Group ROCE and Group recurring EBIT growth (y, y-1)

39 months

Deferred variable 25%

Based on the three year average Group ROCE and Group recurring EBIT growth (y, y-1, y-2)

3 years

SharesGrant in recognition of services rendered in the ref year – not linked to individual or businessperformance criteria – subject to a 3 year lock-up

3 to 7 years

Stock options

Upfront grant for the ref year – not linked to individual or business performance criteria –subject to a 3 year lock-up

The above remuneration components are defined and assessed by the nomination & remuneration committee subject to board
approval. This table is applicable until the year of reference 2016. See G15 – “CEO & executive committee members’ deferred variable
remuneration” for changes as of the year of reference 2017.
CEO’S REMUNERATIONFIXED REMUNERATION
The fixed remuneration of the CEO is reviewed on an annual basis by the nomination & remuneration committee .
VARIABLE CASH REMUNERATION SCHEME AND EVALUATION CRITERIAThe CEO’s annual variable cash remuneration potential currently amounts to € 540,000, half of which involves an undeferred pay-out
based on the individual performance including the annual overall financial performance of the Group, the progress achieved against
Group strategic and sustainable development objectives, and adherence to the values of the Group. Financial criteria include ROCE,
recurring EBIT and EBITDA with budget and year-on-year progress being used as reference. Strategic and sustainable development
objectives are tied to Horizon 2020 covering economic performance, value chain and society, eco-efficiency and great place to work.

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REMUNERATION REPORTOn proposal of the nomination & remuneration committee, the board of directors of 9 February 2017 approved a new concept ofthe deferred variable remuneration applicable as of pay-outs in 2018. The new concept intends to reward for the quality of the results(Group ROCE criterion) and provide an incentive for growth (Group recurring EBIT growth criterion).
It was agreed that the current Group ROCE criterion for the deferred variable will remain in place and that an upward adjustment
or additional variable will be considered based on Group recurring EBIT growth criterion.
The deferred variable remuneration i.e. the other half of the annual variable cash remuneration potential, is based on the Umicore
Group profitability criterion, i.e. the Return on Capital Employed (ROCE), as published in the annual report. The deferred pay-out isassessed over a multi-year timespan, with half of it paid after a period of two years based on the two year average ROCE. The otherhalf 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%(= pay-out of 0%) and a maximum of 17.5% (= pay-out of 100%). When the achieved ROCE percentage falls between the minimum
threshold and the maximum target, the pay-out will be pro-rated.
The additional variable, based on the target of the deferred variable remuneration i.e. for the CEO € 270,000 (target of € 135,000 after
a period of two years and target of € 135,000 after a period of three years), will be determined by adding to the target a percentage
equal to twice the average Group recurring EBIT growth percentage over the last 2 years, respectively 3 years. A threshold of 2%
average Group recurring EBIT growth will be applied, i.e. no adjustments for recurring EBIT growth below 2%.
In case of any relevant structural change, the nomination & remuneration committee reserves the right to review and adjust thevariable remuneration as appropriate.
At the beginning of every reference year, the individual objectives of the CEO 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.
The variable cash remuneration may be converted partly or totally into Umicore shares at the discretion of the CEO. There are noprovisions allowing the Company to reclaim any variable remuneration paid to the CEO.
SHARE-BASED INCENTIVES (SHARE GRANT AND STOCK OPTIONS)
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 respect of the year 2017 was 10,400 (after the split of each share into two new shareson 16 October 2017). The shares are subject to a three year lock-up and are not subject to forfeiture conditions.
Stock options are granted to the CEO as part of the annual Umicore Incentive Stock Option Plan approved by the board of directors.
The number of stock options granted to the CEO amounted in 2017 to 150,000 (after the split of each share into two new shares on
16 October 2017). There is no vesting period and the options are subject to a three year lock-up. Stock options allow the beneficiaryto acquire a specific number of Umicore shares at a fixed price (the exercise price) within a specific period of time.
PENSION AND OTHER BENEFITS
Pensions include both defined contribution plans and the service cost of a defined benefit plan. Other benefits are representation
allowance, benefits in kind (company car), and insurance benefits.

Umicore Annual Report 2017

81

REMUNERATION REPORTEXECUTIVE COMMITTEE MEMBERS’ REMUNERATIONFIXED REMUNERATION
The fixed remuneration of the executive committee members is reviewed on an annual basis by the nomination & remunerationcommittee . The fixed remuneration can be different for each executive committee member and depends on criteria such as
experience and responsibilities.
VARIABLE CASH REMUNERATION SCHEME AND EVALUATION CRITERIA
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 theexecutive committee are eligible for the same annual variable cash remuneration potential currently amounting to € 300,000, half ofwhich involves an undeferred pay-out based on the annual individual performance (including adherence to the values of the Group,
environmental and social performance).
On proposal of the nomination & remuneration committee, the board of directors of 9 February 2017 approved a new concept of thedeferred variable remuneration applicable as of pay-outs in 2018. The new concept intends to reward for the quality of the results(Group ROCE criterion) and provide an incentive for growth (Group recurring EBIT growth criterion).
It was agreed that the current Group ROCE criterion for the deferred variable will remain in place and that an upward adjustment
or additional variable will be considered based on Group recurring EBIT growth criterion. The deferred variable plan including theadditional variable will be measured collectively for the executive committee members.
The deferred variable remuneration i.e. the other half of the annual variable cash remuneration potential, is based on the Umicore
Group profitability criterion, i.e. the Return on Capital Employed (ROCE), as published in the annual report. The deferred pay-out isassessed over a multi-year timespan, with half of it paid after a period of two years based on the two year average ROCE. The otherhalf 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%(= pay-out of 0%) and a maximum of 17.5% (= pay-out of 100%). When the achieved ROCE percentage falls between the minimum
threshold and the maximum target, the pay-out will be pro-rated.
The additional variable, based on the target of the deferred variable remuneration i.e. for the executive committee members € 150,000(target of € 75,000 after a period of two years and target of € 75,000 after a period of three years), will be determined by adding to
the target a percentage equal to twice the average Group recurring EBIT growth percentage over the last 2 years, respectively 3 years.
A threshold of 2% average Group recurring EBIT growth will be applied, i.e. no adjustments for recurring EBIT growth below 2%.
In case of any relevant structural change the nomination & remuneration committee reserves the right to review and adjust thevariable remuneration as appropriate.
At the beginning of every reference year, the annual individual objectives of each executive committee member are fixed by the CEO
on basis of their areas of responsibility. The annual individual objectives are specific, measurable, agreed, realistic, time bound andtake into account the financial performance, the progress achieved against Group strategic and sustainable development objectives,and adherence to the values of the Group. Financial criteria include ROCE, recurring EBIT and EBITDA with budget and year-on-year
progress being used as reference. Strategic and sustainable development objectives are tied to Horizon 2020 covering economic
performance, value chain and society, eco-efficiency and great place to work.
The annual performance of each executive committee member is initially assessed by the CEO. The results of the assessments andthe individual variable cash remuneration proposals are presented by the CEO to the nomination & remuneration committee before
approval by the board.
There are no provisions allowing the Company to reclaim any variable remuneration paid to the executive committee members.

Umicore Annual Report 2017

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REMUNERATION REPORTSHARE 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 each member of the executive committee in respect of the year 2017
was 7,400 (after the split of each share into two new shares on 16 October 2017). The shares are subject to a three year lock-up andare not subject to forfeiture conditions.
Stock options are granted to the executive committee members as part of the annual Umicore Incentive Stock Option Plan approvedby the board of directors. The number of stock options granted to each executive committee member currently amounted in 2017 to
35,000 (after the split of each share into two new shares on 16 October 2017). There is no vesting period and the options are subject toa three year lock-up. Stock options allow the beneficiary to acquire a specific number of Umicore shares at a fixed price (the exercise
price) within a specific period of time.
PENSION AND OTHER BENEFITS
Pensions include both defined contribution plans and the service cost of a defined benefit plan. Other benefits include representation
allowances, company cars and insurance benefits.
TOTAL CEO AND EXECUTIVE COMMITTEE REMUNERATION FOR 2017
All components of the remuneration earned by the CEO and the executive committee members for the reported year are detailed in
the table below:(IN EUROS)

CEO

StatusEXECUTIVE COMMITTEE(IN AGGREGATE)

Self-employed

Time to cash conversion
Current year

Fixed

680,000

2,435,000

15 months

Undeferred Variable 50% (ref year 2017)

220,000

790,000

27 months

Deferred Variable 25% (ref year 2016)

130,950

436,500

39 months

Deferred Variable 25% (ref year 2015)

133,650

408,375

3 years

Shares425,360

1,815,960

3 to 7 years

Stock options

583,500

816,900

PensionDefined contribution plan

47,600139,919

Defined benefits plan (service cost)

123,808

595,018

Others benefits
Total

Representation allowance, benefit in kind company car, insurance benefits

46,223

141,735

2,391,091

7,579,407

Umicore Annual Report 2017

83

REMUNERATION REPORTG14 SHARE AND SHARE OPTION OWNERSHIP AND TRANSACTIONS 2017

EXECUTIVE COMMITTEE SHARE OPTION OWNERSHIP AND TRANSACTIONS 2017*
OPTIONS AT
31 DEC 2016

OPTIONSGRANTEDIN 2017

NUMBER
OF OPTIONSEXERCISED IN
2017

AVERAGEEXERCISE PRICE(IN EUROS)

YEAR OF GRANT
OF OPTIONSEXERCISEDNUMBER
OF OPTIONSFORFEITEDOPTIONS AT
31 DEC 2017**

Marc Grynberg

930,000

150,000

330,000

18.4102011 / 20120

750,000

Stephan Csoma

105,000

35,0000––0140,000

Denis Goffaux

140,000

35,00035,00018.1872013

0

140,000

Géraldine Nolens

71,00035,00012,00018.1872013

0

94,000Filip Platteeuw

105,000

35,00012,00016.143

2014

0

128,000

Pascal Reymondet

105,000

35,00035,00016.143

2014

0

105,000

Marc Van Sande

140,000

35,00070,00017.1652013 / 2014

0

105,000* The number of options and the exercise price take into account the share split on 16 October 2017.
** These options can be exercised at strike prices between € 19.035 and € 25.500 (value after the share split on 16 October 2017).

Details of all options exercised and other share-related transactions of executive committee or board members can be found on the
FSMA website.
EXECUTIVE COMMITTEE SHARE OWNERSHIP 2017
SHARES OWNED AT
31/12/2016

SHARES OWNED AT
31/12/2017

Marc Grynberg

630,400

767,600

Stephan Csoma

21,80029,200Denis Goffaux

37,80042,200Géraldine Nolens

4,700

12,100Filip Platteeuw

22,80030,200

Pascal Reymondet

50,30057,700Marc Van Sande

38,80046,200806,600

985,200

SHARES OWNEDAT 31/12/2016

SHARES OWNEDAT 31/12/2017

909,840

883,960

Total

BOARD OF DIRECTORS SHARE OWNERSHIP 2017
Thomas Leysen
Liat Ben-Zur–

688

Françoise Chombar

6,684

1,684

Mark Garrett

1,666

2,666

Colin Hall
Ines Kolmsee
Gérard Lamarche
Eric Meurice
Rudi Thomaes
Total

–

–

4,610

5,610

–

3,000

1,666

2,666

5,410

4,400

929,876

904,674

Umicore Annual Report 2017

84

REMUNERATION REPORTCONTRACTUAL RELATIONSHIPSCONTRACT BETWEEN UMICORE AND MARC GRYNBERG, CEO
Taking into account Marc Grynberg’s seniority in the Umicore Group, the board resolved as follows in 2008:–– In case of termination of the contract by Umicore, a total compensation equivalent to 18 months of his annual base salary will
be paid.
–– A total compensation of three years of annual base salary as minimum indemnity will be paid to the Chief Executive Officer if
his employment as Chief Executive Officer would be terminated within a 12 month period following a change of control due toa takeover bid (not cumulative with the previous provision).
–– It is at the board of directors’ discretion to determine whether the variable cash remuneration would form part of any
final indemnity.
CONTRACTS BETWEEN UMICORE AND EXECUTIVE COMMITTEE MEMBERS
Following a board decision taken in 2007, in case the employment of an executive committee member should be terminated within
12 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 only applies for Pascal Reymondet and Marc Van Sande who were executive committee members at the date of thisboard decision.
INDIVIDUAL ARRANGEMENTS IN CASE OF TERMINATION OF THE CONTRACT BY UMICORE
Denis Goffaux was appointed Chief Technology Officer on 1 July 2010. Taking into account Denis Goffaux’s seniority in the Umicore Groupa 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 andthis was approved by the board of directors on 1 June 2010.
Stephan Csoma and Filip Platteeuw were appointed executive committee members on 1 November 2012. Taking into account theirseniority 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.
Géraldine Nolens was appointed executive committee member on 1 July 2015. Taking into account Géraldine Nolens’ seniority in the
Umicore Group, a total compensation equivalent to 18 months of her 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 thisarrangement and this was approved by the board of directors on 28 April 2015.
For all prior mentioned executive committee members it is at the board of directors’ discretion as to whether the variable cash
remuneration would form part of any final indemnity.
The contract of Marc Van Sande was signed before the Belgian Corporate Governance Law of 6 April 2010 came into force. In caseof termination the compensation is based on age, seniority in the Umicore Group and the total compensation and benefits.
Pascal Reymondet has a German employment agreement signed on 1 March 1989. There is no contractual arrangement in caseof termination and German law will be applicable.

Umicore Annual Report 2017

85

REMUNERATION REPORTG15 CHANGES TO REMUNERATION SINCE THE END OF 2017

NON-EXECUTIVE DIRECTORS’ REMUNERATION
Based on the review of the overall compensation of the board members and of each element of the compensation, the nomination& remuneration committee concluded that the compensation is appropriate with the exception of the fixed fee of the chairman of theboard, which is far below market compared to European peer companies. The nomination & remuneration committee proposed to theboard an adjustment of the fixed fee of the chairman with € 20,000 to a total fixed fee of € 60,000.
The board of directors of 8 February 2018 followed this recommendation and decided to submit this increase to the approval of
the shareholders.
CEO’S REMUNERATIONOn 7 February 2018, the nomination & remuneration committee reviewed the remuneration of the CEO and the executive committee
members based on a comparison survey with European peer companies and BEL20 index companies.
On proposal of the nomination & remuneration committee, the board of directors of 8 February 2018 decided to increase the fixed
remuneration of the CEO by € 20,000 to € 700,000 as of 1 January 2018.
EXECUTIVE COMMITTEE MEMBERS’ REMUNERATIONThe nomination & remuneration committee of 7 February 2018 reviewed the remuneration of the executive committee members.
On proposal of the nomination & remuneration committee, the board of directors of 8 February 2018 decided to adjust the annual fixed
remuneration of the executive committee members slightly for four members with a more significant salary adjustment for two, thetotal adjustment being 5.5% of the salary mass.
CEO & EXECUTIVE COMMITTEE MEMBERS’ DEFERRED VARIABLE REMUNERATIONThe nomination & remuneration committee reviewed the modalities for the deferred variable remuneration of the CEO and executive
committee members. Upon proposal by the nomination & remuneration committee, the board of directors of 8 February 2018 decided
to apply a minimum deferment of three years, applicable as of reference year 2017. There will therefore be one deferred variable basedon a three-year period instead of the former practice with 50% paid out after two years and 50% paid out after three years.
The board also decided to maintain the additional variable based on average recurring EBIT growth but applying as of reference year2017 a threshold of 10% minimum average recurring EBIT growth instead of 2%. There will therefore be no additional deferred variable
for three-year average recurring EBIT growth below 10%.

Umicore Annual Report 2017

86

ECONOMIC STATEMENTS

Economic statements

GROUP

KEY FIGURES(in million Euros unless stated otherwise)

NOTE

Turnover*
Revenues (excluding metal)

2013

2014

2015

201

2017

9,819.3

8,828.5

10,441.9

11,085.9

12,277.2

2,363.4

2,366.5

2,629.0

2,667.5

2,915.6

Recurring EBITDA

F9

462.6

442.2

504.7

526.8

599.3

Recurring EBIT

F9

304.0

273.7

330.3

350.7

410.3

of which associates

F9

11.8

28.3

14.3

18.3

29.6

Non-recurring EBIT

F9

(43.4)(21.6)(74.9)(110.2)(46.2)IAS 39 effect on EBIT

F9

(0.5)

(2.7)

(2.7)

(9.0)

(20.7)

F9

260.0

249.3

252.7

231.6

343.3

12.4

10.4

12.0

12.5

13.1

13.6

12.2

13.7

14.6

15.1

Total EBIT
Recurring EBIT margin (in %)Return on Capital Employed (ROCE) (in %)F31

Effective recurring tax rate (in %)

F13

21.3

21.8

21.4

25.0

25.7

Recurring net profit, Group share

F9

218.0

193.1

246.0

232.9

266.8

0.0

14.4

16.4

(50.3)

(2.9)

F9

179.0

170.6

169.2

130.7

211.9

Result from discontinued operations, Group share
Net profit, Group share
R&D expenditure

F9

140.6

143.3

144.5

155.9

175.2

Capital expenditure

F34

279.6

202.4

240.3

287.3

365.3

Net cash flow before financing

F34

185.9

139.9

119.0

141.9

(381.0)Total assets of continued operations, end of period

3,512.3

3,851.4

4,030.1

4,145.7

5,115.7

Group shareholders’ equity, end of period

1,677.1

1,704.6

1,731.6

1,789.6

1,803.0
839.9

Consolidated net financial debt of continued operations, end of period

F24

215.0

298.3

321.3

296.3

Gearing ratio of continued operations, end of period (in %)

F24

11.1

14.6

15.3

13.8

31.1

44.2

51.9

61.8

57.6

93.8

Average net debt/recurring EBITDA (in %)Capital employed, end of period

F312,233.6

2,335.3

2,414.5

2,397.4

3,003.5

Capital employed, average

F312,241.3

2,240.1

2,402.2

2,398.7

2,710.0

2013

2014

2015

2016

2017

* Including the elimination of the transactions between continued and discontinued operations.

DATA PER SHARE(in Euros/share)

NOTE

Earnings per share
Recurring EPS

F39

0.98

0.89

1.13

1.07

1.22

EPS – basic

F39

0.80

0.79

0.78

0.60

0.97

EPS – diluted

F39

0.80

0.79

0.78

0.60

0.96

0.50

0.50

0.60

0.65

0.70

0.84

0.65

0.55

0.65

(1.74)

Total assets of continued operations, end of period

16.00

17.82

18.65

18.96

23.31

Group shareholders’ equity, end of period

7.64

7.89

8.01

8.18

8.21

Gross dividend
Net cash flow before financing, basic

F34

Shareprice
High

21.06

19.11

22.78

29.36

39.88

Low

15.77

15.21

15.91

16.19

24.28

Average

17.86

17.16

19.56

23.89

31.45

Close

16.98

16.66

19.34

27.08

39.46

All Group KPIs include the discontinued operations, unless mentioned otherwise. Zinc Chemicals contributed six months in 2016 andBuilding Products until end September 2017 to the KPIs of discontinued operations, unless mentioned otherwise.
On 16 October 2017 each Umicore share was split into two new shares. As a result, as from that date, Umicore’s capital isrepresented by 224,000,000 fully paid-up shares without nominal value, each representing 1/224,000,000 of the capital. All data
was updated accordingly.
Umicore Annual Report 2017

87

ECONOMIC STATEMENTS

NUMBER OF SHARES

NOTE

2013

2014

2015

2016

2017

F39

240,000,000

224,000,000

224,000,000

224,000,000

224,000,000

of which shares outstanding

F39

219,542,678

216,171,456

216,144,932

218,653,700

219,494,433

of which treasury shares

F39

20,457,322

7,828,544

7,855,068

5,346,300

4,505,567

Total number of issued shares, end of period

Average number of shares outstanding, basic

F39

222,514,518

216,124,170

216,890,256

217,775,656

219,079,587

Average number of shares outstanding, diluted

F39

223,466,330

216,903,694

217,854,490

219,370,320

221,148,890

REVENUES (EXCLUDING METAL)

RECURRING EBITDA

Million Euros

Million Euros

3,000
2,500

2,363.4

2,366.5

2,629.0

2,667.5

2,915.6

500
400

1,500

300

1,000

200

500

100

2013

2014

2015

2016

Million Euros
599.3

600

2,000

0

RECURRING EBIT

0

2017

462.6

2013

504.7

442.2

2014

2015

526.8

2016

2017

450
400
350
300
250
200
150
100
50
0

410.3
304.0

2013

330.3

350.7

2015

2016

273.7

2014

R&D EXPENDITURE

CAPITAL EXPENDITURE

NET FINANCIAL DEBT

Million Euros

Million Euros

Million Euros

180
160
140
120
100
80
60
40
20
0

140.6

2013

143.3

2014

144.5

2015

155.9

2016

175.2

2017

400
350
300
250
200
150
100
50
0

365.3
279.6

240.3

202.4

900

839.9

750

287.3

600
450
300

215.0

298.3

321.3

296.3

2014

2015

2016

2017

S

O N D

150

2013

2014

2015

2016

0

2017

2013

RECURRING EPSGROSS DIVIDENDSHARE PRICE

Euros

Euros

Euros

1.4
1.2
1.0

0.98

1.13

1.07

1.22

0.70
0.60
0.50

0.89

0.8

0.40

0.6

0.30

0.4

0.20

0.2

0.10

0

0

2013

2014

2015

2016

2017

0.50

0.70

0.65

0.60

60
50

0.50

40
30
20
10

2013

2014

2015

2016

2017

0

J

F M A MJ

J

RETURN ON CAPITAL EMPLOYED (ROCE)GEARING RATIO & AVERAGENET DEBT/RECURRING EBITDA

RECURRING TAX RATE

%

%

%

20

35
30
25
20
15
10
5
0

15

13.6

10

12.2

13.7

14.6

15.1

5
0

2013

2014

2015

2016

2017

2017

140
120
100
93.8 80
60
40
20
0

31.1

11.1
44.2

2013

14.6
51.9

2014

15.3
61.8

2015

13.8
57.6

2016

2017

30
25
20

21.3

21.8

21.4

2013

2014

2015

A

25.1

25.7

2016

2017

15
10
5
0

Gearing ratio of continued operations, end of period
Average net debt/recurring EBITDA

Umicore Annual Report 2017

88

ECONOMIC STATEMENTS

CATALYSIS

2013

2014

2015

2016

2017

Total turnover

2,020.2

2,181.3

2,749.3

2,779.1

3,090.6(in millions of Euros unless stated otherwise)
Total revenues (excluding metal)

866.9

917.1

1,093.7

1,163.4

1,253.1

Recurring EBITDA

112.8

124.9

172.3

203.4

224.4

Recurring EBIT

73.3

82.6

124.2

152.5

165.5

2.5

7.0

8.8

9.2

0.4

73.7

79.9

115.9

125.6

161.2

of which associates
Total EBIT
Recurring EBIT margin (in %)

8.2

8.2

10.6

12.3

13.2

R&D expenditure

82.0

83.2

91.1

102.0

119.8

Capital expenditure

84.4

59.8

78.7

46.5

45.0

Capital employed, end of period

809.5

851.4

968.2

911.2

1,149.6

Capital employed, average

1,014.3

804.6

811.4

929.6

917.7

Return on Capital Employed (ROCE) (in %)

9.1

10.2

13.4

16.6

16.3

Workforce, end of period (fully consolidated)

2,173

2,290

2,443

2,464

2,952

Workforce, end of period (associates)

167

167

168

177

–

REVENUES (EXCLUDING METAL)

RECURRING EBITDA

RECURRING EBIT

Million Euros

Million Euros

Million Euros

1,400
1,200
1,000
800

1,093.7
866.9

1,163.4

1,253.1

203.4

200

224.4

150
112.8

200

124.9

100

100

400

2013

2014

2015

2016

2017

0

165.5

124.2
73.3

82.6

50

50

200

152.5

150

172.3

917.1

600

0

250

2013

2014

2015

2016

0

2017

2013

2014

2015

2016

2017

R&D EXPENDITURE

CAPITAL EXPENDITURE

RETURN ON CAPITAL EMPLOYED (ROCE)

Million Euros

Million Euros

%

119.8

120
100
80

82.0

83.2

91.1

102.0

20

100
80

84.4

78.7

46.5

40

40

45.0

2013

2014

2015

2016

2017

0

16.3

9.1

2016

2017

10.2

5

20

20

10

16.6
13.4

59.8

60

60

0

15

2013

2014

2015

2016

2017

0

2013

2014

2015

Umicore Annual Report 2017

89

ECONOMIC STATEMENTS

ENERGY & SURFACE TECHNOLOGIES(in millions of Euros unless stated otherwise)

2013

2014

2015

2016

2017

Total turnover

1,132.3

1,191.6

1,475.1

1,469.0

2,392.4

Total revenues (excluding metal)

460.1

487.7

586.9

610.2

893.6

Recurring EBITDA

72.1

90.4

112.6

131.6

197.7

Recurring EBIT

40.0

54.1

70.2

81.7

140.7

2.7

4.7

(3.5)

1.0

10.5

36.6

53.4

37.3

74.2

109.7

of which associates
Total EBIT
Recurring EBIT margin (in %)

8.1

10.1

12.6

13.2

14.6

R&D expenditure

18.6

19.9

20.3

20.2

30.4

Capital expenditure

65.6

46.6

42.5

144.3

225.5

Capital employed, end of period

502.8

618.6

633.4

752.0

1,205.8

Capital employed, average

977.9

512.5

535.8

640.0

695.3

Return on Capital Employed (ROCE) (in %)

7.8

10.1

11.0

11.7

14.4

Workforce, end of period (fully consolidated)

2,061

2,181

2,258

2,357

2,716

Workforce, end of period (associates)

1,056

930

936

847

917

REVENUES (EXCLUDING METAL)

RECURRING EBITDA

Million Euros

Million Euros
893.6

900
750
586.9

600
450

460.1

Million Euros
197.7

200
160

610.2

112.6
72.1

90

2015

2016

2017

0

70.2

90.4
60

40

150

2014

140.7

120

120

487.7

80

2013

150

131.6

300

0

RECURRING EBIT

40.0

81.7

54.1

30

2013

2014

2015

2016

0

2017

2013

2014

2015

2016

2017

R&D EXPENDITURE

CAPITAL EXPENDITURE

RETURN ON CAPITAL EMPLOYED (ROCE)

Million Euros

Million Euros

%

35

30.4

30
25
20

18.6

19.9

20.3

225.5

20.2

144.3

80

65.6

40

5

2013

9

120

15

2014

2015

2016

2017

0

14.4

15
12

160

10

0

240
200

2013

10.1

11.0

11.7

7.8

6
46.6

42.5

2014

2015

3

2016

2017

0

2013

2014

2015

2016

2017

Umicore Annual Report 2017

90

ECONOMIC STATEMENTS

RECYCLING

2013

2014

2015

2016

2017

6,603.4

5,326.2

6,252.1

6,886.4

7,326.7

Total revenues (excluding metal)

756.7

678.4

662.9

641.2

650.3

Recurring EBITDA

278.3

208.7

204.3

187.2

188.9

(in millions of Euros unless stated otherwise)
Total turnover

Recurring EBIT

220.5

148.6

141.5

124.9

127.9

Total EBIT

220.5

141.2

132.5

115.5

121.3

Recurring EBIT margin (in %)

29.2

21.9

21.3

19.5

19.7

R&D expenditure

23.7

24.3

21.2

23.0

18.6

Capital expenditure

93.7

63.8

83.0

72.3

79.5

Capital employed, end of period

520.5

411.7

465.9

498.1

474.5

Capital employed, average

496.1

472.6

460.2

474.5

494.9

Return on Capital Employed (ROCE) (in %)

44.4

31.4

30.7

26.3

25.8

Workforce, end of period (fully consolidated)

3,304

3,302

3,211

3,170

3,092

REVENUES (EXCLUDING METAL)

RECURRING EBITDA

RECURRING EBIT

Million Euros

Million Euros

Million Euros

1,000

400

300

800

756.7

678.4

662.9

600

641.2

650.3

300

250

278.3
208.7

200

204.3

187.2

188.9

400

0

2013

2014

2015

2016

2017

0

150

148.6

141.5

2014

2015

124.9

127.9

2016

2017

100

100

200

220.5

200

50

2013

2014

2015

2016

0

2017

2013

R&D EXPENDITURE

CAPITAL EXPENDITURE

RETURN ON CAPITAL EMPLOYED (ROCE)

Million Euros

Million Euros

%

30
25

100
23.7

24.3
21.2

23.0

83.0

80
18.6

20

70

93.7

15

72.3

63.8

60

79.5

50

20

0

0

2013

2014

2015

2016

2017

44.4

40
30

40

10

60

31.4

30.7

2014

2015

26.3

25.8

2016

2017

20
10

2013

2014

2015

2016

2017

0

2013

Umicore Annual Report 2017

91

ECONOMIC STATEMENTSDISCONTINUED OPERATIONS(in millions of Euros unless stated otherwise)

2013

2014

2015

2016

2017

Total turnover

647.4

709.0

744.7

652.6

330.4

Total revenues (excluding metal)

285.4

288.1

291.8

258.1

125.1

Recurring EBITDA

28.3

36.9

39.6

30.7

12.4

Recurring EBIT

9.8

19.1

31.0

30.6

12.4

0.4

1.3

0.7

0.9

0.9

Total EBIT

(6.8)

19.7

19.6

(34.2)

1.6

Recurring EBIT margin (in %)

3.3

6.2

10.4

11.5

9.2

of which associates

R&D expenditure

3.0

3.4

3.0

3.1

1.6

Capital expenditure

21.5

21.3

27.5

14.5

3.3

Capital employed, end of period

231.2

264.2

199.3

99.2

0.0

Capital employed, average

244.4

251.2

207.6

153.1

71.0

Return on Capital Employed (ROCE) (in %)

4.0

7.6

14.9

20.0

17.5

Workforce, end of period (fully consolidated)

1,545

1,505

1,517

946

–

Workforce, end of period (associates)

502

501

508

420

–

REVENUES (EXCLUDING METAL)

RECURRING EBITDA

RECURRING EBIT

Million Euros

Million Euros

Million Euros

50

350
300

285.4

288.1

291.8

250

40

258.1

30

200
150

125.1

100

36.9

35

28.3

2013

2014

2015

2016

2017

30.6

25
19.1

20

20

0

31.0

30

30.7

12.4

10

50
0

40
39.6

15
10

12.4

9.8

5

2013

2014

2015

2016

2017

0

2013

2014

2015

2016

2017

R&D EXPENDITURE

CAPITAL EXPENDITURE

RETURN ON CAPITAL EMPLOYED (ROCE)

Million Euros

Million Euros

%

5

30

4

25

3

3.0

3.4

3.0

20

3.1

21.5

1.6

14.5

5

0

0

2013

2014

2015

2016

2017

10
3.3

2013

2014

2015

2016

2017

5
0

17.5

14.9

15

10

1

20.0

20

21.3

15
2

25

27.5

7.6
4.0

2013

2014

2015

2016

2017

Umicore Annual Report 2017

92

FINANCIAL STATEMENTS

Contents

Consolidated financial statements

93

F31

Capital employed

151

Consolidated income statement

93

F32

Financial instruments by category

152

Consolidated statement of comprehensive income

93

F33

Fair value of financial instruments

156

Consolidated balance sheet

94

F34

Notes to the cash flow statement

159

Consolidated statement of changes in equity

95

F35

Rights and commitments

160

Consolidated statement of cash flow

96

F36

Contingencies

161

F37

Related parties

161
162

Notes to the consolidated financial statements

97

F38

Events after the reporting period

F1

Basis of preparation

97

F39

Earnings per share

163

F2

Accounting policies

97

F40

IFRS developments

164

F3

Financial risk management

107

F41

Auditors’ remuneration

165

F4

Critical accounting estimates and judgments

110

F42

Discontinued operations

165

F5

Group companies

112

F6

Foreign currency measurement

114

F7

Segment information

115

F8

Business combinations and acquisitions of associates
and joint ventures

120

F9

Result from operating activities

121

F10

Payroll and related benefits

123

F11

Finance cost – net

124

F12

Income from other financial investments

124

F13

Income taxes

125

F14

Intangible assets other than goodwill

126

F15

Goodwill

127

F16

Property, plant and equipment

128

F17

Investments accounted for using the equity method

129

F18

Available-for-sale financial assets and loans granted

130

F19

Inventories

131

F20

Trade and other receivables

131

F21

Deferred tax assets and liabilities

132

F22

Net cash and cash equivalents

134

F23

Currency translation differences and other reserves

135

F24

Financial debt

136

F25

Trade debt and other payables

138

F26

Liquidity of the financial liabilities

139

F27

Provisions for employee benefits

141

F28

Stock option plans granted by the company

148

F29

Environmental provisions

149

F30

Provisions for other liabilities and charges

150

Parent company separate summarised financial statements

168

Management responsibility statement

171

Umicore Annual Report 2017

93

FINANCIAL STATEMENTS

Consolidated financial statements

CONSOLIDATED INCOME STATEMENT
NOTES

2016

2017

TurnoverF9

10,443,541

11,947,264

Other operating income

F959,81371,965

10,503,354

12,019,229

Thousands of Euros

Operating income
Raw materials and consumables

F9(9,040,437)(10,324,428)

Payroll and related benefits

F10(636,071)(700,706)

Depreciation and impairments

F9(192,278)(203,703)

Other operating expenses

F9(379,664)(470,015)(10,248,451)(11,698,853)

Operating expenses
Income (loss) from other financial assets

F12

RESULT FROM OPERATING ACTIVITIES(5,937)(8,286)248,966

312,090

Financial income

F11

4,829

4,354

Financial expenses

F11(19,962)(34,813)

Foreign exchange gains and losses

F11(2,535)(6,864)

Share in result of companies accounted for using the equity method

F17

16,78629,555

248,084

304,322

Profit (loss) before income tax
Income taxes

F13

Profit (loss) from continuing operations
Profit (loss) from discontinued operations (*)

F42

PROFIT (LOSS) OF THE PERIOD(56,420)(75,178)

191,663

229,143(50,303)(2,893)

141,360

226,251of which minority share

10,636

14,308of which Group share

130,724

211,943
0.98

Euro
Basic earnings per share from continuing operations

F39

0.83

Total basic earnings per share

F39

0.60

0.97

Diluted earnings per share from continuing operations

F39

0.83

0.97

Total diluted earnings per share

F39

0.60

0.96

0.65

0.70

Dividend per share(*) Attributable to equity holders of these companies.

The notes on pages 97 to 170 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Thousands of EurosNOTESProfit (loss) of the period from continuing operations

2016

2017

191,663

229,143

Items in other comprehensive income that will not be reclassified to P&L
Changes due to remeasurements of post employment benefit obligations(27,638)

6,464

Changes in deferred taxes directly recognised in other comprehensive income

6,018(4,167)

Items in other comprehensive income that may be subsequently reclassified to P&L
111

3,738

Changes in cash flow hedge reserves

Changes in available-for-sale financial assets reserves

35,991

15,278Changes in deferred taxes directly recognised in other comprehensive income(10,483)(2,286)

Changes in currency translation differences

30,226(83,661)

34,225(64,635)

Other comprehensive income from continuing operations

F23

Total comprehensive income from discontinued operations(55,378)(3,421)

Total comprehensive income for the period

170,510161,087of which Group share

158,249

148,903of which minority share

12,261

12,184The deferred tax impact on the consolidated statement of comprehensive income is due to the cash flow hedge reservesfor € (2.3) million and to employee benefit reserves for € (4.2) million.
The notes on pages 97 to 170 are an integral part of these consolidated financial statements.
Umicore Annual Report 2017

94

FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEET
Thousands of Euros

NOTES

Non-current assets
Intangible assets

31/12/2016

31/12/2017

1,727,409

1,945,675

F14, F15305,340

328,808F16

1,070,403

1,301,411

Investments accounted for using the equity method

F17195,332

153,008

Available-for-sale financial assets

F18

26,414

22,331Loans granted

F18

1,201

11,285Trade and other receivables

F20

11,11414,146

Deferred tax assets

F21

Property, plant and equipment

Current assets

117,605

114,686

2,164,857

3,169,985

Loans granted

F18

14,787

1,750

Inventories

F19

1,188,822

1,628,423

Trade and other receivables

F20

844,271

1,335,661

Income tax receivables
Cash and cash equivalents

F22

Assets of discontinued operations

F42

32,51736,036

84,460168,115

253,484–

TOTAL ASSETS

4,145,751

5,115,661

Equity of the Group

1,848,045

1,862,637

Group shareholdersʼ equity

1,829,014

1,803,034

Share capital and premiums

502,862

502,862

Retained earnings

1,559,969

1,584,442(144,200)(202,517)

Currency translation differences and other reserves

F23

Treasury shares(89,616)(81,754)

Minority interest

58,44659,603Elements of comprehensive income of discontinued operations(39,417)–

Non-current liabilities

491,290

1,168,752

Provisions for employee benefits

F27

337,907342,813

Financial debt

F24

24,394

694,104

Trade and other payables

F25

41,65640,442

Deferred tax liabilities
Provisions

F21

6,924

3,540

F29, F30

80,40987,853

1,661,512

2,084,272

Current liabilities
Financial debt

F24

400,786

313,868

Trade and other payables

F25

1,161,371

1,639,817

57,666

62,830F29, F30

41,69067,759

Income tax payable
Provisions
Liabilities of discontinued operations

F42

TOTAL EQUITY & LIABILITIES

144,908–

4,145,751

5,115,661

The notes on pages 97 to 170 are an integral part of these consolidated financial statements.

Umicore Annual Report 2017

95

FINANCIAL STATEMENTSCONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Thousands of Euros
Balance at the beginning of 2016SHARE
CAPITAL &PREMIUMSCURRENCY
TRANSLATION& OTHER TREASURY MINORITY
RESERVESRESERVESSHARES INTEREST

502,862

1,501,290(175,518)

ELEMENTS OFCOMPREHENSIVETOTAL FORINCOME OF
CONTINUINGDISCONTINUEDOPERATIONSOPERATIONSTOTALEQUITY(129,913)

52,577

1,751,299

33,671

1,784,970
141,360

Result of the period–

181,203––

10,460191,663(50,303)

Other comprehensive income for the period––

32,513–

1,712

34,225(5,075)

29,150Total comprehensive income for the period–

181,203

32,513–

12,172

225,888(55,378)

170,510

Changes in share-based payment reserves

–

–

3,820

–

–

3,820

–

3,820

Dividends–(141,769)––(4,747)(146,515)–(146,515)

Transfers

–

6,839

(9,094)

2,255

–

–

–

–
38,041

Changes in treasury shares

–

–

–

38,041–

38,041–

Changes in scope–

12,405

4,079–(1,557)

14,927(17,708)(2,781)

502,862

1,559,969(144,200)(89,616)

58,446

1,887,460(39,416)

1,848,045
226,251

Balance at the end of 2016
Result of the period–

214,836––

14,308229,144(2,893)

Other comprehensive income for the period––(62,511)–(2,124)(64,635)(528)(65,163)

Total comprehensive income for the period–

214,836(62,511)–

12,184

164,509(3,421)

161,088

Changes in share-based payment reserves

–

–

6,418

–

–

6,418

–

6,418

Dividends–(147,796)––(5,640)(153,436)–(153,436)

Transfers

–

4,512

(6,402)

1,890

–

–

–

–

Changes in treasury shares

–

–

–

5,972

–

5,972

–

5,972

Changes in scope
Balance at the end of 2017–

(47,079)

4,178–(5,386)(48,287)

42,837(5,450)502,862

1,584,442(202,517)(81,754)

59,603

1,862,637–

1,862,637

The legal reserve of € 50.0 million which is included in the retained earnings is not available for distribution.
On 16 October 2017, each Umicore share was split into two new shares. Therefore, the share capital of the Group as at 31 December 2017
was composed of 224,000,000 shares with no par value.
The notes on pages 97 to 170 are an integral part of these consolidated financial statements.

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FINANCIAL STATEMENTSCONSOLIDATED STATEMENT OF CASH FLOW
Thousands of EurosNOTESProfit (loss) from continuing operations
Adjustments for profit of equity companies

2016

2017

191,664

229,144(16,786)(29,554)

Adjustment for non-cash transactions

F34

188,912

190,714

Adjustments for items to disclose separately or under investing and financing cash flows

F34

66,731

98,274

Change in working capital requirement

F34

13,253(275,509)

443,778

213,070

8,517

15,333

Tax paid during the period(65,301)(74,449)

Government grants received(2,270)

(642)

F34

384,723

153,313

Acquisition of property, plant and equipment

F16(207,017)(351,056)

Acquisition of intangible assets

F14(80,764)(25,621)

Acquisition of new subsidiaries, net of cash acquired

F8–(211,508)

Acquisition of financial assets

F18(8,554)(119)

New loans extended

F18

Cash flow generated from operations
Dividend received

NET OPERATING CASH FLOW

Sub-total acquisitions
Disposal of property, plant and equipment
Disposal of intangible assets
Disposal of subsidiaries and associates, net of cash disposed
Disposal of financial fixed assets
Repayment of loans

F18Internal transfers

F34

Sub-total disposals
NET CASH FLOW GENERATED BY (USED IN) INVESTING ACTIVITIESF34

Capital increase (decrease) minority
Own shares(13,000)(9,889)(309,336)(598,194)

4,337

5,414

778

1,438

138,604

74,189

5,491

443

750

20,033(49,261)–

100,698

101,516(208,638)(496,678)–

416

38,041

5,972

Interest received

3,258

4,027

Interest paid

(9,667)(18,398)

New loans and repayments
Dividends paid to Umicore shareholders
Dividends paid to minority shareholders
NET CASH FLOW GENERATED BY (USED IN) FINANCING ACTIVITIES

F34

6,490

562,072(138,266)(150,682)(4,747)(5,640)(104,891)

397,768

Effect of exchange rate fluctuations

1,401

13,997TOTAL NET CASH FLOW OF THE PERIOD

72,596

68,40066,167

71,275

Net cash and cash equivalents at the beginning of the period forcontinuing operations

F22

Impact of final financing carved out entities(67,488)

16,223

71,275

155,898

45,325–of which cash and cash equivalents

129,785

168,115of which bank overdrafts(13,185)(12,217)

Net cash and cash equivalents at the end of the period for continuing operations

F22

Cash for discontinued operations

The notes on pages 97 to 170 are an integral part of these consolidated financial statements.

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FINANCIAL STATEMENTS

Notes to the consolidated financial statements

The company’s consolidated financial statements and the management report prepared in accordance with article 119 of the Belgian
Companies Code set forth on pages 1-50 and 86-171, for the year ended 31 December 2017 were authorised for issue by the Boardof Directors on 16 March 2018. They have been prepared in accordance with the legal and regulatory requirements applicable tothe consolidated financial statements of Belgian companies. They include those of the company, its subsidiaries and its interests
in companies accounted for using the equity method.

F1 BASIS OF PREPARATIONThe Group presents its annual consolidated ﬁnancial statements in accordance with all International Financial Reporting Standards(IFRS) adopted by the European Union (EU).
The consolidated ﬁnancial statements are presented in thousands of Euros, rounded to the nearest thousand, and have been preparedon a historical cost basis, except for those items that are measured at fair value.

F2 ACCOUNTING POLICIES

2.1 PRINCIPLES OF CONSOLIDATION AND SEGMENTATION
2.1.1 SUBSIDIARIES
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when thegroup is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group.
They are deconsolidated from the date that control ceases.
Note F5 lists all signiﬁcant subsidiaries of the company at the closing date.
The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity
interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identiﬁable assets acquired and liabilities and contingent liabilities assumed in a business combination
are measured initially at their fair values at the acquisition date. The group recognises any minority interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the minority interest’s proportionate share of the recognised amounts ofacquiree’s identiﬁable net assets. Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in
the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised
in proﬁt or loss.
Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in proﬁt or loss.
Contingent consideration that is classiﬁed as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses
are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the group’s
accounting policies.
IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations) does not specify the treatment for the elimination of intercompany transactions between discontinued and continued operations. As an accounting policy Umicore opts to not eliminate theintercompany transactions within the income statement between the discontinued and continued operations. For the balance sheet
presentation however, IFRS 10 (Consolidated Financial Statements) overrides IFRS 5 and requires all intercompany balances to beeliminated including between the discontinued and continued operations.
2.1.2 CHANGES IN OWNERSHIP INTERESTS IN SUBSIDIARIES WITHOUT CHANGE OF CONTROLTransactions with minority interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions
with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant shareacquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to minority interests arealso recorded in equity.

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FINANCIAL STATEMENTS

2.1.3 DISPOSAL OF SUBSIDIARIESWhen the group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control islost, with the change in carrying amount recognised in proﬁt or loss. The fair value is the initial carrying amount for the purposes ofsubsequently accounting for the retained interest as an associate, joint venture or ﬁnancial asset. In addition, any amounts previously
recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of therelated assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassiﬁed to
proﬁt or loss.
2.1.4 ASSOCIATES
Associates are all entities over which the group has signiﬁcant inﬂuence but not control, generally accompanying a shareholdingof between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting.
Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased torecognise the investor’s share of the proﬁt or loss of the investee after the date of acquisition. The group’s investment in associates
includes goodwill identiﬁed on acquisition. If the ownership interest in an associate is reduced but signiﬁcant inﬂuence is retained,
only a proportionate share of the amounts previously recognised in other comprehensive income is reclassiﬁed to proﬁt or loss whereappropriate. The group’s share of post-acquisition proﬁt or loss is recognised in the income statement, and its share of post-acquisition
movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to thecarrying amount of the investment. When the group’s share of losses in an associate equals or exceeds its interest in the associate,including any other unsecured receivables, the group does not recognise further losses, unless it has incurred legal or constructive
obligations or made payments on behalf of the associate. The group determines at each reporting date whether there is any objective
evidence that the investment in the associate is impaired. If this is the case, the group calculates the amount of impairment as thedifference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to “share of
proﬁt/(loss) of associates” in the income statement.
Proﬁts and losses resulting from upstream and downstream transactions between the group and its associate are recognised in thegroup’s ﬁnancial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are eliminatedunless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have beenchanged where necessary to ensure consistency with the policies adopted by the group. Dilution gains and losses arising ininvestments in associates are recognised in the income statement.
2.1.5 JOINT ARRANGEMENTS
The group applies IFRS 11 to all joint arrangements. Under IFRS 11 investments in joint arrangements are classiﬁed as either joint
operations or joint ventures depending on the contractual rights and obligations each investor. The group has assessed the nature ofits joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method. Under theequity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter to recognise the group’s
share of the post-acquisition proﬁts or losses and movements in other comprehensive income.
When the group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term
interests that, in substance, form part of the group’s net investment in the joint ventures), the group does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the group and its joint ventures are eliminated to the extent of the group’s interest in
the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies
adopted by the group.
2.1.6 SEGMENT REPORTING
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 & Surface Technologies,
and Recycling.
The Catalysis segment provides automotive catalysts for gasoline and diesel light and heavy duty diesel applications, including on-roadand non-on-road vehicles. The business group also offers stationary catalysis for industrial emissions control and produces precious
metals-based compounds and catalysts for use in the pharmaceutical and fine chemicals industries. The Energy & Surface Technologies
segment is focused on products that are found in applications used in the production and storage of clean energy and in a range of
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FINANCIAL STATEMENTS

applications for surface technologies that bring specific properties and functionalities to end products. All the activities offer a closed
loop service for the customers. The Recycling segment treats complex waste streams containing precious and other specialty metals.
The operations can recover 20 of these metals from a wide range of input materials ranging from industrial residues to end-of-lifematerials. Other activities include production of precious metals-based materials that are essential for applications as diverse as
high-tech glass production, electrics and electronics.
Corporate covers corporate activities, shared operational functions and the Group’s Research, Development & Innovation unit. Umicore’s
minority share in Element Six Abrasives and Ieqsa is also included in Corporate.
Operating segments are reported in a manner consistent with the internal reporting provided to the board and theexecutive committee.
The segment results, assets and liabilities include items directly attributable to the segment as well as those elements that canreasonably 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 pricereferences, “cost plus” mechanisms are used.
Associate companies are allocated to the business group with the closest ﬁt from a market segment perspective.
2.2 INFLATION ACCOUNTING
For the reported period, there is no subsidiary in the Umicore Group having a functional currency belonging to a
hyperinﬂationary economy.
2.3 FOREIGN CURRENCY TRANSLATION
Functional currency: items included in the ﬁnancial statements of each entity in the Group are measured using the currency thatbest reﬂects the economic substance of the underlying events and circumstances relevant to that entity. The consolidated ﬁnancial
statements are presented in € which is the functional currency of the parent. To consolidate the Group and each of its subsidiaries,
the ﬁnancial 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 recognised in theincome 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 liabilitiesof the foreign entity and are translated at the closing rate.
2.4 FOREIGN CURRENCY TRANSACTIONS
Foreign currency transactions are recognised 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 ﬁrst qualiﬁes for recognition. For practical reasonsa 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 thereporting period.
Gains and losses resulting from the settlement of foreign currency transactions, and from the translation of monetary assets andliabilities denominated in foreign currencies, are recognised in the income statement as a ﬁnancial 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).

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FINANCIAL STATEMENTS

2.5 PROPERTY, PLANT AND EQUIPMENT
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 capitalised together with the costs of the assets in accordance withIAS 23. All borrowing costs that cannot be linked directly to an investment are recognised 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 overwhich 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
beneﬁts of the asset. Otherwise they are classiﬁed 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 asthey have useful lives different from those items of property, plant and equipment to which they relate. Umicore’s PPE, being complex
and highly customised industrial assets, typically do not have an individual resale value if put outside the overall context of theoperations. 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:
For material newly acquired or constructed assets, the useful life is separately assessed at the moment of the investment request andcan 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 signiﬁcantly 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 orwrite-down technically obsolete or non-strategic assets that have been abandoned or sold.
Land use rights are part of the Property, Plant and Equipment and are typically amortised over the contractual period.
YEARS
Land

Non-depreciable

Buildings
Industrial buildings

20

Improvements to buildings

10

Other buildings such as offices and laboratories

40

Investment properties

40

Plant, machinery and equipment

10

Furnaces

7

Small equipment

5

Furniture and vehicles
Vehicles5

Mobile handling equipment

7

Computer equipment

3–5

Furniture and office equipment

5–10

2.6 INTANGIBLE ASSETS & EQUITY TRANSACTION EXPENSES
2.6.1 EQUITY TRANSACTION EXPENSES
Expenses for formation and capital increase are deducted from the share capital.
2.6.2 GOODWILL
Goodwill represents the excess of the cost of an acquisition of a subsidiary, associate or jointly controlled entity over the Group’s sharein the fair value of the identiﬁable assets and liabilities of the acquired entity at the date of acquisition. Goodwill is recognised at costless any accumulated impairment losses.

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FINANCIAL STATEMENTS

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 cash-generating unit (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 recognised in the income statement.
These impairment losses are never reversed.
The excess of the Group’s interest in the fair value of the net identiﬁable assets acquired over the cost of acquisition is recognisedin the income statement immediately.
2.6.3 RESEARCH AND DEVELOPMENT
Research costs related to the prospect of gaining new scientiﬁc or technological knowledge and understanding are recognised in theincome statement as an incurred expense.
Development costs are deﬁned as costs incurred for the design of new or substantially improved products and for the processes prior
to commercial production or use. They are capitalised if, among others, the following conditions are met:–– the intangible asset will give rise to future economic beneﬁts, or in other words, the market potential has beenclearly demonstrated.
–– the expenditures related to the process or product can be clearly identiﬁed and reliably measured.
In case it is difﬁcult to clearly distinguish between research or development costs, the costs are considered as being research.
If development costs are capitalised they are amortised using a straight-line method over the period of their expected beneﬁt,
in general five years.
2.6.4 CO2 EMISSION RIGHTS
Within the framework of the Kyoto protocol, a third emission trading period started, covering 2013-2020. Therefore the Flemish
Government granted emission rights to the Flemish sites of certain companies, including Umicore. Each year, at the end of February,
one ﬁfth of these emission rights is put on an ofﬁcial registry account. The release of emission rights to this registry account entails thecapitalisation in the intangible assets, which is in line with the guidance of the Belgian Accounting Standards Commission. Gains on therecognition of emission rights at fair value are deferred until the certiﬁcates 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, awrite-down is booked. At each closing date, the group estimates the actual use of rights for the period and recognises 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 revenues. Historically, Umicore owns the required rights toensure its normal operating activities.
2.6.5 OTHER INTANGIBLE ASSETS
All of the following types are recorded at historical cost, less accumulated amortisation and impairment losses:–– Concessions, patents, licences: are amortised over the period of their legal protection with a minimum of 5% (in general over
5 years).
–– Customer portfolios: are typically amortised over a period of five years.
–– ERP software is typically amortised over a period of 10 years.
–– Smaller software is typically amortised over a period of five years.
In case of an earn out component, a remeasurement is foreseen, adapting the carrying amount of the asset and the amortisation accordingly.
Umicore has currently no intangible asset with an indefinite useful live.
2.7 LEASE
2.7.1 FINANCIAL LEASE
Leases under which the company assumes a substantial part of the risks and rewards of ownership are classiﬁed as ﬁnancial leases.
They are measured at the lower of fair value and the estimated present value of the minimum lease payments at inception of thelease, less accumulated depreciation and impairment losses.
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FINANCIAL STATEMENTS

Each lease payment is allocated between the liability and ﬁnance charges so as to achieve a constant periodic rate of interest on
the ﬁnance balance outstanding. The corresponding rental obligations, net of ﬁnance 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 ofthe useful life and the lease term.
2.7.2 OPERATING LEASE
Leases under which a substantial part of the risks and rewards of ownership are effectively retained by the lessor are classiﬁed as
operating leases. All payments or receipts under operating lease are recognised as an operating expense in the income statement
using the straight-line method.
The group leases metals to and from third parties for speciﬁed periods for which the group receives or pays fees. Metal lease
contracts are typically concluded for less than one year. The metal leases from and to third parties are reported as off-balance
sheet commitments.
2.8 AVAILABLE-FOR-SALE FINANCIAL ASSETS, LOANS AND NON-CURRENT RECEIVABLES
All movements in available-for-sale ﬁnancial assets, loans and receivables are accounted for at trade date.
Financial assets available for sale are carried at fair value. Unrealised gains and losses from changes in the fair value of such assets arerecognised in equity as available-for-sale ﬁnancial 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 ﬂows from the investments have expired or have been transferred and the group has transferred substantially all risks andrewards of ownership.
Loans and receivables are carried at amortised 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.
2.9 INVENTORY
Inventories are carried at the lower of cost or net realisable value. Cost comprises direct purchase or manufacturing costs and an
appropriate allocation of overheads.
Inventories are classiﬁed as:
1. Base products with metal hedging
2. Base products without metal hedging
3. Consumables
4. Advances paid
5. Contracts in progressBase products with metal hedging are metal-containing products on which Umicore is exposed to metal price ﬂuctuation risks andwhere Umicore applies an active and structured risk management process to minimise the potential adverse effects of market priceﬂuctuations on the ﬁnancial performance of the Group.
The metal contents are classiﬁed in inventory categories that reﬂect their speciﬁc 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 recognised when turnover is slow or where the carrying amount is exceeding the net realisable value,
meaning the estimated selling price less the estimated costs of completion and the estimated cost necessary to make the sale. Writedowns 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.

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FINANCIAL STATEMENTS

2.10 TRADE AND OTHER RECEIVABLES
Trade and other receivables are measured at amortised 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 arerecorded 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 derecognised from the balance sheet.
The positive fair value of derivative ﬁnancial instruments is included under this heading.
2.11 CASH AND CASH EQUIVALENTS
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 insigniﬁcant risk of change in value.
These items are carried in the balance sheet at nominal value or amortised cost. Bank overdrafts are included in the current liabilities
on the balance sheet.
2.12 IMPAIRMENT OF NON-FINANCIAL ASSETS
Property, plant and equipment and other non-current assets, including intangible assets and ﬁnancial assets not held for trading, arereviewed 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 recognised as an expense immediately.
A reversal of impairment losses is recognised when there is an indication that the impairment losses recognised 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 amortisation, if no impairment loss had
been recognised.
2.13 SHARE CAPITAL AND RETAINED EARNINGS
A. Repurchase of share capital	When the company purchases some of its own shares, the consideration paid, including any attributable transaction costs net ofincome taxes, is deducted from the total shareholders’ equity as treasury shares. No gain or loss shall be recognised in proﬁt 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 recognised as a liability following approval by
the shareholders.
2.14 MINORITY INTERESTS
Minority interests include a proportion of the fair value of identiﬁable assets and liabilities recognised upon acquisition of a subsidiarythat is attributable to third parties, together with the appropriate proportion of subsequent proﬁts and losses.
In the income statement, the minority share in the Group’s proﬁt or loss is presented separately from the Group’s consolidated result.
2.15 PROVISIONS
Provisions are recognised in the balance sheet when:–– There is a present obligation (legal or constructive) as a result of a past event.
–– It is probable that an outﬂow of resources will be required to settle the obligation.
–– A reliable estimate can be made on the amount of the obligation.

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FINANCIAL STATEMENTS

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 createda valid expectation that it will discharge those responsibilities.
The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the endof the reporting period and taking into account the probability of the possible outcome of the event. Where the effect of the timevalue of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle theobligation. The result of the yearly discounting of the provision, if any, is accounted for as a ﬁnancial result.
The main types of provision are the following:
1. PROVISIONS FOR EMPLOYEE BENEFITS (SEE CHAPTER 2.16, EMPLOYEE BENEFITS)
2. ENVIRONMENTAL OBLIGATIONS
Environmental provisions are based on legal and constructive obligations from past events, in accordance with the company’senvironmental approach and applicable legal requirements. The full amount of the estimated obligation is recognised at the moment
the event occurs. When the obligation is production/activity related, the provision is recognised gradually depending on normal
usage/production level.
3. OTHER PROVISIONS
Includes provisions for litigation, onerous contracts, warranties, exposure to equity investments and restructuring. A provision for
restructuring is recognised 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.
2.16 EMPLOYEE BENEFITS
2.16.1 SHORT-TERM EMPLOYEE BENEFITS
These include wages, salaries and social security contributions, paid annual leave and sick leave, bonuses and non-monetary beneﬁts,
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 ﬁnancial targets. The amount of the bonus is recognised as an expense, based on an
estimation made at the end of the reporting period.
2.16.2 POST EMPLOYMENT BENEFITS (PENSIONS, MEDICAL CARE)
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.
2.16.2.1 DEFINED BENEFIT PLANS
The company has accounted for all legal and constructive obligations both under the formal terms of deﬁned beneﬁt 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 deﬁned beneﬁt obligations and reduced by the fair value of the plan assets.
The past service costs are immediately recognised in the income statement since IAS 19 revised.
All remeasurements as a result of changes in the actuarial assumptions of post-employment deﬁned beneﬁt plans are recognised
through other comprehensive income (OCI) in the period in which they occur and are disclosed in the statement of comprehensive
income as post employment beneﬁt reserves.
2.16.2.2 DEFINED CONTRIBUTION PLANS
The company pays contributions to publicly or privately administered insurance plans. The payments are recognised as expenses
as they fall due and as such are included in personnel costs.
2.16.3 OTHER LONG-TERM EMPLOYEE BENEFITS (JUBILEE PREMIUMS)
These beneﬁts are accrued for their expected costs over the period of employment using an accounting methodology similar
to that for deﬁned beneﬁt pension plans. These obligations are in general valued annually by independent qualiﬁed actuaries.
All remeasurements as a result of changes in the actuarial assumptions are immediately recognised in the income statement.

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2.16.4 TERMINATION BENEFITS (PRE-RETIREMENT PLANS, OTHER TERMINATION OBLIGATIONS)
These beneﬁts arise as a result of the company’s decision to terminate an employee’s employment before the normal retirement dateor of an employee’s decision to accept voluntary redundancy in exchange for those beneﬁts. When they are reasonably predictable inaccordance with the conditions and practices of the countries the company operates in, future obligations are also recognised.
These beneﬁts are accrued for their expected costs over the period of employment, using an accounting methodology similar
to that for deﬁned beneﬁt pension plans. In general, these obligations are valued annually by independent qualiﬁed actuaries.
All remeasurements as a result of changes in the actuarial assumptions are immediately recognised in the income statement.
2.16.5 EQUITY AND EQUITY-RELATED COMPENSATION BENEFITS (SHARE-BASED PAYMENTS IFRS 2)
Different stock option and share programmes allow company employees and company senior management to acquire or obtain sharesof 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 beneﬁciaries from existing own shares. For the share programmes, shares are delivered to the
beneﬁciaries from existing own shares. In both cases, the equity is increased by the amount of the proceeds received corresponding
to the exercise price.
The options and shares are typically vested at the moment of the grant and their fair value is recognised as an employee beneﬁt
expense with a corresponding increase in equity as share-based payment reserves. For the options, the expense to be recognised
is calculated by an actuary, using a valuation model which takes into account all features of the stock options, the volatility of theunderlying 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”.
2.16.6 PRESENTATION
The impact of employee beneﬁts on results is booked under operating results in the income statement, except for the interest anddiscount rate impacts which are classiﬁed under ﬁnancial results.
2.17 FINANCIAL LIABILITIESAll movements in ﬁnancial liabilities are accounted for at trade date.
Borrowings are initially recognised as proceeds received, net of transaction costs. Subsequently they are carried at amortised cost using
the effective interest rate method. Amortised 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 recognised in the income statement upon redemption.
2.18 TRADE AND OTHER PAYABLES
Trade payables are measured at amortised 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 ﬁnancial instruments is included under this heading.
2.19 INCOME TAXES
Taxes on proﬁt or loss of the year include current and deferred tax. Such taxes are calculated in accordance with the tax regulations ineffect 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.
The tax payable is determined based on tax laws and regulations that apply in each of the numerous jurisdiction in which the Group
operates. The income tax positions taken are considered by the Group to be supportable and are intended to withstand challenge
from tax authorities. However it is accepted that some of the position can be uncertain and include interpretation of complex tax laws.
Furthermore, some subsidiaries within the Group can be involved in tax audits usually in relation to prior years that can take time
to conclude. The Group assesses its tax position individually and on a regular basis and if the tax payable differs from the amounts
initially estimated then the difference is charged or credited in the accounts for the year in which it is determined.

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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 ﬁnancial 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 recognised to the extent that it is probable that future taxable proﬁt will be available against which thetemporary differences can be utilised.
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.
2.20 REVENUES RECOGNITION
2.20.1 GOODS SOLD AND SERVICES RENDERED
Revenues from the sale of goods in transformation activities is recognised when signiﬁcant risks and rewards of ownership have beentransferred to the buyer, and no signiﬁcant uncertainties remain regarding recovery of the consideration due, associated costs or the
possible return of the goods.
Revenues from reﬁning activities and services rendered is recognised by reference to the stage of completion of the transaction when
this can be measured reliably.
2.20.2 GOVERNMENT GRANTS
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 recognised in the income statement overthe period necessary to match them with the costs they are intended to compensate.
2.21 FINANCIAL INSTRUMENTS
The company uses derivative ﬁnancial and commodity instruments primarily to reduce the exposure to adverse ﬂuctuations in foreignexchange 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.
2.21.1 TRANSACTIONAL RISKS – FAIR VALUE HEDGING
Derivative ﬁnancial and commodity instruments are used for the protection of the fair value of underlying hedged items (assets,
liabilities and ﬁrm commitments) and are recognised initially at fair value at trade date.
All derivative ﬁnancial 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 recognised in the income statement – as an operating result, if
commodity instruments, and as a ﬁnancial 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 deﬁned under IAS 39, the hedged items are kept at cost andare 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 cashgenerating unit (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 proﬁt from short-term ﬂuctuations in price or trading margins, the inventory is valued atfair value through the income statement and the related physical and/or commodity commitments are classiﬁed as derivatives andmeasured at fair value through the income statement.
2.21.2 STRUCTURAL RISKS – CASH FLOW HEDGING
Derivative ﬁnancial and commodity instruments used for the protection of future cash ﬂows are designated as hedges under cash ﬂow
hedge accounting. The effective portion of changes in the fair value of hedging instruments which qualify as cash ﬂow hedges
are recognised in the shareholders' equity as hedging reserves until the underlying forecasted or committed transactions occur

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FINANCIAL STATEMENTS(i.e. affect the income statement). At that time the recognised 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 proﬁts or losses including those which were deferred in equity, are immediately
recognised in the income statement.
In the absence of obtaining cash-ﬂow hedge accounting at inception as deﬁned under IAS 39, then the fair value of the related hedging
instruments is recognised 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).
2.21.3 EMBEDDED DERIVATIVES
Executory contracts (the “host contract”) may sometimes contain embedded derivatives. Embedded derivatives cause some or all of
the cash ﬂows that would otherwise be expected from the host contract, to be modiﬁed according to a speciﬁed interest rate, ﬁnancial
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 throughproﬁt or loss). The host contract is accounted for using the rules applicable to executory contracts, which effectively means that sucha contract is not recognised in the balance sheet or proﬁt and loss before delivery on the contract takes place (see also Chapter 2.22 –IAS 39 impact).
2.22 NON-RECURRING RESULTS AND IAS 39 EFFECT
Non-recurring results relate primarily to restructuring measures, impairment of assets and other income or expenses arising fromevents or transactions that are clearly distinct from the ordinary activities of the company.
IAS 39 effect relates to non-cash timing differences in revenues recognition due to the non-application of or non-possibility of obtaining
IAS 39 hedge accounting at inception to:a)	Transactional hedges, which implies that hedged items can no longer be measured at fair value and must be submitted to thevaluation 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.
b)	Structural hedges, which implies that the fair value of the related hedging instruments are recognised in the income statement
instead of equity and this prior to the occurrence of the underlying forecasted or committed transactions.
c)	Derivatives embedded in executory contracts, which implies that fair value on the embedded derivatives are recognised in theincome statement as opposed to the executory component where no fair value measurement is allowed.

F3 FINANCIAL RISK MANAGEMENT

Each of the Group’s activities is exposed to a variety of risks, including changes in metal prices, foreign currency exchange rates, certain
market-deﬁned commercial conditions, and interest rates as well as credit and liquidity risks. The Group’s overall risk management
programme seeks to minimise the adverse effects on the ﬁnancial performance of the Group by hedging most of these risks throughthe use of ﬁnancial and insurance instruments.
3.1 CURRENCY RISK
Umicore’s currency risk can be split into three distinct categories: structural, transactional and translational risks.
3.1.1 STRUCTURAL RISK
A portion of Umicore’s revenues are structurally denominated in US dollar (USD), while many of our related operations are locatedoutside the USD zone (particularly in Europe and Asia). Any change in the US dollar exchange rate against the Euro or other currencies
which are not pegged to the US dollar will have an impact on our results.
A large portion of such structural currency exposure derives from US dollar denominated metal prices linked to the recycling andrefining operations.
Another significant portion of this exposure stems from non-metal related revenues denominated in US dollar such as reﬁning charges
or product premia.

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Next to the sensitivity US dollar vs Euro there is also a structural and increasing sensitivity to certain other currency couples such as
the US dollar (USD) and euro (EUR) vs the Brazilian real (BRL), the Korean won (KRW), the Chinese yuan (CNY) and the South African
rand (ZAR).
Structural currency hedging
Umicore’s hedging policy allows for hedging forward its structural currency exposure, either in conjunction with the hedging ofstructural metal price exposure or in isolation, typically when a currency exchange rate or a metal price denominated in Euro is above
its historical average and at a level where attractive margins can be secured.
At the end of 2017, Umicore had structural currency hedging in place relating to its non-metal related currency sensitivity for a.o.
the following pairs of currencies: EUR/USD, USD/KRW, EUR/ZAR, USD/ZAR, USD/CAD, EUR/CNY and USD/CNY.
3.1.2 TRANSACTIONAL RISKThe company is also subject to transactional risks in respect of currencies, i.e. the risk of currency exchange rates ﬂuctuating between
the time the price is ﬁxed with a customer or supplier and the time the transaction is settled. The Group’s policy is to hedge thetransactional risk to the maximum extent possible, primarily through forward contracts.
3.1.3 TRANSLATIONAL RISK
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 tovariations in the value of such local currencies against the Euro, predominantly the US dollar, the BRL, the KRW, the CNY and the ZAR.
While Umicore does not systematically hedge its translational currency exposures, it may enter into ad hoc translational hedges.
3.2 METAL PRICE RISK
Umicore’s metal price risk can be split into three distinct categories: structural, transactional and inventory risks.
3.2.1 STRUCTURAL RISK
Umicore is exposed to structural metal 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 revenues component that ﬂuctuates with the metal price.
Umicore’s policy allows to hedge such metal price exposure, typically if forward metal prices expressed in the functional currency ofthe concerned businesses are above their historical average and at a level where attractive margins can be secured. The extent towhich metal price risk can be hedged depends on the availability of hedging instruments and sufficient associated market liquidity.
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 proﬁts to metals prices is material. However, given the variabilityof the raw-material feed over time and the variable duration of the supply contracts negotiated, it is not suitable to provide a ﬁxed
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 in its other business segments (Catalysis, Energy & Surface Technologies) linked primarily
to the revenues components that are metal price related and depending the metals used in these segments. Also in these casesa higher metal price tends to carry short-term beneﬁts for the proﬁtability of each business. However, other commercial conditions
which are largely independent of the metals price, such as product premiums, are also signiﬁcant and independent drivers of revenues
and proﬁtability.
Structural metal price hedging
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 ﬂows originating from commercial contracts.
Umicore hedged part of its forward metal exposure. At the end of 2017, the outstanding hedge contracts relate to some precious
metals (i.e. gold, silver and palladium) and some base metals (i.e. nickel, copper and lead).
3.2.2 TRANSACTIONAL RISKThe 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, becauseof the lapse of time between the conversion of purchased raw materials into products and the sale of products, the volatility in thereference metal price creates differences between the price paid for the contained metal and the price received. Accordingly, there is

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a transactional exposure to any ﬂuctuations in price between the moment raw materials are purchased (i.e., when the metal is “pricedin”) 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.
3.2.3 METAL INVENTORY RISK
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.
3.3 INTEREST RATE RISKThe Group’s exposure to changes in interest rates relates to the Group’s ﬁnancial debt obligations. At the end of December 2017, theGroup’s gross ﬁnancial debt stood at € 1,008 million, of which € 710 million at ﬁxed rate. The 5-year interest rate swap entered into
in 2013 for an amount of € 150 million will expire in January 2018.
3.4 CREDIT RISK
Credit risk and concentration of credit risk
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. Umicore entered into two credit insurance agreements with different insurers. One global credit insurance contract has been
put in place on a world-wide basis. This contract protects the insured activities against insolvency, political and commercial risks withan individual deductible per invoice of 5% and foresees in a indemniﬁcation cap set at regional or country levels. A second policy
covers a more selective group of trade receivables and foresees in an annual deductible of € 5 million and a maximum indemnityof € 70 million per annum.
Umicore has determined that in a certain number of cases where the cost of credit insurance is disproportionate in relation to therisk to be insured, no such global credit insurance coverage will be sought. For those businesses, characterised by a signiﬁcant levelof customer concentration or by a speciﬁc and close relationship with the customers, speciﬁc insurance contracts may be set up fora 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 ﬁnancial institutions like banks and brokers, Umicore is also establishing internal credit lines.
Speciﬁc limits are set, per ﬁnancial instrument, covering the various risks to which it is exposed when transacting withsuch counterparties.
3.5 LIQUIDITY RISK
Liquidity risk is addressed by maintaining a sufﬁcient degree of diversiﬁcation of funding sources. These include committed anduncommitted short-term bilateral bank facilities, two medium-term syndicated bank facilities, two long-term private placements
and a commercial paper programme (the latter with a maximum amount of € 600 million).
3.6 TAX RISK
The tax charge included in the ﬁnancial 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 ﬁnal tax liability for the period. The Group’s policy is tosubmit 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 thescale 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.
Based on these tax risks described, management performed a detailed assessment for uncertain tax positions which resulted inprovisions recorded for these uncertainties.

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FINANCIAL STATEMENTS

3.7 CAPITAL RISK MANAGEMENTThe Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, to provide returns forshareholders and beneﬁts 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 and the net financial debt over recurring EBITDA
ratio. The gearing ratio is calculated as net ﬁnancial debt divided by the sum of net ﬁnancial debt and total Group equity. Net ﬁnancial
debt is calculated as non-current ﬁnancial debt plus current ﬁnancial debt less cash and cash equivalents. The ﬁgures 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.
3.8 STRATEGIC AND OPERATIONAL RISKS
Umicore faces certain strategic and operational risks that are not necessarily ﬁnancial in nature but which have the potential to impact
the ﬁnancial 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 (36-43) for a description of these risks and an outline of Umicore’s general approach torisk management.
Umicore does not expect a material direct financial impact from the Brexit.

F4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments used in developing and applying the consolidated entity’s ﬁnancial statements are continually evaluatedand are based on historical experience and other factors, including the expectations of future events that may have a ﬁnancial impact
on the entity and that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by deﬁnition,
seldom equal the related actual results.
Assumptions and estimates are applied when:–– Assessing the need for and measurement of impairment losses,–– Accounting for pension obligations,–– Recognising and measuring provisions for tax, environmental, warranty and litigation risks, product returns, and restructuring,–– Determining inventory write-downs,–– Assessing the extent to which deferred tax assets will be realised,–– Useful lives of Property, Plant and Equipment and Intangible assets excluding goodwill.
The critical estimates and judgments that have a signiﬁcant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next ﬁnancial year are listed below.
4.1 IMPAIRMENT OF GOODWILL
The recoverable amount of each cash-generating unit is determined as the higher of the asset’s fair value less costs to sell andits value in use in accordance with the accounting policy. These calculations, impairment testing, require the use of estimates andassumptions 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 internallygenerated estimates and data from external sources. As at 31 December 2017, the carrying amount of the goodwill for the consolidated
entity was € 142.7 million (€ 132.6 million in 2016).
4.2 REHABILITATION OBLIGATIONSProvision is made for the anticipated costs of future rehabilitation of industrial sites and surrounding areas to the extent that a legal orconstructive obligation exists in accordance with accounting policy 2.15. These provisions include future cost estimates associated with

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FINANCIAL STATEMENTS

reclamation, plant closures, waste site closures, monitoring, demolition, decontamination, water puriﬁcation and permanent storageof 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 costestimates. A change in any of the assumptions used may have a material impact on the carrying value of rehabilitation provisions.
As at 31 December 2017, the carrying amount of rehabilitation provisions was € 66.1 million (€ 58.9 million in 2016).
4.3 DEFINED BENEFIT OBLIGATIONS
An asset or liability in respect of deﬁned beneﬁt plan is recognised on the balance sheet in accordance with accounting policy 2.16.
The present value of a deﬁned beneﬁt 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 beneﬁt obligations are discussed in more detail in Note F27. At 31 December 2017, a liability with respect to employee
beneﬁt obligations of € 342.8 million was recognised (€ 337.9 million in 2016).
4.4 RECOVERY OF DEFERRED TAX ASSETS
Deferred tax assets are recognised for deductible temporary differences, unused tax losses and fair value reserves entries only if it isprobable that future taxable proﬁts (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 recognised.
Other assumptions and estimates are disclosed in the respective notes relevant to the item where the assumptions or estimates wereused for measurement.

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FINANCIAL STATEMENTS

F5 GROUP COMPANIES

Below is a list of the main operating companies included in the consolidated ﬁnancial statements.
% INTEREST IN
2016% INTEREST IN
2017

For continuing operations
Argentina

Umicore Argentina S.A.

100.00100.00Australia

Umicore Marketing Services Australia Pty Ltd.

100.00100.00Umicore Australia Ltd.

100.00100.00Austria

Oegussa GmbH

91.29

91.29

Belgium

Todini (BE 0834.075.185)

100.00100.00Umicore Financial Services (BE 0428.179.081)

100.00100.00Umicore Marketing Services Belgium (BE 0402.964.625)

100.00100.00Umicore Specialty Materials Brugge (BE 0405.150.984)

100.00100.00BrazilCanadaChina

FranceUmicore Long Term Finance (BE 0404.867.211)

100.00100.00

Coimpa Industrial Ltda

100.00100.00Umicore Brasil Ltda

100.00100.00Clarex100.00100.00Umicore Shokubai Brasil Industrial Ltda

60.00

60.00

Umicore Canada Inc.

100.00100.00Umicore Autocat Canada Corp.

100.00100.00Umicore Precious Metals Canada Inc.

100.00100.00Umicore Marketing Services (Shanghai) Co., Ltd.

100.00100.00Umicore Marketing Services (Hong Kong) Ltd.

100.00100.00Umicore Autocat (China) Co. Ltd.

100.00100.00Umicore Technical Materials (Suzhou) Co., Ltd.

100.00100.00Jiangmen Umicore Changxin New Materials Co., Ltd.

70.00

70.00

Umicore Jubo Thin Film Products (Beijing) Co., Ltd.

100.00100.00Umicore Shokubai (China) Co Ltd

60.00

60.00

Umicore France S.A.S.

100.00100.00Umicore IR Glass S.A.S.

100.00100.00Umicore Autocat France S.A.S.

100.00100.00Umicore Specialty Powders France
Germany

Italy
India
Japan

0.00

100.00Umicore AG & Co. KG (*)

100.00100.00Umicore Metalle & Oberflächen GmbH

100.00100.00Allgemeine Gold- und Silberscheideanstalt AG

91.21

91.21

Umicore Galvanotechnik GmbH

91.21

91.21

Umicore Technical Materials AG & Co. KG (*)

0.00

100.00Todini GmbH

100.00100.00Umicore Shokubai Germany GmbH

60.00

60.00

Italbras S.p.A.

100.00100.00Todini and Co. S.P.A.

100.00100.00Umicore Autocat India Pvt LTD

100.00100.00Umicore India Private Limited

100.00100.00Umicore Japan KK

100.00100.00Umicore Shokubai Japan Co Ltd

60.00

60.00

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FINANCIAL STATEMENTS% INTEREST IN
2016% INTEREST IN
2017

Umicore Korea Ltd.

100.00100.00Umicore Marketing Services Korea Co., Ltd.

100.00100.00Umicore Materials Korea Ltd

100.00100.00Ordeg Co.,Ltd.

50.00

100.00Liechtenstein

Umicore Thin Film Products AG

100.00100.00

Luxembourg

Umicore International

100.00100.00Umicore Autocat Luxembourg

100.00100.00Netherlands

Schöne Edelmetaal BV

91.21

91.21

Philippines

Umicore Specialty Chemicals Subic Inc.

78.20

78.20

Korea

PortugalUmicore Marketing Services Lusitana Metais Lda

100.00100.00South Africa

Umicore Marketing Services Africa (Pty) Ltd.

100.00100.00Umicore Catalyst South Africa (Pty) Ltd.

65.00

65.00

Spain

Todini Quimica Ibérica, S.L.

100.00100.00SwedenUmicore Autocat Sweden AB

100.00100.00

Switzerland

Allgemeine Suisse SA

91.21

91.21

TaiwanUmicore Thin Fim Products Taiwan Co Ltd

100.00100.00ThailandUmicore Precious Metals Thailand Ltd.

91.21

91.21

Umicore Autocat (Thailand) Co., Ltd.

100.00100.00

United Kingdom

Umicore Coating Services Ltd.

100.00100.00Umicore Marketing Services UK Ltd

100.00100.00USA

Umicore USA Inc.

100.00100.00Umicore Autocat USA Inc.

100.00100.00Umicore Precious Metals NJ LLC

100.00100.00Umicore Precious Metal Chemistry USA LLC

100.00100.00Umicore Precious Metals USA Inc.

100.00100.00Umicore Optical Materials USA Inc.

100.00100.00Umicore Shokubai USA Inc

60.00

60.00

Palm Commodities International

100.00100.00Umicore Technical Materials North America Inc.

100.00100.00Umicore Thin Film Products USA Inc.

100.00100.00Umicore Specialty Materials Recycling, LLC.

100.00100.00(*) A s a result of the integration of Umicore AG & Co. KG and Umicore Technical Materials AG & Co KG into the consolidated accounts of Umicore and thedisclosure of the annual accounts according to § 325 HGB (German Commercial Code), Umicore AG & Co. KG and Umicore Technical Materials AG & Co KG are
exempted from setting up, auditing and disclosing consolidated ﬁnancial statements and ﬁnancial management reports according to Article 264 b of the
HGB (German Commercial Code).

Umicore Annual Report 2017

114

FINANCIAL STATEMENTS

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 (Euro), 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 RATESAVERAGE RATES

2016

2017

2016

2017

US dollar

USD

1.054

1.199

1.107

1.130

British pound

GBP

0.856

0.887

0.819

0.877

Canadian dollar

CAD

1.419

1.504

1.466

1.465

Swiss franc

CHF

1.074

1.170

1.090

1.112

Japanese yen

JPY123.400

135.010120.197126.711

Brazilian real

BRL

3.435

3.967

3.863

3.606

South African rand

ZAR

14.45714.80516.26415.049Chinese yuan

CNY

7.320

7.804

7.352

7.629

Thai baht

THB

37.72639.12139.04338.296

Korean won (100)KRW

12.69412.79612.84212.767

Umicore Annual Report 2017

115

FINANCIAL STATEMENTS

F7 SEGMENT INFORMATION

BUSINESS GROUP INFORMATION 2016
Thousands of Euros

NOTE

ENERGY &SURFACECORPORATE &TOTAL DISCONTINUEDCATALYSIS TECHNOLOGIES RECYCLING UNALLOCATED ELIMINATIONS CONTINUEDOPERATIONS

Total segment turnover

2,779,124

1,468,979

6,886,386

31,750External turnover

2,770,120

1,414,685

6,226,986

31,750–9,004

54,294659,400–(722,698)

Total segment revenues(excluding metals)

1,163,395

610,193641,230–

External revenues

1,162,284

609,912637,172

1,111

281

4,058

116,453

73,238

115,482

Recurring operating result

143,32180,692

Non-recurring operating result(26,665)(914)

Inter-segment turnover

Inter-segment revenues
Operating result

F9

IAS 39 effectEquity method companies

F9(722,698) 10,443,541

TOTAL

652,638

11,096,179

10,443,541

652,638

11,096,179

–

–

–

(5,450)2,409,368

258,133

2,667,501––

2,409,368

258,133

2,667,501–(5,450)–––(56,208)–

248,965(35,448)

213,517

124,888(46,145)–

302,757

29,675

332,432(10,458)(9,989)–(48,025)(61,400)(109,425)(204)(6,540)

1,051

(75)

–

(5,766)(3,723)(9,490)

9,098

1,003

–

6,685

–

16,786

1,254

18,040Recurring

9,153

1,003

–

7,230

–

17,386929

18,315

Non-recurring

664

–

–

(1,781)–(1,117)

325

(792)

IAS 39 effect

(718)

–

–

1,235

–

517

–

517

125,551

74,241

115,482(49,523)–265,751(34,194)

231,557

Recurring EBIT

EBIT

152,474

81,695

124,888(38,914)–

320,143

30,604

350,747

Non-recurring EBIT

(26,001)(914)(10,458)(11,769)–(49,142)(61,075)(110,217)

IAS 39 effect on EBIT

(922)

(6,540)

1,051

1,161

–

(5,249)(3,723)(8,973)50,95349,93762,358

12,693–

175,94282

176,024

50,95349,93762,358

12,693–

175,94282

176,024

176,504

124,178

177,840(36,829)–441,693(34,112)407,581203,427

131,632

187,246(26,221)–496,084

30,687526,771

Consolidated total assets

1,479,625

1,359,785

1,084,014

536,482(567,640)

3,892,267

253,484

4,145,751

Segment assets

1,405,138

1,332,872

1,084,014

443,365(567,640)

3,697,749

237,5033,935,252

74,487

26,913–

93,117–

194,518

15,981

210,499568,805

579,162592,253

980,225(567,640)

2,152,805

144,908

2,297,711

F31

968,200

633,382

465,879

147,715–2,215,176

199,325

2,414,501

Depreciation and amortisation

F9

F9Recurring
EBITDAF9

Recurring EBITDA

Investments in associates
Consolidated total liabilities
Capital Employed at 31/12
of previous year
Capital Employed at 30/06

F31895,612

697,913466,916

173,899–

2,234,340

157,023

2,391,362

Capital Employed at 31/12F31911,191752,037

498,139

136,968–

2,298,336

99,074

2,397,409

Average Capital Employedin first half year

F31

931,906

665,648466,398

160,807–2,224,758

178,174

2,402,931

Average Capital Employed
in second half yearF31

903,401

724,975

482,527

155,434–

2,266,338

128,048

2,394,386

Average Capital Employedin the yearF31

917,653

695,311474,463

158,120–

2,245,548

153,1112,398,659

ROCE

F31

16.62%

11.75%

26.32%(24.61%)

0.00%

14.26%

19.99%

14.62%

Capital expenditure

F34

46,528144,319

72,271

9,714–

272,833

14,505287,338

Total R&D expenditure

F9

101,958

20,18323,023

7,626–

152,7903,070

155,859

R&D recognised in operating
expenses

F988,584

18,32923,023

7,626–

137,561

3,070

140,631

R&D capitalised as intangible
assetsF34

13,374

1,854

–

–

–

15,228–15,228

Umicore Annual Report 2017

116

FINANCIAL STATEMENTS

BUSINESS GROUP INFORMATION 2017
Thousands of Euros

NOTE

ENERGY &SURFACECORPORATE &TOTAL DISCONTINUEDCATALYSIS TECHNOLOGIES RECYCLING UNALLOCATED ELIMINATIONS CONTINUEDOPERATIONS

TOTAL

Total segment turnover

3,090,560

2,392,360

7,326,724

43,910(906,290)

11,947,264

330,356

12,277,620

External turnover

3,068,320

2,333,680

6,501,354

43,910–11,947,264

330,356

12,277,620

Inter-segment turnover

22,24058,680825,370–(906,290)–––

Total segment revenues(excluding metals)

1,253,100

893,603

650,300–(6,420)2,790,583

125,100

2,915,683

External revenues

1,251,820

893,250

645,510––2,790,580

125,100

2,915,680

1,280

350

4,790

–

(6,420)–––160,346

99,231

121,298(68,784)–

312,091783

312,874

165,132

130,217

127,899(54,151)–

369,098

11,537

380,634

10(14,804)(2,718)(14,927)–(32,440)(13,042)(45,482)(4,796)(16,182)(3,883)

294–(24,567)

2,289(22,278)893

10,481–

18,181–

29,555859

30,41329,619Inter-segment revenues
Operating result

F9

Recurring operating result
Non-recurring operating result
IAS 39 effectEquity method companies

F9

Recurring383

10,481–

17,896–28,761859

Non-recurring

(376)

–

–

(392)

–

(768)

–

(768)

IAS 39 effect

885

–

–

676

–

1,562

–

1,562

161,239

109,713

121,298(50,604)–

341,646

1,642

343,287

165,515140,699

127,899(36,255)–

397,858

12,395410,254

Non-recurring EBIT

(366)

(14,804)(2,718)(15,319)–(33,208)(13,042)(46,250)

IAS 39 effect on EBIT

(3,911)(16,182)(3,883)970–(23,005)

2,289(20,717)58,884

57,617

61,835

12,157–

190,49431

190,524

58,88457,042

60,955

12,157–

189,03831

189,069

220,122

167,330

183,134(38,447)–

532,139

1,672

533,811

224,399

197,741

188,855(24,098)–

586,897

12,426599,323

Consolidated total assets

1,878,919

2,661,962

1,074,621

603,519(1,103,360)

5,115,661–

5,115,661

Segment assets

1,878,919

2,626,474

1,074,621

485,999(1,103,360)

4,962,653–

4,962,653

035,488–

117,520–

153,008–

153,008EBIT

F9Recurring EBIT

Depreciation and amortisation

F9

Recurring
EBITDAF9

Recurring EBITDA

Investments in associates

772,775

1,442,307

618,204

1,523,095(1,103,360)

3,253,021–

3,253,021

Capital Employed at 31/12
of previous year

Consolidated total liabilities
F31

911,191752,037

498,139

136,968–

2,298,336

99,074

2,397,409

Capital Employed at 30/06

F31

998,299

976,951

503,565

148,061–2,626,877

92,4972,719,374

Capital Employed at 31/12

F311,149,585

1,205,844

474,522

173,593–

3,003,545–

3,003,545

Average Capital Employedin first half yearF31954,745864,494

500,852

142,515–

2,462,606

95,7862,558,392

Average Capital Employed
in second half year

F31

1,073,942

1,091,397

489,044

160,827–

2,815,211

46,2492,861,459

Average Capital Employedin the year

F31

1,014,344

977,946494,948

151,671–2,638,908

71,0172,709,926

ROCE

F31

16.32%

14.39%

25.84%(23.90%)0.00%

15.08%

17.45%

15.14%

Capital expenditure

F34

45,038225,529

79,526

11,852–361,9443,305

365,250

Total R&D expenditure

F9

119,824

30,351

18,618

4,766–

173,558

1,599

175,157

R&D recognised in operating
expensesF9

107,764

27,485

18,618

4,766–

158,632

1,599

160,232

R&D capitalised as intangible
assetsF34

12,060

2,865

–

–

–

14,926–

14,926

Umicore Annual Report 2017

117

FINANCIAL STATEMENTSGEOGRAPHICAL INFORMATION 2016
NOTE

Thousands of Euros
Total segment turnover

OF WHICHBELGIUM

ASIAPACIFICNORTHAMERICASOUTH
AMERICAAFRICA

TOTAL

6,758,722

121,963

1,898,223

1,326,192

289,144

171,259

10,443,541

924,063

473,540439,236

152,323

41,3618,801

1,581,765

F34

179,497

146,974

65,081

18,448

7,467

2,340

272,834NOTE

EUROPE

OF WHICHBELGIUM

ASIAPACIFICNORTHAMERICASOUTH
AMERICAAFRICA

TOTAL

6,926,079

130,937

3,093,227

1,437,303

346,073

144,581

11,947,264

1,014,335

499,561

591,072

133,497

49,114

8,325

1,796,344

142,691

111,839

198,951

13,673

4,597

2,032

361,944

Total non-current assets
Capital expenditure

EUROPEGEOGRAPHICAL INFORMATION 2017
Thousands of Euros
Total segment turnover
Total non-current assets
Capital expenditure

F34

REVENUES (EXCLUDING METAL)PER BUSINESS GROUP

RECURRING EBITDAPER BUSINESS GROUP

23%

45%

Catalysis
Energy & Surface
Technologies
Recycling
Corporate not included

31%

37%

RECURRING EBIT
PER BUSINESS GROUP
Catalysis
Energy & Surface
Technologies
Recycling
Corporate not included

29%
38%

Catalysis
Energy & Surface
Technologies
Recycling
Corporate not included

32%
32%

CAPITAL EMPLOYED, AVERAGE
PER BUSINESS GROUP
6%
19%
38%

37%

Catalysis
Energy & Surface
Technologies
Recycling
Corporate &Unallocated33%

CAPITAL EXPENDITURE
PER BUSINESS GROUP
12%
23%

3%

62%

R&D EXPENDITURE
PER BUSINESS GROUP
Catalysis
Energy & Surface
Technologies
Recycling
Corporate &UnallocatedCatalysis
Energy & Surface
Technologies
Recycling
Corporate &Unallocated

11%
3%
17%

69%

Umicore Annual Report 2017

118

FINANCIAL STATEMENTS

TURNOVER BY REGION

26%

NON-CURRENT ASSETS BY REGION
EuropeNorth America
South America
Asia-Pacific
Africa1%

EuropeNorth America
South America
Asia-Pacific
Africa

1%

32%

3%
3%

58%

12%

1%
39%
55%

56%

8%

EMPLOYEE COMPENSATION& BENEFITS BY REGION
EuropeNorth America
South America
Asia-Pacific
Africa11%
5%

CAPITAL EXPENDITURE BY REGION

2%

10%

EuropeNorth America
South America
Asia-Pacific
Africa1%
4%

INCOME TAXES BY REGION
EuropeNorth America
South America
Asia-Pacific
Africa

5%

32%
55%

72%
4%
4%

Segment information is presented in respect of the Group’s business segments as deﬁned below.
The segment results, assets and liabilities include items directly attributable to the segment as well as those elements that canreasonably 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 pricereferences, “cost plus” mechanisms are used. Segment turnover and revenue is taking into account intragroup operations. Those aremainly related to recycling services and sales of reﬁned metal from the recycling segment to the other group segments and areimportant 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’s business segments have no single external customer that amounts to 10% or more of the Group’s revenue.

Umicore Annual Report 2017

119

FINANCIAL STATEMENTS

BUSINESS GROUPSThe Group is organised into the following reporting segments:
CATALYSISThe segment comprises the Automotive Catalysts and Precious Metals Chemistry business units. Catalysis provides automotive
catalysts for gasoline and diesel light and heavy duty diesel applications, including on-road and non-on-road vehicles. The businessgroup also offers stationary catalysis for industrial emissions control and produces precious metals-based compounds and catalysts foruse in the pharmaceutical and fine chemicals industries.
ENERGY & SURFACE TECHNOLOGIESThe segment comprises the Cobalt & Specialty Materials, Electro-Optic Materials, Electroplating, Rechargeable Battery Materials andThin Film Products business units. Energy & Surface Technologies’ products are found in applications used in the production and storageof clean energy and in a range of applications for surface technologies that bring specific properties and functionalities to end products.
All the activities offer a closed loop service for the customers. This segment includes the associates Ganzhou Yi Hao Umicore Industries
and Jiangmen Chancsun Umicore Industry.
RECYCLING
The segment consists of the business units Precious Metals Refining, Jewellery & Industrial Metals, Precious Metals Management,
Technical Materials and Platinum Engineered Materials. Recycling treats complex waste streams containing precious and other specialty
metals. The recycling operations can recover 20 of these metals from a wide range of input materials ranging from industrial residues
to end-of-life materials. Other activities include production of precious metals-based materials that are essential for applications asdiverse as high-tech glass production, electrics and electronics.
CORPORATE
Corporate covers corporate activities, shared operational functions and the Group’s Research, Development & Innovation unit. Umicore’s
share in Element Six Abrasives is also included in Corporate. Umicore’s share in Ieqsa which was until June 2017 presented underdiscontinued operations has been transferred to Corporate as from 1 July.
The Building Products and Zinc Chemicals business units are reported as discontinued until their effective divestment. Zinc Chemicals
has been effectively sold at the end of October 2016 and Building Products at the end of September 2017. Hence, the discontinued
operations for 2016 still include 10 months of contribution from Zinc Chemicals as well as the capital gain realised on the sale and for
2017, the discontinued operations still include nine months of contribution from Building Products as well as the capital loss realised on
the sale.
In the geographical segment information, the ﬁgures 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 beneﬁts 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 of the non-recurring operating result and the IAS 39 effect for which deﬁnitions are given in the glossary.
Associate companies are allocated to the business group with the closest ﬁt from a market segment perspective.

Umicore Annual Report 2017

120

FINANCIAL STATEMENTS

F8 BUSINESS COMBINATIONS AND ACQUISITIONS OF ASSOCIATES AND JOINT VENTURES
Thousands of Euros

NOTE

FAIR VALUE 2017

Intangible assets

35,907

Property, plant & equipment

89,196

Other non-current assets

11,736

Non-current assets

136,839

Inventories

130,586

Accounts receivables

114,292

Income tax receivables

1,437

Cash and cash equivalent

8,594

Current assets

254,909

Translation differences(9,022)

Provisions for employee benefits

2,460

Non-current trade & other payables

1,341

Deferred tax liabilities(852)

Environmental provisions

2,471

Provisions for other liabilities and charges

13,468Non-current liabilities

18,891

Current financial debt

43,172

Income tax payables

1,367

Trade and other payables

54,589Current environmental provisions

392

Current liabilities

99,519Net assets acquired
Goodwill
Badwill
Loss on equity investment
Book value of equity investment
Group share purchase price in cash
Net cash & cash equivalent acquired
Net cash out for acquistion of subsidiaries

282,360
F15

14,535(10,900)
1,132(67,023)(220,103)
8,594(211,509)

In March 2017, Umicore announced and completed the acquisition of the combined 50% shareholdings of Samkwang Glass Ind. Co.,
Ltd. and OCI Company Ltd. in the Korean automotive catalyst joint venture, Ordeg Co. Ltd. Umicore – which previously held 50% of theequity – now has full ownership of Ordeg which enables the company to better address the global needs of its automotive catalyst
customers. Ordeg is fully consolidated as from 1 April 2017 and is part of the segment Catalysis. The net asset value of Ordeg in the
opening balance sheet was € 137.6 million, the purchase price for the additional 50% was € 82.4 million and the fair value loss on
the existing 50% shares amounts to € 1.1 million after consideration of a control premium. Taking those elements into consideration,a goodwill of € 10.7 million has been recognised. The aggregated total result of the period of the new acquisition since its 100%
inclusion in the consolidated financial statements of the group corresponds to a gain of € 5.5 million.
At the end of March 2017, Umicore acquired 100% of Eurotungstene, a company within the Eramet Group specialised in developing,
manufacturing and marketing metal powders used in diamond tools and hard metal applications. The acquisition of Eurotungstene,
which is integrated into the Cobalt & Specialty Materials business unit will allow Umicore to broaden its product portfolio to better
serve the needs of its customers. Eurotungstene is fully consolidated as from 1 April 2017 and is part of the segment Energy & Surface
Technologies. The net asset value of Eurotungstene in the opening balance sheet was € 15.6 million and the purchase price was€ 4.7 million. Taking those elements into consideration, a badwill of € 10.9 million has been recognised in other operating income.
The aggregated total result of the period of Eurotungstene since its inclusion in the consolidated financial statement of the groupcorresponds to a gain of € 10.7 million, including the badwill.

Umicore Annual Report 2017

121

FINANCIAL STATEMENTS

In June 2017, Umicore announced that it had reached an agreement to acquire the heavy duty diesel and stationary catalyst businessesof Haldor Topsoe. Haldor Topsoe is a leading producer of high performance catalysts for a wide range of industries. Its automotive
catalysts are used in emission systems for on-road and non-road heavy duty diesel applications and ensure compliance with the moststringent emission norms, including Euro VI. Its stationary business offers catalytic solutions to treat NOx emissions from industrial
sources such as gasfired power plants as well as marine applications. The businesses employ some 280 people, serving customers
from production plants in Frederikssund (Denmark), Houston (Texas), Tianjin (China) and Joinville (Brazil) and from R&D facilities in
Lyngby (Denmark). The closing of the transaction was completed at the end of November 2017 and a preliminary opening balance
sheet has been prepared as of 1 December but may still be subject to adjustments on a number of restatements over the coming
11 months. Haldor Topsoe entities are part of the segment Catalysis and are now fully consolidated as from 1 December. The totalpurchase price was € 133.0 million and the net assets acquired € 129.2 million resulting in a goodwill of € 3.8 million. No result has
been considered for the December closing, taking into account the materiality as the closing was made at year end.

F9 RESULT FROM OPERATING ACTIVITIESThousands of Euros
Sales
Services
Turnover (1)Other operating income (2)

2016

2017

10,340,446

11,822,362

103,095

124,902

10,443,541

11,947,264

59,81371,965OPERATING INCOME OF CONTINUING OPERATIONS

10,503,354

12,019,229

Raw materials and consumables used (3)(9,040,437)(10,324,429)

Payroll and related benefits(636,071)(700,706)

Depreciation of fixed assets(175,944)(190,494)

Impairment loss on fixed assets(21,111)(3,417)

Inventory and bad debt provisions

4,777(9,792)

Depreciation and impairment results(192,278)(203,703)

Services and outsourced refining and production costs(343,433)(404,818)

Royalties, licence fees, consulting and commissions(28,321)(36,330)(4)

Other operating expenses

2,421(3,354)

Increase and decrease in provisions(38,914)(41,544)

Use of provisions

29,311

19,992

Capital losses on disposal of assets(728)(3,961)Other operating expenses(5)

OPERATING EXPENSES OF CONTINUING OPERATIONS(379,664)(470,015)(10,248,450)(11,698,854)

Operating income of discontinued operations

661,311334,291

Operating expenses of discontinued operations(697,994)(319,358)

1) Services mainly include the revenues from tolling contracts.
2) Other operating income for continuing operations mainly include re-invoicing of costs to third parties (€ 27.7 million), badwill recognised on new businesscombination (€ 10.9 million), operating grants (€ 8.5 million), royalties and licence fees (€ 9.7 million), income linked to emission rights (€ 2.1 million),insurance recovery (€ 1.6 million).
3) Raw materials and consumables used include water, gas and electricity for € 83.3 million in 2017 (€ 84.3 million in 2016) for continuing operations.
4) Impairments of ﬁxed assets have been taken and transferred in non-recurring result. Those are mainly related to adjustments to the production
conﬁguration in a number of units.
5) Taxes other than income taxes included in other operating expenses amount to € 19.7 million (€ 9.9 million in 2016) for continuing operations.

Umicore Annual Report 2017

122

FINANCIAL STATEMENTS

R&D EXPENDITURE
NOTE

Thousands of Euros
R&D recognised in Other operating expenses
R&D capitalised as intangible assets

F14

2016

2017

137,561

158,632

15,22814,926

Total R&D expenditure for continuing operations

152,790

173,558

Total R&D expenditure for discontinued operations

3,070

1,599

Total R&D expenditure for continuing operations was € 173.6 million in the fully consolidated companies (€ 175.2 million including thediscontinued operations). The part of the R&D expenditures that is directly recognised in the other operating expenses amounts to€ 158.6 million for the continuing operations (€ 160.2 million including discontinued operations).
NON-RECURRING ELEMENTS AND IAS 39 EFFECTS INCLUDED IN THE RESULT, INCLUDING DISCONTINUED OPERATIONS
2016
TOTAL

RECURRINGTOTALRECURRING

11,096,179

11,096,179––

12,277,619

12,277,312

307–

68,48567,087

2,522(1,124)75,90060,262

16,655(1,017)

Operating income

11,164,664

11,163,265

2,522(1,124)

12,353,519

12,337,574

16,962(1,017)

Raw materials and consumables used

(9,492,911)(9,475,883)(108) (16,920) (10,550,782)(10,543,983)(8,735)

1,936(741,105)(741,064)(41)–(754,832)(751,169)(3,663)–Thousands of Euros

NOTE

Turnover
Other operating income

Payroll and related benefits
Depreciation and impairment resultsof which depreciation and amortisation
Other operating expenses
Operating expenses

IAS 39EFFECT

2017

NONRECURRING

NONRECURRING

IAS 39EFFECT(183,181)(185,105)(2,836)

4,759(203,651)(195,624)(6,294)(1,733)(176,024)(176,024)––(190,524)(189,069)(1,455)–(529,247)(428,849)(104,197)

3,799(508,946)(467,419)(20,063) (21,464)(107,182) (8,362) (12,018,211) (11,958,195)(38,755) (21,261)(10,946,445) (10,830,901)

Income from other financial investments(4,698)68–(22,435)

1,254

Result from operating activities

213,521332,433(109,425) (9,487)

312,873

380,634

Net contribution from equity method companies

18,04018,315(792)

517

30,41329,619EBIT

231,557

350,747

EBITDA

407,581

526,771(110,217)(8,973)

343,287

410,254(46,250) (20,717)(110,217)(8,973)533,811599,323(44,795) (20,717)(4,766)(23,689)–(45,482) (22,278)
(768)

1,562

Finance cost

F11

(20,700)(31,868)–

11,169(38,344)(41,865)–

3,519

Income taxes

F13(69,501)(75,279)

5,654

123

(78,690)(87,185)

4,525

3,971

141,360

243,601(104,563)

2,323

226,253

281,202of which minority shares

10,636

10,746(155)

46

14,30814,431of which group shares

130,724

232,855(104,408)

2,277

211,943

266,771

Net result(41,725) (13,227)
119

(243)

(41,844) (12,984)

Non–recurring items had a negative impact of € 46.3 million on EBIT. Restructuring charges accounted for € 20 million and wereprimarily related to the sale of Thin Film Products large area coatings activity and the closure of its production site in Providence aswell as the discontinuation of production activities at Schöne Edelmetaal in the business unit Jewellery & Industrial Metals. Other items
consisted of a € 13 million capital loss on the sale of Building Products (taking into account that no depreciation charges on its assets
were recognised as from the second half of 2015 in accordance with IFRS 5), an impairment of Umicore’s shareholding in Nyrstarof € 7 million and environmental provision charges of € 7 million. The impact of non-recurring charges on the net result (Group
share) amounted to € 41.7 million. IAS 39 accounting rules had a negative effect of € 20.7 million on EBIT and a negative impact of€ 13.2 million on net result (Group share). The impact concerns timing differences imposed by IFRS that relate primarily to transactionaland structural metal and currency hedges. All IAS 39 impacts are non-cash in nature.

Umicore Annual Report 2017

123

FINANCIAL STATEMENTS

F10 PAYROLL AND RELATED BENEFITS
2016

2017

Wages, salaries and direct social advantages(476,813)(515,680)

Other charges for personnel(25,727)(30,801)

Temporary staff(10,059)(13,132)

Share-based payments(3,548)(6,129)

Employee salaries(516,147)(565,742)

Employer’s social security(95,338)(99,131)

Defined benefit contributions(11,204)(12,042)

Contribution to defined contribution plan

(15,307)(18,699)

Employer’s voluntary contributions (other)(3,194)(2,553)Pensions paid directly to beneficiaries(3,503)(4,342)

Provisions for employee benefits (-increase/+ use and reversals)

8,622

1,803

Pensions and other benefits(24,586)(35,833)

PAYROLL AND RELATED BENEFITS OF CONTINUING OPERATIONS(636,071)(700,706)

Payroll and related benefits of discontinued operations(105,034)(54,126)

2016

2017

Thousands of Euros

AVERAGE HEADCOUNT IN CONSOLIDATED COMPANIESExecutives and managerial staff

1,899

1,819

Non-managers

8,276

8,026

Total including discontinued operations

10,1759,845

of which discontinued operations

901

–

9,274

9,845

NOTE

2016

2017

F28

1,217,750

1,170,000

Total for continuing operations

SHARE-BASED PAYMENTS
Thousands of Euros
Number of stock options granted
Valuation model

Present Economic Value

Assumed volatility (% pa)

25.00

25.00

Risk-free interest rate (% pa)(0.002)(0.004)0.10

Dividend increase (% pa)

0.10Rate of pre-vesting forfeiture (% pa)

NA

NARate 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)

100.00100.00Fair value per granted instrument determined at the grant date (€)

2.34

3.87

Total fair value of options granted

2,843

4,529

47,400 shares granted at 25.50 €

–

1,209

7,400 shares granted at 25.74 €–190

10,312 shares granted at 31.27 €–322

6,800 shares granted at 24.73 €–168

7,400 shares granted at 17.21 €127–

59,250 shares granted at 16.63 €985–

10,368 shares granted at 22.43 €233–

Total fair value of shares granted

1,345

1,890

Reversal provision previous year

(368)

–

SHARE-BASED PAYMENTS

3,821

6,418

Share-based payments to discontinued operations

(273)

(289)

Total Share-based payments continuing operations

3,548

6,129

Umicore Annual Report 2017

124

FINANCIAL STATEMENTS

The Group recognised a share-based payment expense of € 6.1 million during the year for continuing operations.
The part of this expense related to stock options is calculated by an external actuary using the Present Economic Value model whichtakes into account all features of the stock option plans and the volatility of the underlying stock. This volatility has been determinedusing 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 2017, shares have been granted
to top management resulting in an extra charge of € 1.6 million for continuing operations.
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”.

F11 FINANCE COST – NET
Thousands of Euros

2016

2017

Interest income

3,581

4,057

Interest expenses(9,937)(23,540)

Discounting of non-current provisions(5,964)(9,585)

Foreign exchange gains and losses(2,535)(6,864)

Other financial income

1,248

298

Other financial expenses(4,062)(1,687)

Total of continuing operations(17,668)(37,323)

Total of discontinued operations(3,031)(1,023)The net interest charge in 2017 totalled € 19.5 million, in line with the increase of the indebtedness.
The discounting of non-current provisions relates mainly to employee beneﬁts provisions and to provisions for other liabilities andcharges. This amount is inﬂuenced by the present value of these liabilities, which in turn is inﬂuenced by changes in the discount rate,by the cash-out proﬁle and by the recognition of new non-current liabilities. Most of the discounting results in 2017 were booked in
Belgium, Germany and Brazil.
Foreign exchange results include realised exchange results and the unrealised translation adjustments on monetary items using theclosing rate of the period.
They also include fair value gains and losses on other currency ﬁnancial instruments (see note F33). Other ﬁnancial expenses include
payment discounts, bank expenses and other ﬁnancial fees incurred.

F12 INCOME FROM OTHER FINANCIAL INVESTMENTS
Thousands of Euros

2016

2017

Capital gains and losses on disposal of financial investments(4,204)(1,301)45

1,380

Dividend income
Interest income from financial assets

10

(3)

Impairment results on financial investments(1,788)(8,361)

Total for continuing operations(5,937)(8,286)

Total for discontinued operations

1,240(14,149)

The impairment result on ﬁnancial investments mainly relates to impairments on the Nyrstar shares and on the capital loss realised on
the previously 50% held in Ordeg.
The capital losses realised on disposal of financial investments are linked to the sale of Umicore Vital Thin Film Technologies in China.

Umicore Annual Report 2017

125

FINANCIAL STATEMENTS

F13 INCOME TAXES
2016

2017

Current income tax(71,046)(76,714)

Deferred income tax

14,626

1,535

Total tax expense for continuing operations(56,420)(75,178)

Total tax expense for discontinued operations(13,081)(3,512)
312,090

Thousands of Euros
INCOME TAX EXPENSE
RECOGNISED IN THE INCOME STATEMENTRELATIONSHIP BETWEEN TAX EXPENSE (INCOME) AND ACCOUNTING PROFIT
Result from operating activities

248,966

Financial result(17,668)(37,323)

Profit (loss) before income tax of consolidated companies for continuing operations

231,298

274,767

Weighted average theoretical tax rate (%)
Income tax calculated at the weighted average theoretical tax rate for continuing operations(30.38)(27.47)(70,264)(75,470)(8,941)(7,277)

Tax effect of:
Expenses not deductible for tax purposes
Tax-exempted revenues

1,918

7,711

Dividends from consolidates companies & Associates(5,679)(3,071)

Gains & Losses taxed at a reduced rate

20

4

7,943

10,210

Tax computed on other basis(1,076)(2,846)

Utilisation of previously unrecognised tax losses

15,812

9,009

Write-down (or reverse of previous write-down) of DTA(1,404)(533)

Change in applicable tax rate

1,776

(14,360)

Tax holidays

2,310

4,654

Tax incentives deductible from the taxable base

Other tax credits (excluding R&D tax credits)

278

62

Non-recoverable foreign withholding taxes(4,008)(4,807)

Previous years adjustments
Other
Tax expense at the effective tax rate for the year

399

2,617

4,496

(1,082)(56,420)(75,179)

The weighted average theoretical tax rate evolved from 30.38% in 2016 to 27.47% in 2017, for the continuing operations.
Excluding the impact of non-recurring items and the IAS 39 effect, the recurring effective tax rate for 2017 was 25.8% for the continuing
operations (25.7% including the discontinued operations). This increase compared to the 23.3% in 2016 (25.0% including thediscontinued operations) reflects amongst others the changes in the geographical earnings mix.

Umicore Annual Report 2017

126

FINANCIAL STATEMENTS

F14 INTANGIBLE ASSETS OTHER THAN GOODWILL
Thousands of Euros

DEVELOPMENT
EXPENSESCAPITALISEDCONCESSIONS,PATENTS,LICENCES, ETC.

SOFTWARE

CO2 EMISSIONRIGHTSOTHER
INTANGIBLEASSETSTOTALAt the beginning of previous year
Gross value

88,705

18,395

129,538

9,702

35,090281,429

Accumulated amortisation(48,073)(11,600)(91,819)(21)(9,986)(161,499)

Net book value at the beginning of previous year

40,632

6,795

37,7209,680

25,104

119,930

Additions

15,22859,867

1,418

–

4,251

80,764

Disposals

–

–

(88)

(702)

–

(790)

Amortisation charged (included in “Depreciation andimpairments”)(12,330)(5,343)(9,311)–(3,596)(30,580)

Impairment losses recognised (included in “Depreciationand impairments”)(1,430)

–

(706)

–

–

(2,136)

–

–

–

(100)

–

(100)

Emission rights allowances
Translation differences
Other movements

373

(229)

357

0

149

650

2,149

2,087

5,143

–

(4,369)5,010

At the end of previous year

44,621

63,17734,534

8,879

21,539172,749

Gross value

106,741

80,073

134,489

8,879

31,505

361,685

Accumulated amortisation(62,120)(16,896)(99,955)–(9,967)(188,938)

Net book value at the end of previous year

44,621

63,17734,534

8,879

21,538

172,748
35,907

Acquisition through business combinations–

35,513394––

Additions

14,926

4,578

1,069

231

4,817

25,621

Disposals

–

–

(247)

(1,695)(266)(2,207)

Amortisation charged (included in “Depreciation andimpairments”)(11,811)(10,955)(9,513)–(3,701)(35,981)

Impairment losses recognised (included in “Depreciationand impairments”)(1,644)

–

(522)

–

–

(2,166)

–

–

–

(33)

–

(33)
(2,755)Emission rights allowances

(959)

(320)

(652)

(0)

(822)

Other movements

Translation differences(2,246)(7,275)

4,688

–

(180)

(5,013)At the end of the year

42,88684,71829,751

7,382

21,386

186,122

Gross value

117,039

113,120

136,625

7,382

34,466408,632

Accumulated amortisation(74,152)(28,402)(106,874)–(13,081)(222,509)

Net book value for continuing operations

42,88784,71829,751

7,382

21,385

186,122“Additions” are mainly explained by capitalised expenses in new information systems and internally generated developments.
€ 16.2 million are linked to own productions, of which € 14.1 million are development expenses.
The acquisitions through business combination are related mainly to the acquisition of Haldor Topsoe.
The line “other movements” mainly includes the sale of Umicore Vital Thin Film Technologies (China) and 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 2017

127

FINANCIAL STATEMENTS

F15 GOODWILL
31/12/2016

31/12/2017

Gross value

144,935

150,820

Accumulated impairment losses(13,075)(18,228)

Net book value at the end of previous year

131,860

132,592–

14,535

Thousands of Euros
At the end of the previous year

Acquisition through business combinations
Translation differences732(4,442)At the end of the year

132,592

142,685

Gross value

150,820

158,536

Accumulated impairment losses(18,228)(15,851)

Net book value for continuing operations

132,592

142,685

Net book value for discontinued operations

676–

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 acquisitions of remaining 50% of Ordeg and Haldor Topsoe entities (see note F8) and to
exchange differences.
The goodwill has been allocated to the primary segments as follows:
CATALYSISENERGY & SURFACETECHNOLOGIESRECYCLINGDISCONTINUEDOPERATIONS

TOTAL

31/12/2016

37,202

77,05018,340676

133,268

31/12/2017

51,65872,74518,282–

142,685

Thousands of Euros

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 cash ﬂow modelling on the basis of the Group’s operational plans which typically look forward
five years. On macroeconomic indicators such as currency and metal prices, the testing uses typically prevailing market conditions.
The rates used are typically the ones observed on international exchanges in the last quarter of the year.
The 2017 modelling used an average tax rate of 28.5% (in 2016, average tax rates of 27.5% to 28.5% were used) and a weighted
average cost of capital post-tax of 8.5% (same as in 2016). Terminal values were determined on the basis of a perpetual growth rateof on average 2% (same as in 2016). Inﬂation rates were based on guidance coming from national and international institutes like the
NBB or ECB.

Umicore Annual Report 2017

128

FINANCIAL STATEMENTS

F16 PROPERTY, PLANT AND EQUIPMENTLAND AND
BUILDINGS

PLANT,MACHINERYAND
EQUIPMENTFURNITURE
AND
VEHICLESOTHERTANGIBLEASSETSCONSTRUCTION
IN PROGRESS
AND ADVANCEPAYMENTS

TOTAL

740,014

1,529,768

192,541

16,481

157,079

2,635,882

Accumulated depreciation(394,724)(1,065,576)(138,531)(14,459)–(1,613,291)

Net book value at the beginning of previous year

345,290

464,192

54,0092,021

157,079

1,022,591

Additions

16,192

33,766

9,126

361

147,572

207,017

Disposals(54)(1,005)

(424)

(1)

(2,653)(4,137)

Depreciations (included in “Depreciation and impairments”)(29,133)(98,874)(16,789)(203)–(144,999)

Net impairment losses recognised (included in“Depreciation and impairments”)(5,196)(11,867)(1,657)(4)–(18,724)

Thousands of Euros
At the beginning of previous year
Gross value

Translation differences

3,636

6,279

1,107

(14)

611

11,618Other movements

25,598106,610

9,947

(108)

(145,009)(2,962)At the end of previous year

356,333

499,100

55,3202,052

157,600

1,070,404

Gross value

780,351

1,660,666

202,829

15,727

157,599

2,817,172

Accumulated depreciation(424,018)(1,161,566)(147,510)(13,676)–(1,746,770)

Net book value at the end of previous year

356,333

499,100

55,3192,052

157,599

1,070,403

Acquisition through business combinations

57,981

29,214

711

64

1,226

89,196

Additions

5,747

25,7159,234

650

309,710351,056

Disposals(2,182)(4,881)

(677)

(3)

(201)

(7,944)

Depreciations (included in “Depreciation and impairments”)(29,892)(108,446)(15,880)(161)–(154,379)(26)(1,427)

(327)

–

–

(1,779)Net impairment losses recognised (included in“Depreciation and impairments”)
Translation differences(9,715)(14,941)(1,538)(119)(4,477)(30,790)

Other movements

29,002

111,585

9,521(1,475)(162,984)(14,351)

407,247

535,919

56,363

1,007

300,874

1,301,411

3,421

28

2

–

–

3,451

Gross value

859,433

1,817,170

212,731

15,305300,874

3,205,515

Accumulated depreciation(452,186)(1,281,251)(156,368)(14,298)–(1,904,103)

Net book value for continuing operations

407,247

535,919

56,363

1,007

300,874

1,301,411

4,056

101

30

–

–

4,187

Accumulated amortisation

(635)

(73)

(27)

–

–

(736)

Net book value for continuing operations

3,421

28

2

–

–

3,451

At the end of the financial year
Of which leasing

Gross value

The non-maintenance related additions to property, plant and equipment primarily relate to Umicore’s growth in clean mobility andrecycling. The Energy & Surface Technologies business group accounted for over 60% of the capital expenditures, reflecting in particular
the ongoing investment programmes to increase production capacity in cathode materials.
The acquisitions through business combination are related to the acquisitions of Ordeg, Eurotungstene and Haldor Topsoe entities.
The line “other movements” mainly includes the sale of Umicore Vital Thin Film Technologies (China) and 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 2017

129

FINANCIAL STATEMENTS

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 andjoint ventures:
COUNTRY

MEASUREMENTCURRENCYPERCENTAGEPERCENTAGE

2016

2017

For continuing operations
ASSOCIATESIEQSA(1)

Peru

PEN

40.00

40.00

Ganzhou Yi Hao Umicore Industries

China

CNY

40.00

40.00

United Kingdom

USD

40.22

40.22

China

CNY

40.00

40.00

Korea

KRW

50.00

100.00Element Six Abrasives
Jiangmen Chancsun Umicore Industry Co.,LTD
JOINT VENTURES
Ordeg(2)(1) As from 1 July 2017, Ieqsa is again reported in the Corporate segment in continuing operations. IEQSA was reported in discontinued operations in 2016.
(2) In March 2017, Umicore announced and completed the acquisition of the combined 50% shareholdings of Samkwang Glass Ind. Co., Ltd. and OCI Company
Ltd. in the Korean automotive catalyst joint venture, Ordeg Co. Ltd. Umicore – which previously held 50% of the equity – now has full ownership of Ordeg
since 1 April.

In 2016, the stake in Rezinal (in discontinued operations) was sold in August 2016 to our partner in the joint-venture.
Within this note, only the figures of the continuing operations are shown.
The elements recognised in Other Comprehensive Income for investments accounted for using the equity method are mainly related
to employee benefits reserves and translation reserves.
Investments in associates are accounted for in accordance with the equity method and represent approximately 3% of Umicore’s
consolidated balance sheet total. Umicore has no individual material investments in associates. Considering the objectives of the
IFRS 12 disclosure requirements, the most signiﬁcant associate is Element Six Abrasives, in which Umicore holds 40.22%. Element Six
Abrasives is a synthetic diamond supermaterials group, part of De Beers Group, its majority shareholder. The group operates worldwide
with primary manufacturing facilities in China, Ireland, Germany, the UK, the US and South Africa. Element Six Abrasives is a proﬁtablegroup, generating positive cash ﬂow and a stable recurring dividend income for Umicore. The group’s functional currency is US dollar.
Umicore is represented in the Board of Directors and the audit committee of Element Six Abrasives, which enables to sufﬁciently
protect its interest in this associate. Besides its equity share in this company, Umicore has no other commitments, guarantees or
obligations arising from its involvement in this associate. Non-recurring results and material contingencies, if any, in respect of
the ﬁnancial statements of Element Six Abrasives, are separately disclosed under the relevant captions of Umicore’s consolidated
ﬁnancial statements.
Thousands of Euros
At the end of previous year

NET BOOKVALUEGOODWILL

TOTAL

153,526

41,806

195,332(77,634)

Change in scope(77,634)–

Profit for the year

29,555–29,555

Dividends(12,331)–(12,331)

1,323

–

1,323

Change in other reserves
Translation differences
Other movements
At the end of the year for continuing operations

640

(713)

(74)

12,116

4,722

16,838107,194

45,814

153,008

Umicore Annual Report 2017

130

FINANCIAL STATEMENTS

Umicore’s share in the aggregated balance sheet and profit and loss items of the associates and joint ventures would have been
as follows:
31/12/2016

31/12/2017

Assets

305,420

239,481

Liabilities

135,092

113,883

Turnover328,082

325,655

Net result

16,78629,555

Thousands of Euros

In the above table, they are no more assets and liabilities related to joint-ventures in 2017 as Umicore has now 100% in Ordeg.

F18 AVAILABLE-FOR-SALE FINANCIAL ASSETS AND LOANS GRANTEDAVAILABLE-FOR-SALE
FINANCIAL ASSETSLOANSGRANTED29,236

1,534

Increase

8,554

80

Decrease(9,709)0

Impairment losses (included in “Income from other financial instruments”)(1,949)0Thousands of Euros
NON-CURRENT FINANCIAL ASSETSAt the beginning of previous year

Reversals of impairment losses (included in “Income from other financial instruments”)

161

0Translation differences

24

(36)

Fair value recognised in equity

111

0

Other movements

(14)

(377)

26,414

1,201

At the end of previous year
Acquisition through business combinations

3

432

Change in scope

0340

Increase

119

9,785

Decrease

(570)

(93)

Impairment losses (included in “Income from other financial instruments”)
Translation differences(7,229)

0

(18)

(373)

Fair value recognised in equity

3,738

0

Other movements

(122)

(8)

22,331

11,285At the end of the financial year for continuing operations
CURRENT FINANCIAL ASSETSAt the end of the preceding financial year

0

14,787

Decrease0(13,000)

Translation differences

0

(37)

0

1,750

At the end of the financial year for continuing operations

The movements of the available-for-sale financial assets are mainly linked to the Nyrstar shares.
The movements in the loans granted are related to repayment of loans granted in the context of the sale of the Zinc Chemical activities
and a new loan granted in the context of the sale of Umicore Vital Thin Film Technologies in China and to a convertible loanin Luxemburg.

Umicore Annual Report 2017

131

FINANCIAL STATEMENTS

F19 INVENTORIES
Thousands of Euros

31/12/2016

31/12/2017

ANALYSIS OF INVENTORIES
Base product with metal hedging – gross value

1,018,679

1,401,385

Base product without metal hedging – gross value

162,865

216,769

Consumables – gross value

61,291

63,263

Write-downs(66,976)(70,289)

Advances paid

5,680

15,024Contracts in progress

7,282

2,272

1,188,822

1,628,423

92,531–

Total inventories for continuing operations
Total of discontinued operations

Inventories have increased by € 439.6 million compared with December 2016. This increase is mainly due to higher activities andhigher metal prices but also to new business combinations.
Reversals of impairments of permanently tied-up metal inventories had an impact of € 1.2 million for continuing operations.
The expense recognised in Raw Materials and Consumables in the income statement amounts to € 406.2 million, before the IAS 39
adjustment and for the continuing operations.
Based on metal prices and currency exchange rates prevailing at the closing date, the value of metal inventory would have been
€ 1,050 million higher than the book value. However, these inventories cannot be realised as they are tied up in manufacturing andcommercial operations.
There are no pledges on, or restrictions to, the title on inventories.

F20 TRADE AND OTHER RECEIVABLES
31/12/2016

31/12/2017

Cash guarantees and deposits

9,532

12,068Other receivables maturing > 1 year

1,158

1,048

Assets employee benefits

424

1,029

Total for continuing operations

11,11414,145

Total of discontinued operations

6,188

–

706,656

1,075,389

Thousands of EurosNOTE

NON-CURRENT

CURRENT
Trade receivables (at cost)
Trade receivables (write-down)(9,279)(7,509)Other receivables (at cost)

78,778145,519

Other receivables (write-down)(6,893)(4,513)

Interest receivable

244

273

Fair value receivable financial instruments held for cash flow hedging

F33

21,347

46,628Fair value receivable other financial instruments

F33

15,959

11,169Deferred charges and accrued income

37,45868,705

Total for continuing operations

844,271

1,335,660

Total of discontinued operations

23,931–

Current trade receivables have increased by € 491.4 million. The increase is mainly due to higher business volumes through the year,
higher metal prices but also to new business combinations as per note F8.

Umicore Annual Report 2017

132

FINANCIAL STATEMENTS

OVERDUE BETWEENTOTALNOTE DUE

0-30 DAYS

30-60 DAYS

60-90 DAYS

> 90 DAYS

Trade receivables(w/o doubtful and securitised receivables) – at cost

685,937

554,124

96,56423,543

4,552

7,152

Other receivables – at cost

78,77877,745

(137)

304

(517)

1,382

1,053,414

818,341

177,391

47,036

4,680

5,967

145,519

139,350

1,785

(105)

237

4,251

Thousands of Euros
AGEING BALANCE ANALYSIS AT THE END OF PREVIOUS YEAR

AGEING BALANCE ANALYSIS AT THE END OF YEAR
Trade receivables(w/o doubtful and securitised receivables) – at cost
Other receivables – at cost

CREDIT RISK – TRADE RECEIVABLES
Thousands of Euros
AT THE BEGINNING OF PREVIOUS YEAR

TRADE
RECEIVABLES(WRITE-DOWN)OTHERRECEIVABLES(WRITE-DOWN)

TOTAL(13,818)(8,570)(5,253)

Change in scope

(724)

–

(724)

Impairment losses recognised in P&L(152)(1,633)(1,785)

Reversal of impairment losses

104

1

105

Impairment written off against asset carrying amount

928

–

928

2

(0)

2

Translation differences

(866)

(10)

(876)

At the end of previous year

(9,279)(6,894)(16,169)

AT THE BEGINNING OF THE FINANCIAL YEAR

Other movements(9,279)(6,894)(16,169)

Impairment losses recognised in P&L(5,140)(608)(5,748)

Reversal of impairment losses

5,951

2,981

8,932

Impairment written off against asset carrying amount

242

–

242

Other movements

290

–

286

Translation differences
At the end of the financial year for continuing operations

427

7

433

(7,509)(4,514)(12,023)

In principle, Umicore uses credit insurance as a means to mitigate the credit risk related to trade receivables. Two credit policies havebeen concluded with two different insurers. At closing, € 566 million of the group trade receivables of the continuing operations
were covered by a policy where indemniﬁcation in case of non payment amounts to 95% with an indemniﬁcation cap set at regionalor country level. The other policy covered € 188 million of trade receivables with a global annual deductible of € 5 million and amaximum indemnity per year of € 70 million.
Finally some of our businesses function without credit insurance and instead internal credit limits are set based on available ﬁnancial
information and business knowledge. Theses limits are duly reviewed and approved by management.

F21 DEFERRED TAX ASSETS AND LIABILITIESThousands of Euros

31/12/2016

31/12/2017

Tax assets and liabilities
Income tax receivables

32,51736,036

Deferred tax assets

117,605

114,686

Income tax payable(57,666)(62,830)

Deferred tax liabilities(6,924)(3,540)Net deferred taxes for discontinued operations

3,648

–

Umicore Annual Report 2017

133

FINANCIAL STATEMENTSASSETS
Thousands of Euros
At the end of preceding financial year

LIABILITIES

NET

2016

2017

2016

2017

2016

2017
110,681

104,057

117,605(6,235)(6,924)

97,822

Deferred tax recognised in the P&L

1,546

371

13,0801,164

14,626

1,535

Deferred tax recognised in equity(9,116)(10,009)

4,585

3,173

(4,531)(6,836)
8,673

–

7,821

–

852

–

Change in scope

Acquisitions through business combination

(162)

28

(75)

–

(237)

28

Translation adjustments

3,208(3,147)

(152)

158

3,056

(2,989)Transfer

18,202

1,965(18,127)(1,964)75

1Other movements
At the end of financial year for continuing operations
Total of discontinued operations

(130)

52

–

–

(130)

52

117,605

114,686(6,924)(3,540)110,681111,146

3,812

–

(164)

–

3,648

–

9,241

8,857

(17,618)(16,139)(8,377)(7,282)

–

184

(565)

(394)

(565)

(210)

4,929

8,032

(22,110)(19,386)(17,181)(11,354)

DEFERRED TAX IN RESPECT OF EACH TYPE OF TEMPORARY DIFFERENCE
Intangible assets
Goodwill on fully consolidated companies
Property, plant and equipment

46

365

(33)

(129)

13

236

Inventories

Long-term receivables

29,69236,452(17,120)(18,999)

12,572

17,453

Trade and other receivables

5,590

10,932(9,107)(15,549)(3,517)(4,617)

Group Shareholder’s equity

290

–

(508)

(3,557)(218)(3,557)Long-term Financial Debt and other payable

12,090

9,435

(736)

(1,364)

11,354

8,071

Provisions Employee Benefits

67,894

68,226(1,444)(1,582)

66,45066,644

Provisions for Environment

17,873

13,299

(531)

(535)

17,342

12,764
594

Provisions for other liabilities and charges

4,816

3,836

(420)

(3,242)

4,396

Current Financial Debt

2,714

37

–

–

2,714

37

Current Provisions for Environment

1,878

3,073

–

–

1,878

3,073

Current Provisions for Other Liabilities & Charges

5,798

8,340

(8)

(8)

5,790

8,332

Trade and other payables

15,41923,709(2,232)(8,769)13,187

14,940Total deferred tax due to temporary differences

178,270

194,777(72,433)(89,653)

105,837

105,124Tax losses to carry forward

77,15653,464––

77,15653,464
1,541

Investments deductions

2,152

1,541

–

–

2,152

Notional interest carried forward

8,549

719

–

–

8,549

719

Other

5,207

5,959

–

–

5,207

5,959

Deferred tax assets not recognised(88,220)(55,662)––(88,220)(55,662)

Total tax assets/liabilities

183,114200,798(72,433)(89,653)

110,681111,146

Compensation of assets and liabilities within same entity(65,509)(86,112)65,50986,112

Net amount

117,605

114,686(6,924)(3,540)110,681111,146

Thousands of Euros

2016

2017

2016

2017

BASE

BASE

TAX

TAX

302,275

191,477

88,22055,662

Amount of deductible temporary differences, unused tax losses or tax
credits for which no deferred tax asset is recognised in the balance sheet
Expiration date with no time limit

Umicore Annual Report 2017

134

FINANCIAL STATEMENTS

The changes of the period in temporary differences are charged to the income statement except those arising from events that wererecognised directly in the other comprehensive income.
The main movements in deferred tax recognised directly in the other comprehensive income are deferred taxes generated by temporary
differences included within the lines ”Trade and other receivables” (negative by € 4.4 million), “Trade and other payables” (positive by€ 2.4 million) and “Provisions for employee beneﬁts” (negative by € 4.8 million).
Deferred tax assets are only recognised to the extent that their utilisation is probable, i.e. if a tax beneﬁt 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 recognised.
Unrecognised deferred tax assets of € 55.7 million mainly arise from tax losses (€ 50.2 million), deductions for investments(€ 1.8 million), and temporary differences on property plant and equipment (€ 2.0 million).
In accordance with IAS 12, a deferred tax liability on untaxed reserves of the Belgian companies, amounting potentially to€ 37.5 million, has not been recognised as management anticipates that this liability will not be incurred in a foreseeable future.

F22 NET CASH AND CASH EQUIVALENTS
Thousands of Euros

31/12/2016

31/12/2017

10,521

16,94825

41

CASH AND CASH EQUIVALENTS
Short-term investments: bank term deposits
Short-term investments: term deposits (other)
Cash-in-hands and bank current accounts
Total cash and cash equivalents

73,914

151,126

84,460168,115

Bank overdrafts

13,185

12,218Net cash as in Cash Flow Statement for continuing operations

71,275

155,897

Total of discontinued operations

45,326–All cash and cash equivalents are fully available for the Group.
Prudent liquidity risk management implies maintaining sufﬁcient cash and marketable securities, the availability of funding throughan 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 ﬂexibility in funding by maintaining availability undercommitted credit lines. Excess liquidities are invested for very short periods and are spread over a limited number of banks, allenjoying a satisfactory credit rating.

Umicore Annual Report 2017

135

FINANCIAL STATEMENTS

F23 CURRENCY TRANSLATION DIFFERENCES AND OTHER RESERVES

The detail of the Group’s share in currency translation differences and other reserves is as follows:
AVAILABLEFOR-SALE
FINANCIALASSETSRESERVES

CASH
FLOW
HEDGE
RESERVESDEFERREDTAXES
DIRECTLY
RECOGNISEDIN OCICHANGES IN POSTEMPLOYMENT BENEFITS,
ARISING FROMCHANGES IN ACTUARIAL
ASSUMPTIONS–(21,873)

63,330(208,473)

28,690(37,191)(175,517)

111

23,582(438)(26,246)

3,820

–

829

Remeasurements derecognised out of othercomprehensive income–

12,624(4,174)

–

–

–

8,450

Transfer from/to retained earnings

–

–

–

–

(9,094)–(9,094)

Change in scope

–

108

(746)

3,777

(166)

1,106

4,079

Exchange differences

–

(214)

63

(1,051)–

28,25527,054111

14,22758,035(231,993)

23,250(7,830)(144,199)

Thousands of Euros
Balance at the beginning of previous year
Remeasurements recognised in othercomprehensive income

Balance at the end of previous year

SHAREBASEDCURRENCYPAYMENT TRANSLATIONRESERVES DIFFERENCES

TOTAL

Balance at the beginning of the year

111

14,22758,035(231,993)

23,250(7,830)(144,199)

Remeasurements recognised in othercomprehensive income

3,738

22,666(9,308)

2,369

6,418

–

25,884Remeasurements derecognised out of othercomprehensive income–(7,167)

2,749

14

–

–

(4,404)

Transfer from/to retained earnings

–

–

–

–

(6,402)–(6,402)

Change in scope––(3,711)

5,769

166

1,954

4,178

Exchange differences

–

(221)

97

3,918

–

(81,366)(77,572)

3,849

29,50547,862(219,923)

23,433(87,242)(202,517)

Balance at the end of the year

Gains and losses recognised in the other comprehensive income (OCI) on available-for-sale ﬁnancial assets relate to the fair value
adjustments of the period on the Nyrstar shares (refer to note F18 on available-for-sale ﬁnancial assets).
The net gains recognised in the OCI regarding cash ﬂow hedges (€ 22.7 million) are the changes in fair value of new cash ﬂow
hedging instruments or existing ones at opening but which have not yet expired at year end. The net gains derecognised from OCI(€ 7.2 million) are the fair values of the cash ﬂow hedging instruments existing at the opening which expired during the year. A gainof € 9.8 million was recognised in the income statement, as a result of expired cash ﬂow hedges.
New net remeasurements as a result of changes in the actuarial assumptions on the deﬁned post-employment beneﬁt plans havebeen recognised in OCI for € 2.4 million.
The 2017 shares and stock option plans have led to a share-based payment reserve increase of € 6.4 million, including discontinued
operations (refer to note F10 on employee beneﬁts). € 6.4 million, linked to exercised options and free shares plans, have beentransferred to retained earnings.
The change in currency translation differences is mainly due to the weakening of the US dollar (USD), Korean won (KRW), Brazilian real
(BRL) and Chinese yuan (CNY) compared to the Euro currency.

Umicore Annual Report 2017

136

FINANCIAL STATEMENTS

F24 FINANCIAL DEBT
Thousands of Euros

BANK
LOANS

OTHER
LOANS

TOTAL
71,296

NON-CURRENTAt the beginning of previous year

70,013

1,286

Increase

–

3,330

3,330

Decrease(50,013)(193)(50,205)

Transfers
At the end of previous year

–

(27)

(27)

20,0004,396

24,394690,000

Increase

690,000(0)

Decrease

0

(286)

(285)

Transfers(20,000)(4)(20,004)

690,000

4,106

694,104

At the end of the financial year for continuing operations
CURRENT PORTION OF LONG-TERM FINANCIAL DEBTS
At the end of the preceding financial year

–

144

144

20,0003

20,00320,000147

20,147SHORT-TERM
LOAN:
SHORT-TERM
BANK COMMERCIALBANK LOANS OVERDRAFTS
PAPER

OTHER
LOANS

TOTAL

Increase/decrease
At the end of the financial year for continuing operations

Thousands of Euros
CURRENTAt the end of the preceding financial year
Increase/decrease (including CTD’s)
At the end of the financial year for continuing operations

117,205

13,185

268,607

1,646

400,643

87,799(967)(192,109)(1,646)(106,923)

205,004

12,21876,4980293,720

Net financial debt at 31 December 2017 stood at € 839.9 million, up from € 296.3 million at the start of the year, largely driven by
Umicore’s capital expenditures and net working capital spending as well as the acquisitions in Automotive Catalysts and Cobalt &Specialty Materials.
The bank loans mainly consist of:–– two long-term private debt placements denominated in Euros for a total of € 690.0 million (fair value € 686 million);–– a € 20.0 million bank loan maturing in December 2018. The fair value of the bank loan was € 20.0 million on 31 December 2017
based on the DCF-method;–– short-term borrowings of € 205.0 million. The maturity dates of these bank loans are very short term and are negotiated at theconvenience of the treasury department at market conditions as part of its daily management of treasury operations;–– commercial papers short-term issuances for € 76.5 million;–– bank overdrafts of € 12.2 million assimilated to utilisation of overnight bank credit facilities.
On 31 December 2017, there were no outstanding advances under the € 300 million Syndicated Bank Credit Facility maturing in October
2021 and no outstanding advances under the € 215 million Syndicated Bank Credit Facility maturing in September 2018.
The aforementioned Syndicated Bank Credit Facilities and the two long-term private debt placements require the Company to comply
with certain ﬁnancial covenants. Umicore has not faced any breach of those covenants in 2017 or in previous years.
The long-term debts only include debts in Euros.
The net gearing ratio end of 2017 of 31.1% (13.8% in 2016) is well within the group’s targeted capital structure limits.

Umicore Annual Report 2017

137

FINANCIAL STATEMENTS

EUROS

TOTAL

Bank loans

710,000

710,000

Other loans

4,252

4,252

714,252

714,252

Thousands of Euros
Analysis of long-term debts by currencies (including current portion)

Non-current financial debts (including current portion)
Thousands of Euros

2016

2017

Non-current financial debt

24,394

694,104

Current portion of non-current financial debt
Current financial debt

144

20,147400,643

293,720

Cash and cash equivalents(84,460)(168,115)

Net financial debt

340,721839,857

Total of discontinued operations(44,468)–

Total net financial debt including discontinued operations

296,252

839,857

GROSS OUTSTANDING DEBT

8%
1% 0%

22%

Short-term bank loans
Long-term bank loans
Commercial paper
Bank overdrafts
Other bank facilities

68%

Millions of Euros

2016

2017

Net financial debt including discontinued operations

296.3

839.9

Equity1,848.0

1,862.6

Total

2,144.3

2,702.5

13.8

31.1

Gearing ratio (%)

Umicore Annual Report 2017

138

FINANCIAL STATEMENTS

F25 TRADE DEBT AND OTHER PAYABLES
Thousands of Euros

NOTE

31/12/2016

31/12/2017
26,205

NON-CURRENT
Long-term trade payables

25,132Other long-term debts

3,988

3,681

Investment grants and deferred income from grants

12,536

10,555

Total for continuing operations

41,65640,442

Total of discontinued operations

182–

CURRENT
Trade payables

843,498

1,209,684

Advances received on contracts in progress

21,023

31,947

Tax payable (other than income tax)

26,696

27,742

Payroll and related charges

95,780122,250

Other amounts payable

17,63544,244

Dividends payable

11,687

11,696584

5,355

Accrued interest payable
Fair value payable financial instrument held for cash flow hedging

F33

7,118

17,122

Fair value payable other financial instruments

F33

11,725

12,035

125,625

157,740

Total for continuing operations

Accrued charges and deferred income

1,161,371

1,639,815

Total of discontinued operations

103,478–

Trade payables increased by € 478.4 million, mainly due to higher volumes and higher metal prices. The increase is also due to new
business combinations.
The tax payables (other than income tax) mainly include VAT payables.

Umicore Annual Report 2017

139

FINANCIAL STATEMENTS

F26 LIQUIDITY OF THE FINANCIAL LIABILITIESPREVIOUS FINANCIAL YEAREARLIEST CONTRACTUAL MATURITY
Thousands of Euros

<1
MONTH

1 TO 3 3 MONTHS –MONTHS
1 YEARFINANCIAL DEBT

90,491

63,940Current

1 TO 5
YEARS

>5
YEARS

TOTAL

246,356

21,6552,740

425,180

90,491

63,940246,356––

400,786

Short-term bank loans

69,113

13,977

34,115––

117,205

Bank overdrafts

3,282

–

9,903

–

–

13,185

Short-term loan: commercial paper

16,44549,932

202,230––

268,607

Other loans

1,639

6

–

–

–

1,646

12

24

108

–

–

144

–

–

–

21,6552,740

24,39420,000Current portion of other long-term loans
Non-current
Bank loans

–

–

–

20,000–

Other loans

–

–

–

1,655

2,740

4,394

TRADE AND OTHER PAYABLES

727,819

319,091

110,201

9,737

36,181

1,203,029

Current

727,819

319,091

110,201

4,262–

1,161,373
843,498

571,534

246,804

25,159––Advances received on contracts in progress

Trade payables

1,462

7,069

12,491––

21,023

Tax payable (other than income tax )24,163

2,077

456

–

–

26,696
95,780

Payroll and related charges

21,70429,67544,401––Other amounts payable

9,611

1,829

6,196

–

–

17,635

Dividends payable

11,687––––

11,687

(91)

672

3

–

–

584

Accrued interest payable, third parties

316

651

2,627

3,525

–

7,118

Fair value payable other financial instruments

1,529

6,157

3,303

737

–

11,725

Accrued charges and deferred income

Fair value payable financial instrument held for cash flow hedging

85,90424,156

15,565––

125,625

Non-current

–

–

–

5,475

36,181

41,656Long-term trade payables

–

–

–

–

25,132

25,132Other long-term debts

–

–

–

89

3,899

3,988

Investment grants and deferred income from grants

–

–

–

5,386

7,151

12,536

Umicore Annual Report 2017

140

FINANCIAL STATEMENTS

FINANCIAL YEAREARLIEST CONTRACTUAL MATURITY
Thousands of Euros

<1
MONTH

FINANCIAL DEBT

116,741

64,273Current

116,741
115,545

Short-term bank loans
Bank overdrafts
Short-term loan: commercial paper

1 TO 3 3 MONTHS –MONTHS
1 YEAR

1 TO 5
YEARS

>5
YEARS

TOTAL

132,853

694,104

0

1,007,972

64,273

132,853––

313,868

64,24925,210––205,004

1,184–

11,034––

12,218––76,498––76,49820,000Current portion of long-term bank loans––

20,000––Current portion of other long-term loans

12

25

111

–

–

147

–

–

–

694,104

0694,104

Non-current
Bank loans

–

–

–

690,000–

690,000

Other loans

–

–

–

4,104

0

4,104
1,680,256

TRADE AND OTHER PAYABLES

1,078,419

393,214

162,297

12,40533,921

Current

1,078,419

393,214

162,297

5,884–

1,639,814

Trade payables

848,563309,995

51,128––1,209,684
31,947

Advances received on contracts in progress

10,8897,866

13,192––

Tax payable (other than income tax)

20,343

6,805

593

–

–

27,742

Payroll and related charges

36,30835,22150,721––

122,250

Other amounts payable

16,591

7,297

20,356––44,244

Dividends payable

11,696––––

11,696

Accrued interest payable, third parties

4,255

1,087

14

–

–

5,355

641

2,353

8,244

5,884

–

17,122

Fair value payable financial instrument held for cash flow hedging
Fair value payable other financial instruments
Accrued charges and deferred income
Non-current

3,156

7,439

1,440

–

–

12,035125,978

15,151

16,610––157,740

–

–

–

6,521

33,92140,442
26,205Long-term trade payables

–

–

–

1,311

24,894

Other long-term debts

–

–

–

–

3,681

3,681

Investment grants and deferred income from grants

–

–

–

5,210

5,345

10,555

Umicore Annual Report 2017

141

FINANCIAL STATEMENTS

F27 PROVISIONS FOR EMPLOYEE BENEFITSThe Group has various legal and constructive deﬁned beneﬁt obligations, the vast majority of them being “ﬁnal pay” plans linked to theBelgian and German operations.

Thousands of Euros
At the end of the previous year
Acquisition through business combinations
Increase (included in “Payroll and related benefits”)
Reversal (included in “Payroll and related benefits”)
Use (included in “Payroll and related benefits”)

POSTTERMINATIONEMPLOYMENTPOSTBENEFITSBENEFITS, EMPLOYMENTEARLYPENSIONS
BENEFITS – RETIREMENT
AND SIMILAR
OTHER AND SIMILAR
289,147

4,074

29,127OTHER
LONG-TERMEMPLOYEEBENEFITS

TOTAL

15,559337,907

2,254

–

–

206

2,460

26,683

275

6,652

1,245

34,855

(18)

(1)

–

(73)

(92)

(27,284)(82)(8,877)(592)(36,835)

Interest and discount rate impacts (included in “Finance cost – Net”)

5,429

19

152

251

5,852

Translation differences

(333)

(77)

(63)

(13)

(486)

Transfers

823

3

(816)

351

363

Recognised in other comprehensive income

(840)

(372)

0

(0)

(1,212)295,861

3,840

26,177

16,934

342,812

31/12/2016

MOVEMENTS
2017

31/12/2017

Belgium

57,599(3,961)

53,638Germany

259,166

7,385

266,551

Subtotal

316,765

3,424

320,189

19,1193,504

22,623

Total for continuing operations

335,884

6,928

342,812

Discontinued operations

36,896(36,896)–

At the end of the financial year for continuing operations

Thousands of Euros

Other entities

The ﬁrst table shows the balances and the movements in provisions for employee beneﬁts of the fully consolidated subsidiaries only.
There is a difference in the line “Recognised in other comprehensive income” 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.
The following disclosure requirements under IAS 19 amended were derived from the reports obtained from external actuaries.

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FINANCIAL STATEMENTS

Umicore deﬁned beneﬁt pension schemes for the 2 major countries are the following:
BELGIUM

Characteristics of the Deﬁned Beneﬁt plans
Umicore companies in Belgium operate deﬁned beneﬁt plans that provide retirement beneﬁts which are related to salary
and age or length of service. These retirement plans represent a deﬁned beneﬁt obligation of € 223.6 million and assetsfor € 170.0 million. They foresee in a lump sum payment upon retirement and beneﬁts 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 analysed in terms of risk- and-return proﬁles and solvency measures. A statement of investment principles andfunding policy are derived from this. The purpose is to have a well-diversiﬁed 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 (level1 fair value classiﬁcation). 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 diversiﬁed so that the failure of any single investment would not have amaterial impact on the overall level of assets.

GERMANY Characteristics of the Deﬁned Beneﬁt plans
The post-employment beneﬁts are mainly unfunded pension plans of deﬁned beneﬁt type providing retirement, disability
and death beneﬁts. All beneﬁt plans are based on ﬁnal or ﬁnal average pay beside the deferred compensation plan.
The beneﬁts of the deferred compensation plan are based on annual converted salary and provide a guaranteed interestof 3.0% p.a. (6.0% p.a. for salary conversions before 2014). All retirement plans represent a deﬁned beneﬁt obligation of€ 273.3 million and assets for € 6.8 million.
Funding
As mentioned here above, the post-employment beneﬁts 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.
The most significant risks related to the defined benefit plans are:–– Asset volatility: The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets
underperform this yield, this will create a deﬁcit.
–– Changes in bond yields: A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by
an increase in the value of the plan’s bond holdings.
–– Salary risk: The majority of the plans’ beneﬁt obligations are calculated by reference to the future salaries of plan members.
As such, any salary increase of plan members higher than expected will lead to higher liabilities.
–– Longevity risk: All pension plans beside the new deferred compensation plan as from 2014 provide life annuities which involve therisk of longevity i.e. the risk that the payment period of the pension increases due to the increase in life expectancy. The company
uses mortality rates which depend on the year of birth to include this risk in the pension obligation.
–– Risk of cash outﬂow: Since death as active and disability beneﬁts are provided there is a risk of cash outﬂow before retirement.
–– Legislation risks: If the law which deﬁne the beneﬁt changes, it can result in a change of the obligations.

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FINANCIAL STATEMENTS

Some additional risks are related to Germany only:–– There is a risk that adjustments of pensions paid by the ”Pensionskasse Degussa” are not fully borne by the “Pensionskasse” andtherefore can result in an additional unfunded pension obligation due to a guaranteed interest rate of 3.5%. As it is not possible toapply the full IAS 19 calculation method, the fund is evaluated as a Deﬁned Contribution plan. The risk of the additional obligation
expected until end of 2022 has been included in the pension obligation.
–– The old deferred compensation plan provides a guaranteed interest rate of 6% which increases the risk for a pension cost in addition
to the converted salary. The plan has been closed at 31 December 2013 and replaced by a plan with no signiﬁcant risk in this respect.
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 Deﬁned
Contribution plans have to be considered under IFRS as Deﬁned Beneﬁt plans. Law Vandenbroucke states that in the context ofdeﬁned contribution plans, the employer must guarantee a minimum return of 3.75% on employee contributions and 3.25% on
employer contributions. However, shortly before year end 2015, a change in the Belgian Law was enacted resulting in a decreaseof the guaranteed return from 3.25 % to a minimum interest rate defined based upon the Belgian 10-year interest rate but
within the range 1.75% – 3.25%. The new rate (currently 1.75%) applies for the years after 2015 on future contributions and also
on the accumulated past contributions as at 31 December 2015 if the financing organism does not guarantee a certain result on
contributions until retirement age. If the organism does guarantee such a result, the rates 3.25/3.75% still apply.
Because of this minimum guaranteed return, the employer is exposed to a ﬁnancial risk: further contributions could be required if the
return on assets would not be sufﬁcient to reach the minimum beneﬁts to be paid. The group has plans that are ﬁnanced throughinsurance contract as well as one plan ﬁnanced through an IORP. The related deﬁned beneﬁt obligations have been aggregated withthe other obligations for deﬁned beneﬁt plans. The Projected Unit Credit (PUC) methodology has been used.
Total defined benefit obligations related to those plans amounts to € 94.3 million as at the end of December 2017 and related plan
assets to € 90.2 million.

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FINANCIAL STATEMENTS

Thousands of Euros

2016

2017

CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of the year

469,027

521,153

Current service cost

25,382

29,236

Interest cost

9,950

9,612

Plan Participants’ Contributions

781

843

Remeasurements – changes in demographic assumptions

5,427(2,233)Remeasurements – changes in financial assumptions

23,6002,964

Remeasurements – experience adjustments

14,861

4,611

Benefits paid from plan/company(21,084)(22,994)

Expenses paid

(1,582)(2,080)Plan combinations(6,060)13,277851(2,368)521,153552,021

2016

2017

156,670

183,246

Exchange rate changes
Benefit obligation at end of the year
Thousands of Euros
CHANGE IN PLAN ASSETS
Fair value of plan assets at the beginning of the year
Expected return on plan assets

2,863

3,403

Remeasurements on plan assets

16,036

5,286

Employer contributions

28,98232,265

Member contributions

781

843

Benefits paid from plan/company(21,084)(22,994)

Expenses paid

(1,615)(2,145)

241

11,836

Net transfer in/(out) (including the effect of any business combinations/divestitures)
Exchange rate changes
Fair value of plan assets at the end of the year372

(1,966)

183,246

209,774

Pension plans mainly in Belgium, Korean, Liechtenstein, Germany and Japan are wholly or partly funded with assets covering asubstantial part of the obligations. All other plans have no material funding or are unfunded.

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FINANCIAL STATEMENTS

Thousands of Euros

2016

2017
552,021AMOUNT RECOGNISED IN THE BALANCE SHEET
Defined benefit obligations

521,153

Fair value of plan assets

183,246

209,774

Funded Status

337,907342,247

Effect of asset ceiling/onerous liability
Net liability (asset)––

337,907342,247

29,236COMPONENTS OF PENSION COSTS
Amounts recognised in profit and loss statement
Current service cost

25,382

Interest cost

9,950

9,612

Interest income on plan assets(2,863)(3,403)Remeasurement of Other Long Term Benefits

1,319

1,176

Administrative expenses and taxes

33

36

Total pension cost recognised in P&L account33,821

36,657

Total of discontinued operations

2,662

2,662

Cumulative remeasurements at opening

169,220

195,689

Remeasurements of the year

26,706(1,212)

(319)

151

Amounts recognised in other comprehensive income

Minorities
Recycled into P&L

–

(81)

Exchange differences

82

(233)

195,689

194,314

Total recognised in the OCI at subsidiaries

30,55125,606

Total recognised in the OCI

Remeasurements at associates and joint ventures

226,241

219,921

Total of discontinued operations

10,395–

Effect of changes in demographic assumptions

5,364(2,147)

Effect of changes in financial assumptions

23,3372,758

Effect of experience adjustments

13,782

3,465(Return) on plan assets (excluding interest income)(15,950)(5,167)

Total remeasurements included in Other Comprehensive Income

26,533(1,091)

1,527

830

Remeasurements (recognised in other comprehensive income)

Total of discontinued operations

The interest cost and return on plan assets as well as the discount rate impact on the non-post employment beneﬁt plans, arerecognised under the ﬁnance cost in the income statement (see note F11). All other elements of the expense of the year are classiﬁed
under the operating result in the “wages, salaries and direct social advantages”.
Remeasurements of the year recognised in OCI originate mainly from a change in discount rates on the pension plans and differences
between the expected and actual return on plan assets.

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FINANCIAL STATEMENTS

2016

2017

PRINCIPAL ACTUARIAL ASSUMPTIONS
Weighted average assumptions to determine benefit obligations at year end
Discount rate (%)

1.73

1.73

Rate of compensation increase (%)

2.76

2.81

Rate of price inflation (%)

1.78

1.79

Rate of pension increase (%)

1.48

1.38

2.12

1.66
2.76

Weighted average assumptions used to determine net cost
Discount rate (%)
Rate of compensation increase (%)

2.94

Rate of price inflation (%)

2.00

1.78

Rate of pension increase (%)

1.61

1.48
2017

Thousands of Euros

FAIR VALUE
OF ALL PLANASSETSFAIR VALUE OF PLANASSETS WITH QUOTEDMARKET PRICE

Plan assets
Cash and cash equivalents

11,151

11,145Equity instruments

36,46636,455

Debt instruments

78,02577,899Real estate

8,048

8,042

Assets held by insurance company

69,47158,784

Other
Total plan assets

6,613

1,279

209,774

193,604

Assumptions are recommended by the local actuaries in line with the IAS 19 revised. The standard reference for the Eurozone is iBOXXAA Index yield and similar indexes are used for the other regions. Mortality tables used are country speciﬁc.
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.
2017

Thousands of EurosVALUATION
TREND+0.25%VALUATION
TREND-0.25%

523,131561,550

13.70

14.67

544,248

520,134

548,387

535,583

Sensitivity to trend rate assumptions on discount rate
Present value of defined benefit obligation
Weighted average duration of benefit obligation (in years)
Sensitivity to trend rate assumptions on inflation rate
Present value of defined benefit obligation
Sensitivity to trend rate assumptions on salary increase rate
Present value of defined benefit obligation

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FINANCIAL STATEMENTS

Thousands of Euros

2016

2017

BALANCE SHEET RECONCILIATION
Balance sheet liability (asset) as of previous year

312,357

337,907

Pension expense recognised in P&L in the financial year

33,821

36,657

Amounts recognised in SoCI

26,533(1,091)

Employer contributions via funds in the financial year

(17,075)(20,712)

Employer contributions paid directly in the financial year

(11,907)(11,553)

Amounts recognised due to plan combinations(6,301)

1,441

479

(402)

337,907342,247

Exchange rate adjustment – (gain)/loss
Balance sheet liability (asset) as of end of the year

AT 31 DECEMBER
Thousands of Euros
Present value of defined benefit obligation

2013

2014

2015

2016

2017

440,757

527,028

469,027

521,153552,021

Fair value of plan assets

172,954

195,326

156,670

183,246

209,774

Deficit (surplus) in the plan

267,803

331,702

312,357

337,907342,247

Experience adjustments on plan assets(31,125)(10,444)(3,320)(16,036)(5,286)

Experience adjustments on plan liabilities

5,274(4,543)

5,399

14,861

4,611

Thousands of Euros2017

EXPECTED CASH FLOWS FOR FOLLOWING YEAR
Expected employer contributions

30,317

Expected total benefit payments
Year 1

22,164

Year 2

17,564

Year 3

22,596

Year 4

28,160Year 5

26,130

Next 5 years

134,424

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FINANCIAL STATEMENTS

F28 STOCK OPTION PLANS GRANTED BY THE COMPANY
PLAN

EXPIRY DATEEXERCISE

ISOP 2008

14/04/2018

all working days of Euronext Brussels

EXERCISE PRICE IN EUROS(THE EXERCISE PRICE MAY BE
HIGHER IN CERTAIN COUNTRIES)NUMBER OF OPTIONSSTILL TO BE EXERCISED

16.29

30,00016.36

030,000ISOP 201113/02/2018

all working days of Euronext Brussels

19.04

37,50019.62

32,00019.27

069,500ISOP 201212/02/2019

all working days of Euronext Brussels

17.66

118,324

18.84

45,50018.00

22,000185,824

ISOP 201312/02/2020

all working days of Euronext Brussels

18.19
19.34

402,750
60,000462,750ISOP 201410/02/2021

all working days of Euronext Brussels

16.14

788,625

15.80

61,25016.49

15,000864,875

ISOP 2015

09/02/2022

all working days of Euronext Brussels

17.29

1,111,000

18.90

54,00019.50

52,5001,217,500

ISOP 201604/02/2023

all working days of Euronext Brussels

16.63

1,217,750
1,217,750

ISOP 201713/02/2024

all working days of Euronext Brussels

25.50
27.04

1,122,250
47,7501,170,000

Total

5,218,199

On 16 October 2017, each Umicore share was split into two new shares. The tables of note F28 are restated to reflect the new split in
the number of stock options and in the prices.
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 treasury shares. Options whichhave not been exercised before the expiry date elapse automatically.

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FINANCIAL STATEMENTS

2016

2017

NUMBEROF SHARE
OPTIONSWEIGHTEDAVERAGEEXERCISEPRICE

NUMBEROF SHARE
OPTIONSWEIGHTEDAVERAGEEXERCISE
PRICE

6,817,750

16.83

5,645,750

16.84

DETAILS OF THE SHARE OPTIONS OUTSTANDING DURING THE YEAR
Outstanding at the beginning of the year
Granted during the year

1,217,750

16.63

1,170,000

25.56

Exercised during the year

2,377,750

16.00

1,597,551

17.39

Expired during the year

12,000

0.00

–

0.00

Outstanding at the end of the year

5,645,750

17.16

5,218,199

18.98

Exercisable at the end of the year

5,645,750

17.16

5,218,199

18.98

The options outstanding at the end of the year have a weighted average contractual life until March 2022.
The details concerning the calculation of the fair value of the options granted are detailed under note F10 on Payroll and related Benefits.

F29 ENVIRONMENTAL PROVISIONS
Thousands of Euros
At the end of previous year

PROVISIONSFOR SOIL
CLEAN-UP & SITEREHABILITATIONOTHERENVIRONMENTALPROVISIONS

TOTAL

58,854

2,328

61,182Acquisition through business combinations

2,471

392

2,862

Increase

8,792

2,490

11,281

Reversal

(380)

(174)

(554)

Use (included in Other operating expenses)(3,448)(1,927)(5,374)

Discounting (included in Finance cost – Net)

1,480

–

1,480

(1,682)(2)(1,684)At the end of the financial year for continuing operations

66,086

3,107

69,193

Of which – Non-current

54,5841,000

55,584

11,502

2,108

13,610Translation differences– Current

Provisions for environmental legal and constructive obligations are recognised and measured by reference to an estimate of theprobability of future cash outﬂows 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 recognised.
Provisions increased overall by € 8.0 million, with additional provisions and acquisitions through business combinations (Ordeg andEurotungstene) which are higher than the uses and reversals of existing provisions.
The increase in provisions for soil and groundwater remediation is mainly related to new provisions taken in Belgium, the USA andFrance. Most of the uses of provisions for the period are linked to the realization during the period of site remediation programmes in
Brazil, in the USA and in Belgium.
No major movements occurred in 2017 on the provisions that were taken to address the historical radioactive waste material in
Belgium (Olen). Further negotiation with all competent authorities to ﬁnd a sustainable and acceptable storage solution are ongoing,
however, at a slow pace.
The movements of the other environmental provisions are mainly related to the need for and adjustment of CO2 emission rights
in Belgium.
Management expects the most signiﬁcant cash outﬂows on these projects for non-current elements to take place within five years.

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FINANCIAL STATEMENTS

F30 PROVISIONS FOR OTHER LIABILITIES AND CHARGES
Thousands of Euros
At the end of the previous year

PROVISIONS FORREORGANISATION& RESTRUCTURINGPROVISIONS FOR
OTHER LIABILITIESAND CHARGES

TOTAL

30,86830,04960,913Acquisition through business combinations

1,500

11,96813,468

Increase

9,843

23,68033,523

Reversal(666)(3,459)(4,125)(3,406)(9,582)(12,988)

Translation differences(261)(1,509)(1,770)Transfers

(826)

471

(356)

–

(2,249)(2,249)At the end of the financial year for continuing operations

37,05149,36986,416

Of which – Non-current

12,522

19,74832,27017,95736,19354,150Use (included in “Other operating expenses”)

Financial charges– Current

Provisions for reorganisation and restructuring and for tax, warranty and litigation risks, onerous contracts and product returns arerecognised and measured by reference to an estimate of the probability of future outﬂow of cash as well as to historical data basedon the facts and circumstances known at the end of the reporting period. The actual liability may differ from the amounts recognised.
Provisions increased overall by € 25.5 million. The acquisitions through business combinations are related to Ordeg (Korea) andEurotungstene (France).
Additional provisions for reorganisation and restructuring have been taken in Germany, China and in the USA. The new provisions relate
mainly to the closure of the production site of Thin Film Products in the USA (Providence).
Uses of provisions for reorganisation and restructuring were taken mainly in Germany and China while some reversal of prior years’
booked provisions took place in Germany.
The increases for other liabilities and charges are related mainly to the net increase of the IAS 39 related provisions for € 20.8 million,leaving an IAS 39 closing balance of € 27.2 million for the continuing operations.
The uses of provisions for other liabilities and charges are related to warranty and litigation provisions in Belgium, Korea and Germany.
No assessment is possible regarding the expected timing of cash outﬂows related to the non-current part of the provisions for otherliabilities and charges.

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FINANCIAL STATEMENTS

F31 CAPITAL EMPLOYED
Thousands of Euros

NOTE

31/12/2016

30/06/2017

31/12/2017

Intangible assets

F14, F15305,340

294,253

328,808

Property, plant and equipment

F16

1,070,403

1,159,574

1,301,411

Investments accounted for under the equity method

F17195,332

126,780

153,008

Available-for-sale financial assets

F18

26,41418,927

22,331Inventories

F19

1,188,822

1,329,157

1,628,423

Non-current receivable (excluding assets employee benefits)

F20

Adjusted current accounts receivable
Income tax receivable
Assets included in capital employedNon-current trade and other payables

F25

Adjusted current accounts payable
Translation reserves

10,690

10,577

13,118821,361

1,105,210

1,282,173

32,51735,161

36,0363,650,879

4,079,638

4,765,307

41,656

39,63040,442

1,154,261

1,316,499

1,622,720

F23(7,830)(76,123)(87,244)

Non-current provisions

F29, F30

80,41082,61387,853Current provisions

F29, F30

41,69051,33467,759

Income tax payable

57,666

62,64962,830Liabilities included in capital employed

1,367,853

1,476,601

1,794,359

Capital employed

2,283,026

2,603,037

2,970,948

IAS 39 and eliminations

15,30923,83932,596

Capital employed discontinued

99,07492,497–

Capital employed as published

2,397,409

2,719,373

3,003,544

Average Capital Employed in half year preceding closing date

2,394,387

2,861,459

2,398,660

2,709,925

350,747

410,254

14.62%

15.14%

Average Capital Employed in year preceding closing date
Recurring EBIT in year preceding closing date
ROCE in year preceding closing date

F9

Current account receivable and payable included in “Capital Employed” do no take into account margin calls and gains and losses
booked on the mark-to-market value 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.

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FINANCIAL STATEMENTS

F32 FINANCIAL INSTRUMENTS BY CATEGORYAS AT THE END OF PREVIOUS YEAR

Thousands of EurosCARRYING AMOUNTLEVELHELD FOR
LOANS,TRADING –CASH FLOW RECEIVABLESNO HEDGE
HEDGEANDFAIR VALUE ACCOUNTING ACCOUNTINGPAYABLESAVAILABLEFOR-SALE

ASSETS
Available-for-sale financial assets
Available-for-sale financial assets – Shares

1

Loans granted
Loans to associates and non-consolidated affiliates
Trade and other receivables

26,414–––

26,414

26,414–––

26,414

15,988––15,988–15,988––15,988–855,385

15,95921,347

818,079–

Non-current
Cash guarantees and deposits

9,532

–

–

9,532

–

Other receivables maturing in more than 1 year

1,158

–

–

1,158

–

Assets employee benefits

424

–

–

424

–

706,656––

706,656–

Current
Trade receivables (at cost)
Trade receivables (write-down)(9,279)––(9,279)–Other receivables (at cost)

78,778––78,778–(6,893)––(6,893)

–

244

–

–

244

–

Other receivables (write-down)Interest receivable

2

Fair value of financial instruments held for cash flow hedging

221,347–

21,347––

Fair value receivable other financial instruments

15,95915,959–––Deferred charges and accrued income

37,458––37,458–84,460––84,460–10,521––

10,521

–

25

–

–

25

–

Cash and cash equivalents
Short-term investments: bank term deposits
Short-term investments: term deposits (other)
Cash-in-hand and bank current accounts

73,914––73,914–TOTAL OF FINANCIAL INSTRUMENTS (ASSETS)

982,247

15,95921,347

918,527

26,414426,282––

425,182–

LIABILITIESFinancial debt
Non-current
Bank loans

21,100––20,000–

Other loans

4,396

–

–

4,396

–

Current
Short-term bank loans

117,205––

117,205–

Bank overdrafts

13,185––

13,185–

Short-term loan: commercial paper
Other loans
Trade and other payables

268,607––268,607

–

1,790

–

–

1,790

–

1,203,027

11,725

7,118

1,184,184–

Non-current
Long-term trade payables

25,132––

25,132–Other long-term debts

3,988

–

–

3,988

–

Investments grants and deferred income from grants

12,536––

12,536–

843,498––

843,498–

Current
Trade payables

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FINANCIAL STATEMENTS

AS AT THE END OF PREVIOUS YEAR

Thousands of EurosCARRYING AMOUNTLEVELHELD FOR
LOANS,TRADING –CASH FLOW RECEIVABLESNO HEDGE
HEDGEANDFAIR VALUE ACCOUNTING ACCOUNTINGPAYABLESAVAILABLEFOR-SALE

Advances received on contracts in progress

21,023––21,023–Tax – other than income tax – payable

26,696––

26,696–

Payroll and related charges

95,780––95,780–

Other amounts payable

17,635––

17,635–

Dividends payable

11,687––

11,687

–

584

–

–

584

–

Accrued interest payable
Fair value financial instrument held for cash flow hedging

2

7,118

–

7,118

–

–

Fair value payable other financial instruments

2

11,725

11,725–––

Accrued charges and deferred income
TOTAL OF FINANCIAL INSTRUMENTS (LIABILITIES)

125,625––

125,625–

1,629,309

11,725

7,118

1,609,366–

AS AT THE END OF THE FINANCIAL YEAR

Thousands of EurosCARRYING AMOUNTLEVELHELD FOR
LOANS,TRADING –CASH FLOW RECEIVABLESNO HEDGE
HEDGEANDFAIR VALUE ACCOUNTING ACCOUNTINGPAYABLESAVAILABLEFOR-SALE

ASSETS
Available-for-sale financial assets
Available-for-sale financial assets – Shares

1

Loans granted
Loans to associates and non-consolidated affiliates
Trade and other receivables

22,331–––

22,331

22,331–––

22,331

13,035––

13,035–

13,035––

13,035–

1,349,805

11,16946,6281,292,009–

Non-current
Cash guarantees and deposits

12,068––12,068–Other receivables maturing in more than 1 year

1,048

–

–

1,048

–

Assets employee benefits

1,029

–

–

1,029

–

1,075,389––

1,075,389–

Trade receivables (write-down)(7,509)––(7,509)–Other receivables (at cost)

145,519––

145,519–

Current
Trade receivables (at cost)

Other receivables (write-down)(4,513)––(4,513)–

Interest receivable

2

273

–

–

273

–

Fair value of financial instruments held for cash flow hedging

246,628–46,628––Fair value receivable other financial instruments

11,169

11,169–––Deferred charges and accrued income

68,705––68,705–

168,115––

168,115–

16,948––

16,948

–

41

–

–

41

–

Cash and cash equivalents
Short-term investments: bank term deposits
Short-term investments: term deposits (other)
Cash-in-hand and bank current accounts

151,126––

151,126–

TOTAL OF FINANCIAL INSTRUMENTS (ASSETS)

1,553,286

11,16946,6281,473,159

22,331

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FINANCIAL STATEMENTS

AS AT THE END OF THE FINANCIAL YEAR

Thousands of EurosCARRYING AMOUNTLEVELHELD FOR
LOANS,TRADING –CASH FLOW RECEIVABLESNO HEDGE
HEDGEANDFAIR VALUE ACCOUNTING ACCOUNTINGPAYABLESAVAILABLEFOR-SALE

LIABILITIESFinancial debt

1,004,013––

1,007,974–

Non-current
Bank loans

686,000––

690,000–

Other loans

4,106

–

–

4,106

–

Current
Short-term bank loans

225,044––

225,004–

Bank overdrafts

12,218––

12,218–

Short-term loan: commercial paper

76,498––76,498

–

148

–

–

148

–

1,680,256

12,035

17,122

1,651,099–

Other loans
Trade and other payables
Non-current
Long-term trade payables

26,205––

26,205–

Other long-term debts

3,681

–

–

3,681

–

Investments grants and deferred income from grants

10,555––

10,555–

1,209,684––

1,209,684–

Current
Trade payables
Advances received on contracts in progress

31,947––

31,947–

Tax – other than income tax – payable

27,742––

27,742–

Payroll and related charges

122,250––

122,250–

Other amounts payable

44,244––44,244–

Dividends payable

11,696––

11,696–

Accrued interest payable

5,355

–

–

5,355

–

17,122–

17,122––

Fair value financial instrument held for cash flow hedging

2

Fair value payable other financial instruments

2

Accrued charges and deferred income
Total of financial instruments (Liabilities)

12,035

12,035–––

157,740––

157,740–

2,684,269

12,035

17,122

2,659,073–

Loans and debt have been issued at market rates which would not create any major differences with effective interest expenses.
All categories of ﬁnancial 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 ﬁnancial instruments traded in active markets is based on quoted market prices at the end of the reporting period.
The fair value of ﬁnancial instruments that are not traded in an active market is determined using valuation techniques, mainly
discounted cash ﬂow, using market assumptions prevailing 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 ﬂows. The fair valueof forward foreign exchange, metal and energy contracts is determined using quoted forward exchange, metal and energy rates at theend of the reporting period.
The fair value of quoted ﬁnancial assets held by the Group is their quoted market price at the end of the reporting period. The fairvalue of ﬁnancial liabilities is estimated by discounting the future contractual cash ﬂows at the current market interest rate that isavailable to the Group for similar ﬁnancial instruments.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values.

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FINANCIAL STATEMENTS

32.1 FAIR VALUE HIERARCHYThe Group adopted the amendment to IFRS 7 for ﬁnancial instruments which are measured in the balance sheet at fair value, witheffect 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 ﬁnancial assets are measured as level 1. All the metal, energy and foreign currency
derivatives are measured as level 2.
32.2 SENSITIVITY ANALYSIS ON FINANCIAL INSTRUMENTS
Umicore is sensitive to commodity prices, foreign currency and interest rate risk on its ﬁnancial instruments.
32.2.1 COMMODITY PRICESThe fair value on ﬁnancial instruments related to cash ﬂow hedging sales would have been € 7.1 million lower/higher if the metal
prices would strengthen/weaken by 10%.
The fair value on ﬁnancial instruments related to cash ﬂow hedging purchases would have been € 3.3 million higher/lower if theenergy prices would strengthen/weaken by 10%. The fair value on ﬁnancial instruments related to cash ﬂow hedging purchases would
have been € 11.8 million higher/lower if the metal prices would strengthen/weaken by 10%.
The fair value on other commodity sales ﬁnancial instruments would have been € 14.8 million lower/higher and the fair value on othercommodity purchases ﬁnancial instruments would have been € 13.5 million higher/lower if the metal prices would strengthen/weakenby 10%.
32.2.2 FOREIGN CURRENCY
The fair value of forward currency contracts related to cash ﬂow hedging would have been € 5.3 million higher if the Euro would
strengthen against US dollar by 10% and would have been € 6.5 million lower if the Euro would weaken against US dollar
by 10%. The fair value of forward currency contracts related to cash ﬂow hedging would have been € 0.9 million lower if the Euro
would strengthen against ZAR by 10% and would have been € 1.1 million higher if the Euro would weaken against South African rand(ZAR) by 10%.
The fair value of forward currency contracts related to cash ﬂow hedging would have been € 11.2 million lower if the US dollar would
strengthen against KRW by 10% and would have been € 12.9 million higher if the US dollar would weaken against Korean won (KRW)by 10%.
The fair value of other forward currency contracts sold would have been € 44.7 million higher if the Euro would strengthen against
US dollar by 10% and would have € 54.6 million lower if the Euro would weaken against US dollar by 10%.
The fair value of other forward currency contracts bought would have been € 19.2 million lower if the Euro would strengthen against
US dollar by 10% and would have been € 23.5 million higher if the Euro would weaken against US dollar by 10%.
The fair value of net position of current assets and liabilities exposed to US dollar would have been € 36.2 million lower if the Euro
would strengthen against US dollar by 10% and would have been € 44.3 million higher if the Euro would weaken against US dollar
by 10%.

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FINANCIAL STATEMENTS

F33 FAIR VALUE OF FINANCIAL 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 reputablebrokers and banks.
33.1 FINANCIAL INSTRUMENTS RELATED TO CASH FLOW HEDGINGNOTIONAL OR CONTRACTUALAMOUNT

FAIR VALUE

31/12/2016

31/12/2017

31/12/2016

31/12/2017

Forward commodities sales

78,82059,314

4,558(10,571)

Forward commodities purchases(52,408)(135,996)

9,051

21,027

Forward currency contracts sales

Thousands of Euros

352,559

431,038

3,169

21,013Forward currency contracts purchases–(103,090)–(1,337)

Forward IRS contracts––(2,550)(625)

Total fair value impact subsidiaries

14,22829,505

Recognised under trade and other receivables

21,347

46,628

Recognised under trade and other payables(7,119)(17,122)

Total

14,22829,505The principles and documentation on the hedged risks as well as the timing related to the Group’s cash ﬂow hedging operations areincluded in note F3 Financial risk management.
The fair values of the effective hedging instruments are in the ﬁrst instance recognised in the fair value reserves recorded in equity andare derecognised 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, nickel, leadand copper. The forward commodity purchase contracts are set up to hedge primarily the electricity, gas and fuel oil price risks.
The forward currency contracts are set up to hedge US Dollar towards Euro, Korean won (KRW), Brazilian real (BRL), Canadian dollar(CAD) and South African rand (ZAR) and Euro towards South African rand (ZAR).
The terms and conditions of the forward contracts are common market conditions.
In those circumstances whereby the hedge accounting documentation as deﬁned under IAS 39 is not available, ﬁnancial instruments
used to hedge structural risks for metals and currencies are measured as if they were held for trading. However, such instruments arebeing used to hedge future probable cash ﬂows and are not speculative in nature.
Umicore has not faced any ineffectiveness on cash ﬂow hedging in P&L in 2016 and 2017.
33.2 OTHER FINANCIAL INSTRUMENTS
NOTIONAL OR CONTRACTUALAMOUNT

FAIR VALUE

31/12/2016

31/12/2017

31/12/2016

31/12/2017

Forward commodities sales

174,163

140,686

4,451(7,030)Forward commodities purchases(147,073)(131,626)(1,414)

3,714

Forward currency contracts sales

697,010

629,862(5,109)6,364

Forward currency contracts purchases(274,284)(254,281)

6,304(3,915)

Thousands of Euros

Total fair value impact subsidiaries

4,233

(867)

Recognised under trade and other receivables

15,959

11,169

Recognised under trade and other payables(11,725)(12,035)

Total

4,233

(867)

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 deﬁned under IAS 39, ﬁnancial instruments used to hedge transactional risks

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FINANCIAL STATEMENTS

for metals and currencies are measured as if they were held for trading. However, such instruments are being used to cover existingtransactions and ﬁrm commitments and are not speculative in nature.
The fair values are immediately recognised in the income statement under Other operating income for the commodity instruments andthe Net Finance cost for the currency instruments.
AS AT THE END OF PREVIOUS YEAREARLIEST CONTRACTUAL MATURITY (UNDISCOUNTED)
Thousands of Euros

<1
MONTH

1 TO 3 3 MONTHS –MONTHS
1 YEAR

1 TO 5
YEARS

TOTAL

FINANCIAL INSTRUMENTS ASSETS (FAIR VALUE)
Commodity risk
Total forward sales (CFH)

39

751

2,215

1,553

4,558

Total forward purchases (CFH)

272

544

2,450

5,785

9,051

Total forward sales (other)

664

4,592

1,198

–

6,454

Total forward purchases (other)

946

(150)

617

155

1,567

FX Risk
Forward currency contracts sales (CFH)

321

887

3,992

2,537

7,737

Forward currency contracts sales (other)

1,304

69

115

–

1,488

Forward currency contracts purchases (other)

1,361

2,031

3,042

15

6,449

–

–

–

(2,550)(2,550)FINANCIAL INSTRUMENTS LIABILITIES (FAIR VALUE)
Interest Rate Risk
Interest rate swaps
Commodity risk
Total forward sales (other)(1,244)

(775)

17

–

(2,002)

Total forward purchases (other)(770)(1,835)

(270)

(106)

(2,981)

(316)

(651)

(2,627)(974)(4,569)Forward currency contracts sales (other)631(3,546)(3,051)(630)(6,597)

Forward currency contracts purchases (other)

(146)

1

–

–

(145)

FX Risk
Forward currency contracts sales (CFH)

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FINANCIAL STATEMENTS

AS AT THE END OF THE FINANCIAL YEAREARLIEST CONTRACTUAL MATURITY (UNDISCOUNTED)
Thousands of Euros

<1
MONTH

1 TO 3 3 MONTHS –MONTHS
1 YEAR

1 TO 5
YEARS

TOTAL

FINANCIAL INSTRUMENTS ASSETS (FAIR VALUE)
Commodity risk
Total forward sales (CFH)

–

98

295

–

393

Total forward purchases (CFH)

534

1,073

7,313

12,10721,027

Total forward purchases (other)

578

2,751

401

–

3,730

Forward currency contracts sales (CFH)

1,807

3,630

19,181590

25,208Forward currency contracts sales (other)

4,890

1,506

1,019

–

7,415

23

0

–

–

23

–

–

–

(626)

(626)

FX Risk

Forward currency contracts purchases (other)
FINANCIAL INSTRUMENTS LIABILITIES (FAIR VALUE)
Interest Rate Risk
Interest rate swaps
Commodity risk
Total forward sales (CFH)(359)(1,839)(6,028)(2,738)(10,964)

Total forward sales (other)(1,883)(4,386)(761)–(7,030)

(88)

71

–

–

(16)

Total forward purchases (other)
FX Risk

(276)

(508)

(2,079)(1,332)(4,195)

Forward currency contracts purchases (CFH)

(6)

(6)

(137)

(1,187)(1,337)

Forward currency contracts sales (other)

(362)

(678)

(11)

–

(1,051)

Forward currency contracts purchases (other)(823)(2,446)(669)–(3,939)Forward currency contracts sales (CFH)

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FINANCIAL STATEMENTS

F34 NOTES TO THE CASH FLOW STATEMENT

34.1 DEFINITIONS
The cash ﬂow statement identiﬁes operating, investing and ﬁnancing activities for the period. Umicore uses the indirect method for theoperating cash ﬂows. The net proﬁt and loss is adjusted for:–– the effects of non-cash transactions such as provisions, impairment losses, mark to market, etc., and the variance in operating
capital requirements.
–– items of income or expense associated with investing or ﬁnancing cash ﬂows.
2016

2017

Depreciations

175,944

190,494

Adjustment IAS 39(5,403)21,048–(10,900)

Thousands of Euros
Adjustments for non-cash transactions

Negative goodwill taken in result(Reversal) Impairment charges

22,899

11,779Mark to market of inventories and commitments(20,435)(37,465)

Exchange difference on long-term loans

1,297(3,602)Inventories and bad debt provisions

(880)

8,488

Depreciation on government grants

(726)

(671)

Share-based payments

3,548

6,129

Change in provisions

12,669

5,417

Total

188,912

190,71456,42074,670Interest (income) charges

6,356

19,483(Gain) loss on disposal of fixed assets

3,999

5,504

(45)

(1,380)66,731

98,274(135,153)(439,601)

Trade and other receivables(7,244)(497,337)

Trade and other payables

85,783482,394

As in the consolidated balance sheet(56,614)(454,544)

Non-cash items (*)

59,72447,791

Items disclosed elsewhere (**)

(7,228)(4,489)Impact of business combination–

195,485

Currency translation differences

17,370(59,754)

As in the consolidated cash flow statement

13,253(275,509)

ADJUSTMENTS FOR ITEMS TO DISCLOSE SEPARATELY OR UNDER INVESTING AND FINANCING CASH FLOWS
Tax charge of the period

Dividend income
Total
CHANGE IN WORKING CAPITAL REQUIREMENT ANALYSIS
Inventories(*)	Non cash items are mainly linked to mark to market of inventories and commitments, strategic and transactional hedging and inventories, impairments ininventories and bad debt provisions.
(**) Item disclosed elsewhere are mainly due to changes in interest, dividend and tax receivable and payable and government grants.
NET CASH
AND CASH
EQUIVALENT

LOANS(W/O BANKOVERDRAFTS)

NET FINANCIAL
DEBT

At the end of previous year

71,275411,996

340,721

Cash flow of the period

68,399583,758

515,359

Impact of final financing carved out entities

16,223–(16,223)

At the end of the financial year

155,897995,754

839,857

Net debt, including the discontinued

155,897995,754

839,857

Thousands of Euros

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FINANCIAL STATEMENTS

34.2 NET CASH FLOW GENERATED BY OPERATING ACTIVITIESOperating cash ﬂow after tax from continuing operations is € 153.3 million. Working capital requirements for continuing operations
increased by € 275.5 million, in line with higher activity levels and metal prices.
34.3 NET CASH FLOW USED IN INVESTING ACTIVITIESNet cash used in investing activities for continuing operations increased by € 288.0 million in 2017. Capital expenditure for continuing
operations reached € 361.9 million if capitalised R&D costs are excluded as per Umicore’s deﬁnition of capital expenditures (refer toGlossary). Most of the capital expenditure is related to Umicore’s growth investments in clean mobility and recycling. The Energy& Surface Technologies business group accounted for over 60 % of this amount, reflecting in particular the ongoing investment
programmes to increase production capacity in cathode materials.
Acquisitions accounted for a cash out of € 211.5 million and include the acquisition of the remaining 50% stake in Ordeg and of thestationary emission control and heavy duty diesel catalyst business of Haldor Topsoe in the Automotive Catalyst business unit as wellas the acquisition of Eurotungstene in the Cobalt & Specialty Materials business unit (see note F8). This cash out was only partly offset
by divestment proceeds of Building Products (for € 67.7 million as per note F42) and Umicore Vital Thin Film Product Technologies(€ 6.5 million, net of cash).
In 2016, the line “internal transfer” of the net cash flow generated by investing activities reflected the fact that the financing grantedby Umicore to the business unit Zinc Chemicals was no longer due after the divestment was completed. The financing was reimbursed
as part of the consideration paid.
34.4 NET CASH FLOW USED IN FINANCING ACTIVITIESThe cash used in ﬁnancing activities is mainly the consequence of the net increase of indebtedness (€ 562.1 million), the use of own
shares to cover the exercise of options (€ 6.0 million), and the payment of dividends (€ 156.3 million) and of interest (€ 14.4 million).
Thousands of Euros
Acquisition of tangible assets
Acquisition of intangible assets
Acquisitions of assets
Capitalised R&D

2016

2017

207,297351,249

80,76425,621

288,061

376,870

15,22814,926

Capital expenditure for continuing operations

272,833

361,944

Acquisitions of assets for discontinued operations

14,505

3,305

Capital expenditure, including discontinued

287,338

365,250

Thousands of Euros

2016

2017

Guarantees constituted by third parties on behalf of the Group

61,09957,329

Guarantees constituted by the Group on behalf of third parties

4,178

937

Guarantees received

84,728109,735

Goods and titles held by third parties in their own names but at the Group’s risk

366,623

383,582

F35 RIGHTS AND COMMITMENTS

Commitments to acquire and sell fixed assets

4,815

3,754

Commercial commitments for commodities purchased (to be received)

425,066

574,203

Commercial commitments for commodities sold (to be delivered)749,699

1,082,347

Goods and titles of third parties held by the Group

1,794,320

1,902,691

Miscellaneous rights and commitments
Total

2,532

2,522

3,493,060

4,117,100

35.1 GUARANTEES CONSTITUTED BY THIRD PARTIES ON BEHALF OF THE GROUP
are secured and unsecured guarantees given by third parties to the creditors of the group guaranteeing that the Group’s debts andcommitments, actual and potential, will be satisfactorily discharged.

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FINANCIAL STATEMENTS

35.2 GUARANTEES CONSTITUTED BY THE GROUP ON BEHALF OF THIRD PARTIES
are guarantees or irrevocable undertakings given by the Group in favour of third parties guaranteeing the satisfactory discharge ofdebts or of existing or potential commitments by the third party to its creditors.
There are no loan commitments given to third parties.
35.3 GUARANTEES RECEIVED
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 acustomer’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.
35.4 GOODS AND TITLES HELD BY THIRD PARTIES IN THEIR OWN NAMES BUT AT THE GROUP’S RISK
represent goods and titles included in the Group balance sheet for which the Group bears the risk and takes the proﬁt, but where thesegoods and titles are not present on the premises of the Group . It concerns mainly inventories leased out to third parties or held underconsignment or under tolling agreement by third parties.
35.5 COMMERCIAL COMMITMENTS
are ﬁrm commitments to deliver or receive metals to customers or from suppliers at ﬁxed prices.
35.6 GOODS AND TITLES OF THIRD PARTIES HELD BY THE GROUP
are goods and titles held by the group, but which are not owned by the Group. It concerns mainly third party inventories leased in orheld 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 speciﬁed, mostly short term,
periods and for which the group pays or receives fees. As at 31 December 2017, there was a net lease-in position of € 715 million
vs. € 675 million at end of 2016. This increase is mainly caused by higher volumes and higher metal prices.

F36 CONTINGENCIESThe 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 to have a material adverse effect on the financial conditionof Umicore.

F37 RELATED PARTIES
Thousands of Euros

2016

2017

TRANSACTIONS WITH JOINT VENTURES AND ASSOCIATES
Operating income

108,523

208,385

Operating expenses(91,187)(223,437)
213

Financial income

81

Financial expenses(1)–

Dividends received(8,723)(12,331)

Thousands of Euros

2016

2017

OUTSTANDING BALANCES WITH JOINT VENTURES AND ASSOCIATES
Current trade and other receivables

25,48043,090Current trade and other payables

35,152

67,394

Loan asset short term

2,450

1,538

The transactions with associates and joint ventures are mainly commercial transactions, sales and purchases of goods and services.
There are no transaction with entities held by key management personnel.

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162

FINANCIAL STATEMENTS

Thousands of Euros

2016

2017

685,303910,256

BOARD OF DIRECTORS
Salaries and other compensation
Fixed portion

227,322

289,433

Variable portion (based on attended meetings)

218,000

275,000

Value of the share grant

232,606

322,456

Benefit in kind company car chairman

2,971

2,767

Umicore contribution to the Swiss social security

4,404

20,600No 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.
Thousands of Euros

2016

2017

EXECUTIVE COMMITTEE
Salaries and other benefits

7,557,111

9,466,215

Short-term employee benefits

3,352,140

4,312,306
1,202,590

Post-employment benefits

1,299,414

Other long-term benefits

968,760

983,562

Share-based payments

1,936,797

2,967,757

The data above shows the accounting view of the board and executive committee remuneration and differs somewhat from theinformation 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 beneﬁts.
These do not feature in the remuneration report .
With regards to share-based incentives the share grant ﬁgures included in share-based payments above represent the value of theshares granted in 2017 for services rendered in 2016. The remuneration report shows the value of the shares granted in 2018 orservices rendered in the reporting year i.e. 2017.
The ﬁgures related to the undeferred part of the variable cash remuneration linked to the individual performance for the reference year
2017, included in short-term employee beneﬁts, represent the level of accruals at the end of reporting period. The remuneration reportfeatures the actual amounts paid.
Accruals booked for the deferred parts of the variable cash remuneration for the reference year 2017 are included in the other longterm beneﬁts. The amounts to be paid in 2019 and 2020 will depend on long-term performance measures and the exact amounts paid
will be included in the remuneration reports for the years in question.

F38 EVENTS AFTER THE REPORTING PERIOD

Following the board of directors meeting of 8 February 2018, Umicore announced that a gross dividend of € 0.70 per share would be
proposed to the annual general meeting (of which € 0.325 per share were already paid out as interim dividend in August 2017).
On 8 February 2018, Umicore placed 22,400,000 new shares with institutional and other investors through an accelerated bookbuild
conducted under private placement exemptions. The new shares represented 10% of the number of outstanding shares prior thetransaction (224,000,00). On 12 February 2018, the new shares were admitted to trading on Euronext Brussels and as from that day,the total number of shares outstanding amount to 246,400,000. The proceeds of the accelerated bookbuild (€ 892 million) will be used
to fund Umicore’s growth investments and will provide Umicore with more flexibility to pursue potential acquisitions and partnership.
The new shares from the capital increase will be entitled to a dividend payment of € 0.375 corresponding to the balance of the grossannual dividend for 2017, subject to shareholders’ approval of a full year dividend of € 0.70 per share.
Umicore announced at the end of November 2017 that it has agreed to sell its European Technical Materials business to SAXONIA
Edelmetalle GmbH, a long-established German refiner and manufacturer of precious metal chemical compounds, semi-finishedproducts and contact parts. The agreement concerns the Technical Materials activities in Germany and Italy, which manufacture contact
materials and brazing alloys for technical applications. Closing of the transaction took place at the end of January 2018.

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FINANCIAL STATEMENTS

Umicore announced in December 2017 that it has reached an agreement to acquire Materia´s metathesis catalyst IP and businessportfolio for a price of USD 27 million. Materia is a leading US-based producer of metathesis catalysts and thermoset resins.
Its metathesis business is a technology leader in homogeneous catalysts with unique proprietary technology developed by 2005
Chemistry Nobel Prize laureate Prof. Robert H. Grubbs and others and a broad portfolio of customised metathesis catalysts.
The transaction was subject to closing conditions and has been finalised in the course of January 2018.

F39 EARNINGS PER SHARE
2016

2017

EPS – basic

0.83

0.98

EPS – diluted

0.825

0.97

Euros
Excluding discontinued operations

Including discontinued operations
EPS – basic

0.6

0.97

EPS – diluted

0.595

0.96

Recurring EPS

1.07

1.22

The following earnings ﬁgures have been used as the numerator in the calculation of basic and diluted earnings per share:
NUMERATOR ELEMENTS
2016

2017

Without discontinued operations

181,203214,836

With discontinued operations

130,724

211,943

232,855

266,771

Thousands of Euros
Net consolidated profit, Group share

Recurring net consolidated profit, Group share

NOTE
F9

F9

The following numbers of shares have been used as the denominator in the calculation of basic and diluted earnings per share:
DENOMINATOR ELEMENTS
Total shares issued as at 31 Decemberof which treasury sharesof which shares outstanding
Weighted average number of outstanding shares
Potential dilution due to stock option plans
Adjusted weighted average number of outstanding shares

2016

2017

224,000,000

224,000,000

5,346,300

4,505,567

218,653,700

219,494,433

217,775,656

219,079,587

1,594,664

2,069,303

219,370,320

221,148,890

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.
On 16 October 2017, each Umicore share was split into two new shares. As a result, at the end of December, Umicore’s capital isrepresented by 224,000,00 fully paid-up shares without nominal value.
During 2017, no new shares were created as a result of the exercise of stock options with linked subscriptions rights. During the year
Umicore used 1,597,551 of its treasury shares in the context of the exercise of stock and 71,912 for shares granted. In the course of 2017.
Umicore bought back 828,730 own shares. On 31 December 2017, Umicore owned 4,505,567 of its own shares representing 2.01 % of
the total number of shares issued as at that date.

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FINANCIAL STATEMENTS

F40 IFRS DEVELOPMENTS

The following new standards and amendments to standards have been issued, but are not mandatory for the first time for thefinancial year beginning 1 January 2017 and have been endorsed by the European Union:–– IFRS 9 “Financial instruments”, effective for annual periods beginning on or after 1 January 2018. The standard addresses theclassification, measurement, derecognition of financial assets and financial liabilities and general hedge accounting.
	Based on the results of a detailed analysis during the second semester of 2017, there is a likelihood that the “IAS 39 correction” maybe reduced materially due to the fact that IFRS 9 allows more flexible hedge accounting on metals and currencies. The exact impact
per activity is currently being reviewed. In respect of physical commitments and inventories, provisions will have to be considered
for any unbalanced positions and uncertainties within any physical commitments. The analysis on the expected adjustments due toan expected credit loss model is still ongoing.
–– IFRS 15 “Revenue from contracts with customers”. The standard will improve comparability of the top line in financial statements
globally. Companies using IFRS will be required to apply the revenue standard for annual periods beginning on or after
1 January 2018.
	The revenue streams and triggers for revenue recognition have been analysed for all business units during 2017 to ensure alignment
with the 5-step model under IFRS 15. Based on the detailed analysis, it can be concluded that there are no material inconsistencies
expected between the current revenue recognition model applied and the revenue recognition triggers under IFRS 15.
The following new standards, amendments and interpretation to standards have been issued, but are not mandatory for the firsttime for the financial year beginning 1 January 2017 and have not been endorsed by the European Union:–– IFRS 16 “Leases”. This standard replaces the current guidance in IAS 17 and is a far reaching change in accounting by lessees inparticular. Under IAS 17, lessees were required to make a distinction between a finance lease (on balance sheet) and an operatinglease (off balance sheet). IFRS 16 requires lessees to recognise a lease liability reflecting future lease payments and a “right-of-use
asset” for virtually all lease contracts. For lessors, the accounting stays almost the same. However, as the IASB has updated theguidance on the definition of a lease (as well as the guidance on the combination and separation of contracts), lessors will also beaffected by the new standard. Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of
an identified asset for a period of time in exchange for consideration.
	A project has been launched during 2017 in which the preparation phase, consisting of capturing all contracts and necessary
information for IFRS 16 has been kicked off. During 2018, group management in close collaboration with local management, willfurther evaluate and assess the impact applying the criteria under IFRS 16. IFRS 16 contains a scope exception for leases to explore
for or use minerals, oil, natural gas and similar non-regenerative resources. Consequently, Umicore’s metal leases will stay out-ofscope of the leasing standard. Umicore has no other significant lease contracts and therefore the impact of the implementation of
IFRS 16 is expected to be limited.
–– IFRIC 23 “Uncertainty over income tax treatments” (effective 1 January 2019). This interpretation clarifies the accounting for
uncertainties in income taxes. The interpretation is to be applied to the determination of taxable profit (tax loss), tax bases, unused
tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. Umicore is analysing
the tax uncertainties within the group and the impact that this clarification may have.
For all other new interpretations and standards not yet mandatory as from 1 January 2017, management has no indications that this will
result in a material impact on the Group’s consolidated financial statements.

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FINANCIAL STATEMENTS

F41 AUDITORS’ REMUNERATION

The world-wide remuneration for the statutory auditor and its afﬁliated companies totalled € 4.0 million, including an amount of€ 1.8 million for the statutory audit missions (€ 0.5 million for the audit of the mother company) and € 2.2 million for non-statutory
audit services including audit-related and other attestation services (€ 0.4 million) and other non-audit related services (€ 1.8 million).

F42 DISCONTINUED OPERATIONSIn 2015, in light of Umicore’s review of its portfolio of activities, a process was initiated to prepare the Zinc Chemicals and Building
Products business units for a future outside the Umicore Group. Management analysed whether criteria were met to present bothactivities as discontinued operations. Based on this analysis it was decided to present both business units as discontinued operations
as from 30 June 2015.
As a result,since 2015, discontinued operations were shown in one line item on the balance sheet in accordance with IFRS 5 and withelimination of balance sheet positions between the continued and discontinued operations. No deprecations have been recorded for
discontinued operations as from 30 June 2015 but all discontinued balance sheet items were presented at the lower of the fair valueless cost-to-sell and the carrying amount, in accordance with IFRS 5 and based upon a detailed impairment analysis.
In June 2016, Umicore announced that an agreement to sell its Zinc Chemicals business unit to OpenGate Capital, a US-based private
equity firm, had been reached. The transaction has been effectively closed at the end of October 2016. All the income statement
elements of Zinc Chemicals before the end of October have been shown under discontinued operations.
In May 2017, it was announced that Umicore entered into exclusive negotiations with Fedrus International for the sale of its Building
Products activities. The transaction has been effectively closed at the end of September 2017. All the income statements elements of
Building Products before the end of September have been shown under discontinued operations.
As per 1st July 2017, the activities of Ieqsa have been transferred again to the continuing operations in the Corporate segment.

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FINANCIAL STATEMENTSASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS
Thousands of Euros

31/12/2016

31/12/2017

Non-current assets

90,344–

Property, plant and equipment

62,137–

Investments accounted for using the equity method

15,981–Other non-current assets

12,226–

Current assets

163,140–

Inventories

92,531–

Trade and other receivables

23,931–

Cash and Cash equivalents

45,326–

Other current assets

1,352

–

TOTAL ASSETS

253,484–

Non-current liabilities

39,768–Provisions for employee benefits

36,896–

Financial debt
Other non-current liabilities
Current liabilities
Financial debt
Trade and other payables
Other current liabilities
TOTAL EQUITY & LIABILITIES

487

–

2,385

–

105,140–

371–

103,478

–

1,291

–

144,908–

Analysis of the result of discontinued operations and cash flows including a restatement of prior periods in accordance with IFRS 5 isshown below:
CONDENSED INCOME STATEMENT OF DISCONTINUED OPERATIONS
Thousands of Euros

2016

2017

Operating income

661,311334,291

Operating expenses(696,754)(333,507)

Result from operating activities(35,445)

783

Finance cost – Net(3,031)(1,023)

Share in result of companies using the equity method

1,254

859

Profit (loss) before income tax(37,222)

619

Income taxes(13,081)(3,512)

Profit (loss) of the period(50,303)(2,893)

Basic earnings per share from discontinued operations(0.23)(0.01)

Diluted earnings per share from discontinued operations(0.23)(0.01)Euros

CONDENSED CASH FLOW STATEMENT OF DISCONTINUED OPERATIONS
2016

2017

(63,363)

6,800

Net cash flow generated by (used in) investing activities

28,909(42,710)

Net cash flow generated by (used in) financing activities(22,579)

7,031

Thousands of Euros
Net operating cash flow

Effect of exchange rate fluctuations on cash held

(3,002)(224)

Net cash flow from discontinued operations(60,034)(29,103)

Net cash and cash equivalents at the beginning of the period for discontinued operations

37,87245,326

Impact of final financing carved out entities

67,488(16,223)

Net cash and cash equivalents at the end of the period for discontinued operations

45,326–

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FINANCIAL STATEMENTS

Referring to the accounting policies, the Group has made a policy choice of assessing whether the arrangement will continue in the
future and as a result, intercompany transactions within the income statement between the discontinued and continued operations
are not eliminated against continuing operation to the extent that the arrangement will continue in the future and the amounts will
become external revenues/expenses in subsequent periods.
The commercial transactions between continued and discontinued operations amounted to € 5.2 million in the operating expenses ofthe discontinued operations and € 0.8 million in the operating income of the discontinued operations (taking 9 months of results fordiscontinued operations).
The balance sheet of the Building Products entities at the end of September on which the capital gain calculation has been based was:ASSETS AND LIABILITIES OF DISCONTINUED ENTITIES SOLD
Thousands of Euros

30/09/2017

Non-current assets

76,856

Current assets

229,311TOTAL ASSETS

306,166

Equity81,934Retained earnings

87,609Items of OCI reclassified to retained earnings(5,796)

Items of OCI to be reclassified to P&L
Non-current liabilities

120
47,833Current liabilities

176,400

TOTAL LIABILITIES

224,234

Price received

67,666

Capital Loss

(14,148)

The reconciliation between the consideration paid and the cash flow from investing activities of continuing operations is detailed innote 34.

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FINANCIAL STATEMENTS

Parent company separate summarised
financial statements
The annual accounts of Umicore are given below in summarised 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.
UMICORERue du Marais 31 Broekstraat
B-1000 Brussels (Belgium)
The statutory auditor did not express any reservations in respect of the annual accounts of Umicore.
The legal reserve of € 50.0 million which is included in the retained earnings is not available for distribution.
Thousands of Euros

31/12/2015

31/12/2016

31/12/2017

4,117,701

SUMMARISED BALANCE SHEET AT 31 DECEMBER
1. ASSETS
Fixed assets

3,835,808

3,847,718

II. Intangible assets

88,287

117,183

110,018

III. Tangible assets

353,974

365,507398,464

IV. Financial assets

3,393,547

3,365,028

3,609,219

684,601

752,880

950,746

373

373

373

343,868

351,864

339,484

Current assets
V. Amounts receivable after more than one year
VI. Stocks and contracts in progress
VII. Amounts receivable within one year

163,725

216,042

381,570

VIII. Investments

162,043

164,809200,213

IX. Cash at bank and in hand
X. Deferred charges and accrued income
Total assets

951

1,901

780

13,641

17,891

28,3264,520,409

4,600,598

5,068,447

1,214,164

1,222,013

1,211,092

500,000

500,000

500,000

6,610

6,610

6,610

91

91

91

2. LIABILITIES AND SHAREHOLDERS’ EQUITY
Capital and reserves
I. Capital
II. Share premium accountIII. Revaluation surplus
IV. Reserves

330,067

289,770

281,908

V. Result carried forward

236,627

270,367

264,754

Vbis. Result for the period

135,456

148,537

149,816

5,313

6,638

7,913

VI. Investments grants
Provisions and deferred taxation
VII.A. Provisions for liabilities and charges

109,685

111,775

117,426

3,196,560

3,266,810

3,739,929

VIII. Amounts payable after more than one year

1,572,000

1,981,249

1,693,125

IX. Amounts payable within one year

1,563,686

1,193,761

1,973,509

Creditors		

X. Accrued charges and deferred income

60,87391,80073,295

Total liabilities and shareholders’ equity

4,520,409

4,600,598

5,068,447

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169

FINANCIAL STATEMENTS

Thousands of Euros

31/12/2015

31/12/2016

31/12/2017

INCOME STATEMENT
I. Operating income

2,961,093

2,415,676

2,960,635

II. Operating charges(2,888,281)(2,412,640)(2,900,861)

III. Operating result

72,812

3,036

59,774

IV. Financial income

182,294

258,002

161,063

V. Financial charges(106,570)(113,178)(69,747)

VI. Result on ordinary activities before taxes

148,536

147,860

151,090

X. Income taxes(13,080)677(1,274)

XI. Result for the period

135,456

148,537

149,816

XIII. Result for the period available

135,456

148,537

149,816

2015

2016

2017

511,065

520,620

568,719

Thousands of Euros
APPROPRIATION ACCOUNT
A. Profit (loss) to be appropriated
1. Profit (loss) for the financial year

135,456

148,537

149,816

2. Profit (loss) carried forward

375,609372,083

418,903
7,862

C. Appropriation to equity(8,482)40,296

3. To the reserve for own shares(8,482)40,296

7,862

D. Profit (loss) to be carried forward(1)372,083

418,903

414,569

2. Profit (loss) to be carried forward
F. Profit to be distributed(1)372,083

418,903

414,569(130,500)(142,013)(162,012)(130,500)(142,013)(162,012)

1. Dividends
Ordinary shares(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 26 April 2018; the gross dividend of € 0.7 will not change.					THOUSANDS
OF EUROSNUMBER OF
SHARES		 At the end of the preceding financial year

500,000

224,000,000

		 At the end of the financial year

500,000

224,000,000

500,000

224,000,000

STATEMENT OF CAPITAL
A. Share capital
1. Issued capital

2. Structure of the capital
2.1. Categories of shares
			 Ordinary shares
2.2. Registered shares or bearer shares
			 Registered

41,908,468

			 Bearer
E. Authorised unissued capital

182,091,532
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170

FINANCIAL STATEMENTS% CAPITALNUMBER OF
SHARESNOTIFICATIONDATEFamily Trust Desmarais, Albert Frère and Groupe Bruxelles Lambert S.A.

15.00

33,605,672

24/09/2015

BlackRock Investment Management

4.86

10,876,681

14/08/2017

APG Asset management

3.00

6,728,778

24/10/2016

Vanguard International Growth Fund

3.02

6,775,231

06/12/2017

Others72.10

161,508,071

31/12/2017

Own shares held by Umicore

2.01

4,505,567

31/12/2017

100.00224,000,000

100.00224,000,000

G. SHAREHOLDER BASE(1)of which free float(1) At 31 December 2017, 5,218,199 options on Umicore shares are still to be exercised. This amount includes 5,218,199 acquisition rights of existing shares heldby Umicore.

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171

FINANCIAL STATEMENTSManagement responsibility statement

We hereby certify that, to the best of our knowledge, the Consolidated Financial Statements as of 31 December 2017, prepared inaccordance 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, ﬁnancial position and proﬁt or loss of the Group andthe undertakings included in the consolidation taken as a whole, and that the management report includes a fair review of thedevelopment 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.
16 March 2018,
Marc Grynberg
Chief Executive Ofﬁcer

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172

ENVIRONMENTAL STATEMENTS

Contents

ENVIRONMENTAL STATEMENTS
Environmental key figures

173

Notes to the environmental key figures

173

E1

Scope of environmental statements

173

E2

Emissions to water and air

174

E3

Greenhouse gases

176

E4

Energy177

E5Water use

179

E6

Waste

180

E7

Historical pollution

181

E8

Regulatory compliance and management system

182

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173

ENVIRONMENTAL STATEMENTS

Environmental statements

ENVIRONMENTAL KEY FIGURES*
UNIT
Metal emissions to water (load)

NOTES

2013

2014

2015

2016

2017

kg

E2

5,560

5,639

4,459

3,738

1,437

E2

313,883

543,332

328,013339,001

125,688kg

E2

12,522

13,30914,544

1,761

1,829

E2

130,169

128,465

135,660

86,09884,463

Metal emissions to water (impact units)
Metal emissions to air (load)
Metal emissions to air (impact units)
SOx emissions

tonne

E2

686

1,189

1,197

892

661

NOx emissions

tonne

E2

386

425

452

365

320

CO2e emissions (scope1+2) – Market-based**

tonne

E3

690,767

664,568

710,143

662,059

633,704

CO2e emissions (scope1+2) – Location-based**

tonne

E3

–

–

–

735,065

663,307

Energy consumption

terajoules

E4

7,557

7,304

7,742

6,737

6,532

Water usethousand m3

E5

4,343

4,645

4,904

4,851

4,755

Total waste produced

tonne

E7

68,57576,81072,66377,62572,80455,432

Hazardous wasteof which recycled
Non-hazardous waste

tonne

E7

45,66854,824

51,52559,437

%

E7

16.9

7.5

7.8

3.8

4.3

tonne

E7

22,90621,986

21,13818,18817,373of which recycled

%

E7

60.2

60.4

56.3

57.8

58.2

Compliance excess rate

%

E9

0.8

0.9

0.8

0.9

0.1

Environmental complaints

N°

E9

25

31

25

19

34

Sites ISO 14001 certified

%

E9

97

97

92

88

92

*

Data for 2015 and previous years includes the divested business unit Zinc Chemicals, while data from 2016 onwards does not. Data for 2016 and previous
years includes the divested business unit Building Products, while data for 2017 does not.
** CO 2 e emissions data for 2015 and previous years is an aggregation of market-based and location-based scope 2 emissions. A direct comparison to
2016/2017 data is not possible. If such comparison were to be made, the most meaningful approximation is to use the market-based 2016/2017 figure(see section E3 for details).

NOTES TO THE ENVIRONMENTAL KEY FIGURESE1 SCOPE OF ENVIRONMENTAL STATEMENTS

The environmental key figures include data from consolidated industrial sites where Umicore has operational control. Due to thecompletion of the divestiture of the business unit Building Products (Discontinued operations) and the closure of four further sites in
2017, the following sites are no longer reported compared to 2016: Auby, Bray-et-Lû, Viviez (France), Bratislava (Slovakia), Gatterstädt(Germany), Lyss-Wiler (Switzerland), Vilvoorde (Belgium) (all Building Products), Port Elizabeth (“Young Park” site of Automotive
Catalysts, South Africa), Qingyuan (China, Thin Film Products), Shanghai (China, Cobalt & Specialty Materials) and Suzhou (China,
Technical Materials). One site was added to the reporting scope: Rayong (Thailand, Automotive Catalysts). This brings the total numberof consolidated industrial sites that report environmental data to 49, down from 59 in 2016.
Within the scope of Umicore’s reporting framework, most of the sites report their environmental data at the end of the third quarter
together with a forecast for the fourth quarter. In January, the forecasted values are checked by the sites for significant deviations and,if needed, corrected. The six sites with the largest environmental impact for 2017 are: Hanau (Germany; Catalysis, Recycling), Olen
(Belgium; Energy & Surface Technologies, Group R&D), Hoboken (Belgium; Recycling), Jiangmen (China; Energy & Surface Technologies),
Cheonan UMK and Cheonan UMAK (both Korea; Energy & Surface Technologies). They report their full year figures. A sensitivity
analysis undertaken for the 2017 data on energy consumption data indicates that the potential deviation of the Group environmental
performance would be less than 2% 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 2016 annual report has been
restated in the 2017 report. Unless mentioned otherwise, environmental key performance indicators (KPIs) for 2015 and previous
years include the business unit Zinc Chemicals that was divested during 2016, while 2016 and 2017 KPIs do not include Zinc Chemicals.
Likewise, environmental KPIs for 2016 and previous years include the business unit Building Products that was divested during 2017,
while 2017 KPIs do not include Building Products, unless mentioned otherwise.
More details on Umicore’s management approach are available in the corresponding section on pages 63-67.

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ENVIRONMENTAL STATEMENTS

E2 EMISSIONS TO WATER AND AIR

Umicore’s Vision 2015 achievements of reducing our metal emissions to water and air in terms of impact by 26% and 37%, respectively,
marked a great step towards sustainable operations. We consider the emission levels achieved in 2015 our frame of reference in thecontext of sustainable operations that include the management of the emissions to water and air.
The aim for Horizon 2020 is to build on the Vision 2015 achievements by reducing the impact of metal emissions while considering
growing volumes of production. In practice, this means that we aim to at least maintain the level of metals emitted to water and air
in terms of impact that we achieved as part of Vision 2015.
Metal emissions to water are defined as the total amount of metals emitted after treatment to surface water from effluent(s)expressed in kg/year. If sites make use of an external waste water treatment plant, the efficiency of that treatment is consideredif known to the site.
Metal emissions to air are defined 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 scientific 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 wascalculated based upon these references. The metal impact to air and to water is expressed as “impact units/year”.
We identified the sites that contribute at least 95% in terms of load (for SOx and NOx) or impact units (for metals emissions to waterand air) of the total 2015 Group figures (excluding the divested business unit Zinc Chemicals). For emissions to water and air, datacollection for 2017 was restricted to the identified material sites (fewer than 10). All other sites were requested to only submit datain case of significant upward deviations from the 2015 baseline for the site.
The aim of improving on 2015 levels of metal emissions to water and air is measured by way of comparing emissions of the current
reporting year (i.e. 2017) with those of the reference year 2015 and using the same scope of activities as 2015 for the material sites.
To calculate the change in metal emissions to water and air in comparison with the reference year 2015, a baseline has been
established for each site in scope. The baseline is established by multiplying the actual activity level of the current reporting year (i.e.
2017) by the 2015 emission intensity (see example below). The baseline 2015 is then calculated by adding up all site-level baselines
for the sites in scope. Examples of activity parameters at sites are: tonnes produced per year, machine hours per year, tonnes of input
material in recycling process per year.
ExampleIn 2015, site A produced 20 t of product X and emitted 5 kg of metal Y (impact factor of Y = 8 impact units/kg) to air, resulting in a
metal emissions intensity of 2 impact units/t of product X. In 2017, site A produced 22 t of product X and emitted 5 kg of metal Y,
resulting in a metal emissions intensity of 1.8 impact units/ton of product X.
The 2015 baseline reported in 2017 is then: activity level of 2017 (22 t) x 2015 emissions intensity (2 impact units/t) = 44 impact units.
Therefore, the measured 5 kg – equivalent to 40 impact units – emitted in 2017 represents a reduction of 10% compared to what it
would have been under 2015 operating conditions.
The 2015 baseline is recalculated yearly (2016, 2017 and the following years). It is defined as the metal emissions that would havebeen expected with the activity volumes of the reporting year (i.e. 2017), but with the metal emissions intensity of the reference year
2015. The performance for each year is expressed as a percentage in comparison to the calculated 2015 group baseline applicable toeach year.

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ENVIRONMENTAL STATEMENTS

The calculation of metal emissions to water and air covers fully consolidated operations and activities that are part of the Group during
the reporting year (2016, 2017 and the following years) and that were also part of the Group in 2015. Performance is reported only forthe total of the material sites for each KPI.
SOx and NOx emissions are expressed in absolute numbers in tonnes/year.
GROUP DATA – EMISSION SCOPE METAL EMISSIONS TO AIR AND WATERUNIT

BASELINE 2015 IN
RELATION TO 2017

2016

2017

Metal emissions to water

impact units

409,691

339,001

125,688

Metal emissions to air

impact units

144,049

86,09884,463METAL EMISSION REDUCTIONPERFORMANCE (TO WATER)METAL EMISSION REDUCTIONPERFORMANCE (TO AIR)

%

%

100

100

99

100

80

80

60

60

40

31

70
59

40
20

20
0

100

2015

2016(1)

2017

0

2015

2016(2)

2017(1) Baseline 2015 in relation to 2016 was 343,649, leading to a reduction of 1% in 2016 in comparison with 2015.
(2) Baseline 2015 in relation to 2016 was 123,831, leading to a reduction of 30% in 2016 in comparison with 2015.

METAL EMISSIONS TO WATER
The metal emissions to water in 2017 using the defined scope resulted in 125,688 impact units. Metal emissions to water in 2015 using
the defined scope were 308,753 impact units. To assess progress on our commitment, this 2015 metal emissions level normalised for2017 activity was 409,691 impact units. In 2017, we have therefore achieved a 69% reduction of metal emissions to water in terms ofimpact for the defined scope.
This evolution can be mainly attributed to our Hoboken plant (Belgium, Recycling). The increased efficiency of the waste water treatment
plant at the site due to investments in improvement projects over the last years is paying off, and some efficiency improvements
and scale-effects after an additional capacity increase of precursor production at our new site in Cheonan (Korea, Energy & Surface
Technologies) have also contributed to the decrease of the emission intensity in terms of impact by metals emissions to water.
METAL EMISSIONS TO AIR
The metal emissions to air in 2017 using the defined scope were 84,463 impact units. Metal emissions to air in 2015 using the defined
scope resulted in 117,918 impact units. To assess progress on our commitment, this 2015 metal emissions level normalized for 2017activity was 144,049 impact units. In 2017, we have therefore achieved a 41% reduction of metal emissions to air in terms of impact
for the defined scope.
The reductions are observed across almost all the sites in scope to a varying degree, and can be ascribed for the most part to further
efforts that improved air filter efficiency and to improvements in overall process efficiency.
LEAD EMISSIONS AT HOBOKEN (BELGIUM, RECYCLING)
In 2015, infrastructure works at the roof of the lead refinery led to increased lead deposition in the surrounding residential area ofMoretusburg. Consequently, the biological monitoring results showed an increased number of children with lead in blood levels
above the recommended reference level of 5 micrograms/dl blood (Centre for Disease Control and Prevention, USA). This biologicalmonitoring campaign is conducted twice per year by the provincial authorities.

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ENVIRONMENTAL STATEMENTS

The site pulled together to identify improvements actions to reverse the deposition values. These projects subsequently implemented
took priority over other investments that had already been planned. By the end of 2016, the rolling annual average for lead emissions
decreased again to acceptable levels. While average lead levels among children in the neighbourhood have decreased, continued
action and follow-up will be needed to further reduce the number of children with lead in blood levels above the reference value.
At the fall biological monitoring campaign, in 2017, 32% of the children still had lead in blood levels above the reference value of 5 µg/
dl, down from 37% in fall 2016.
Umicore continues to work closely with the authorities to implement specific precautionary hygiene measures such as the cleaning of
the homes of the children with the highest levels of lead concentration.
OTHER EMISSIONS
UNIT

2013

2014

2015

2016

2017

SOx emissions

tonne

686

1,189

1,197

892

661

NOx emissions

tonne

386

425

452

365

320

The SOx emissions for the Group decreased from 892 t in 2016 (excluding the divested business unit Building Products) to 661 t in 2017,a reduction of 26%.
The NOx emissions decreased from 349 t in 2016 (excluding the divested business unit Building Products) to 320 t in 2017,
an 8% reduction.

E3 GREENHOUSE GASES

The introduction of our energy efficiency and carbon footprint policy in 2011 guided us to a 26% reduction in CO2 equivalent emissions
within the defined scope in Vision 2015 and to permanent attention and awareness of energy efficiency at the sites and in the business
units’ management processes.
Under Horizon 2020, Umicore’s improvement focus is on energy efficiency. The efforts to increase energy efficiency are expected tocontribute to further reducing our carbon footprint.
Umicore reports its absolute CO2e emissions as per the scope outlined in E1. The absolute CO2 equivalent (CO2e) emission volumes
are calculated using the Greenhouse Gas Protocol definition and reporting methodology for scope 1 and 2 (WBCSD and WRI 2004,
and amendment for scope 2 of 2015). Scope 2 for Umicore includes not only purchased electricity but also steam and compressed airpurchased from third parties (e.g. from industrial parks). CO2e includes the greenhouse gases CO2, CH4 and N2O 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 calculation of scope 2 emissions for each site is done in two ways: once using market-based CO2 emission factors and once using
location-based CO2 emission factors. The market-based emission factors allow calculating the CO2 emissions based on the specificcontracts that sites have in place with their energy suppliers, considering the relevant energy mix for these contracts (including green
energy attributes, where applicable). The location-based CO2 emission factors facilitate calculating the CO2 emissions based on theresidual energy mix in a country/region (where this data is available), thus explicitly excluding green energy attributes that are sold by
the power producers in dedicated supply contracts. The total CO2 emissions for the Group are then presented as two separate values
based on this differentiation, and the metrics are abbreviated as: CO2e market-based and CO2e location-based.
The WBCSD Chemical Sector Working Group on GHG Measurement and Reporting established additional guidance to cope withobserved anomalies in GHG reporting. Umicore has implemented these guidelines already since the 2012 reporting. The publicationof the sector guidelines can be found on their website.
GROUP DATA
UNIT

2013

2014

2015

2016

2017

CO2e emissions (scope1+2) – Market-based

tonne

690,767

664,568

710,143

662,059

633,704

CO2e emissions (scope1+2) – Location-based

tonne

–

–

–

735,065

663,307

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ENVIRONMENTAL STATEMENTS

Total CO2e market-based emissions in 2017 were 633,704 t. Total CO2e location-based emissions were 663,307 t. The difference between
these two figures, 29,603 t, is due to specific energy contracts with a favourable energy mix that our sites have in place, which result ina lower carbon footprint than the residual energy mix for the country/region that the site is located in.
Total CO2e market-based emissions in 2016 were 662,059 t (646,454 t when excluding the divested business unit Building Products,
which represented 2% of the Group’s market-based emissions in that year). Total CO2e location-based emissions in 2016 were 735,065 t(720,160 t when excluding the divested business unit Building Products, which represented 2% of the Group’s location-based emissions
in that year).
The comparison of 2017 with 2016 market-based emissions (excluding the divested business unit Building Products) shows relatively
stable emissions (down 2% year-on-year). This is due to a combination of factors and can mainly be attributed to higher activity levels
across several sites of the business units Rechargeable Battery Materials and Cobalt & Specialty Materials on the one hand, and tothe closure of further individual sites (see section E1) as well as emission reductions and favorable CO2 emission factors for purchased
energy at Hoboken (Belgium, Recycling) on the other hand. When including the divested business unit Building Products in the 2016
figures, there is a 4% reduction year-on-year.
BUSINESS GROUP DATAUNITCATALYSISENERGY &SURFACETECHNOLOGIES

CO2e emissions (scope1+2) – Market-based

tonne

108,401

229,368

295,493633,704

CO2e emissions (scope1+2) – Location-based

tonne

119,627

235,588

307,629

663,307

RECYCLING

UMICOREGROUP

E4 ENERGY

Umicore is committed under Horizon 2020 to an even more efficient use of energy in its operations. In practice, this means that we
aim to further increase the energy efficiency level that we achieved as part of Vision 2015.
The WBCSD Chemical Sector Working Group on GHG Measurement and Reporting established additional guidance to cope withobserved anomalies in GHG and energy reporting. Umicore has implemented these guidelines already since the 2012 reporting.
Publication of the sector guidelines can be found on the WBCSD website.
In the scope of Horizon 2020 a greater emphasis is on those sites that are contributing the most to Umicore’s total energy consumption,and certain parameters such as activity indicators have been thoroughly reviewed for those sites and updated where required.
Monitoring and reporting of the energy consumption continues to be done at all sites. The bigger contributors are additionallyencouraged and required to report on their energy efficiency projects.
An analysis of the contributions of the sites to the energy consumption at group level identified 23 sites that contributed more than
95% to the 2017 total.
GROUP DATA – IN THE CONTEXT OF THE ENERGY EFFICIENCY OBJECTIVE
The aim of improving on 2015 levels of energy efficiency is measured by way of comparing the energy consumption of the current
reporting year (i.e. 2017) with the energy consumption of the reference year 2015 and using the same scope of activities as 2015.
To calculate the change in energy consumption in comparison with the reference year 2015, a baseline has been established for eachsite in scope. The baseline is established by multiplying the actual activity level of the current reporting year (i.e. 2017) by the 2015
energy intensity (see example below). The baseline 2015 is then calculated by adding all site-level baselines for the sites in scope.
Examples of activity parameters at sites are: tonnes produced per year, machine hours per year, tonnes of input material in recycling
process per year.
ExampleIn 2015 site A produced 200 t of product X and consumed 80,000 GJ, resulting in an energy intensity of 400 GJ/t of product X. In 2017site A produced 220 t of product X and consumed 80,000 GJ, resulting in an energy intensity of 364 GJ/ton of product X.
The 2015 baseline reported in 2017 is then: activity level of 2017 (220 t) x 2015 energy intensity (400 GJ/t) = 88,000 GJ.
Therefore the 80,000 GJ consumed in 2017 represents an improvement of 10% compared to what it would have been under 2015
operating conditions.

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ENVIRONMENTAL STATEMENTS

The baseline 2015 is recalculated yearly (2016 and the following years). It is defined as the energy consumption that would havebeen expected with the activity volumes of the reporting year (i.e. 2017), but with the energy intensity of the reference year 2015.
The performance for each year is expressed as a percentage in comparison to the calculated 2015 group baseline applicable toeach year.
The calculation of this KPI covers fully consolidated operations and activities that are part of the Group during the reporting year (2016,2017 and the following years) and that were also part of the Group in 2015. It should be noted that the sites of the former business
units Zinc Chemicals and Building Products and sites that were added to the reporting in 2016 and 2017, i.e. Nowa Ruda (Poland) andRayong (Thailand) (both Catalysis), are therefore not in the reporting scope for this KPI. The energy consumption data also includes our
corporate headquarters in Brussels (Belgium).
ENERGY EFFICIENCY OBJECTIVE
UNIT
Energy consumption

terajoules

BASELINE 2015 IN
RELATION TO 2017

2016

2017

7,720

6,241

6,082

NORMALISED ENERGY CONSUMPTION
%
100

100

94
79

80
60
40
20
0

2015

2016(1)

2017(1) Baseline 2015 in relation to 2016 was 6,664 TJ, leading to a reduction of 6% in 2016 in comparison with 2015.

The energy consumption 2017 using the defined scope was 6,082 TJ. The energy consumption in 2015 using the defined scope
was 5,557 TJ. To assess progress on our commitment, this 2015 energy consumption level normalised for 2017 activity was 7,720 TJ.
This means that for equivalent production levels we consumed 21% less energy. In other words, the energy efficiency has improvedby 21% in 2017 compared to the reference year 2015.
This improvement is mainly due to scale-effects in connection with the ongoing capacity increase at our Rechargeable Battery
Materials sites. Further improvements and consolidations at other sites also contributed to the overall decrease in energy intensity.
Energy efficiency projects have been implemented at the most important sites in line with foregoing sustainable development
objectives since 2006. In 2017, 23 sites represented more than 95% of the Group’s energy consumption. At these sites, 38 energy
efficiency projects have been reported as being implemented during 2017 and contributed significant energy savings.

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ENVIRONMENTAL STATEMENTS

ABSOLUTE ENERGY CONSUMPTION
Total energy consumption increased from 6,323 TJ in 2016 (excluding the divested business unit Building Products) to 6,532 TJ in 2017,a 3% increase year-on-year.
Indirect energy consumption by primary energy source (purchased electricity, steam and compressed air) for production sites and officebuildings in 2017 was 2,632 TJ. Direct energy consumption by primary energy source (fuel, gas oil, natural gas, LPG, coal and cokes)
was 3,900 TJ.

ENERGY CONSUMPTION (ABSOLUTE)
terajoules
10,000
8,000

7,557

7,304

7,742
6,737

6,532

2016

2017

6,000
4,000
2,000
0

2013

2014

2015

BUSINESS GROUP DATA
UNIT
Energy consumption

terajoules

CATALYSISENERGY &SURFACETECHNOLOGIESRECYCLING

UMICORE
GROUP

980

2,646

2,897

6,532

E5 WATER USE

GROUP DATAWATER USE
thousand m 3
6,000
5,000

4,343

4,645

4,904

4,851

4,755

2015

2016

2017

4,000
3,000
2,000
1,000
0

2013

2014

Water use is defined as the total volume of water expressed in thousand m³/year from domestic water supply, groundwater wells,surface water and rainwater. Groundwater extraction for remediation purposes and cooling water returned to its original water bodyare not counted.
The total water use for the Group increased somewhat, from 4,435 thousand m³ in 2016 (excluding the divested business unit Building
Products) to 4,755 thousand m³ in 2017. The increase in water use is mainly due to intensified dust suppression at the Hoboken site
(Belgium, Recycling).

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ENVIRONMENTAL STATEMENTS

BUSINESS GROUP DATA
UNIT
Water use

CATALYSISENERGY &SURFACETECHNOLOGIESRECYCLING

UMICORE
GROUP

622

2,235

1,898

4,755

thousand m3

E6 WASTEGROUP DATAHAZARDOUS WASTE
tonne
60,00050,00040,00030,000

4,102
7,729

50,722

2,287
4,011

57,15047,5142,369
53,06337,93920,00010,000
0

2013

2014

2015

2016

2017

Non-recycled
Recycled

Waste is defined 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 based on the local regulation for the region where the reporting
entity is located.
In 2017, a total of 72,804 tonnes of waste were generated compared to 74,546 tonnes in 2016 (excluding the divested business unit
Building Products), a decrease of 2%.
The total volume of hazardous waste decreased from 57,441 tonnes in 2016 (excluding the divested business unit Building Products)
to 55,432 tonnes in 2017, a decrease of 3%. The recycling rate of hazardous waste has remained at similar levels with 4% in 2017
compared to 3% in 2016 (excluding Building Products).
The total volume of non-hazardous waste increased from 17,105 tonnes in 2016 (excluding the divested business unit Building Products)
to 17,373 tonnes in 2017, an increase of 2%.
BUSINESS GROUP DATAUNITCATALYSISENERGY &SURFACETECHNOLOGIES

Total waste produced

tonne

5,469

27,36339,97372,804

Hazardous waste

tonne

3,655

18,46033,31655,432

%

7.30

4.67

3.72

4.27

tonne

1,813

8,903

6,657

17,373

%

47.23

33.11

94.70

58.18

of which recycled
Non-hazardous wasteof which recycled

RECYCLING

UMICOREGROUP

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ENVIRONMENTAL STATEMENTS

E7 HISTORICAL POLLUTION

Active participation in the management and remediation of risks that have resulted from historical operations is an integral part of
the Umicore Way. Over the past 15 years, Umicore’s proactive programme for assessing and remediating, where necessary, soil andgroundwater contamination has made significant progress. The following section illustrates the main ongoing programmes and theprogress made during 2017.
BELGIUM
Background: On 23 April 2004, Umicore signed a Covenant with the regional waste authorities (OVAM) and the Regional Ministerof the Environment in the Flemish Region of Belgium according to which Umicore committed to spend € 62 million over 15 years
to remediate the historical pollution on four sites, two of which – Balen and Overpelt – now belong to Nyrstar, a business that wasdivested by Umicore in 2007.
2017 Activities: In Hoboken, an agreement was reached with the competent authorities to extend the on-site storage facility, so thaton-site remediation work (excavation) can restart. An alternative concept for groundwater remediation has been discussed and agreed
upon with the authorities. The practical implementation of the remedial system is planned in 2019.
In Olen, the on-site groundwater remediation programme that was started in 2007 continued in 2017. In 2017, contaminated soil andburied waste were further excavated at different locations where infrastructure work was needed, such as the construction of the
new canteen.
In 2014, Umicore and the competent authorities signed an agreement to extend by 5 years the period to complete the necessary
risk reduction action within the 9 km perimeter. The agreement also contains an important clause through which Umicore and theauthorities will tackle remediation of the Bocholt site, a former arsenic plant that was shut down and dismantled in the early 1970s.
Work will start in 2018.
FRANCEIn Viviez, Umicore has completed the large-scale remediation programme that was started in 2011 and has transferred the postremedial obligations to a third party. In 2017, Umicore together with other partners joined a voluntary program to address the soil
contamination identified in the private gardens around the Viviez site. Data collection was performed in 2017, and appropriate
measures will be defined.
The former mining concession Saint-Félix de Pallières in the South of France was secured in full compliance with the applicablelegislation and returned to the French Authorities in 2004. In recent years, more attention has been focused by certain stakeholder
groups on the potential health effects linked to the former mining activities. Although the authorities, including the Ministry ofEnvironment, have acknowledged that the mining concession was returned to the French State according to the requirements of theapplicable legislation, Umicore committed voluntarily to support the authorities in addressing the concerns of the local population.
USA
Umicore continued to treat drainage water at a former mining site in Colorado. Umicore is currently building a new waste
water treatment facility that will further decrease the metal concentration in the discharge, thus decreasing the volume of solid
waste produced.
After the closedown of the Maxton plant in North Carolina, soil and groundwater contamination was identified. Umicore entereda voluntary remediation programme with the authorities to fully address the issue by 2033. In 2017, a significant part of the soil
contamination was addressed by stabilising the metals and thus preventing them from leaching into the groundwater.
BRAZIL
During an environmental assessment that was performed following its acquisition in 2003, groundwater pollution was detected at
the Guarulhos site in Brazil. This historical pollution dates from before Umicore’s purchase of the operations. Umicore took immediate
measures to stop the spreading of this contamination to the neighbouring areas by installing a hydraulic barrier that has been in fulloperation since 2011. Targeted extraction systems were put in place on site to speed up the remediation. Umicore is continuing toconsider more cost-effective remedial systems, such as in-situ applications.

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ENVIRONMENTAL STATEMENTS

E8 REGULATORY COMPLIANCE AND MANAGEMENT SYSTEMGROUP DATACOMPLIANCE EXCESS RATE
%
1.4
1.2
1.0
0.8

0.8

0.9

0.8

0.9

0.6
0.4
0.2
0

0.1

2013

2014

2015

2016

2017

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 defined 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 ofmeasurements multiplied by the number of parameters per measurement.
In 2017, some 55,000 environmental measurements were carried out at all of Umicore’s industrial sites compared to some 43,000 theyear before (excluding the divested business unit Building Products).
The number of measurements that did not meet the regulatory or permit requirements is very low at 0.1% for the Group, compared to
0.9% in 2016. The year-on-year reduction is mainly due the divestment of a site where a higher ratio of excess readings was reported
in 2016 and prior years.
Of the 49 consolidated industrial sites, 45 sites have put in place an environmental management system certified against ISO
14001. The remaining four sites are acquisitions that joined Umicore reporting between 2015-17, and all four sites are planning theimplementation of an environmental management system during 2018/2019. Except for the newer of the two Cheonan sites (Korea,
Energy & Surface Technologies), the five other major sites with significant environmental impacts have been certified against the
ISO 14001 management system for many years. The newer of the two Cheonan sites, which joined Umicore reporting in 2015, hasscheduled the implementation of a certified environmental management system during 2018.
In total, 34 environmental complaints were received in 2017, most of which were related to noise and odour. Twenty-one of thecomplaints are ongoing.

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SOCIAL STATEMENTS

Contents

SOCIAL STATEMENTS
Social key figures

184

Notes to the social key figures

184

S1

Scope of social statements

184

S2

Workforce

185

S3

People engagement

188

S4

Employee relations

190

S5

Code of Conduct

191

S6

Occupational health

191

S7

Occupational safety

194

S8

Process safety

196

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SOCIAL STATEMENTS

Social statements

SOCIAL KEY FIGURES

UNIT

Workforce (fully consolidated companies)

N°

NOTES

2013

2014

2015

2016

2017

S2

10,19010,368

10,429

9,921

9,769

Temporary contracts% of workforce

S2

3.42

3.62

3.91

3.45

3.86

Women amongst all employees% of workforce

S2

21.53

21.68

21.72

21.60

21.92

Women amongst all managers% of workforce

S2

20.52

21.25

22.18

22.11

22.37

Women amongst senior management% of workforce

S2

8.70

8.33

9.49

9.09

6.77

Women in “business operations” management functions

%

S2

–

–

–

14.27

15.55

Non-European representation in senior management functions %

S2

–

–

–

16.67

18.05

Average training hours per employee

hours/employee

S3

45.18

45.59

45.06

41.49

45.33

Employees having a yearly appraisal% of workforce

S3

95.65

95.82

95.97

96.03

98.29

Voluntary leavers – ratio% of workforce

S3

3.33

3.42

3.35

4.10

5.03

Employees represented by union or Collective Labour
Agreement (CLA)% of workforce

S4

71.33

71.44

71.11

69.41

65.41

Exposure ratio “all biomarkers aggregated” (1)

%

S6

2.6

1.8

2.3

3.2

2.7

Number of occupational linked diseases

N°

S6

14

21

12

12

11

People with platinum sensitisation

N°

S6

4

4

0

1

1

Fatal accidents

N°

S7

0

2

0

1

0

Lost Time Accidents (LTA)

N°

S7

35

37

47

59

51

Lost Time Accidents (LTA) for sub-contractors

N°

S7

22

11

9

15

22

LTA frequency rate

LTA/million hours
worked

S7

2.08

2.16

2.66

3.34

3.01

LTA severity rate

lost days/thousand
hours worked

S7

0.10

0.94

0.12

0.56

0.09

(1) Ratio between the number of monitoring results exceeding the Umicore target value, defined for relevant hazardous substances, and the total number ofmonitoring results.

NOTES TO THE SOCIAL KEY FIGURESS1 SCOPE OF SOCIAL STATEMENTS

In total, 92 consolidated sites are included in the HR related notes of the social reporting (S2 to S5).
This is 10 fewer than in 2016, mainly because of divestments. The largest impact came from the divestment of the Building Products
business unit and the acquisitions in Catalysis.
The sites report full year data for the social indicators. The indicators presented are based on data from fully consolidated companies
unless indicated otherwise.
The workforce-related indicators contain the data for the sites acquired from Haldor Topsøe. The other indicators however do not havethese sites in scope, since they only joined Umicore in December. Workforce and other indicators for the divested sites of Building
Products and Thin Film Products site in China are not included.
The historical numbers (2016 and before) were not restated.

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SOCIAL STATEMENTS

S2 WORKFORCEGROUP DATA

Workforce (fully consolidated companies)

UNIT

2013

2014

2015

2016

2017

N°

10,19010,368

10,429

9,921

9,769

Workforce from associated companies

N°

3,867

3,706

3,301

3,196

3,360

Employees men

N°

7,996

8,120

8,164

7,778

7,628

Employees women

N°

2,194

2,248

2,265

2,143

2,141

Full-time equivalent

N°

–

–

–

9,716

9,574

Employees < 30 years

N°

–

–

–

1,620

1,697

Employees between 30 and 50 years

N°

–

–

–

5,605

5,504
2,568

Employees > 50 years

N°

–

–

–

2,696

Temporary contracts% of workforce

3.42

3.62

3.91

3.45

3.86

Women amongst all employees% of workforce

21.53

21.68

21.72

21.60

21.92

Women amongst all managers% of workforce

20.52

21.25

22.18

22.11

22.37

Women amongst senior management% of workforce

8.70

8.33

9.49

9.09

6.77

Women in “business operations” management functions

%

–

–

–

14.27

15.55

Non-European representation in senior management functions

%

–

–

–

16.67

18.05

Workforce: Number of employees on Umicore payroll at the end of the period in fully consolidated 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.
Full time equivalent: The FTE of a worker is calculated by dividing the actual working regime, hours, shifts by the regime, hours, shiftsof a full-time worker at the end of the period in fully consolidated companies.
This applies to all hourly paid, monthly paid, managers and interns on Umicore’s payroll at the end of the reported semester including
part-time and temporary employees but excludes employees with a dormant contract (career interruption, maternity leave, parental
leave, etc.), employees on long-term illness (country specific length of continuous absence) and early retirees.

TOTAL WORKFORCEWORKFORCE – AGE SPLIT

16,00014,00012,00010,000
8,000

17%
3,867

3,706

3,301

10,19010,368

10,429

3,196
9,921

3,360

26%

25
20

21.53

21.68

21.72

21.60

21.92

20.52

21.25

22.18

22.11

22.37

14.27

15.55

9.49

9.09

6.77

2015

2016

2017

15

9,769

10

6,000
4,000

56%

2,000
0

Employees < 30 years
Employees between
30 and 50 years
Employees > 50 years

WOMEN REPRESENTATION

2013

2014

2015

Fully consolidated companies
Associated companies

2016

2017

5
0

8.70

8.33

2013

2014

Amongst all employees
Amongst all managers
Amongst senior management
In “business operations” management functions

TOTAL WORKFORCE
The total workforce increased by 12 employees to a total of 13,129. For the fully consolidated companies, the workforce decreased by
152 people to 9,769, mainly because of the divestment of Building Products. While the divestment of Building Products alone would
have seen a larger decrease in workforce, business groups Catalysis and Energy & Surface Technologies saw growth to bring the
reduction to a lesser number.
Amongst the associated companies there was an increase of 164 employees driven by organic growth in Element Six Abrasives.

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SOCIAL STATEMENTS

The FTE of 9,574 (consolidated) comes very close to the reported headcount of 9,769, illustrating that most of Umicore employees areworking on a full-time basis.
TEMPORARY CONTRACTS
Temporary contracts as a percentage of the workforce of fully consolidated companies increased slightly to 3.86% in 2017.
GENDER SPLIT
The percentage of women was 21.92% 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 six years. Women are more represented in administrative and commercial functions,compared to functions in the industrial operations.
GENDER SPLIT – SENIOR MANAGERS
While the total percentage of women employees has remained rather stable (see above), the percentage of women managers has
shown a steady increase from 18.65% in 2010 to 22.37% in 2017. The percentage of women in senior management has decreased thelast two years, resulting in 6.77%. We have set the ambition to reach 15% of women in senior management functions by 2020.
WOMEN IN “BUSINESS OPERATIONS” MANAGEMENT FUNCTIONS
To monitor career development, we have defined the notion of “business operations” management functions, referring to those in
the fields of operations, sales and General Management. Within the senior management group, these functions represent 55% of thegroup, as opposed to 45% for the support functions.
As from the year 2016, we monitor the percentage of women in these “business operations” functions, because these functions seem
to offer a clearer pathway into the senior functions. In 2017, the percentage of women within this management group employed inbusiness operations functions rose to 15.55% compared to 14.27% in 2016.
NON-EUROPEAN REPRESENTATION IN SENIOR MANAGEMENT FUNCTIONS
As from 2016, we also monitor the percentage of non-European representation in senior management functions, as an indicator for
diversity. In 2017, this percentage increased to 18.05% from 16.67% in 2016.
REGIONAL DATAUNITEUROPENORTHAMERICASOUTH
AMERICAASIAPACIFIC

AFRICA

UMICORE
GROUP

Workforce (fully consolidated companies)

N°

5,782

858

685

2,182

262

9,769

Workforce from associated companies

N°

1,098

17

446

1,027

772

3,360

Employees men

N°

4,561

672

506

1,729

160

7,628

Employees women

N°

1,221

186

179

453

102

2,141

Full-time equivalentN°

5,603.61

853.81684.502,180.00

251.64

9,573.56

Temporary contracts% of workforce

5.07

0.58

0.88

3.30

0.38

3.86

ENERGY &SURFACECATALYSIS TECHNOLOGIESRECYCLINGCORPORATEUMICOREGROUP

BUSINESS GROUP DATAUNIT
Workforce (fully consolidated companies)

N°

2,952

2,716

3,092

1,009

9,769

Workforce from associated companies

N°

0

917

0

2,443

3,360

Employees men

N°

2,359

2,118

2,557

594

7,628

Employees women

N°

593

598

535

415

2,141

Full-time equivalentN°

2,924.67

2,709.88

3,061.37

877.64

9,573.56

Temporary contracts% of workforce

4.51

4.34

2.94

3.47

3.86

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SOCIAL STATEMENTS

GENERAL OVERVIEW OF SITES AND EMPLOYEESPRODUCTION SITES

R&D | TECHNICALCENTRESOTHER SITESEMPLOYEES

1

2,898

2

244

1 (1)

1,985 (366)EuropeAustria1

Belgium

31

Denmark

1

1

France3Germany

5 (1)Ireland

(1)

Italy

1

Liechtenstein

1

137

2

101

(541)
2

80

1

Luxembourg

83
1

Netherlands

1

Poland

1

11
47

1

94

Portugal

1

5

Russia

1

7

Spain

1

4

1 (1)

39 (8)

Sweden1

Switzerland
United Kingdom

1

3
44 (183)

1

(1)

3 (1)
1

9

China

5 (3)

1

5 (1)

906 (1,014)

India

1

1

71

Japan

2

3

2 (1)

174 (9)

Philippines

1

South Korea

3

2

2

744

Asia-Pacific
Australia

79

TaiwanThailand

2

United Arab Emirates

2

21

1

178

(1)

(4)

North America
Canada3

226

MexicoUnited States

9

2

1

5

3 (1)

627 (17)

South America
Argentina

1

Brazil

4

Peru

(1)

59
1

626
(446)

AfricaSouth Africa
Total

1 (1)
51 (7)

14 (1)

1

262 (772)

35 (7)

9,769 (3,360)

Figures in brackets denotes “of which associates and joint venture companies”. Where a site has both production facilities and offices (eg Hanau, Germany)
it is classified as a production site only. Some of our production sites and R&D | technical centres are located on the same site but are counted separately.

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SOCIAL STATEMENTS

S3 PEOPLE ENGAGEMENTGROUP DATA

Employees having a yearly appraisal

UNIT

2013

2014

2015

2016

2017

% of workforce

95.65

95.82

95.97

96.03

98.39

Average number of training hours per employee

hours/employee

45.18

45.59

45.06

41.49

45.33

Average number of training hours per employee – Menhours/employee

45.82

48.09

45.32

42.38

46.53

Average number of training hours per employee – Women

hours/employee

42.26

39.76

47.39

38.28

41.01

Average number of training hours per employee – Managers

hours/employee

41.41

37.18

34.24

41.03

38.54

Average number of training hours per employee– Other employee categories

hours/employee

44.82

46.29

46.09

41.52

46.44

Voluntary leavers ratio% of workforce

3.33

3.42

3.35

4.10

5.03

Voluntary leavers men

N°

253

273

280

309

404

Voluntary leavers women

N°

89

80

69

97

70

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.
Voluntary leavers: Number of employees leaving the company of their own will (excluding retirement and the expiry of a fixed-term
contract). This figure is related to the workforce from fully consolidated companies.

AVERAGE NUMBER OF TRAINING
HOURS PER EMPLOYEEAVERAGE NUMBER OF TRAINING
HOURS PER EMPLOYEE CATEGORYAVERAGE NUMBER OF TRAINING
HOURS PER EMPLOYEE – GENDER SPLIT

Hours/employee

Hours/employee

Hours/employee

60

50
45
40
35
30
25
20
15
10
5
0

50

45.18

45.59

45.06

2014

2015

40

41.49

45.33

30
20
10
0

2013

2016

2017

38.54

Managers

Other employee
categories

VOLUNTARY LEAVERS RATIOVOLUNTARY LEAVERS RATIO%% of workforce

6
5.03

5
4

4.10
3.33

3.42

Africa3South America

2

North America

1Europe

0

2013

2014

2015

2016

2017

46.53
41.01

Men

Women

2.30

Asia-Pacific

3.35

50
45
40
35
30
25
20
15
10
5
0

46.44

10.94
3.09
7.44
2.96

0 1 2 3 4 5 6 7 8 9 10 11 12

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SOCIAL STATEMENTS

REGIONAL DATAEUROPENORTHAMERICASOUTH
AMERICAASIAPACIFIC

AFRICA

UMICORE
GROUP

hours/employee

39.02

39.15

72.57

58.55

29.87

45.33

Employees having a yearly appraisal% of workforce

98.68

96.59

98.82

97.64

98.85

98.29

Voluntary leavers ratio% of workforce

2.96

7.44

3.09

10.94

2.30

5.03

CATALYSISENERGY &SURFACETECHNOLOGIES

UNIT
Average number of training hours per employee

BUSINESS GROUP DATAUNITRECYCLINGCORPORATEUMICORE
GROUP

Average number of training hours per employee

hours/employee

45.22

49.06

43.63

41.02

45.33

Employees having a yearly appraisal% of workforce

96.69

97.92

99.48

99.90

98.29

Voluntary leavers ratio% of workforce

5.13

8.48

2.85

2.41

5.03

TRAINING HOURS
In 2017, the average training hours per employee reached 45.33 hours. This is an increase from 2016 and a return towards the average
number of the previous years.
This increase is partially attributed to higher training efforts for the sites that are expanding and that need to make extra onboarding
efforts for the newly hired employees.
Data shows that managers training hours (38.54 hours) are lower than for other employees (46.44 hours). This reflects the high efforts
of on-the-job training for newly hired operators.
YEARLY APPRAISAL
In 2017, almost all employees (98.39%) from fully consolidated companies have an appraisal interview to discuss their development atleast once a year.
VOLUNTARY LEAVERS
In the previous five years, the percentage of voluntary leavers has fluctuated between 3.2 and 3.8. The last two years the percentage
increased to reach 5.03% in 2017. As was the case in previous years, significant regional differences can be observed with Asia Pacificreporting the highest turnover rate (10.94%) and Africa (2.30%) and Europe (2.96 %) the lowest. The high turnover rate in Asia Pacificis not unique to Umicore and can be explained by a highly competitive and fluid labour market in some of the growth markets.
VOLUNTARY LEAVERS – GENDER
14.77% of the voluntary leavers are women, which is lower than the 21.92% presence of women in the workforce of fully
consolidated companies

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SOCIAL STATEMENTS

S4 EMPLOYEE RELATIONSGROUP DATA

Employees represented by union orCollective Labour Agreement (CLA)

UNIT

2013

2014

2015

2016

2017

% of workforce

71.33

71.44

71.11

69.41

65.41

EMPLOYEES REPRESENTED BY UNION
OR COLLECTIVE LABOUR AGREEMENT(CLA)% of workforce
90
80
70

71.33

71.44

71.11

69.41

65.41

2014

2015

2016

2017

60
50
40
30
20
10
0

2013

REGIONAL DATA
UNIT
Employees represented by union orCollective Labour Agreement (CLA)% of workforce

BUSINESS GROUP DATA
UNIT
Employees represented by union orCollective Labour Agreement (CLA)% of workforce

EUROPENORTHAMERICASOUTH
AMERICAASIAPACIFIC

AFRICA

UMICORE
GROUP

84.23

8.39

92.99

31.44

47.71

65.41

ENERGY &SURFACECATALYSIS TECHNOLOGIESRECYCLINGCORPORATEUMICORE
GROUP

87.74

76.51

65.41

49.80

52.84

UNION AND COLLECTIVE LABOUR AGREEMENT
In total, 65.41% of Umicore employees belong to a trade union organisation and/or the level of their wages are negotiated througha collective bargaining agreement. On a regional basis, there are significant differences in union representation, with the highest
representation in South America and Europe and the lowest in North America and Asia Pacific. The 2017 decrease is mainly attributed
to the divestment of Building Products.
SUSTAINABLE DEVELOPMENT AGREEMENT
In 2007, Umicore signed a Sustainable Development Agreement with the International union IndustriALL, which was again renewed in2015 for a period of four years. In this agreement, Umicore commits to a number of principles including: the banning of child labourand forced labour, recognising the right to its employees to organise 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.

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SOCIAL STATEMENTS

S5 CODE OF CONDUCT

Since 2011, Umicore has organised for the first time a systematic Group-wide internal reporting on Code of Conduct issues. In 2017 a
total of 14 cases were reported, involving a total of 15 employees. The type of action taken varies from a warning letter to dismissal.

S6 OCCUPATIONAL HEALTH

All consolidated industrial sites where Umicore has operational control are included in the scope of the occupational health reporting.
Compared to 2016, data of 11 sites are not reported anymore: Auby, Bray-et-Lû, Viviez (France, Building Products), Vilvoorde (Belgium,
Building Products), Lyss-Wiler (Switzerland, Building Products), Gatterstädt, (Germany, Building Products), Bratislava (Slovakia, Building
Products), Qingyuan (China, Thin Film Products), Suzhou TM (China, Technical Materials), Port-Elisabeth Young Park (South Africa,
Automotive Catalysts). One site was added to the reporting scope: Rayong (Thailand, Automotive Catalysts). This brings the total
number of reporting sites to 49.
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 in the corresponding section
on pages 66-67.
GROUP DATA

UNIT

2013

2014

2015

2016

2017

Exposure ratio “all biomarkers aggregated” (1)

%

2.6

1.8

2.3

3.2

2.7

Exposure ratio lead (blood)

0.5

%

0.9

1.0

0.8

0.5

Exposure ratio arsenic (urine) (2)

%

1.6

1.1

1.3

2.0

1.0

Exposure ratio cobalt (urine) (2)

%

10.7

7.3

8.7

9.0

6.0

Exposure ratio cadmium (urine) (2)

%

1.0

0.6

1.1

1.4

0.7

Exposure ratio nickel (urine) (2)

%

1.1

0.3

1.3

2.0

1.4

Exposure ratio indium (blood) (2)

%

–

–

–

11.3

14.2

People with platinum salts sensitisation

N°

4

4

0

1

1
0

(2)

People with noise induced hearing loss

N°

3

5

2

4

People with contact dermatitis

N°

2

2

3

0

2

People with occupational asthma other than Pt-salts

N°

0

0

1

0

0

People with muskulo-skeletal ailments

N°

5

14

7

7

8

(1) Ratio between the number of monitoring results exceeding the Umicore target value, defined for relevant hazardous substances, and the total number ofmonitoring results.
(2) T he exposure ratio of a specific metal is defined as the ratio between the number of employees with a biological monitoring result exceeding the Umicore
target value for that specific metal and the total number of employees exposed to that metal. The Umicore target values are based upon recent peer
reviewed scientific data and regularly re-evaluated in the context of new evidence.

It is Umicore’s objective to have by 2020 no exceedance for the biomarkers of exposure for the metals listed below. The following
target values have been defined:–– Cadmium: 2 micrograms per gram of creatinine in urine.
–– Lead: 30 micrograms per 100 ml of blood.
–– Cobalt: 15 micrograms per gram of creatinine.
–– Indium: 1 microgram per litre of plasma.
–– Arsenic and nickel: 30 micrograms per gram of creatinine.
–– Platinum salts: no new cases of platinum salt sensitization.
The number of occupational diseases is the number of employees with a newly-diagnosed occupational disease or occupationallylinked symptoms during the reporting cycle.

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SOCIAL STATEMENTS

In 2017, a total of 5,389 biological samples were taken from employees with an occupational exposure to at least one of the metals
mentioned above (platinum salts excluded). 145 readings showed a result in excess of the internal target value. This brings the total
excess rate to 2.7%, down from 3.2% in 2016. All occupationally exposed employees are regularly monitored by an occupational
health physician.
LEAD
Occupational lead exposure represents a potential health risk mainly in the business group Recycling. In total, 7 of the 1,294 occupationally
exposed employees exceeded the target value of 30μg/100ml, bringing the excess rate for lead exposure to 0.5%, the same level asin 2016.
The majority of the excess readings were in the lead refinery at the Hoboken site (Belgium, Recycling). Besides a strict respiratory protection
policy, an increased ventilation is implemented to further reduce exposures at the workplace. All workers are submitted to a detailed
medical surveillance programme.
ARSENIC
Occupational exposure to arsenic is possible in the business groups Energy & Surface Technologies and Recycling. In total, 1 % of the
862 occupationally exposed had an excess reading during 2017 compared to 2.0% in 2016.
All workers occupationally exposed to arsenic are submitted to a medical surveillance programme to closely follow-up theirhealth condition.
COBALT
In total, 1,008 employees are occupationally exposed to cobalt, mainly in the business group Energy & Surface Technologies.
The number of employees exceeding the target value was 60, resulting in an excess rate of 6%, down from 9% in 2016. In thebusiness unit Rechargeable Battery Materials, the number of exposed people rose by more than 25%. Despite this, we noticed
a significant decrease in excess readings in this business unit from 49 in 2016, down to 20 in 2017.
During the past year, the sites in Cheonan (Korea, Energy & Surface Technologies) invested a lot in improved ventilation systems
as well as further improving compliance with respiratory protection programmes and housekeeping measures. Against this, theexcess readings at the business units Cobalt & Specialty Materials increased from 28 in 2016 to 40 in 2017. This was mainly caused byincreased exposures at the sites in Olen (Belgium, Energy & Surface Technologies) and Fort Saskatchewan (Canada, Energy & Surface
Technologies). The business unit has developed an action plan focusing on technical improvements, housekeeping and personal
behaviour of workers to again decrease the exposures.
For workers exposed to cobalt, both business units Cobalt & Specialty Materials and Rechargeable Battery Materials have implemented
Umicore’s occupational health guidance for cobalt, including biological monitoring and medical surveillance.
CADMIUM
Occupational exposure to cadmium represents a potential health risk in the business groups Energy & Surface Technologies andRecycling. Cadmium in urine is an excellent biomarker for lifetime exposure. In 2017, a total of 454 employees had an occupational
exposure to cadmium.
Only 3 employees recorded a cadmium in urine reading in excess of the target value, compared to 7 in 2016. This resulted in an excess
rate of 0.7% compared to 1.4% in 2016.
NICKELThe business groups Energy & Surface Technologies and Recycling have occupational exposure to nickel. In 2017, a total of
1,447 employees were exposed to nickel. In 2017, 20 of the exposed workers exceeded the target level resulting in an excess level of
1.4%, compared to 2% in 2016.
A decrease in nickel excess readings was observed for the site in Jiangmen (China, Energy & Surface Technologies) and the sites in
Cheonan (Korea, Energy & Surface Technologies), comparable to the decreases in cobalt exposures (see above).
The site in Wickliffe (USA, Energy & Surface Technologies) noticed 14 excess readings. This site only participated for the first time in
the biological monitoring evaluation. These results helped the site to further refine their dust management programme including
ventilation systems improvements and personal protective equipment programmes.
All workers exposed to nickel are submitted to a medical surveillance programme.

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SOCIAL STATEMENTS

INDIUM
Recently peer reviewed literature clearly demonstrates that occupational exposure to indium and indium tin oxide may result in healtheffects mainly at the level of the respiratory tract. Umicore contributed to this improved scientific knowledge through its collaboration
with the National Institute of Occupational Safety and Health (NIOSH, USA) who conducted a health hazard assessment programme(2012-2016) at the site in Providence (USA, Energy & Surface Technologies). Based upon these scientific data, Umicore defined a target
level for indium in plasma of 1 microgram per litre of plasma. Indium in plasma is a biomarker of lifetime exposure.
In 2017, 324 employees were occupationally exposed to indium, of which 14,2% had an excess reading for indium in plasma.
These results were all observed at the site in Providence (USA, Energy & Surface Technologies). Over the past years, the NIOSH
evaluation confirmed that significant workplace exposure reductions were achieved at the site while also detailed medical surveillance
programmes were put in place. At the end of 2017, activities at the site were discontinued.
PLATINUM SALTS
The business groups Catalysis and Recycling have workplaces with exposure to platinum salts.
In 2017, we had 1 newly diagnosed employee with a platinum salt sensitisation at the site in Port Elisabeth (South-Africa, Catalysis).
All workers exposed to platinum salts are monitored through an occupational health programme following a Umicore health guideline
and regularly checked for platinum salt sensitisation.
OTHER OCCUPATIONAL RELATED DISEASESIn 2017, 2 employees were diagnosed with an occupationally induced contact dermatitis and 8 developed a musculoskeletal disorderdue to their occupation. All people concerned are followed by an occupational health physician.
In 2017, the medical departments of the Umicore sites in Belgium together with the human resources organisation developed andimplemented a programme to raise awareness on burn-out. Over the past years, Umicore has been confronted with several burn‑out
cases which led to long-term sickness periods with impact on both the individual and the organisation. The action plan consistsof primary prevention of burn-out combined with early recognition of symptoms and case management support. Concrete actions
included awareness campaigns via leaflets, workshops and information sessions and training for supervisors. Similar programmes havebeen implemented at Umicore sites in other countries such as Germany.

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SOCIAL STATEMENTS

S7 OCCUPATIONAL SAFETY

In total for 2017, 91 consolidated sites, of which 54 are industrial sites, are included in the safety reporting. This number also includes
commercial offices but excludes the sites of the divested business unit Building Products.
Additional information on Umicore’s management approach on safety can be found in the corresponding section on page 66.
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 2020.
GROUP DATA

UNIT

2013

2014

2015

2016

Fatal accidents

N°

0

2

0

1

2017
0

Fatal accidents sub-contractors

N°

0

0

0

0

0

Lost Time Accidents (LTA)

N°

35

37

47

59

51

Lost Time Accidents (LTA) sub-contractors

N°

22

11

9

15

22

2.08

2.16

2.66

3.34

3.01

N°

1,726

16,122

2,134

9,848

1,590

0.10

0.94

0.12

0.56

0.09

146

112

148

127

138

8.67

6.53

8.38

6.78

8.15

LTA frequency rate
Calendar days lost
LTA severity rate
Recordable Injuries (RI)

N°

Recordable Injuries frequency rate
Ratio N° of sites with no LTA/total N° of sites reporting

%

79

84

84

84

84

Sites OHSAS 18001 certified

%

32.8

40.0

36.6

41.7

51.0

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
specified in a contract.
Fatal accident: a work-related accident with fatal outcome.
Lost time accident (LTA): a work-related injury resulting in more than one shift being lost from work.
Recordable injury (RI): a work-related injury resulting in more than one first aid treatment or in a modified working programme 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.

FREQUENCY RATESEVERITY RATE

4.0
3.34

3.5
3.0
2.5
2.0

2.66
2.08

3.01

2.16

1.5
1.0
0.5
0

2013

2014

2015

2016

2017

1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0

0.94

0.56

0.12

0.10

2013

2014

2015

0.09

2016

2017

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SOCIAL STATEMENTS

REGIONAL DATA
UNIT
Lost Time Accidents (LTA)N°

BUSINESS GROUP DATAUNITEUROPENORTHAMERICASOUTH
AMERICAASIAPACIFIC

AFRICA

UMICORE
GROUP

43

3

0

5

0

51

RECYCLINGCORPORATEENERGY &SURFACECATALYSIS TECHNOLOGIESUMICOREGROUP

Fatal accidents

N°

0

0

0

0

0

Lost Time Accidents (LTA)

N°

4

12

34

1

51

Calendar days lost

N°

106

320

1,157

7

1,590

In 2017, a total number of 51 lost time accidents were recorded, compared to 59 in 2016. This resulted in a frequency rate of 3.01, downfrom 3.34 in 2016, and in a severity rate of 0.09. The number of reported recordable injuries increased from 127 in 2016 to 138 in 2017.
The recordable injury frequency rate for 2017 was 8.15 compared to 6.78 in 2016.
A total of 22 lost time accidents were registered for contractors compared to 15 in 2016.
During 2017, 84% of the reporting sites operated without a lost time accident, the same percentage as in 2016. 51% of the sites werecertified using the occupational health and safety management system OHSAS 18001, compared to 42% in 2016.
43 lost time accidents, or 84%, of the total number of lost time accidents, occurred in Europe. Of these, 30 lost time accidents occurred
on Belgian sites and 10 on German sites. The Americas accounted for 3 accidents and 5 accidents happened on Asia-Pacific sites.
In 2017, the business group Catalysis recorded 4 lost time accidents, all in the Automotive Catalysts business unit. Besides continued
technical improvements, the business unit Automotive Catalysts continues the SafeStart® behavioural safety programme in all its
operating sites. This program focuses on both habitual and unintentional safety behaviour. All Automotive Catalysts production plants
are required to be certified against the OHSAS 18001 management system. At year-end, the sites in Port Elizabeth (South Africa),
Tsukuba and Himeji ( Japan) had operated over 5 years without a lost time accident or recordable injury to Umicore staff and no losttime accident to contractors on site. The site in Rayong (Thailand) recorded more than 3 years (including the site construction) withouta lost time accident or recordable injury to Umicore staff and no lost time accident to contractors on site.
The business group Energy & Surface Technologies recorded 12 lost time accidents, of which 4 were in the business unit Cobalt &Specialty Materials, 4 in the business unit Rechargeable Battery Materials, 3 in the business unit Electro-Optical Materials and 1 in thebusiness unit Electroplating. The increase in number of lost time accidents in the business unit Rechargeable Battery Materials falls
together with the increase of newly hired employees at the site in Cheonan (Korea) as part of their expansion programs. The business
unit has taken proper action to reinforce its in-house developed safety leadership program based on a behaviour observation and riskintervention techniques. The business unit Cobalt & Specialty Materials continued a similar risk awareness and competency programme
in several of its sites. The site in Dundee (UK) has been recognised for its excellent and sustained safety performance, recording atleast 10 years with no lost time accident or recordable injury to Umicore staff and no lost time accident to contractors. Beijing (China)
and Tsukuba ( Japan) operated more than 5 years without lost time accident and recordable injury to Umicore staff and lost time
accidents to contractors. The site in Balzers (Liechtenstein) operated more than 3 years without lost time accident and recordable injury
to Umicore staff and lost time accident to contractors.
The business group Recycling had 34 lost time accidents. The business unit Precious Metal Refining recorded a disappointing safety
performance with 23 lost time accidents. In 2017, to reverse the poor safety performance, the site management has launched the
Safety@ Precious Metals Refining campaign. Main pillars consist of passion for safety, caring for each other and teamwork. The aim is
to develop and maintain a safety culture where everybody spontaneously cares for his or her safety as well as their colleague’s safety.
The campaign is supported by practical actions in which all employees participate. The business unit Jewellery & Industrial Metals
recorded 6 lost time accidents, while the business unit Technical Materials had 4 lost time accidents. At the end of 2017, the site inVicenza (Italy) 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.
One lost time accident occurred in general services and corporate offices including Group Research & Development.

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SOCIAL STATEMENTS

S8 PROCESS SAFETY

In 2017, Umicore’s Group-wide process safety project was finalized. Main results included the approval and publication of all the process
safety standards and guidelines, the development of a tailor-made software to perform process safety risk analyses, and process safetyassessments of all the critical sites. With the closing of this project, process safety has become a structural Group EHS management
activity with the main objectives to follow up on and support the sites with the implementation of the process safety management
elements, to ensure the quality of process risk assessments and to animate a Group-wide process safety network. New initiatives
in this context are the full integration of process safety into the EHS compliance audit program and the development of a dedicatedthree-day HAZOP leader training, with first training sessions already given in Brazil and Belgium.
Group-wide leading and lagging process safety indicators have been defined for future reporting.

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VALUE CHAIN STATEMENTS

Contents

VALUE CHAIN STATEMENTS
V1

Scope of value chain statements

V2

Critical raw materials

198
198

V3

Conflict minerals

199

V4

Indirect procurement

200

V5

Products and services

201

V6

Donations202

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VALUE CHAIN STATEMENTS

Value chain statements

V1 SCOPE OF THE VALUE CHAIN STATEMENTS

The value chain and society theme focuses on potential impacts on society that we have as a company through our activities, products
and services. For reporting, all entities of the group are considered. While we focus primarily on our activities directly linked to clean
mobility and recycling, other initiatives targeting suppliers, customers or society in general are being tracked and appropriately
reported, be it via communication such as this annual report or via other specific communication channels.

V2 CRITICAL RAW MATERIALS

Securing adequate volumes of raw materials is an essential factor in the ongoing viability of our product and service offering and inbeing able to achieve our Horizon 2020 growth objectives. The risks and opportunities vary considerably from one business unit toanother and for this reason we have taken a decentralised approach to risk and opportunity management. We have determined toseek a competitive edge in terms of our access to critical raw materials and in our ability to secure these raw materials in an ethicaland sustainable way.
SCOPE
The indicator presented covers all activities that were still part of Umicore on 31 December 2017, except for the Technical Materials
activities, for which Umicore is assessing strategic options.
The reporting is done according to the business units reported in group structure on page 10.
IDENTIFICATION OF THE CRITICAL RAW MATERIALSIn 2016, each business unit was asked to follow a 3-step process to identify the raw materials that are critical in achieving the Horizon
2020 objectives.
The process consisted of the following elements:–– Definition of the criteria applicable to the raw material specific to the business unit’s activity;–– Identification of the raw materials with a high probability of restrictions in supply, taking the selected criteria into account;–– Calculation of the impact on the Horizon 2020 objectives of the supply risk identified.
Twenty-one supply criteria, covering various aspects of sustainability, have been offered to the business units as input into themapping. The criteria can be clustered in the following themes:–– EHS or regulatory aspects of the raw material–– Concentration in the market or restrictions in the country of origin–– Ethical aspects and potential conflicts with the code of conduct linked to the raw material–– Unavailability due to end-of-life of the mineral source–– Physical constraints at origin
As supply risks and opportunities can change the identification of the critical raw materials is a dynamic process. In 2017 8 of the
9 business units have updated their mapping. The optics and electronics activities from the former Thin Film Product have been
integrated, as of January 2018, into the Electro-Optic Materials business unit, which has a process for criticality assessment in place.
Therefore, we considered this as not covered yet.
MITIGATION ACTIONS
For those materials that have been identified as critical it is particularly important to define actions to mitigate the risk of
supply disruption.
Mitigation actions can vary depending on the materials and the position of the business unit in the market. Action plans and dedicatedmitigation measures must be in line with the identified risks and opportunities and are therefore regularly updated. The reviewing
frequency and process vary from business unit to business unit depending on the specific supply conditions.
The approach on cobalt sourcing further evolved in 2017. Umicore uses cobalt in materials that go into rechargeable batteries, tools,
catalysts and several other applications.

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VALUE CHAIN STATEMENTS

The Sustainable Procurement Framework for Cobalt that covers Umicore’s cobalt purchases worldwide was adapted in 2017 to be
fully aligned with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals and this constitutes a first in the cobalt
industry. The main effect of this alignment lies in the communication of risks in our supply chain, which will now be communicated on
our website and in the compliance report. Umicore obtained, for the third year in a row, third party assurance from PwC that its cobalt
purchases in 2017 are carried out in line with the conditions set out in the revised framework. The Umicore Responsible global supply
chain of minerals from conflict-affected and high-risk areas has also been revised to include cobalt in the scope of the document.
As the focus on sustainable supply of cobalt further increased in 2017 Umicore’s approach continued to provide welcomed risk
mitigation in this regard.
In the context of the developments in rechargeable battery materials, Umicore has been looking at ways to further promote its actions
on sustainable supply both internally and externally. The function of Senior Vice-President in charge of the sustainability aspects ofthe value chain for rechargeable batteries has been created and is fulfilled since 1 January 2018. The focus lies particularly on cobalt.
The function entails representing Umicore at various high-level institutions, including as Chairman of the Cobalt Institute, in the steeringcommittee of the “Global Battery Alliance” which was formed under the auspices of the World Economic Forum and more generally
being a spokesman for sustainability for our RBM and CSM businesses. The function also includes supporting initiatives that promote
the collection and recycling of cobalt-containing devices and interacting with NGOs on improving health and safety for sustainablecobalt mining in Africa.
Created in 2016 the Umicore internal “Metals and minerals” group has now been running for a full year. This group of corporate services
and several business units aims at sharing group practices around sustainable supply. Next to the activities around cobalt, the approachfor conflict minerals and other upcoming issues are being discussed. Other topics include the identification of critical raw materials andmitigation actions.

V3 CONFLICT MINERALS
On 1 January 2021, the Conflict Minerals Regulation will come into full force across the EU. This law is similar in scope to the US Dodd
Frank Act of 2012. The new law aims to help stem the trade in four minerals – tin, tantalum, tungsten and gold – that sometimes
finance armed conflict or are mined using forced labour.
In addition to existing policies and charters such as the Umicore Code of Conduct, Human Rights Policy and Sustainable Procurement
Charter, Umicore also has a specific policy regarding “Responsible global supply chain of minerals from conflict-affected andhigh‑risk areas”.
In 2017, Umicore continued to ensure that its operations with a production of gold are certified as conflict-free. Increasingly Umicore
customers request such a guarantee and we provide these customers with the necessary documentation to assure the conflict-freestatus of our products. The Umicore internal “Metals and Minerals” working group streamlines and optimises the efforts required forthis growing customer demand through best practices sharing.
The Precious Metals Refining operations in Hoboken and Guarulhos are certified as “conflict-free smelters” by the London Bullion Market
Association (LBMA). In 2018, UPMR Hoboken will be submitted to an LBMA conflict-free silver audit of its 2017 activities for the firsttime. Such audits are voluntary for 2017, but will be mandatory for the LBMA accredited silver refiners in the future.
The Jewellery & Industrial Metals operations in Pforzheim, Vienna and Bangkok are certified as part of the Responsible Jewellery
Council’s (RJC) Chain of Custody program. The Jewelry & Industrial Metals sites of Pforzheim is also accredited by the LBMA as Good
Delivery refiner. Although platinum does not belong to the list of conflict minerals, the business unit Jewelry & Industrial Metals has
passed the audit for responsible platinum sourcing by the RJC. The sites of Pforzheim and Vienna are also certified for palladium andrhodium. Both the RJC Chain of Custody and LBMA Good Delivery accreditations qualify the accredited sites for listing in the Responsible
Minerals Initiative conformant smelters and refiners (formerly CFSI (Conflict Free Sourcing Initiative) Conflict Free Smelter List).
The Responsible Minerals Initiative is used by many customers to streamline the process to guarantee conflict-free products in complex
supply chains. A typical example is the automotive industry, where a structure has been created to assure that all individual elementsof a car can be certified as not containing conflict minerals sourced from non-certified origins. This procedure is not a ban on thosematerials (tin, tantalum, tungsten and gold), but is a process to create transparency in the supply chain to ensure they can source
conflict-free minerals. Other industries such as the electronics industry implement the same or similar processes.

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VALUE CHAIN STATEMENTS

V4 INDIRECT PROCUREMENT

While the metal-bearing raw materials are purchased directly by the business units (direct procurement, see notes V2 and V3 forspecific sustainable supply related actions), Umicore’s purchasing and transportation teams worldwide take care of the energy andother goods and services which is referred to as indirect procurement.
SCOPE
The indicators presented are based on 2017 data from our Procurement & Transportation department covering indirect procurement for
Belgium and Germany. This represents roughly 10% of total spend.
ASSESSMENT OF SUPPLIERS
Sustainability performance of specific suppliers is assessed by EcoVadis, a well-known collaborative platform providing Supplier
Sustainability Ratings.
52 assessment scores were made available to the team in 2017. The total number of scores received since 2011 amounts to 350.
This represents the number of unique suppliers that have been assessed since 2011 and does not consider the regular re-assessmentof a supplier. This number is very similar to the 2016 figure of 349 and shows that the most critical suppliers have now been covered.
Since 2017, a “quick scan” based on criteria such as size, geographical location and type of product or service provided is systematicallyused for new suppliers. This tool determines the need for an EcoVadis assessment.
AVERAGE SCORE OF SUPPLIERS BY TOPIC
The proportion of suppliers with a score of 45 or higher, so-called suppliers “engaged in CSR” (Corporate Social Responsibility), has
increased significantly to 77% compared to 62% in 2016.
None of the scores received in 2017 are indicating a “high risk”, whereas the number of “medium opportunity” suppliers is growing.
This indicates that more and more suppliers are organising to create vision and transparency on CSR.
In September 2017, the Umicore Group was re-evaluated by Ecovadis and was scored 68, which confirms the gold recognition level.
This result includes our company among the top 5% performers evaluated by EcoVadis.

SUPPLIERS’ SCORE IN ECOVADISASSESSMENT

19%

23%

25-44: some basic
steps made on
sustainability issues
45-64: appropriate
sustainability
management system
65-84: advanced
practices onsustainability

58%

AVERAGE SCORE
Environmental

57.8

Labour practices

54.3

Fair business practices

48.2

Suppliers

48.2

Overall

53.3

More information on Umicore’s relationship with suppliers can be found in the Stakeholder engagement section on page 53 and in theperformance review on pages 26-27.

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VALUE CHAIN STATEMENTS

V5 PRODUCTS AND SERVICESRESOURCE EFFICIENCY
Primary raw materials: are those materials that have a direct relation to their first 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 first life cycle and will be re-processed through recycling leading
to a second, third…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.

RESOURCE EFFICIENCY

13%
38%

Primary materials
Secondary materials
End-of-life materials

49%

In 2017, 62% of the materials were from end-of-life or secondary origin while 38% were of primary origin, compared to 55% and 45%
in 2016, respectively. The shift towards more secondary and end-of-life raw materials is mainly due to the divestment of the business
unit Building Products and due to the effect of the capacity increase in the Hoboken smelter.
PRODUCTS AND SERVICES CONTRIBUTING TO SPECIFIC SUSTAINABILITY ASPECTS
Our primary focus in terms of sustainable products and services is to leverage those activities that provide solutions to the megatrendsof clean mobility and resource scarcity. For more information please see the Value chain and society performance discussion on
pages 26-27.
We developed an indicator to underline our focus on clean mobility and recycling. In 2017, the revenues of those activities that deliverproducts or services that are directly linked to one of these two megatrends was 64.6% of 2017 Group revenues up from 62% in 2016.
The increase is the result of a higher activity both in recycling and clean mobility. As we work towards our Horizon 2020 goals andbring even more focus to our business, we would expect this percentage to continue to increase. It should be noted that many ofthe materials and services making up the remaining 35.4% of revenues provide answers to specific societal needs such as improved
connectivity (materials for high quality glass, displays) or reduced energy consumption (materials for use in energy efficient lighting
such as LEDs).

REVENUES FROM CLEAN MOBILITY
AND RECYCLING

65%

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VALUE CHAIN STATEMENTS

Business units continue to develop specific solutions for sustainability aspects of our products and their applications in close relationshipwith customers. Typical subjects dealt with in such developments are the reduction of risks related to the use of products, reductionof the hazard of products or a higher material efficiency in the delivery or the use of our products.
MANAGEMENT OF PRODUCT REGULATIONWorldwide, changes to existing product related legislation as well as the introduction of new legislation might impact our business.
Although the European REACH regulation is still the most relevant one for Umicore, the Korean-REACH is gaining importance.
Two dossiers will be submitted for the June 2018 registration deadline.
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 thatthe metal specifics are understood by the regulators and the companies.
In 2017, as part of regular maintenance, 14 REACH dossiers were updated among others to increase the tonnage band, reply to ECHA
requests and to include with new information on composition, uses or Chemical Safety Report. In preparation of the third phase of the
EU REACH regulation, 115 new registrations were submitted. Some 89 dossiers still need to be submitted by 31 May 2018. For most ofthem, submission dossiers are elaborated as part of the work done in the industry working group consortia.
While the regulatory landscape may shift in the future, only a few of Umicore’s substances feature today on the “Candidate List”
for potential REACH authorisation. The placing of a substance on the REACH “Candidate List” is designed as a first step in subjectingthat substance to robust and detailed scientific evaluation of risk as a basis for its continued use or substitution if economically andtechnically feasible alternatives to that substance exist.
Umicore further expanded its Safety Data Sheets data base. The data base now contains 4,455 products and has Safety Data Sheets
available for 110 countries in 41 languages.

V6 DONATIONSSCOPE
The indicators presented are based on data from fully consolidated companies for a full year with the exception of the December
acquisition of Haldor Topsoe.
The historical numbers (2016 and before) were not restated.
GROUP DATA
2013

2014

2015

2016

2017

Cash donations

Thousands of Euros

UNIT

1,373.82

1,103.47

1,034.91

1,078.03

1,151.46

Donations in kindThousands of Euros

152.27200.88135.11167.4760.47

Staff freed timeThousands of Euros

86.71

104.99

49.36

44.17

87.40

Total donations

Thousands of Euros

1,612.80

1,409.35

1,219.38

1,289.68

1,299.34

DONATIONS
Thousands of Euros
2,000
1,612.80
1,500

1,409.35

1,219.38 1,289.68 1,299.34

1,000
500
0

2013

2014

2015

2016

2017

Cash donations
Donations in kind
Staff freed time

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VALUE CHAIN STATEMENTS

Each business unit is expected to allocate an annual budget that provides sufficient donations and sponsorship support to each site’scommunity engagement programme. By way of guidance, this budget should equate to an amount corresponding to a third of a percentof the business unit’s average annual consolidated recurring EBIT (i.e. excluding associates) for the three previous years.
Donations are subdivided into cash donations, donations in kind and staff time. Group level donations are coordinated by a Committee
reporting to the CEO.
REGIONAL DATA

Total donations

UNIT

EUROPENORTHAMERICASOUTH
AMERICAASIAPACIFIC

AFRICA

UMICOREGROUP

Thousands of Euros

1,027.53

133.12

35.07

97.20

6.42

1,299.34

ENERGY &SURFACECATALYSIS TECHNOLOGIESRECYCLINGCORPORATEUMICORE
GROUP

302.35495.03

1,299.34

BUSINESS GROUP DATA
UNIT
Total donations

Thousands of Euros

148.73353.24

In 2017, Umicore contributed a total of € 1,299 thousand in donations. For the business units, the total amount of € 804 thousand is inline with the guidance of approximately one third of one percent of each unit’s average annual recurring consolidated EBIT for the past
three years. Additional group level donations were made for an amount of € 495 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 have a global reach. The main areasfor Group level donations in 2017 included support for two major UNICEF educational projects in Madagascar and in India, three projects
coordinated by Entrepreneurs for Entrepreneurs (in Mali, Ecuador and Togo) and support for student sustainable mobility projects.

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ASSURANCE REPORTS

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ASSURANCE REPORTS

Umicore Annual Report 2017

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ASSURANCE REPORTS

Umicore Annual Report 2017

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ASSURANCE REPORTS

Umicore Annual Report 2017

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ASSURANCE REPORTS

Umicore Annual Report 2017

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ASSURANCE REPORTS

Umicore Annual Report 2017

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ASSURANCE REPORTS

Umicore Annual Report 2017

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GRI CONTENT INDEXGRI content index

GRI STANDARDS REFERENCEDISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2017

102-1

Name of the organisation

Front cover

102-2

Activities, brands, products, and services

9-10 (Umicore at a glance); 14-17 (Business model)

102-3

Location of headquarters

Inside back cover; back cover

102-4

Location of operations

8 (Umicore at a glance); 185 (Social statements: S2)

102-5

Ownership and legal form

Back cover

102-6

Markets served

9 (Umicore at a glance); 18-24 (Economic review)

102-7

Scale of the organisation

8-10 (Umicore at a glance); 185-187 (Social statements: S2);
94 (Economic and financial statements: consolidated balance sheet)

102-8

Information on employees and other workers

185-187 (Social statements: S2)

102-9

Supply chain

25-27 (Value chain and society review), 197-203 (Value chain statements: V2-V4)

102-10Significant changes to the organisationand its supply chain

18-24 (Economic review), 201-202 (Value chain statements: V5)

102-11

Precautionary principle or approach

36-37 (Risk management and internal control); 38-43 (Key risks and opportunities)

102-12External initiatives

COSO; OECD Guidelines; ILO Human Rights; SRI, FTSE; PACI; GRI; IIRC

102-13

Membership of associations

57 (Stakeholder engagement)

102-14

A statement from the most seniordecision-maker of the organisation

4-7 (CEO and Chairman’s review)102-15Key impacts, risks, and opportunities

38-43 (Key risks and opportunities)

102-16

Values, principles, standards,
and norms of behaviour

The Umicore Way; Code of Conduct; 36-37 (Risk management and internal control);
53-58 (Stakeholder engagement); 69 (Corporate governance statements: G1);
75 (Corporate governance statements:G9); 191 (Social statements: S5)

102-17

Mechanisms for advice and concerns
about ethics

Code of Conduct; 195 (Social statements: S5)

102-18Governance structure

69-72 (Corporate governance statements: G2, G4, G5);
63-67 (Management approach)102-19Delegating authority

63-67 (Management approach)102-20Executive-level responsibility for economic,
environmental, and social and societal topics

48-49 (Executive Committee); 63-67 (Management approach)102-21

Consulting stakeholders on economic,
environmental, and social and societal topics

53-58 (Stakeholder engagement); 58-61 (Materiality)

102-22Composition of the highest governancebody and its committees

44-47 (Board of Directors); 69 (Corporate governance statements: G2)

102-23Chair of the highest governance body

44-47 (Board of Directors); 69 (Corporate governance statements: G2)

102-24

Nominating and selecting the highest
governance body

70-72 (Corporate governance statements: G4)

102-25

Conflicts of interest

74-75 (Corporate governance statements: G7, G9-G11);
Corporate Governance Charter; Code of Conduct

102-26

Role of highest governance body insetting purpose, values, and strategy

69 (Corporate governance statements: G2)

102-27

Collective knowledge of highest
governance body

70-72 (Corporate governance statements: G4)

102-28

Evaluating the highest governancebody’s performance70-72 (Corporate governance statements: G4)

GRI 102: GENERAL DISCLOSURES
ORGANISATIONAL PROFILESTRATEGYETHICS AND INTEGRITY

GOVERNANCE

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GRI CONTENT INDEXGRI STANDARDS REFERENCEDISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2017102-29Identifying and managing economic,
environmental, and social and societal impacts

36-37 (Risk management and internal control); 38-43 (Key risks and opportunities);
53-58 (Stakeholder engagement); 59-62 (Materiality);
63-67 (Management approach)102-30Effectiveness of risk management processes

36-37 (Risk management and internal control)

102-31

Review of economic, environmental,
and Social and societal topics

38-43 (Key risk and opportunities); 63-67 (Management approach);70-72 (Corporate governance statements: G4)

102-32Highest governance body’srole in sustainability reporting

63-67 (Management approach)102-33

Communicating critical concerns

53-58 (Stakeholder engagement); 68-75 (Corporate governance statements:
G1, G3, G9, G10, G11); Corporate Governance Charter; Code of Conduct102-34Nature and total number of critical concerns

not reported

102-35

Remuneration policies

76-85 (Remuneration report); Corporate Governance Charter; Code of Conduct102-36

Process for determining remuneration

76-85 (Remuneration report); Corporate Governance Charter; Code of Conduct102-37

Stakeholders’ involvement in remuneration

76-85 (Remuneration report); Corporate Governance Charter; Code of Conduct102-38Annual total compensation ratio

not reported

102-39Percentage increase in annual totalcompensation ratio

not reported

102-40

List of stakeholder groups

53-58 (Stakeholder engagement)

102-41

Collective bargaining agreements

190 (Social statements: S4)

102-42

Identifying and selecting stakeholders

53-58 (Stakeholder engagement)

102-43

Approach to stakeholder engagement

53-58 (Stakeholder engagement)

102-44

Key topics and concerns raised

53-58 (Stakeholder engagement); 59-62 (Materiality)

102-45

Entities included in the consolidated
financial statements

8-10 (Umicore at a glance); 18-35 (Performance review); 69 (Corporate governancestatements: G2); 112-113, 129-130 (Economic and financial statements: F5, F17)102-46

Defining report content and topic boundaries

59-62 (Materiality); 63-67 (Management approach)102-47

List of material topics

59-62 (Materiality); 63-67 (Management approach)102-48

Restatements of information

63-67 (Management approach); 172 (Environmental statements: E1); 184, 191, 194(Social statements: S1, S6, S7); 200 (Value chain statements: V4);
216 (About this report)

102-49Changes in reporting

184, 191, 194 (Social statements: S1, S6, S7); 173-177 (Environmental statements:
E1, E2, E3); 198, 200, 202-203 (Value chain statements: V1, V4, V6);
216 (About this report)

102-50

Reporting period

Front cover; Inside front cover; 216 (About this report)

102-51

Date of most recent report

Annual report website

102-52

Reporting cycle

Front cover; Inside front cover; Annual report website

102-53

Contact point for questions regarding
the report

Inside back cover;
General: stakeholder@umicore.com;
Financial: evelien.goovaerts@umicore.com;
Social: mark.dolfyn@umicore.com;
Environmental: bert.swennen@umicore.com

102-54Claims of reporting in accordancewith the GRI Standards

Inside front cover; 216 (About this report)

102-55

GRI content index

This section; 216 (About this report)

102-56External assurance

204-210 (Assurance report)

GOVERNANCE (CONTINUED)STAKEHOLDER ENGAGEMENTREPORTING PRACTICE

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GRI CONTENT INDEXGRI STANDARDS REFERENCEDISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2017

GRI 103: MANAGEMENT APPROACH
103-1

Explanation of the material topic
and its boundary

63-67 (Management approach)103-2

The management approach andits components

63-67 (Management approach)

103-3

Evaluation of the management approach

63-67 (Management approach)GRI 201: ECONOMIC PERFORMANCE
201-1

Direct economic value generated
and distributed

50 (Key figures); 8-10 (Umicore at a glance); 58 (Stakeholder engagement);
120-122,163 (Economic and financial statements: F8, F9, F39)

201-3

Defined benefit plan obligations
and other retirement plans

141-147 (Economic and financial statements: F27)

201-4

Financial assistance received
from government

56 (Stakeholder engagement)

Proportion of senior management
hired from the local community

Similar scope covered in 185-187 (Social statements: S2)

GRI 202: MARKET PRESENCE
202-2

GRI 203: INDIRECT ECONOMIC IMPACTS
203-1

Infrastructure investments
and services supported

51 (Key figures); 54-57 (Stakeholder engagement);
181 (Environmental statements: E7); 202-203 (Value chain statements: V6)

205-1

Operations assessed for risks
related to corruption

36-37 (Risk management and internal control); Umicore is signatoryof Partnering Against Corruption Initiative

205-2

Communication and training aboutanti-corruption policies and procedures

All employees receive informal training on the Code of Conduct
when joining the company

GRI 205: ANTI-CORRUPTIONGRI 206: ANTI-COMPETITIVE BEHAVIOR
206-1

Legal actions for anti-competitive behaviour,
anti-trust, and monopoly practices

161 (Economic and financial statements: F36)

Recycled input materials used

8-10 (Umicore at a glance); 201-202 (Value chain statements: V5)

GRI 301: MATERIALS
301-2
GRI 302: ENERGY
302-1

Energy consumption within the organisation

177-179 (Environmental statements: E4)

302-3

Energy intensity

177-179 (Environmental statements: E4)

302-4

Reduction of energy consumption

177-179 (Environmental statements: E4)

305-1

Direct (Scope 1) GHG emissions

176-177 (Environmental statements: E3)

305-2

Energy indirect (Scope 2) GHG emissions

176-177 (Environmental statements: E3)

305-7

Nitrogen oxides (NOx), sulphur oxides (SOx),
and other significant air emissions

174-176 (Environmental statements: E2)

GRI 305: EMISSIONSGRI 308: SUPPLIER ENVIRONMENTAL ASSESSMENT
308-2

Negative environmental impacts inthe supply chain and actions taken

25-27 (Value chain and society review), 197-203 (Value chain statements: V2-V4)

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GRI CONTENT INDEXGRI STANDARDS REFERENCEDISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2017

New employee hires and employee turnover

8-10 (Umicore at a glance); 50 (Key figures); 31-35 (Great place to work review);
185-189 (Social statements: S2; S3)

GRI 401: EMPLOYMENT
401-1

GRI 403: OCCUPATIONAL HEALTH AND SAFETY
403-1

Workers representation in formal
joint management–worker healthand safety committees

190 (Social statements: S4)

403-2

Types of injury and rates of injury, occupational
diseases, lost days, and absenteeism, andnumber of work-related fatalities

50 (Key figures); 31-35 (Great place to work review);
191-195 (Social statements: S6, S7)

403-4

Health and safety topics covered in formal
agreements with trade unions

190 (Social statements: S4); Global framework Agreement
on Sustainable Development

GRI 404: TRAINING AND EDUCATION
404-1

Average hours of training per year
per employee

50 (Key figures); 31-35 (Great place to work review); 188-189 (Social statements: S3)

404-2

Programmes for upgrading employee skills
and transition assistance programmes

31-35 (Great place to work review); 188-189 (Social statements: S3)

404-3

Percentage of employees receiving regularperformance and career development reviews

188-189 (Social statements: S3)

GRI 405: DIVERSITY AND EQUAL OPPORTUNITY
405-1

Diversity of governance bodies
and employees

31-35 (Great place to work review); 70-72 (Corporate governance statements: G4);
185-187 (Social statements: S2)

Operations and suppliers at significant risk
for incidents of child labour

This element is taken into account as part of the objective on “Sustainablesupply”; see 25-27 (Value chain and society review); 198-200 (Value chain
statements V2-V4 for approach toward sustainable supply); Ensuring sustainablecobalt sourcing online case study

GRI 408: CHILD LABOR
408-1

GRI 409: FORCED OR COMPULSORY LABOR
409-1

Operations and suppliers at significant risk
for incidents of forced or compulsory labour

This element is taken into account as part of the objective on “Sustainable supply”;
see 28-30 (Value chain and society review); 196-198 (Value chain statements V2V4); Ensuring sustainable cobalt sourcing online case study

GRI 414: SUPPLIER SOCIAL ASSESSMENT
414-2

Negative Social and societal impacts
in the supply chain and actions taken

25-27 (Value chain and society review), 197-203 (Value chain statements: V2-V4)

GRI 416: CUSTOMER HEALTH AND SAFETY
416-1

Assessment of the health and safety
impacts of product and service categories

201-202 (Value chain statements: V5)

GRI 417: MARKETING AND LABELING
417-1

Requirements for product and service
information and labelling

201-202 (Value chain statements: V5)

OTHER MATERIAL TOPICS REPORTED
Criticality of raw materials

To complement the reporting on GRI 308: Supplier Environmental Assessment andGRI 414: Supplier Social Assessment. See 25-27 (Value chain and society review),
197-203 (Value chain statements: V2-V4)

Sustainable products and services

To complement reporting on GRI 301: Materials. See 25-27 (Value chain andsociety); 201-202 (Value chain statements: V5)

Process safety

To complement reporting on GRI 403: Occupational Health and Safety.
See 196 (Social statements: S8)

Metal emissions to air and water

To complement reporting on GRI 305: Emissions.
See 174-176 (Environmental statements: E2)

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REFERENCES & KEY LINKS

References & key links

UMICORE www.umicore.com
ANNUAL REPORT annualreport.umicore.com
ANNUAL REPORT GLOSSARY annualreport.umicore.com/glossary
THE UMICORE WAY www.umicore.com/en/about/values/#materialsforabetterlife
CODE OF CONDUCT www.umicore.com/en/governance/code-of-conduct
HORIZON 2020 www.umicore.com/en/cases/horizon-2020
GLOBAL FRAMEWORK AGREEMENT ON SUSTAINABLE DEVELOPMENT
www.industriall-union.org/sites/default/files/uploads/documents/2015/Belgium/industriall_umicore_gfa_2015.pdf
SUSTAINABLE PROCUREMENT CHARTER www.umicore.com/storage/main/umicore-sustainable-procurement-charter-2017.pdf
RESPONSIBLE GLOBAL SUPPLY CHAIN OF MINERALS FROM CONFLICT-AFFECTED AND HIGH-RISK AREAS
www.umicore.com/storage/main/responsiblesupplychainpolicy.pdf
SUSTAINABLE PROCUREMENT FRAMEWORK FOR COBALT www.umicore.com/storage/main/sustainablecobaltsupplybrochurefinal.pdf
DUE DILIGENCE COMPLIANCE REPORT COBALT PROCUREMENT
www.umicore.com/en/cases/sustainable-procurement-framework-for-cobalt/compliance-report
CORPORATE GOVERNANCE CHARTER www.umicore.com/en/governance/corporate-governance-charter
UMICORE CAREERS www.umicore.com/en/careers
INVESTOR RELATIONS www.umicore.com/en/investors
SHAREHOLDER RIGHTS www.umicore.com/en/governance/shareholder-rights
UMICORE NEWS www.umicore.com/en/investors/news-results/press-releases

OTHER REFERENCES & LINKSCORPORATE GOVERNANCE COMMITTEE www.corporategovernancecommittee.be/en
ECOVADIS www.ecovadis.com
FINANCIAL SERVICES AND MARKETS AUTHORITY www.fsma.be/enOECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE SUPPLY CHAINS OF MINERALS FROM CONFLICT-AFFECTED AND HIGH-RISK AREAS
www.oecd.org/daf/inv/mne/OECD-Due-Diligence-Guidance-Minerals-Edition3.pdf
RESPONSIBLE MINERALS INITIATIVE, FORMERLY CONFLICT-FREE SOURCING INITIATIVE www.responsiblemineralsinitiative.org
WBCSD GUIDANCE FOR ACCOUNTING AND REPORTING CORPORATE GHG EMISSIONS IN THE CHEMICAL SECTOR VALUE CHAIN
www.wbcsd.org/contentwbc/download/2831/35596
WORLD ECONOMIC FORUM’S PARTNERING AGAINST CORRUPTION INITIATIVE (PACI) SIGNATORIES
web.worldbank.org/archive/website00818/WEB/OTHER/62_COMPA.HTM

Umicore Annual Report 2017

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ABOUT THIS REPORT

About this report

The Umicore Annual Report offers a comprehensive and integrated view of our economic, financial, environmental,
value chain and social performance for 2017.
This report consists of two sections: an annual review and a statements section, also available as two distinct booklets. The annual
review (first booklet, pages 1 to 51) provides a Umicore overview and focuses on the key performance aspects of 2017 as they
relate to our Horizon 2020 strategy. The statements section (second booklet, pages 52 to 216) includes a thorough description of themateriality assessment and the approach to economic, environmental, value chain and social management, as well as full financial,environmental, value chain, social and governance statements and notes. All elements of the 2017 Annual Report can be consulted at
http://annualreport.umicore.com/.
AN INTEGRATED APPROACH
One of the key objectives of this report is to reflect our integrated strategic approach which combines economic, environmental, value
chain and social performance targets. This report further refines the approach based on elements from the “International Integrated
Reporting Framework” developed by the International Integrated Reporting Council, which requires a more complete disclosure anddiscussion of the material factors influencing our business and the risks and opportunities linked to our Horizon 2020 strategy.
REPORTING SCOPE
This report covers our operations for the 2017 calendar year which is also the Umicore fiscal year, and reports on the progress towards
our Horizon 2020 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 are available, the performance indicators in the document arereported with a comparison base going back five years.
The economic scope of this report covers all fully consolidated operations and the financial contributions of all associate and joint
venture companies. The Building Products activities were divested in October and the economic contribution of this activity is included
for nine months.
The environmental and social scope is limited to all fully consolidated entities except for the Building Products activities – any
divergence from this scope is explained in the relevant chapter or note in the report.
DATA
The economic and financial data are collected through our financial management and consolidation process. The environmental andsocial data are collected through environmental and social data management systems and integrated into a central reporting tool,
along with the economic and financial data.
ASSURANCEThis report has been independently verified by PwC Bedrijfsrevisoren/Réviseurs d’Entreprises (PwC). PwC’s audit of financial
information is based on full set of IFRS consolidated financial statements on which it has expressed an unqualified opinion. This fullset of IFRS consolidated financial statements and the auditor’s report thereon, can be found on pages 93 to 170 and page 204-209 of
the report. The social, value chain 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 foundon pages 172 to 203. The independent auditor’s report of PwC on the social, value chain and environmental statements can be foundon page 210 of the report.
This report has been prepared in accordance with the GRI Standards: Core option. A full GRI index can be found on pages 211-214.
The Global Reporting Initiative (GRI) is a network-based organisation that pioneered the world’s most widely used sustainability
reporting framework. The GRI Standards, launched in October 2016, are the first global standards for sustainability reporting.
Umicore has aligned the corporate reporting to the non-financial reporting requirements set out in the Belgium Companies Code.
PRESENTATION & FEEDBACK
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 theentire 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 on both the print and on-line versions of the report (see facing page for contact details).
Feedback received on our previous reports has been considered in the preparation of this report.

Umicore Annual Report 2017

FINANCIAL CALENDAR1

ADDITIONAL INFORMATION

26 APRIL 2018

STOCK
Euronext Brussels

General meeting of shareholders(financial year 2017)30 APRIL 2018

Ex-dividend trading date

3 MAY 2018

Payment date for dividend

30 JULY 2018

Half year results 2018

7 FEBRUARY 2019
Full year results 2018

GENERAL INFORMATION
Natalia Agüeros-Macario
Phone: +32 2 227 71 02
E-mail: natalia.agueros@eu.umicore.com
FINANCIAL INFORMATION
Evelien Goovaerts
Phone: +32 2 227 78 38
E-mail: evelien.goovaerts@umicore.com
SOCIAL INFORMATIONMark Dolfyn
Phone: +32 2 227 73 22
E-mail: mark.dolfyn@umicore.com
ENVIRONMENTAL INFORMATION
Bert Swennen
Phone: +32 2 227 74 45
E-mail: bert.swennen@umicore.com
LANGUAGESThis report is also available
in French and Dutch.

FEEDBACKLet us know what you think about this report.
Send an e-mail to stakeholder@umicore.com

1 Dates are subject to change. Please check the Umicore website for updates to the financial calendar.

INTERNET
This report can be downloaded
from the Umicore website:
http://annualreport.umicore.com/
REGISTERED OFFICE
UmicoreRue du Marais 31 Broekstraat
B-1000 Brussels
Belgium
Phone: +32 2 227 71 11
Fax: +32 2 227 79 00
Internet: umicore.com
Company Number: 0401574852
VAT No: BE 0401 574 852
PUBLISHER RESPONSIBLE AT LAW
Umicore Group Communications
Christopher Smith
Phone: +32 2 227 72 21
E-mail: christopher.smith@umicore.com
CONCEPT & REALISATION
Radley Yeldar – ry.com
PHOTOGRAPHS
Jean-Michel Byl, Anka Van Raemdonck,
Thorkild Jensen, Umicore

For enquiries and additional information please contact
UmicoreSociété anonyme – Naamloze vennootschap

Rue du Marais 31 Broekstraat
B-1000 Brussels
Belgium
Phone: +32 2 227 71 11
www.umicore.com/en/contact

umicore.com