Powering ahead
Integrated Annual Report 2018

CONTENTS

About this report2018 Annual review

Our 2018 Annual Report consists of the following documents,
which can be downloaded in pdf format:

Statement

1

About us2

3 business groups

3

Horizon 2020

4

Umicore at a glance6

CEO & Chairman’s review

7

Global trends

102018 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.
2018 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, social and value chain performance data forthe group.

Taking on the big challenges

11

The report is externally verified and has been prepared inaccordance with the GRI Standards: Core option. Find the GRI
Index on p.191.

Business model

12

Driving economic performance

14

WEB-BASED CONTENT
To access the full web-based report including our case studies
please visit our dedicated reporting centre via the link below.

Value chain and society24

Eco-efficiency

29

Great place to work

34

Risk management and internal control

41

Board of directors

52

Executive committee

56

Senior Vice Presidents

60

Key figures

62

VISIT ANNUALREPORT.UMICORE.COM

Front cover image: Umicore Capital Market Days Powering Ahead 2018
Inside back cover: Employer branding advertisement

Umicore Integrated Annual Report 2018

1

In 2018 we delivered on our strategy to
become the undisputed leader in clean mobility
materials and recycling, winning new business
which will accelerate growth over the coming
years, stepping up R&D efforts, and expanding
production capacity to meet growing demand.
All this was accomplished while achieving
record results and reaching our original Horizon
2020 objectives two years ahead of schedule.
Our unique ability to close the materials loop
together with certified clean and ethical supply
are at the heart of our approach to sustainability.
Our ongoing growth investments, combinedwith a promising innovation pipeline, put us in
an ideal position to address the need for cleaner
mobility and the growing scarcity of materials
while creating shareholder value in the short,medium and long term.

Umicore Integrated Annual Report 2018

2

The global materials technology & metals recycling group
PROVIDING TOMORROW’S SUSTAINABLE SOLUTIONS FOR CLEAN MOBILITY AND RECYCLING

INTERNALCOMBUSTION ENGINE

Umicore provides:
Emission control catalysts

PLUG-IN HYBRIDELECTRIC VEHICLE

Umicore provides:
Battery cathode materials andemission control catalysts

Umicore is uniquely positioned in all
aspects of clean mobility materials andin recycling. We provide clean-mobility
solutions for all platform types and
we recycle these materials when theyreach the end of their useful life.
Using our metallurgy, chemistry and materials
science expertise, this closed-loop business model isour powerful differentiator and it will continue to be
the basis on which we carry out our business andbuild our strategy. .
We provide automotive catalysts to clean the exhaustgases from internal combustion engines for lightduty and heavy-duty vehicles of all fuel types, andthe rechargeable battery materials and automotive
catalysts that are required to power hybrid, plug-in
hybrid and full electric vehicles. We also produce
catalysts for fuel cell-powered vehicles and for static
or industrial applications.

FULL ELECTRIC VEHICLE

Umicore provides:
Battery cathode materials

FUEL CELLS

Umicore provides:
Electro-catalyst andbattery cathode materials

The recovered materials are then transformed into puremetals or new products.
We develop custom materials and ensure that processes
take account of health and safety, recyclability, cost
efficiency, waste reduction and energy efficiency, bothin our own facilities and across the value chain.
We believe our success is linked to how we balance
the economic, environmental and social impact of
our operations.
Our integrated approach to sustainability is not just aboutminimizing the impact of our industrial operations: ourcommitment to ethical and responsible sourcing give
us a greater competitive edge while delivering value
for all.
Umicore strives to have a positive impact, enhancing
quality of life through our products and services,
reducing harmful vehicle emissions, giving new life
to used metals, powering the cars of the future.

Umicore operates one of the world’s most sophisticatedprecious metals recycling facility and, across ouractivities, we can recover 28 precious and non-ferrous
metals from industrial residues, used electronic scrap,
batteries, automotive and industrial catalysts, fuelcells and more. We also provide recycling services
to customers to help maximize their efficiency.

Umicore Integrated Annual Report 2018and vehicle emissions tolight-duty and heavy-duty

We andprovidesolutions for all platform types
for allclean-mobility
fuel types
Uniquely positionedCATALYSIS vehicles
As a global materials and technology
group,
and we can recycle these materials when they reach the end
our materials tackle global trends for clean air, e-mobility and resource stewardship.
in all aspects ofe provide solutions for the 21st century, by combiningof their useful life. This closed-loopbusiness model is our
3
powerful differentiator, and it will continue to be the basis
clean mobility and in recycling.
metallurgy, chemistry and materials science expertise.
We areinnovative
leaderonan
which
we carryoutinour business and build our strategy.
provide cleaner
Umicore plays a key role in the transition to a low-carbon
futureairas

We adeliverclean leader
energyinstorage
We aretechnology

cathode materials for lithium-ion

solutionsandcatalysts
powerGROUPStheOUR COMPLEMENTARYENABLEA MORESUSTAINABLE
WORLDemissioncontrol
forvehicles
batteries
in electrified transportation,
WeBUSINESS
provideclean-mobility
solutionsfor all platform
types
In all our activities, we develop custom materials and ensure
and andtechnologiesof the future
ENERGYlight-duty
heavy-duty
portable electronics and energy storage
and wecanmaterials whenreach theend LIFE TO USED METALSCOMBINING CUTTING-EDGE TECHNOLOGIESANDRECYCLING
TO
GIVE
NEW
vehiclesandforrecycle
all fuelthesetypes
that processes take account of health and safety, recyclability,&they
SURFACEWe reduce harmful industrial
Umicore plays a key role in the transition to a andlow-carbon
future asto
vehicle emissions
providecleaner air
our materials tackle global trends for clean air, e-mobility and resource
stewardship.

CATALYSISof their useful life. This closed-loop businessmodel is our
TECHNOLOGIES

cost efficiency, waste reduction and energy efficiency,

powerful differentiator, and it will continue to be the basis
We reduce harmful industrial
and vehicle emissions toprovide cleaner air

We are a technology leader inemissionfor storage
Wecontroldelivercatalysts
clean energy
light-duty
and heavy-duty
solutionsand power the vehicles
vehicles andand technologies
for all fuel typesof the future

CATALYSISCATALYSIS HARMFUL EMISSIONSREDUCING

We deliver clean energy storage
solutions and power the vehicles
and technologies of the future

AUTOMOTIVE CATALYSTS
We leading
are an innovative
leaderin
We are one of the
producersof emission
We contribute to resource
materials
fordiesellithium-ion
control catalystscathodefor gasoline
andon-roadstewardship by recycling
batteries in electrified
transportation,and non-road applications,power
generation
metals and end-of-life
ENERGYportable electronics
andenergy storageand industrial processes
to meetenvironmental
products in a closed loop
& SURFACE
standards around the world.

TECHNOLOGIES

whether in our own facilities or across the entire value chain.
on which
we carry out our business and build our strategy.
We contribute to resource
We arequality leaderin
Wea operate
worldwide,
seeking to attract the best talent andWe are anleaderinstewardshipby recycling
recycling complex waste streams
ENERGY&innovative
SURFACEreap the many benefits of diversity among our colleagues.
cathodematerials
for andlithium-ion
In all our
activities,
weend-of-life
develop custom materials and ensure
metalscontaining precious metals and
RECYCLINGTECHNOLOGIES
batteries in products
electrified
transportation,
in a closed loop
other valuable materials

that processes take account of health and safety, recyclability,
ENERGY
electronics and energy storage
RECYCLING
POWERING THEportable
FUTURE
GIVINGNEW LIFE TOOurUSEDMETALS
integrated approach to sustainability is not just abo
cost efficiency, waste reduction and energy efficiency,& SURFACETECHNOLOGIES
minimizing the impact of our industrial operations: owhether in our own facilities or across the entire value chain.

InternalInnovation is a coreMETALS
value at Umicore and ourcommitment
COBALT & SPECIALTY
commitment
to ethical and responsible sourcing give us
We MATERIALS
operate worldwide, seeking to attractPRECIOUS
the best talent and REFINING
Combustion Engine
leadmeansmostthat thevast majority of
We are experts in sourcing, production and to maintain our
Wecompetitive
operate theworld’ssophisticatedEmission control
catalysts edge while delivering value for all.
greatercompetitive
many
benefits
Wereapare athequalityleaderin of diversity among our colleagues.
distribution of cobalt and nickel
products.
precious metals
recyclingare
our Research& Development investments
go towards
cleanfacility
mobilityand
andwerecycling.
recycling complex
waste streams
Our materials arecontaining
at the heartofeverydayexperts
intreatingthemostcomplexmaterials.
precious metals andproducts such as otherrechargeable
batteries, tools,
Our refining and recycling technology gives usedvaluable materials
RECYCLING
paints and tyres. Our recycling and refining
metals a new lease of life. Our processes help
Plug-In Hybrid
processes, including our proprietarylithium-ion
bring value to the circular economy.
Internal
Electric Vehicle
rechargeable battery recycling
technology,
give
Combustion
EngineBattery cathode materials andInnovation is a core value at Umicore
andcatalysts
our commitment
new life to cobalt andEmission
othercontrol
metals.
Full Electric Vehicle
PRECIOUS METALS MANAGEMENT
emission control catalysts

PRECIOUS METALS CHEMISTRY
Wemetals-based
are a quality leader
in forWe are experts incatalysis
recycling complex
wastetreatment
streams to maintain our competitive lead means that the vast majority oflife-enhancing applications.
Emissioncontaining
precious
metalsand
our Research& Development
investments
go towards
cleanMATERIALS
mobility and recycling.
RECHARGEABLEBATTERY
technologies, cancer
treatments,
theproductionofother valuable materials
We are a pioneer in battery materials and a leadingfinechemicals
andadvanced
electronics
–
all
are
RECYCLING
cathode material supplier for rechargeable lithiummade possible by our organometallic technology
ion batteries, giving added range and performanceknow-how.
to electric vehicles, and longer battery life forInnovation is a core value at Umicore and our commitment
Full Electric Vehicle
portable electronics.
to maintain our competitive lead means that the vast majority of

We contribute to resource
stewardship by recycling
metals and end-of-life
products in a closed loop

Battery cathode materials

our Research & Development investments go towards clean mobility and recycling.

ELECTROPLATING
We are experts in developing metal-based coatingproducts applied to printed circuit boards, jewelry
and industrial components. Our precious metalelectrolytes and processes are used in coatings fortechnical, functional and decorative applications.
ELECTRO-OPTIC MATERIALSWe are a leading supplier of material solutions forthe space, optics and electronics sectors, including
products for thermal imaging, wafers for spacesolar cells, high brightness LEDs and chemicals forfibre optics.

cathode materials
We supply and handleBattery
all precious
metals,ensuring physical delivery by using both theoutput of our precious metals refineries and our
network of industrial partners and banks. We offer
our customers tailor-made solutions for delivering,hedging and trading precious metals.

JEWELRY & INDUSTRIAL METALSWe are experts in developing products andprocesses based on precious metals such as
gold, silver and platinum. Our customers use
these materials to make fine jewelry, coins,high-purity glass and industrial catalysts.
We provide our customers with sustainable andresponsible sourcing of these metals. and closedloop recycling.

Umicore Integrated Annual Report 2018

Fuel cells
Electro-catalyst and battery
cathode materials

4

Horizon 2020 progress
ECONOMIC PERFORMANCEOUR OBJECTIVESVALUE CHAIN AND SOCIETY

STRENGTHENLEADERSHIPDOUBLE 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.

KEY PERFORMANCE
INDICATORSGROUP REVENUESANNUAL GROWTHOBJECTIVE ACHIEVED:REBIT MORE THAN DOUBLEDFROM 2014 TO 2018

42% CATALYSIS

2018 REBIT INCREASE

19%

+17%

+29% VS 2017

READ MORE ABOUT ECONOMICPERFORMANCE ON PAGE 14

REBALANCEPORTFOLIO39%

SUSTAINABLE
SUPPLYSUSTAINABLE
PRODUCTS & SERVICES

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.

ALIGNED WITH OECD DUEDILIGENCE GUIDANCE FOR
E NERGY & SURFACE RESPONSIBLE SUPPLYTECHNOLOGIESCHAINS OF MINERALS FROM
CONFLICT-AFFECTED AND
RECYCLING
HIGH-RISK AREAS

72%

OF TOTALREVENUES FROM
CLEAN MOBILITY
AND RECYCLING

READ MORE ABOUT VALUE CHAIN
AND SOCIETY ON PAGE 24

Umicore Integrated Annual Report 2018

5

OUR OBJECTIVESECO-EFFICIENCYGREAT PLACE TO WORKEFFICIENTOPERATIONS

WHY THEY AREIMPORTANTKEY PERFORMANCE
INDICATORS

To make sustainability anirrefutable competitive advantage
for Umicore.

ENERGY CONSUMPTION*-29% VS 2015
*adjusted for intensity

SAFETY

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

NUMBER OF
ACCIDENTS

61

HEALTHTo monitor, manage and protectfrom exposure risks.

PEOPLEENGAGEMENTTo 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.

EXCESS READINGS*TOTAL EMPLOYED

2.8%

10,420* based on internal target values

RETENTION RATE

92.8%

READ MORE ABOUT ECOEFFICIENCY ON PAGE 29

READ MORE ABOUT GREAT PLACETO WORK ON PAGE 34

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 ONPAGES 63 AND 72

Umicore Integrated Annual Report 2018

6

Umicore at a glance
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€ 3,271m 6%of revenues

RECURRING EBIT

€ 514mREVENUES BY GEOGRAPHY€ 1.36per share

RESOURCE EFFICIENCY

42% PRIMARY MATERIALS

11.2% NORTH AMERICA	
5 8% SECONDARY AND
END-OF-LIFE MATERIALS

42.2% ASIA-PACIFIC

10,420PRODUCTION SITES

48

R&D | TECHNICAL CENTRES

14

RECURRING EPS

39.4% EUROPE
3.8% SOUTH AMERICACOLLEAGUES

5,723
17
5

838
11
2
678
5
1

2,922
14
6
259
1

3.4% AFRICA

Umicore Integrated Annual Report 20187

CEO & Chairman’s review
MARC GRYNBERG AND THOMAS LEYSEN LOOK BACK ON 2018 AND EVALUATE THE OUTLOOK FOR UMICOREMARC GRYNBERG CEO& THOMAS LEYSEN CHAIRMAN
Once more Umicore set a record
performance in 2018, as our recent
investments have started to pay off.
Recurring EBIT grew by 29% to € 514 million,
reflecting strong growth in Energy & Surface
Technologies. Return on Capital employed grew from
15.1% in 2017 to 15.4% in 2018, above our long-termvalue creation goal.
The four key objectives set in 2015 in our Horizon
2020 strategic plan – to become a clear leader inclean mobility materials and recycling, to double
company earnings, to balance the contribution fromour business groups, and to turn our leadership insustainability into a greater competitive edge –were reached two years ahead of schedule. At our
Capital Markets day in June we announced that we
had identified an EBIT potential of 35% to 45% over
and above our original Horizon 2020 target and weremain confident that this will be achieved in 2020.
Contribution by business group had reached agood balance in 2017, but with revenues in Energy &Surface Technologies increasing by 44% this segment
overtook Catalysis in 2018 to become our largest.
The main driver was Rechargeable Battery Materials

which continued to outgrow the electric vehicle
market, together with strong demand and supportive
prices in the recycling and distribution activities of
Cobalt and Specialty materials in the first half of theyear. EBIT increased by 82%, reflecting scale effects
following the ramp-up of new production capacity
in Korea and China, completed on an accelerated
schedule in 2018. Revenues in Catalysis increased
by 9%, benefiting mainly from the integration of
the former Haldor-Topsoe heavy duty diesel andstationary emission control catalyst activities andfrom higher demand for our gasoline catalyst
technologies. Revenues in Recycling increased by 6%
and recurring EBIT by 12%, reflecting volume growthand more supportive metal prices despite the impactof the fire in the Hoboken plant.
We continued to make substantial investments
in 2018 with capital expenditure amounting to€ 478 million, mainly relating to the completion of
the investments in a greenfield site in Korea and abrownfield expansion in China for the Rechargeable
Battery Materials operations. Other investments
included work on improving the environmental
performance of the Hoboken plant by revamping

Umicore Integrated Annual Report 2018

CEO & CHAIRMAN’S REVIEW
the lead refinery, resulting in an immediate andsignificant reduction in emissions.
In February 2018, we successfully completed a capitalincrease of € 881 million aimed at funding growthinvestments. At the end of 2018, net financial debt
stood at € 861 million, corresponding to 24% of
equity. Our operating cash flows and strong balance
sheet provide ample room to fund our ambitious
growth. The Board of Directors will propose a grossannual dividend of € 0.75 per share and this will bepresented to the shareholders for approval at theAnnual General Meeting on 25 April.
Part of turning sustainability into a greater
competitive edge includes pursuing sustainability
goals in areas such as safety and supply chain.
Progress was uneven in 2018.
Despite the priority given to safety by management,
our performance in 2018 was disappointing and wesadly had to record a tragic fatality to a contractor
on our site in Arab, Alabama. The group recorded
61 lost time accidents in 2018 compared to 51 in
2017 (excluding the Building Products Unit, divested
in September 2017). Over the same period thefrequency rate increased from 3.01 to 3.36 and theseverity rate from 0.09 to 0.1. Our efforts to improvesafety performance need to be further stepped up
in 2019, with specific awareness campaigns andprograms aiming to change mindsets durably and toestablish a dominant safety culture.
Our eco-efficiency is measured against our Horizon
2020 goal of performing equally well or better thanin 2015, with values adjusted for activity levels.
On this front, we continue to improve year-on-year
despite our expansion and production ramp-up.
Overall, when related to 2015 values and adjusted
for production levels, metal emissions to water
were down 71% compared to 2015 levels, comparedwith 69% in 2017, mainly thanks to decreases in
Hoboken and Cheonan. Metal emissions to air were
down by 46% on 2015 levels, compared with 41% in2017, mainly thanks to the work on further reducing
emissions in Hoboken. In terms of energy efficiency,
our energy consumption was down 29% against
2015, compared with a 21% improvement in 2017.
Many of our efforts in 2018 to make Umicore agreat place to work were centered on recruitment
initiatives for our growing businesses. Total headcountincreased to 10,420 in 2018, an increase of 7% over2017 (9,769). Our success in hiring so many skilled
people, primarily in China, Korea and Belgium,is testimony to our efforts to make Umicore an
attractive place to work and to promote Umicore asa sustainable employer, supported by deploymentof an Employer Branding programme. In terms ofdiversity, 2018 showed an increase in the proportionof women in management and senior management
but decreases in women in business operations and in
non-Europeans in senior management. The ambition
to reach 15% of women in senior management
functions by 2020 is confirmed. The seventh editionof our People Survey achieved record participation
at 81%, one main outcome being to show increased
confidence in our future as a company.

Umicore is so far the first and only
cathode material producer to be able
to offer certified materials from a clean
and ethical origin to customers in therechargeable battery value chain.
As an example of our sustainable sourcing, ourOECD-compliant cobalt procurement framework
is covered by third party assurance. We have also
used our expertise in cobalt and gold supply chain
due diligence to establish responsible sourcing of

8

platinum group metals. In 2018 we also obtained
LBMA certification for the sourcing of silver.

The added value of our sustainability
approach is demonstrated as ourclosed loop model gains traction.
Massive electrification and sourcing for the catalyst
or fuel cells industries are only possible by closing
the loop and recycling all the power train elements
when they reach end of life, both for environmental
reasons and because of the scarcity of the metals
required for these technologies, especially forrechargeable batteries.
The 3 megatrends identified as the drivers for our
Horizon 2020 strategy have proven even stronger
than initially expected. The adoption of electrified
vehicles is being accelerated by the move away fromdiesel passenger vehicles in Europe, and demand is
growing rapidly. Our broad portfolio of the highest
quality, mostly customized, cathode materials,
combined with the swift ramp-up of new production
capacity in China and Korea and our pioneering
approach to ensure sustainable supply, haveenabled us to win large EV platforms. Our ongoing€ 660 million investment plan will further strengthen
our position to capture a significant share of EVrelated growth, with greenfield production sites in
China, set to start coming on stream by the end of
2019, and in Poland where construction is expected
to start in spring 2019.
The trend to cleaner mobility is confirmed by
the ever-tighter emission norms introduced inseveral regions, especially Europe, China and India,
promising unprecedented mid- to long-term value
growth in automotive catalysts, especially from ourleading position in new gasoline engines requiring
particulate filters and our improved position in heavy

Umicore Integrated Annual Report 2018

CEO & CHAIRMAN’S REVIEW
duty diesel. The emerging fuel cell business further
confirms our unique ability to provide solutions for all
future drivetrain technologies.
Resource scarcity is an ever-growing concern mostespecially for the metals needed in rechargeable
batteries and we plan to upscale our battery recycling
facilities so that they are ready to come on stream in
the mid-2020s.
The geo-political environment remains volatile andwe also recognize a challenging macro-economic
environment impacting especially the automotive
market. We remain committed to our strategic goals
which we will achieve by ever stronger focus and byremaining agile with tailored solutions and the ability
to ramp up new production quickly and effectively.
Technology innovation remains a key to our successand our 56% increase in patent family filings, over
2017, bears witness to our increased effort and to thestrength of our innovation pipeline.

9

As we close this review, we would like to express ourthanks to all the stakeholders for their contribution to
our success in 2018. One of the highlights of the year
was the successful equity offering made in February
which raised close to € 900 million, not only
enabling us to realize our investment needs but also
showing confidence in our strategy and positioning.
While acknowledging that 2019 may be challenging
in terms of the macro-economic environment, we canconfirm that we see strong mid- to long-term value
growth in all aspects of clean mobility and recycling.

We have reaffirmed our confidence
that we will reach the potential upside
above our original 2020 ambitions andwe look forward to sharing our successwith all stakeholders.
MARC GRYNBERG CEO& THOMAS LEYSEN CHAIRMAN

This annual report again confirms our commitment
to integrated reporting. The award won by Umicore
for best Belgian sustainability report in 2017 hasgalvanized our efforts to continuous improvement,
which you will see in this year’s report through the
improved and unified page formatting, additional
information on organization and society, together witha new section specifically dedicated to shareholders
and a much-improved online presence. We hope you
will find this report clear and informative.

Umicore Integrated Annual Report 2018

As a global materials and technology group,
we provideAs
solutionsthe 21st andcentury,
by combining
a globalfor
materials
technology
group,
a globalfor
materials
technology
group,
ourwe
metallurgy,
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provideAs
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21st and
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provide solutions
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andscienceexpertise.
Umicore plays a key role in the transition to a low-carbon future as
our metallurgy, chemistrymaterials
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our materials tackle andglobal trends
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our materials tackle
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We reduce harmful industrial
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We reduceprovide
harmfulcleaner
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We reduce harmful industrial
provide cleaner airand vehicle emissions toprovide cleaner air

CATALYSISCATALYSISCATALYSISWe deliver clean energy storage
solutions and power the vehicles
technologiesof thestorage
futureWeanddeliverclean energy
solutions and power the vehicles
We deliver clean energy storage
and technologies of the future
solutions and power the vehicles
and technologies of the future

ENERGY& SURFACE
ENERGYTECHNOLOGIES&ENERGY
SURFACETECHNOLOGIES& SURFACE

We are a technology leader inemissioncontrolcatalysts
forin emission
controlcatalysts
light-duty
andandheavy-duty
for light-duty
heavy-dutyWe
are a technology
leader invehicles andfor allfuel types
emissioncontrolcatalystsforWe are a technology leader inlight-duty and heavy-duty
emission control catalysts forvehicles and for all fuel types
light-duty and heavy-duty
vehicles and for all fuel types

We are an innovative leader incathode materials for lithium-ion
batteries
electrifiedleader
transportation,We
are anininnovativein cathodeportableelectronics
andenergystoragecathodeforlithium-ion
materialsmaterials
for lithium-ion
batteriesinWe are an innovative leader inbatteries
electrified transportation,
electrifiedintransportation,
portablecathode materials for lithium-ion
portableelectronics
and storage
energy storage
electronics
and energy
batteries in electrified transportation,
portable electronics and energy storage

We contribute to resource
We are a quality leader in
TECHNOLOGIES recycling complex waste streams
stewardship by recycling
and toend-of-life
containing
precious
metalsWe metals
contributeresource
We are a quality
leaderin andproducts
inaclosedloop
othervaluablematerials
stewardship by recycling
recycling complex waste streams
We contribute to resource
We are a quality leader in
RECYCLING
metals and end-of-life
containing precious metals andstewardship by recycling
recycling complex waste streams
products in a closed loop
other valuable materials
metals and end-of-life
containing precious metals and
RECYCLING
at Umicore
our commitment
products in a closed loop Innovation is a core value
othervaluableandmaterials

RECYCLING

to maintain our competitive lead means that the vast majority ofInnovation is a core value at Umicore and our commitment
our Research & Development investments go towards clean mobility and recycling.
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leadatmeans
thatandtheourvastcommitment
majority ofInnovation
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Umicoreour Research & Development
go towards
cleanthatmobility
andmajority
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VEHICLE ELECTRIFICATIONcost
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benefitsof diversity
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and
clean
air bycombining energy efficientsystemswithrenewable
reap the many benefits of diversity among ou
energy sources. Incentives favoring electric vehicles
Internal
are increasing globally.
Combustion Engine

RESOURCE SCARCITY

Emission control catalysts

Internal

EngineDeveloping technologies, Combustion
such as increasinglyInternal
Emissioncontrolcatalysts
powerful rechargeable batteries to reduce the
Combustion Engine
environmental impacts of society, increases
Emission control catalysts
the demand for specialty and precious metals.
Mining metals from primary sources has significant
environmental impacts, including a high carbon
footprint. Easy-to-mine deposits
are Vehicle
increasingly
Full Electric
scarce and ore bodies poorer.
Battery cathode materials
Full Electric Vehicle
Battery cathode materials

Full Electric Vehicle

Battery cathode materials

our Research & Development investments go towards clean mobility and recycling.

Umicore Integrated Annual Report 2018

GLOBAL TRENDS

11

Taking on the big challenges
OUR BUSINESS MODEL AND HORIZON 2020 STRATEGY ARE FOCUSEDON MAKING A DIFFERENCE IN THE WORLD’S MOST PRESSING ISSUES
Umicore is working to meet the growing demandfor clean mobility and clean air. We are a leading
producer of catalysts and catalytic filters used inemission abatement systems for light and heavyduty vehicles, on-road and off-road. Our catalysts
and particulate filters convert 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.
We strive to deliver environmentally friendly
technologies that ensure resource efficiency andsustainability in industry’s supply chain.

Umicore fosters sustainable growth andchampions its circular business model.
Our Hoboken facility is the world’s largest andmost complex precious metals recycling operation,
processing over 200 types of raw material – frommining and industrial residues to “End-of-life”
materials, such as electronic scrap and spent
rechargeable batteries – and recovering over 20
different metals. As part of our closed-loop businessmodel, most of our business units recycle industrial
residues from customers. Umicore is growing its
capacity to cater to rising demand.
We deliver environmental and ethical sourcing
benefits, and increased resource security.

Umicore is working to deliver energy efficiency
technologies, optimize resource use and reduce
pollution. We are a leading producer of cathodematerials for lithium-ion batteries, which are key
in determining the power and energy density ofrechargeable batteries, to maximize driving distanceof electrified vehicles. Our nickel-manganesecobalt (NMC) cathode materials are a reference in
the industry. To meet growing market demand,
we announced significant investments from 2017
to 2019 to further increase our production of NMC
cathode materials.

Umicore is determined to be a preferred employer
wherever we operate and are committed toempowering women for leadership. We are a
growing business with presence in markets aroundthe world and have won Top Employer status for oursites in Europe and Asia. We think this is because
we strive to create a collaborative environment,
ensuring meaningful work and career-long learningand development opportunities. This means our
employees have an average length of service of
10 years, and that group-wide we have over 92.8%
retention rate.

We provide solutions for a cleaner and more
resilient future.

We all share the same values, we all respect one
another and we are all working towards making
materials for a better life.

Umicore Integrated Annual Report 2018

BUSINESS MODEL

12

Turning sustainability into our competitive edge
PROVIDING THE BEST TECHNOLOGICAL SOLUTIONS FOR CLEAN MOBILITY AND RECYCLING

We transform metals into functional
materials and recycle them to makenew materials. Our products deliver
solutions for cleaner air and increased
e-mobility, while we turn wastemetals into a resource. Our ethicalsourcing and closed-loop approachgive us a greater competitive edge.

application
know-howmetalsChemistry
Material science
Metallurgy

recyclingmaterial
solutions

METALS
Metals are an outstanding ingredient for sustainable
materials production because they can be recycled
infinitely without losing any of their chemical or
physical properties. This is one of the foundationsof our business model. A high volume of our metalscome from recycled sources - production scraps
and residues from customers and other industries,and end-of-life materials through our closed-loop
services. Using our Sustainable Procurement Charterand our framework for Cobalt, we purchase theremainder of our metal supplies from sustainably andethically vetted primary sources.
APPLICATION KNOW-HOW
We take metal and apply our expertise in metallurgy,
chemistry, engineering and materials scienceskills, we add our product, process and market
know-how and offer solutions that enable ourcustomers to develop better, more sophisticated andsafer products.

MATERIAL SOLUTIONS
Our know-how transforms metals into functional
materials that are integrated into products by ourcustomers, usually companies making products for
consumer or industrial use. Our catalysis materials
provide clean air and health solutions, while ourbattery materials give added range and performanceto electric vehicles and increased battery life toportable electronics. Our materials are also insidecomputer motherboards, in domestic light switches
and in the fiber optics and satellites that keep
you connected.
RECYCLING
We run two types of recycling operations that,together, can recover 28 metals. Our precious metals
recycling operation in Hoboken, Belgium, is built torecycle and refine the most complex materials andto recover a broad spectrum of metals. Our otherrecycling operations, in collaboration with customers,
recover specific metals from production residues.

Many factors – from raw materials
supply to talent retention – underpin
our business model. We manage theseresources and relationships for thelong term.

Umicore Integrated Annual Report 2018

BUSINESS MODELSKILLS AND EXPERTISE
Our colleagues contribute to Umicore through theirexpertise and commitment. Metallurgy, chemistry,engineering and materials science skills are criticallyimportant in our key growth areas: recycling andmaterials for clean mobility.
We are growing in Asia and in Europe and thismeans a greater focus on attracting talent for
positions ranging from production operators,
engineers, research scientists, to commercial andadministrative functions.
UMICORE TECHNOLOGYTechnology is at the core of our success.
We are committed to innovation and research anddevelopment (R&D) are key for innovation-led growth.
We develop a significant part of our technology using
Umicore R&D findings and invest 6% of our revenues
in R&D. Umicore also develops technology in with ourindustrial or academic partners and we protect our
intellectual property with patents.
UMICORE OPERATIONS
Our operations are carried out in recycling plants,
specialised chemicals and materials production
facilities, offices and research centers, in 30 countries,
often close to our customers to support collaborationand to meet their specific product requirements.
We aim for excellence in environmental and social
performance in all our operations.
We seek to minimise the impact of metal
emissions, generate improved material and energy
efficiency and offer a safe and healthy workplace.
Operational excellence is important both in securing
our license to operate and in helping to make Umicore
more competitive.

MAXIMUM EFFICIENCYInput 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.
INVESTMENT & FUNDING
Investing in Umicore is an investment in producing
materials for a better life – our mission – andsupporting our strategy. Umicore has a proven trackrecord of funding strategic growth initiatives fromthe capital generated from our own operations.
Indebtedness is kept low, as we aim to retain theequivalent of an investment grade credit status.

Our closed-loop business model delivers
economic, social and environmental
value for all our stakeholders.
PRODUCTS & SERVICES
Our ambition is to produce materials for a better
life. Umicore products can be found in applications
that make day-to-day life more comfortable andcontribute to a cleaner, more efficient world. We work
closely with our customers to develop customized
materials or processes that consider health andsafety, recyclability, cost efficiency, waste reductionand energy efficiency both in our own facilities
and in the value chain. We continuously search forinnovative solutions for our customers and work
to meet the needs of a rapidly changing and moredemanding world.

13

THE UMICORE WAY
Umicore is committed to the principles of sustainable
development. We aim for excellence in environmental
and social impact and strive to offer a safe andhealthy workplace. We offer solutions to global
challenges: our recycling services address growing
resource scarcity and reduce industrial waste andemissions. Our catalysts help reduce air pollution,
while our rechargeable battery materials help makeelectrified transportation a reality. Umicore offers
high quality employment with competitive salaries,
training and development opportunities and longterm employment prospects.
Each site aims to be considered as a preferred
employer locally. Umicore supports the principle ofcollective bargaining and signed a Global Framework
Agreement on Sustainable Development with theIndustriALL Global Union.
SUPERIOR GROWTH & RETURNS
Umicore aims to generate a return on capital employedof more than 15%. One of our Horizon 2020 goals
is to double our earnings, mainly through growth inrecycling and materials for clean mobility. While theprimary focus is on organic growth, acquisitions arealso considered if they fit the strategy and can add
value for shareholders.
Umicore pays out a stable or gradually increasing
dividend and has a track record of returning excess
cash to shareholders through share buybacks.

Umicore Integrated Annual Report 2018

14

Driving economic performance2020 Target

KEY RISKS & OPPORTUNITIESSTRENGTHENLEADERSHIP

Confirm our strong position and unique offer
in clean mobility materials and recycling.

DOUBLETHE EARNINGS

Double the size of recurring EBIT compared to 2014
excluding the discontinued operations.

REBALANCEPORTFOLIO

Ensure a more balanced contributionof earnings from our 3 business groups.

1

Regulatory and legal context

2 Sustainable and ethical supply
3 Technology and substitution
4

Market5 Metal price

SEE RISKS ON PAGE 41

CASE STUDY

Growing for
Clean Mobility
Umicore has been focusing its growth investments inthe areas of clean mobility and recycling to deliver on
its Horizon 2020 strategy.
These investments have laid the foundations forlong-term growth and are already creating value
today by generating attractive returns.
VISIT ANNUALREPORT.UMICORE.COM

Board field trip to Umicore Jiangmen, China 2018

Umicore Integrated Annual Report 2018

15

Economic review
IN 2018 WE REACHED THE HORIZON 2020 ECONOMIC PERFORMANCE TARGETSTWO YEARS AHEAD OF SCHEDULE AND REAFFIRMED THE UPSIDE POTENTIAL

€

514m

GROUP REBIT

RECURRING EBITDA

RECURRING EBIT

RETURN ON CAPITAL EMPLOYED (ROCE)

Millions of Euros

Millions of Euros

%

800

600
500

600

€

478m

GROUP CAPEX

15.4%
ROCE

‘14 | 442.2‘15 | 504.7‘16 | 526.8‘17 | 599.3‘18 | 720.1

400
200
0

‘14 | 273.7‘15 | 330.3‘16 | 350.7‘17 | 410.3‘18 | 513.6

400
300
200
100

‘14

‘15

‘16

‘17

‘18

We have selected 3 key performance indicators(KPI) to measure our success in the execution of
our Horizon 2020 growth strategy and our progress
towards our longer-term targets and objectives:– Recurring EBITDA: This KPI gives a clear
indication on earnings and profitability, and is also
a good proxy for generated operating cashflows(cashflow from operations before change in cash
working capital).
– Recurring EBIT: As part of our Horizon 2020
strategy we had set a 2020 recurring EBIT target of
doubling the 2014 figure.
– ROCE: We want our investments to create value by
generating attractive returns and have set a Group
ROCE target of 15%+.

0

‘14

‘15

‘16

‘17

‘18

Umicore is delivering on its strategy to be theundisputed leader in clean mobility materials andrecycling, with its offering of product and process
technologies, combined with its closed loop approachand sustainable supply. As part of this strategy, we
have won significant new business in the latter half of2018, which will accelerate our growth in the coming
years. For instance, in Automotive Catalysts, Umicore
won the largest share of the gasoline platforms
requiring particulate filters in Europe and China.
In Rechargeable Battery Materials Umicore continued
to secure major xEV platforms with OEMs globally.
We have delivered consistent recurring EBITDA
increase since 2014, the reference year for our Horizon
2020 strategy and this despite the divestments of 4
business units. In 2018, recurring EBITDA increased
by 23% with growth across all three business groups.

20
18
16
14
12.2
12
10
8
6
4
2
0
‘14

13.7

‘15

14.6

15.1

15.4

‘16

‘17

‘18

The recurring EBIT of € 514 million in 2018 is above
the original 2020 target, 2 years ahead of schedule.
Compared to the baseline of 2014, returns on capital
employed have increased substantially and now
apply to a much larger capital employed base,resulting in significant shareholder value creation.

In 2018, a period marked by intense
investments, our Group ROCE increased
to 15.4%, above our target, with all
business groups continuing to create
substantial shareholder value.
In addition, we continued to step up our R&D efforts,
which is reflected in a 56% increase in the number ofpatent family filings compared to the previous year.

Umicore Integrated Annual Report 2018

ECONOMIC REVIEW16

CATALYSISRECURRING EBITDA

RECURRING EBIT

RETURN ON CAPITAL EMPLOYED (ROCE)

Millions of Euros

Millions of Euros

%

250

200

200

‘14 | 124.9‘15 | 172.3‘16 | 203.4‘17 | 224.4‘18 | 237.2

150
100
50
0

‘14

‘15

‘16

‘17

‘18

Revenues for Catalysis increased 9%, benefiting
primarily from the integration of Haldor Topsoe’s
heavy-duty diesel and stationary emission control
catalyst activities, as well as from higher demandfor Umicore’s gasoline catalyst technologies.
Recurring EBIT increased 2% with volume growth
partly offset by the less favorable engine mix
in Europe. The ROCE for Catalysis included someanticipated temporary dilution effect owing torecent acquisitions that have yet to deliver their fullsynergy potential. New capacity will come on stream
in China, Europe and India towards the end of 2019
to accommodate for recent platform wins compliant
with new legislations.
Revenues for Automotive Catalysts were higher,
driven by an increased contribution from the heavyduty diesel catalyst activity and higher demand for
Umicore’s gasoline catalyst technologies.

Umicore has won the largest shareof new gasoline platforms requiring
particulate filters in Europe and China
and is becoming the global leader inthis segment.

20
16.6

150

‘14 | 82.6
‘15 | 124.2‘16 | 152.5‘17 | 165.5‘18 | 168.2

100
50
0

15
10

16.3
14.0

13.4
10.2

5

‘14

‘15

‘16

‘17

‘18

0

‘14

‘15

‘16

‘17

‘18

Considering the growing share of gasoline engines
in the mix, Umicore is best positioned to benefit
from the unprecedented value growth of the car
catalyst market.

mix, with an increased exposure to the popular
SUV segment, as well as customer wins. Umicore’s
volumes were substantially higher in South America,
in line with the recovering car market.

Umicore recorded higher car catalyst sales volumes
year on year, reflecting its strong position in gasoline
applications and despite the fast-declining salesof diesel cars in Europe. Global light-duty vehicle
production contracted by 1.1% in 2018 reflecting theslowdown of the Chinese and European car markets
in the second half of the year.

Umicore recorded higher revenues in China where
its customers outgrew the market. This strong
performance was in sharp contrast with the evolutionof the Chinese car market, which contracted in thesecond half of the year. Moreover, Umicore has
won additional awards for China 6a and b compliant
platforms. To cater for these awards, Umicore issubstantially increasing its catalyst production
capacity in China with the new lines set to come on
stream at the end of 2019.

In Europe, demand for Umicore’s gasoline catalysts
was strong particularly for direct injection engines,
which require more complex catalyst systems underEuro 6d. To cater for this growing demand Umicore isexpanding capacity at its Nowa Ruda plant in Poland.
The additional production lines are due to come on
stream in the second half of 2019. Revenues were
impacted by the decline in diesel car production and,to a lesser extent, customer platform delays in thesecond half of the year caused by the introductionof the new WLTP testing regime. In North America,
Umicore’s revenues increased despite a declining car
market. Umicore benefitted from a good platform

Umicore successfully expanded its market sharewith Japanese OEMs globally, while in Korea,
revenues were flat in a slightly declining market.
Umicore outpaced the South Asian market supportedby the ongoing ramp-up of production in its new
facility in Thailand. In India, Umicore won new Bharat
Stage 6 awards, for which new production capacity
will come on stream in the course of 2019.

Umicore Integrated Annual Report 2018

ECONOMIC REVIEW17

The expansion underlines Umicore’s
unparalleled position in clean mobility
materials as the only company
This acquisition enabled us to broaden worldwide offering at commercial
our technology portfolio, extend our scale the full spectrum of materials
customer base in Europe and China technologies required to enable thetransition to clean er mobility.
and expand our production footprint.
The heavy-duty diesel segment benefitted from theintegration of Haldor Topsoe’s heavy-duty diesel andstationary emission control catalyst activities.

Umicore is now better positioned to capture thefuture growth of the global heavy-duty market,
which is set to more than double in value by 2025
(compared with 2017) driven by more stringent
legislation in key regions.

Alongside fuel cell catalysts, higher sales of active
pharmaceutical ingredients and products used inchemical metal deposition applications contributed
to the overall year-on-year growth of the business
unit revenues.

In Precious Metals Chemistry, revenues from fuelcell catalysts used in the transportation segment
increased, benefiting from a first uptake of fuel celldrivetrain technology as an environmentally friendly
alternative to internal combustion engines bothfor passenger cars and heavy-duty applications.
Umicore has a complete and competitive portfolio of
catalyst technologies for fuel cells and has enteredinto close collaboration agreements with leading
OEMs for existing car platforms as well as future
development programs.
In order to support the growth of our customers,
we are expanding our fuel cell catalyst production
capacity in Korea, as announced in December 2018.
The new plant will be commissioned towards the endof 2019 and production will ramp up in 2020.

Umicore Integrated Annual Report 2018

ECONOMIC REVIEW18

ENERGY & SURFACE TECHNOLOGIESRECURRING EBITDA

RECURRING EBIT

RETURN ON CAPITAL EMPLOYED (ROCE)

Millions of Euros

Millions of Euros

%

350

300

300

250

250

‘14 | 90.4
‘15 | 112.6‘16 | 131.6‘17 | 197.7‘18 | 322.9

200
150
100

‘14 | 54.1
‘15 | 70.2
‘16 | 81.7
‘17 | 140.7‘18 | 256.6

200
150
100

‘14

‘15

‘16

‘17

‘18

0

17.5
14.4

15
10

10.1

11.0

11.7

‘15

‘16

5

50

50
0

20

‘14

‘15

‘16

‘17

‘18

0

‘14

‘17

‘18

Revenues in Energy & Surface Technologies increased
substantially (+44%), with Rechargeable Battery
Materials continuing to outgrow the xEV market.
The business group also benefited from strong
demand and a supportive price environment in
the refining and distribution activities of Cobalt &Specialty Materials in the first half of the year.

Revenues and volumes for Rechargeable Battery
Materials increased significantly, driven primarily bystrong demand for Umicore’s proprietary Cellcore®
NMC (nickel manganese cobalt) cathode materials usedin lithium-ion batteries for transportation applications.
This growth was supported by the fast ramp-up of new
production capacity both in China and Korea.

Umicore’s broad portfolio of cathode material
technologies offers automotive OEMs around theworld state-of-the-art solutions to achieve longer
driving ranges, faster charge and low battery
degradation in combination with cost optimisation.
Umicore has captured a significant share of thesegment growth.

The increase in recurring EBIT was even greater(+82%), reflecting scale effects following the rampup of new capacity in Korea and China as partof the € 460 million investment program, which
was launched in 2016. The program consisted of a
combination of a brownfield expansion in China anda greenfield site in Korea and was completed in 2018
on an accelerated schedule.

In addition, shipments of High Energy LCO (lithium
cobaltite) cathode materials for batteries used inhigh-end portable electronics and shipments of NMC
cathode materials for energy storage applications
were also higher year on year.

Our products are present on morethan 20 platforms with OEMs globallyand in qualification for several large
new platforms.

Sales of full electric and plug-in hybrid vehicles grewby more than 60% year-on-year globally and reached
2 million vehicles in 2018.

ROCE for Energy & Surface Technologies was well up
despite a 50% increase in capital employed year-onyear.

The majority of automotive OEMs
have started to expand their offeringof electrified car models in anticipationof tighter CO2 regulations coming into
force in several regions.

Umicore also has the ability to scale up production
rapidly and its proprietary production lines arecapable of producing the full range of NMC
materials, all certified for the most stringent
automotive requirements.

Revenues of Energy & Surface Technologies should
increase further in 2019 on the back of continued
growth in Rechargeable Battery Materials.
This growth is expected to be more pronounced in
the second half of the year when the first productionlines will come on stream in the new plant in China.

In order to meet the growing demand from its
customers, Umicore is expanding cathode materials
production capacity in Korea and China and will soon
start construction of a first production facility inEurope. The swift ramp-up of the new lines in Korea
and China supported rapid volume growth over thecourse of the year and generated scale benefits.

Umicore Integrated Annual Report 2018

ECONOMIC REVIEWThe construction of the greenfield site in China is
progressing according to plan, with commissioning
expected around mid-2019. In Nysa, Poland, theengineering work is ongoing and construction of the
new cathode materials production plant is expected
to start in the spring of 2019 with commissioning
planned for mid-2020.
Revenues for Cobalt & Specialty Materials were up
year-on-year. The refining, recycling and distribution
activities generated a strong performance in thefirst half of the year due to high volume growth andfavorable prices.
Market conditions became more challenging inthe second half of the year, with the cobalt pricein particular declining sharply after the peak levels
reached in June. The product businesses recorded
solid demand for nickel compounds used in thebattery, plating and catalyst industries as wellas carboxylates used in catalytic applications.
Revenues in the tool materials activity were slightly
below the strong levels of 2017.
The Energy & Surface Technologies business group
includes the battery recycling activity, consistent with
Umicore’s closed loop approach. Umicore recorded
higher activity levels at its battery recycling pilot
plant and secured new contracts for the recycling ofspent automotive and portable electronics batteries.
With the worldwide penetration of electrified
vehicles set to increase sharply in the coming years,
industrial-scale battery recycling will be vital forsustainable electric mobility.

19

Umicore has developed unrivalled
competences and industrial capabilities
to recover critical raw materials fromspent batteries and battery production
scrap, in a sustainable manner.
The growing scarcity of metals and increasing societalpressures to source raw materials in an ethical andenvironmentally sustainable manner has resulted ina growing need for increased traceability in supply
chains. An increasing number of automotive OEMs
are therefore looking for a closed loop approach asoffered by Umicore.
The technology and research alliances, which Umicore
entered with BMW and Audi in 2018, underscore themerits of Umicore’s closed loop approach.
Revenues for Electroplating were stable.
Higher revenues for decorative applications andplatinised compounds used in electrocatalytic
materials offset the impact of competitive pressure
on precious metal-based electrolytes used in
portable electronics.
Revenues for Electro-Optic Materials were slightly
lower compared to the previous year mainly due toa smaller contribution from the substrate activities,
which were impacted by subdued demand from thespace photovoltaics and LED segments. Demand for
germanium tetrachloride and infrared finished optics
remained stable.

Umicore Integrated Annual Report 2018

ECONOMIC REVIEW

20RECYCLING

RECURRING EBITDA

RECURRING EBIT

RETURN ON CAPITAL EMPLOYED (ROCE)

Millions of Euros

Millions of Euros

%

300

160

35

140
‘14 | 208.7‘15 | 204.3‘16 | 187.2‘17 | 188.9‘18 | 194.7

200

100

30

120

‘14 | 148.6‘15 | 141.5‘16 | 124.9‘17 | 127.9‘18 | 134.8

100
80
60
40
20

0

‘14

‘15

‘16

‘17

‘18

Excluding the impact of the sale of the European
activities of Technical Materials in January 2018,
revenues and recurring EBIT increased 6% and 12%
respectively, reflecting the growth in processedvolumes and somewhat more supportive metal
prices in Precious Metals Refining.
Recycling remained a premium return business due
to its unique business model and service offering.
The increased ROCE in 2018 includes the effect ofthe divestments of the European operations ofTechnical Materials.
Revenues and earnings for Precious Metals Refining
were considerably higher, primarily driven by higher
processed volumes, despite the impact of the firein the Hoboken plant on 12 September 2018, and asomewhat more supportive metal prices for certain
PGMs (Platinum Group Metals) and specialty metals.

0

31.4

30.7

25

26.3

25.8

‘16

‘17

27.9

20
15
10
5

‘14

‘15

‘16

‘17

‘18

Processed volumes were higher despite the fire in the
Hoboken plant. The fire occurred at one of the off-gas
cleaning facilities which was shut down for clean-up
and repair until mid-January 2019. While operations inother parts of the plant were unaffected, the overallthroughput rate was impacted. This resulted in lower
volume growth and a temporary increase in working
capital at year-end. The enhanced performance ofthe smelter meant that its maintenance shutdown
was rescheduled to early 2019, further contributing
to the volume growth in 2018.

The
environmental
investments
to revamp the lead refinery
were completed in 2018 andyielded immediate and significant
emissions reduction.
The supply mix was broadly unchanged. While theavailability of complex industrial by-products andend-of-life materials was supportive for the ramp-up,
commercial terms in some segments continued to be
impacted by competitive pressure.

0

‘14

‘15

‘18

Excluding the impact of the divestment of theEuropean Technical Materials, revenues for Jewelry &Industrial Metals remained stable. The performanceof the product businesses remained strong, inparticular for industrial applications, despite
competitive pressure and a lower availability ofsilver-containing scrap which affected the refining
and recycling activities. Order levels for jewelry
products remained stable. The construction of the
facility in China for equipment used in the special
glass industry is nearing completion and will becommissioned in Q1 2019.
The earnings contribution from Precious Metals
Management increased year-on- year, mainly as aresult of favorable trading conditions for most PGMs.
The demand for the physical delivery of metals was
also strong, reflecting higher demand for silver andother industrial metals, and a recovery in demand
for gold investment bars in the second half of 2018.

Umicore Integrated Annual Report 2018

ECONOMIC REVIEW

21

FINANCIAL REVIEWNON-RECURRING ITEMS
Non-recurring items had a negative impactof € 14 million on EBIT for the full period.
Restructuring charges accounted for € 14 million andwere mainly related to the plan to end industrial
activities in Guarulhos, Brazil and transfer themto the existing site in Americana. Impairments onpermanently tied-up metal inventories accounted fora € 6 million charge and are largely linked to a lower
cobalt price at the end of the period. These charges
were partly offset by non-recurring income including
the gain on the sale of the European operations ofTechnical Materials. The negative impact of the
non-recurring items on the net result (Group share)amounted to € 9 million.
Umicore has adopted IFRS 9 Financial Instruments asof 1 January 2018 which replaces the provisions of IAS
39 on accounting and classification of financial assets
and liabilities, financial instruments and hedging.
Therefore, Umicore no longer applies IAS 39 and nolonger reports an IAS 39 effect.
FINANCIAL RESULT AND TAXATIONNet recurring financial charges totaled € 69 million,
up compared to the previous year. Net interest
charges increased as the € 690 million mediumand long-term debt was drawn down for the entire
period. The accelerating growth in Asia also resulted
in higher funding in local currency and higher
forex costs.
The recurring tax charge for the period amounted
to € 107 million, increasing in line with the higher
underlying operating result and corresponding to asomewhat lower recurring effective tax rate of 24.4%
vs 25.7% in 2017. The total tax paid in cash over theperiod amounted to € 127 million.

CASHFLOWS

Cashflow from operations beforechanges in working capital increased
to a record level of € 800 million.
Most of this cash flow was used
to fund a € 707 million increase inworking capital.
This increase resulted from the business expansion
and higher prices for certain metals, in particular in
the Energy & Surface Technologies business groupthat accounted for more than two thirds of Umicore’s
working capital increase.
Capital expenditures totaled € 478 million, up from€ 362 million (excluding Discontinued Operations) in
2017, with the Energy & Surface Technologies businessgroup accounting for two thirds of this amount.
The capex spending in 2019 is expected to be higher
than in 2018, driven by the greenfield expansions
underway in Rechargeable Battery Materials, thecapacity expansions in Catalysis and the investments
to be carried out during the extended shutdown
in Hoboken. Acquisitions and divestments accounted
for a net cash outflow of € 95 million. This includes
the increase in Umicore’s stake in its Chinese cathodematerial production entity to 90% and the acquisitionof Materia’s metathesis catalysts business partly
offset by the proceeds from the sale of the European
operations of Technical Materials, all of which took
place in the first half of the year.

FINANCIAL DEBTNet financial debt at 31 December 2018 stood at €861 million, up from € 840 million at the start of theyear. This reflects the € 881 million net proceeds fromthe February capital increase and the net free cash
flow from the period. The majority of the outstanding
financial debt is composed of the € 690 million longterm private debt placements in Europe and theUnited States.

Net financial debt at the end of theperiod corresponded to 1.2x recurring
EBITDA
which
leavesamplebalance sheet room to execute thegrowth strategy.
Group shareholders’ equity stood at € 2,609 million
resulting in a net gearing ratio (net debt / net debt +equity) of 24.4% compared to 31% end of 2017.

Dividends paid to Umicore shareholders over theperiod amounted to € 175 million and the net cash
outflow related to the purchase of treasury shares tocover stock options and share grants was € 79 million.

Umicore Integrated Annual Report 2018

ECONOMIC REVIEW

22

Investing in Umicore€

0.75

GROSS DIVIDENDTOTAL NUMBER OF ISSUED SHARES
2018
Total shares issued as at 31 Decemberof which treasury shares

€

1.36

EARNINGS PER SHARE (+14%)

RETURNS TO SHAREHOLDERS

246,400,000– 1st in Materials sector, 13th overall

1.4

5,356,583

1.2

241,043,417

1.0

Weighted average number ofoutstanding shares

239,202,537

Adjusted weighted average number ofoutstanding shares

CARBON CLEAN 200

1.6

of which shares outstanding

Potential dilution due to stock option plans

INDICES & RATINGS

Recurring
EPS (€/share)
Dividend(€/share)
Payout ratio

0.8
0.6
0.4

2,484,056

0.2

241,686,593

0Investing in Umicore is an investmentin producing materials for a better
life – our mission – and supporting
our strategy.
We have a strong capital structure with ample
funding headroom to execute our growth strategy.
Indebtedness is kept at low levels to retain theequivalent of an investment grade credit status.
THE UMICORE SHARE
Umicore shares are listed on the Euronext stock
exchange. On 8 February 2018 Umicore successfully
placed 22,400,000 new shares with institutional
investors, resulting in net proceeds of € 881 million.
On 12 February 2018, the new shares were admitted
to trading on Euronext Brussels and as a result, thetotal number of outstanding and fully paid-up shares,
and the number of voting rights, are 246,400,000.

‘14

‘15

‘16

‘17

‘18

Umicore bought back 1,958,988 of its own sharesin 2018. During the year, 1,037,470 shares wereused in the context of exercised stock options.
On 31 December 2018 Umicore held 5,356,583 sharesin treasury, representing 2.17% of the Group’s
outstanding shares.
SHAREHOLDER RETURNS
Umicore’s policy is to pay a stable or gradually
increasing dividend. There is no fixed pay-out ratio.
The Board of Directors will propose a gross annual
dividend of € 0.75 per share at the annual shareholders’meeting. Considering the interim dividend of € 0.35
per share paid out on 28 August 2018 and subject toshareholder approval, a gross amount of € 0.40 per
share will be paid out on 2 May 2019.

ECPI– EMU Ethical Equity– World ESG Equity– Global Megatrend 100– Euro ESG Equity

FORUM ETHIBEL– Sustainability Index Excellence Europe– Sustainability Index Excellence Global– Ethibel PIONEERFTSE RUSSEL– FTSE4GOOD– FTSE Environmental Opportunities
Index Series

MSCI– MSCI BELGIUM IMI INDEX– ACWI Sustainable Impact Index (7th)– Global Pollution Prevention Index (1st)– AAA ESG Rating (Leader)

VIGEO EIRIS– Eurozone 120– Benelux 20

Umicore Integrated Annual Report 2018

ECONOMIC REVIEW
Every few years Umicore organizes Capital Markets
Days to update our investors and analysts with indepth presentations on topics relevant to Umicore’s
strategy. Our current Horizon 2020 growth strategy
was introduced at our Capital Markets Days in 2015.
On June 6th and 7th of 2018, as Umicore passed the
mid-point of the Horizon 2020 strategy, we held
Capital Markets Days in Seoul, Korea under thetheme “Powering Ahead”.
At the event, management presented a strategic
update on Horizon 2020 with a special focus on
Umicore’s unique position in today’s and tomorrow’s
clean mobility materials. More than 70 investors andanalysts from all over the world travelled to Seoul,
and close to 200 viewers followed the webcast,reflecting increased interest from the financial
community in learning about how Umicore is leading
the way in clean mobility.
During the event, CEO Marc Grynberg reflected on the
key milestones already achieved since the launch of
Horizon 2020 and provided an update on the everstrengthening megatrends that drive Umicore’s
key businesses.

23

Pascal Reymondet (EVP Catalysis) and Kurt
Vandeputte (SVP Rechargeable Battery materials)
further elaborated on Umicore’s leadership position
in automotive catalysts and rechargeable battery
materials and how technology and environmental
regulations will drive growth for their respective
businesses in the coming years.
Denis Goffaux (former CTO and current EVP Energy& Surface Technologies) provided further insights on
Umicore’s long-term innovation roadmap in clean
mobility materials and how Umicore’s technologicalflexibility provides answers to the mixed challenges
in terms of future drivetrains by covering all thetechnological bases.
We also invited the participants to join us on guided
tours of our state-of-the-art cathode materials
production plant in Cheonan and our automotive
catalyst technology development center in Incheon,
both near Seoul.

These visits gave the participants a
unique opportunity to engage withmanagement, and gain tangible
insights by seeing how Umicore isdelivering leadership in clean mobility
and seeing the reality of our R&D andproduction assets on site.

SEOUL, KOREAVISIT INVESTOR RELATIONS ONLINE

Umicore Integrated Annual Report 2018

24

Value chain and society
2020 Target
SUSTAINABLE
SUPPLYSUSTAINABLE
PRODUCTS & SERVICESKEY RISKS & OPPORTUNITIESSecure materials supply
and promote our closed loop business offer.

1

Regulatory and legal context

2 Sustainable and ethical supply
3 Technology and substitution

Develop products that create
sustainable value for our customers and society.

4Market7

Climate & Environment

SEE RISKS ON PAGE 41

CASE STUDY

Bringing the world of sustainable
technologies to schools
As a technology-oriented business, Umicore
has particular interest in the next generation of
innovators.  
Stimulating scientific interest andchallenging young people to think about innovation
are important links in building a sustainable future.

VISIT ANNUALREPORT.UMICORE.COM

Students exploring Umicore infrared optics technology in Olen, Belgium

Umicore Integrated Annual Report 2018

25

Value chain and society
WE AIM TO LEVERAGE OUR SUSTAINABILITY APPROACH IN THE VALUE CHAIN,
BOTH UPSTREAM WITH OUR SUPPLIERS AND DOWNSTREAM WITH OUR CUSTOMERSCLEAN MOBILITY & RECYCLING REVENUES
%
100
90
80
70
60
50
40
30
20
10
0

65

‘16

67

‘17

Umicore’s efforts in the field of ethical sourcing can
generate a competitive edge for the company.

72

Downstream, we have a strong portfolio of products
and services that offer specific sustainability
advantages to our customers and society.

‘18

We use this long-standing and growing
experience in ethical sourcing andsustainably managing raw materials to
advocate for better practices.

Our success is measured in our ability
to provide environmental and ethicalsourcing benefits of scarce raw
materials and to deliver products andservices that create sustainable value
for our customers and society.
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 emphasis on
the management of key raw materials supply
requirements. We have also sought to ensure thatIn 2018, Umicore played a leading role in several efforts
to advance industry practices, including with the Cobalt
Institute, where Umicore supported the developmentof the Cobalt Industry Responsible Assessment
Framework (CIRAF) which is a management framework
for risk assessment and mitigation, aiming at ensuring
responsible cobalt production and sourcing.
Within the World Economic Forum’s “Global Battery
Alliance”, Umicore took a leading role in the circular
economy working group that, in 2018, focused on
finding and analyzing the gaps to close the battery
loop. We also contributed to another important project
within the Global Battery Alliance that aims to develop astandard for Artisanal Small-scale Mining to ensure thatthe cobalt extraction industry is free of child labor.
For more information on our partnerships and workwith civil society, see Stakeholder Engagement p.63.

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, thatthey 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, whichmakes them the basis for sustainable products andservices. We want Umicore to be a leader in providing
and creating material-based solutions to contributeto fundamental improvements in the quality of life.
To ensure our activities are conducted in line with
the Umicore Way, we have adopted policies including
the Umicore Code of Conduct, Human Rights Policy,
Sustainable Procurement Charter.
Umicore fully supports the United Nations Universal
Declaration of Human Rights. We are committed to
uphold fundamental human rights and respect thoserights in conducting our operations throughout theworld. Our commitment to respecting Human Rights andWorking Conditions applies to all Umicore employees,
all subsidiaries and joint ventures where we haveoperational control, and to all subcontractors working
on our sites.
Our success depends on a relation of trust andprofessionalism with employees, commercial partners,
shareholders, government authorities and the public.
These principles are embedded in our Code of Conduct
which sets the framework for ethical behavior andrespect of the rule of law, including regarding anticorruption and bribery.

Umicore Integrated Annual Report 2018

VALUE CHAIN & SOCIETYSUSTAINABLE & ETHICAL SUPPLY
As a global materials technology and recycling group,
we purchase and recycle minerals and metals foruse in a wide range of products and technologies.
For our operations to function, we need raw materials,
transportation, energy and other goods and services.
Sustainable procurement is a key driver in Umicore’s
Horizon 2020 aspiration to make sustainability into acompetitive edge.
We have developed a Sustainable Procurement
Charter based on our vision and values as outlinedin the Umicore Way to reflect our commitment tosustainable development in all areas of procurement.
The Charter outlines our commitment to fair dealing,transparency and communication, health and safety,
and our efforts to include smaller sized and local
suppliers in our procurement processes wherever
possible, to support local economies where
we operate.
In return, we expect our suppliers to be committed
to business integrity, to promote the principles ofsustainable procurement in their supply chain, tobe compliant with local environmental laws and torespect international human rights law on their own
sites and from their own suppliers, including to abolishchild and forced labor and eliminate discrimination.
Overall, we have over 18,000 suppliers worldwide
to which we paid over € 8.5 billion (including themetal content of raw materials) in 2018. Umicore’s
Purchasing & Transportation teams worldwide
manage indirect procurement processes for energy
and other goods and services (accounting for 10% of
our spend) while the metal-bearing raw materials arepurchased directly by the business units (accounting
for 90% of our spend). In 2018, EcoVadis continued
to assess indirect procurement streams for Umicore.

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 decentralized approach to risk andopportunity management.
In some regions of the world, exploitation ofnatural resources is used to fund conflict or can beassociated with violations of human rights. We aredetermined to ethically and sustainably secure acompetitive edge in our approach to critical raw
materials. Considering our commitment to support
and contribute to the respect of human rights andethics in business, we have developed a Responsible
Supply Chains Of Minerals From Conflict-Affected
And High-Risk Areas policy based on the current
OECD Guidelines.

Umicore continues to ensure that gold
production operations are certified asconflict-free.
Our customers are increasingly requesting suchguarantees and we provide them with the necessary
documentation to assure the conflict-free status ofour products. Our Hoboken and Guarulhos sites are
certified as conflict-free smelters by the London
Bullion Market Association (LBMA), and in 2018,
our Hoboken smelter successfully passed the LBMA
voluntary conflict-free silver audit of its 2017 activities.
For more information on our many accreditations see
Statements, note V3.
For over a century Umicore has been a world leader
in cobalt products, used in many applications, fromtooling to rechargeable batteries for electric cars.
Some reserves of cobalt ore are in regions fraught

26

with challenges, giving rise to unethical practices
such as forced labor, poor health and safety
conditions, child labor and corruption.
For us, sustainable procurement of cobalt means
considering economic, environmental and social
performance of our suppliers, and the social andenvironmental impact of the supply, in the purchaseof materials. To source cobalt, we have implementeda pioneering Sustainable Procurement Framework for
Cobalt and were the first to obtain external validation
for its approach in this area.
To ensure the traceability of materials in our supply
chain we carry out detailed research and risk
assessments of our suppliers. This includes visiting
plants, screening policies and procedures and,if required, developing improvement programs.
In 2018, Umicore again performed due diligence
activities for all its purchased cobalt materials usedin rechargeable batteries, tools, catalysts and several
other applications.
Umicore obtained, for the fourth year in a row,third-party assurance from PwC that our 2018 cobalt
purchases are carried out in-line with the conditions
set out in the Framework. Our yearly reporting on due
diligence activities is not only unique to Umicore, butalso reflects a high level of pro-active transparency.
The share of cobalt from recycled origin was also
reviewed by PwC as part of the assurance process
and was 6.1% for 2018.
The compliance report for 2018 can be downloaded
at https://www.umicore.com/en/cases/sustainableprocurement-framework-for-cobalt/

Umicore Integrated Annual Report 2018

VALUE CHAIN & SOCIETY

27

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 andservices is on activities that provide solutions to themegatrends of clean mobility and resource scarcity.
We developed an indicator to underline our focus onclean mobility and recycling. In 2018, the revenues
from activities that deliver products or services thatare directly linked to one of these megatrends was
71.8% of 2018 Group revenues, up from 67.2% in2017. The increase is the result of higher activity bothin recycling and clean mobility. As we work towards
the Horizon 2020 goals, we expect this percentage tocontinue to increase.
Many of the materials and services making up theremaining 28.2% of revenues provide answers tospecific societal needs such as improved connectivity(materials for high quality glass, displays) or reduced
energy consumption (materials for use in energyefficient lighting such as LEDs).

We develop specific sustainability
solutions for our products and theirapplications by working closelywith customers.
Typically, these developments focus on reducing
product risks and hazards and increasing material

Exploded view of battery pack used in electric vehicles

At Umicore Rechargeable Battery Materials weprovide our customers with the best cathode active
material, which leads to greater mobility and a
reliable source of energy.
1 in 5 Li-ion batteries ever produced for portableelectronics contains Umicore materials. Our materials
are also used in the automotive industry to reduce
CO 2 emissions and increase driving range.

Our integrated business model allows us to control
our product from the receipt of raw material, overthe precursor, up to the final cathode active material.
Umicore offers an environmentally responsible andcommercially attractive recycling solution for the
products we put on the market. Our unique Closed
Loop illustrates our passion and commitment to
the environment.

efficiency in the delivery or the use of our products.
See more about our efforts in this area, including ourapproach to international regulatory compliance (i.e.
REACH) see Statements, note V5.

VISIT UMICORE.COM/INDUSTRIES

Umicore Integrated Annual Report 2018

VALUE CHAIN & SOCIETY

Umicore seeks to contribute to thewell-being of the communities
in which it operates and to be a
responsible corporation and good
corporate neighbor.
In this context, Umicore supports several causes bothfinancially and by making time and talent available.
Umicore channels resources to sponsorships anddonations with each business unit expected toallocate an annual donations budget based on
an internal framework that promotes stable andlonger-term commitments, irrespective of the wider
economic environment.  

Giving back to society
VISIT ANNUALREPORT.UMICORE.COM

Umicore believes that by empowering Umicore sites
for local sponsorship and donation initiatives, it will
make a positive difference in the communities in which
it operates, beyond the direct benefits generated by
employment and local taxes. Umicore’s support may
include contributions in kind and releasing staff towork on community-related projects.
While sites determine the specific focus of theirown initiatives, the general focus is on supportingand promoting a strong social fabric in thecommunity around the site, with priority given to
educational initiatives.  

Educational initiatives are particularly
relevant for Umicore as a technologyoriented business and provide an
excellent way of engaging withyoung people in the community andreinforcing links between Umicore andits neighborhood.

28

At corporate level, the emphasis is on projects withan international scope. Priority is given to initiatives
with a clear educational component and that linkwith sustainable development (social, environmental
and/or technological).  
PARTNERING FOR IMPACT
Quality education for all is one of the main objectivesof UNICEF, with which Umicore has had a long-term
partnership since 2011, committing to 2 specificchild-education projects in India and Madagascar.
Despite impressive achievements and tireless work,
big efforts are still needed to ensure that every childhas access to quality education in both countries.
UNICEF is doing a remarkable job by acting in the field,
hand in hand with local authorities. Our partnershiptranslates into very concrete actions such as theconstruction of schools or the improvement ofeducation systems.
In addition, Umicore is a founding memberof Entrepreneurs pour Entrepreneurs/ Ondernemers
voor Ondernemers which pairs corporate donors
with development charities that focus on promoting
entrepreneurship in the developing world. Over theyears, Umicore and Entrepreneurs for Entrepreneurs
have supported work in Bolivia, Cambodia, Congo,
Ecuador, Haiti, Mali, Togo and more.  
Umicore also aims to contribute to disaster relief
wherever it may be needed, with a long-termand stable commitment through partnerships
with UNICEF and Doctors without Borders/Médecins sans Frontières.
These combined efforts around the globe support us
in our ambition to be a responsible company and to
give back to society.

Umicore Integrated Annual Report 2018

29

Eco-efficiency
2020 Target
EFFICIENTOPERATIONSKEY RISKS & OPPORTUNITIES
Increase value through efficient useof metals, energy and other inputs.

1

Regulatory and legal context

3 Technology and substitution
7

Climate & Environment

SEE RISKS ON PAGE 41

CASE STUDY

Innovation for a
Sustainable Future
Umicore plays a key role in transitioning to a lowcarbon future as our products deliver solutions forcleaner air and increased e-mobility, while we turnwaste metals into a resource.

VISIT ANNUALREPORT.UMICORE.COM

In line with our Horizon 2020 strategy, we focus ourresearch and development efforts on technologies
that address the key global challenges of clean air,electrified transport and resource scarcity.

Umicore Employees in Rayong, Thailand

Umicore Integrated Annual Report 2018

30

Eco-efficiency
WE AIM TO OPTIMISE THE SUSTAINABILITY PERFORMANCE OF OUR OWN OPERATIONS, FOCUSING ON ENERGY EFFICIENCY-

29%

ENERGY CONSUMPTIONNORMALIZED ENERGY CONSUMPTION

R&D EXPENDITURE%

Millions of Euros

100

100

79

80

-

46%

METAL EMISSIONS TO AIR

250

94
71

‘14 | 143.3‘15 | 144.5‘16 | 155.9‘17 | 175.2‘18 | 196.4

150

60

100

40

50

20
0

200

‘15

‘16(1)‘17(2)

‘18

0

‘14

‘15

‘16

‘17

‘18

(1) and (2) see note E4 in Environmental Statements-

71%

METAL EMISSIONS TO WATER

Our success is measured in our ability to makesustainability a competitive advantage by being
increasingly energy and material efficient comparedwith our 2015 baseline.
As part of our commitment to sustainability, wetake into account the environmental impact of ouroperations, and strive to continuously improve
our environmental performance, implement risk
management strategies based on valid dataand sound science, actively participate in the
management and remediation of risks that are theresult of historical operations and facilitate andencourage responsible design, use, re-use, recycling
and disposal of our products.

As a materials technology company, we aim to drive
an even more efficient use of metals, energy and other
inputs in our operations to balance environmental
and economic factors and work to increase closedloop relationships with our customers.
Umicore is a world leader in the eco-efficient recycling
and refining of precious metal bearing materials suchas by-products from other non-ferrous industries,
consumer and industrial recyclable product. Our ecoefficient process entails maximizing both the physicalrecycling of materials and the revenue obtained, while
minimizing the associated environmental burden
and total cost. We recover and sell precious, special,secondary and base metals and our closed-loopbusiness model maximizes material re-use.

This ambition to address increasing global resource
scarcity and achieve material efficiency is an
important factor in our strategy. In 2018, despite an
ongoing expansion and capacity ramp-up requiring
additional primary raw materials, we still secured
over half our materials supply from non-primarysources: 58% of the materials we used were fromend-of-life or secondary origin, while 42% were ofprimary origin.
In our Horizon 2020 strategy, we defined energy
efficiency and metal emissions reduction as key
eco-efficiency performance indicators. We pursue
eco-efficiency initiatives to generate compelling
value and a competitive edge through reduced costs,
minimizing our carbon footprint and strengthening
our license to operate. In addition, we believe that it
is equally important to continuously monitor, control
and report our performance in relation to otherenvironmental aspects.
This year, we have included new content on our
Research, Development and Innovation efforts.
We are consistently investing in research toinnovate in clean mobility and sustainability.
Umicore prioritizes R&D to support our Horizon
2020 ambitions by focusing on the development ofinnovative solutions for materials and processes.
Our ability to create a pipeline for these innovations
and solutions is an important component of our longterm eco-efficiency performance.

Umicore Integrated Annual Report 2018

ECO-EFFICIENCY
ENERGY EFFICIENCY

Umicore plays a key role in thetransition to a low-carbon society.
We produce rechargeable battery materials for
EVs, catalysts for reducing transport and industrial
emissions, and contribute to resource stewardship byrecycling metals and end-of-life products in a closed
loop. In our own operations, we are committed toachieving further energy efficiency compared to our2015 levels.
Energy consumption is continually monitored andregulated at all sites. The bigger contributors are
additionally encouraged to develop energy efficiency
projects and are required to report on them.
In 2018, 28 sites accounted for 95% of the Group’s
energy consumption with a total of 42 energy
efficiency projects implemented over the course of
the year. By the end of the year, Umicore had achieved
a 29% reduction in energy consumption compared to
the 2015 baseline, correcting for production intensity.
This result is the combination of improvements
in productivity and the implementation of energy
efficiency projects.
Several Umicore sites have implemented the ISO
50001 energy efficiency standard and the twolargest sites in Belgium have been part of the energy
efficiency covenant with the Flemish government
since 2004.
Due to added capacity and higher activity levels
across several sites in our Rechargeable Battery
Materials activities, Recycling activities and new
Automotive Catalysts acquisitions, the total marketbased CO 2 e emissions increased 21% in comparison
with 2017.

METAL EMISSION REDUCTION
TO AIRMETAL EMISSION REDUCTION
TO WATER

%

%

100

100

80

100

59

54

60

40

40

20

20

0

‘15

‘16(3)

99

80

70

60

100

31

‘17(4)

‘18

0

‘15

‘16(1)

31

29‘17(2)‘18(3) and (4) see note E2 in Environmental Statements(1) and (2) see note E2 in Environmental Statements

METAL EMISSIONS
We monitor and take steps to reduce the impact
of metals emissions on the environment – both towater and air. Each of the different metals that weemit has a specific level of potential toxicity for theenvironment and human health. For this reason, we
focus on reducing the impact of our emissions.

Compared to 2015, after correction for activity levels,
the impact of emissions to water in 2018 fell by
71%, largely due to the increased efficiency of thewastewater treatment facility at our Hoboken site.

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 theiractivity level. Monitoring continues on all sites.

Regarding impact of metal emissions to air,considering activity levels, we achieved a reductionof 46% in 2018 compared to 2015, mainly due toimproved filtration, reduction in load in a few sites
and process efficiency with a focus on metals withhigh impact.
For more, see Statements, note E2.

Over 95% of the impact of metal
emissions to water and air is the resultof production activities on 10 or fewersites, confirming that most of oursites do not have a significant metal
emissions impact.

Umicore Integrated Annual Report 2018

ECO-EFFICIENCY32

STEWARDSHIP
Umicore is a global company with a global footprint.
In terms of our products and services, we are uniquely
positioned to address global megatrends namely theneed for cleaner air and resource stewardship, andenvironmental performance and safety are at theheart of our process designs.
Umicore continues to provide advanced emission
control and battery material technologies while
advocating for a ramp-up of clean energy and clean
mobility technologies.  
We also emphasize thelinks between a Circular Economy and responsible
sourcing, resource efficiency, waste management
and high-quality recycling. We believe that we turnsustainability into a greater competitive edge throughour unique business model and our commitment toethical and responsible sourcing.
Part of our commitment to sustainability, as statedin The Umicore Way, is to take into account theenvironmental impact of our operations with growing
and expanding capacity. Many factors are consideredin choosing to build new sites or to expand existingsites. Our new site in Nysa, Poland, for example, wasselected for its vicinity to our European customers(providing reduced transport impact of our products)
and a skilled technical workforce, as well as lowcarbon electricity supply. The Nysa site will make useof windmills, hydro-energy and photovoltaics.
Active participation in the management andremediation of risks from operations is an integral
part of the Umicore Way. Our proactive program forassessing and remediating, where necessary, soil
and groundwater contamination progresses tirelessly
year-on-year.

Umicore employees at our site in Pilar, Argentina.

PROCESS WATER EFFICIENCY: UMICORE ARGENTINA CLOSED THE LOOP FOR COOLING WATER
In January 2018, our Precious Metals Chemistry site in
Pilar, Argentina completed the construction of a closed
loop system for the site’s cooling water.
Previously, water at the site was drawn directly froman underground well and fed directly to condensers andthermoregulators, as well as two 90m3 storage tanks,
which in turn pumped water to cool other condensers
and machinery. All the water was discharged directly
after use. As production began to grow, so did the waterrequirements, and the site considered replacing the wellpump to increase the flow.

Instead, a collaborative project team bringing together
Umicore teams from Argentina, Brazil and Germany
worked to create a closed loop for cooling water in Pilar.
By closing the water loop and adding a new cooling tower
and 2 new chillers, the plant now has a continuous supply
of cooling water while significantly reducing water use
and discharge.
Thanks to the new closed loop for cooling water, our Pilarsite reduced water use over 97.8% year on year (from226,000 m³ in 2017, down to 4,800 m³ in 2018).

VISIT UMICORE.COM/INDUSTRIES

Umicore Integrated Annual Report 2018

ECO-EFFICIENCYAs a materials technology company, our future
success and sustainability depend on our ability
to develop and market innovative products andservices. We strive to meet the needs of a rapidlychanging world and continuously search for new
solutions for our customers. We dedicate ourresearch and development (R&D) to solving some of
the world’s largest societal challenges in the areasof clean mobility and clean air, resource scarcity
and sustainability.

Research,
Development& Innovation

33

work includes silicon-based anode materials, cathodematerials for Li-ion and solid-state batteries and fuelcell catalysts.

Technology is at the core of our success.

In 2018, Umicore invested € 196 million in R&D, €21 million more than in 2017, driven by a higher
level of R&D in Catalysis and in Energy & Surface
Technologies. The R&D spend represented 6%of revenues and capitalized development costs
accounted for € 20 million. Intensified R&D efforts
resulted in a 56% increase in the number of patentfamily filings compared to 2017.

From production and process technology to deep
knowledge of metallurgy and materials science,a significant part of our technology is delivered
using Umicore R&D findings. Umicore also develops
technology in collaboration with industrial or
academic partners and, where appropriate, we
protect our intellectual property with patents.

The higher R&D expenditure in Catalysis was mainly
associated with new product developments to help
customers meet upcoming emission regulations in
Europe and China, which require a broader rangeof more technologically advanced automotive
catalysts such as gasoline particulate filters and NOx
abatement systems.

We have prioritized our R&D programs to support
our Horizon 2020 ambitions with a focus on thedevelopment of innovative material and processsolutions. Every year, the Executive Committee
identifies innovation projects (“Top 10”) in productand process developments which are key to achieving
future growth ambitions.

R&D efforts in Energy & Surface Technologies wereprimarily driven by programs aimed at developing
new product technologies to deliver higher energy
density, faster charging times and lower costs.

We are working to meet growing demand byconsistently investing in research for clean mobility
and to secure future success and sustainability
through innovation. Umicore’s technology roadmap
includes programs covering short-, mid- and longterm research horizons for cathode and composite
anode materials and for solid state technologies, also
including innovative production processes.

In our refining and recycling activities, newmetallurgical processes to further reduce CO 2
footprint and waste streams are under development.
Process flows based on recycling streams such as
spent automotive catalysts and end-of-life batteries
are being addressed.

We are committed to technology
innovation to maintain our competitive
lead with an R&D organization fit todeliver our future growth.

Our work focuses on improved catalyst materials forgasoline and diesel vehicles to meet increasingly
stringent regulations. For battery materials, current

Umicore Integrated Annual Report 2018

34

Great place to work
2020 Target
HEALTHSAFETYPEOPLEENGAGEMENTKEY RISKS & OPPORTUNITIES
6

Become a zero-accident workplace.

Talent attraction and retention

Reduce employee exposure to specific metals.

Further improve people engagement with specific focus
on talent attraction & retention, diversity management
and employability.

SEE RISKS ON PAGE 41

CASE STUDY

Introducing the
Umicore Awards
The Umicore Awards were launched as a new global
initiative to reward and recognize high-performing
teams and individuals who make a real anddiscernible impact on our business success.

VISIT ANNUALREPORT.UMICORE.COM

This recognition program was designed to celebrate
and strengthen the winning culture that defines
our organization in every area, at every level.
and strengthen the winning culture that defines ourorganization in every area, at every level.

2018 Umicore award-winner In-Sik Choi

Umicore Integrated Annual Report 2018

35

Great place to work
THE LONG-TERM SUCCESS OF UMICORE DEPENDS ON OUR BEING A SAFE, HEALTHY AND ENGAGING PLACE TO WORK

10,420
GROUP EMPLOYEESTOTAL WORKFORCEWORKFORCE BY REGION

16,000Fully
consolidated Associatedcompanies
companies‘14 | 3,706‘14 | 10,368‘15 | 3,301‘15 | 10,429‘16 | 3,196‘16 | 9,921‘17 | 3,360‘17 | 9,769‘18 | 3,180‘18 | 10,420

12,00092.8%
RETENTION RATEWORKFORCE BY BUSINESS GROUP

N°

8,000
4,000
0

‘14

‘15

‘16

‘17

10%
2%

28%

55%
7%

EuropeNorth America
South America
Asia-Pacific
Africa

8%

30%
27%

Catalysis
Energy &Surface Technologies
Recycling
Corporate

33%

‘18

Our success is measured in our ability to offer asafe workplace and embed a safety culture in
our workforce, to monitor, manage and protect ouremployees from exposure risks, to ensure Umicore’s
status as an employer of choice in all the regions
where we operate and to manage talent as a driverfor reaching our desired business growth.
We are proud of our position as a pioneer and world
leader in materials technology and sustainability, but
in an industry as disruptive as ours, we know weneed to keep innovating, challenging ourselves andgrowing, both as a company and as an employer.
We strive to create an environment in which all our
employees can succeed, and which encourages
innovation, thrives on collaboration, rewards
contribution and provides every employee with theopportunity to develop.

The varying ambitions and interests of our colleagues
and new recruits enrich Umicore with new outlooks
and new ways of working together which build ourcompetitive advantage.

Our values and mutual respect remain
consistent as we all work towards thesame vision: to create materials for abetter life.
Umicore has a truly global profile, with operations on
every major continent. There are 10, 420 employees
currently working at Umicore, across 48 production
sites, 14 research & development centers as well as insupporting offices including our global headquarters
in Brussels.

Our Horizon 2020 strategy is designed to consider
the evolution of Umicore, the labor market andsocietal expectations. Our objectives are centered onhealth and safety, talent management, diversity andemployability –aspects that will have the greatest
impact on reaching Horizon 2020 goals.
Despite competitive markets we are making strides
in talent management, diversity and employee
engagement. We continue to pursue and ourchallenging goals of eliminating lost-time accidents
and occupational-related ill-health and we continue
to seek new ways to engage colleagues by promoting
safety and wellbeing in the workplace.

Umicore Integrated Annual Report 2018

GREAT PLACE TO WORKLOST TIME ACCIDENTSEXPOSURE RATIO‘ALL BIOMARKERS AGGREGATED’

80

4.0

HEALTH & SAFETY

51

47
40

61

59

60

2.7

2.8

2.3

37

2.0

1.8

1.0

20
0

3.2
3.0

‘14

‘15

‘16

‘17

‘18

ZERO ACCIDENTS
One of Umicore’s Horizon 2020 environmental andsocial objectives is to aim to be a great place towork, with all business units expected to contribute.
Priorities include driving towards zero accidents andreaching the occupational metals exposure target ofzero excess readings.
The safety of our people is a key priority for
management. Nevertheless, the safety performancein 2018 was disappointing. The Group recorded 61
lost time accidents in 2018 compared to 51 in 2017(excluding the Building Products business unit, which
was divested in September 2017). The frequency rate
was 3.36 and the severity rate was 0.10 (compared
to 3.01 and 0.09 respectively in 2017 – excluding
Building Products).

0

‘14

‘15

‘16

‘17

‘18

Our efforts to improve safety performance will befurther stepped up in 2019, with awareness campaigns
and specific programs aimed at changing mindset
and creating a more prominent safety culture.
Process safety became a structural Group EHS
management activity in 2017 through full integration
into the EHS compliance audit program. A dedicated
3-day HAZOP leader training has increased process
safety knowledge throughout our organization.
In 2018, process safety activities focused on executing
process risk assessment studies. At year end, overhalf the production processes had received specificprocess hazard and risk assessments compliant toUmicore standards. A detailed timeline for completionof the remaining studies over the coming years gives
priority to processes with high risk profiles.

36

OCCUPATIONAL EXPOSURE
Umicore makes continuous efforts to eliminate
occupational-related health issues and to promote
wellbeing in the workplace. The main occupational
health risks are related to exposure to hazardous
substances and physical hazards (mainly noise).

Umicore is leading the industry by
setting voluntary, science-based targets
for potentially hazardous exposurethat 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 program.
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 2018, a total of 6,939 biological samples were takenfrom employees with occupational exposure to atleast one of the metals mentioned above (platinum
salts excluded). 195 readings showed a result inexcess of the internal target value, bringing the total
excess rate to 2.8%, comparable to 2.7% in 2017.
All occupationally exposed employees are regularly
monitored by an occupational health physician.

Umicore Integrated Annual Report 2018

GREAT PLACE TO WORK37

TALENT MANAGEMENTWORKFORCE BY REGIONVOLUNTARY LEAVERSRATIO BY REGIONAVERAGE NUMBER
OF TRAINING HOURS PER EMPLOYEEN°%HOURS/EMPLOYEE

6,000

20

50
45
40
35
30
25
20
15
10
5
0

5,000
4,000
3,000
2,000

Africa | 259
Asia-Pacific | 2,922
South America | 678
North America | 838
Europe | 5,723

1,000
0

Talent management involves finding and retaining
the right people at all levels of the organization andin a wide variety of functions, including equipment
operators, laboratory analysts, office staff andproduction engineers. For Umicore the main drivers
are linked to the Horizon 2020 growth ambitions inthe sectors and regions where we are active.
The number of employees in fully consolidated
companies increased to 10,420 at the end of 2018from 9,769 in 2017, in line with Umicore’s growthtrajectory and primarily reflecting new hires in China
and Korea. The recruitment of new colleagues inthese regions, which are characterized by significant
competition for talent, shows that Umicore is an
attractive employer with wide recognition of its
pioneering role in sustainability and in offeringsolutions to societal problems. New colleagues
were also recruited in Belgium for R&D and in the
Hoboken plant.

15
10
5

Africa | 1.54
Asia-Pacific | 16.55
South America | 2.20
North America | 5.86
Europe | 3.75

0Significant regional differences in turnover rates
continue, with Asia Pacific reporting the highest
turnover rate at 16.55%, and South America (2.20%)
and Africa (1.54%) the lowest. The high turnoverrate in Asia Pacific is not unique to Umicore and isdue to the highly competitive and fluid labor market
in the region. In recent years the voluntary leavers
rate increased, with about 39% occurring during thefirst 6 months of employment. Both these factors
are more pronounced in our newer Asia Pacificsites which have seen significant growth, further
underlining the challenge in attracting and retaining
the right people in these areas.

‘14 | 45.59‘15 | 45.06‘16 | 41.49‘17 | 45.33‘18 | 43.10

‘14

‘15

‘16

‘17

‘18

Umicore provides managers with a training
curriculum aligned across all regions and promotes
career development using an internal online
vacancies tool, promoting greater internal mobility.
Training at Umicore encompasses traditionalclassroom-type modules, e-learning, and inservice instruction.
In 2018, the average training hours per employee
reached 43.10 hours, a slight decrease from 2017.
Data show that managers’ training hours (37.59 hours)
are lower than for other employees (42.94 hours).

Significantly, Umicore can attract,develop and retain high caliber leaders
by offering attractive and challenging
leadership roles, supported by suitabledevelopment opportunities.

Umicore Integrated Annual Report 2018

GREAT PLACE TO WORK

38

150

10
5

50
0

9.70

200

6.77

15

100
57%

14.27

250

15.55

20

300

9.09

Employee age < 30 years
Employee age between
30 and 50 years
Employee age > 50 years

15.08

25

350

9.49

24%

21.60
22.11

400
19%

21.92
22.37

%
21.72
22.18

WOMEN AT UMICORE

N°

21.68
21.25

WORKFORCE AGE DISTRIBUTION (1)8.33

WORKFORCE AGE SPLIT

21.30
22.98

DIVERSITY

15

20

25

30

35

40

45

50

55

60

65

70

0

‘14

‘15

‘16

‘17

Amongst all
employees
Amongst all
managers
Amongst senior
management
In “business
operations”
management‘18(1) Employees under 18 are trainees, apprentices or interns.
See note S4 on our commitment against child labor.

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 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.
We are especially seeking broader culturalrepresentation in its management teams. Currently,
17.91% of the top management positions in Umicore
are filled by non-Europeans, a slight decrease
from 2017.

Considering that 60.6% of our revenues are generated
outside Europe and our growing global footprint,
we decided to act to ensure that non-Europeans
are better represented in our senior management.
Our efforts continue, as a better balance in thisregard will enable us to make business decisions thatare better aligned with the markets we serve.
Umicore employees span 71 nationalities, and in 2018,
we counted 37 nationalities among our new hires.
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 21.3% of Umicore’s total workforce
is female), more needs to be done to improve thecareer prospects for talented women within Umicore.

Women in management roles have steadily
increased from 18.65% in 2010 to 22.98%. in 2018,
while women in ‘business operations’ management
functions slightly decreased from 15.55% in 2017 to
15.08% in 2018. These functions tend to provide themost candidates for all senior leadership positions.
Women in senior management increased from 6.77%
in 2017 to 9.7% in 2018. We have set the ambition
to reach 15% of women in senior management
functions by 2020.
The Coaching Circles training program for female
managers in Belgium offers a combination of
mentoring, coaching, training and networking.
This program was developed by the Focus on Women
platform, in support of Umicore’s diversity andinclusion policy with the purpose of making women
more aware of their capacities and stimulating themto take their career actively into their own hands.
In 2018, 17 managers participated in the program.

Umicore Integrated Annual Report 2018

GREAT PLACE TO WORK39

EMPLOYEE ENGAGEMENT

As part of Horizon 2020, People Engagement ishigh on Umicore’s agenda. We are convinced thatengaged and effective employees are key to our
success. The people survey is an important tool that
we use for measuring progress and to define specificaction plans to achieve our goal. In spring this year,
we conducted the seventh edition of our People
Survey. The survey offers colleagues the opportunity
to express themselves freely and give their opinion
on a range of important topics associated with theirwork and Umicore.
The questionnaire is simpler and more efficient thanin previous years. Umicore continues to guarantee
100% privacy, as completed questionnaires were
processed by external supplier Korn Ferry.
Overall participation was at the very high level of
81%, with highest participation in Asia Pacific (93%),
South America (89%) and North America (85%),
reflecting the success of the online approach andmost of all an increasing level of engagement.

Our overall average is now for the
first time above the Chemical Industry
norm and even approaching the High
Performing norm, with clear progress
made in several areas since our last
survey in 2014.
One of the strongest trends is increased confidence
in our future as a company.
The survey also demonstrated that our Employer
Brand Pillars are truly representative of the daily
reality of Umicore. One of the general trends thatemerged was the different pattern of responses
depending on age group and we need to examine
carefully how best to take account of all aspirations.

Umicore Electro-Optic Materials employees in Olen, Belgium.

The 2014 People Survey revealed progress on several
fronts in Electro-Optic Materials’ (EOM) business unit,
except in collaboration. To address this, the iTeam
program was launched to strengthen team collaboration.
Through strong focus on communication and a bottomup approach, EOM scored top class results on all
dimensions surveyed in 2018. Building on this success,
EOM launched a follow up platform, ‘Let’s connect’,through which all employees are connected to the EOMstrategy by translating business, customers, people andenvironmental targets and results to the shop floor.

The breakdown of local results was shared withthe teams on each site which are meant to leadto local action plans. One first approach has been
the long-awaited launch of our new intranet tool,
Umicore Connect, and Umicore will gradually achieve
greater benefit from the digital workplace in generalduring 2019.

Umicore Integrated Annual Report 2018

GREAT PLACE TO WORK
We aim to lead the way for both ourcustomers and our employees.
We strive to create a collaborative environment anda culture of shared ideas, developing expertise andadvancing careers, working together on technologies
that will benefit future generations and setting new
standards in one of the world’s most dynamic anddisruptive industries.
In our state-of-the-art production processes technicaloperators, production supervisors and engineers
use their know-how and ideas to benefit future
generations. Our support teams play a critical rolein supporting the business growth by making sure
our decisions are commercially viable, enhancing our
reputation, building new customer relationships or
finding the right people who can build on what wehave already achieved.

Working
at Umicore
VISIT UMICORE.COM/CAREERSManagers at Umicore work on projects that are
as exciting as they are challenging. R&D experts
develop the technologies that address issues fromclean mobility to resource scarcity.

We seek to ensure career-long learningand development opportunities forour employees and to promote thetransferability of skills and knowledge
across Umicore.
The Junior Management Programme (JUMP) is offered
to a selected group of junior managers using a “twincoaching” format, bringing together two participantsfrom different regions and business units, but within
the same function family, to develop international
thinking, shadow best practices and provide exposure
to other business units.

40

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.
People work longer before retiring, particularly inEurope. Umicore wants to ensure that people who
are working well into their sixties are provided
with suitable, motivating and rewarding work andcan transfer their skills and knowledge to younger
colleagues. This is accomplished by training,
maintaining their mental flexibility to carry out newtasks, managing work-life issues, and providing
support in the transition from employee to retiree.

“Top 100 Best Business Company” Korea

Leading for Excellence (L4E) is offered to a selectedgroup of managers in the Asia Pacific region to drive

Umicore Integrated Annual Report 2018

41

Managing risk effectively
WE TAKE A BALANCED APPROACH TO MANAGING RISK AND SEIZING OPPORTUNITIES TO DELIVER ON OUR STRATEGIC GOALSRISK &OPPORTUNITYSTRATEGIC
FOCUS AREA

1

2

3

4

5

REGULATORY& LEGAL
CONTEXTSUSTAINABLE& ETHICAL
SUPPLYTECHNOLOGY &SUBSTITUTION

MARKETMETAL PRICEECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY
ECO-EFFICIENCYECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETYECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY
ECO-EFFICIENCYECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY

67

TALENT
CLIMATE &ATTRACTION & ENVIRONMENTRETENTION

ECONOMICPERFORMANCEGREAT PLACETO WORKREAD MORE ON PAGE 48

READ MORE ON PAGE 49

VALUE CHAIN
AND SOCIETY
ECO-EFFICIENCYCHANGE INRISK PROFILECHANGE IN
OPPORTUNITY
PROFILEMORE
INFORMATIONREAD MORE ON PAGE 44

READ MORE ON PAGE 45

READ MORE ON PAGE 46

READ MORE ON PAGE 47

READ MORE ON PAGE 50

Key:   increase   no change

Umicore Integrated Annual Report 2018

RISK MANAGEMENT AND INTERNAL CONTROL42

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

Umicore Integrated Annual Report 2018

RISK MANAGEMENT AND INTERNAL CONTROL

Each business unit operates in anenvironment which carries specificgrowth expectations and differing
degrees of market and technologicaluncertainty that could impact strategic
objectives. As such, the primary sourceof risk and opportunity identification
lies within the business units.

OUR INTERNAL CONTROL SYSTEM
Internal control mechanisms exist throughout
Umicore to provide management with reasonableassurance of our ability to achieve our objectives.
They cover:

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.

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 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.

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

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.

43

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, 2 cycles (financial closing
and reporting, human resources) were assessed
during 2018 by the 100 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.

Umicore Integrated Annual Report 2018

KEY RISKS AND OPPORTUNITIES

44

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 AREAECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY
ECO-EFFICIENCYPOTENTIAL IMPACT
Umicore is exposed to changes in the regulatory environment in the
countries or regions where it operates. Umicore’s businesses stand tobenefit 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.
IP and IP protection-related matters impact technology-driven businesses.

CHANGE IN CONTEXTCHANGE IN RISK PROFILE

Increase
CHANGE IN
OPPORTUNITY PROFILE

Increase

Worldwide, changes to existing product-related legislation and theintroduction of new legislation might impact our business. Although theEuropean REACH regulation is still the most relevant for Umicore, KoreanREACH is gaining importance. For more information, see Statements,
note V5.
The trend towards more stringent emission legislation and targets
continued, while new measures on vehicle emissions push industry
to innovate in emission control system design, including catalysts andcatalytic filters and increase the demand for electric vehicles.

program and constantly monitors changes in legal requirements where
we operate. For more information, see Statements, note E8.
Umicore continues to play an active role in informing European legislatorsof various emission control technologies for both diesel and gasoline
powered vehicles, to help legislators make informed decisions about
future emission and testing norms.
Umicore continues to ensure its ability to meet the surging demandfor cathode materials for rechargeable batteries used in electrified
transportation. Our investment program to expand production capacity ofcathode materials in China and Korea is on track.
Umicore successfully achieved the third and last REACH registration deadline
in May 2018. In total we have submitted 216 registrations for this deadline,
including 112 previous submissions. Registration of additional substances
continues to be needed due to new business developments.
Umicore has submitted 4 registrations for the Korean REACH regulation for
the June 2018 deadline for priority chemical substances and has submitted
2 new substance registrations. Another 3 registrations are ongoing.
We monitor that our products have the freedom to operate and proactively
manage our patent portfolio.
Umicore trade compliance closely follows and responds to global
trade conditions.

Increasing trade regulations in 2018’s geopolitical context continue to bea factor in Umicore’s global footprint.

MEASURES TAKEN BY UMICORETo ensure ongoing compliance with environmental legislation on our
industrial sites, Umicore has a well-established EHS compliance audit

Umicore Integrated Annual Report 2018

KEY RISKS AND OPPORTUNITIES245

SUSTAINABLE AND ETHICAL SUPPLYSTRATEGIC FOCUS AREAECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY

POTENTIAL IMPACT

MEASURES TAKEN BY UMICORE

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
for the ongoing success and growth of our business.

Umicore has implemented policies and measures covering human rights,
the right for workers to organize, collective bargaining, equal opportunities
and non-discrimination, banning of child labor, banning of forced labor,consistent with International Labour Organisation (ILO) standards.
These commitments are supported through a Global Framework Agreement
on Sustainable Development with IndustriALL Global Union.

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 labor and support
corruption and money laundering. We ensure that procurement of minerals
from conflict-affected and high-risk areas is in line with Umicore’s values,
while providing an advantage to our customers.

CHANGE IN RISK PROFILE

Increase
CHANGE IN
OPPORTUNITY PROFILECHANGE IN CONTEXTExisting and upcoming laws aiming to drive the responsible sourcing ofconflict minerals (tin, tantalum, tungsten and gold), has increased thevisibility and concern on the conditions around conflict mineral sourcing
in public discourse

In addition to existing policies and charters such as the Umicore Codeof Conduct, Human Rights Policy and Sustainable Procurement Charter,
Umicore also has a specific policy for “Responsible global supply chain ofminerals from conflict-affected and high-risk areas”.
In 2018, Umicore again received third-party validation for the applicationof its Sustainable Procurement Framework for Cobalt, which is alignedwith the OECD ‘Due Diligence Guidance for Responsible Supply Chains from
Conflict-Affected and High-Risk Areas’.
Because Umicore is already compliant on conflict and high-risk mineralregulations, our sustainable supply chain has become an even greater
competitive advantage.
We use our long-standing and growing experience in sustainable sourcing
to advocate for more responsible sourcing. To read more about some of ouradvocacy work, see Stakeholder Engagement p. 63.

Increase

Umicore Integrated Annual Report 2018

KEY RISKS AND OPPORTUNITIES

346

TECHNOLOGY AND SUBSTITUTIONSTRATEGIC FOCUS AREAECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY
ECO-EFFICIENCYPOTENTIAL IMPACT

MEASURES TAKEN BY UMICORE

Umicore is a materials technology group with a strong focus on thedevelopment of innovative materials and processes. The choice anddevelopment of these technologies represents the single biggest
opportunity and risk for Umicore.

Every year, the Executive Committee identifies innovation projects (“Top10”) which are key to achieving Horizon 2020 (and beyond) growthambitions and cover product and process developments. A selectionof these projects is reviewed during the year either through dedicatedtechnology reviews or as part of strategic business reviews.

Achieving the best cost-performance balance for materials is a priority
for Umicore and its customers. There is always a risk that customers willseek alternative materials for their products should those of Umicore notprovide this optimum balance. The risk is especially present in businesses
producing materials containing expensive metals (especially those withhistorically volatile pricing characteristics).

CHANGE IN CONTEXTCHANGE IN RISK PROFILENo change
CHANGE IN
OPPORTUNITY PROFILE

Trends in rechargeable battery materials for automotive applications haveunderscored that NMC materials with increasing nickel content are thetechnology of choice for customers in current and upcoming electrified
vehicle platforms. Besides the focus on high performing battery
materials, novel processes are being developed to decrease cost andenvironmental impact across the entire battery value chain.

Previous years’ R&D investments have brought great success and createda space to shift R&D positioning. Umicore invested selectively in new
fields relevant to core activities in 2018. Overall spend was equivalent to6.1% of revenues.
Umicore patents disruptive technologies. In 2018, Umicore registered 75
new patent families.
For more information on Umicore’s approach to managing its innovationand technology portfolio see Statements, page 73.

In vehicle emission control, regulatory debates have reinforced the needto have a broad spectrum of technologies available for both gasoline anddiesel applications.

Increase

Umicore Integrated Annual Report 2018

KEY RISKS AND OPPORTUNITIES

447

MARKETSTRATEGIC FOCUS AREAECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY

POTENTIAL IMPACT
The main industries served by Umicore are automotive (clean mobility
materials, recycling), consumer electronics (rechargeable battery materials,
recycling, coating and electroplating solutions) and non-ferrous metal
mining and refining industries (recycling activities). Umicore is sensitive to
any major growth or global reduction in activity levels or market disruptionsin these industries.

CHANGE IN CONTEXT
The global economic outlook started on a positive note in the first halfof 2018, supported by solid growth in global manufacturing and trade.
Trade and consumer confidence began to decline over the summer
owing to geo-political and trade tensions, uncertainty about Brexit, andtariff implementations.

CHANGE IN RISK PROFILE

Change in perimeter(see Change in context)

CHANGE IN
OPPORTUNITY PROFILE

Increase

After modest growth in the first half of 2018, the global automotive
industry started to contract in the second half, with a slowdown in the
Chinese and European car markets. It is anticipated that demand in theautomotive sector will continue to be impacted by the less favorable
macro-economic environment witnessed in the beginning of 2019.
Although the short-term outlook is anticipated to be more subdued
demand in key regions, more stringent vehicle emission legislation
coming into force on major markets in the coming years is expected toprovide a substantial longer-term uplift.

In the consumer electronics sector, demand for cathode materials forrechargeable batteries is sensitive to the macro-economic environment.
Our broad portfolio of other products used in consumer electronics tends
to compensate for market fluctuations.
In recycling our process remains unique, giving a stable outlook in thishigh-value market.

MEASURES TAKEN BY UMICORE
Umicore is delivering on its growth strategy and is becoming theundisputed leader in clean mobility materials and recycling. As aresult, Umicore delivered another set of record results in 2018 andreached its Horizon 2020 targets two years ahead of schedule.
Umicore won significant additional business in the second half of 2018
which will further accelerate its growth in the coming years.
The Executive Committee undertook a review of potentially disruptive
market and technology trends in automotive and discussed its
findings with the Board of Directors.
In recycling a continuous program of new investments aims to optimize
future performance and to enhance environmental performance.

The risk profile of Umicore reflects growing exposure to the automotive
industry and to Asia, in both cases driven by the fast-growing sales ofcathode materials for use in electrified vehicles.
With its broad portfolio of cathode material technologies certified for themost stringent automotive requirements, its industrial-scale production
capabilities and its qualifications on more than 20 platforms, Umicore
should continue to benefit disproportionally from the accelerating
penetration of electrified vehicles.

Umicore Integrated Annual Report 2018

KEY RISKS AND OPPORTUNITIES

548

METAL PRICESTRATEGIC FOCUS AREAECONOMICPERFORMANCECHANGE IN RISK PROFILE

Change in perimeter(see Change in context)

CHANGE IN
OPPORTUNITY PROFILENo change

POTENTIAL IMPACT

CHANGE IN CONTEXT

Umicore’s earnings are exposed to risks relating to the prices of the metals
which we process or recycle. These risks relate mainly to the impactthat metal prices have on the surplus metals recovered from materials
supplied for recycling, and concern platinum, palladium, rhodium, gold,
silver and a 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 part of the future price risks.

Prices for precious metals strengthened in 2018. Prices for gold, palladium
and rhodium increased, while silver and platinum prices faced a volatileenvironment in which gains were often completely offset by subsequentlosses, leaving a small increase over the full year cycle.

Umicore also faces transactional price risks on metals. The majority ofits metal-based transactions use global metal market references. If theunderlying metal price were constant, the price Umicore pays for the
metal contained in the raw materials purchased would be transferredto the customer as part of the price charged for the product. However,
because of the lapse of time between the conversion of purchased
raw materials into products and the sale of products, the volatility inthe reference metal price creates differences between the price paid
for the contained metal and the price received. Accordingly, there is atransactional exposure to any ﬂuctuations in price between the time raw
materials are purchased (when the metal is “priced in”) and the time theproducts are sold (when the metal is “priced out”). The Group’s policy is
to hedge the transactional risk to the maximum extent possible, primarily
through forward contracts.

The continued rapid growth in battery materials substantially increased theglobal demand and use of specific metals such as cobalt or nickel. In thecase of cobalt, higher demand and perceived supply scarcity resulted in asignificant market price hike in the first six months. Newly commissioned
supply and a more moderate global demand expectation resulted ina price correction over the second half of the year. Umicore was thus
confronted with significant cobalt price volatility in 2018.

MEASURES TAKEN BY UMICOREOver the course of 2018, Umicore entered into forward contracts securing
a portion of its structural price exposure for certain precious metals andbase metals in 2019 and 2020, thereby increasing earnings predictability.
For cobalt, Umicore’s transactional hedging policy aims to match
to a maximum extent the pricing in and pricing out of the contracted
metal. Such physical back-to-back hedging in 2018 allowed to managetransactional risks related to cobalt in a volatile market.

The accelerating growth in battery materials is rapidly increasing
the exposure to specific related metals such as cobalt or nickel.
Increasing volumes, the vulnerability to the associated price volatility andin the case of certain metals such as cobalt the absence of a liquid paper
forward market result in increased metal risks.
For more information on the structural risk and on the transactional andinventory risk related to the metal prices, see Statements, note F3.

Umicore Integrated Annual Report 2018

KEY RISKS AND OPPORTUNITIES649

TALENT ATTRACTION AND RETENTIONSTRATEGIC FOCUS AREA
GREAT PLACETO WORKPOTENTIAL IMPACT

MEASURES TAKEN BY UMICORE

The attraction and retention of skilled people are important factors inenabling Umicore to fulfil its strategic ambitions and to build further
expertise, knowledge and capabilities in the business. Being unable to doso would compromise our ability to deliver on our goals.

We recruited the highest number of employees ever in 2018. To support
our recruitment, we deployed our new global employer brand, with a
special focus on challenging labor markets in Europe and Asia.

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

CHANGE IN CONTEXT
Our accelerated expansion combined with competitive labor markets
have created even greater recruitment needs.
CHANGE IN RISK PROFILETo attract employees, we participate at Job Fairs, on Campus events at
Universities and making best use of professional recruitment and social
media channels. We also focused on improving the personal experienceduring the recruitment process and optimizing the on-boarding process
for newcomers.
We address retention, especially challenging in Asia, with initiatives
to improve the well-being of our employees, through assessing andimproving our positioning of compensation and benefits and by offeringlearning & development opportunities for our employees.
We also ensure leadership development and give special attention to thedevelopment of identified top talent through different initiatives and arevery well positioned in terms of employee engagement and enablement.

Increase
CHANGE IN
OPPORTUNITY PROFILE

Increase

Umicore Integrated Annual Report 2018

KEY RISKS AND OPPORTUNITIES

750CLIMATE AND ENVIRONMENTSTRATEGIC FOCUS AREAECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY
ECO-EFFICIENCYPOTENTIAL IMPACT

MEASURES TAKEN BY UMICORE

Umicore requires certain metals or metal-containing raw materials
to manufacture its products and feed its recycling activities. Some ofthese raw materials are comparatively scarce and require very specificsourcing strategies.

Umicore plays a key role in the transition to a low-carbon future as ourmaterials tackle global trends for clean air and e-mobility, and our closed
loop business model tackles resource stewardship.

Climate and environment impacts are mostly related to our supply of
primary raw materials or to our suppliers’ extraction of these primary raw
materials. Easy-to-mine deposits are becoming increasingly scarce and ore
bodies poorer. Many specialty metals required for new, environmentallyfriendly technologies can only be obtained as a by-product of othermetals. Treating complex materials from above-ground sources, such asindustrial residues and end-of-life materials, is increasingly important.

Our facility in Hoboken is the world’s largest and most complex precious
metals recycling operation, processing over 200 types of raw material
and recovering over 20 different metals. We ensure that a high volume
of our metals come from secondary sources – production scraps, residues
and end-of-life materials. We recover 28 metals from our closed loop
activities. In 2018, Umicore engaged with customers to close the loop for
key battery materials such as cobalt.

CHANGE IN RISK PROFILE

Climate change causes extreme natural events, chronic deviations inmean temperatures and precipitation patterns, and rising sea levels.
This could impact our sites or supply chain.

Essential input materials such as fuels and chemicals are purchased using
our Sustainable Procurement Charter. Our remaining metal supplies comefrom primary sources, for which Umicore has long-term and shorter-term
procurement arrangements.

Increase

Historical industrial activity requires active management and remediation.
Increasingly stringent regulations on energy use and emissions can induce
higher operational costs.

Umicore manages its historical environmental legacy, ensuring adequate
financial provisions that are reviewed twice a year. For more information,see Statements, notes E7 and F29.

CHANGE IN CONTEXT
Civil society and political discourse are increasingly demanding thatbusiness takes an active role in mitigating climate change.

We ensure that our current activities keep to the most stringent
environmental standards for air and water and work every year to improve
our energy efficiency despite our growth and increased production.

Our accelerated expansion combined with increased demand for our
products have increased Umicore’s exposure to potential climate orenvironmental risks and the opportunity to expand in a way that can
mitigate or address these risks.

Our global footprint and diverse site locations reduce our exposure tophysical risks. New sites have been chosen considering proximity tocustomers, access to skilled workforce, excellent logistics, infrastructureand green energy.

CHANGE IN
OPPORTUNITY PROFILE

Increase

Umicore Integrated Annual Report 2018

51

Management

UmicoreUmicoreIntegrated
Integrated Annual
Annual Report 2018

52

Board of Directors
BOARD DIVERSITY
Tenure6 (0-2 years)
2 (3-5 years)
2 (6+ years)

Independence

6 Independent
4 Non-independent

Gender

7 Male3 Female

Nationalities

Australia

Belgium

FranceGermany

Switzerland USA

Standing left to right: Liat Ben-Zur, Eric Meurice, Gérard Lamarche, Marc Grynberg, Mark Garrett, Colin Hall, Ines Kolmsee, Koenraad Debackere, Géraldine Nolens (Board Secretary)
Sitting left to right: Françoise Chombar, Thomas Leysen, Marc van Sande (Board Advisor)
Not pictured: Karel Vinck (Honorary Chairman)

Umicore Integrated Annual Report 2018

BOARD OF DIRECTORSTHOMAS LEYSEN

MARC GRYNBERGCHAIRMAN

Belgian, 58

NR

DATE APPOINTED TO BOARD
10 May 2000 (date appointment
Chair: 19 November 2008)
EDUCATION
Law – KU Leuven, Belgium
EXPERIENCE
Thomas Leysen became Chairman of
Umicore in November 2008 after serving
as Chief Executive Officer of Umicore since
2000. During this mandate, he transformed
the former Union Minière, a non-ferrous
company in an international materialstechnology group called Umicore. He joined
Umicore in 1993 as member of the Executive
Committee, and successively managed
several industrial divisions.
EXTERNAL APPOINTMENTS

LIAT BEN-ZUR

53FRANÇOISE CHOMBARCHIEF EXECUTIVE OFFICER,
EXECUTIVE DIRECTOR

INDEPENDENT NON-EXECUTIVE DIRECTOR

INDEPENDENT NON-EXECUTIVE DIRECTOR

Belgian, 53

American, 42

Belgian, 56

DATE APPOINTED TO BOARD
19 November 2008

DATE APPOINTED TO BOARD
25 April 2017

DATE APPOINTED TO BOARD
26 April 2016

EDUCATION
Commercial Engineering – Solvay Brussels
School of Economics & Management,
Belgium

EDUCATION
Electrical engineering – UC Davis, USA
Business Administration – UCLA Anderson,
USA

EDUCATION
Dutch, English, Spanish Interpretation &Honorary Ambassadorship for Applied
Language Studies – Ghent University, Belgium

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 DuPont deNemours in Brussels and Geneva.

EXPERIENCE
Liat Ben-Zur has been Corporate Vice
President for Modern Life and Devices ProductMarketing Management at Microsoft since
September 2018. Prior to joining Microsoft,
she was SVP and Digital Technology Leader
at Royal Philips where she was responsiblefor driving the connectivity and digitalstrategy, since 2014. She served previously
in several leadership positions at Qualcomm,a US wireless telecommunications company,
and was co-founder and Chairwoman of the
AllSeen Alliance, a consortium for an open
source, common language for the Internetof Things.

EXPERIENCE
Françoise Chombar is co-Founder, Chief
Executive Officer and Managing Directorof Melexis, a producer of smart sensor
and driver semiconductors for automotive,
industrial and durable consumer applications.
She served previously as planning manager
at Elmos GmbH and operations manager
and director at several companies within
the Elex group. Françoise was a mentor in
the Belgian women’s network Sofia for 17
years and is committed to STEM and genderbalance advocacy. In 2018, she received thetitle of Science Fellow by the VUB, Universityof Brussels.

EXTERNAL APPOINTMENTS
Non-Executive Director, Nexans SA, France

Chair, KBC Group, banking and insurance group, Belgium
Chair, Mediahuis, a major newspaper publishing groupin Belgium and The Netherlands
Chair, King Baudouin Foundation, Belgium

NR

EXTERNAL APPOINTMENTS
CEO and Director, Melexis, Belgium
Chairwoman, Flemish STEM Platform, an independent
advisory group to the government of Flanders

Key:

NR Nomination & remuneration committee (Chair)

NR Nomination & remuneration committee (Member)A

Audit committee (Chair)A

Audit committee (Member)

Umicore Integrated Annual Report 2018

BOARD OF DIRECTORSKOENRAAD DEBACKEREMARK GARRETT

INDEPENDENT NON-EXECUTIVE DIRECTOR

Belgian, 57

COLIN HALL

INDEPENDENT NON-EXECUTIVE DIRECTOR

A

Australian/Swiss, 56

DATE APPOINTED TO BOARD
26 April 2018

DATE APPOINTED TO BOARD
28 April 2015

EDUCATION
Engineering – Ghent University, Belgium

EDUCATION
Economics –Australia

Management – Ghent University, Belgium

UniversityofINES KOLMSEENON-EXECUTIVE DIRECTOR

NR

Melbourne,Management – MIT Sloan School of Management,
USA

Applied Information Systems – Melbourne
Institute of Technology, Australia

EXPERIENCE
Prof. Dr. Ir. Koenraad Debackere has beenwith KU Leuven since 1995, where he teaches
Technology & Innovation Management andPolicy. He has won numerous awards for his
research and for scientific excellence, and in2010 was awarded a Francqui Lecture Chair in
economics and business.

EXPERIENCE
Mark Garrett has been Chief Executive Officer
at Marquard & Bahls AG, a Hamburg-based
leading independent energy supply, trading
and logistics company, since August 2018.
Before joining Marquard & Bahls AG, he
served as Chief Executive Officer at Borealis
AG, Austria, he position he had held since2007. Prior to that, he built an extensive
career in the chemical industry working withcompanies such as Ciba-Geigy and DuPont.
EXTERNAL APPOINTMENTS
CEO, Executive Board, Marquard & Bahls AG, Germany
Non-Executive Director, Board of Directors, NOVA
Chemicals Corporation, Canada
Non-Executive Director, Board of Directors, Axalta
Coating Systems Ltd., USA

54

INDEPENDENT NON-EXECUTIVE DIRECTOR

American, 48

A

German, 48

A

DATE APPOINTED TO BOARD
26 April 2016

DATE APPOINTED TO BOARD
26 April 2011

EDUCATION
Business Administration – Stanford Graduate
School of Business, USA

EDUCATION
Process and Energy Engineering – Technische
Universität Berlin, Germany

EXPERIENCE
Colin Hall has been the Head of Investments
at Groupe Bruxelles Lambert (GBL) since2016. He built an extensive career, startingin the merchant banking division of Morgan
Stanley, then in New York and London at the
Rhône Group, a private equity firm, and later
Partner in Long Oar Global Investors, a hedge
fund sponsored by Tiger Management.
In 2012, he became CEO of Sienna Capital,
a 100% subsidiary of GBL that manages its
alternative investments (private equity,
credit and specific thematic funds).

Industrial Engineering – École nationalesupérieure des Mines de Saint-Étienne,
FranceEXTERNAL APPOINTMENTS
Non-Executive Director, Audit
Committee, Imerys SA, France

andBusiness Administration – INSEAD Business
School, France
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.

Strategic

Non-Executive Director, Supervisory Board, Kartesia
Management, Luxembourg
Non-Executive
Belgium

Director,

Non-Executive Director,
Parques Reunidos, Spain

Ergon

CapitalNomination

Partners,

Committee,

Non-Executive Director, Presiding Committee, GEA,
GermanyKey:

NR Nomination & remuneration committee (Chair)

NR Nomination & remuneration committee (Member)A

Audit committee (Chair)A

Audit committee (Member)

Umicore Integrated Annual Report 2018

BOARD OF DIRECTORSGÉRARD LAMARCHE

ERIC MEURICE55

NON-EXECUTIVE DIRECTOR

INDEPENDENT NON-EXECUTIVE DIRECTOR

HONORARY CHAIRMAN

KAREL VINCKABOUT THE BOARD

Belgian, 57

French, 62

BelgianDATE APPOINTED TO BOARD
25 April 2017

DATE APPOINTED TO BOARD
28 April 2015

EDUCATION
Economic Sciences – Louvain, Belgium

EDUCATION
Economics – Sorbonne, France

BOARD SECRETARY

The board’s cumulative industry experienceis broad, covering automotive, electronics,
chemicals, metals, energy and financesectors in addition to the fields of academia
and science.

INSEADBusiness
School,AdvancedManagement Program for Suze Group
Executives, France

Mechanical Engineering – École Centrale
Paris, France

Belgian, 47

EXPERIENCE
Gérard Lamarche has been Co-CEO ofGroupe Bruxelles Lambert (GBL) since 2012.
He built an extensive career, starting at
Deloitte Haskins & Sells in Belgium, thenSociété Générale de Belgique as Investment
Manager, Controller and Advisor to theStrategy and Planning Department, and Suez,
as Secretary of the Executive Committee,
then SVP in charge of Planning, Control
and Accounting. In 2000, Gérard Lamarchejoined NALCO (the US subsidiary of the Suez
Group and world leader in industrial water
treatment) as General Managing Director.
He was appointed CFO of the Suez Group
in 2003.
EXTERNAL APPOINTMENTSGÉRALDINE NOLENSBusiness Administration – Stanford Graduate
School of Business, USA
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 charge ofThomson Multimedia TV Division and held
senior positions in several technology groups
such as Intel, ITT, and Dell Computer.

It also includes people experienced in the
public and private sector and members withexperience in the different regions in which
Umicore is active.

MARC VAN SANDE

BOARD ADVISOR
Formely EVP Energy & Surface Technologies
Belgian, 67

The board also has collective experience indisciplines that are specifically relevant toUmicore’s non-financial Horizon 2020 goals
such as health and safety, talent attraction
and retention and supply chain sustainability.

EXTERNAL APPOINTMENTS
Non-Executive Director,
The Netherlands

NXP

Collectively the board possesses strong
experience of managing industrial operations
and counts 9 active or former CEOs in
its ranks.

Semiconductors,

READ MORE ABOUT CORPORATE
GOVERNANCE ON PAGE 76

Non-Executive Director, IPG Photonics, USA
Non-Executive Director, Meyer Burger, Switzerland
Non-Executive Director, Soitec, France

Non-Executive Director, Finance and Audit Committee,
LafargeHolcim, Switzerland
Non-Executive Director, Audit Committee andChairman of the Remuneration Committee, Total,
FranceNon-Executive
Switzerland

Key:

Director,

Audit

Committee,

SGS,

NR Nomination & remuneration committee (Chair)

NR Nomination & remuneration committee (Member)A

Audit committee (Chair)A

Audit committee (Member)

Umicore Integrated Annual Report 2018

56

Executive Committee

Sitting left to right: Pascal Reymondet, An Steegen, Denis Goffaux, Marc Grynberg, Géraldine Nolens, Stephan Csoma, Filip Platteeuw

Umicore Integrated Annual Report 2018

EXECUTIVE COMMITTEE
MARC GRYNBERG

FILIP PLATTEEUWAN STEEGEN

57

GÉRALDINE NOLENSCHIEF EXECUTIVE OFFICERCHIEF FINANCIAL OFFICERCHIEF TECHNOLOGY OFFICEREXECUTIVE VICE-PRESIDENTCHIEF COUNSEL

53

46

48

47

EDUCATION
Commercial Engineering - Solvay Brussels
School of Economics & Management,
Belgium

EDUCATION
Applied Economics
Belgium

EDUCATION
PhD in Material Science and ElectricalEngineering - KU Leuven, Belgium

EDUCATION
Master of Laws - University of Chicago Law
School, USA

EXPERIENCE
An Steegen joined Umicore and was
appointed Chief Technology Officer in
October 2018, after serving as Executive
Vice President Semiconductor Technology
and System R&D at imec, a leading research
center with a focus on nanoelectronics anddigital technology innovation.

European Economic Law - Julius Maximilians
Universität Würzburg, Germany

EXPERIENCE
Marc Grynberg was appointed Chief Executive
Officer in November 2008 after heading theAutomotive Catalysts business unit from2006 to 2008, and serving as CFO of Umicore
from 2000 until 2006.
He joined Umicore in 1996 as Group Controller.
Prior to joining Umicore, Marc worked for
DuPont de Nemours in Brussels and Geneva.

–

Ghent

University,

Financial Management – Vlerick Management
School, Belgium
EXPERIENCE
Filip Platteeuw was appointed Chief Financial
Officer in November 2012, after serving as VPof Corporate Development from 2010 to 2012.
He joined Umicore in 2004 and was
instrumental in the Cumerio spin-off in2005, and then led the project team for thecreation of Nyrstar and its successful IPO
in 2007. Filip has extensive experience ininvestment banking, corporate banking andequity research with KBC Bank.

Prior to joining imec in 2010, An worked
at IBM’s Semiconductor Research &Development center in Fishkill, NY andin the last several years of service atIBM, was in charge of the bulk CMOS
technology development.

Law - KU Leuven, Belgium
EXPERIENCE
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.

Umicore Integrated Annual Report 2018

EXECUTIVE COMMITTEEDENIS GOFFAUXSTEPHEN CSOMA

PASCAL REYMONDETEXECUTIVE VICE-PRESIDENT
ENERGY & SURFACE TECHNOLOGIESEXECUTIVE VICE-PRESIDENTRECYCLINGEXECUTIVE VICE-PRESIDENTCATALYSIS

50

54

59

EDUCATION
Mining Engineering - Université de Liège,
Belgium

EDUCATION
Economics - UC Louvain, Belgium

EDUCATION
Master of Science - Stanford University, USA

Mandarin - Fudan University Shanghai, China

Engineering - École Centrale Paris, France

EXPERIENCE
Denis was appointed Executive VicePresident Energy & Surface Technologies
in 2018, after serving as Chief Technology
Officer from 2010 to September 2018 and
EVP for Precious Metals Refining from 2015
to 2018.

EXPERIENCE
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 SouthAmerica from 2005 to 2009.

EXPERIENCE
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.

Prior to that, he occupied successive businessline and country management functions in
China and Japan. Denis began his career at
Umicore with Research & Development in
Olen, before moving to what was then our
Cobalt & Energy Products Business Unit.

Stephan joined Umicore in 1992 and set up
Umicore’s first industrial operations in China
in the mid-1990s and went on to lead theZinc Chemicals business unit.

58

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.

READ MORE ABOUT OUR MANAGEMENTAPPROACH ON PAGE 72

Umicore Integrated Annual Report 2018

EXECUTIVE COMMITTEEAN STEEGEN

59

DENIS GOFFAUXCHIEF TECHNOLOGY OFFICEREXECUTIVE VICE-PRESIDENT ENERGY& SURFACE TECHNOLOGIESGroup Research & Development

Cobalt & Specialty Materials

Electro-Optic Materials

Rechargeable Battery Materials
Electroplating
Japan

FILIP PLATTEEUWPASCAL REYMONDETCHIEF FINANCIAL OFFICEREXECUTIVE VICE-PRESIDENTCATALYSISFinance

Automotive Catalysts

Corporate Development

Precious Metals Chemistry

Procurement & Transportation

India

MARC GRYNBERG

North America

CHIEF EXECUTIVE OFFICER

Chairman of the Executive Committee
Human Resources
Information Systems
Group CommunicationsGÉRALDINE NOLENSEXECUTIVE VICE-PRESIDENTCHIEF COUNSEL

Legal
Environment, Health & Safety
Corporate Security
Internal Audit

STEPHAN CSOMAEXECUTIVE VICE-PRESIDENTRECYCLING

Precious metals Refining
Precious Metals Management
Jewelry & Industrial Metals
Government Affairs
Umicore Marketing Services
China
South America

Umicore Integrated Annual Report 2018

60

Senior Vice-Presidents
PATRICK VERMEULEN

SVP INFORMATIONSYSTEMSPIERRE VAN DE BRUAENE

SVP ENVIRONMENT,HEALTH & SAFETY

MARC GRYNBERGCHIEF EXECUTIVE OFFICER

IGNACE DE RUIJTERGÉRALDINE NOLENSSVP HUMAN RESOURCESEXECUTIVE VICE-PRESIDENT,CHIEF COUNSEL

Most main areas of activity are assumed
by a Senior Vice-President as indicated in
the diagrams. Other functions, including
Audit, Corporate Development, Corporate
Security, Finance, Group Communications,
Legal, Purchasing & Transportation andregional oversight for Japan, report directly
to the Executive Committee member as
described on p.59

GUY BEKEJOHAN RAMHARTERSVP STRATEGIC PROJECTSSVP ELECTRO-OPTIC
MATERIALS

AN STEEGEN

CHIEF TECHNOLOGY OFFICERSYBOLT BROUWERSVP GROUP R&D

Umicore Integrated Annual Report 2018

SENIOR VICE-PRESIDENTSMICHAEL NEISELWILFRIED MÜLLER

SVP AUTOMOTIVE CATALYSTSCONTROLLING, PURCHASING,
IT & BUSINESS DEVELOPMENT

BART SAP

SVP AUTOMOTIVE CATALYSTS
GLOBAL RESEARCH & TECHNOLOGY,PRODUCT MANAGEMENTJORIS VAN HOVE

SVP BATTERY MATERIALSSUPPLY CHAIN

SVP COBALT &SPECIALTY MATERIALSJÖRG VON RODENRALPH KIESSLINGSVP AUTOMOTIVECATALYSTS OPERATIONSTHOMAS ENGERTDENIS GOFFAUXSVP AUTOMOTIVE CATALYSTS
SALES & MARKETINGEXECUTIVE VICE-PRESIDENTCATALYSISSVP STRATEGICDEVELOPMENTS ENERGY &SURFACE TECHNOLOGIESEXECUTIVE VICE-PRESIDENT ENERGY& SURFACE TECHNOLOGIESSVP RECHARGEABLEBATTERY MATERIALSPASCAL REYMONDETJAN VLIEGENSVP ELECTROPLATING

KURT VANDEPUTTE61

LOTHAR MUSSMANN

SVP PRECIOUS
METALS CHEMISTRYGUY ETHIER

SVP SUPPLYCHAIN SUSTAINABILITYBERNHARD FUCHSLUC GELLENSSVP PRECIOUS METALSMANAGEMENT & UMICORE
MARKETING SERVICES

SVP PRECIOUS
METALS REFININGDAVID FONGCARSTEN GERLEMAN

SVP & COUNTRY MANAGER
GREATER CHINA

STEPHAN CSOMASVP UMICORE
SOUTH AMERICAEXECUTIVE VICE-PRESIDENTRECYCLING

FRANZ-JOSEF KRONSVP JEWELRY& INDUSTRIAL METALSEGBERT LOX

SVP GOVERNMENT AFFAIRS

Umicore Integrated Annual Report 2018

62

Key figures
2014

2015

2016

2017

2018

2,366.5

2,629.0

2,667.5

2,915.6

3,271

273.7

330.3

350.7

410.3

514

ECONOMIC PERFORMANCE (in millions of Euros unless stated otherwise)
Revenues (excluding metal)
Recurring EBIT
Return on Capital Employed (ROCE) (in %)

12.2

13.7

14.6

15.1

15.4

R&D expenditure

143.3

144.5

155.9

175.2

196

Capital expenditure

202.4

240.3

287.3

365.3

478

Recurring EPS (in €/share)

0.89

1.13

1.07

1.22

1.36

Gross dividend (in €/share)

0.50

0.60

0.65

0.70

0.75

–

–

65

67

72

Total donations (in thousands of Euros)

1,409.35

1,219.38

1,289.68

1,299.34

1,431.66

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

664,568

710,143

662,059

633,704

765,756

SOCIAL, ENVIRONMENTAL AND VALUE CHAIN PERFORMANCE
Revenues from clean mobility and recycling (in %)––735,065

663,307783,843

Energy consumption (in terajoules)

7,304

7,742

6,737

6,532

7,447

Workforce (fully consolidated companies)

10,368

10,429

9,921

9,769

10,420

Lost Time Accidents (LTA)

37

47

59

51

61

LTA frequency rate

2.16

2.66

3.34

3.01

3.36

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

LTA severity rate

0.94

0.12

0.56

0.09

0.10

Exposure ratio ‘all biomarkers aggregated’ (in %)

1.8

2.3

3.2

2.7

2.8

Average number of training hours per employee

45.59

45.06

41.49

45.33

43.10

Voluntary leavers ratio

3.42

3.35

4.10

5.03

7.18

Umicore Integrated Annual Report 2018

IF OUR PIONEERINGAPPROACH CAN
MAKE US A LEADERIN SUSTAINABILITY

UMICORE.COM/CAREERS

FINANCIAL CALENDAR1

ADDITIONAL INFORMATION

25 APRIL 2019

STOCK
Euronext Brussels

General meeting of shareholders(financial year 2018)29 APRIL 2019

Ex-dividend trading date

30 APRIL 2019
Record date

2 MAY 2019

Payment date for dividend

31 JULY 2019

Half year results 2019

7 FEBRUARY 2020
Full year results 2019

ABOUT THIS REPRTNatalia Agüeros-Macario+32 2 227 71 02
natalia.agueros@eu.umicore.com
ECONOMIC INFORMATION
Evelien Goovaerts+32 2 227 78 38
evelien.goovaerts@umicore.com
HUMAN RESOURCES INFORMATION
Céline Van Haute+32 2 227 72 67
celine.vanhaute@eu.umicore.com
ENVIRONMENT, HEALTH &SAFETY INFORMATION
Bert Swennen+32 2 227 74 45
bert.swennen@umicore.com
VALUE CHAIN INFORMATION
Wouter Ghyoot+32 2 227 75 41
wouter.ghyoot@eu.umicore.com

LANGUAGESThis report is also available
in French and Dutch.
INTERNET
Download this report at:
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
DESIGN & EXECUTION
Radley Yeldar – ry.com
PHOTOGRAPHY
Jean-Michel Byl, Umicore

FEEDBACKLet us know what you think about this report.
Send an e-mail to annualreport@eu.umicore.com

1

Dates are subject to change. Please check the Umicore website for updates to the financial calendar.

umicore.com

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

Governance andstatements
Integrated Annual Report 2018

Governance and statements

About this report

Stakeholder engagement

63

Materiality

68

Management approach

72

Corporate governance report76

Remuneration report

83

Economic statements

90

Financial statements

95

Environmental statements

159

Social statements

169

Value chain statements

179

Assurance reports

185

GRI content index

191

References & key links

194

About this report195

Our 2018 Annual Report consists of the following documents,
which can be downloaded in pdf format:
2018 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.
2018 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, social and value chain performance data for
the Group.
The report is externally verified and has been prepared inaccordance with the GRI Standards: Core option. Find the GRI
Index on p. 191.
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

Umicore Integrated Annual Report 2018

STAKEHOLDER ENGAGEMENT

Stakeholder Engagement
Umicore is a publicly listed company. As such, we interact with many parties who have aninterest 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 withthem. 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 ourdecentralised approach to unit management.
The executive committee receives feedback from stakeholders in several ways, ranging fromdirect feedback from visits to customers, suppliers, employees and investors, to information
provided by the business units, departments or workers’ representatives during their regularbriefings 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 importancefor Umicore in the coming years. The development of the strategy has involved a specificstakeholder 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 a better understanding of industry-related issues.
These associations are also important platforms for Umicore to contribute to broader, industrywide action on sustainable development.
On a less formal level, members of our senior management are often called upon or 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 inbroad terms, using generic stakeholder categories that apply to most industrial organisations.
Also shown are the nature of the transactions that occur and a brief description of the dialogue
between Umicore and the stakeholders.

63

SUPPLIERS
Raw materials
Transportation

SUPPLIERS

EnergyRevenues

UMICORE

Other goods and services

Umicore operates through three business groups on 5 continents. These business groups not
only require materials to make their products but also energy, transportation and a range ofother services. Overall, Umicore has over 18,000 suppliers worldwide. These suppliers benefit
from our presence as a customer: in 2018, Umicore paid these suppliers € 8.5 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 acceptable terms 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 andTransportation 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 ourprevious objective on sustainable procurement. For information on the level of achievement
against this objective see Value Chain & Society, p. 24.

CUSTOMERSCUSTOMERS

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 60.6% of 2018 revenues being
generated outside Europe. The business units are responsible for providing support to theircustomers to improve their understanding of the hazards and risks of any products either on

Umicore Integrated Annual Report 2018

STAKEHOLDER ENGAGEMENT
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 their products and services. In themost 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 10,420 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 2018, Umicore paida total of € 731 million in salaries and other benefits to the employees of the fully consolidated
companies. Social security payments totalled € 101 million.
Umicore is committed not only to providing competitive salaries and working conditions to
its employees, but also to providing the necessary occupational and professional training
opportunities. Employees are expected to adhere to the principles and policies outlined in The
Umicore Way and our Code of Conduct. Open dialogue is promoted within the company with
our employees and includes an opinion survey every 3 years.
Umicore respects the principle of collective bargaining wherever it is requested. While suchpractice is commonplace in Europe, in other locations collective bargaining mechanisms andtrade unions may be less common or face local legal restrictions. Umicore has a sustainable
development agreement with the international union IndustriALL on the global implementationof its policies on human rights, equal opportunities, labor conditions, ethical conduct andenvironmental protection. The agreement allows trade unions to participate constructively
in the pursuit of these objectives. A joint monitoring committee composed of both parties
oversees the implementation of the agreement.

64

SHAREHOLDERS AND INVESTORSSHAREHOLDERS
AND INVESTORSCapitalShareholder value

Funds

Superior returns

UMICORE

Umicore strives to provide timely and accurate information on its strategy, performance andprospects to its shareholders. Next to the publication of press releases and the Annual Report,
Umicore’s management and Investor Relations team communicate with investors during theirworldwide roadshows, regular site visits, investor conferences, webcasts and conference calls.
Umicore has a high free float with a broad base of international shareholders which at the endof 2018 were primarily situated in Europe and North America. The overview of shareholders
holding voting rights equal to 3% or more can be found on our website. 22 brokerage firms
cover and publish equity research notes on Umicore, reflecting strong and global investor
interest in Umicore’s equity story and growth opportunities.
On 8 February 2018 Umicore successfully placed through an accelerated bookbuild 22,400,000
new ordinary shares, representing 10% of the then outstanding shares. On 12 February 2018,
the new shares were admitted to trading on Euronext Brussels. As a result, as from that day,the total number of outstanding and fully paid-up shares and the numbers of voting rights
amount to 246,400,000.
80% of Umicore’s net debt consists of fixed-rate medium- and long-term notes issued withprivate debt investors in Europe and North America. Additionally, Umicore has also credit lines
with numerous banks both in Belgium and elsewhere. Dialogue with the banks is primarily the
responsibility of the corporate Finance Department although each legal entity within Umicore
maintains business relationships with its local banking community.

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 facilitatesknowledge sharing through the Company.

Umicore Integrated Annual Report 2018

STAKEHOLDER ENGAGEMENTASSOCIATE AND JOINT VENTURE COMPANIESSOCIETY
WealthSOCIETY

65

Licence to 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 isgenerated 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 legallydefined 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 tothis commitment to sound operating practices, Umicore also strives to develop materials thatenhance 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-governmental organisations) also
periodically declare a stake in our operations and the way we do business. Umicore welcomessuch interest and attempts to engage with such groups in an open and constructive manner.

ASSOCIATE AND
JOINT VENTURECOMPANIES

Contribution to
Umicore profits
Technologicalcomplementaries

Investment
Guidance

UMICORE

Market accessUmicore has investments in various business activities over which it does not exercise fullmanagement 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 inownership 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 andjoint venture companies in which we hold a stake. Where management control is not exercisedby Umicore, representation on the board of directors is the way in which we are able to guideand 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 theoperations be run in accordance with the principles of the Umicore Way.
Umicore is rigorous in safeguarding any intellectual property that is shared with associate or
joint venture partners. For a full list of associate and joint venture companies see Statements,
note F5.

Umicore makes voluntary contributions at site and Group-level to a range of charitable causes
in line with an internal policy and guidelines. We manage Group-level engagement efforts
through a Group Donations Committee that has the mandate of engaging with civil society
groups and determining the extent of partnerships at Group level. For information on these
initiatives in 2018 see page 28 of this report.

Umicore Integrated Annual Report 2018

STAKEHOLDER ENGAGEMENTPUBLIC SECTOR AND AUTHORITIESPUBLIC SECTOR
AND AUTHORITIESServices
Formal licenceto operate

Taxes
Industry insightand experience

UMICORE

Umicore paid a total of € 133 million in taxes on our 2018 operations. Umicore and our employees
also contributed a total of € 101 million in social security payments. Umicore periodically enters
into partnerships with public institutions such as universities with the primary aim of furtheringcertain research projects. Similarly, partnerships and research grants are occasionally contractedwith public organisations. Grants contributed € 7.7 million to the EBIT in 2018. Umicore does notmake donations to political parties or organisations as a matter of policy.
In 2018, we continued our efforts to inform public policy and foster contacts with public authorities
worldwide. These efforts are coordinated through the Government Affairs department andfocus primarily on Europe, North America and China. Umicore aims to raise the profile andunderstanding 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 andinnovation networks, particularly in the context of programmes that support the developmentof 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 part of the European Innovation Partnership (EIP) on Raw Materials,
B20-G20, the High-Level Group (HLG) on Key Enabling Technologies (KET), the Steering Committeeof Energy Materials Industrial Research Initiative (EMIRI) and the ERA-MIN network on industrial
handling of 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 is mindful of the sensitivity of taking positions on issues ofpublic interest and has developed guidelines for doing so responsibly. Umicore is currently amember (both at corporate and business unit level) of the organisations listed below. This year,
we have included detail on the nature of some of our work with some of these organizations.

66

CORPORATE
The World Economic Forum’s Global Battery Alliance was launched in September 2017.
This global public-private partnership comprises over 40 international organizations toestablish a sustainable battery value chain to power the decarbonization of the world’s
energy and transport systems. Umicore chairs the Executive Board. In collaboration with
our partners in 2018, we worked toward ensuring that the cobalt extraction industry is
free of child labor and that alternative livelihoods for cobalt-dependent households are
made available, and on assessing the viability of a circular economy for batteries. This work
explored a second life battery market, material passports to enable battery recycling thanks
to regulations that facilitate cross-border transport of spent batteries, the collection of endof-life portable electronics to increase battery recycling and the creation of economic value
for innovative projects supporting mining communities.
Other memberships and activities at Group-level include: 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 ofCommerce 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); FlandersChina Chamber of Commerce; Metalle pro Klima (a WirtschaftsVereinigung Metalle initiative);
TransAtlantic Business Council; Vlamnse Technische Kring (VTK); World Economic Forum.
CATALYSISAs air quality concerns, especially in cities, continue to increase, legislation aiming tominimize the impact on air quality of transportation using internal combustion engines is
becoming increasingly stringent. As a producer of key components of catalytic emission
control systems, Umicore is a member of various industry associations worldwide throughwhich, in close collaboration with automotive engineering companies, we aim to provide an
option in the portfolio of ultra-clean transportation of the future using the most advanced
emission control technologies.
Other memberships and activities on the topic of catalysis include: 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 GroupUmicore Integrated Annual Report 2018

STAKEHOLDER ENGAGEMENT
Metals Association (IPA); Manufacturers of Emission Controls Association (MECA); Verband derAutomobilindustrie (VDA); Verband der Chemischen Industrie e.V. (VCI).
ENERGY & SURFACE TECHNOLOGIES
Accelerating the transition to a low-carbon society requires driving down the cost of clean
energy and clean mobility technologies. Advanced materials represent a sizeable partof the cost of these clean technologies and are key enablers of the low-carbon society.
The advanced materials path from lab to market is long, risky and capital-intensive, so
industry welcomes risk-sharing initiatives supporting European industrial leadership.
Founded in 2012 by Umicore and other industrial and research organizations, EMIRI (theEnergy Materials Industrial Research Initiative) works to increase awareness about the roleof advanced materials in everyday life and in the European economy, and advocates forstronger EU-level innovation support.
Other memberships and activities on the topics of energy and surface technologies include:
Cobalt Development Institute; Cobalt REACH consortium; Deutsche Gesellschaft für Galvano- undOberflaechentechnik (DGO); Energy Materials Industrial Research Initiative (EMIRI); European
Association for Battery, Hybrid and Fuel Cell Electric Vehicles (AVERE); Nickel Institute; Nickel
REACH consortium.
RECYCLING
The European Union is striving to establish a Circular Economy. Umicore, a frontrunner with
our “closed loop” business model, contributes to numerous conferences and expert working
groups. Specifically, we emphasize the links between a Circular Economy and responsible
sourcing, resource efficiency, waste management and high-quality recycling. We use ourexperience to promote electromobility as a gateway to Circular Economy in Europe.
Other memberships and activities on the topic of recycling include: 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).

67

DISTRIBUTION OF ECONOMIC BENEFITS

The most significant portion of Umicore’s total income was used to secure the metal componentof raw materials (the cost of which is passed on to the customer). After subtracting otherraw materials costs, energy-related costs and depreciation, the remaining economic benefits
available for distribution stood at € 1,227 million.
The biggest portion (€ 731 million) was distributed to employees. The bulk of employee
benefits was in the form of salaries, with the balance going to national insurance contributions,pensions and other benefits.
Net interest to creditors totalled € 33 million, while taxes to the governments and authorities
in the places where we operate, totalled € 133 million. The earnings attributed to minority
shareholders were € 10.86 million.
Subject to approval by shareholders at the AGM in April 2019, the Board of Directors will proposea gross annual dividend of € 0.75 per share. Considering the interim dividend of € 0.35 pershare paid out on 28 August 2018 and subject to shareholder approval, a gross amount of€ 0.40 per share will be paid out on 2 May 2019. This is in line with Umicore’s policy of paying
a steady or gradually-increasing dividend.
In 2018, Umicore made charitable donations totalling € 1.35 million.
Millions of Euros

2018

Economic value distributed (including contribution from associates)

13,825.02

Raw materials cost (excluding water, gas & electricity)

11,759.48

Water, gas & electricity cost

95.80

Depreciation & impairments

227.16

Other costs (net)515.57

Direct economic value generated

1,227.00

Millions of Euros2018

Direct economic value generated

1,227.00

Total taxes

133.44Creditors

33.20

Minority shareholders

10.86

Shareholders (dividends only)

180.78Retained by the Company

136.20Charitable donations
Employee compensation & benefits

1.35
731.05

Umicore Integrated Annual Report 2018

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 Vision2015 strategy built on existing competencies, market positions and our long-standing expertisein metallurgy, materials science, application know-how and recycling, and combined them withour closed-loop business 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 growth15-20% average returnon capital long-term

Become a preferred
employer
Reduce employee bodyconcentrations ofspecific metals(Cd, Pb, Co, Ni, As, Pt)

Assess and discuss
individual employee
development annually

ECO-EFFICIENCYReduce our CO2 emissions
by 20% (based on 2006
industrial scope)

STAKEHOLDERENGAGEMENT

Implement our
new sustainableprocurement charter

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

Invest in tools tounderstand and measure
our product life cycles
and impacts

Identify key stakeholders
and engage with the local
community at all our sites

68

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 turnsustainability 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

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
10-11 for more on these megatrends). The landscape had shifted significantly in photovoltaics,
the fourth megatrend, where a combination of economic and technology choices led to aless 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 arelinked to clean air (automotive catalysts), vehicle electrification (rechargeable battery materials)
and resource efficiency, ensuring precious and specialty metals recycling through our closedloop 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, thevast majority of Umicore employees had received 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.

Umicore Integrated Annual Report 2018

MATERIALITY
In sustainable procurement, we built on our reputation as a pioneer in the field by deploying
our Sustainable Procurement Charter and sought 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-free company 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 our goals and to develop goals that enhance Umicore’s
competitive positioning, as follows:
MAINTAIN ACHIEVEMENTS in carbon and metal emissions, preferred employer andstakeholder engagement. Although we will not set further objectives for these themes, wewill continue to measure and report on the impact and performance when relevant from amateriality point of view.
IMPROVE safety and occupational exposure. We will continue to pursue the zero accident andzero excess readings goals.
SECURE COMPETITIVE ADVANTAGE through sustainable sourcing. Thanks to the implementationof the Umicore Sustainable Procurement Charter, we have developed a reputation for ethicalsourcing. This approach is aligned with Umicore’s values and ethics but comes at a cost thatis only gradually accepted by customers. Horizon 2020 seeks to leverage this sustainablesourcing approach to generate an enhanced competitive edge.
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 mainlevers for Umicore’s growth, we screened for other topics of material importance to our business
units and to our main stakeholder groups (see Stakeholder Engagement, p. 63).
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 from the 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 wellas potentially relevant topics discussed by international business groups, research groups
and media.

69

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 discussedwith 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 thebusiness unit management teams.
Based on the feedback received, a revised version of the Umicore Group materiality matrix wascompiled 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 ambitionof 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 with the management of each business unit to determine
the social and environmental topics that could generate a greater competitive edge. To ensurea 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 importantfor 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 assessedthat 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 thereporting scope.

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MATERIALITY70

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

ECO-EFFICIENCYGREAT PLACETO WORKSTRENGTHEN LEADERSHIPSUSTAINABLE SUPPLYEFFICIENT OPERATIONSSAFETY

Confirm our strong position and unique offer in clean
mobility materials and recycling processes

Secure materials supply and promote our closed-loopbusiness offer

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

Become a zero-accident workplace

Main material topics: Criticality of raw materials,
Recyclability and potential 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 andefficiency, Opportunities and risk from technologies andproducts, 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 distribution of earnings
among the three business groups

SUSTAINABLE PRODUCTS AND SERVICES
Develop products that create sustainable value for ourcustomers or society
Main material topics: Life cycle thinking, Opportunities
and risk from technologies and products, Productstewardship, Public health and safety, Resource
efficient products and production, Toxic substancesand phase 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: Occupational safety,
Process safety

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

PEOPLE ENGAGEMENT
Further improve people engagement with 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 (ie CO2 or metal emissions)are reported in the statements section of the report.

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MATERIALITY

71

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 andgrowth 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 abalanced reflection of external requirements and our own internal needs, and enable abalanced appreciation of our performance.
5. 2018 UPDATESFollowing the 2018 review, the board of directors confirmed that Operational Excellence,
Supply, Products, Human Resources and Health and Safety remain Umicore’s material issues.
We continue to follow our Horizon 2020 objectives and the associated materiality in determining
the content and disclosure in this report.

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MANAGEMENT APPROACH

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 oftoday’s life and will continue to be enablers for future wealth creation. We believe that metalrelated materials have a vital role to play, as they can be efficiently and infinitely recycled, whichmakes them the basis for sustainable products and services. We want Umicore to be a leader inproviding and creating material-based solutions to contribute to fundamental improvements inthe quality of life. The overarching principles guiding our “Materials for a better life” mission are:72

The supporting components of our Horizon 2020 strategy (see Materiality page 69) described inthis chapter, including policies, responsibilities and evaluation, ensure a close monitoring of oureconomic, 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 andgovernance 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.

VALUESENVIRONMENT AND
SOCIETYEMPLOYEES

BUSINESS INTEGRITY

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

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

We strive to be apreferred employer ofboth current andpotential employees.

Wherever we operate,
our reputation is a mostvaluable asset, and it isdetermined by how weact. We avoid any actionthat 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 the principles of sustainable development. Our Horizon 2020
economic growth ambitions are tied to the megatrends of resource scarcity, clean air andvehicle 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 ouroperational excellence and the aspects of our products and services that we can further improve
to turn sustainability into a greater competitive edge.

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 and Procurement &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 and social performance isowned by the Executive Vice-President of that entity. At business unit level, these aspects are
owned by the head of the business unit. At site level, the site manager is responsible for the
economic, social and environmental performance of the site.
MONITORING, EVALUATION AND CONTINUOUS IMPROVEMENT
Corporate EHS and Corporate HR have developed detailed technical guidance notes to assist thebusiness units and sites, ensuring a collective understanding of concepts, definitions, roles andresponsibilities. 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 agroup 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 toevaluate 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

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MANAGEMENT APPROACH
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
the robustness of the associated data management system. Wherever necessary, performanceindicators and reporting processes are reviewed and updated after every assurance cycle, aspart of a continuous improvement process.

ECONOMIC & 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 andenvironmental problems. These growth areas form the basis of the Horizon 2020 strategy andare 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 we undertake, 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 canvary over time in function 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 earningsenhancing in the early phase of their integration 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 preciousand 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 developmentof 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 thepayment of dividends. Umicore has a policy of paying a stable or 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 buy-backs and cancellations.

73

FINANCIAL STRENGTH
Umicore aims to safeguard the business through sound financial management and by
maintaining a strong balance sheet. While we have no fixed target regarding debt levels, we
aim to maintain an investment grade status at all times. We also seek to maintain a healthybalance between short and longer-term debt and between debt secured at fixed and floatinginterest rates. This approach, coupled with strong cash flow generation, allows us to self-fund
the majority of our growth initiatives.
RESEARCH 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% of revenues
typically dedicated to R&D every year.
MARKET PRESENCE
As part of our Horizon 2020 strategy, Umicore seeks to maintain market leadership positions inrecycling 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 in any country or region
which makes up a significant part of that country or region’s economy. Our business is global innature with 48 production sites in 22 countries.
ECONOMIC AND FINANCIAL PERFORMANCE POLICY
Our approach to financial and economic management derives from our vision, values andorganisational principles as described in The Umicore Way. Specific internal policies havebeen developed to frame the Company’s approach to specific financial and economic aspects
including: Dividend, Financing and Funding, Transfer Pricing, Credit Management, Hedging,
Capital Expenditure and Mergers & 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 performanceof his/her business group. The Chief Technology Officer and his/her organisation has oversightfor 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 andfinancial performance of the business unit. The Chief Financial Officer has overall oversight ofUmicore’s financial and economic performance and is supported by a Corporate Finance teamthat 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 the business unit.

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MANAGEMENT APPROACH
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 reductionof 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 ofour business and the ones that are most important to our various stakeholders (see Materiality,p. 68). The performance review of energy efficiency is reported in the Eco-Efficiency, p. 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 interms of environmental performance. These underlying performance indicators, detailed in theEnvironmental Statements, include:–– Emission to water and air, note E2–– Greenhouse gases, note E3–– Water consumption, note E5–– Waste volumes, note E6–– Control and remediation of historical pollution, note E7–– Regulatory compliance and management systems, note E8
The following specific management approach applies to both material topics and the underlying
performance indicators.
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 policyon energy efficiency was rolled out throughout the Group from 2011 to 2015 and created a highlevel of awareness 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 the environmental
impact related to the acquisition and transformation of metals into products.

74

ENVIRONMENTAL PERFORMANCE RESPONSIBILITY
Umicore’s environmental performance and impact accountability lies with the executive
committee. In the executive committee, the Chief Counsel is Executive Vice-President forEnvironment, Health and Safety, Corporate Security and Internal Audit and responsible for allenvironmental matters and is supported by the Senior Vice President Environment, Health &Safety. The Executive Vice-Presidents are responsible for the overall environmental performanceof 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, for example through an expected reduction of our carbon
footprint of lower impact or the metal emissions on air and water.

SOCIAL PERFORMANCEGOALS AND PERFORMANCE 2016-2020
As set out in The Umicore Way, we strive to be a preferred employer for both current andpotential employees and to act and operate in line with the expectations of society. We havedefined three social objectives within the context of our Horizon 2020 strategy: reducing losttime accidents to zero, further reducing occupational exposure to specific metals and increasing
our diversity, talent attraction and retention and employability. We also have objectives which
relate to our broader social impact and these can be found in our Management Approach to
Value Chain and Society, later in this chapter.
These objectives were defined as material topics in the materiality assessment both by internaland 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 inline with expectations from society, it should also increase our chance of success. Given theageing population and the need for longer careers, we are also putting programmes in place toincrease 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 toWork section, p. 34.
While Umicore’s social objectives determine a special focus through 2020, we believe it is equallyimportant 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, note S2Umicore Integrated Annual Report 2018

MANAGEMENT APPROACH–– Monitoring of human rights, compliance and risk, note S4–– Monitoring of employee health aspects beyond metal exposure, notes S5-S6–– Monitoring of contractor safety, note S7
The following specific management approach applies to both materials topics and theunderlying performance indicators.
SOCIAL PERFORMANCE POLICY
Our approach to social performance derives from the vision, values and organisational principles
found in The Umicore Way. An internal Group Social Reporting Guidance Note provides detailed
guidance on measuring and reporting on social performance. Specific internal policies havebeen developed to frame specific elements of our social management approach including
Safety, Human Rights and Working Conditions and Training & Development. In addition, Umicore
has a Global Framework Agreement on Sustainable Development in place with international
trade unions.
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 the business 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 toprovide 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 andretaining the right skills).

VALUE CHAIN & 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 bestpractices. The Umicore Way also covers the relationships with our various 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.

75

The performance review of these material topics is reported in the Value Chain and Society,p. 24.
While Umicore’s value chain and society objectives determine a special focus through 2020,
we believe it is equally important to continuously monitor, control and report our relationshipwith all the other stakeholders. Information on our stakeholder groups is listed in the
Stakeholder Engagement, p. 63. In addition, we report on the following topics in the Value
Chain Statements section:–– Monitoring of the supplier assessment for indirect procurement, note V4–– Product regulatory compliance, note V5–– Monitoring of our donations, note V6
The following specific management approach applies to both materials topics and theunderlying 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 highrisk 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-specificapproach whereby all business units are required to identify and engage with their respective
suppliers, customers and stakeholders. In addition, a team comprising members of various
departments, including Corporate EHS, Corporate HR, Group Communications, Corporate Financeand 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 throughour 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 through communications such as this annual report or through other specificcommunication channels.

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CORPORATE GOVERNANCE REPORT76

CORPORATE GOVERNANCE REPORT
G1

Corporate governance framework

77

G2

Corporate structure

77

G3

Shareholders

77

G4

Board of Directors

78

G5

Executive committee

G6 Relevant information in the event of a takeover bid
G7

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

G8 Statutory auditor

80
80
81
82

G9 Code of Conduct

82

G10 Market Manipulation and Insider Trading82

G11 Compliance with the 2009 Belgian Code on
Corporate Governance

82

REMUNERATION REPORT
G12 Board of Directors’ remuneration

83

G13 CEO and Executive Committee remuneration

84

G14 Share and share option ownership and transactions 201787

G15 Changes to Remuneration since the end of 201789

Umicore Integrated Annual Report 2018

CORPORATE GOVERNANCE REPORTG1 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 (www.corporategovernancecommittee.be).
The Corporate Governance Charter describes in detail the governance structure of the Company
and the policies and procedures of the Umicore group. The Charter is available on the Umicore
website (http://www.umicore.com/en/governance/corporate-governance-charter/) and may
be obtained on request from Umicore’s Group Communications Department.
Umicore has articulated its mission, values and basic organizational philosophy in a document
called “The Umicore Way”. This document spells out how Umicore views its relationship with
its customers, shareholders, employees and society. It is supplemented by detailed company
codes and policies, the most significant of which is the Code of Conduct (see note G9).
In terms of organizational philosophy, Umicore believes in decentralization and in entrustinga large degree of autonomy to each of its business units. The business units in turn areaccountable for their contribution to the group’s value creation and for their adherence to group
strategies, policies, standards and sustainable development approach.
In this context, Umicore is convinced that a sound corporate governance structure constitutes anecessary 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 optimalbalance between a culture of entrepreneurship at the level of the business units and effective
steering and oversight processes. The Corporate Governance Charter deals in more detailwith the responsibilities of the shareholders, the board of directors, the CEO, the executive
committee and the specific role of the audit committee and of the nomination & remunerationcommittee. The present statements provide information on governance issues which relate
primarily to the financial year 2018.

G2 CORPORATE STRUCTURE

The board of directors is the ultimate decision-making body of Umicore, subject to all mattersspecifically 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 and a 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 responsiblefor devising the overall strategy of Umicore and for submitting it to the board for review andapproval. It is also entrusted with the implementation of this strategy and with the effective
oversight of the business units and corporate functions. The executive committee is furthermore
responsible for screening the various risks and opportunities that Umicore may encounter in the77

short, medium or longer term (see Risk Management section) and for ensuring that adequate
systems are in place to address these. The executive committee is responsible for defining andapplying Umicore’s approach to sustainable development.
Umicore is organized in business groups which in turn comprise business units that sharecommon 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 groupwide 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 areas of finance, human resources,internal audit, legal, tax, and public and investor relations.

G3 SHAREHOLDERS

3.1 ISSUED SHARES – CAPITAL STRUCTURE
On 31 December 2018 there were 246,400,000 Umicore shares in issue, compared to 224,000,000
on 31 December 2017. This increase resulted from the capital increase dated 12 February
2018. Following this capital increase, the Company’s capital was increased by € 50,000,000
through the issuance of 22,400,000 new shares. The new shares were fully subscribed andpaid up for a total gross amount of € 891,520,000 (issuance premium included). The capitalincrease took place in the framework of the authorized capital and was realized by way of a
private placement to institutional investors through an accelerated bookbuilding procedure.
The preferential subscription right of the existing shareholders was disapplied with respect tothis capital increase.
The identity of shareholders having declared a participation of 3% or more as of 31 December
2018 can be found in Parent Company Separate Summarized Financial Statements, p.157.
Also on 31 December 2018 Umicore owned 5,356,583 of its own shares representing 2.17% of
its capital. Information concerning the shareholders’ authorization for Umicore to buy back its
own shares and the status of such buy-backs can be consulted in the Corporate Governance
Charter and on Umicore’s website.
During the year 1,037,470 own shares were used in the context of the exercise of employee stock
options and 70,502 shares were used for share grants, of which 10,002 to the board members,
54,800 to the executive committee members and 5,700 following a partial conversion intoshares of the bonus of the CEO.

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CORPORATE GOVERNANCE REPORT
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 stability of Umicore.
In 2018 Umicore paid a gross dividend of € 0,70 EUR per share relating to the financial year 2017.
This was an increase by € 0.05 EUR compared to the gross dividend paid in 2017 in respect of
the financial year 2016.
In July 2018 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. As aresult, a gross interim dividend of € 0.35 per share was paid on 28 August 2018.
3.3 SHAREHOLDERS’ MEETINGS 2018
The annual shareholders’ meeting was held on 26 April 2018. On this occasion the shareholders
approved the standard resolutions regarding the annual accounts, the appropriation of theresults and the discharges to the directors and to the statutory auditor regarding their respective
2017 mandates. At the same meeting, the shareholders appointed Mr Koenraad Debackere
as new, independent director for a period of 3 years. Furthermore, the mandates of Messrs
Thomas Leysen and Marc Grynberg as director were renewed for 3 years, and the mandatesof Messrs Mark Garrett and Eric Meurice as independent directors were also renewed for 3
years. The annual shareholders’ meeting also approved the remuneration of the board for 2018.
Details of the fees paid to the directors in 2018 are disclosed in the remuneration report.
Also on 26 April 2018, an extraordinary shareholders’ meeting renewed the authorization
conferred to the Company and its direct subsidiaries to acquire Umicore shares and theauthorization granted to the board of directors to increase the Company’s capital (ie theauthorized capital). These renewed authorizations are valid until respectively 31 May 2022 and
28 May 2023.

G4 BOARD OF DIRECTORS

78

definitive appointment of the above director. The new director completes the term of office of
his or her predecessor.
On 31 December 2018, the board of directors was composed of 10 members: 9 non-executive
directors and one executive director.
On the same date 6 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.
In terms of gender and cultural diversity, the Board counts 3 women and 6 different nationalities
among its 10 members. Diversity also arises from the board members’ educational backgrounds
which include engineering, law, economics, finance and applied languages. The board’s
cumulative industry experience is broad, covering automotive, electronics, chemicals, metals,
energy, finance and scientific/educational sectors. It also includes people experienced in the
public and private sector and members with experience in the different regions in which Umicore
is active. Collectively the board possesses strong experience of managing industrial operations
and counts 9 active or former CEOs in its ranks. The board also has collective experience indisciplines 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 2018:–– Mr Koenraad Debackere was appointed independent director for a period of 3 years at theannual shareholders’ meeting held on 26 April 2018;–– The mandate of Mr Rudi Thomaes as independent director expired on 26 April 2018
Furthermore, the mandates of the following directors were renewed for 3 years in 2018:–– Messrs Thomas Leysen and Marc Grynberg, as directors;–– Messrs Mark Garrett and Eric Meurice, as independent directors.

4.1 COMPOSITION
The board of directors, the members of which are appointed by the shareholders’ meeting
resolving by a simple majority of votes without any attendance requirement, is composed ofat least 6 members. The directors’ term of office may not exceed 4 years. In practice, directors
are elected for a (renewable) period of 3 years.

4.2 MEETINGS AND TOPICS
The board of directors held 5 regular meetings in 2018. On one occasion the board also took
decisions by unanimous written consent.The matters reviewed by the board in 2018 included:–– financial performance of the Umicore group;

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 forthe dismissal of directors. The articles of association provide for the possibility for the board
to appoint directors in the event of a vacancy. The next general meeting must decide on the–– adoption of the statutory and consolidated annual accounts and approval of the statutory andconsolidated annual reports (including the remuneration report);–– approval of the annual and half-year financial statements;–– approval of the agenda of an ordinary and an extraordinary shareholders’ meeting and callingof these meetings;

Umicore Integrated Annual Report 2018

CORPORATE GOVERNANCE REPORT–– capital increase in the context of the authorized capital through an accelerated
bookbuilding procedure;–– Umicore culture and board functioning review;–– investment and divestment projects;–– funding mandates;–– EHS review, including sustainable development;–– audit committee reports;–– strategic opportunities and operational challenges;–– business risk assessment;–– 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 sites in Suzhou (China) and the
production facility for cathode materials in Jiangmen (China).
4.3 PERFORMANCE REVIEW OF THE BOARD AND ITS COMMITTEES
The chairman regularly conducts a performance review of the board and its committees.
The last performance review took place in 2018, based on an open discussion during the board
meeting of 24 September 2018. The assessment included the following items: composition of theboard, selection and appointment of directors, functioning of the board, quality of informationand discussions, culture within the board, performance of duties by the board, relations withthe executive committee, and the audit and nomination & remuneration committees.

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4.4 AUDIT COMMITTEE
The audit committee’s composition and the qualifications of its members are fully in line withthe requirements of Article 526bis of the Belgian Companies Code and the 2009 Belgian Codeon Corporate Governance.
The audit committee is composed of 3 non-executive directors, 2 of them being independent.
It is chaired by Mrs Ines Kolmsee.
The composition of the audit committee underwent one change in 2018: Mr Rudi Thomaes was
replaced by Mr Koenraad Debackere with effective date 26 April 2018.
All the members of the Audit committee have extensive experience in accounting and audit
matters as demonstrated by their curriculum.
The committee met 5 times in 2018. Apart from the review of the 2017 full year and the 2018half year accounts, the audit committee reviewed reports and discussed matters related tointernal audit and risk management, including the effectiveness of controls and mitigationplans. Particular attention was given to risk management matters related to the business group
Energy & Surface Technologies in view of its fast growth. The 2019 internal audit plan was
validated. The committee met with the Group’s auditor and reviewed and approved provided
non-audit services. Considerations related to auditor rotation were discussed.
4.5 NOMINATION & REMUNERATION COMMITTEE
The nomination & remuneration committee is composed of 3 members, who are all nonexecutive directors, 2 of them being independent. It is chaired by the chairman of the board.
The composition of the nomination & remuneration committee underwent one change in 2018:
Mr Rudi Thomaes was replaced by Mrs Françoise Chombar with effective date 26 April 2018.
5 nomination & remuneration committee meetings were held in 2018. 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 the stock grant and option plansoffered in 2018. The committee also discussed the succession planning at the level of the board
and the executive committee.

Umicore Integrated Annual Report 2018

CORPORATE GOVERNANCE REPORT
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 4 members. It is chaired by the CEO, who isappointed by the board of directors. The members of the executive committee are appointed by
the board of directors upon proposal by the CEO and upon recommendation of the nomination& remuneration committee.
The composition of the executive committee remained underwent the following changes
in 2018:–– Mr Marc Van Sande retired and left the executive committee on 31 March 2018;–– Mrs An Steegen was appointed Chief Technology Officer and member of the executive
committee with effective date 1 October 2018.
On 31 December 2018 the executive committee was composed of 7 members including the CEO.
5.2 PERFORMANCE REVIEWA review of the performance of each executive committee member is conducted annuallyby the CEO and discussed with the nomination & remuneration committee. The results arepresented to and discussed to/by the board of directors.
The board also meets annually in a non-executive session (ie without the CEO being present)in order to discuss and review the performance of the CEO.
The above performance reviews took place on 8 February 2018.

G6 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 orother securities.
The Company is furthermore not aware of any restrictions imposed by law except in the context
of the market abuse legislation and of the lock-up requirements imposed on some share grants
by the Belgian Companies Code.

80

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 the shareholders concerned are admitted to the shareholders’meeting and their rights are not suspended. The admission rules to shareholders’ 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 theCompany were suspended by law on 31 December 2018, save for the 5,356,583 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 authorized
capital, only an extraordinary shareholders’ meeting is authorized to amend Umicore’s articles
of association. A shareholders’ meeting may only deliberate on amendments to the articles ofassociation – including capital increases or reductions, mergers, de-mergers and a winding-up –if at least 50% of the subscribed capital is represented. If the above attendance quorum is notreached, a new extraordinary shareholders’ meeting must be convened, which will deliberate
regardless of the portion of the subscribed capital represented. As a general rule, amendments
to the articles of association are only adopted if approved by 75% of the votes cast. The Belgian
Companies Code provides for more stringent majority requirements in specific instances, suchas the modification of the corporate object or the company form.
The Company’s articles of association were amended once in 2018, following the renewal of theauthorized capital approved by the extraordinary shareholders’ meeting held on 26 April 2018.

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
programs may not be transferred inter vivos.

Umicore Integrated Annual Report 2018

CORPORATE GOVERNANCE REPORT
6.7 AUTHORISED CAPITAL – BUY-BACK OF SHARESThe Company’s share capital may be increased following a decision of the board within thelimits of the so-called “authorized capital”. The authorization must be granted by an extraordinary
shareholders’ meeting; it is limited in time and amount and is subject to specific justificationand purpose requirements.
Under the previously approved authorized capital (extraordinary shareholders’ meeting heldon 26 April 2016 and published on 13 May 2016) the board was authorized to increase theCompany’s capital by a maximum amount of € 50,000,000.

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

On 8 February 2018, prior to the board discussing or taking any decision, Marc Grynberg declaredthat he had a direct conflicting interest of a proprietary nature in the implementation of thedecisions 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 thisdecision and he did not take part in the voting.

On 12 February 2018 the board used the above authorization to increase the Company’s sharecapital by € 50,000,000 through the issuance of 22,400,000 new shares. The new shares were
fully subscribed and paid-up for a total gross amount of € 891,520,000 (issuance premiumincluded). This capital increase was realized by way of a private placement to institutional
investors through an accelerated bookbuilding procedure. The preferential subscription right ofthe existing shareholders was disapplied with respect to this capital increase.

The above decisions had/will have the following financial consequences:

The extraordinary shareholders’ meeting held on 26 April 2018 (resolutions published on 29 May
2018) renewed the authorization granted to the board to increase the Company’s share capital.
The board is now authorized to increase the capital in one or more times, now by a maximum
amount of € 55,000,000. Up until 31 December 2018, the board had not used this renewed
authorization. The authorization will lapse on 28 May 2023.

Furthermore he received in 2018 a gross amount of € 130,950 as first half of the deferredpayment of his variable cash remuneration for the reference year 2016 based on (1) the 2-year
average Umicore group profitability criterion, ie the average return on capital employed (ROCE)
for the reference years 2016 and 2017 (ie 14.9% giving rise to a percentage pay-out of 74%) and(2) the 2-year average EBIT growth for the same reference years 2016 and 2017 multiplied by 2
(ie 11.6% giving rise to a percentage pay-out of 23%). Also in 2018 he received a gross amountof € 133,650 as the second half of the deferred payment of his variable cash remuneration for
the reference year 2015 based on (1) the 3-year average Umicore group ROCE for the reference
years 2015, 2016 and 2017 (ie 14.5% giving rise to a percentage pay-out of 70%) and (2) the
3-year average EBIT growth for the same reference years 2015, 2016 and 2017 multiplied by 2
(ie 14.5% giving rise to a percentage pay-out of 29%).

Following a resolution of the extraordinary shareholders’ meeting held on 26 April 2018 theCompany is authorized to acquire own shares on a regulated market within a limit of 10%of the subscribed capital, at a price per share comprised between € 4 and € 100 and until
31 May 2022 (included). The same authorization was also granted to the Company’s direct
subsidiaries. The Company acquired 1,958,988 own shares in 2018 in implementation of theabove authorization.
6.8 AGREEMENTS BETWEEN THE COMPANY AND ITS BOARD MEMBERS OR EMPLOYEESPROVIDING FOR COMPENSATION IF THEY RESIGN, OR ARE MADE REDUNDANT WITHOUTVALID REASON, OR IF THEIR EMPLOYMENT CEASES BECAUSE OF A TAKE-OVER-BID
All the senior vice-presidents of the Umicore group are entitled to a compensation equivalent
to 36 months base salary in the event of a dismissal within 12 months after a change of controlof the Company. As far as the members of the executive committee are concerned, reference
is made to the Remuneration Report (p.83).

A) CASH REMUNERATIONThe CEO received a fixed gross remuneration of € 700,000 in 2018. Also in 2018, he received agross variable cash remuneration totalling € 220,000 as non-deferred part of his variable cash
remuneration for the reference year 2017.

The ROCE range is set between 7.5% (= pay-out of 0%) and a maximum of 17.5% (= payout of 100% at plan performance). When the achieved ROCE percentage falls between theabove targets, the pay-out will be pro-rated. The impact of the EBIT growth is calculated bymultiplying the average percentage of the EBIT growth for the reference years by 2.
In 2019 he will receive the second half of the deferred payment of his annual variable cash
remuneration for the reference year 2016 based on (1) the 3-year average Umicore group ROCE
for the reference years 2016, 2017 and 2018 and (2) the 3-year average Umicore EBIT growth forthe same reference years 2016, 2017 and 2018.

Umicore Integrated Annual Report 2018

CORPORATE GOVERNANCE REPORT
Upon recommendation of the nomination & remuneration committee, the board of directors
decided on 8 February 2018 that, as from reference year 2017 a deferment of 3 years applies
with a pay-out after 3 years for each reference year, based upon a 3-year average ROCE andrecurring EBIT growth. With respect to the 3-year average recurring EBIT growth, the thresholdincreased from 2% to a minimum of average recurring EBIT growth of 10%.
B) GRANT OF SHARES AND STOCK OPTIONS
The financial consequences for Umicore consist of: either 1) as long as Umicore decides tokeep the shares it holds today: the financing and opportunity cost of maintaining such sharesin 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 dateof 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 2018, no specific transactions or contractual commitments occurred between a memberof the board or of the executive committee on the one hand, and Umicore or one of its affiliatedcompanies on the other hand.

G8 STATUTORY AUDITORAt the annual shareholders’ meeting held on 25 April 2017 the statutory auditor’s mandate ofPricewaterhouseCoopers Bedrijfsrevisoren/Réviseurs d’Entreprises BCVBA/SCCRL was renewed
for a period of 3 years. The statutory auditor is represented by Mr Kurt Cappoen for the exerciseof this mandate.

82

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 Codeof Conduct is to ensure that all persons acting on behalf of Umicore carry out their activities
in an ethical way and in accordance with the laws and regulations and with the standards
Umicore sets through its present and future policies, guidelines and rules. The Code of Conduct
contains a specific section on complaints and expressions of concern by employees and“whistleblower” 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 found under 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 Codeon Corporate Governance.

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, ie in 2020
(the latter provided it occurs before 17 June 2020).
The Umicore policy detailing the independence criteria for the statutory auditor may berequested from Umicore.

Umicore Integrated Annual Report 2018

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 and the commitment of
the board members as well as prevailing international market conditions. On the basis of therecommendation made by the nomination & remuneration committee as to the form andstructure of remuneration, the board of directors adopts the policy for remuneration of the nonexecutive directors. The nomination & remuneration committee bases its proposals on a review
of prevailing market conditions for listed companies which are part of the BEL20 index as wellas other European companies of similar size operating in the Chemicals, Metals and Materials
sectors. The results of the survey are discussed within the Nomination & Remuneration
Committee and the board determines the remuneration for non-executive directors and board
Committee 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 theend of 2017 Umicore conducted a survey of Umicore directors’ fees against those of listedcompanies which make up 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 werereviewed by the nomination & remuneration committee on 7 February 2018.
Based on the review of the overall compensation of the board members and of each elementof the compensation, the nomination & remuneration committee concluded that the annual
fixed fee for the Chairman requires adjustment. The nomination & remuneration committee
proposed to the board an increase of the Chairman’s annual fixed fee by € 20,000, the annual
fixed fee of the other members of the board remaining unchanged.
The board of directors of 8 February 2018 followed this recommendation and the annual
shareholders’ meeting of 26 April 2018 approved the non-executive directors’ remuneration.
The remuneration of the non-executive board members was as follows in 2018:–– Chairman: annual ﬁxed fee: € 60,000 + € 5,000 per meeting attended + 2,000 Umicore shares.
–– 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.

83

The remuneration of the board Committee members was as follows in 2018:
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.
2018 BOARD REMUNERATION OVERVIEW(IN EUROS)
Thomas Leysen (Chairman)(Non-Executive Director)

MEETINGSATTENDED

Board
Fixed annual fee

60,000Fee per attended meeting

5,000

Value of 2,000 granted shares

99,6805/5

Nomination & Remuneration Committee
Fee per attended meeting
Total remuneration
Benefit in kind company car
Marc Grynberg(Executive Director)

Board

Liat Ben-Zur(Independent,
Non-Executive Director)

Board

Françoise Chombar(Independent,
Non-Executive Director)

5,000

5/5

209,680
2,563

No remuneration as a Director(see hereafter 2018 CEO remuneration)
Fixed annual fee

5/5

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares

49,840Total remuneration

90,840

4/5

Board
Fixed annual fee

27,000Fee per attended meeting

2,500

Value of 1,000 granted shares

49,8405/5

Nomination & Remuneration Committee
Fee per attended meeting
Total remuneration

3,000

4/4

101,340

continued

Umicore Integrated Annual Report 2018

REMUNERATION REPORT(IN EUROS)
Koenraad Debackere(Independent,
Non-Executive Director)
Appointed by the AGM
of 26 April 2018

Board
Fixed annual fee

18,493

Fee per attended meeting

2,500

Value of 684 granted shares

34,091

3/3

3,425

Fee per attended meeting

3,000

Total remuneration

72,508

3/3

Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares

49,8404/5

Nomination & Remuneration Committee
Fee per attended meeting
Total remuneration
Colin Hall
(Non-Executive Director)

Rudi Thomaes(Independent,
Non-Executive Director)
End of mandate: AGM of
26 April 2018

Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares

49,840Total remuneration

90,840

4/5

Board
Fixed annual fee

8,581

Fee per attended meeting

2,500

Value of 318 granted shares

15,849

1/2

Audit Committee
Fixed annual fee

1,589

Fee per attended meeting

3,000

2/2

3,000

5/5

105,840

Fee per attended meeting

3,000

1/1

Total remuneration

37,519Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares retroceded to GBL

49,840

Fixed annual fee

5,000

Fee per attended meeting

3,000

Total remuneration

4/5

3/5

104,840

Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares

49,840

4/5

Audit Committee
Fixed annual fee
Fee per attended meeting
Total remuneration
Gérard Lamarche(Non-Executive Director)

Eric Meurice(Independent,
Non-Executive Director)

MEETINGSATTENDED

Nomination & Remuneration Committee

Audit Committee

Ines Kolmsee(Independent,
Non-Executive Director)(IN EUROS)

Audit Committee
Fixed annual fee

Mark Garrett(Independent,
Non-Executive Director)

MEETINGSATTENDED

84

G13 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 andin line with market practices, as well as an attractive variable remuneration to reward theperformance of the company against financial and sustainability criteria.
The compensation and benefits package for the CEO and executive committee members
includes the following components: fixed remuneration, variable remuneration, share-based
incentives (share grant subject to a 3-year lock-up period and incentive stock option plans thatcan only be exercised after three years), pension plans and other benefits.

10,0005,000

5/5

125,840

Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares retroceded to GBL

49,840Total remuneration

94,3405/5

Umicore Integrated Annual Report 2018

REMUNERATION REPORTThe 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 createshareholder value. Shares are granted each year to the CEO and executive committee members
in respect of the prior year and are subject to a 3-year lock-up period. As stock options are
irrevocably taxed upon grant according to Belgian law, they have to vest at the time of granting
and are therefore not linked to individual or business performance criteria. As a result, theshare-based incentives should not be considered as a variable remuneration as meant underthe Belgian Corporate Governance law of 6 April 2010 and are vested upon grant.
The remuneration of the CEO and executive committee members is reviewed on an annual basisby the nomination & remuneration committee. A survey is conducted every year to assess thecompetitiveness of the remuneration packages. Umicore benchmarks the total remunerationof 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 ofthe variable remuneration is deferred and subject to multi-year targets or criteria. As fromthe reference year 2017 a deferment of 3 years applies with one deferred payout after 3
years in accordance with the performance criteria (3-year average ROCE and 3-year average
recurring EBIT).
SYNTHETIC SUMMARY OF THE REMUNERATION OF THE CEO AND THE EXECUTIVECOMMITTEE MEMBERS

TIME TO CASH CONVERSION
Current
year (y)FixedAnnual review based on market practices BEL20 and European peer companies

15 months

Undeferredvariable 50%

Fixed discretionary based on individual objectives

3 years

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

39 months

Deferredvariable 50%

Based on the 3-year average Group ROCE and Group recurring EBIT
growth (y, y+1, y+2)

3 to 7 years

Stock options

Upfront grant for the ref year – not linked to individual or business performance
criteria – can only be exercised after three years

The above remuneration components are defined and assessed by the nomination& remuneration committee subject to board approval.

85

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 ofwhich 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 andsustainable 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.
On proposal of the nomination & remuneration committee, the board of directors of 9 February
2017 approved a new concept of the 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).
Upon recommendation of the nomination & remuneration committee, the board of directors
decided on 8 February 2018 that, as from reference year 2017 a deferment of 3 years applies,
with a pay-out after 3 years for each reference year, based upon a 3-year average ROCE andrecurring EBIT growth. With respect to the 3-year average recurring EBIT growth, the thresholdincreased from 2% to a minimum of average recurring EBIT growth of 10%.
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. In case the 10% average recurring EBIT growththreshold is reached, the recurring EBIT growth percentage will be multiplied by 2 and added to
the ROCE pay-out percentage. There will be no adjustment for recurring EBIT growth below 10%.
In case of any relevant structural change, the nomination & remuneration committee reserves
the right to review and adjust the variable 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 arepresented by the chairman, discussed and approved by the board.

Umicore Integrated Annual Report 2018

REMUNERATION REPORTThe 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 thediscretion of the CEO. There are no provisions 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 recognitionof services rendered in the previous year. The number of shares granted to the CEO in respectof the year 2018 was 10,400. The shares are subject to a 3-year lock-up and are not subject toforfeiture conditions.
Stock options are granted to the CEO as part of the annual Umicore Incentive Stock Option Planapproved by the board of directors. The number of stock options granted to the CEO amounted
in 2018 to 150,000. As stock options are irrevocably taxed upon grant according to Belgian law,
there is no vesting period. The options can only be exercised after 3 years. 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 are representation allowance, benefits in kind (company car), andinsurance benefits.

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EXECUTIVE COMMITTEE MEMBERS’ REMUNERATIONFIXED REMUNERATION
The fixed remuneration of the executive committee members is reviewed on an annual basisby the nomination & remuneration committee. 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 performanceas well as the overall performance of the Umicore Group. All the members of the executive
committee are eligible for the same annual variable cash remuneration potential currently
amounting to € 300,000, half of which involves an undeferred pay-out based on the annual
individual performance (including adherence to the values of the Group, environmental andsocial performance).
On proposal of the nomination & remuneration committee, the board of directors of 9 February
2017 approved a new concept of the 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).
Upon recommendation of the nomination & remuneration committee, the board of directors
decided on 8 February 2018 that, as from reference year 2017 a deferment of 3 years applies,
with a pay-out after 3 years for each reference year, based upon a 3-year average ROCE andrecurring EBIT growth. With respect to the 3-year average recurring EBIT growth, the thresholdincreased from 2% to a minimum of average recurring EBIT growth of 10%.
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. In case the 10% average recurring EBIT growththreshold is reached, the recurring EBIT growth percentage will be multiplied by 2 and added to
the ROCE pay-out percentage. There will be no adjustment for recurring EBIT growth below 10%.

Umicore Integrated Annual Report 2018

REMUNERATION REPORT
In case of any relevant structural change the nomination & remuneration committee reserves
the right to review and adjust the variable 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 and take
into account the financial performance, the progress achieved against Group strategic andsustainable 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 theCEO. The results of the assessments and the individual variable cash remuneration proposals
are presented by the CEO to the nomination & remuneration committee before approval by
the board.
There are no provisions allowing the Company to reclaim any variable remuneration paid to the
executive committee members.
SHARE-BASED INCENTIVES (SHARE GRANT AND STOCK OPTIONS)
Umicore shares are granted to the executive committee members at the discretion of the boardof 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 2018 was 7,400.
The shares are subject to a 3-year lock-up and are not subject to forfeiture conditions.
Stock options are granted to the executive committee members as part of the annual Umicore
Incentive Stock Option Plan approved by the board of directors. The number of stock options
granted to each executive committee member currently amounted in 2018 to 35,000. As stock
options are irrevocably taxed upon grant according to Belgian law, there is no vesting period.
The options can only be exercised after 3 years. Stock options allow the beneficiary to acquirea specific number of Umicore shares at a fixed price (the exercise price) within a specific periodof 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.

87

TOTAL CEO AND EXECUTIVE COMMITTEE REMUNERATION FOR 2018
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)CEOEXECUTIVE
COMMITTEE(IN AGGREGATE)

StatusSelf-employed

Fixed

700,000

2,306,250

Undeferred Variable 50% (ref year 2018 – payout 2019)

220,000

662,500

Deferred Variable 25% (ref year 2016 – payout 2019)

144,450

481,500

Shares (ref year 2018 – grant in 2019)354,432

1,381,284

1,033,500

1,266,038

Defined contribution plan

51,156

149,452

Defined benefits plan (service cost)

117,241

512,156

Other benefits:
Representation allowance, benefit in kind company
car, insurance benefits

51,631

123,293

2,672,410

6,882,473

Stock options (ref year 2018 – grant in 2018)
Pension:Total

G14 SHARE AND SHARE OPTION OWNERSHIP AND
TRANSACTIONS 2018EXECUTIVE COMMITTEE SHARE OPTION OWNERSHIP AND TRANSACTIONS 2018*
NUMBEROF
OPTIONS OPTIONSOPTIONS AT GRANTED EXERCISED
31 DEC 2017IN 2018
IN 2018

AVERAGEEXERCISE
PRICE(IN €)YEAR OFNUMBER
GRANT OFOFOPTIONS OPTIONSEXERCISED FORFEITEDOPTIONSAT 31 DEC
2018*

Marc Grynberg

750,000

150,000

30,00018.1872013

0

Stephan Csoma

140,000

35,00070,00016.716

2014/2015

0

870,000
105,000

Denis Goffaux

140,000

35,00035,00016.1432014

0

140,000

Géraldine Nolens

94,00035,00000–0129,000

Filip Platteeuw

128,000

35,00023,00016.1432014

0

140,000

Pascal Reymondet

105,000

35,00017,50017.2892015

0122,500

0

0

0

0

0

0

An Steegen*

These options can be exercised at strike prices between € 16,143 and € 40,90 (value after the share split
on 16 October 16 2017).

Umicore Integrated Annual Report 2018

REMUNERATION REPORT
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 2018

SHARESOWNED AT
31/12/2017

SHARESOWNED AT
31/12/2018

Marc Grynberg

767,600

813,700

Stephan Csoma

29,20036,600Denis Goffaux

42,20049,600Géraldine Nolens

12,10019,500Filip Platteeuw

30,20037,600

Pascal Reymondet

57,70065,100939,000

1,022,100

An Steegen
Total

BOARD OF DIRECTORS SHARE OWNERSHIP 2018

Thomas Leysen

0

SHARESOWNED AT
31/12/2017

SHARESOWNED AT
31/12/2018

883,960

806,000

Liat Ben-Zur

688

1,688

Françoise Chombar

1,684

2,684

Mark Garrett

2,666

3,666

Colin Hall

–

–

5,610

6,610

Gérard Lamarche

3,000

3,000

Eric Meurice

2,666

3,666

Ines Kolmsee

Debackere Koenraad
Total

–

684

900,274

827,998

88

CONTRACTUAL RELATIONSHIPSCONTRACT BETWEEN UMICORE AND MARC GRYNBERG, CEO
Taking into account Marc Grynberg’s seniority in the Umicore Group, the board resolved asfollows in 2008:–– In case of termination of the contract by Umicore, a total compensation equivalent to18 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 beterminated within a 12 months period following a change of control due to a 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
INDIVIDUAL ARRANGEMENTS IN CASE OF TERMINATION OF THE CONTRACT BY UMICORE
The agreements with the executive committee members appointed before 1 July 2018 include acompensation equivalent to 18 months of the annual base salary in case of contract termination.
In line with the Belgian Corporate Governance Law of 6 April 2010, this arrangement wasapproved by the board of directors respectively on 1 June 2010 (for Denis Goffaux), on
18 September 2012 (for Stephan Csoma and Filip Platteeuw) and on 28 April 2015 (for Géraldine
Nolens), following the recommendation of the nomination & remuneration committee.
Pascal Reymondet has a German employment agreement signed on 1 March 1989. There is nocontractual arrangement in case of termination and German law will be applicable.
For the executive committee members appointed after 1 July 2018, a 12 months compensationof the annual base salary will apply in case of contract termination.
For all 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.

Umicore Integrated Annual Report 2018

REMUNERATION REPORTG15 CHANGES TO REMUNERATION SINCE THE END OF 2018

NON-EXECUTIVE DIRECTORS’ REMUNERATION
Based on the review of the overall compensation of the board members and of eachelement of the compensation, the nomination & remuneration committee concluded that thecompensation is appropriate.
CEO’S REMUNERATIONOn 6 February 2019, 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 7 February
2019 decided to increase the annual variable cash remuneration potential of the CEO by€ 160,000 to € 700,000 as of 1 January 2019, half of which is deferred over 3 years. The numberof share-based incentives (stock options) will decrease from 150,000 to 140,000. The fixed
remuneration has not been adjusted and remains at € 700,000.

89

EXECUTIVE COMMITTEE MEMBERS’ REMUNERATIONThe nomination & remuneration committee of 6 February 2019 reviewed the remuneration of
the executive committee members. On proposal of the nomination & remuneration committee,
the board of directors of 7 February 2019 decided to adjust the annual fixed remuneration of theexecutive committee members by € 20,000 to € 420,000 and to increase their annual variable
cash remuneration potential by € 80,000 to € 380,000 as of 1 January 2019, half of which isdeferred over 3 years.
The number of share-based incentives (stock options) will decrease from 35,000 to 30,000.
Following the recommendation of the nomination & remuneration committee of 6 February
2019, the board of directors decided on 7 February 2019 that, similar to the CEO, the membersof the executive committee may also receive their variable cash remuneration partly or totallyin the form of Umicore shares at their discretion.

Umicore Integrated Annual Report 2018

ECONOMIC STATEMENTSGROUP

KEY FIGURES(in million Euros unless stated otherwise)

NOTE

Turnover*
Revenues (excluding metal)

2014

2015

2016

2017

2018

8,828.5

10,441.9

11,085.9

12,277.2

13,716.7
3,271.1

2,366.5

2,629.0

2,667.5

2,915.6

Recurring EBITDA

F9

442.2

504.7

526.8

599.3

720.1

Recurring EBIT

F9

273.7

330.3

350.7

410.3

513.6

of which associates

F9

28.3

14.3

18.3

29.6

5.4

Non-recurring EBIT

F9

(21.6)(74.9)(110.2)(46.2)(13.6)IAS 39 effect on EBIT

F9

(2.7)

(2.7)

(9.0)

(20.7)

0.0

F9

249.3

252.7

231.6

343.3

500.0

10.4

12.0

12.5

13.1

15.5

12.2

13.7

14.6

15.1

15.4

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

Effective recurring tax rate (in %)

F13

21.8

21.4

25.0

25.7

24.4

Recurring net profit, Group share

F9

193.1

246.0

232.9

266.8

326.4

14.4

16.4

(50.3)(2.9)

0.0

Result from discontinued operations,Group share
Net profit, Group share

F9

170.6

169.2

130.7

211.9

317.0

R&D expenditure

F9

143.3

144.5

155.9

175.2

196.4

Capital expenditure

F34

202.4

240.3

287.3

365.3

477.6

Net cash flow before financing

F34

139.9

119.0

141.9

(381.0)(604.0)3,851.4

4,030.1

4,145.7

5,115.7

6,053.3

Total assets of continued operations,end of period

1,704.6

1,731.6

1,789.6

1,803.0

2,609.4

Consolidated net financial debt of continued
operations, end of period

Group shareholders' equity, end of period
F24

298.3

321.3

296.3

839.9

861.0

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

F24

14.6

15.3

13.8

31.1

24.4

67.0

64.0

56.0

140.0

119.0

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

F312,335.3

2,414.5

2,397.4

3,003.5

3,802.4

Capital employed, average

F312,240.1

2,402.2

2,398.7

2,710.0

3,344.2* Including the elimination of the transactions between continued and discontinued operations.
Umicore’s 2018 consolidated financial statements include certain adjustments compared to the preliminary
statements included in the 2018 full year results press release published on 8 February 2019. None of theadjustments have any impact on Umicore’s key performance indicators (revenues (excluding metal), earnings,
related margins or cash flows) nor on any of the 2018 business reviews as published on 8 February 2019.
These adjustments reflect a correction of certain intra company elimination bookings made as part of thecompletion of Umicore’s 2018 full year closing process.
Compared to the preliminary statements as included in the 2018 full year press release published on 8 February
2019, the adjustments are as follows:90–– In relation to the 2018 consolidated income statement: intra company eliminations leading to a decrease ofboth the cost of raw materials and consumables and turnover by € 1,070 million respectively as compared tothe preliminary statements. Consequently, operating expenses and operating income are decreased by thesame amount.
–– In relation to the 2018 consolidated balance sheet: intra company eliminations leading to a decrease of bothtrade and other receivables and trade and other payables by € 352 million respectively as compared to thepreliminary statements. Consequently, current assets and current liabilities, and total assets and total liabilities
are decreased by the same amount.

DATA PER SHARE(in Euros/share)

NOTE

2014

2015

2016

2017

2018

Earnings per share
Recurring EPS

F39

0.89

1.13

1.07

1.22

1.36

EPS – basic

F39

0.79

0.78

0.60

0.97

1.33

EPS – diluted

F39

0.79

0.78

0.60

0.96

1.31

0.50

0.60

0.65

0.70

0.75

Gross dividend

0.65

0.55

0.65

(1.74)(2.53)

Total assets of continued operations,end of period

Net cash flow before financing, basic

F34

17.82

18.65

18.96

23.31

25.11

Group shareholders’ equity, end of period

7.89

8.01

8.18

8.21

10.83
53.14

Shareprice
High

19.11

22.78

29.36

39.88

Low

15.21

15.91

16.19

24.28

34.17

Average

17.16

19.56

23.89

31.45

45.01

Close

16.66

19.34

27.08

39.46

34.86

All Group KPIs included the discontinued operations until September 2017, unless mentioned otherwise.
Zinc Chemicals contributed 6 months in 2016 and Building Products until end September 2017.
On 16 October 2017 each Umicore share was split into 2 new shares. As a result, as from that date,Umicore’s capital is represented 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.

NUMBER OF SHARES
Total number of issued

NOTE

2014

2015

2016

2017

2018

F39

224,000,000

224,000,000

224,000,000

224,000,000

246,400,000
241,043,417

shares, end of periodof which shares outstanding

F39

216,171,456

216,144,932

218,653,700

219,494,433

of which treasury shares

F39

7,828,544

7,855,068

5,346,300

4,505,567

5,356,583

Average number of shares
outstanding, basic

F39216,124,170

216,890,256

217,775,656

219,079,587

239,202,537

Average number of shares
outstanding, diluted

F39

216,903,694

217,854,490

219,370,320

221,148,890

241,686,593

Umicore Integrated Annual Report 2018

ECONOMIC STATEMENTS
REVENUES (EXCLUDING METAL)

RECURRING EBITDA

RECURRING EPSGROSS DIVIDEND

Million Euros

Million Euros

Euros

Euros
0.8

3,500

800

1.6

3,000

700

1.4

2,500

‘14 | 2,366.5‘15 | 2,629.0‘16 | 2,667.5‘17 | 2,915.6‘18 | 3,271.1

2,000
1,500
1,000

600
500
400
300
200

0.8
0.6
0.4

100

0.2

0

0

0

‘15

‘16

‘17

‘18

‘14

‘15

‘16

‘17

‘18

0.6

‘14 | 0.89
‘15 | 1.13
‘16 | 1.07
‘17 | 1.22
‘18 | 1.36

1.0

500
‘14

0.7

1.2

‘14 | 442.2‘15 | 504.7‘16 | 526.8‘17 | 599.3‘18 | 720.1

91‘14 | 0.50
‘15 | 0.60
‘16 | 0.65
‘17 | 0.70
‘18 | 0.75

0.5
0.4
0.3
0.2
0.1

‘14

‘15

‘16

‘17

0

‘18

‘14

‘15

‘16

‘17

‘18

RECURRING EBIT

R&D EXPENDITURE

SHARE PRICE

RETURN ON CAPITAL EMPLOYED (ROCE)

Million Euros

Million Euros

Euros

%

60

20
18
16
14
12.2
12
10
8
6
4
2
0
‘14

250

150
100

‘18

‘14

‘15

‘16

‘17

CAPITAL EXPENDITURE

NET FINANCIAL DEBT

Million Euros

Million Euros

600
500‘14 | 202.4‘15 | 240.3‘16 | 287.3‘17 | 365.3‘18 | 477.6

400
300
200
100
0

‘14

‘15

‘16

‘17

‘18

1,000
900
800
700
600
500
400
300
200
100
0

0

‘18

‘14 | 298.3‘15 | 321.3‘16 | 296.3‘17 | 839.9‘18 | 861.0

‘16

‘17

‘18

‘15

14.6

15.1

15.4

‘16

‘17

‘18

RECURRING TAX RATE

%

%

35

140.0

25

10

160

31.1

30

15
‘15

13.7

GEARING RATIO & AVERAGENET DEBT/RECURRING EBITDA

24.4

14.6
67.0

15.3
64.0

120

13.8

60

56.0

40

5

20
0

‘15

‘16

21.8

21.4

‘14

‘15

25.0

25.7

‘16

‘17

24.4

20

80

0

‘14

30

140

119.0 10020
‘14

31/12/2018‘17

30/11/2018‘16

31/10/2018‘15

30/09/2018‘1410
31/07/2018

031/08/2018

020

31/05/2018

50

30

30/06/2018

100

50
40

31/03/2018

200‘14 | 143.3‘15 | 144.5‘16 | 155.9‘17 | 175.2‘18 | 196.4

30/04/2018

300

200

28/02/2018‘14 | 273.7‘15 | 330.3‘16 | 350.7‘17 | 410.3‘18 | 513.6

400

29/12/2017

500

29/01/2018

600

‘17

‘18

10

0

‘18

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

Umicore Integrated Annual Report 2018

ECONOMIC STATEMENTS
CATALYSIS(in millions of Euros unless stated otherwise)
Total turnover

2014

2015

2016

2017

2018

2,181.3

2,749.3

2,779.1

3,090.6

3,311.0

Total revenues (excluding metal)

917.1

1,093.7

1,163.4

1,253.1

1,360.4

Recurring EBITDA

124.9

172.3

203.4

224.4

237.2

Recurring EBIT

82.6

124.2

152.5

165.5

168.2

of which associates

REVENUES (EXCLUDING METAL)

RECURRING EBITDA

Million Euros

Million Euros

1,600

250

1,400
1,200
1,000

7.0

8.8

9.2

0.4

0.0

800

Total EBIT

79.9

115.9

125.6

161.2

162.3

600

Recurring EBIT margin (in %)

8.2

10.6

12.3

13.2

12.4

400

R&D expenditure

83.2

91.1

102.0

119.8

135.5

Capital expenditure

59.8

78.7

46.5

45.0

78.8

Capital employed, end of period

851.4

968.2

911.2

1,149.6

1,264.9
1,200.2

200‘14 | 917.1‘15 | 1,093.7‘16 | 1,163.4‘17 | 1,253.1‘18 | 1,360.4‘14 | 124.9‘15 | 172.3‘16 | 203.4‘17 | 224.4‘18 | 237.2

150
100
50

200
0

‘14

‘15

‘16

‘17

0

‘18

‘14

‘15

‘16

Capital employed, average

811.4

929.6

917.7

1,014.3

Return on Capital Employed (ROCE) (in %)

10.2

13.4

16.6

16.3

14.0

RECURRING EBIT

R&D EXPENDITURE

Workforce, end of period (fully consolidated)

2,290

2,443

2,464

2,952

3,070

Million Euros

Million Euros

167

168

177

–

–

200

160

Workforce, end of period (associates)

92

‘17

‘18

140
150

120

‘14 | 82.6
‘15 | 124.2‘16 | 152.5‘17 | 165.5‘18 | 168.2

100
50‘14 | 83.2
‘15 | 91.1
‘16 | 102.0‘17 | 119.8‘18 | 135.5

100
80
60
40
20

0

‘14

‘15

‘16

‘17

0

‘18

‘14

‘15

‘16

‘17

‘18

CAPITAL EXPENDITURE

RETURN ON CAPITAL EMPLOYED (ROCE)

Million Euros

%

100

20
16.6

80

‘14 | 59.8
‘15 | 78.7
‘16 | 46.5
‘17 | 45.0
‘18 | 78.8

60
40

10

16.3
14.0

13.4
10.2

5

20
0

15

‘14

‘15

‘16

‘17

‘18

0

‘14

‘15

‘16

‘17

‘18

Umicore Integrated Annual Report 2018

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

2014

2015

2016

2017

2018

Total turnover

1,191.6

1,475.1

1,469.0

2,392.4

3,650.2

Total revenues (excluding metal)

487.7

586.9

610.2

893.6

1,289.3

Recurring EBITDA

90.4

112.6

131.6

197.7

322.9

Recurring EBIT

54.1

70.2

81.7

140.7

256.6

4.7

(3.5)

1.0

10.5

0.9

Total EBIT

of which associates

53.4

37.3

74.2

109.7

251.3

Recurring EBIT margin (in %)

10.1

12.6

13.2

14.6

19.8

R&D expenditure

19.9

20.3

20.2

30.4

38.8

Capital expenditure

46.6

42.5

144.3

225.5

316.1

Capital employed, end of period

618.6

633.4

752.0

1,205.8

1,769.1
1,469.4

REVENUES (EXCLUDING METAL)

RECURRING EBITDA

Million Euros

Million Euros

1,400

350

1,200

300

1,000

‘14 | 487.7‘15 | 586.9‘16 | 610.2‘17 | 893.6‘18 | 1,289.3

800
600
400

‘14 | 90.4
‘15 | 112.6‘16 | 131.6‘17 | 197.7‘18 | 322.9

250
200
100
50

200
0

‘14

‘15

‘16

‘17

0

‘18

‘14

‘15

‘16

Capital employed, average

535.8

640.0

695.3

977.9

Return on Capital Employed (ROCE) (in %)

10.1

11.0

11.7

14.4

17.5

RECURRING EBIT

R&D EXPENDITURE

Workforce, end of period (fully consolidated)

2,181

2,258

2,357

2,716

3,447

Million Euros

Million Euros

Workforce, end of period (associates)

930

936

847

917

782

300

* Adjusted turnover figure for 2018 compared to the preliminary statements included in the February 8 2019press release, as explained in the note on p. 90.

‘17

‘18

45
40

250

35

‘14 | 54.1
‘15 | 70.2
‘16 | 81.7
‘17 | 140.7‘18 | 256.6

200
150
100

‘14 | 19.9
‘15 | 20.3
‘16 | 20.2
‘17 | 30.4
‘18 | 38.8

30
25
20
15
10

50
0

93

5
‘14

‘15

‘16

‘17

0

‘18

‘14

‘15

‘16

‘17

‘18

CAPITAL EXPENDITURE

RETURN ON CAPITAL EMPLOYED (ROCE)

Million Euros

%

400

20

350
300

‘14 | 46.6
‘15 | 42.5
‘16 | 144.3‘17 | 225.5‘18 | 316.1

250
200
150
100

15
10

10.1

11.0

11.7

5

50
0

17.5
14.4

‘14

‘15

‘16

‘17

‘18

0

‘14

‘15

‘16

‘17

‘18

Umicore Integrated Annual Report 2018

ECONOMIC STATEMENTS
RECYCLING(in millions of Euros unless stated otherwise)
Total turnover

2014

2015

2016

2017

2018

5,326.2

6,252.1

6,886.4

7,326.7

7,625.4

Total revenues (excluding metal)

678.4

662.9

641.2

650.3

626.2

Recurring EBITDA

208.7

204.3

187.2

188.9

194.7

Recurring EBIT

148.6

141.5

124.9

127.9

134.8

Total EBIT

141.2

132.5

115.5

121.3

125.8

Recurring EBIT margin (in %)

21.9

21.3

19.5

19.7

21.5

R&D expenditure

24.3

21.2

23.0

18.6

15.2

Capital expenditure

63.8

83.0

72.3

79.5

68.4

Capital employed, end of period

411.7

465.9

498.1

474.5

546.4

Capital employed, average

472.6

460.2

474.5

494.9

483.1

Return on Capital Employed (ROCE) (in %)

31.4

30.7

26.3

25.8

27.9

Workforce, end of period (fully consolidated)

3,302

3,211

3,170

3,092

2,832

–

–

–

–

–

Workforce, end of period (associates)

REVENUES (EXCLUDING METAL)

RECURRING EBITDA

Million Euros

Million Euros

800

300

600

‘14 | 678.4‘15 | 662.9‘16 | 641.2‘17 | 650.3‘18 | 626.2

400
200
0

‘14

‘15

‘16

‘17

‘14 | 208.7‘15 | 204.3‘16 | 187.2‘17 | 188.9‘18 | 194.7

200

100

0

‘18

‘14

‘15

‘16

‘17

RECURRING EBIT

R&D EXPENDITURE

Million Euros

Million Euros

160

‘18

30

140

25

120

‘14 | 148.6‘15 | 141.5‘16 | 124.9‘17 | 127.9‘18 | 134.8

100
80
60
40

‘14 | 24.3
‘15 | 21.2
‘16 | 23.0
‘17 | 18.6
‘18 | 15.2

20
15
10
5

20
0

94

‘14

‘15

‘16

‘17

0

‘18

‘14

‘15

‘16

‘17

‘18

CAPITAL EXPENDITURE

RETURN ON CAPITAL EMPLOYED (ROCE)

Million Euros

%

100

18
16

80

‘14 | 63.8
‘15 | 83.0
‘16 | 72.3
‘17 | 79.5
‘18 | 68.4

60
40
20
0

14
12

12.2

13.7

14.6

15.1

15.4

‘16

‘17

‘18

10
8
6
4
2

‘14

‘15

‘16

‘17

‘18

0

‘14

‘15

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTSCONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flow
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F1 Basis of preparation
F2 Accounting policies
F3 Financial risk management
F4 Critical accounting estimates and judgments
F5 Group companies
F6 Foreign currency measurement
F7 Segment information
F8 Business combinations and acquisitions of associates
and joint ventures
F9 Result from operating activities
F10 Payroll and related benefits
F11 Finance cost – net
F12 Income from other financial investments
F13 Income taxes
F14 Intangible assets other than goodwill
F15 Goodwill
F16 Property, plant and equipment
F17 Investments accounted for using the equity method
F18 Financial assets at fair value through OCI and loans granted
F19 Inventories
F20 Trade and other receivables
F21 Deferred tax assets and liabilities
F22 Net cash and cash equivalents
F23 Currency translation differences and other reserves
F24 Financial debt
F25 Trade debt and other payables
F26 Liquidity of the financial liabilities
F27 Provisions for employee benefits

96
96
97
98
99

100
100
109
112
113
114
115
119

F28 Stock option plans granted by the Company
F29 Environmental provisions
F30 Provisions for other liabilities and charges
F31 Capital employed
F32 Financial instruments by category
F33 Fair value of financial instruments
F34 Notes to the cash flow statement
F35 Rights and commitments
F36 Contingencies
F37 Related parties
F38 Events after the reporting period
F39 Earnings per share
F40 IFRS developments
F41 Auditors’ remuneration

140
141
141
142
143
148
151
152
152
153
153
154
154
155

PARENT COMPANY SEPARATE SUMMARISED FINANCIAL STATEMENTS

156

MANAGEMENT RESPONSIBILITY STATEMENT

158

95

120
122
123
123
123
124
125
126
127
128
128
129
130
131
132
133
134
135
136

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTSCONSOLIDATED INCOME STATEMENT
NOTES

2017

2018

TurnoverF911,947,264

13,716,737

Other operating income

F9

Thousands of Euros

Operating income

71,965

101,559

12,019,229

13,818,296–– In relation to the 2018 consolidated income statement: intra company eliminations leading to a decrease ofboth the cost of raw materials and consumables and turnover by € 1,070 million respectively as compared tothe preliminary statements. Consequently, operating expenses and operating income are decreased by thesame amount.
–– In relation to the 2018 consolidated balance sheet: intra company eliminations leading to a decrease of bothtrade and other receivables and trade and other payables by € 352 million respectively as compared to thepreliminary statements. Consequently, current assets and current liabilities, and total assets and total liabilities
are decreased by the same amount.

Raw materials and consumables

F9(10,324,428)(11,855,284)

Payroll and related benefits

F10(700,706)(731,054)

Depreciation and impairments

F9(203,703)(227,162)

Other operating expenses

F9(470,015)(516,593)(11,698,853)(13,330,094)(8,286)

5,044

312,090493,246

Profit (loss) of the period from continuing operations
Items in other comprehensive income that will not bereclassified to P&L

Operating expenses
Income (loss) from other financial assets

F12

RESULT FROM OPERATING ACTIVITIESFinancial income

F11

4,354

5,805

Financial expenses

F11(34,813)(47,847)

96

The notes on pages 100 to 157 are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
NOTES

Thousands of Euros

2017

2018

229,143

327,843

Foreign exchange gains and losses

F11(6,864)(26,840)(7,611)F17

29,555

6,720

Changes due to remeasurements of post employment
benefit obligations

6,464

Share in result of companies accounted for using
the equity method583

431,083

Changes in deferred taxes directly recognised in othercomprehensive income(4,167)304,322(75,178)(103,240)

229,143

327,843

Profit (loss) before income tax
Income taxes

F13

Profit (loss) from continuing operations
Profit (loss) from discontinued operations*
PROFIT (LOSS) OF THE PERIOD(2,893)–

Changes in financial assets at FV through OCI reserves

3,738(2,699)226,251

327,843

Changes in cash flow hedge reserves

15,278(30,180)

Changes in deferred taxes directly recognised in othercomprehensive income(2,286)

10,169of which minority share

14,308

10,860of which Group share

211,943

316,984(EUR)

Euro
Basic earnings per share from continuing operations

F39

0.98

1.33

Total basic earnings per share

F39

0.97

1.33

Diluted earnings per share from continuing operations

F39

0.97

1.31

Total diluted earnings per share

F39

0.96

1.31

0.70

0.75

Dividend per share

Items in other comprehensive income that may besubsequently reclassified to P&L* Attributable to equityholders of these companies. The details of the discontinued results of 2017 can be foundin the 2017 Consolidated Financial Statements.
Umicore’s 2018 consolidated financial statements include certain adjustments compared to the preliminary
statements included in the 2018 full year results press release published on 8 February 2019. None of theadjustments have any impact on Umicore’s key performance indicators (revenues (excluding metal), earnings,
related margins or cash flows) nor on any of the 2018 business reviews as published on 8 February 2019.
These adjustments reflect a correction of certain intra company elimination bookings made as part of thecompletion of Umicore’s 2018 full year closing process.
Compared to the preliminary statements as included in the 2018 full year press release published on 8 February
2019, the adjustments are as follows:

Changes in currency translation differences
Other comprehensive income fromcontinuing operations

F23

Total comprehensive income from discontinued operations(83,661)(4,129)(64,635)(33,868)(3,421)–

161,087

293,975

of which Group share

148,903

283,454of which minority share

12,184

10,521

Total comprehensive income for the period

The deferred tax impact on the consolidated statement of comprehensive income is due to the
cash flow hedge reserves for € 10.2 million and to employee benefit reserves for € 0.6 million.
The notes on pages 100 to 157 are an integral part of these consolidated financial statements.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

97

CONSOLIDATED BALANCE SHEET*
Thousands of Euros

NOTES

31/12/2017

31/12/2018

Thousands of Euros

1,945,675

2,246,215

Equity of the Group

1,862,638

2,659,336

F14, F15

328,808

337,305

Group shareholders’ equity

1,803,033

2,609,408

Share capital and premiums

502,862

1,384,273

Retained earnings

1,584,442

1,610,882

Non-current assets
Intangible assets
Property, plant and equipment

F161,301,411

1,601,892

Investments accounted for using the equity method

F17153,008

151,372

Available-for-sale financial assets

F18

22,331–

Financial assets at fair value through Other Comprehensive Income

F18

–

8,028

Treasury shares

Currency translation differences and other reserves

NOTES

F23

31/12/2017

31/12/2018(202,517)(227,644)(81,754)(158,103)

Loans granted

F18

11,285

2,627

Minority interest

Trade and other receivables

F20

14,146

12,134Non-current liabilities

Deferred tax assets

F21

114,686

132,855

Provisions for employee benefits

F27

342,813

333,791

3,169,985

3,807,095

Financial debt

F24694,104

708,846
24,391

Current assets

59,60349,927

1,168,752

1,185,381

Loans granted

F18

1,750

6,270

Trade and other payables

F25

40,442Inventories

F19

1,628,423

2,308,094

Deferred tax liabilities

F21

3,540

6,225

Trade and other receivables

F20

1,335,660

1,145,980

Provisions

F29, F30

87,852

112,128

36,036

61,672Current liabilities

2,084,272

2,208,593

F22

168,115

285,079

Financial debt

F24

313,868

436,760

5,115,661

6,053,310

Trade and other payables

F25

1,639,817

1,589,360

Income tax receivables
Cash and cash equivalents
TOTAL ASSETS

Income tax payable
Provisions
TOTAL EQUITY & LIABILITIES

F29, F30

62,83074,50067,759107,973

5,115,661

6,053,310* Adjusted figures for 2018 compared to the preliminary statements included in the 8 February 2019 press
release, as explained in footnote on p. 96.

The notes on pages 100 to 157 are an integral part of these consolidated financial statements.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

98

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYRESERVES

CURRENCY
TRANSLATION &OTHER RESERVESTREASURY
SHARESMINORITY
INTERESTTOTAL FORCONTINUINGOPERATIONSELEMENTS OFCOMPREHENSIVEINCOME OFDISCONTINUEDOPERATIONS

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

58,446

1,887,460(39,416)

1,848,045–

214,836––

14,308229,143(2,893)

226,251

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)–

12,183

164,507(3,421)

161,087

SHARE CAPITAL& PREMIUMS
502,862

Result of the period

Thousands of Euros
Balance at the beginning of 2017

TOTAL EQUITY

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
Change in accounting policies–(47,079)

4,178–(5,386)(48,287)

42,837(5,450)502,862

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

59,603

1,862,636(0)

1,862,636–(2,369)––144(2,225)–(2,225)502,862

1,582,073(202,517)(81,754)

59,747

1,860,411(0)

1,860,411

Result of the period–

316,984––

10,860327,844–

327,844

Other comprehensive income for the period––(33,529)–(339)(33,868)–(33,868)

Total comprehensive income for the period–

316,984(33,529)–

10,521

293,976–

293,976

Restated balance at the beginning of 2018

Changes in share-based payment reserves––

11,150––

11,150–

11,150881,410–––

10,874892,284–

892,284

Dividends–(175,337)––(20,110)(195,447)–(195,447)

Transfers–(20)(2,981)

3,001

–

–

–

–

Changes in treasury shares

–

–

–

(79,350)–(79,350)–(79,350)

Capital increase

Changes in scope
Balance at the end of 2018–

(112,811)

233–(11,104)(123,682)–(123,682)

1,384,273

1,610,882(227,644)(158,103)

49,9272,659,343(0)2,659,336

The legal reserve of € 55.0 million which is included in the retained earnings is not available for distribution.
The share capital of the Group as at 31 December 2018 was composed of 246,400,000 shares with no par value.
The capital increase is the consequence of the increase of share capital during the first semester 2018 as a result of an equity placement through an accelerated bookbuild for a total gross amountof € 891.5 million (€ 881 million net of transaction costs).
The change in scope for € 123.7 million is related to the increase of Umicore’s interest in its Chinese cathode material production entity from 70% to 90%.
The notes on pages 100 to 157 are an integral part of these consolidated financial statements.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

99

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

2017

2018

Thousands of Euros

229,144

327,844

Capital increase(29,554)(6,720)Adjustment for non-cash transactions

F34

190,714348,280

Own sharesAdjustments for items to disclose separately or underinvesting and financing cash flows

F34

98,274130,369

Interest received

Change in working capital requirement

F34

NOTES

Capital increase (decrease) minority

Interest paid

Cash flow generated from operations

2018

–

881,364

416

10,794

5,972(79,350)

4,027

5,936

(18,398)(37,615)(275,509)(708,017)

New loans and repayments

562,072

120,310

213,070

91,756

Dividends paid to Umicore shareholders(150,682)(175,347)

Dividend received

15,333

8,392

Dividends paid to minority shareholders

Tax paid during the period(74,449)(127,446)

NET CASH FLOW GENERATED BY (USED IN)
FINANCING ACTIVITIES

Government grants received

2017

F34

(5,640)(20,110)

397,768

705,982

(642)

–

F34

153,313(27,299)

Effect of exchange rate fluctuations

13,997(508)

Acquisition of property, plant and equipment

F16(351,056)(465,989)

TOTAL NET CASH FLOW OF THE PERIOD

68,400101,217

Acquisition of intangible assets

F14(25,621)(31,758)

71,275

155,898F8(211,508)(24,188)

Net cash and cash equivalents at the beginning of theperiod for continuing operations

F22

Acquisition of new subsidiaries, net of cash acquired–(123,384)

Impact of final financing carved out entities

16,223–Acquisition of financial assets

F18

(119)

(2,480)F22155,898

257,114

New loans extended

F18

of which cash and cash equivalents

168,115

285,079of which bank overdrafts(12,217)(27,965)

NET OPERATING CASH FLOW

Acquisition in additional shareholdings in subsidiaries(9,889)(2,524)(598,194)(650,324)

Disposal of property, plant and equipment

5,414

6,182

Disposal of intangible assets

1,438

12,071

Disposal of subsidiaries and associates, net of cash disposed

74,18935,701443

17,398Sub-total acquisitions

Disposal of financial fixed assets
Repayment of loans

F18Internal transfers
Sub-total disposals
NET CASH FLOW GENERATED BY (USED IN)
INVESTING ACTIVITIES

F34

20,033

3,634–(1,620)101,516

73,366(496,678)(576,958)

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

The notes on pages 100 to 157 are an integral part of these consolidated financial statements.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
The Company’s consolidated financial statements and the management report prepared inaccordance with article 119 of the Belgian Companies Code set forth on pages 1-63 and 90158, for the year ended 31 December 2018 were authorised for issue by the Board of Directors
on 8 March 2019. They have been prepared in accordance with the legal and regulatory
requirements applicable to the 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 EUR, rounded to thenearest thousand, and have been prepared on 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 the Group 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 istransferred 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 considerationtransferred for the acquisition of a subsidiary is the fair values of the assets transferred, theliabilities incurred to the former owners of the acquiree and the equity interests issued by theGroup. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Identiﬁable assets acquired and liabilities andcontingent liabilities assumed in a business combination are measured initially at their fairvalues 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 of acquiree’s identiﬁable net assets. Acquisition-related costs
are expensed as incurred.

100

If the business combination is achieved in stages, the acquisition date carrying value of theacquirer’s previously held equity interest in the acquiree is re-measured to fair value at theacquisition 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 theacquisition date. Subsequent changes to the fair value of the contingent consideration thatis deemed to be an asset or liability is recognised in proﬁt or loss. Contingent considerationthat is classiﬁed as equity is not re-measured, and its subsequent settlement is accounted forwithin equity.
Inter-company transactions, balances and unrealised gains on transactions between groupcompanies 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 inter-company transactions between discontinued andcontinued operations. As an accounting policy Umicore opts to not eliminate the intercompany
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 be eliminated 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 share acquiredof the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on
disposals to minority interests are also recorded in equity.
2.1.3 DISPOSAL OF SUBSIDIARIESWhen the Group ceases to have control, any retained interest in the entity is re-measured toits fair value at the date when control is lost, with the change in carrying amount recognised
in proﬁt or loss. The fair value is the initial carrying amount for the purposes of subsequently
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 areaccounted for as if the Group had directly disposed of the related assets or liabilities. This may
mean that amounts previously recognised in other comprehensive income are reclassiﬁed to
proﬁt or loss.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
2.1.4 ASSOCIATES
Associates are all entities over which the group has signiﬁcant inﬂuence but not control, generallyaccompanying a shareholding of between 20% and 50% of the voting rights. Investments inassociates 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
to recognise 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 ownershipinterest 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 where appropriate. The group’s share of post-acquisition proﬁt or loss is recognisedin 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 groupdoes not recognise further losses, unless it has incurred legal or constructive obligations ormade payments on behalf of the associate. The group determines at each reporting datewhether there is any objective evidence that the investment in the associate is impaired. If thisis the case, the group calculates the amount of impairment as the difference between therecoverable 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 andits associate are recognised in the group’s ﬁnancial statements only to the extent of unrelated
investor’s interests in the associates. Unrealised losses are eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Accounting policies of associates
have been changed where necessary to ensure consistency with the policies adopted by thegroup. Dilution gains and losses arising in investments in associates are recognised in theincome 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 thecontractual rights and obligations each investor. The group has assessed the nature of its joint
arrangements and determined them to be joint ventures. Joint ventures are accounted forusing the equity method. Under the equity method of accounting, interests in joint ventures are
initially recognised at cost and adjusted thereafter to recognise the group’s share of the postacquisition 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

101

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 theextent of the group’s interest in the joint ventures. Unrealised losses are also eliminated unlessthe transaction provides evidence of an impairment of the asset transferred. Accounting policiesof the joint ventures have been changed where necessary to ensure consistency with thepolicies adopted by the group.
2.1.6 SEGMENT REPORTING
Note F7 provides the Company’s segment information, in line with IFRS 8. Umicore is organisedin business units. Operating segments under IFRS 8 at Umicore are differentiated by their
growth drivers in the areas of Catalysis, Energy & Surface Technologies, and Recycling.
The Catalysis segment provides automotive catalysts for gasoline and diesel light and heavyduty diesel applications, including on-road and non-on road vehicles. The business groupalso offers stationary catalysis for industrial emissions control and produces precious metalsbased 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 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 ofthese metals from a wide range of input materials ranging from industrial residues to end-oflife materials. 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 isalso included in Corporate.
Operating segments are reported in a manner consistent with the internal reporting provided
to the Board and the Executive Committee.
The segment results, assets and liabilities include items directly attributable to the segment aswell as those elements that can reasonably be allocated to a segment.
The pricing of inter-segment sales is based on an arm’s length transfer pricing system. In theabsence of relevant market price references, “cost plus” mechanisms are used.
Associate companies are allocated to the business group with the closest ﬁt from a market
segment perspective.

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FINANCIAL STATEMENTS
2.2 INFLATION ACCOUNTING
For the reported period, there is one subsidiary in the Umicore Group having a functional currency
belonging to a hyperinﬂationary economy in Argentina. However, in view of significance to theGroup, this is not material for IAS 29 to be applied.
2.3 FOREIGN CURRENCY TRANSLATION
Functional currency: items included in the ﬁnancial statements of each entity in the Groupare measured using the currency that best reﬂects the economic substance of the underlying
events and circumstances relevant to that entity. The consolidated ﬁnancial statements arepresented in EUR which is the functional currency of the parent. To consolidate the Group andeach 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 ofthe shareholders’ equity under “currency translation differences”.
When a foreign operation is partially disposed of or sold, exchange differences that wererecorded in equity are recognised in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as
local currency assets and liabilities of the foreign entity and are translated at the closing rate.
2.4 FOREIGN CURRENCY TRANSACTIONS
Foreign currency transactions are recognised during the period in the functional currency ofeach entity at exchange rates prevailing at the date of transaction. The date of a transactionis the date at which the transaction ﬁrst qualiﬁes for recognition. For practical reasons a ratethat approximates the actual rate at the date of the transaction is used at some operations, forexample, an average rate for the week or the month in which the transactions occur.
Subsequently, monetary assets and liabilities denominated in foreign currencies are translated
at the closing rate at the end of the reporting period.

102

2.5 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at historical cost, less accumulated depreciation andimpairment 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 thecosts of the assets in accordance with IAS 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 over which an asset is expected to be used by the Company.
Repair and maintenance costs are expensed in the period in which they are incurred, if they
do not increase the future economic beneﬁts of the asset. Otherwise they are classiﬁed as
separate components of items of property, plant and equipment. Those major components ofitems of property, plant and equipment that are replaced at regular intervals are accounted
for as separate assets as they have useful lives different from those items of property, plantand equipment to which they relate. Umicore’s PPE, being complex and highly customisedindustrial assets, typically do not have an individual resale value if put outside the overall
context of the operations. Therefore, no residual value is taken into account when determining
the depreciable value.
The typical useful life per main type of property, plant and equipment are as follows:–– For material newly acquired or constructed assets, the useful life is separately assessed at
the moment of the investment request and can deviate from the above standards.
–– Management determines the estimated useful lives and related depreciation charges forproperty, plant and equipment. Management uses standard estimates based on a combinationof physical durability and projected product life or industry life cycles. These useful lives couldchange 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 or write-down technically obsolete or nonstrategic assets that have been abandoned or sold.

Gains and losses resulting from the settlement of foreign currency transactions, and from thetranslation of monetary assets and liabilities denominated in foreign currencies, are recognisedin 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
Land use rights are part of the Property, Plant and Equipment and are typically amortised overthe 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
VehiclesMobile handling equipment

57Computer 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 share in the fair value of the identiﬁable assets andliabilities of the acquired entity at the date of acquisition. Goodwill is recognised at cost lessany accumulated impairment losses.
Goodwill from associates and joint ventures is presented in the balance sheet on the line
“Investments accounted for under the equity method”, together with the investment itself.
To assess impairment, goodwill is allocated to a cash-generating unit (CGU). At each balance
sheet date, these CGUs are tested for impairment, meaning an analysis is performed todetermine 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.

103

2.6.3 RESEARCH AND DEVELOPMENT
Research costs related to the prospect of gaining new scientiﬁc or technological knowledge andunderstanding are recognised in the income 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 been clearly demonstrated.
–– the expenditures related to the process or product can be clearly identiﬁed andreliably 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 astraight-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 sitesof certain companies, including Umicore. Each year, at the end of February, one ﬁfth of theseemission rights is put on an ofﬁcial registry account. The release of emission rights to thisregistry account entails the capitalization in the intangible assets, which is in line with theguidance of the Belgian Accounting Standards Commission. Gains on the recognition 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 theclosing market price is below the carrying value, a write-down is booked. At each closing date,the Group estimates the actual use of rights for the period and recognises a provision for therights 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 therelease of deferred revenue. Historically, Umicore owns the required rights to ensure its normal
operating activities.

The excess of the Group’s interest in the fair value of the net identiﬁable assets acquired overthe cost of acquisition is recognised in the income statement immediately.

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FINANCIAL STATEMENTS
2.6.5 OTHER INTANGIBLE ASSETS
All the following types are recorded at historical cost, less accumulated amortization andimpairment losses:–– Concessions, patents, licenses: are amortized over the period of their legal protection with aminimum of 5% (in general over 5 years).
–– Customer portfolios: are typically amortized over a period of five years.
–– ERP software are typically amortized over a period of ten years.
–– Smaller software are typically amortized over a period of five years.
In case of an earn out component, a remeasurement is foreseen, adapting the carrying amountof the asset and the amortization 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 ofownership are classiﬁed as ﬁnancial leases. They are measured at the lower of fair value andthe estimated present value of the minimum lease payments at inception of the lease, lessaccumulated depreciation and impairment losses.
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 ischarged to the income statement over the lease period. Leased assets are depreciated over the
shorter of the 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 retainedby the lessor are classiﬁed as operating leases. All payments or receipts under operating lease arerecognised 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.

104

2.8 FINANCIAL ASSETS AT FAIR VALUE THROUGH OCI, LOANS AND NON-CURRENTRECEIVABLES
All movements in financial assets at fair value through OCI, loans and receivables are accounted
for at trade date.
Financial assets at fair value through OCI are carried at fair value. Unrealised gains and losses
from changes in the fair value of such assets are recognised in equity as financial assets atfair value through OCI reserves (Other Comprehensive Income). When the assets are sold or
impaired, the accumulated fair value adjustments are also included in the OCI. Financial assets
are derecognised when the rights to receive cash ﬂows from the investments have expiredor have been transferred and the Group has transferred substantially all risks and rewardsof 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 realizable value. Cost comprises directpurchase or manufacturing costs and an appropriate allocation of overheads.
Inventories are classiﬁed as:
1. Base products eligible for metal hedging
2. Base products without metal hedging
3. Consumables
4. Advances paid
5. Contracts in progressBase products eligible for metal hedging are metal-containing products on which Umicore is
exposed to metal price ﬂuctuation risks and where Umicore applies an active and structured
risk management process to minimise the potential adverse effects of market price ﬂuctuations
on the ﬁnancial performance of the Group.
The metal contents are classiﬁed in inventory categories that reﬂect their speciﬁc nature andbusiness 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.

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FINANCIAL STATEMENTS
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 realizable value, meaning the estimated selling price less theestimated costs of completion and the estimated cost necessary to make the sale. Write-downs
are presented separately. Advances paid are down-payments on transactions with suppliers
for which the physical delivery has not yet taken place and are booked at nominal value.
Contracts in progress are valued using the percentage-of-completion method.
2.10 TRADE AND OTHER RECEIVABLES
Trade and other receivables are measured at amortised cost, ie at the net present value of thereceivable amount. Unless the impact of discounting is material, the nominal value is taken.
Receivables are written down for irrecoverable amounts. All write-downs are recorded on a
separate account and are netted with the carrying amounts when all chances of recovery
are depleted.
Trade receivables of which substantially all the risks and rewards have been transferred are
derecognised from the balance sheet. The positive fair value of derivative ﬁnancial instruments
is included under this heading.
Trade and other receivables are subject to a new impairment methodology, referred to as the
Expected Credit Loss (ECL) model, measuring the expected credit losses based on shared credit
risk characteristics. Umicore has established an allowance matrix based on different customer
and sector ratings, ageing balances, macro-economic and regional factors and historicalloss patterns.
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 ofthree 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, are reviewed for impairment whenever events orchanges in circumstances indicate that the carrying amount may not be recoverable. If any such
indication exists, the recoverable amount of the asset is estimated.

105

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 thecarrying amount that would have been determined, net of depreciation or amortization, if noimpairment 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 of income 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 adeduction 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 subsidiary that is attributable to third parties, together withthe appropriate proportion of subsequent proﬁts and losses.
In the income statement, the minority share in the Group’s proﬁt or loss is presented separatelyfrom 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.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
A constructive obligation is an obligation that derives from Company actions where, by anestablished pattern of past practice or published policies, the Company has indicated that it will
accept certain responsibilities and, as a result, the Company has created a valid expectationthat 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 end of the reporting period and taking into account the probabilityof the possible outcome of the event. Where the effect of the time value of money is material,
the amount of a provision is the present value of the expenditure expected to be required tosettle the obligation. 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, inaccordance with the Company’s environmental 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 graduallydepending 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 approveda 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 sickleave, 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.

106

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 andreduced 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-employmentdeﬁned 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 postemployment 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 inpersonnel 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 arein general valued annually by independent qualiﬁed actuaries. All remeasurements as a resultof changes in the actuarial assumptions are immediately recognised in the income statement.
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 date or 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, theseobligations are valued annually by independent qualiﬁed actuaries. All remeasurements
as a result of changes in the actuarial assumptions are immediately recognised in theincome statement.

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 throughpayments to insurance companies or trustee-administered funds.

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FINANCIAL STATEMENTS

107

2.16.5 EQUITY AND EQUITY-RELATED COMPENSATION BENEFITS (SHARE-BASED PAYMENTS IFRS 2)
Different stock option and share programs allow Company employees and Company senior
management to acquire or obtain shares of the Company.

2.19 INCOME TAXES
Taxes on proﬁt or loss of the year include current and deferred tax. Such taxes are calculated inaccordance with the tax regulations in effect in each country the Company operates in.

The option or share exercise price equals the market price of the (underlying) shares at thedate of the grant. When the options are exercised, shares are delivered to the beneﬁciaries
from existing own shares. For the share programs, 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.

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 options and shares are typically vested at the moment of the grant and their fair value isrecognised as an employee beneﬁt expense with a corresponding increase in equity as sharebased payment reserves. For the options, the expense to be recognised is calculated by anactuary, using a valuation model which takes into account all features of the stock options, thevolatility of the underlying stock and an assumed exercise pattern.
As long as the options granted have not been exercised, their value is reported in the Statementof 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 and discount rate impacts which are classiﬁed underﬁnancial 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, ie at the net present value of the payableamount. 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.

The tax payable is determined based on tax laws and regulations that apply in each of thenumerous jurisdictions 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 Groupassesses its tax position individually and on a regular basis and if the tax payable differs fromthe amounts initially estimated then the difference is charged or credited in the accounts forthe year in which it is determined.
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 theCompany operates in.
Deferred tax assets are only recognised to the extent that it is probable that future taxable
proﬁt will be available against which the temporary 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 REVENUE RECOGNITION FROM CONTRACTS WITH CUSTOMERS
Despite the complexity of several processes within each business unit, the performanceobligations are rather straight forward, those being:–– Catalysis: the delivery of the goods in accordance with contract specifications. These specifications
have been predefined and validated through samples. This latter is not considered as asignificant stream for further analysis under IFRS 15.
–– Recycling: the return of the refined metals back to the client in accordance with the contracteither in their pure metal content or as part of a (semi)finished product and the sale of metal(including boni) towards customers.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS–– Energy and Surface Technologies: the delivery of the products according to specificationagreed in the sales order received.
Umicore has carefully considered the satisfaction of the performance obligation and concludes
that for sales within Catalysis the revenue is recognised at a point of time when the control
transfers to the customer. Despite the products being customised, the considerations for overtime have not been met given that the customer does not control the production process nor
has the Group the entitlement to get paid prior to delivery of the goods. The control is therefore
transferred based upon the usual delivery terms (incoterms) and the customer accepting thegoods upon delivery.
For sales within Recycling, the revenue is recognised at a point in time when the control of therefined products or metal is back in the hands of the customers (refinery) or in the hands of thecustomers (sale of metal, including boni), embarked by the delivery.
For sales within Energy and Surface Technologies the revenue is recognised at a point in time
when the control is transferred to the customer, this moment being driven by the delivery of
the products according to the incoterms.
Some of the contracts do contain commercial discounts and rebates, however frequency isrelatively low, and magnitude is not significant. If applicable, these are recognised in the same
period the sale is established.
There are no additional warranty agreements sold to clients on top of legal requirements,
therefore these are not considered as a separate performance obligation.
Consequently, the transaction price identified within the agreement is allocated in full to theperformance obligation.
There are no significant contract balances where either the Group has performed theperformance obligation for which no billing occurred yet, or alternatively has received advancepayments for which the performance obligation has not been satisfied.
The revenues from contracts with customers are further detailed in note F9.
The assessment in view of impairment losses is captured under the expected credit loss model
as detailed in note F20.
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 withthe conditions attached to it. Grants are recognised in the income statement over the period
necessary to match them with the costs they are intended to compensate.

108

2.21 FINANCIAL INSTRUMENTS
The Company uses derivative ﬁnancial and commodity instruments primarily to reduce theexposure to adverse ﬂuctuations in foreign exchange rates, commodity prices, interest rates
and other market risks. The Company uses mainly spot and forward contracts to cover the metal
and currency risk, and swaps to hedge the interest rate risk. The operations carried out on the
futures markets are not of a speculative nature.
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 initiallyat fair value at trade date.
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
IFRS 9. The bottom layer approach for the fair value hedge on groups of closed portfolios offoreign exchange risk and commodity risk exposures is applied. Under this approach, bottom
layers representing the nominal amount of an exposure that has historically been present on aconstant and continuous basis are defined. A bottom layer is part of a group of both on balanceand off balance foreign exchange and commodity positions, that is, either trade payables,
inventories and purchase commitments or trade receivables and sales commitments exposedto the variability of foreign currencies or commodity prices.
For commodity risk exposures, IFRS 9 based bottom layer based fair value hedge accounting isapplied to the extent there are market based derivatives available for that commodity. In theabsence of such market based derivatives and so obtaining fair value hedge accounting at
inception as defined under IFRS 9, the hedged items are kept at cost and are submitted to thevaluation rules applicable to similar non-hedged items, ie the recognition at the lower of costor market (IAS 2) for inventories, or the recognition of provisions for onerous contracts (IAS 37)
for physical commitments.
When there is a consistent practice of trading of commodities through the use of commodity
contracts by a dedicated subsidiary or a cash-generating 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 at fair value through the income statement and the related
physical and/or commodity commitments are classiﬁed as derivatives and measured at fairvalue through the income statement.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
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 (ie affect the income statement). At that time the recognised gains andlosses 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
IFRS 9, 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.
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 expectedfrom 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 aderivative is not closely related to the host contract, it is separated from the host contract andaccounted for under the rules of IFRS 9 (fair value through proﬁt or loss). The host contract isaccounted for using the rules applicable to executory contracts, which effectively means thatsuch a contract is not recognised in the balance sheet or proﬁt and loss before delivery on thecontract takes place.
2.22 NON-RECURRING RESULTS
Non-recurring results relate primarily to restructuring measures, impairment of assets andother income or expenses arising from events or transactions that are clearly distinct from theordinary activities of the Company.
2.23 IMPACT OF CHANGES IN ACCOUNTING POLICIES ON THE OPENING OF FINANCIAL
STATEMENTS
2.23.1 IMPACT OF IFRS 9IFRS 9 replaces the provisions of IAS 39 on the accounting and classification of financial assets
and liabilities, financial instruments and hedging. Umicore adopted IFRS 9 as from 1 January
2018, resulting in a number of changes in accounting policies and adjustments in the financial
statements. Comparative figures have not been restated.

109

The total impact on the Group’s retained earnings as at 1 January 2018 amounts to € 2.4 million:–– Closing retained earnings 31 December 2017 under IAS 39: € 1,584.4 million–– Increase in allowance for trade and other receivables under the Expected Credit Loss (ECL)
model: € -8.4 million (net impact after taxes) (refer to the above accounting policies)–– Application of Fair Value Hedge accounting: € +6.0 million (net impact after taxes) (refer tothe above accounting policies)
Opening retained earnings 1 January 2018 under IFRS 9: € 1,582.1 million.
The additional ECL based loss allowances taken in result during 2018 amount to € 3.0 million
before taxes.
2.23.2 IMPACT OF IFRS 15
As of 1 January 2018, IFRS 15 “Revenue from Contracts with Customers” replaces IAS 18“Revenue”, IAS 11 “Construction Contracts” and a number of revenue related interpretations.
The new standard establishes a five-step model to account for revenues arising from contracts
with customers. Umicore has assessed each of the revenue streams of every business unit fromtaking the new five-step model into account and concluded that IFRS 15 does not have any
material impact on the revenue recognition of the Group. Consequently, the Group did not haveto change its accounting policies or make any retrospective adjustment.

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 programmeseeks to minimise the adverse effects on the ﬁnancial performance of the Group by hedging
most of these risks through the use of ﬁnancial and insurance instruments.
3.1 CURRENCY RISK
Umicore’s currency risk can be split into three distinct categories: structural, transactional andtranslational 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 located outside the USD zone (particularly in Europe andAsia). Any change in the USD exchange rate against the EUR or other currencies which are
not pegged to the USD 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.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

110

An increasing portion of the structural risk exposures stems from non-metal related revenues
denominated in USD such as product premia and refining charges. This increase is particularly
related to the accelerating growth in battery materials activities in Asia.

the value of such local currencies against the EUR, predominantly the KRW, CNY, USD, BRL and
ZAR. While Umicore does not systematically hedge its translational currency exposures, it may
enter into ad hoc translational hedges.

Next to the sensitivity USD vs EUR, there is also a structural and increasing sensitivity to certain
other currency pairs such as the USD and EUR vs the Korean won (KRW), the Chinese yuan
(CNY), the Canadian dollar (CAD) and the South African rand (ZAR).

3.2 METAL PRICE RISK

Structural currency hedging
Umicore’s hedging policy allows for hedging forward its structural currency exposure, either in
conjunction with the hedging of structural metal price exposure or in isolation, typically when acurrency exchange rate or a metal price denominated in EUR is above its historical average andat a level where attractive margins can be secured.
In relation to the structural risk, the Group assesses the hedge effectiveness through acritical terms match between the hedged item (future probable cash flows) and the hedging
instrument amongst others amount and maturity. The Group applies a prudent approach in theapplication of structural hedging, never up to 100%, avoiding thereby ineffectiveness arisingfrom difference in maturity between hedged item and hedging instrument or changes in
exposure amounts.
At the end of 2018, 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, USD/
CNY, EUR/CNY, EUR/ZAR and USD/CAD.
3.1.2 TRANSACTIONAL RISKThe company is also subject to transactional risks in respect of currencies, ie the risk of currency
exchange rates ﬂuctuating between the time the price is ﬁxed with a customer or supplier andthe time the transaction is settled. The Group’s policy is to hedge the transactional risk to the
maximum extent possible, primarily through forward contracts.
In relation to the transactional risk, the Group assesses the hedge effectiveness through acritical terms match between the hedged item (balance sheet items and commitments) andthe hedging instrument amongst others amount and maturity. The Group hedges transactionalrisks to the maximum extent up to 100%. Any ineffectiveness can arise from difference inmaturity between hedged item and hedging instrument or changes in exposure amounts, but
this will never be material.
3.1.3 TRANSLATIONAL RISK
Umicore is an international company and has foreign operations which do not have the EUR
as their functional currency. When the results and the balance sheets of these operations areconsolidated into Umicore’s Group accounts the translated amount is exposed to variations in

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 impactthat metal prices have on surplus metals recovered from materials supplied for treatment or
any other revenue 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 of the concerned businesses are above their historical average and at a level where
attractive margins can be secured. The extent to which metal price risk can be hedged depends
on the 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 variability of the rawmaterial feed over time and the variable duration of the supply contracts negotiated, it is notsuitable 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 pricesensitivity in its other business segments (Catalysis, Energy & Surface Technologies) linked
primarily to the revenue components that are metal price related and depending the metals
used in these segments. Also, in these cases a higher metal price tends to carry short-term
beneﬁts for the proﬁtability of each business. However, other commercial conditions which arelargely independent of the metals price, such as product premiums, are also signiﬁcant andindependent 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 pricebased cash ﬂows originating from commercial contracts. Umicore hedged part of its forward
metal exposure. At the end of 2018, the outstanding hedge contracts relate to some precious
metals (ie gold, platinum and palladium) and some base metals (ie nickel, copper and lead).
In relation to the structural risk, the Group assesses the hedge effectiveness through acritical terms match between the hedged item (future probable cash flows) and the hedging
instrument amongst others amount and maturity. The Group applies a prudent approach in theapplication of structural hedging, never up to 100%, thereby avoiding ineffectiveness arising

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

111

from difference in maturity between hedged item and hedging instrument or changes in
exposure amounts.

of the period and included a € 40 million contract that will expire in 2023. The 5-year interest
rate swap entered into in 2013 for an amount of € 150 million expired in January 2018.

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, because of the lapse of time between the conversion of purchased raw
materials into products and the sale of products, the volatility in the reference metal pricecreates differences between the price paid for the contained metal and the price received.
Accordingly, there is a transactional exposure to any ﬂuctuations in price between the moment
raw materials are purchased (ie, when the metal is “priced in”) and the moment the products
are sold (ie 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.

3.4 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 ormetal lease operations. In order to manage its credit exposure, Umicore has determined acredit policy with credit limit requests, approval procedures, continuous monitoring of the credit
exposure and dunning procedure in case of delays.

In relation to the transactional risk, the Group assesses the hedge effectiveness through acritical terms match between the hedged item (balance sheet items and commitments) andthe hedging instrument amongst others amount and maturity. The Group hedges transactionalrisks to the maximum extent up to 100%. Any ineffectiveness can arise from the difference inmaturity between hedged item and hedging instrument or changes in exposure amounts, but
this will never be material.
The accelerating growth in battery materials is rapidly increasing the exposure to specificrelated metals such as cobalt or nickel. Increasing volumes, the vulnerability to the associatedprice volatility and, in the case of certain metals such as cobalt, the absence of a liquid paper
forward market result in increased metal risks. For cobalt, Umicore’s transactional hedging
policy aims to match to a maximum extent the pricing in and pricing out of the contracted
metal. Such physical back-to-back hedging allows managing transactional risks related tocobalt in a volatile market.
3.2.3 METAL INVENTORY RISK
The group faces metal price risks on its permanently tied up metal inventories. This risk isrelated 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 2018, the Group’s gross ﬁnancial debt stood at € 1,146 million, including€ 650 million at ﬁxed rate. The outstanding interest rate swaps totalled € 64 million at the end

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, politicaland commercial risks with an individual deductible per invoice of 5% and foresees in an
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
indemnity of € 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 the risk to be insured, no such global credit insurance
coverage will be sought. For those businesses, characterised by a signiﬁcant level of customer
concentration or by a speciﬁc and close relationship with the customers, speciﬁc insurance
contracts may be set up for a certain period. It should be noted that some sizeable transactions,such as the sales of precious metals by Recycling, have a limited credit risk as payment before
delivery is a widely accepted practice. Regarding its risk exposure to ﬁnancial institutions likebanks and brokers, Umicore is also establishing internal credit lines. Speciﬁc limits are set, perﬁnancial 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 and uncommitted short-term bilateral bank facilities, two committed
medium-term syndicated bank facilities, two committed long-term private placements and acommercial paper programme.
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 to submit tax returns within
the statutory time limits and engage tax authorities to ensure that the Group’s tax affairs are

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
as current as possible and that any differences in the interpretation of tax legislation andregulation are resolved as quickly as possible. Given the scale and the international nature of
the Group’s business, VAT, sales tax and intra-Group transfer pricing are an inherent tax risk as
it is for other international businesses. Changes in tax laws or in their application with respect
to matters such as transfer pricing, VAT, foreign dividends, R&D tax credits and tax deductions,
could increase the Group’s effective tax rate and adversely affect its net results. Based on thesetax risks described, management performed a detailed assessment for uncertain tax positions
which resulted in provisions recorded for these uncertainties.

Assumptions and estimates are applied when:

3.7 CAPITAL RISK MANAGEMENTThe Group’s objectives when managing capital are to safeguard its ability to continue as agoing concern, to provide returns for shareholders and beneﬁts for other stakeholders, and tomaintain an optimal capital structure to reduce the cost of capital.

–– Assessing the extent to which deferred tax assets will be realised

In order to maintain or adjust the capital structure, the Group may, for example, adjust theamount 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 lesscash 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 groupaims 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 tothe Risk Management section (pages 41-50) for a description of these risks and an outline of
Umicore’s general approach to risk management. Umicore does not expect a material direct
financial impact from Brexit.

F4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments used in developing and applying the consolidated entity’s ﬁnancial
statements are continually evaluated and are based on historical experience and other factors,
including the expectations of future events that may have a ﬁnancial impact on the entity andthat are believed to be reasonable under the circumstances. The resulting accounting estimates
will, by deﬁnition, seldom equal the related actual results.

112–– Assessing the need for and measurement of impairment losses–– Accounting for pension obligations–– Recognizing and measuring provisions for tax, environmental, warranty and litigation risks
product returns, and restructuring–– Determining inventory write-downs–– 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 theasset’s fair value less costs to sell and its value-in-use in accordance with the accounting policy.
These calculations, impairment testing, require the use of estimates and assumptions such as
discount rates, exchange rates, commodity prices, future capital requirements and future operating
performance. Internal estimates of future business performance are based on an analysis of a
combination of factors including: market growth projections, market share estimates, competitive
landscape, pricing and cost evolution. Such analysis combines both internally-generated estimatesand data from external sources. As at 31 December 2018, the carrying amount of the goodwill forthe consolidated entity was € 142.5 million (€ 142.7 million in 2017).
4.2 REHABILITATION OBLIGATIONSProvision is made for the anticipated costs of future rehabilitation of industrial sites andsurrounding areas to the extent that a legal or constructive obligation exists in accordancewith accounting policy 2.15. These provisions include future cost estimates associated withreclamation, plant closures, waste site closures, monitoring, demolition, decontamination,water puriﬁcation and permanent storage of historical residues. These future cost estimates
are discounted to their present value. The calculation of these provision estimates requires
assumptions such as application of environmental legislation, plant closure dates, available
technologies and engineering cost estimates. A change in any of the assumptions used may
have a material impact on the carrying value of rehabilitation provisions. As at 31 December
2018, the carrying amount of rehabilitation provisions was € 60.8 million (€ 66.1 million
in 2017).

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
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 ofeach year. The consolidated entity’s employee beneﬁt obligations are discussed in more detailin note F27. At 31 December 2018, a liability with respect to employee beneﬁt obligations of€ 333.8 million was recognised (€ 342.8 million in 2017).
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 is probable 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 arerecognised. Other assumptions and estimates are disclosed in the respective notes relevant to
the item where the assumptions or estimates were used for measurement.
4.5 PROVISIONS FOR OTHER LIABILITIES AND CHARGESAs mentioned under notes 2.21.1 and 3.2.2., Umicore’s policy is to hedge to the maximum
extent possible its transactional metal price risk, applying IFRS 9 based fair value hedge
accounting to the extent there are market-based derivatives available. In the absence of suchmarket-based derivatives, the hedged items, a.o. physical metal commitments, are kept at costand are subject to the IAS 37 principles for onerous contracts. The onerous contract provision
decision is based on an assessment of the level of commitment expected from a third party
to honor its contractual obligations towards Umicore (in the event the metal price at the close
would be substantially higher (lower) than the contracted metal price in the case of Umicore
purchases (sales)). In 2018, the market volatility in the cobalt price in particular triggered suchrisk assessments. If instead of IAS 37 principles, IFRS 9 based fair value hedge accounting would
have applied, such provisions would be recognized as mark-to-markets.
In view of the fast growth of Umicore battery materials for transport applications, the group’s
exposure to the automotive industry is increasing. This industry has a practice of applying
warranty and recall settlements related to potential product quality events (irrespective ofwhether any legal obligation exists). In view thereof, Umicore introduced, in 2018, a dedicatedprovisioning model.

113

F5 GROUP COMPANIES

Below is a list of the main operating companies included in the consolidated ﬁnancial statements.
% INTEREST IN
2017% INTEREST IN
2018

For continuing operations
Argentina

Umicore Argentina S.A.

100.00100.00Australia

Umicore Marketing Services Australia Pty 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)

100.00100.00

Coimpa Industrial Ltda

100.00100.00Umicore Brasil Ltda

100.00100.00Clarex100.00100.00Umicore Shokubai Brasil Industrial Ltda

60.00

60.00

Umicore Catalisadores Ltda.

100.00100.00Umicore 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

90.00

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

100.00100.00BrazilCanadaChina

Umicore Shokubai (China) Co Ltd

60.00

60.00

Umicore Catalyst (China) Co., Ltd.

100.00100.00DenmarkUmicore Denmark ApS

100.00100.00FranceUmicore 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 S.A.S.

100.00100.00Todini France S.A.S.

100.00100.00Umicore AG & Co. KG (*)

100.00100.00Allgemeine Gold- und Silberscheideanstalt AG

91.21

91.21

Umicore Galvanotechnik GmbH

91.21

91.21

Todini Deutschland GmbH

100.00100.00Germany

As at 31 December 2018, the carrying amount of the provisions for other liabilities and charges
amount to € 119,9 million (€ 49,4 million in 2017)
Italy

Umicore Shokubai Germany GmbH

60.00

60.00

TODINI AND CO. S.P.A.

100.00100.00Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

India
Japan
South Korea% INTEREST IN
2017% INTEREST IN
2018

Umicore 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

Umicore Korea Ltd.

100.00100.00Umicore Marketing Services Korea Co., Ltd.

100.00100.00Umicore Materials Korea Ltd

100.00100.00Ordeg Co.,Ltd.

100.00100.00Liechtenstein

Umicore Thin Film Products AG

100.00100.00

Luxemburg

Umicore International

100.00100.00Umicore Autocat Luxembourg

100.00100.00

MexicoTodini Atlántica S.A. de C.V.

70.00

70.00

Netherlands

Schöne Edelmetaal BV

91.21

114

(*) A s a result of the integration of Umicore 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 is 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).

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 (€), are as
set out below. All subsidiaries, associates and joint-ventures have as functional currency thecurrency of the country in which they operate, except for Element Six Abrasives (Ireland) where
the functional currency is the US dollar.
CLOSING RATESAVERAGE RATES

2017

2018

2017

2018

91.21

American dollar

USD

1.199

1.145

1.130

1.181

GBP

0.887

0.895

0.877

0.885
1.529

Philippines

Umicore Specialty Chemicals Subic Inc.

78.20

78.20

UK Pound sterling

PolandUmicore Autocat Poland sp. z o.o.

100.00100.00

Canadian dollar

CAD

1.504

1.561

1.465

Todini Europe sp. z o.o.

70.00

70.00

Swiss franc

CHF

1.170

1.127

1.112

1.155

PortugalUmicore Marketing Services Lusitana Metais Lda

100.00100.00Japanese yen

JPY135.010125.850

126.711130.396

South Africa

Umicore Marketing Services Africa (Pty) Ltd.

100.00100.00Brazilian real

BRL

3.967

4.437

3.606

4.316

Umicore Catalyst South Africa (Pty) Ltd.

65.00

65.00

South African rand

ZAR

14.80516.45915.04915.619Todini Quimica Ibérica, S.L.

100.00100.00Chinese yuan

CNY

7.804

7.875

7.629

7.808

THB

39.12137.05238.29638.164KRW

12.79612.77912.76712.991

Spain
SwedenUmicore Autocat Sweden AB

100.00100.00Thai baht

Switzerland

Allgemeine Suisse SA

91.21

91.21

Korean won (100)TaiwanUmicore Thin Film Products Taiwan Co Ltd

100.00100.00ThailandUmicore Precious Metals Thailand Ltd.

91.21

91.21

Umicore Autocat (Thailand) Co., Ltd.

100.00100.00Umicore Shokubai (Thailand) Co., Ltd.

60.00

60.00

100.00100.00Umicore Marketing Services UK Ltd

100.00100.00Umicore 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.

100.00100.00Umicore Catalyst USA, LLC

100.00100.00

United Kingdom Umicore Coating Services Ltd.
USA

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

115

F7 SEGMENT INFORMATION

BUSINESS GROUP INFORMATION 2017

CATALYSISENERGY & SURFACETECHNOLOGIESRECYCLINGCORPORATE &UNALLOCATEDELIMINATIONSTOTALCONTINUEDDISCONTINUEDOPERATIONS

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

22,24058,680825,370–(906,290)–––

Total segment revenues (excluding metals)

1,253,100

893,600

650,300–(6,420)2,790,580

125,100

2,915,680

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)

Thousands of Euros

NOTE

Inter-segment turnover

Inter-segment revenues
Operating result

F9

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

893

10,481–

18,181–

29,555859

30,413

Recurring383

10,481–

17,896–28,761859

29,619Non-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)F958,884

57,617

61,835

12,157–

190,49431

190,524

58,88457,042

60,955

12,157–

189,03831

189,069F9220,122

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

EBIT

F9

F9

Recurring EBIT

Depreciation and amortisation
Recurring
EBITDA
Recurring EBITDA

Investments in associates
Consolidated total liabilities–

35,488–

117,520–

153,008–

153,008

772,775

1,442,307

618,204

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

3,253,021–

3,253,021
2,397,409

Capital Employed at 31/12 of previous year

F31

911,191752,037

498,139

136,968–

2,298,336

99,074

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 Employed in 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 Employed in 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 expenses

F9

107,764

27,485

18,618

4,766–

158,632

1,599

160,232

R&D capitalised as intangible assets

F34

12,060

2,865

–

–

–

14,926–

14,926

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

116

BUSINESS GROUP INFORMATION 2018*

CATALYSISENERGY &SURFACETECHNOLOGIESRECYCLINGCORPORATE &UNALLOCATEDELIMINATIONSTOTAL CONTINUED

Total segment turnover

3,310,960

3,650,170

7,625,440

46,067(915,900)

13,716,737

13,716,737

External turnover

3,272,660

3,592,840

6,805,170

46,067–

13,716,737

13,716,737

Thousands of Euros

NOTE

TOTAL

38,30057,330820,270–(915,900)––

Total segment revenues (excluding metals)

1,360,400

1,289,300

626,200–(4,830)3,271,070

3,271,070

External revenues

1,359,220

1,288,870

622,980––

3,271,070

3,271,070

1,180

430

3,220

–

(4,830)––162,329

250,423

125,802(45,307)–493,247

493,247

Recurring operating result

168,157

255,781

134,807(50,539)–508,206

508,206

Non-recurring operating result(5,828)(5,357)(9,006)

5,232–(14,959)(14,959)

–

855

–

5,865

–

6,720

6,720

Recurring

–

855

–

4,503

–

5,358

5,358

Non-recurring

–

–

–

1,362

–

1,362

1,362

162,329

251,279

125,802(39,442)–499,967

499,967

Recurring EBIT

168,157

256,636

134,807(46,036)–

513,564

513,564

Non-recurring EBIT

(5,828)(5,357)(9,006)

6,594–(13,597)(13,597)

69,08866,27459,873

11,343–

206,577

206,577

69,08866,27459,873

11,343–

206,577

206,577

231,417317,552

185,674(28,099)–

706,544706,544

Inter-segment turnover

Inter-segment revenues
Operating result

Equity method companies

EBIT

Depreciation and amortisation

F9

F9

F9

F9

Recurring
EBITDAF9

237,245

322,910

194,680(34,694)–

720,141

720,141

Consolidated total assets

2,031,404

3,741,418

1,132,969

478,013(1,330,495)

6,053,310

6,053,310

Segment assets

2,031,404

3,706,334

1,132,969

361,725(1,330,495)

5,901,938

5,901,938–

35,084–116,288–

151,372

151,372

814,036

1,948,071

593,408

1,368,954(1,330,495)

3,393,974

3,393,974
3,003,545

Recurring EBITDA

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

F31

1,149,585

1,205,844

474,522

173,593–

3,003,545

Capital Employed at 30/06

F311,193,144

1,451,330

455,680

185,221–3,285,375

3,285,374

Capital Employed at 31/12

F311,264,885

1,769,135

546,396

221,997–

3,802,413

3,802,414

Average Capital Employed in first half year

F31

1,171,365

1,328,587

465,101

179,407–

3,144,460

3,144,459

Average Capital Employed in second half yearF31

1,229,015

1,610,233

501,038

203,609–3,543,894

3,543,894

Average Capital Employed in the year

F31

1,200,190

1,469,410

483,069

191,508–

3,344,177

3,344,177

ROCE

F31

14.01%

17.47%

27.91%(24.04%)0.00%

15.36%

15.36%

Capital expenditure

F34

78,797

316,063

68,431

14,298–477,589

477,589

Total R&D expenditure

F9135,523

38,845

15,196

6,875–

196,440

196,440

R&D recognised in operating expenses

F9

120,51433,60815,196

6,875–

176,193

176,193

R&D capitalised as intangible assets

F34

15,010

5,237

–

–

–

20,247

20,247* Adjusted figures for 2018 compared to the preliminary statements included in the 8 February 2019 press release, as explained in footnote on p. 96.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTSGEOGRAPHICAL INFORMATION 2017
Thousandsof Euros

EUROPE

OF WHICHBELGIUM

Total segment
turnover6,926,079

130,937

Total non current
assets1,014,335

CapitalexpenditureNOTE

ASIAPACIFICNORTHAMERICASOUTH
AMERICA

3,093,227

1,437,303

346,073

AFRICATOTALRECURRING EBIT PER
BUSINESS GROUP

6%

F34

499,561

142,691

111,839

591,072
198,951

133,497
13,673

49,114
4,597

8,325
2,032

1,796,344

24%

ASIAPACIFICNORTHAMERICASOUTH
AMERICA

Total segment
turnover6,443,219

117,143

4,140,094

2,528,858

441,024

Total non-current
assets

1,036,033

506,347

863,947

151,709

42,894

6,949

2,101,532

131,551

103,707319,374

21,298

3,914

1,452

477,589

F34

REVENUES (EXCLUDING METAL)PER BUSINESS GROUP

Catalysis
Energy & Surface
Technologies
Recycling
Corporate not included

14%
36%

AFRICA

Catalysis
Energy & Surface
Technologies
Recycling
Corporate& Unallocated

44%

46%

OF WHICHBELGIUMNOTE

30%

361,944EUROPE

Capitalexpenditure

CAPITAL EMPLOYED, AVERAGE PER
BUSINESS GROUP

144,581 11,947,264

GEOGRAPHICAL INFORMATION 2018
Thousandsof Euros

117

TOTAL

163,541 13,716,737

CAPITAL EXPENDITURE PER
BUSINESS GROUP

14%

3%

R&D EXPENDITURE PER
BUSINESS GROUP
8%

16%
Catalysis
Energy & Surface
Technologies
Recycling
Corporate& Unallocated

RECURRING EBITDA PER
BUSINESS GROUP

3%
20%

69%

Catalysis
Energy & Surface
Technologies
Recycling
Corporate& Unallocated

66%
19%
41%

39%

Catalysis
Energy & Surface
Technologies
Recycling
Corporate not included

26%
31%

43%

Catalysis
Energy & Surface
Technologies
Recycling
Corporate not included

TURNOVER BY REGION

1%
30%
47%
3%
19%

NON-CURRENT ASSETS BY REGION

EuropeNorth America
South America
Asia-Pacific
Africa

1%
41%
49%
2%

EuropeNorth America
South America
Asia-Pacific
Africa7%

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
CAPITAL EXPENDITURE
BY REGION

1%

EMPLOYEE COMPENSATION & BENEFITSBY REGION

13%
28%

1% 4%
66%

EuropeNorth America
South America
Asia-Pacific
Africa

4%

2%

10%
71%

EuropeNorth America
South America
Asia-Pacific
Africa118

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 aswell as those elements that can reasonably be allocated to a segment.
The pricing of inter-segment sales is based on an arm’s length transfer pricing system. In theabsence of relevant market price references, ‘cost plus’ mechanisms are used. Segment turnoverand revenue is taking into account intragroup operations. Those are mainly related to recycling
services and sales of reﬁned metal from the recycling segment to the other group segments
and are important to assess the performance of the segments concerned.
Since these transactions cannot be considered as external operations, they are eliminated at
the group level, to present a net view.

INCOME TAXES BY REGION
5%
35%
47%
2%

11%

EuropeNorth America
South America
Asia-Pacific
AfricaThe Group’s business segments have no single external customer that amounts to 10 percent
or more of the Group’s revenue.
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 business group alsooffers stationary catalysis for industrial emissions control and produces precious metals-based
compounds and catalysts for use in the pharmaceutical and fine chemicals industries.
ENERGY & SURFACE TECHNOLOGIESThe segment comprises the Cobalt & Specialty Materials, Electro-Optic Materials, Electroplating andRechargeable Battery Materials. Energy & Surface Technologies’ products are found in applications
used in the production and storage of 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.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
RECYCLING
The segment consists of the business units Precious Metals Refining, Jewelry & Industrial
Metals and Precious Metals Management. 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 as diverse 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 under Discontinued
operations has been transferred to Corporate as from 1 July 2017.
The Building Products and Zinc Chemicals business units were reported as discontinued until theireffective divestment, respectively in 2017 (end of September) and in 2016.
In the geographical segment information, the ﬁgures presented as non-current assets exclude theamounts 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 theoperating result as presented in the Income Statement consists of the non-recurring operating
result 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.

119

F8 BUSINESS COMBINATIONS AND ACQUISITIONSOF ASSOCIATES AND JOINT VENTURESIn June 2017, Umicore announced that it had reached an agreement to acquire the heavy-duty
diesel and stationary catalyst businesses of Haldor Topsoe. The closing of the transaction wascompleted at the end of November 2017 and a preliminary opening balance sheet was prepared
as of 1 December but was still be subject to adjustments on a number of restatements over the
coming 11 months. Following the final opening balance sheet as per the end of November 2018,
the net value of the assets bought represented a total amount of € 132.1 million (€ 129.2 million
in 2017) and the total purchase price has been adjusted to 134.3 million (€ 133.0 million in 2017).
This results in a goodwill of € 2.2 million (preliminary € 3.8 million in 2017). The main lines ofthe balance sheet that have been updated since 2017 are “property, plant and equipment” (seenote F16), “inventory”, “accounts receivable” and “provisions for other liabilities and charges” (seenote F30). Those are reflected under the lines "acquisition through business combinations" of thecorresponding impacted notes.
In January 2018, Umicore acquired Materia’s metathesis catalyst IP and business portfolio for a priceof $ 27 million. Through the acquisition, Umicore broadened its range of catalyst technologies,
expands its homogeneous catalysts offer and gain access to an extended customer base.
The combined metathesis portfolios will provide Umicore’s customers full access to proprietary,patent-protected cutting-edge technology. This activity is integrated in Umicore’s Precious Metals
Chemistry business unit. The net value of the assets bought (mainly IP and customer portfolio as
reflected in note F14) is in line with the price paid and therefore no goodwill has been recognised.
The acquired net assets are reflected under the lines "acquisition through business combination"of the impacted notes.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
F9 RESULT FROM OPERATING ACTIVITIESR&D EXPENDITURE
2017

2018

Sales

11,822,362

13,602,160

Services

124,902

114,576

11,947,264

13,716,736

71,965

101,559

Thousands of Euros

Turnover (1)Other operating income (2)OPERATING INCOME OF CONTINUING OPERATIONS

12,019,229

13,818,295

Raw materials and consumables used (3)(10,324,429)(11,855,284)

Payroll and related benefits(700,706)(731,054)

Depreciation of fixed assets(190,494)(206,577)

Impairment loss on fixed assets(3,417)(6,780)Inventory and bad debt provisions(9,792)(13,805)

Depreciation and impairment results (4)(203,703)(227,162)

Services and outsourced refining and production costs(404,818)(412,970)

Royalties, licence fees, consulting and commissions(36,330)(33,808)

Other operating expenses(3,354)(6,664)

Increase and decrease in provisions(41,544)(78,546)

Use of provisions

19,992

17,131

Capital losses on disposal of assets(3,961)(1,736)

Other operating expenses (5)(470,015)(516,593)(11,698,854)(13,330,093)

Operating income of discontinued operations

334,291–

Operating expenses of discontinued operations(319,358)–

OPERATING EXPENSES OF CONTINUING OPERATIONS

120

Thousands of Euros

NOTE

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

F14

2017

2018

158,632

176,193

14,926

20,247

Total R&D expenditure for continuing operations

173,558

196,440

Total R&D expenditure for discontinued operations

1,599

–

Total R&D expenditure for continuing operations was € 196.4 million in the fully consolidated
companies. The part of the R&D expenditures that is directly recognised in the other operating
expenses amounts to € 176.2 million.

Turnover refers to turnover from customers as per IFRS 15. The further disaggregation is detailed in note F7.
As described in the accounting policy 2.20, the revenue from contracts with customers are recognised at a point
in time.
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(€ 44.9 million in 2018 and € 27.7 million in 2017), operating grants (€ 8.9 million in 2018 and € 8.5 million
in 2017), royalties and licence fees (€ 9.1 million in 2018 and € 9.7 million in 2017), income linked toemission rights (€ 2.8 million in 2018 and € 2.1 million in 2017), insurance recovery (€ 2.0 million in 2018and €1.6 million in 2017), various interest and penalties for late payments (€ 6.9 million in 2018) and gains
on disposal of assets (€ 2.8 million in 2018).
3) Raw materials and consumables used include water, gas and electricity for € 95.8 million in 2018(€ 83.3 million in 2017) for continuing operations.
4) Impairments of ﬁxed assets have been taken and transferred in non-recurring results. 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 € 30.2 million (€ 19.7 million
in 2017) for continuing operations.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

121

NON-RECURRING ELEMENTS AND IAS 39 EFFECTS INCLUDED IN THE RESULT, INCLUDING DISCONTINUED OPERATIONS
2017
Thousands of Euros

NOTE

Turnover
Other operating income

TOTAL

RECURRING NON-RECURRING

2018
IAS 39EFFECT

NONRECURRING

TOTALRECURRING

12,277,619

12,277,312

307–

13,716,737

13,716,737–

75,90060,262

16,655(1,017)

101,559

93,7597,800

Operating income

12,353,519

12,337,574

16,962(1,017)

13,818,296

13,810,496

7,800

Raw materials and consumables used

(10,550,782)(10,543,983)(8,735)

1,936(11,855,284)(11,851,572)(3,712)

Payroll and related benefits(754,832)(751,169)(3,663)–(731,054)(730,844)(210)

Depreciation and impairment results(203,651)(195,624)(6,294)(1,733)(227,162)(216,195)(10,966)of which depreciation and amortisation
Other operating expenses
Operating expenses(190,524)(189,069)(1,455)–(206,577)(206,577)–(508,946)(467,419)(20,063)(21,464)(516,593)(503,826)(12,767)(27,655)(12,018,211)(11,958,195)(38,755)(21,261)(13,330,094)(13,302,438)

Income from other financial investments(22,435)

1,254(23,689)

–

5,044

147

4,896

Result from operating activities

312,873

380,634(45,482)(22,278)493,246508,205(14,959)

Net contribution from equity method companies

30,41329,619

(768)

1,562

6,720

5,358

1,362

EBIT

343,287

410,254(46,250)(20,717)499,967

513,564(13,597)(13,597)

EBITDA

533,811599,323(44,795)(20,717)706,544

720,141

Finance cost

F11(38,344)(41,865)–

3,519(68,883)(68,883)–

Income taxes

F13(78,690)(87,185)

4,525

3,971

(103,240)(107,238)

3,998(9,599)Net result

226,253

281,202(41,725)(13,227)

327,843

337,442of which minority shares

14,30814,431119(243)

10,86011,012(152)

of which Group shares

211,943

266,771(41,844)(12,984)

316,984

326,430(9,447)

Non–recurring items had a negative impact of € 13.6 million on EBIT. Restructuring charges
accounted for € 14 million and were related to the plan to close down industrial activities in
Guarulhos (Brazil) and transfer them to the existing site in Americana (Brazil). Impairments onpermanently tied-up metal inventories accounted for a € 6 million charge and are largely
linked to a lower cobalt price at the end of the period. These charges were partly offset by
non-recurring income including the gain on the sale of the European operations of TechnicalMaterials. The negative impact of the non-recurring items on the net result (Group share)amounts to € 9.4 million.

The cobalt market price substantially decreased since the 31 December 2018 closing date.
The prevailing cobalt market price is currently lower than the average cost of the permanently
tied-up cobalt inventories, implying a risk of future impairment charges.
Umicore has adopted IFRS 9 “Financial Instruments” as from 1 January 2018 which replaces theprovisions of IAS 39 on accounting and classification of financial assets and liabilities, financial
instruments and hedging. As a consequence, Umicore no longer applies IAS 39 and no longer
reports an IAS 39 effect.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
F10 PAYROLL AND RELATED BENEFITSSHARE-BASED PAYMENTS
2017

2018

Wages, salaries and direct social advantages(515,680)(538,855)

Other charges for personnel(30,801)(34,211)

Temporary staff(13,132)(13,058)

Share-based payments(6,129)(11,150)

Thousands of Euros

Employee salaries(565,742)(597,274)

Employers’ social security(99,131)(101,028)

Defined benefit contributions(12,042)(15,602)

Contribution to defined contribution plan

(18,699)(15,781)

Employer‘s voluntary contributions (other)(2,553)(3,956)

Pensions paid directly to beneficiaries(4,342)(3,598)Provisions for employee benefits (-increase / + use and reversals)

1,803

6,185

Pensions and other benefits(35,833)(32,752)

PAYROLL AND RELATED BENEFITS OF CONTINUING OPERATIONS(700,706)(731,054)(54,126)–2017

Payroll and related benefits of discontinued operations

AVERAGE HEADCOUNT IN CONSOLIDATED COMPANIES

122

Thousands of Euros
Number of stock options granted
Valuation model

NOTE

2017

2018

F28

1,170,000

1,182,625

Present Economic Value

Assumed volatility (% pa)

25.00

25.00

Risk-free interest rate (% pa)(0.004)0.120

Dividend increase (% pa)

0.10

0.10

Rate of pre-vesting forfeiture (%pa)

NA

NA

Rate of post-vesting leaving (%pa)

10.00

10.00

Minimum gain threshold (% pa)

30.00

30.00

Proportion who exercise given minimum gain achieved (% pa)

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

3.87

6.89

Total fair value of options granted

4,529

8,148

47,400 shares granted at 25.50 EUR

1,209

–

7,400 shares granted at 25.74 EUR

190

–
–

10,312 shares granted at 31.27 EUR

322

6,800 shares granted at 24.73 EUR

168

–

2018

54,800 shares granted at 40.90 EUR

–

2,241
498

Executives and managerial staff

1,819

1,816

10,002 shares granted at 49.84 EUR–

Non-managers

8,026

8,276

5,700 shares granted at 45.87 EUR–

261

Total including discontinued operations

9,845

10,092

Total fair value of shares granted

1,890

3,001

Total for continuing operations

9,845

10,092

11,150SHARE-BASED PAYMENTS

6,419

Share-based payments to discontinued operations

(289)

0

TOTAL SHARE-BASED PAYMENTS CONTINUING OPERATIONS

6,129

11,150

The Group recognised a share-based payment expense of € 11.1 million during the year forcontinuing operations.
The part of this expense related to stock options is calculated by an external actuary using the
Present Economic Value model which takes into account all features of the stock option plans
and the volatility of the underlying stock. This volatility has been determined using the historicalvolatility 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 2018, shares have been granted to top management resulting in an extra charge of€ 3.0 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”.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
F11 FINANCE COST – NET

123

F13 INCOME TAXES

Thousands of Euros

2017

2018

Thousands of Euros

Interest income

4,057

5,842

INCOME TAX EXPENSE

2017

2018

(112,599)

Interest expenses(23,540)(39,059)

Recognised in the Income Statement

Discounting of non-current provisions(9,585)(3,394)Current income tax(76,714)

Foreign exchange gains and losses(6,864)(26,840)

Deferred income tax

1,535

9,359

Other financial income

298–

Total tax expense for continuing operations(75,178)(103,240)

Other financial expenses(1,687)(5,432)

Total tax expense for discontinued operations(3,512)–

Total of continuing operations(37,323)(68,883)

RELATIONSHIP BETWEEN TAX EXPENSE (INCOME) AND ACCOUNTING PROFIT

Total of discontinued operations(1,023)–Result from operating activities

312,090493,246

Financial result(37,323)(68,883)

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

274,767

424,363

The net interest charge in 2018 totalled € 33.2 million, in line with the increase of
the indebtedness.
The discounting of non-current provisions relates mainly to employee beneﬁts provisions andto environmental provisions. 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 therecognition of new non-current liabilities. Most of the discounting results in 2018 were booked
in Germany and to a lesser extent to Belgium and Brazil. 2018 contains for Belgium as well as apositive discounting impact of € 1.2 million related to the re-evaluation of the earn-out related
to the acquisition in 2016 of three NMC battery material patent families from 3M.
Foreign exchange results include realised exchange results and the unrealised translation
adjustments on monetary items using the closing rate of the period. The accelerating growthin Asia results in higher forex costs including the cost of forward points in hedge instruments.

Weighted average theoretical tax rate (%)
Income tax calculated at the weighted average theoretical tax rate forcontinuing operations(7,277)
7,711

551

Dividends from consolidated companies & Associates(3,071)(1,798)4–

Tax incentives deductible from the taxable base

Gains & losses taxed at a reduced rate

10,21017,383

Tax computed on other basis(2,846)(799)

Utilisation of previously unrecognised tax losses

9,009

8,321

(533)

(14,579)

Write-down (or reverse of previous write-down) of DTA
Change in applicable tax rate

F12 INCOME FROM OTHER FINANCIAL INVESTMENTS
2017

2018

(1,301)

4,925

Dividend income

1,380

124

(3)

(6)

Interest income from financial assets
Impairment results on financial investments(8,361)–

Total for continuing operations(8,286)

5,044

Total for discontinued operations(14,149)–(2,009)

Expenses not deductible for tax purposes
Tax-exempted revenues

They also include fair value gains and losses on other currency ﬁnancial instruments (see noteF33). Other ﬁnancial expenses include payment discounts, bank expenses and other ﬁnancial
fees incurred.

Capital gains and losses on disposal of financial investments(24.13)(102,385)

Tax effect of:Tax holidays

Thousands of Euros(27.47)(75,470)(14,360)

1,732

4,654

13,675

Other tax credits (excluding R&D tax credits)

62

4,575

Non-recoverable foreign withholding taxes(4,807)(10,325)

Previous years’ adjustments

2,617(13,589)

Other(1,082)(3,993)Tax expense at the effective tax rate for the year

(75,179)(103,240)

The weighted average theoretical tax rate evolved from 27.5% in 2017 to 24.1% in 2018 for thecontinuing operations.
Excluding the impact of non-recurring items and the IAS 39 effect (until 2017), the recurring
effective tax rate for 2018 was 24.4%. This compares to the 25.8% in 2017, reflecting amongst
others the changes in the geographical earnings mix.

The capital gains realised on disposal of financial investments are mainly linked to the sale of
the European Technical Materials business to Saxonia Edelmetalle GmbH.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

124

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

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 beginning of previous year

44,621

63,17734,534

8,879

21,538

172,748–

35,513394––

35,907

additions

14,926

4,578

1,069

231

4,817

25,621

disposals

–

–

(247)

(1,695)(266)(2,207)amortisation charged (included in “Depreciation and impairments”)(11,811)(10,955)(9,513)–(3,701)(35,981)

impairment losses recognised (included in “Depreciation and impairments”)(1,644)

–

(522)

–

–

(2,166)

–

–

–

(33)

–

(33)

(959)

(320)

(652)

–

(822)

(2,755)acquisition through business combinations

emission rights allowancestranslation differences(2,246)(7,275)

4,688

–

(180)

(5,013)At the end of previous 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 at the end of previous year

42,88784,71829,751

7,382

21,385

186,122acquisition through business combinations

–

2,989

–

–

21,40824,397

additions20,247

5,007

1,997

2,929

1,577

31,758

disposals–(12,324)–––(12,324)(10,801)(10,709)(9,029)–(6,262)(36,802)

(376)

–

(371)

–

–

(747)

–

–

–

795

–

795

637

(1)

(32)

–

464

1,069

other movements

amortisation charged (included in “Depreciation and impairments”)
impairment losses recognised (included in “Depreciation and impairments”)
emission rights allowancestranslation differences
other movements(5,241)

–

3,611

–

2,252

621

At the end of the year

47,353

69,68025,930

11,10640,745

194,814Gross value

131,273

107,319

140,054

11,106

60,584450,336

Accumulated amortisation(83,920)(37,639)(114,124)–(19,839)(255,522)

Net book value for continuing operations

47,353

69,68025,930

11,10640,745

194,814“Additions” are mainly explained by capitalised expenses in new information systems andinternally generated developments. € 22.6 million are linked to own productions, of which€ 19.8 million are development expenses.

The line ‘other movements’ mainly includes the sale of the European operations of TechnicalMaterial and the transfer between intangible assets in progress (included under “other intangible
assets”) and the other categories of intangible assets.

The acquisitions through business combination are related mainly to the acquisition of Materia’s
catalyst IP and business portfolio. The line “disposals” includes the re-evaluation of the earnout
related to the acquisition in 2016 of three NMC battery material patent families from 3M.

There are no pledges on, or restrictions to, the title on intangible assets, other than disclosed
in note F35.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
F15 GOODWILL
Thousands of Euros

The goodwill has been allocated to the primary segments as follows:
31/12/2017

31/12/2018

150,820

158,536

At the end of the previous year
Gross value
Accumulated impairment losses(18,228)(15,851)

Net book value at the end of previous year

132,592

142,685

acquisition through business combinations

14,535––(1,701)adjustment from subsequent identification of fair value of assets and liabilities

125

translation differences(4,442)

1,507

At the end of the year

142,685

142,491

Gross value

158,536

158,457

Accumulated impairment losses(15,851)(15,966)

Net book value for continuing operations

142,685

142,491

This table includes goodwill related to fully consolidated companies only. Goodwill relating tocompanies accounted for by the equity method is detailed in note F17.
The change of the period relates to the changes of purchase price and the opening balance
sheets of the acquired Haldor Topsoe entities (see note F8) and to exchange differences.

CATALYSISENERGY &SURFACETECHNOLOGIESRECYCLING

TOTAL

31/12/2017

51,65872,74518,282

142,685

31/12/2018

50,012

74,232

18,247

142,491

Thousands of Euros

Management tests annually whether goodwill has suffered any impairment in accordance withthe 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 bymeans of discounted cash ﬂow modelling on the basis of the Group’s operational plans which
typically look forward 5 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 2018 modelling used an average tax rate of 25.5% (in 2017, average tax rate of 28.5% wasused) and a weighted average cost of capital post-tax of 8.5% (same as in 2017). Terminal values
were determined on the basis of a perpetual growth rate of on average 2% (same as in 2017).
Inﬂation rates were based on guidance coming from national and international institutes likethe NBB or ECB.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

126

F16 PROPERTY, PLANT AND EQUIPMENT
Thousands of Euros

LAND AND PLANT, MACHINERY
BUILDINGSAND EQUIPMENTFURNITURE AND
VEHICLESOTHER TANGIBLEASSETSCONSTRUCTION IN
PROGRESS AND
ADVANCE PAYMENTSTOTAL

At the beginning of previous year
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 beginning of previous year

1,070,403

356,333

499,100

55,3192,052

157,599

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)

net impairment losses recognised (included in “Depreciation and impairments”)
translation differences(1,427)

(327)

–

–

(1,779)(14,941)(1,538)(119)(4,477)(30,790)

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

other movements
At the end of previous year(26)
(9,715)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 at the end of previous year

407,247

535,919

56,363

1,007

300,874

1,301,411

acquisition through business combinations

16,282

8,840

20

548

149

25,838

additions

4,418

21,958

10,313

142

429,158

465,989

disposals(1,276)(2,684)

(300)

(13)

(604)

(4,877)depreciations (included in “Depreciation and impairments“)(32,772)(120,434)(16,082)(163)–(169,452)

net impairment losses recognised (included in “Depreciation and impairments”)(1,513)(4,192)

(273)

(1)

–

(5,980)translation differences

1,465(1,196)(158)

22(1,060)(928)

other movements

91,501

220,937

17,755(577)(339,726)(10,111)1,601,891

At the end of the financial year

485,351

659,148

67,638964

388,791

Gross value

977,173

2,090,305

226,527

14,678

388,791

3,697,474

Accumulated depreciation(491,822)(1,431,157)(158,888)(13,715)–(2,095,582)

Net book value for continuing operations

485,351

659,148

67,638964

388,791

1,601,892

2,901

23

–

–

–

2,924

Gross value

3,300

43

31

–

–

3,374

Accumulated amortisation

(399)

(20)

(31)

–

–

(450)

Net book value for continuing operations

2,901

23

–

–

–

2,924

of which leasing

The non-maintenance related additions to property, plant and equipment relate mainly to theEnergy & Surface Technologies business group. Those capex spending in 2019 are expected tobe higher than in 2018, driven by the greenfield expansions underway in Rechargeable Battery
Materials, the capacity expansion in Catalysis and the investments to be carried out during theextended shutdown in Hoboken.
The acquisitions through business combination are related to changes in the opening balance
sheet of the acquired Haldor Topsoe entities (see note F8).

The line ‘other movements’ mainly includes the sale of the European operations of TechnicalMaterials 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, otherthan disclosed in note F35.

Umicore Integrated Annual Report 2018

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 and joint ventures:
COUNTRY

MEASUREMENTCURRENCY PERCENTAGE PERCENTAGE
2017

2018

For continuing operations
IEQSA

Peru

PEN

40.00

40.00

Ganzhou Yi Hao Umicore Industries

China

CNY

40.00

40.00

Luxembourg

USD

40.22

40.22

China

CNY

40.00

40.00

Jiangmen Chancsun Umicore Industry Co.,LTD

At the end of previous year

The elements recognized 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 andrepresent approximately 2.5% 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 proﬁtable group, generating positive cash ﬂow. The group’s functional currency is
USD. Umicore is represented in the Board of Directors and the audit committee of Element Six
Abrasives, which enables Umicore 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.

NET BOOKVALUEGOODWILL

TOTAL

107,194

45,814

153,008

profit for the year

6,720

–

6,720

dividends(8,366)–(8,366)change in other reserves(1,504)–(1,504)translation differences

(85)

(21)

(106)

1,620

–

1,620

105,580

45,793

151,372

other movements
At the end of the year for continuing operations

ASSOCIATES

Element Six Abrasives

Thousands of Euros

127

Umicore‘s share in the aggregated balance sheet and profit and loss items of the associates andjoint ventures would have been as follows:
Thousands of Euros

31/12/2017

31/12/2018

Assets239,481249,274

Liabilities

113,883

125,299

Turnover325,655

279,920

Net result

29,555

6,720

In the above table, they are no more assets and liabilities related to joint ventures.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
F18 FINANCIAL ASSETS AT FAIR VALUE THROUGH OCI AND
LOANS GRANTED
Thousands of Euros

FINANCIAL ASSETS AT
FV THROUGH OCI

F19 INVENTORIES

26,414LOANS
GRANTED
1,201

acquisition through business combinations

3432

change in scope–

340

increase

119

9,785

decrease

(570)

(93)

(7,229)

–

(18)

(373)

impairment losses (included in “Income from otherfinancial instruments”)
translation differences
fair value recognised in equity

3,738

–

other movements

(122)

(8)

22,331

11,285At the end of previous year
acquisition through business combinations

233

0increase

2,481

1,738

decrease(17,461)

(126)

(7)

(7)

translation differences
fair value recognised in equity(2,699)–other movements

3,150(10,263)

8,028

2,627

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

–

1,750

increase–

816

decrease–(3,538)translation differences

–

9

other

–

7,233

–

6,270

At the end of the financial year for continuing operations

31/12/2017

31/12/2018

Base product eligible for metal hedging – gross value

1,401,385

2,088,873

Base product without metal hedging – gross value

216,769

199,410Consumables – gross value

63,26379,025

Write-downs(70,289)(69,771)

Advances paid

15,024

7,983

Contracts in progress

2,272

2,573

1,628,423

2,308,094

92,531–Thousands of Euros

NON-CURRENT FINANCIAL ASSETSAt the beginning of previous year

128

ANALYSIS OF INVENTORIES

Total inventories for continuing operations
Total of discontinued operations

Inventories have increased by € 679.7 million compared with December 2017. This increase ismainly due to higher activities and higher metal prices.
Impairments of permanently tied-up metal inventories had an impact of € 6.0 million.
Permanently tied-up metal inventories are classified under Base products eligible for metal
hedging – gross value, and are not hedged against the metal price risk (refer to note 3.2.3).
The expense recognised in Raw Materials and Consumables in the income statement amounts
to € 697.5 million.
Based on metal prices and currency exchange rates prevailing at the closing date, the value of
metal inventory would have been € 1,009 million higher than the book value. However, theseinventories cannot be realised as they are tied up in manufacturing and commercial operations.
There are no pledges on, or restrictions to, the title on inventories.

The movements of the financial assets at fair value through OCI are mainly linked to the Nyrstar
shares, all of which were sold in the course of 2018.
The movements in the current loans granted are mainly related to repayment of loans grantedin the context of the sale of Umicore Vital Thin Film Technologies in China, and to repayment ofloans granted to equity companies. The movements in non current loans are mainly related toa convertible loan in Luxembourg.
The other movements are mainly related to transfer between current and non-current assets
and to the convertible loan in Luxembourg partly converted in shares.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
F20 TRADE AND OTHER RECEIVABLES
NOTE

Thousands of Euros

31/12/2017

31/12/2018

NON-CURRENT
Cash guarantees and deposits

12,068

9,912

Other receivables maturing > 1 year

1,048

1,049

Assets employee benefits

1,029

1,172

Total for continuing operations

14,145

12,133CURRENT
Trade receivables (at cost)

1,075,389

893,621

Trade receivables (write-down)(7,509)(22,576)

Other receivables (at cost)

145,519

221,162

Other receivables (write-down)(4,513)(246)

Interest receivable

273

177

Fair value receivable financial instruments held for cash flow hedging

F33

46,62817,184

Fair value receivable – financial instruments related to FV hedging

F33

11,16918,84468,705

17,813

1,335,660

1,145,979

Deferred charges and accrued income
Total for continuing operations

OVERDUE BETWEEN
Thousands of Euros

TOTAL

NOT
DUE

0-30
DAYS

30-60
DAYS

60-90
DAYS

> 90
DAYS

AGEING BALANCE ANALYSIS AT THE
BEGINNING OF THE YEAR

The Group applies the IFRS 9 simplified approach to measure expected credit losses which uses
a lifetime expected loss allowance for all trade receivables. To measure the expected credit
losses, trade receivables have been grouped based on shared credit risk characteristics and thedays past due. The expected loss rates are based on the payment profiles of sales over a periodof 60 months before 31 December 2018 or 1 January 2018 respectively and the corresponding
historical credit losses experienced within this period. The historical loss rates are adjusted toreflect current and forward-looking information on macro-economic factors affecting the abilityof the customers to settle the receivables. The Group has identified macro-economic factors,
Probability of Default (PD) and Loss given Default (LGD) to be the most relevant factors, andaccordingly adjusts the historical loss rates based on expected changes in these factors.
CREDIT RISK – TRADE RECEIVABLES
TRADE
OTHER
RECEIVABLESRECEIVABLES(WRITE-DOWN) (WRITE-DOWN)

Thousands of Euros
AT THE BEGINNING OF PREVIOUS YEAR

(9,279)Impairment losses recognised in P&L
Reversal of impairment losses(16,169)(5,140)(608)(5,748)

5,951

2,981

8,932

Impairment written off against asset carrying amount

242

–

242

Other movements

290

–

286

Translation differences

427

7

433

At the end of previous year

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

818,341

177,391

47,036

4,680

5,967

Other receivables – at cost

145,519

139,350

1,785

(105)

237

4,251

Change in accounting policies

Loss allowance

10,782

4,656

818

747

1,477

3,084

Expected loss rate

0.90%

0.49%

0.46%

1.59%

30.04%

30.18%AT THE BEGINNING OF THE FINANCIAL YEAR

(7,509)(4,514)(12,023)(10,782)–(10,782)

Acquisition through business combination

(814)

–

(814)

Change in scope

(141)

–

(141)

(4,515)–(4,515)

Impairment losses recognised in P&L

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

859,577615,298

166,279

55,65014,3208,029

Other receivables – at cost

221,162

216,234

51

3,147

67

1,663

Loss allowance

13,948

8,076

1,195

685

0

3,992

Expected loss rate

1.29%

0.97%

0.72%

1.17%

0.00%

41.19%

TOTAL(6,894)

1,053,414

Trade receivables (w/o doubtful andsecuritised receivables) – at cost

129

Reversal of impairment losses

168

1,324

1,492

Impairment written off against asset carrying amount

71

2,939

3,010
909

Other movements

909–

Translation differences

35

5

40

(22,577)(247)(22,823)

At the end of the financial year for continuing operations

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
In principle, Umicore uses credit insurance as a means to mitigate the credit risk related
to trade receivables. In 2018, two credit policies with two different insurers were in place.
At closing, € 652 million of the Group trade receivables of the continuing operations werecovered by a policy where indemniﬁcation in case of non-payment amounts to 95% with anindemniﬁcation cap set at regional or country level. The other policy covered € 144 million of
trade receivables with a global annual deductible of € 5 million and a maximum indemnity per
year of € 70 million.

ASSETS
Thousands of Euros

2017

2018

2017

2018

8,857

15,541(16,139)(16,425)(7,282)

(884)

184

–

(394)

(605)

(210)

(605)

8,032

7,793

(19,386)(16,926)(11,354)(9,133)

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

365

747

(129)

(135)

236

612

Inventories

Long-term receivables

36,452

47,629(18,999)(18,983)

17,45328,646

Trade and other receivables

10,932

9,820(15,549)(10,163)(4,617)(343)

Group shareholders’ equity––(3,557)(4,234)(3,557)(4,234)

9,435

5,446

(1,364)(1,446)

8,071

4,000

68,22660,121(1,582)(2,624)

66,64457,497

(535)

(461)

12,764

11,708(3,242)(3,195)

594

8,867

–

(29)

37

1,010

2,990

–

–

3,073

2,990

12,247

(8)

(8)

8,332

12,239Long-Term Financial Debt and other payable
Provisions Employee Benefits
Provisions for Environment

13,29912,169Provisions for other liabilities and charges

3,836

12,06237

1,039

Current Provisions for Environment

3,073

Current Provisions for Other Liabilities& Charges

8,340

31/12/2017

31/12/2018

Income tax receivables

36,036

61,672

Deferred tax assets

114,686

132,855

Income tax payable(62,830)(74,500)

Net deferred taxes for discontinued operations(3,540)(6,225)ASSETSLIABILITIES

NET

2017

2018

2017

2018

2017

2018

117,605

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

–

1,313

–

(1,077)–

236

Deferred tax recognised in the P&L

371

15,722

1,164(6,363)

1,535

9,359

Deferred tax recognised in equity(10,009)

12,057

3,173(1,201)(6,836)

10,856

7,821

(348)

852

(832)

8,673

(1,181)Thousands of Euros
At the end of preceding financial year
Change in accounting policies

Acquisitions through business combination28(3,605)

–

108

28

(3,496)

Translation adjustments

Change in scope(3,147)

(633)

158

(122)

(2,989)(755)

Transfer

1,965(5,896)(1,964)

6,802

1

905

52

(440)

–

–

52

(440)

114,686

132,855(3,541)(6,225)111,146

126,630

Other movements
At the end of financial year forcontinuing operations

NET

2018

F21 DEFERRED TAX ASSETS AND LIABILITIESTax assets and liabilities

LIABILITIES

2017

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.

Thousands of Euros

130

Current Financial Debt

Trade and other payables

23,70924,040(8,769)(9,906)

14,94014,134

Total deferred tax due to temporary
differences

194,777

211,644(89,653)(85,140)

105,124

126,504

Tax losses to carry forward

53,46440,323––53,46440,323

Investments deductions

1,541

1,889

–

–

1,541

1,889

Notional interest carried forward

719

–

–

–

719

–

5,959

2,957

–

–

5,959

2,957

Other
Deferred tax assets not recognised(55,662)(45,043)––(55,662)(45,043)

Total tax assets/liabilities

200,798

211,770(89,653)(85,140)

111,146

126,630

Compensation of assets and liabilities
within same entity(86,112)(78,915)

86,112

78,915––

Net amount

114,686

132,855(3,540)(6,225)111,146

126,630

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

Thousands of Euros

2017

2018

2017

2018

F22 NET CASH AND CASH EQUIVALENTS

BASE

BASE

TAX

TAX

Thousands of Euros

31/12/2017

31/12/2018

16,948

13,687

CASH AND CASH EQUIVALENTS

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

131

Short-term investments: bank term deposits
Short-term investments: term deposits (other)
191,477

163,42155,66245,043The changes of the period in temporary differences are charged to the income statement except
those arising from events that were recognised 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 andother receivables” (positive by € 7.3 million), “Intangibles” (positive by € 2.5 million) and“Provisions for employee beneﬁts” (positive by € 0.7 million).
Deferred tax assets are only recognised to the extent that their utilisation is probable, ie 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 timethe deferred taxes are recognised.
Unrecognised deferred tax assets of € 45.0 million mainly arise from tax losses (€ 39.2 million),deductions for investments (€ 1.9 million), and temporary differences on property plant andequipment (€ 1.0 million), on inventories (€ 1.5 million) and on trade payables (€ 1.9 million).

41–

151,126

271,392

Total cash and cash equivalents

168,115

285,079

Bank overdrafts

12,21827,965

155,897

257,114

Cash-in-hands and bank current accounts

Net cash as in Cash Flow Statement for continuing operations

All cash and cash equivalents are fully available for the Group.
Prudent liquidity risk management implies maintaining sufﬁcient cash and marketablesecurities, the availability of funding through an adequate amount of committed credit facilities
and the ability to close out market positions.
Due to the dynamic nature of the underlying businesses, the Group maintains ﬂexibility infunding by maintaining availability under committed credit lines. Excess liquidities are invested
for very short periods and are spread over a limited number of banks, all enjoying a satisfactory
credit rating.

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 anticipatesthat this liability will not be incurred in a foreseeable future.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

132

F23 CURRENCY TRANSLATION DIFFERENCES AND OTHER RESERVES

The detail of the Group’s share in currency translation differences and other reserves is as follows:
FINANCIALASSETS AT FVTHROUGH OCIRESERVESCASH FLOWHEDGERESERVES –COMMODITIES

111

13,609

1,334

(715)

3,738

2,796

19,781Remeasurements derecognised out of othercomprehensive income–(5,950)Transfer from/to retained earnings–

Change in scope–

Exchange differences

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

Balance at the end of previous year

CASH FLOWHEDGECASH FLOW
DEFERREDRESERVES –HEDGETAXES DIRECTLY
CURRENCIES RESERVES – IRS RECOGNISED IN OCICHANGES IN POSTEMPLOYMENT BENEFITS,
ARISING FROM CHANGES INACTUARIAL ASSUMPTIONSSHARE-BASEDPAYMENTRESERVES

CURRENCY
TRANSLATIONDIFFERENCES

TOTAL

58,035(231,993)

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

89(9,308)

2,369

6,418

–

25,884(1,217)

–

2,749

14

–

–

(4,404)

–

–

–

–

–

(6,402)–(6,402)–––(3,711)

5,769

166

1,954

4,178

–

–

(221)

–

97

3,918

–

(81,366)(77,572)

3,849

10,456

19,675(625)

47,862(219,923)

23,432(87,242)(202,517)

Balance at the beginning of the year

3,849

10,456

19,675(625)

47,862(219,923)

23,432(87,242)(202,517)

Remeasurements recognised in othercomprehensive income(2,699)(18,395)

4,650

39

7,876

(6,390)

11,150–(3,769)Remeasurements derecognised out of othercomprehensive income

–

4,441

(20,736)

–

2,930

–

–

–

(13,365)

Transfer from/to retained earnings

–

–

–

–

–

–

(2,981)–(2,981)

Change in scope

–

(426)

–

–

(38)

697

–

–

233

Exchange differences

–

–

(179)

–

32

(1,268)–(3,831)(5,245)

1,150(3,925)

3,411

(586)

58,663(226,884)

31,600(91,073)(227,644)

Balance at the end of the year

Gains and losses recognised in the other comprehensive income (OCI) on financial assets atfair value through OCI relate mainly to the fair value adjustments of the period on the Nyrstar
shares (refer to note F18 on Financial assets at fair value through OCI).
The net losses recognised in the OCI regarding cash ﬂow hedges (€ 13.7 million) are thechanges 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 (€ 16.3 million)
are the fair values of the cash ﬂow hedging instruments existing at the opening which expired
during the year. A gain of € 19.5 million was recognised in the income statement, as a resultof expired cash ﬂow hedges.

New net remeasurements as a result of changes in the actuarial assumptions on the deﬁned
post-employment beneﬁt plans have been recognised in OCI for € -6.4 million.
The 2018 shares and stock option plans have led to a share-based payment reserve increase of€ 11.1 million (refer to note F10 on employee beneﬁts). € 3.0 million, linked to exercised options
and free shares plans, have been transferred to retained earnings

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
F24 FINANCIAL DEBT

133

The bank loans mainly consist of:Thousands of Euros

BANK
LOANS

OTHER
LOANS

TOTAL

NON-CURRENTAt the beginning of previous year–– two long-term private debt placements denominated in euros for a total of € 690 million(fair value € 696 million);–– short-term borrowings of € 368 million, reflecting the working capital needs and part of thedaily management of the treasury operations;

20,0004,396

24,396690,000–

690,000

Decrease

–

(286)

(286)

Transfers(20,000)(4)(20,004)–– commercial paper short-term issuances for € 41 million;

690,000

4,106

694,104

55,133–55,133–– bank overdrafts of € 28 million assimilated to the utilisation of overnight bank credit facilities.

–

(258)

(258)

(129)

(2)

(130)

IncreaseAt the end of previous year
Increase
Decrease
Translation differences
Transfers
At the end of the financial year for continuing operations(40,000)(3)(40,003)

705,005

3,842

708,846

CURRENT PORTION OF LONG-TERM FINANCIAL DEBTS
At the end of the preceding financial year
Increase/decrease

20,000147

20,147(20,000)(91)(20,091)

–

56

56

At the end of the financial year for continuing operations

Thousands of Euros

SHORT-TERM
LOAN:
SHORT-TERM
BANK COMMERCIALBANK LOANS OVERDRAFTSPAPERThe 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 2018 or in previous years.
The long-term debts mainly include debts in euros.
The line "new loans and repayment of loans" in the consolidated statement of cash flow does
not include the movements on bank overdrafts and the currency translation differences.

TOTAL

CURRENTAt the end of the preceding financial year

On 31 December 2018, there were no outstanding advances under the € 300 million SyndicatedBank Credit Facility maturing in October 2022 and no outstanding advances under the€ 352 million Syndicated Bank Credit Facility maturing in April 2023.

205,004

12,21876,498

Increase/decrease (including CTDs)

162,719

15,747(35,482)

142,984

At the end of the financial year forcontinuing operations

367,723

27,96541,016436,704

The net gearing ratio end of 2018 of 24.4% (31.1% in 2017) is well within the Group’s targeted
capital structure limits.

293,720

Net financial debt at 31 December 2018 stood at € 860.6 million, up from € 839.9 million at
the start of the year. The proceeds from the capital increase realised in February 2018 for an
amount of € 892 million were largely used for Umicore’s capital expenditures and net working
capital spending.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
EUROS

Thousands of Euros

OTHER

TOTAL

Analysis of long-term debts by currencies (including current portion)
Bank loans
Other loans
Non-current financial debts (including current portion)
Thousands of Euros

F25 TRADE DEBT AND OTHER PAYABLES
NOTE

Thousands of Euros
690,000

15,005705,005

3,897

–

3,897

693,897

15,005708,902

2017

2018

134

31/12/2017

31/12/2018

NON-CURRENT
Long-term trade payables

26,205

9,653

Other long-term debts

3,681

3,768

Investment grants and deferred income from grants

10,555

10,971

Total for continuing operations

40,442

24,392

Non-current financial debt

694,104

708,846

Current portion of non-current financial debt

20,14756

1,209,684

1,102,383

Current financial debt

293,720436,704

Advances received on contracts in progress

31,947

46,383

Cash and cash equivalents(168,115)(285,079)

Tax payable (other than income tax)

27,74237,005

Net financial debt

839,856

860,527

Payroll and related charges

122,250

122,762

Other amounts payable

44,24480,845

Dividends payable

11,696

11,655

Accrued interest payable

5,355

6,497

17,122

16,844GROSS OUTSTANDING DEBT
4%
2%0%
32%

62%

Fair value payable financial instrument held for cash flow hedging

F33

Fair value payable – financial instruments related to FV hedging

F33

Accrued charges and deferred income

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

Total for continuing operations

Millions of Euros

2017

2018

Net financial debt including discontinued operations

839.9

860.5

Equity1,862.6

2,659.3

Total

2,702.5

3,519.9

31.1

24.4

Gearing ratio (%)

CURRENT
Trade payables

12,035

11,844

157,740

153,140

1,639,815

1,589,360

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
THE TAX PAYABLES (OTHER THAN INCOME TAX)
MAINLY INCLUDE VAT PAYABLES. F26 LIQUIDITY
OF THE FINANCIAL LIABILITIESFINANCIAL YEAREARLIEST CONTRACTUAL MATURITY

PREVIOUS FINANCIAL YEAREARLIEST CONTRACTUAL MATURITY
Thousands of Euros<1
1 TO 3 3 MONTHSMONTH MONTHS– 1 YEAR

1 TO 5
YEARS

>5
YEARS

TOTAL

FINANCIAL DEBT

116,741

64,273

132,853

684,104–

1,007,972

Current

116,741

64,273

132,853––

313,868

115,545

64,24925,210––205,004

1,184–

11,034––

12,218

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

76,498––76,498Current portion of long-term bank loans––

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

12

25

111

–

–

147

Non-current

–

–

–

694,104–

694,104

Bank loans

–

–

–

690,000–

690,000

Other loans

–

–

–

4,104

–

4,104

TRADE AND OTHER PAYABLES

1,078,419

393,214

162,297

12,40533,921

1,680,256

Current

1,078,419

393,214

162,297

5,884–

1,639,814

Trade payables

848,563309,995

51,128––1,209,684

Advances received on contracts in progress

10,8897,866

13,192––

31,947

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

Fair value payable financial instrument
held for cash flow hedging

641

2,353

8,244

5,884

–

17,122

Fair value payable – financial instruments
related to FV hedging

3,156

Accrued charges and deferred income

125,978

15,151

16,610––157,740

–

–

–

6,521

33,92140,442
26,205

Non-current

7,439

1,440

135

–

–

12,035Long-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

Thousands of Euros<1
1 TO 3 3 MONTHSMONTH MONTHS– 1 YEAR

1 TO 5
YEARS

>5
YEARS

FINANCIAL DEBT

288,938

TOTAL

46,566

101,256 708,828

18

1,145,607

Current

288,938

46,566

101,256––

436,760

Short-term bank loans

265,390

46,54155,791––

367,723

Bank overdrafts

23,535

–

4,430

–

–

27,965

Short-term loan: commercial paper––

41,016––41,016

Current portion of other long-term loans

13

25

18

–

–

56

–

–

– 708,828

18

708,846
705,005

Non-current
Bank loans

–

–

–

705,005–

Other loans

–

–

–

3,823

18

3,841

TRADE AND OTHER PAYABLES

1,028,453

384,302

168,779

13,00819,211

1,613,754

Current

1,028,453

384,302

168,779

7,828–

1,589,362

Trade payables

767,995

295,217

39,172––

1,102,383

Advances received on contracts in progress

10,885

19,292

16,206––

46,383

Tax payable (other than income tax)

24,756

4,151

8,098

–

–

37,005

Payroll and related charges

35,65330,82356,286––

122,762

Other amounts payable

52,1509,869

18,826––80,845

Dividends payable

11,655––––

11,655

Accrued interest payable, third parties

5,095

1,166

235

–

–

6,497

Fair value payable financial instrument
held for cash flow hedging

434

1,951

6,631

7,828

–

16,844

Fair value payable – financial instruments
related to FV hedging

4,695

4,698

2,452

–

–

11,844

Accrued charges and deferred income

115,133

17,13420,873––

153,140

Non-current

–

–

–

5,180

19,211

24,392Long-term trade payables

–

–

–

–

9,653

9,653

Other long-term debts

–

–

–

–

3,768

3,768

Investment grants and deferred income
from grants

–

–

–

5,180

5,791

10,971

Umicore Integrated Annual Report 2018

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

Thousands of Euros
At the end of the previous year

POSTTERMINATIONEMPLOYMENTPOSTBENEFITSOTHER
BENEFITS, EMPLOYMENTEARLY LONG-TERM
PENSIONS
BENEFITS – RETIREMENT EMPLOYEEAND SIMILAR
OTHER AND SIMILAR
BENEFITS

TOTAL

295,861

3,840

26,177

16,934

342,812

Increase (included in “Payroll andrelated benefits”)

22,242

260

5,914

888

29,304

Reversal (included in “Payroll andrelated benefits”)

21

–

–

(1,619)(1,598)(25,342)(70)(8,026)(453)(33,891)

5,017

26

114

198

5,354

Use (included in “Payroll andrelated benefits”)
Interest and discount rate impacts(included in “Finance cost – Net”)

141

(223)

57

10

(15)

Transfers(1,119)

22

3,241

(145)

2,000

Recognised in othercomprehensive income

6,226

–

–

–

6,225

Translation differences

Other movements
At the end of the financial year forcontinuing operations

Thousands of Euros(13,924)

(66)

(153)

(2,258)(16,401)

289,124

3,788

27,324

13,554

333,790

31/12/2017

MOVEMENTS
2018

31/12/2018

Belgium

53,6389,326

62,964Germany

266,551(21,003)245,548

Subtotal

320,189(11,677)

308,512

Other entities

22,623

2,655

25,278

Total for continuing operations

342,812(9,022)

333,790

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 OCI”
compared to what is shown in note F23 as that note also includes associates and joint venturesthat are accounted for according to the equity method. The line "other movements" relates
mainly to the sale of the European operations of Technical Materials.
The following disclosure requirements under IAS 19 amended were derived from the reports
obtained from external actuaries.

BELGIUM

136

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 € 237.7 million
and assets for € 174.7 million. They foresee 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 selfadministrated 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 theconsequences of strategic investment policies are analysed in terms of risk-andreturn 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 (level 1 fair value classiﬁcation). The plans hold nodirect positions in Umicore shares or bonds, nor do they own any property used byan Umicore entity. Investments are well diversiﬁed so that the failure of any single
investment would not have a material 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 convertedsalary and provide a guaranteed interest of 3.0% per annum (6.0% per annum forsalary conversions before 2014). All retirement plans represent a deﬁned beneﬁt
obligation of € 252.5 million and assets for € 6.9 million.
Funding
As mentioned 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.

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

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

137

The most significant risks related to the defined benefit plans are:And some risks are related to Belgium only:–– Asset volatility: The plan liabilities are calculated using a discount rate set with reference tocorporate bond yields; if plan assets underperform this yield, this will create a deﬁcit.

–– Because of the Belgian legislation applicable to second 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 of deﬁned contributionplans, 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 inthe Belgian Law was enacted resulting in a decrease of the guaranteed return from 3.25% toa minimum interest rate defined based upon the Belgian 10-year interest rate but within therange 1.75% – 3.25%. The new rate (currently 1.75%) applies for the years after 2015 on futurecontributions and also on the accumulated past contributions as at 31 December 2015 if thefinancing 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.

–– 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 2014provide life annuities which involve the risk of longevity ie the risk that the payment periodof 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 arisk of cash outﬂow before retirement.
–– Legislation risks: If the law which deﬁne the beneﬁt changes, it can result in a change ofthe obligations.
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” and therefore can result in an additional unfunded pension
obligation due to a guaranteed interest rate of 3.5%. As it is not possible to apply the full
IAS19 calculation method, the fund is evaluated as a Deﬁned Contribution plan. The risk of theadditional 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 beenclosed at 31 December 2013 and replaced by a plan with no signiﬁcant risk in this respect.

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 theminimum beneﬁts to be paid. The Group has plans that are ﬁnanced through insurance contract
as well as one plan ﬁnanced through an IORP. The related deﬁned beneﬁt obligations have been
aggregated with the 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 € 105.6 million as at the endof December 2018 and related plan assets to € 97.5 million.
Thousands of Euros

2017

2018

CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of the year

521,153552,021

Current service cost

29,23628,920Interest cost

9,612

9,359

Plan Participants’ Contributions

843

861

Remeasurements – changes in demographic assumptions(2,233)

4,678

Remeasurements – changes in financial assumptions

2,964(7,727)

Remeasurements – experience adjustments

4,611

5,967

Benefits paid from plan/Company(22,994)(28,913)

Expenses paid

(2,080)(2,101)

Plan combinations

13,277(14,915)

Exchange rate changes
Benefit obligation at end of the year

(2,368)902

552,021549,052

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
Thousands of Euros

2017

2018

CHANGE IN PLAN ASSETS
Fair value of plan assets at the beginning of the year

Thousands of Euros

2017

2018

195,689

194,314Amounts recognised in other comprehensive income
183,246

209,774

Expected return on plan assets

3,403

3,668

Change in scope

Remeasurements on plan assets

5,286(4,410)Remeasurements of the year

Employer contributions

32,26534,671

Member contributions

843

861

(22,994)

Benefits paid from plan/Company

138

Cumulative remeasurements at opening

–

(697)

(1,212)

6,225

Minorities

151

57

Recycled into P&L

(81)

–

(28,913)

Exchange differences

(233)

50
199,949

Expenses paid

(2,145)(2,151)

Total recognised in the OCI at subsidiaries

194,314

Net transfer in/(out) (including the effect of any business combinations/divestitures)

11,836

1,630

Remeasurements at associates and joint ventures

25,606

26,932

Exchange rate changes(1,966)971

Total recognised in the OCI

219,921226,882

209,774

216,101

Fair value of plan assets at the end of the year

Pension plans mainly in Belgium, Korean, Liechtenstein, Germany and Japan are wholly or
partly funded with assets covering a substantial part of the obligations. All other plans have nomaterial funding or are unfunded.
Thousands of Euros

2017

2018

AMOUNT RECOGNISED IN THE BALANCE SHEET
Defined benefit obligations

552,021549,052

Fair value of plan assets

209,774

216,101

Funded Status

342,247

332,951

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

342,247

332,951

Effect of changes in demographic assumptions(2,147)4,358

Effect of changes in financial assumptions

2,758(7,579)Effect of experience adjustments

3,465

5,121

(Return) on plan assets (excluding interest income)(5,167)

4,329

Total remeasurements included in Other Comprehensive Income(1,091)

6,229

830

–

Total of discontinued operations

The interest cost and return on plan assets as well as the discount rate impact on the non-postemployment beneﬁt plans, are recognised under the ﬁnance cost in the income statement (seenote F11). All other elements of the expense of the year are classiﬁed under the operating resultin 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.

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

29,23628,920Interest cost

9,612

9,359

Interest income on plan assets(3,403)(3,668)Remeasurement of Other Long-Term Benefits

1,176

1,099

36

50

Total pension cost recognised in P&L account36,65735,760Total of discontinued operations

2,662

0

Administrative expenses and taxes

Remeasurements (recognised in other comprehensive income)

2017

2018

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

1.73

1.85

Rate of compensation increase (%)

2.81

2.85

Rate of price inflation (%)

1.79

1.78

Rate of pension increase (%)

1.38

1.36

Weighted average assumptions used to determine net cost
Discount rate (%)

1.66

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

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
2018

Thousands of Euros

FAIR VALUE
OF ALL PLANASSETSFAIR VALUE OF PLANASSETS WITH QUOTEDMARKET PRICE

Plan assets
Cash and cash equivalents

14,452

14,447

Equity instruments

35,77335,763

Debt instruments

83,84983,595

Real estate
Assets held by insurance company
Other
Total plan assets

7,091

5,506

72,29960,736

2,636

972

216,100

201,019

Assumptions are recommended by the local actuaries in line with the IAS19 revised. The standard
reference for the Eurozone is iBOXX AA Index yield and similar indexes are used for the otherregions. 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.
2018

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

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

519,074554,981

12.86

13.92

Sensitivity to trend rate assumptions on inflation rate
Present value of defined benefit obligation

538,190515,733

541,935

529,357

Sensitivity to trend rate assumptions on salary increase rate
Present value of defined benefit obligation

139

2017

2018

Balance sheet liability (asset) as of previous year

337,907342,247

Pension expense recognised in P&L in the financial year

36,65735,760

Amounts recognised in SoCI

(1,091)

6,229

Employer contributions via funds in the financial year

(20,712)(23,174)

Employer contributions paid directly in the financial year

(11,553)(11,497)

1,441(16,545)

Thousands of Euros
BALANCE SHEET RECONCILIATION

Amounts recognised due to plan combinations
Exchange rate adjustment – (gain)/loss
Balance sheet liability (asset) as of end of the year

(402)

(69)

342,247

332,951

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

2014

2015

2016

2017

2018

527,028

469,027

521,153552,021549,052

Fair value of plan assets

195,326

156,670

183,246

209,774

216,101

Deficit (surplus) in the plan

331,702

312,357

337,907342,247

332,951

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

4,410

Experience adjustments on plan liabilities(4,543)

5,399

14,861

4,611

5,967

Thousands of Euros2018

EXPECTED CASH FLOWS FOR FOLLOWING YEAR
Expected employer contributions

33,344

Expected total benefit payments
Year 1

22,001

Year 2

23,409Year 328,387

Year 4

24,973

Year 525,644

Next 5 years

123,196

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
F28 STOCK OPTION PLANS GRANTED BY THE COMPANY
PLAN

EXPIRY DATEEXERCISE

ISOP 201212/02/2019

all working days ofEuronext Brussels

ISOP refers to “Incentive Stock Option Plan” (worldwide plan for managers).

EXERCISE PRICE IN EUROS(THE EXERCISE PRICE MAY BE
HIGHER IN CERTAIN COUNTRIES)NUMBER
OF OPTIONS STILLTO BE EXERCISED

17.66

63,574

18.84

–

18.00

10,00018.19

309,905

19.34

25,000The stock options, which are typically vested at the time of the grant, are foreseen to besettled with treasury shares. Options which have not been exercised before the expiry dateelapse automatically.
2017

73,574ISOP 2013ISOP 2014

ISOP 201512/02/2020

10/02/2021

09/02/2022

all working days ofEuronext Brussels

all working days ofEuronext Brussels

all working days ofEuronext Brussels

16.14

140

2018

NUMBEROF SHARE
OPTIONSWEIGHTEDAVERAGEEXERCISEPRICE

NUMBEROF SHARE
OPTIONSWEIGHTEDAVERAGEEXERCISE
PRICE

DETAILS OF THE SHARE OPTIONS OUTSTANDING
DURING THE YEAR

334,905

Outstanding at the beginning of the year

5,645,750

16.94

5,218,199

18.98

451,750

Granted during the year

1,170,000

25.56

1,182,625

40.90

Exercised during the year

1,597,551

17.39

1,037,470

17.31

–

–

6,500

–

15.80

25,375

Expired during the year

16.49

15,000

Outstanding at the end of the year

5,218,199

18.98

5,356,854

24.14

492,125

Exercisable at the end of the year

5,218,199

18.98

5,356,854

24.14

17.29

828,62518.90

27,00019.50

30,250885,875

ISOP 201604/02/2023

all working days ofEuronext Brussels

16.63

ISOP 201713/02/2024

all working days ofEuronext Brussels

25.50

1,217,750

The options outstanding at the end of the year have a weighted average contractual life until
March 2023.
The details concerning the calculation of the fair value of the options granted are detailed undernote F10 on Payroll and related Benefits.

1,217,750

27.04

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

ISOP 201808/02/2025

all working days ofEuronext Brussels

40.90

1,182,625
1,182,625

Total

5,356,854

Umicore Integrated Annual Report 2018

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

F30 PROVISIONS FOR OTHER LIABILITIES AND CHARGESPROVISIONSFOR SOIL
CLEAN-UP & SITEREHABILITATIONOTHERENVIRONMENTALPROVISIONS

TOTAL

66,086

3,107

69,193

Change in scope

(150)

–

(150)

Increase

62

2,544

2,606

Reversal(1,810)(548)(2,359)Use (included in "Other operating expenses")(2,180)(1,607)(3,787)

Discounting (included in "Finance cost – Net")

(785)

–

(785)

(467)

(15)

(482)

At the end of the financial year for continuing operations

60,755

3,481

64,236

Of which – Non-current

49,9601,077

51,037

10,7952,404

13,199Translation differences– Current

141

Provisions for environmental, legal and constructive obligations are recognised and measured
by reference to an estimate of the probability 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 decreased overall by € 5.0 million, with additional provisions which are lower thanthe uses and reversals of existing provisions.

PROVISIONS FOR PROVISIONS FORREORGANISATION OTHER LIABILITIES& RESTRUCTURING
AND CHARGES

Thousands of Euros
At the end of the previous year
Change in accounting policies
Change in scope
Acquisition through business combinations

TOTAL

37,05149,36986,416(4,973)–(4,973)

(128)

(409)

(537)

–

11,507

11,507
83,785

Increase

8,536

75,249

Reversal(1,470)(3,458)(4,928)Use (included in “Other operating expenses”)(5,875)(8,109)(13,985)

Translation differences

(247)

267

20

Transfers(1,938)673(1,265)

Financial charges

–

(146)

(146)

Other movements

–

(35)

(35)

35,928

119,936

155,859

19,73741,35361,09016,19078,583

94,773At the end of the financial year for continuing operations
Of which – Non-current– Current

Provisions for reorganization and restructuring and for tax, warranty and litigation risks, onerous
contracts and product returns are recognised and measured by reference to an estimate of theprobability of future outﬂow of cash as well as to historical data based on the facts and circumstances
known at the end of the reporting period. The actual liability may differ from the amounts recognised.

Most of the uses of provisions for soil and groundwater remediation for the period are linked
to the realization during the period of site remediation programs in Brazil, in the USA andin Belgium.

Provisions increased overall by € 69.4 million.

No major movements occurred in 2018 on the provisions that were taken to address thehistorical radioactive waste material in Belgium (Olen). Further negotiation with all competentauthorities to ﬁnd a sustainable and acceptable storage solution are ongoing, however, at aslow pace.

Additional provisions for reorganization and restructuring have been taken in Brazil, related
to the discontinuation of certain activities. The use of provisions for reorganization andrestructuring were mainly taken in Brazil, USA and Germany. Some reversals of prior years’
provisions were taken in Germany and France.

The movements of the other environmental provisions are mainly related to the need for andadjustment of CO2 emission rights in Belgium.

The impact of changes in accounting policies is related to the shift from IAS 39 to IFRS 9 onhedge accounting and the treatment of hedging instruments and hedged items.

Management expects the most signiﬁcant cash outﬂows on these projects for non-current
elements to take place within 10 years.

The increase of provisions for other liabilities and charges is mainly related to the introductionof IFRS 9 for fair value hedging where under the revised standard for some commodities no fairvalue hedge accounting can be obtained. Consequently, IAS 37 principles for onerous contracts
are applied in these circumstances (see Note F4.5). Other increases relate to increased warranty
and litigation risks in Belgium, Korea and China (see Note F4.5).

The acquisitions through business combinations are related to the acquisition from Halder
Topsoe (Brazil and Denmark).

No assessment is possible regarding the expected timing of cash outflows related to the noncurrent part of the provisions for other liabilities and charges.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
F31 CAPITAL EMPLOYED
Thousands of Euros

NOTE

Intangible assets

31/12/2017 30/06/2018

31/12/2018

F14, F15

328,808342,213337,305

Property, plant and equipment

F161,301,411

1,420,698

1,601,892

Investments accounted for under the equity method

F17153,008

160,702151,372

Financial assets at FV through OCI

F1822,331

4,870

8,028

Inventories

F19

1,628,423

1,886,298

2,308,094

Non-current receivable (excluding assets
employee benefits)

F20

13,118

10,59010,962

1,282,173

1,492,030

1,123,503

36,03635,856

61,672

4,765,307

5,353,256

5,602,829

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

F25

Adjusted current accounts payable
Translation reserves

40,442

41,997

24,391

1,622,720

1,859,413

1,572,515

F23(87,244)(98,010)(91,075)

Non-current provisions

F29, F30

87,853

129,889

112,128

Current provisions

F29, F30

107,973

67,75975,691

62,83059,57574,500Liabilities included in capital employed

1,794,359

2,068,556

1,800,432

Capital employed

2,970,947

3,284,700

3,802,397

32,596674

16

Capital employed as published3,003,544

3,285,374

3,802,413

Average Capital Employed in half year
preceding closing date

2,861,459

3,543,894

Average Capital Employed in year precedingclosing date

2,709,925

3,344,176

Income tax payable

IAS 39 and eliminations

Recurring EBIT in year preceding closing date
ROCE in year preceding closing date

F9410,254

513,564

15.14%

15.36%

142

Current account receivable and payable included in “Capital Employed” do not 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 employedat the end of the period and at the end of the preceding period. Average capital employed forthe year is calculated as the average of the capital employed of both half years.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

143

F32 FINANCIAL INSTRUMENTS BY CATEGORYAS AT THE END OF PREVIOUS YEARCARRYING AMOUNTFAIR VALUEHELD FOR
TRADING –NO HEDGE
ACCOUNTINGCASHFLOW HEDGEACCOUNTING

22,331–––

22,331

22,331–––

22,331

13,035––

13,035–

13,035––

13,035–

1,349,805

11,16946,6281,292,009–

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

–

Thousands of Euros

LEVEL

LOANS, FINANCIAL ASSETSRECEIVABLESAT FV THROUGH
AND PAYABLESOCIASSETS
Financial assets at FV through OCI
Financial assets at FV through sales – Shares

1

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

Current
1,075,389––

1,075,389–

Trade receivables (write-down)

Trade receivables (at cost)(7,509)––(7,509)–Other receivables (at cost)

145,519––

145,519–

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 – financial instruments related to FV hedging

11,169

11,169–––Deferred charges and accrued income

68,705––68,705–

168,115––

168,115–

Cash and cash equivalents
Short-term investments: bank term deposits
Short-term investments: term deposits (other)

16,948––

16,948

–

41

–

–

41

–

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

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
AS AT THE END OF PREVIOUS YEAR

Thousands of Euros144

CARRYING AMOUNTLEVELFAIR VALUEHELD FOR
TRADING –NO HEDGE
ACCOUNTINGCASHFLOW HEDGEACCOUNTING

1,004,013––

1,007,974

LOANS, FINANCIAL ASSETSRECEIVABLESAT FV THROUGH
AND PAYABLESOCILIABILITIESFinancial debt–

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–Current
Trade payables
Advances received on contracts in progress

1,209,684––

1,209,684–

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

–

Fair value financial instrument held for cash flow hedging

217,122–

17,122––

Fair value payable – financial instruments related to FV hedging

212,035

12,035–––

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

157,740––

157,740–

2,684,269

12,035

17,122

2,659,073–

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
AS AT THE END OF THE FINANCIAL YEAR145

CARRYING AMOUNTFAIR VALUEHELD FOR
TRADING –NO HEDGE
ACCOUNTINGCASHFLOW HEDGEACCOUNTING

LOANS,RECEIVABLES
AND PAYABLESFINANCIALASSETS AT FVTHROUGH OCI

8,028

–

–

–

8,028

8,028

–

–

–

8,028

8,897

–

–

8,897

–

8,897

–

–

8,897

–

1,158,112

18,844

17,184

1,122,084–

Cash guarantees and deposits

9,912

–

–

9,912

–

Other receivables maturing in more than 1 year

1,049

–

–

1,049

–

Assets employee benefits

1,172

–

–

1,172

–

Thousands of EurosLEVEL

ASSETS
Financial assets at FV through OCI
Financial assets at FV through OCI – Shares

1

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

Current
Trade receivables (at cost)

893,621––893,621–

Trade receivables (write-down)(22,576)––(22,576)–

Other receivables (at cost)

221,162––

221,162

–

(246)

–

–

(246)

–
–

Other receivables (write-down)Interest receivable

2

177

–

–

177

Fair value of financial instruments held for cash flow hedging

217,184–

17,184––

18,844

18,844–––

Fair value receivable – financial instruments related to FV hedging
Deferred charges and accrued income

17,813––

17,813–

285,079––

285,079–

Short-term investments: bank term deposits

13,687––

13,687–Cash-in-hand and bank current accounts

271,392––

271,392–

TOTAL OF FINANCIAL INSTRUMENTS (ASSETS)

1,460,116

18,844

17,184

1,416,060

8,028

Cash and cash equivalents

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
AS AT THE END OF THE FINANCIAL YEAR146

CARRYING AMOUNTFAIR VALUEHELD FOR
TRADING –NO HEDGE
ACCOUNTINGCASHFLOW HEDGEACCOUNTING

LOANS,RECEIVABLES
AND PAYABLESFINANCIALASSETS AT FVTHROUGH OCI

1,151,608––

1,145,607–

Bank loans

711,005––

705,005–

Other loans

3,842

–

–

3,842

–

Short-term bank loans

367,723––

367,723–

Bank overdrafts

27,965––27,965–

Short-term loan: commercial paper

41,016––41,016

–

56

–

–

56

–

1,613,750

11,844

16,844

1,585,062–

Long-term trade payables

9,653

–

–

9,653

–

Other long-term debts

3,768

–

–

3,768

–

Investments grants and deferred income from grants

10,971––

10,971–Thousands of EurosLEVEL

LIABILITIESFinancial debt
Non-current

Current

Other loans
Trade and other payables
Non-current

Current
Trade payables

1,102,383––

1,102,383–

Advances received on contracts in progress

46,383––

46,383–Tax – other than income tax – payable

37,005––37,005–

Payroll and related charges

122,762––

122,762–

Other amounts payable

80,845––80,845–

Dividends payable

11,655––

11,655–

Accrued interest payable

6,497

–

–

6,497

–
–

Fair value financial instrument held for cash flow hedging

216,844–

16,844–

Fair value payable – financial instruments related to FV hedging

211,844

11,844–––

Accrued charges and deferred income

153,140––

153,140–

Total of financial instruments (Liabilities)

2,765,358

11,844

16,8442,730,669–

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

147

Loans and debt have been issued at market rates which would not create any major differenceswith effective interest expenses. All categories of ﬁnancial instruments of Umicore are at fairvalue except the non-current bank and other loans for which the carrying amounts differ fromthe fair value (see note F24).

The fair value on ﬁnancial instruments related to cash ﬂow hedging purchases would have been
€ 1.9 million higher/lower if the energy prices would strengthen/weaken by 10%. The fair value
on ﬁnancial instruments related to cash ﬂow hedging purchases would have been € 8.4 million
higher/lower if the metal prices would strengthen/weaken by 10%.

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 nottraded in an active market is determined using valuation techniques, mainly discounted cashﬂow, using market assumptions prevailing at the end of the reporting period.

The fair value on other commodity sales ﬁnancial instruments would have been € 20.6 million
lower/higher and the fair value on other commodity purchases ﬁnancial instruments would
have been € 20.7 million higher/lower if the metal prices would strengthen/weaken by 10%.

In particular, the fair value of interest rate swaps is calculated as the present value of theestimated future cash ﬂows. The fair value of forward foreign exchange, metal and energy
contracts is determined using quoted forward exchange, metal and energy rates at the end of
the reporting period.
The fair value of quoted ﬁnancial assets held by the Group is their quoted market price at theend of the reporting period. The fair value of ﬁnancial liabilities is estimated by discounting thefuture contractual cash ﬂows at the current market interest rate that is available to the Groupfor similar ﬁnancial instruments.
The carrying value less impairment provision of trade receivables and payables are assumed toapproximate their fair values.
32.1 FAIR VALUE HIERARCHYThe Group adopted the amendment to IFRS 7 for ﬁnancial instruments which are measured in thebalance sheet at fair value, with effect from January 2009. This amendment requires disclosuresof 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 financial assets at fair value through OCI 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.

32.2.2 FOREIGN CURRENCY
The fair value of forward currency contracts related to cash ﬂow hedging would have been
€ 3.2 million lower if the EUR would strengthen against USD by 10% and would have been
€ 4.0 million higher if the EUR would weaken against USD by 10%.
The fair value of forward currency contracts related to cash ﬂow hedging would have been
€ 2.5 million lower if the EUR would strengthen against ZAR by 10% and would have been
€ 3.0 million higher if the EUR would weaken against ZAR by 10%.
The fair value of forward currency contracts related to cash ﬂow hedging would have been
€ 10.5 million lower if the USD would strengthen against KRW by 10% and would have been€ 12.5 million higher if the USD would weaken against KRW by 10%.
The fair value of forward currency contracts related to cash flow hedging would have been
€ 3.2 million lower if the EUR would strengthen against CNY by 10% and would have been
€ 3.9 million higher if EUR would weaken against CNY by 10%.
The fair value of forward currency contracts related to cash flow hedging would have been
€ 3.2 million lower if the USD would strengthen against CNY by 10% and would have been
€ 3.4 million higher if USD would weaken against CNY by 10%.
The fair value of other forward currency contracts sold would have been € 57.6 million higher if
the EUR would strengthen against USD by 10% and would have € 70.4 million lower if the EUR
would weaken against USD by 10%.
The fair value of other forward currency contracts bought would have been € 18.8 million lower
if the EUR would strengthen against USD by 10% and would have been € 22.9 million higher if
the EUR would weaken against USD by 10%.
The fair value of net position of current assets and liabilities exposed to USD would have been
€ 22.3 million lower if the EUR would strengthen against USD by 10% and would have been
€ 27.2 million higher if the EUR would weaken against USD by 10%.

32.2.1 COMMODITY PRICESThe fair value on ﬁnancial instruments related to cash ﬂow hedging sales would have been
€ 2.8 million lower/higher if the metal prices would strengthen/weaken by 10%.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
F33 FAIR VALUE OF FINANCIAL INSTRUMENTS

Umicore has not faced any ineffectiveness on cash ﬂow hedging in P&L in 2017 and 2018.

Umicore hedges its structural and transactional commodity (metal and energy), currency andinterest rate risks using respectively commodity derivatives (mainly quoted on the London Metal
Exchange), currency derivatives and Interest Rate Swaps with reputable brokers and banks.
33.1 FINANCIAL INSTRUMENTS RELATED TO CASH FLOW HEDGINGNOTIONAL OR
CONTRACTUAL AMOUNT
Thousands of Euros
Forward commodities sales
Forward commodities purchases

FAIR VALUE

31/12/2017

31/12/2018

31/12/2017

31/12/2018

59,314

22,498(10,571)(5,779)(135,996)(101,452)

21,027

1,854

Forward currency contracts sales

431,038

486,796

21,013

1,060

Forward currency contracts purchases(103,090)(89,545)(1,337)3,790

Forward IRS contracts

23,00664,290

(625)

(586)

Total fair value impact subsidiaries

29,505340

Recognised under trade and other receivables

46,62817,184

Recognised under trade and other payables(17,122)(16,844)

Fair value impact associates and joint ventures
Total

148

(1,440)29,505(1,100)The principles and documentation on the hedged risks as well as the timing related to theGroup’s cash ﬂow hedging operations are included in note F3 Financial risk management.
The fair values of the effective hedging instruments are in the ﬁrst instance recognised in thefair value reserves recorded in equity and are derecognised when the underlying forecasted orcommitted transactions occur (see note F23).
The forward commodities sales contracts are set up to hedge primarily the following
commodities: gold, silver, palladium, platinum nickel, lead and copper. The forward commodity
purchase contracts are set up to hedge primarily the electricity, gas and fuel oil price risks andthe commodity nickel.
The forward currency contracts are set up to hedge USD towards EUR, KRW, CNY, BRL and CAD
and EUR towards ZAR.
The terms and conditions of the forward contracts are common market conditions.
In those circumstances whereby the hedge accounting documentation as deﬁned under IFRS 9
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 are being used tohedge future probable cash ﬂows and are not speculative in nature.

The fair values of the hedging instruments are not significant. The forward commodities sales
contracts are set up to hedge primarily the following commodities: gold, silver, palladium,
platinum, nickel, lead and copper. The forward commodity purchase contracts are set up to
hedge the electricity, gas and fuel oil price risks and the commodity nickel. The forward currency
contracts are set up to hedge USD towards EUR, KRW, CNY, BRL and CAD and EUR towards ZAR.
33.2 FINANCIAL INSTRUMENTS RELATED TO FAIR VALUE HEDGINGNOTIONAL OR
CONTRACTUAL AMOUNT
Thousands of Euros

31/12/2017

FAIR VALUE

31/12/2018

31/12/2017

31/12/2018

Forward commodities sales

140,686

194,909(7,030)3,101Forward commodities purchases(131,626)(234,618)

3,714

4,861

Forward currency contracts sales

629,862

1,350,314

6,364(3,741)

Forward currency contracts purchases(254,281)(669,549)(3,915)

2,779

(867)

7,000

Total fair value impact subsidiaries
Recognised under trade and other receivables

11,16918,844

Recognised under trade and other payables(12,035)(11,844)

(867)

7,000

Total

The fair values of the hedging instruments are not significant as the closing rates do notmaterially differ from the strike rates. The forward commodities sales contracts are set up to
hedge primarily the following commodities: gold, silver, palladium, platinum, rhodium, nickel,
lead and copper. The forward commodity purchase contracts are set up to hedge primarily gold
and copper. The forward currency contracts are set up to hedge USD towards EUR, KRW, CNY,
BRL and CAD and EUR towards CNY, ZAR, CAD, CHF, JPY, THB, DKK and NOK.
The principles and documentation related to the Group’s transactional hedging are included
in note F3 “Financial risk management”. The Group’s fair value hedging of currencies andcommodities comply with IFRS 9 fair value hedge accounting rules (see also note F2.21.1). In theabsence of hedge accounting documentation as deﬁned under IFRS 9, ﬁnancial instruments
used to hedge transactional risks for metals and currencies are measured as if they were held
for trading. However, such instruments are being used to cover existing transactions and 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 and the Net Finance cost for the currency instruments.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

149

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

<1
MONTH

1 TO 3 3 MONTHSMONTHS– 1 YEAR

1 TO 5
YEARS

TOTAL

FINANCIAL INSTRUMENTS ASSETS (FAIR VALUE)
Commodity risk
–

98

295

–

393

Total forward purchases (CFH)

534

1,073

7,313

12,10721,027

Total forward purchases (FV Hedging)

578

2,751

401

–

3,730

Forward currency contracts sales (CFH)

1,807

3,630

19,181590

25,208Forward currency contracts sales (FV Hedging)

4,890

1,506

1,019

–

7,415

23

–

–

–

23

–

–

–

(626)

(626)

Total forward sales (CFH)

FX Risk

Forward currency contracts purchases (FV Hedging)
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 (FV Hedging)(1,883)(4,386)(761)–(7,030)

(88)

71

–

–

(16)

Total forward purchases (FV Hedging)
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 (FV Hedging)

(362)

(678)

(11)

–

(1,051)

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

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

150

AS AT THE END OF THE FINANCIAL YEAREARLIEST CONTRACTUAL MATURITY (UNDISCOUNTED) –NOTIONAL AMOUNTS
Thousands of Euros< 1 MONTH 1 TO 3 MONTHS

3 MONTHS –1 YEAR

1 TO 5 YEARSEARLIEST CONTRACTUAL MATURITY (UNDISCOUNTED) –FAIR VALUE
TOTAL< 1 MONTH 1 TO 3 MONTHS

3 MONTHS –1 YEAR

1 TO 5 YEARSTOTALFINANCIAL INSTRUMENTS ASSETS
Commodity risk
Total forward sales (CFH)
Total forward purchases (CFH)

373

384

2,177

–

2,934

21

42

162

–

225

–

–

11,907–

11,907

–

–

7,244

–

7,244

Total forward sales (FV Hedging)

29,81253,33032,724–

115,866

2,867

4,066

1,035

–

7,968

Total forward purchases (FV Hedging)

7,939

188,556

175–

196,670

417

5,202

5

–

5,624

20,90542,216

187,937–251,058

404

867

4,654

–

5,925

276

610

5,460

83,19989,545

15

33

264

3,478

3,790

FX Risk
Forward currency contracts sales (CFH)
Forward currency contracts purchases (CFH)
Forward currency contracts sales (FV Hedging)

643,282

64,92360,9452,162

771,312

1,540

(104)

142

–

1,578

Forward currency contracts purchases (FV Hedging)

427,440

158,318

39,515–625,273

1,960

1,524

190

–

3,674

24,290––40,00064,290

(277)

–

–

(309)

(586)
(6,003)

FINANCIAL INSTRUMENTS LIABILITIESInterest Rate Risk
Interest rate swaps
Commodity risk
–

3,660

15,904–

19,564–(1,546)(4,457)–

Total forward purchases (CFH)

276

610

5,460

83,19989,5452

560(5,458)(5,391)

Total forward sales (FV Hedging)

7,252

53,095

18,697–79,044(312)(4,147)(408)–(4,867)

Total forward purchases (FV Hedging)

20,31910,188

7,441–

37,948

(415)

(188)

(160)

–

(763)

Total forward sales (CFH)

FX Risk
9,505

19,01085,933

121,290

235,738

(159)

(410)

(2,234)(2,061)(4,864)

Forward currency contracts sales (FV Hedging)

397,094

78,235

103,674–

579,003(3,494)

11(1,837)–(5,320)Forward currency contracts purchases (FV Hedging)

25,086

15,541

3,649–

44,276

(475)

(374)

(47)

–

(896)

Forward currency contracts sales (CFH)

Umicore Integrated Annual Report 2018

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 the operating cash ﬂows. The net proﬁt and loss is adjusted for:151(**) Item disclosed elsewhere are mainly due to changes in interest, dividend and tax receivable and payable
and government grants.

Thousands of Euros

NET CASH
LOANS
AND CASH(W/O BANKEQUIVALENT OVERDRAFTS)NET
FINANCIAL
DEBT–– the effects of non-cash transactions such as provisions, impairment losses, mark to market,
etc., and the variance in operating capital requirements.

At the end of previous year

155,897995,754

Cash flow of the period

101,217

121,887

20,670–– items of income or expense associated with investing or ﬁnancing cash ﬂows.

At the end of the financial year

257,114

1,117,641

860,527

2017

2018

Depreciations

190,494

206,577

Adjustment IAS 39

21,048–

Negative goodwill taken in result(10,900)–(Reversal) Impairment charges

11,7796,780Mark to market of inventories and commitments(37,465)

53,081

Exchange difference on long-term loans(3,602)(395)

Inventories and bad debt provisions

8,488

13,805(1,236)

Thousands of Euros
Adjustments for non-cash transactions

Depreciation on government grants(671)

Share-based payments

6,129

11,150Change in provisions

5,417

58,518

190,714348,280

Tax charge of the period

74,670103,240

Interest (income) charges

19,48333,217(Gain) loss on disposal of fixed assets

5,504(5,963)

Dividend income(1,380)

(124)

Total

98,274130,369

Inventories(439,601)(679,671)

Trade and other receivables(497,337)

166,200

Total
ADJUSTMENTS FOR ITEMS TO DISCLOSE SEPARATELY OR UNDER INVESTING
AND FINANCING CASH FLOWSCHANGE IN WORKING CAPITAL REQUIREMENT ANALYSIS

Trade and other payables

482,394(54,837)

As in the consolidated balance sheet(454,544)(568,308)

Non-cash items (*)

47,791(133,286)

Items disclosed elsewhere (**)

(4,489)12,451

Impact of business combination

195,485(6,885)Currency translation differences
As in the consolidated cash flow statement(59,754)(11,991)(275,509)(708,017)

839,857

34.2 NET CASH FLOW GENERATED BY OPERATING ACTIVITIESOperating cash ﬂow after tax from continuing operations is € -27.3 million. The change inworking capital requirements for continuing operations is € -708.0 million in 2018, in line withhigher activity levels and metal prices.
34.3 NET CASH FLOW USED IN INVESTING ACTIVITIESNet cash used in investing activities for continuing operations increased by € 80.3 million
in 2018. Capital expenditure for continuing operations reached € 477.6 million if capitalized
R&D costs are excluded as per Umicore’s deﬁnition of capital expenditures (refer to Glossary).
The capital expenditure spending in 2019 is expected to be higher than in 2018, driven by thegreenfield expansions underway in Rechargeable Battery Materials, the capacity expansions
in Catalysis to cater for additional demand and the investments to be carried out during theextended shutdown in Hoboken.
The acquisition in additional shareholdings in subsidiaries for € 123.5 million is related to theincrease of Umicore’s interest in its Chinese cathode material production entity from 70% to90%. Acquisitions of new subsidiaries accounted for a cash out of € 24.2 million and mainly
include the acquisition of Materia’s metathesis catalyst IP and business portfolio (see note F8).
The disposal of subsidiaries for € 35.7 million mainly include the sale of the European TechnicalMaterials business to Saxonia Edelmetalle GmbH.
34.4 NET CASH FLOW USED IN FINANCING ACTIVITIESThe cash generated in ﬁnancing activities is mainly the consequence of the increase of sharecapital during the first semester 2018 as a result of an equity placement through an accelerated
bookbuild for a total gross amount of € 891.5 million (€ 881 million net of transaction costs),
capital increase from minorities (€ 10.8 million) and the net increase of the indebtedness(€ 120.3 million). The cash used in financing activities is mainly related to the purchase and useof own shares to cover the exercise of options (€ 79.3 million), and the payment of dividends(€ 195.4 million) and of interest (€ 31.7 million).

(*)	
N on-cash items are mainly linked to mark to market of inventories and commitments, strategic andtransactional hedging and inventories, impairments in inventories and bad debt provisions.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
Thousands of Euros
Acquisition of tangible assets
Acquisition of intangible assets
Acquisitions of assets
Capitalised R&D

2017

2018

351,249

466,078

25,621

31,758376,870

497,836

14,926

20,247

Capital expenditure for continuing operations

361,944477,589

Acquisitions of assets for discontinued operations

3,305

–

Capital expenditure, including discontinued

365,250

477,589

F35 RIGHTS AND COMMITMENTS
Thousands of Euros

2017

2018

Guarantees constituted by third parties on behalf of the Group

57,32985,289

Guarantees constituted by the Group on behalf of third parties

937

551

Guarantees received

109,735

127,423

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

383,582

474,563

3,754

3,130

Commitments to acquire and sell fixed assets

574,203582,971

Commercial commitments for commodities sold (to be delivered)Commercial commitments for commodities purchased (to be received)

1,082,347

1,112,482

Goods and titles of third parties held by the Group

1,902,691

2,650,255

2,522

1,684

4,117,100

5,038,348

Miscellaneous rights and commitments
Total

35.1 GUARANTEES CONSTITUTED BY THIRD PARTIES ON BEHALF OF THE GROUP
These are secured and unsecured guarantees given by third parties to the creditors of theGroup guaranteeing that the Group’s debts and commitments, actual and potential, will besatisfactorily discharged.
35.2 GUARANTEES CONSTITUTED BY THE GROUP ON BEHALF OF THIRD PARTIES
These are guarantees or irrevocable undertakings given by the Group in favor of third parties
guaranteeing the satisfactory discharge of debts or of existing or potential commitments by thethird party to its creditors.
There are no loan commitments given to third parties.
35.3 GUARANTEES RECEIVED
These are pledges and guarantees received guaranteeing the satisfactory discharge of debts
and existing and potential commitments of third parties towards the Group, with the exceptionof guarantees and security in cash.

152

The guarantees received are mainly related to supplier guarantees backed by bankinstitutions. 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 thecarrying 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
These represent goods and titles included in the Group balance sheet for which the Groupbears the risk and takes the proﬁt, but where these goods and titles are not present on thepremises 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
These 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
These are goods and titles held by the Group, but which are not owned by the Group. It concerns
mainly third-party inventories leased in or held under consignment or tolling agreements withthird parties. It also includes in a lesser extent some non-metal operating leases.
The Group leases metals (particularly gold, silver, platinum and palladium) 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 2018, there was a net lease-in position of € 1,121 million
vs. € 715 million at end of 2017. 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 arelikely to have a material adverse effect on the financial condition of Umicore.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
F37 RELATED PARTIES

Thousands of Euros

153

2017

2018

9,466,215

10,996,814

4,312,306

3,766,440

EXECUTIVE COMMITTEE

2017

2018

Operating income

208,385

263,197

Short-term employee benefits

Operating expenses(223,437)(290,356)

Post-employment benefits

1,202,590

1,167,807

Financial income

213

180

Other long-term benefits

983,562

1,260,250

Dividends received(12,331)(8,366)

Share-based payments

2,967,757

4,802,317

Thousands of Euros

2017

2018

Current trade and other receivables

43,09048,939Current trade and other payables

67,39478,493

Loan asset short-term

1,538

–

Thousands of Euros

Salaries and other benefits

TRANSACTIONS WITH JOINT VENTURES AND ASSOCIATESOUTSTANDING BALANCES WITH JOINT VENTURES AND ASSOCIATES

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.
Thousands of Euros

2017

2018

910,256

1,036,151
296,088

BOARD OF DIRECTORS
Salaries and other compensation
Fixed portion

289,433

Variable portion (based on attended meetings)

275,000

239,000

Value of the share grant

322,456

498,500

Benefit in kind company car chairman

2,767

2,563

Umicore contribution to the Swiss social security

20,600–No variable or other compensation element (apart from attendance-related fees) is associatedwith directorship. No loan or guarantees have been granted by the Company to members of
the Board.

The data above shows the accounting view of the Board and Executive Committee remunerationand differs somewhat from the information provided in the Remuneration Report in the
Corporate Governance section.
In the tables above, the employer social security contributions, if applicable, are included in the
short-term employee 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 the shares granted in 2018 for services rendered in2017. The Remuneration Report shows the value of the shares granted in 2019 or services
rendered in the reporting year ie 2018.
The ﬁgures related to the undeferred part of the variable cash remuneration linked to theindividual performance for the reference year 2018, included in short-term employee beneﬁts,
represent the level of accruals at the end of reporting period. The Remuneration Report features
the actual amounts paid.
Accruals booked for the deferred parts of the variable cash remuneration for the reference
year 2018 are included in the other long-term beneﬁts. The amounts to be paid in 2021 will
depend on long-term performance measures and the exact amounts paid will be included in
the Remuneration Report of 2020.

F38 EVENTS AFTER THE REPORTING PERIOD

Following the Board of Directors meeting of 7 February 2019, Umicore announced that a grossdividend of € 0.75 per share would be proposed to the Annual Shareholders Meeting (of which€ 0.35 per share was already paid out as interim dividend in August 2018).

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
F39 EARNINGS PER SHARE
2017

2018

EPS – basic

0.98

1.33

EPS – diluted

0.97

1.31

EPS – basic

0.97

1.33

EPS – diluted

0.96

1.31

Recurring EPS

1.22

1.36

Euros
Excluding discontinued operations

Including discontinued operations

The following earnings ﬁgures have been used as the numerator in the calculation of basic anddiluted earnings per share:
NUMERATOR ELEMENTS
Thousands of Euros
Net consolidated profit, Group share

NOTE

Without discontinued operations
With discontinued operations
Recurring net consolidated profit, Group share

2017

2018

214,836

316,984F9F9211,943

316,984

266,771

326,430

The following numbers of shares have been used as the denominator in the calculation of basic
and diluted earnings per share:
DENOMINATOR ELEMENTS
2017
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

2018

224,000,000 246,400,000
4,505,567

5,356,583

219,494,433

241,043,417

219,079,587 239,202,537
2,069,303

2,484,056

221,148,890

241,686,593

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.

154

During 2018, no new shares were created as a result of the exercise of stock options with linked
subscriptions rights. During the year Umicore used 1,037,470 of its treasury shares in the context
of the exercise of stock and 70,502 for shares granted. In the course of 2018, Umicore boughtback 1,958,988 own shares. On 31 December 2018, Umicore owned 5,356,583 of its own shares
representing 2.17% of the total number of shares issued as at that date.
On 8 February 2018, Umicore placed 22,400,000 new shares with institutional and otherinvestors through an accelerated bookbuild conducted under private placement exemptions.
The new shares represented 10% of the number of outstanding shares prior to the transaction(224,000,000). 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 net proceeds of the accelerated bookbuild (€ 881 million) will be used to fund Umicore’s
growth investments and will provide Umicore with more flexibility to pursue potential
acquisitions and partnership.

F40 IFRS DEVELOPMENTS

The following new standards and amendments to standards have been issued, and aremandatory for the first time for the financial year beginning 1 January 2018 and have beenendorsed by the European Union:–– IFRS 9 “Financial instruments”, effective for annual periods beginning on or after 1 January
2018. The standard addresses the classification, measurement, derecognition of financial
assets and financial liabilities and general hedge accounting. IFRS 9 replaces the provisionsof IAS 39 on the accounting and classification of financial assets and liabilities, financial
instruments and hedging. Umicore adopted IFRS 9 as from 1 January 2018, resulting in a
number of changes in accounting policies and adjustments in the financial statements (seeF2 Accounting Policies).
–– IFRS 15 “Revenue from contracts with customers”. As of 1 January 2018, IFRS 15 “Revenue
from Contracts with Customers” replaces IAS 18 “Revenue”, IAS 11 “Construction Contracts” anda number of revenue related interpretations. The new standard establishes a five-step modelto account for revenue arising from contracts with customers. Umicore has assessed each of
the revenue streams of every business unit from taking the new five-step model into accounts
and concludes that IFRS 15 does not have any material impact of the revenue recognition of
the Group. Consequently, the Group did not make any retrospective adjustments.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
The following new standards, amendments and interpretation to standards have been issued,
and are mandatory for the first time for the financial year beginning 1 January 2019. Those havebeen endorsed by the European Union:–– IFRS 16 “Leases”. This standard replaces the current guidance in IAS 17 and is a far-reachingchange in accounting by lessees in particular. Under IAS 17, lessees were required to make a
distinction between a finance lease (on balance sheet) and an operating lease (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 the guidance on the definition of alease (as well as the guidance on the combination and separation of contracts), lessors will
also be affected by the new standard. Under IFRS 16, a contract is, or contains, a lease if thecontract conveys the right to control the use of an identified asset for a period of time inexchange for consideration.

155

F41 AUDITORS’ REMUNERATION

The world-wide remuneration for the statutory auditor and its afﬁliated companies totalled€ 2.3 million, including an amount of € 1.7 million for the statutory audit missions (€ 0.5 million
for the audit of the mother company) and € 0.6 million for non-statutory audit services including
audit-related and other attestation services (€ 0.3 million) and other non-audit related services(€ 0.3 million).

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, has further evaluated andassessed 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-of-scope of the leasing
standard. Umicore has leases for cars, forklifts, some offices and other buildings. As per note
F35 on rights and commitments, non-metal operating leases amount for € 45 million, out of
which € 7 million represent low value or short-term leases which will be both recognised ona straight-line basis as expense in profit and loss. The expected impact on the right-of-use
assets and lease liability in the balance sheet will be around € 37 million. The impact on the
EBIT will not be material for Umicore.
–– IFRIC 23, “Uncertainty over income tax treatments”. 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 does not expect thatIFRIC 23 will have a material impact as compared to equity.
For all other new interpretations and standards not yet mandatory as from 1 January 2018,
management has no indications that this will result in a material impact on the Group‘s
consolidated financial statements.

Umicore Integrated Annual Report 2018

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 Bankof Belgium.
UMICORERue du Marais 31
B-1000 Brussels (Belgium)
The statutory auditor did not express any reservations in respect of the annual accountsof Umicore.
The legal reserve of € 55.0 million which is included in the retained earnings is not available
for distribution.

Thousands of Euros

156

31/12/2016

31/12/2017

31/12/2018

3,847,718

4,117,701

2,121,852

–

–

8,256

117,183

110,018

114,447

SUMMARISED BALANCE SHEET AT 31 DECEMBER
1. ASSETS
Fixed assets
I. Formation expenses
II. Intangible assets
III. Tangible assets

365,507398,464

425,814

IV. Financial assets

3,365,028

3,609,219

1,573,335

752,880

950,746

1,696,083

373

373

362,679

VI. Stocks and contracts in progress

351,864

339,484

641,452

VII. Amounts receivable within one year

216,042

381,570

502,354

VIII. Investments

158,103

Current assets
V. Amounts receivable after more than one year

164,809200,213

IX. Cash at bank and in hand

1,901

780

3,937

X. Deferred charges and accrued income

17,891

28,32627,5584,600,598

5,068,447

3,817,935

1,222,013

1,210,824

2,148,647

500,000

500,000

550,000

6,610

6,610

848,130

91

91

91

IV. Reserves

289,770

281,908

363,257

V. Result carried forward

270,367

264,486

152,177

Vbis. Result for the period

148,537

149,816

227,001

6,638

7,913

7,991

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

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

111,775

117,426

125,326

3,266,810

3,740,197

1,543,962

VIII. Amounts payable after more than one year

1,981,249

1,693,125

692,996

IX. Amounts payable within one year

1,193,761

1,973,777

758,953

X. Accrued charges and deferred income

91,80073,29592,013

Total liabilities and shareholders’ equity

4,600,598

5,068,447

3,817,935

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS
THOUSANDS
OF EUROS

157

NUMBER OF
SHARES

31/12/2016

31/12/2017

31/12/2018

I. Operating income

2,415,676

2,960,635

3,628,486

A. Share capital

II. Operating charges(2,412,640)(2,900,861)(3,532,944)

1. Issued capital

III. Operating result

3,036

59,77495,542

		 At the end of the preceding financial year

500,000

224,000,000

IV. Financial income

258,002

161,063

193,305

		 At the end of the financial year

550,000

246,400,000

550,000

246,400,000

Thousands of Euros
INCOME STATEMENTSTATEMENT OF CAPITAL

V. Financial charges(113,178)(69,747)(59,393)

2. Structure of the capital

VI. Result on ordinary activities before taxes

147,860

151,090

229,4542.1. Categories of shares

677(1,274)(2,453)

XI. Result for the period

148,537

149,816

227,0012.2. Registered shares or bearer shares

XII. Result for the period available

148,537

149,816

227,001

			 Registered

46,912,818

			 Bearer

199,487,182

X. Income taxes

Thousands of Euros

2016

2017

2018

APPROPRIATION ACCOUNT
A. Profit (loss) to be appropriated			 Ordinary shares

E. Authorised unissued capital

55,000520,620

568,719

641,302

1. Profit (loss) for the financial year

148,537

149,816

227,001

2. Profit (loss) carried forward

372,083

418,903414,301

G. SHAREHOLDER BASE(1)40,296

7,862(81,349)

Family Trust Desmarais, Albert Frère and Groupe Bruxelles Lambert S.A.

17.50

43,110,052

07/12/2018

40,296

7,862(76,349)

BlackRock Investment Management

4.32

10,641,933

27/02/2018(5,000)Norges Bank

3.11

7,663,845

08/08/2018

418,903414,301

379,178

C. Appropriation to equity
3. To the reserve for own shares
4. Allocation to legal reserves
D. Profit (loss) to be carried forward(1)2. Profit (loss) to be carried forward
F. Profit to be distributed(1)% CAPITAL

418,903414,301

379,178

Others

72.90

179,627,587

31/12/2018(142,013)(162,280)(180,775)

Own shares held by Umicore

2.17

5,356,583

31/12/2018

100.00246,400,000(142,013)(162,280)(180,775)

of which free float

100.00246,400,000

1. Dividends
Ordinary shares

NUMBER OF NOTIFICATIONSHARESDATE(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 25 April 2019; the grossdividend of EUR 0.75 will not change.

(1) At 31 December 2018, 5,356,854 options on Umicore shares are still to be exercised. This amount includes
5,356,854 acquisition rights of existing shares held by Umicore.

Umicore Integrated Annual Report 2018

FINANCIAL STATEMENTS

158

MANAGEMENT RESPONSIBILITY STATEMENT

We hereby certify that, to the best of our knowledge, the Consolidated Financial Statements
as of 31 December 2018, prepared in accordance with the International Financial ReportingStandards (IFRS) as adopted by the European Union, and with legal requirements applicable inBelgium, give a true and fair view of the assets, liabilities, ﬁnancial position and proﬁt or lossof the Group and the undertakings included in the consolidation taken as a whole, and that the
management report includes a fair review of the development and performance of the businessand the position of the Group and the undertakings included in the consolidation taken as awhole, together with a description of the principal risks and uncertainties that they face.
8 March 2019,
Marc Grynberg
Chief Executive Ofﬁcer

Umicore Integrated Annual Report 2018

159

CONTENTS
Environmental key figures
Notes to the environmental key figures
E1 Scope of environmental statements
E2 Emissions to water and air
E3 Greenhouse gases
E4 Energy
E5 Water use
E6 Waste
E7 Historical pollution
E8 Regulatory compliance and management system

160
160
162
163
164
165
166
166
168

Umicore Integrated Annual Report 2018

160

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

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

Metal emissions to air(impact units)

NOTES

2014

2015

2016

2017

2018

E2

5,639

4,459

3,738

1,437

1,861

E2

543,332

328,013339,001

125,688

144,657

E2

13,30914,544

1,761

1,829

1,564

E2

128,465

135,660

86,09884,46388,044

SOx emissions

tonne

E2

1,189

1,197

892

661

657

NOx emissions

tonne

E2

425

452

365

320

304

CO2e emissions (scope1+2)

tonne

E3

664,568

710,143

662,059

633,704

765,756

tonne

E3

–

–

735,065

663,307783,843

Energy consumption

terajoules

E4

7,304

7,742

6,737

6,532

7,447

Water usethousand m3

E5

4,645

4,904

4,851

4,755

5,885

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

Total waste produced

tonne

E7

76,81072,66377,62572,80478,777

Hazardous waste

tonne

E7

54,824

51,52559,43755,44258,758

%

E7

7.5

7.8

3.8

4.3

5.3

of which recycled

tonne

E7

21,986

21,13818,18817,37320,018of which recycled

%

E7

60.4

56.3

57.8

58.2

62.2

Compliance excess rate

%

E9

0.9

0.8

0.9

0.1

0.1

Environmental complaints

N°

E9

31

25

19

34

29

Sites ISO 14001 certified

%

E9

97

92

88

92

91

Non-hazardous waste*

Data for 2015 and 2014 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 datafor 2017 and 2018 does not.
** CO 2 e emissions data for 2015 and 2014 is an aggregation of market-based and location-based scope 2
emissions. A direct comparison to 2016-2018 data is not possible. If such comparison were to be made, themost meaningful approximation is to use the market-based 2016-2018 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. The following sites are no longer reported compared to 2017: Amsterdam(The Netherlands; Jewelry and Industrial Metals), Providence (USA) and Vicenza (Italy) (bothTechnical Materials). Due to the acquisition of the HDD and stationary catalyst businesses
from Haldor Topsøe, the acquisition of Eurotungstene from Eramet and the acquisition offull ownership of the joint venture Ordeg the following sites were added to the reporting
scope: Bayport (USA; Automotive Catalysts), Frederikssund (Denmark; Automotive Catalysts),
Grenoble (France; Cobalt and Specialty Materials), Joinville (Brazil; Automotive Catalysts),
Lyngby (Denmark; Automotive Catalysts), Onsan, Songdo (both Korea; Automotive Catalysts)
and Tianjin (China; Automotive Catalysts). This brings the total number of consolidated industrialsites that report environmental data to 54, up from 49 in 2017. (Note that the former activitiesof the business unit Technical Materials at the Hanau site (Germany) were divested and nolonger reported in 2018.)
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, theforecasted values are checked by the sites for significant deviations and, if needed, corrected.
The 6 sites with the largest environmental impact for 2018 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 2018 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 publishedin the 2017 annual report has been restated in the 2018 report. Unless mentioned otherwise,
environmental key performance indicators (KPIs) for 2015 and 2014 include the business
unit Zinc Chemicals that was divested during 2016, while 2016-2018 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 and 2018 KPIs do not include
Building Products.
See more details on Umicore’s management approach, p.72.

Umicore Integrated Annual Report 2018

161

E2 EMISSIONS TO WATER AND AIR

Umicore’s Vision 2015 achievements of reducing our metal emissions to water and air in termsof 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 the context ofsustainable 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 ofmetal 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 considered if 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 thedifferent toxicity and ecotoxicity levels of the various metals when they are emitted to theenvironment. 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 noeffect 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 andGovernmental Hygienists, 2011). An impact factor of 1 was attributed to the zinc (oxide) OEL
of 2 mg/m³. Subsequently, an impact factor for all relevant metals was calculated based uponthese 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 water and air) of the total 2015 Group figures (excluding thedivested business unit Zinc Chemicals). For emissions to water and air, data collection for 2018
was restricted to the identified material sites (10 or fewer). All other sites were requested toonly submit data in case of significant upward deviations from the 2015 baseline for the site.
Sites that joined Umicore in 2018 were evaluated with regard to their past emissions to waterand air, and in case their emissions were on a par with the top 95% emitters of Umicore in 2015,
these new sites were also required to submit data and included in the absolute emission figures.
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 (ie 2018) 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 bymultiplying the actual activity level of the current reporting year (ie 2018) by the 2015 emission
intensity (see example below). The baseline 2015 is then calculated by adding up all site-levelbaselines 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 productX. In 2018, 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 2018 is then: activity level of 2018 (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 2018 represents a
reduction of 10% compared to what it would have been under 2015 operating conditions.
The 2015 baseline is recalculated yearly (2016-2018 and the following years). It is defined as themetal emissions that would have been expected with the activity volumes of the reporting year
(ie 2018), but with the metal emissions intensity of the reference year 2015. The performancefor each year is expressed as a percentage in comparison to the calculated 2015 Group baseline
applicable to each year.
The calculation of metal emissions to water and air covers fully consolidated operations andactivities that are part of the Group during the reporting year (2016-2018 and the following
years) and that were also part of the Group in 2015. Performance is reported only for the totalof the material sites for each KPI.
SOx and NOx emissions are expressed in absolute numbers in tonnes/year.

Umicore Integrated Annual Report 2018

162

GROUP DATA – EMISSION SCOPE METAL EMISSIONS TO AIR AND WATERUNIT

BASELINE 2015 IN
RELATION TO 2018

2016

2017

2018

Metal emissions to water

impact units

453,075

339,001

125,688

131,723

Metal emissions to air

impact units

163,101

86,09884,46387,664METAL EMISSION REDUCTIONPERFORMANCE (TO WATER)METAL EMISSION REDUCTIONPERFORMANCE (TO AIR)

%

%

100

100

99

100

80

80

60

60

40

31

29

20
0

METAL EMISSIONS TO AIR
The metal emissions to air in 2018 using the defined scope were 87,664 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 2018 activity was
163,101 impact units. In 2018, we have therefore achieved a 46% reduction of metal emissions
to air in terms of impact for the defined scope.

100

70
59

54

40
20

‘15

‘16(1)‘17(2)

‘18

0

‘15

‘16(3)‘17(4)in Subic (Philippines, Energy & Surface Technologies). Furthermore, while reducing significantly
in metal emissions to water by load, our site in Olen (Belgium, Energy & Surface Technologies)
experienced an increase in impact to water due to an increase in certain emitted metals with
an elevated environmental impact factor, related to variations in input material composition
and waste water treatment efficiency.

‘18(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 2017 was 409,691, leading to a reduction of 69% in 2017 in comparison with 2015.
(3) Baseline 2015 in relation to 2016 was 123,831, leading to a reduction of 30% in 2016 in comparison with 2015.
(4) Baseline 2015 in relation to 2017 was 144,049, leading to a reduction of 41% in 2017 in comparison with 2015.

METAL EMISSIONS TO WATER
The metal emissions to water in 2018 using the defined scope resulted in 131,723 impact units.
Metal emissions to water in 2015 using the defined scope were 290,714 impact units. To assess
progress on our commitment, this 2015 metal emissions level normalized for 2018 activity was
453,075 impact units. In 2018, we have therefore achieved a 71% reduction of metal emissions
to water in terms of impact for the defined scope compared to 2015.
This evolution can be largely 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 further, and some efficiency improvements andscale-effects after further capacity increase of precursor production at our Cheonan UMAK site
(Korea, Energy & Surface Technologies) have also contributed to the decrease of the emission
intensity in terms of impact by metals emissions to water. This continuing positive trend wasbalanced to some degree by a year-on-year increase in metal emissions to water at our site

The reductions are observed across many sites in scope to a varying degree, but in particular
our efforts to reduce emissions to air at our site in Hoboken (Belgium, Recycling) bore fruit in2018 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 of Moretusburg. Consequently, the biological monitoring results
showed an increased number of children with levels of lead in blood above the recommendedreference level of 5 microgram/dl blood (Center for Disease Control and Prevention, USA).
This biological monitoring campaign is conducted twice per year by the provincial authorities.
During 2018, the site continued its action plan, including the installation of an enhanced
ventilation system in the lead refinery, which significantly contributed to lower lead in fine dust
deposition values.
While the average lead levels among children in the neighborhood have decreased, continued
action and follow-up will be needed to further reduce the number of children who show levelsof lead in blood above the reference value. At the 2018 fall biological monitoring campaign,
23% of the children still have levels of lead in blood above the reference value of 5 µg/dl,
compared to 32% in 2017.

Umicore Integrated Annual Report 2018

163

OTHER EMISSIONS
UNIT

2014

2015

2016

2017

2018

SOx emissions

tonne

1,189

1,197

892

661

657

NOx emissions

tonne

425

452

365

320

304

The SOx emissions for the Group stayed relatively stable with a slight decrease from 661 t in2017 to 657 t in 2018.
The NOx emissions decreased from 320 t in 2017 to 304 t in 2018, a 5% 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 topermanent 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 toincrease energy efficiency are expected to contribute 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 air purchased from third parties (eg from industrial parks). CO2e includes thegreenhouse gases CO2, CH4 and N2O for scope 1 and major process emissions. Other greenhousegases 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 2 ways: once using marketbased CO2 emission factors and once using location-based CO2 emission factors. The marketbased emission factors allow calculating the CO2 emissions based on the specific contracts
that sites have in place with their energy suppliers, considering the relevant energy mix forthese contracts (including green energy attributes, where applicable). The location-based CO2
emission factors facilitate calculating the CO2 emissions based on the residual energy mix in acountry/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 2 separate values based on this differentiation, and themetrics are abbreviated as: CO2e market-based and CO2e location-based.

The WBCSD Chemical Sector Working Group on GHG Measurement and Reporting establishedadditional guidance to cope with observed anomalies in GHG reporting. Umicore has
implemented these guidelines already since the 2012 reporting. The publication of the sector
guidelines can be found on their website.
GROUP DATA
CO2e emissions (scope1+2)

UNIT

2014

2015

2016

2017

2018

tonne

664,568

710,143

662,059

633,704

765,756

tonne

–

–

735,065

663,307783,843– Market-based
CO2e emissions (scope1+2)– Location-based

Total CO2e market-based emissions in 2018 were 765,756 t. Total CO2e location-based emissions
were 783,843 t. The difference between these 2 figures, 18,087 t, is due to specific energy
contracts with a favorable energy mix that our sites have in place, which result in a lower
carbon footprint than the residual energy mix for the country/region that the site is located in.
Total CO2e market-based emissions in 2017 were 633,704 t, and total CO2e location-based
emissions in 2017 were 663,307 t.
The comparison of 2018 with 2017 market-based emissions shows an increase by 21%. This canmainly be attributed to added capacity and higher activity levels across several sites of thebusiness unit Rechargeable Battery Materials and at the Hoboken site (Belgium, Recycling) as
well as new acquisitions, mainly in the business unit Automotive Catalysts.
BUSINESS GROUP DATAUNITENERGY &SURFACECATALYSIS TECHNOLOGIESRECYCLING

UMICOREGROUP(1)CO2e emissions (scope1+2)– Market-based

tonne

131,469

308,167

325,672

765,756CO2e emissions (scope1+2)

tonne

148,541

315,114319,802783,843– Location-based(1) Umicore Group data includes the data for Corporate Headquarters in Brussels, Belgium.

Umicore Integrated Annual Report 2018

164

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 levelthat we achieved as part of Vision 2015.
The WBCSD Chemical Sector Working Group on GHG Measurement and Reporting establishedadditional guidance to cope with observed 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 themost 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 andreporting of the energy consumption continues to be done at all sites. The bigger contributors
are additionally encouraged 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
28 sites that contributed more than 95% to the 2018 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 theenergy consumption of the current reporting year (ie 2018) with the energy consumption of thereference 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 each site in scope. The baseline is established by multiplying
the actual activity level of the current reporting year (ie 2018) by the 2015 energy 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 200 t of product X and consumed 80,000 GJ, resulting in an energy
intensity of 400 GJ/t of product X. In 2018 site 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 2018 is then: activity level of 2018 (220 t) x 2015 energy intensity(400 GJ/t) = 88,000 GJ.
Therefore the 80,000 GJ consumed in 2018 represents an improvement of 10% compared towhat it would have been under 2015 operating conditions.

The baseline 2015 is recalculated yearly (2016-2018 and the following years). It is defined as theenergy consumption that would have been expected with the activity volumes of the reporting
year (ie 2018), but with the energy intensity of the reference year 2015. The performance foreach year is expressed as a percentage in comparison to the calculated 2015 Group baseline
applicable to each year.
The calculation of this KPI covers fully consolidated operations and activities that are part of
the Group during the reporting year (2016-2018 and the following years) and that were alsopart of the Group in 2015. Therefore, the sites of the former business units Zinc Chemicals andBuilding Products and a few other individual sites that are all not with Umicore any more are
not in the reporting scope of this KPI. Likewise, several sites that joined Umicore in 2016-2018
are therefore also 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 2018

2016

2017

2018

8,692

6,241

6,082

6,183

NORMALISED ENERGY CONSUMPTION
%
100

100

94
79

80

71

60
40
20
0

‘15

‘16(1)‘17(2)‘18(1) Baseline 2015 in relation to 2016 was 6,664 TJ, leading to a reduction of 6% in 2016 in comparison with 2015.
(2) Baseline 2015 in relation to 2017 was 7,720 TJ, leading to a reduction of 21% in 2017 in comparison with 2015.

The energy consumption 2018 using the defined scope was 6,183 TJ. The energy consumption
in 2015 using the defined scope was 5,487 TJ. To assess progress on our commitment, this2015 energy consumption level normalized for 2018 activity was 8,692 TJ. This means thatfor equivalent production levels we consumed 29% less energy. In other words, the energy
efficiency has improved by 29% in 2018 compared to the reference year 2015.

Umicore Integrated Annual Report 2018

165

This improvement is mainly due to scale-effects in connection with the ongoing capacity
increase at our Rechargeable Battery Materials sites in Korea and China. Further efficiency
improvements and consolidations at other sites also contributed to the overall decrease inenergy intensity.
Energy efficiency projects have been implemented at the most important sites in line withforegoing sustainable development objectives since 2006. In 2018, 28 sites represented
more than 95% of the Group’s energy consumption. At 12 of these sites, 42 energy efficiency
projects have been reported as being implemented during 2018 and contributed significant
energy savings.
ABSOLUTE ENERGY CONSUMPTION

E5 WATER USE

GROUP DATAWATER USE
thousand m 3
6,000
5,000
‘14 | 4,645‘15 | 4,904‘16 | 4,851‘17 | 4,755‘18 | 5,885

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

ENERGY CONSUMPTION (ABSOLUTE)

0terajoules

‘14

‘15

‘16

‘17

‘18

10,0008,000

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 body are not counted.

‘14 | 7,304‘15 | 7,742‘16 | 6,737‘17 | 6,532‘18 | 7,447

6,000
4,000

The total water use for the Group increased from 4,755 thousand m³ in 2017 to 5,885 thousand m³
in 2018, an increase of 24%. The increase in water use is due to a combination of a new waste
water treatment plant at a major site, new sites and new capacity being added and increase inproduction, mostly in Energy & Surface Technologies.

2,000
0

‘14

‘15

‘16

‘17

‘18

Total energy consumption increased from 6,532 TJ in 2017 to 7,447 TJ in 2018 a 14% increase yearon-year. This can mainly be attributed to added capacity and higher activity levels across several
sites of the business unit Rechargeable Battery Materials, as well as new acquisitions mainly inthe business unit Automotive Catalysts.

BUSINESS GROUP DATA
UNIT
Water usethousand m3

ENERGY &SURFACECATALYSIS TECHNOLOGIES
512

3,640

RECYCLING

UMICORE
GROUP

1,733

5,885

Indirect energy consumption by primary energy source (purchased electricity, steam andcompressed air) for production sites and office buildings in 2018 was 3,405 TJ. Direct energy
consumption by primary energy source (fuel, gas oil, natural gas, LPG, coal and cokes) was 4,042 TJ.
BUSINESS GROUP DATA
UNIT
Energy consumption

terajoules

ENERGY &SURFACECATALYSIS TECHNOLOGIES
1,328

RECYCLING

UMICOREGROUP (1)

2,839

7,447

3,272

(1) Umicore Group data includes the data for Corporate Headquarters in Brussels, Belgium.

Umicore Integrated Annual Report 2018

166

E6 WASTE

BUSINESS GROUP DATAGROUP DATAUNITHAZARDOUS WASTE
tonne
60,000Non-recycled‘14 | 50,722‘15 | 47,514‘16 | 57,150‘17 | 53,067‘18 | 55,637

40,00030,00020,00010,000
0

‘14

‘15

‘16

‘17

Recycled‘14 | 4,102‘15 | 4,011‘16 | 2,287‘17 | 2,375‘18 | 3,121‘18

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 2018, a total of 78,777 tonnes of waste were generated compared to 72,815 tonnes in 2017,an increase of 8%.
The total volume of hazardous waste increased from 55,442 tonnes in 2017 to 58,758 tonnes in
2018, an increase of 6%. The recycling rate of hazardous waste has remained at similar levels
with 5% in 2018 compared to 4% in 2017.
The total volume of non-hazardous waste increased from 17,373 tonnes in 2017 to 20,018 tonnes
in 2018, an increase of 15%.

RECYCLING

UMICORE
GROUP

Total waste produced

tonne

8,182

28,59142,00478,777

Hazardous waste

tonne

5,456

18,00632,29658,758

%

18.71

3.99

3.92

5.31

tonne

2,726

10,584

6,708

20,018

%

50.27

45.40

93.72

62.25

of which recycled

50,000ENERGY &SURFACECATALYSIS TECHNOLOGIES

Non-hazardous wasteof which recycled

E7 HISTORICAL POLLUTION

The history of Umicore goes back more than 200 years. It all started with the merger of a numberof mining and smelting companies, which gradually evolved into the materials technology andrecycling company Umicore is today. In the mid-1990s, Umicore started a process of divesting
its remaining mining rights as part of its strategic reorientation towards added-value materials
and recycling.
Umicore’s predecessor companies operated within the boundaries of national mining legislationand in compliance with the environmental standards valid at the time these mines wereoperational. The closure of the mines and the restitution of mining concessions to the relevant
state authorities has consistently been carried out in collaboration with the competent authorities
and local stakeholders. This process takes into consideration the specific circumstances of eachsite. Regarding the downstream industrial smelting and refining installations, remediation
projects are developed in close consultation with other stakeholders to reduce any risks to an
acceptable level as defined by the authorities.
Active participation in the management and remediation of risks that have resulted from
historical operations is an integral part of the Umicore Way. Umicore’s proactive program forassessing and remediating, where necessary, soil and groundwater contamination has madesignificant progress. The following section illustrates the main ongoing programs and theprogress made during 2018.

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BELGIUM
The mining sites in Belgium laid the foundation of our oldest predecessor company, VieilleMontagne. The mining concession of the same name was granted by Emperor Napoleon
Bonaparte in 1805 and 5 more concessions were added over time, all located in eastern
Wallonia. The mining activities in Belgium ceased in the 1950s and extensive rehabilitation
work to secure the site was carried out at all concessions in close consultation with thecompetent authorities. One concession was officially transferred back to the Government, while
the transfer of the others is currently being processed.
In addition, over a century of non-ferrous metals production in Hoboken, Olen, Balen andOverpelt impacted soil and groundwater on the industrial sites and on neighbouring lands.
In November 1997, Umicore concluded a voluntary agreement with the Flemish Regionof Belgium to deal with this historical contamination. On 23 April 2004, Umicore signed anaddendum to the 1997 Covenant with the regional waste authorities (OVAM) and the Regional
Minister of the Environment in the Flemish Region of Belgium, in which Umicore committed
to spend € 62 million over 15 years for historical pollution remediation on four sites, two of
which – Balen and Overpelt – now belong to Nyrstar, a business that was divested by Umicore
in 2007. In addition, OVAM and Umicore joined forces to remediate historic pollution in the
additional areas surrounding the industrial sites, defined as a 9km perimeter, over 10 years.
Both parties contributed €15 million to a new fund for the remediation work. In 2014, OVAM
and Umicore agreed to extend the program an additional 5 years. The agreement also contains
an important clause through which Umicore and the authorities will tackle remediation of the
Bocholt site, a former arsenic plant that was shut down and dismantled in the early 1970s.
In 2018, preparatory works to better define the extent and the risk of the contamination havestarted. Awaiting remedial works, groundwater use restrictions have been put in place.
In Hoboken, what began as a lead and silver refining operation in 1887 grew to a large industrial
plant extracting precious metals from waste. Over the years, Umicore has replaced heavily
contaminated topsoil and remediated the historical contamination in the adjacent residential
area. In 2017, an agreement was reached with the local authorities to extend the on-site storage
facility, so that on-site topsoil remediation work can restart. A new groundwater remediation
system is planned for 2019.
In Olen, the pollution in and around the site is the result of historical production activities
mainly of copper and cobalt. As soon as the Covenant was signed, the remediation work on
the Olen site began. An on-site groundwater remediation program started in 2007 is ongoing.
In 2018, contaminated soil and buried waste were further excavated at various locations where
infrastructure work was needed, such as the construction of the new warehouse.

Between 1922 and 1980, radium and uranium were also produced in Olen. The radium produced
for cancer treatment purposes at this site was offered to Nobel laureate Marie Curie for her firstexperiments with radioactive material. The radium production plant was demolished during the1970s and the radium production waste was confined to an aboveground storage facility, as was
the norm at the time. Since no dedicated legislation for final disposal is in place, Umicore iscarrying out safety and monitoring works to guarantee that no risks are emanating from thoseremnants for neither the workers on site, nor the surrounding population.
FRANCE
Umicore’s predecessor companies operated mines in France from the mid-1800s. The lastremaining mining activities were terminated in the late 1960s to early 1970s, and extensive
rehabilitation works were carried out at the former mining sites, all located in the south ofFrance, during the 1990s. All former mining concessions in France have been returned to the
French government, the last being confirmed by ministerial decree in 2005.
Mining activity in Saint-Félix-de-Pallières began in the 19th century to exploit a subsoil rich inzinc and zinc-derived metals. The former mining concession was closed in 1971 and was secured
in full compliance with the applicable legislation. The concession was waived in 2004 after the
French authorities acknowledged that all the measures prescribed had been complied with.
Despite ending its mining activity, Umicore never left the area and regularly monitors the stateof a landfill containing flotation residues and which is still Umicore’s property. To guarantee
safe and stable conditions of the landfill on a long-term basis, Umicore will start extensive
maintenance work. In recent years, more attention has been focused by certain stakeholder
groups on the potential health effects linked to the former mining activities. Despite having
complied with all the requirements of the administration at the time of the termination of themining activities, Umicore offered to support the authorities in addressing the concerns of thelocal population on a voluntary basis.
In Viviez, the pollution in and around the site is the result of historical production activities
of zinc products started in 1855. Umicore invested € 40 million in completing a large-scaledecontamination program from 2011 to the end of 2016 and has transferred the obligations
after decontamination to a third party. Although soil contamination has many sources,
Umicore, together with other partners, joined a voluntary program in 2017 to address the soil
contamination identified in the private gardens around the Viviez site. Data collection was
performed in 2017 and 2018 and appropriate measures are being defined by a dedicated expert
panel, under the control of the competent authorities.

Umicore Integrated Annual Report 2018

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USA
In 1980, one of Umicore’s predecessor companies acquired an abandoned silver-gold mine at
Platoro in the Rocky Mountains in Colorado. Subsequent exploration drillings were unsuccessful
and any attempt to further exploit the mine were stopped.
Remedial work started in the 1990s, consisting of capping and landscaping waste rock piles andinstalling a water treatment plant to capture and treat the acid mine drainage that continuously
flows out of the mine. The mining site is in a nature recreation area. Umicore continues tomanage the site and treat drainage water to meet the stringent environmental requirements.
Umicore built a new modern waste water treatment facility in 2018 to further decrease themetal concentration in the discharge and decrease the volume of solid waste produced.
From 1980 to 2010, Umicore operated a cobalt-producing facility in Maxton, North Carolina.
After the closing and the demolition of the Maxton plant, soil and groundwater contamination
was identified. Umicore entered a voluntary decontamination program with the authorities
to fully address the issue by 2033. In 2017, a significant portion of the soil contamination
was addressed by stabilizing the metals and thus preventing them from leaching into thegroundwater. Following this action, the focus is now on the decontamination of the groundwaterto prevent the contamination from spreading to the neighbouring area.
BRAZIL
Umicore acquired industrial units in the cities of Americana (SP), Guarulhos (SP) and Manaus(AM) in Brazil in 2003. During an environmental assessment that was performed following theacquisition, groundwater pollution was detected at the Guarulhos site. 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 neighboring areas by installing a hydraulicbarrier that has been in full operation since 2011. Targeted extraction systems were put in placeon site to speed up the remediation. Umicore is continuing to consider more cost-effective
remedial systems, such as in-situ applications.

E8 REGULATORY COMPLIANCE AND MANAGEMENT SYSTEMGROUP DATACOMPLIANCE EXCESS RATE
%
5
4
3
2
1
0

0.9

0.8

0.9

‘14

‘15

‘16

0.1

0.1

‘17

‘18

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 alimit 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 theregion the reporting entity is operating. The total number means the number of measurements
multiplied by the number of parameters per measurement.
In 2018, some 48,000 environmental measurements were carried out at all of Umicore’s
industrial sites compared to some 55,000 the year before.
The number of measurements that did not meet the regulatory or permit requirements is very
low at 0.14% for the Group, compared to 0.10% in 2017.
Of the 54 consolidated industrial sites, 49 have put in place an environmental management
system certified against ISO 14001. The remaining 5 sites are acquisitions and new sites thatjoined Umicore reporting between 2014-18, and all 5 sites are planning the implementation of anenvironmental management system during 2019. All major sites with significant environmental
impacts are certified against the ISO 14001 management system.
In total, 29 environmental complaints were received in 2018, most of which were related tonoise and odor. 12 of the complaints are ongoing.

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169

SOCIAL STATEMENTS
Social key figures
Notes to the social key figures
S1 Scope of social statements
S2 Workforce
S3 People engagement
S4 Employee relations
S5 Code of Conduct
S6 Occupational health
S7 Occupational safety
S8 Process safety

170
170
170
173
174
175
175
177
178

Umicore Integrated Annual Report 2018

170

SOCIAL KEY FIGURES

UNIT

NOTES

2014

2015

2016

2017

2018

Workforce (fully consolidated companies)

N°

S2

10,368

10,429

9,921

9,769

10,420Temporary contracts% ofworkforce

S2

3.62

3.91

3.45

3.86

3.13

Women amongst all employees% ofworkforce

S2

21.68

21.72

21.6

21.92

21.30

Women amongst all managers% ofworkforce

S2

21.25

22.18

22.11

22.37

22.98

Women amongst senior management% ofworkforce

S2

8.33

9.49

9.09

6.77

9.70

Women in “business operations”
management functions

%

S2

–

–

14.27

15.55

15.08

Non-European representationin senior management functions

%

S2

–

–

16.67

18.05

17.91

Average training hours per employee

hours/
employee

S3

45.59

45.06

41.49

45.33

43.10

Employees having a yearly appraisal% ofworkforce

S3

95.82

95.97

96.03

98.29

96.15

Voluntary leavers – ratio% ofworkforce

S3

3.42

3.35

4.10

5.03

7.18

Employees represented by unionor Collective Labour Agreement (CLA)% ofworkforce

S4

71.44

71.11

69.41

65.41

64.49

Exposure ratio “all biomarkers
aggregated” (1)

%

S6

1.8

2.3

3.2

2.7

2.8

Number of occupational linked diseases

N°

S6

21

12

12

11

12

People with platinum sensitisation

N°

S6

4

0

1

1

3

Fatal accidents

N°

S7

2

0

1

0

0

Fatal accidents for sub-contractors

N°

S7

0

0

0

0

1

Lost Time Accidents (LTA)

N°

S7

37

47

59

51

61

Lost Time Accidents (LTA) for
sub-contractors

N°

S7

11

9

15

22

21

LTA frequency rate

LTA/million
hours worked

S7

2.16

2.66

3.34

3.01

3.36

LTA severity rate

lost days/
thousandhours worked

S7

0.94

0.12

0.56

0.09

0.10

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

NOTES TO THE SOCIAL KEY FIGURESS1 SCOPE OF SOCIAL STATEMENTS

In total, 89 consolidated sites are included in the HR related notes of the social reporting (S2
to S5).
This is 3 fewer than in 2017 due to the Thin Film Products Providence site closure and thedivestment of Technical Materials in Europe, the Vicenza and Jordbro sites were sold. Furthermore,
the divestment of Technical Materials in Europe also impacted the headcount at the Hanau site
but it did not involve a site closure.
The sites report full year data for the social indicators. The indicators presented are based on datafrom fully consolidated companies unless indicated otherwise.
Workforce and other indicators for the divested sites of Technical Materials in Europe are
not included.
The historical numbers (2017 and before) were not restated.

S2 WORKFORCEGROUP DATA

UNIT

2014

2015

2016

2017

2018

N°

10,368

10,429

9,921

9,769

10,420Workforce from associated companies

N°

3,706

3,301

3,196

3,360

3,180

Employees men

N°

8,120

8,164

7,778

7,628

8,201

Employees women

N°

2,248

2,265

2,143

2,141

2,219

Full-time equivalent

N°

–

–

9,716

9,574

10,224

Workforce (fully consolidated companies)

Employees < 30 years

N°

–

–

1,620

1,697

1,980

Employees between 30 and 50 years

N°

–

–

5,605

5,504

5,939
2,501

Employees > 50 years

N°

–

–

2,696

2,568

Temporary contracts% of workforce

3.62

3.91

3.45

3.86

3.13

Women amongst all employees% of workforce

21.68

21.72

21.60

21.92

21.30
22.98

Women amongst all managers% of workforce

21.25

22.18

22.11

22.37

Women amongst senior management% of workforce

8.33

9.49

9.09

6.77

9.70

Women in “business operations”
management functions

%

–

–

14.27

15.55

15.08

Non-European representation in senior
management functions

%

–

–

16.67

18.05

17.91

Workforce: Number of employees on Umicore payroll at the end of the period in fully
consolidated companies.

Umicore Integrated Annual Report 2018

171

The number includes part-time and temporary employees but excludes employees with adormant contract, employees on long-term illness and sub-contracted employees.
Temporary contract: Umicore employees with a temporary contract, included in the workforceof 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, shifts of 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) andearly retirees.

TOTAL WORKFORCEWORKFORCE – AGE SPLIT

No
16,000Fully
consolidated Associatedcompanies
companies‘14 | 3,706‘14 | 10,368‘15 | 3,301‘15 | 10,429‘16 | 3,196‘16 | 9,921‘17 | 3,360‘17 | 9,769‘18 | 3,180‘18 | 10,420

12,000
8,000
4,000
0

‘14

‘15

‘16

‘17

19%

24%

Employee age < 30 years
Employee age between
30 and 50 years
Employee age > 50 years

57%

‘18

WOMEN REPRESENTATION

15.08

6.77

9.70

14.27
9.09

9.49

8.33

10

15.55

20
15

21.30
22.98

21.92
22.37

21.60
22.11

21.72
22.18

25

21.68
21.25

%

5
0

‘14

‘15

‘16

‘17

‘18

Amongst all employees
Amongst all managers
Amongst senior management
In “business operations”
management

TOTAL WORKFORCE
The total workforce increased by 471 employees to a total of 13,600. For the fully consolidated
companies, the workforce increased by 651 people to 10,420, mainly due to growth in thefollowing countries: China, South Korea, Belgium and Poland in the Business Groups Catalysis,
Energy & Surface Technologies and Corporate.
Amongst the associated companies there was a decrease of 180 employees primarily due tothe transfer of production equipment, related activities and personnel from Jiangmen JCU to
Umicore and reductions in personnel at a few sites in Germany and South Africa in Element Six.
The FTE of 10,224 (consolidated) comes very close to the reported headcount of 10,420,
illustrating that most of Umicore employees are working on a full-time basis.
TEMPORARY CONTRACTS
Temporary contracts as a percentage of the workforce of fully consolidated companies
decreased slightly to 3.13% in 2018.
GENDER SPLIT
The percentage of women was 21.30% 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 5
years. Women are more represented in administrative and commercial functions, compared tofunctions in the industrial operations.
GENDER SPLIT – SENIOR MANAGERS
While the total percentage of women employees has remained rather stable (see above), thepercentage of women managers has shown a steady increase from 18.65% in 2010 to 22.98%
in 2018. The percentage of women in senior management increased to 9.70%, a good gainfrom 6.77% in 2017. 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 2018, the percentage of women within this management group employed in business
operations functions decreased slightly to 15.08% compared to 15.55% in 2017. While there wasan increase of the number of women in these “business operations” functions, with the growthof the Company the spread of the male counterpart grew more in these functions.

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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 2018, this percentage decreased to17.91%, a slight decrease from 2017 at 18.05% but a remained gainful increase from 16.67%
in 2016.
REGIONAL DATA

Liechtenstein

UNIT

NORTH
SOUTH
EUROPE AMERICA AMERICAASIAPACIFIC

AFRICA

UMICORE
GROUP

Total workforce

N°

6,776

855

1,156

3,805

1,008

13,600Workforce (fully
consolidated companies)

N°

5,723

838

678

2,922

259

10,420Workforce fromassociated companies

N°

1,053

17

478

883

749

3,180

Employees men

N°

4,563

652

502

2,325

159

8,201

Employees women

N°

1,160

186

176

597

100

2,219

Full-time equivalentN°

5,531.84

834.60678.002,920.60

Temporary contracts% ofworkforce

3.83

0.84

1.18

3.15

BUSINESS GROUP DATA
UNIT

259.00 10,224.04
0.00

3.13

PRODUCTION
SITES

R&D |
TECHNICALCENTRESOTHER SITESEMPLOYEES

Germany

5 (1)

2

1

1,730 (306)

Ireland

(1)

(563)

Italy

2
1

1

Luxembourg

19Netherlands

1

10

Poland1

150

Portugal

1

6

Russia

1

7

Spain

1

4

(1)

36 (4)

Sweden1

1

Switzerland
United Kingdom

RECYCLING CORPORATE

UMICORE
GROUP

1

2
45 (180)

1

(1)

3 (1)
1

8

China

5 (3)

1

5 (1)

1,351 (871)

India

1

1

80

Japan

2

3

2 (1)

172 (8)

Philippines

1
3

2

2

1,024

Asia-Pacific
Australia

ENERGY &SURFACECATALYSIS TECHNOLOGIES

32
80

Total workforce

N°

3,070

4,229

2,832

3,469

13,600South Korea

Workforce (fully
consolidated companies)

N°

3,070

3,447

2,832

1,071

10,420

TaiwanWorkforce fromassociated companies

N°

0

782

0

2,398

3,180

United Arab Emirates

Thailand

83

2

2

22

1

182

(1)

(4)

North America

Employees men

N°

2,433

2,777

2,362

629

8,201

CanadaEmployees women

N°

637

670

470

442

2,219

MexicoFull-time equivalentN°

3,057.32

3,427.85

2,779.03

959.84

10,224.04

Temporary contracts% ofworkforce

5.11

2.67

2.33

1.03

3.13

GENERAL OVERVIEW OF SITES AND EMPLOYEESPRODUCTION
SITES

R&D |
TECHNICALCENTRESOTHER SITESEMPLOYEES

1

3,102

2

254

1

Belgium

31

Denmark

1

1

France

3

8

238
2

1

5

3 (1)

595 (17)

South America
Argentina

1

Brazil

4

Peru

(1)

61
1

617
(478)

AfricaEuropeAustria

United States

3

144
112

South Africa

1 (1)

Total

48 (7)1
14 (1)

259 (749)

35 (6) 10,420 (3,180)

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 centers are located on the same site but are counted separately.

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S3 PEOPLE ENGAGEMENTGROUP DATAAVERAGE NUMBER OF TRAINING HOURSPER EMPLOYEE – GENDER SPLITVOLUNTARY LEAVERS RATIO

Hours/employee

%

UNIT

2014

2015

2016

2017

2018

Employees having a yearly appraisal% ofworkforce

95.82

95.97

96.03

98.39

96.15

Average number of training hours
per employee

hours/
employee

45.59

45.06

41.49

45.33

43.10

Average number of training hours
per employee – Menhours/
employee

48.09

45.32

42.38

46.53

44.68

Average number of training hours
per employee – Women

hours/
employee

39.76

47.39

38.28

41.01

37.29

Average number of training hours
per employee – Managers

hours/
employee

37.18

34.24

41.03

38.54

37.59

Average number of training hours per
employee – Other employee categories

hours/
employee

46.29

46.09

41.52

46.44

42.94

Voluntary leavers ratio% ofworkforce

3.42

3.35

4.10

5.03

7.18

Voluntary leavers men

N°

273

280

309

404

619

Voluntary leavers women

N°

80

69

97

70

110

15

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.

10

40
30

8

Men | 44.68
Women | 37.29

7.18

6

20

4

10

2

0

5.03
4.10

3.42

3.35

‘14

‘15

‘16

NORTH
SOUTH
AMERICA AMERICAASIAPACIFIC

AFRICA

UMICORE
GROUP

0

‘17

‘18

VOLUNTARY LEAVERS RATIO, BY REGION% of workforce
20

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 fromfully consolidated companies.

AVERAGE NUMBER OF TRAINING
HOURS PER EMPLOYEEAVERAGE NUMBER OF TRAINING
HOURS PER EMPLOYEE CATEGORY

Hours/employee

Hours/employee

50
45
40
35
30
25
20
15
10
5
0

50

‘14 | 45.59‘15 | 45.06‘16 | 41.49‘17 | 45.33‘18 | 43.10

10

50

40
30

Managers | 37.59
Other employee categories | 42.94

Africa | 1.54
Asia-Pacific | 16.55
South America | 2.20
North America | 5.86
Europe | 3.75

50

REGIONAL DATAUNITEUROPE

Average number of training
hours per employee

hours/
employee

39.81

40.25

57.05

48.17

34.36

43.10

Employees having
a yearly appraisal% ofworkforce

98.32

92.72

100.00

91.75

98.84

96.15

Voluntary leavers ratio% ofworkforce

3.75

5.86

2.20

16.55

1.54

7.18

20
10

‘14

‘15

‘16

‘17

‘18

0

Umicore Integrated Annual Report 2018

174

BUSINESS GROUP DATA

S4 EMPLOYEE RELATIONSCATALYSISENERGY &SURFACETECHNOLOGIES

Average number of training
hours per employee

hours/
employee

40.06

49.07

41.79

37.19

43.10

Employees having
a yearly appraisal% ofworkforce

91.89

95.97

99.86

99.16

96.15

Voluntary leavers ratio% ofworkforce

5.68

13.21

3.45

3.16

7.18

UNIT

RECYCLING

UMICORECORPORATEGROUP

TRAINING HOURS
In 2018, the average training hours per employee decreased to 43.10 hours from the previous
year. The training hours for “on the job learning” are not consistently captured or registered inall sites.
Data shows that managers training hours (37.59 hours) are lower than for other employees(42.94 hours).
YEARLY APPRAISAL
In 2018, almost all employees (96.15%) from fully consolidated companies have an appraisal
interview to discuss their development at least once a year.
VOLUNTARY LEAVERS
The last three years the percentage of voluntary leavers has been increasing and in 2018,
reached 7.18%. As was the case in previous 2 years, significant regional differences can beobserved with Asia Pacific reporting the highest turnover rate (16.55%) and South America(2.20%) and Africa (1.54%) the lowest. The high turnover rate in Asia Pacific is not unique toUmicore and can be explained by a highly competitive and fluid labour market in some of thegrowth markets. We also observe a trend that about 39% of the global voluntary leavers left
the Company during the first 6 months of employment, primarily from the large sites in Asia
Pacific, sites that have had a significant growth.
VOLUNTARY LEAVERS – GENDER
15.09% of the voluntary leavers are women, which is lower than the 22.98% presence of
women in the workforce of fully consolidated companies.

GROUP DATA

Employees represented by union orCollective Labour Agreement (CLA)

UNIT

2014

2015

2016

2017

2018

% of
workforce

71.44

71.11

69.41

65.41

64.49

ASIAPACIFIC

AFRICA

UMICORE
GROUP

38.26

33.20

64.49

RECYCLINGCORPORATEUMICORE
GROUP

87.43

77.87

64.49

EMPLOYEES REPRESENTED BY UNION OR
COLLECTIVE LABOUR AGREEMENT (CLA)% of workforce
100
80

71.44

71.11

69.41

65.41

64.49

‘14

‘15

‘16

‘17

‘18

60
40
20
0

REGIONAL DATA
UNIT
Employees represented
by union or Collective
Labour Agreement (CLA)% ofworkforce

BUSINESS GROUP DATA
UNIT
Employees represented
by union or Collective
Labour Agreement (CLA)% ofworkforce

NORTH
SOUTH
EUROPE AMERICA AMERICA
84.15

8.59

92.63

ENERGY &SURFACECATALYSIS TECHNOLOGIES
47.88

56.28

Umicore Integrated Annual Report 2018

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UNION AND COLLECTIVE LABOR AGREEMENT
In total, 64.49% of Umicore employees belong to a trade union organization and/or the levelof their wages are negotiated through a collective bargaining agreement. On a regional basis,
there are significant differences in union representation, with the highest representation inSouth America and Europe and the lowest in North America.
SUSTAINABLE DEVELOPMENT AGREEMENT
In 2007, Umicore signed a Sustainable Development Agreement with the International union
IndustriALL, which was again renewed in 2015 for a period of four years. In this agreement,
Umicore commits to a number of principles including: the banning of child labor and forcedlabor, recognizing the right to its employees to organize themselves and to participate incollective 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.

S5 CODE OF CONDUCT

Since 2011, Umicore has organized for the first time a systematic Group-wide internal reportingon Code of Conduct issues. In 2018 a total of 20 cases were reported, involving a total of 28
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 thescope of the occupational health reporting. Compared to 2017, data of 3 sites are not reported
anymore: Amsterdam (Netherlands, Jewelry and Industrial Metals), Providence (USA, Thin Film
Products) and Vicenza (Italy, Technical Materials). 8 sites were added to the reporting scope:
Bayport (USA, Automotive Catalyst), Frederikssund and Lyngby (Denmark, Automotive Catalyst),
Joinville (Brazil, Automotive Catalyst), Songdo and Onsan (South-Korea, Automotive Catalyst),
Tianjin (China, Automotive Catalyst) and Grenoble (France, Cobalt and Specialty Materials).
This brings the total number of reporting sites to 55.
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 approach tooccupational health can be found in the corresponding section of Management Approach, p.72.

GROUP DATA

UNIT

2014

2015

2016

2017

2018

Exposure ratio “all biomarkers aggregated” (1)

%

1.8

2.3

3.2

2.7

2.8

Exposure ratio lead (blood) (2)

%

1.0

0.8

0.5

0.5

2.0

Exposure ratio arsenic (urine) (2)

%

1.1

1.3

2.0

1.0

1.2

Exposure ratio cobalt (urine) (2)

%

7.3

8.7

9.0

6.0

5.0
0.5

Exposure ratio cadmium (urine) (2)

%

0.6

1.1

1.4

0.7

Exposure ratio nickel (urine) (2)

%

0.3

1.3

2.0

1.4

2.6

Exposure ratio indium (blood) (2)

%

–

–

11.3

14.2

2.8

People with platinum salts sensitisation

N°

4

0

1

1

3

People with noise induced hearing loss

N°

5

2

4

0

0

People with contact dermatitis

N°

2

3

0

2

3

People with occupational asthma other than Pt-salts

N°

0

1

0

0

0

People with musculoskeletal ailments

N°

14

7

7

8

6

(1)	Ratio between the number of monitoring results exceeding the Umicore target value, defined for relevanthazardous substances, and the total number of monitoring results.
(2) The exposure ratio of a specific metal is defined as the ratio between the number of employees with abiological monitoring result exceeding the Umicore target value for that specific metal and the total numberof 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 liter 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 occupationally linked symptoms during the reporting cycle.
In 2018, a total of 6,939 biological sampling procedures took place from employees with an
occupational exposure to at least one of the metals mentioned above (platinum salts excluded).
195 readings showed a result in excess of the internal target value. This brings the total excess
rate to 2.8%, comparable to the 2.7% excess rate in 2017. All occupationally exposed employees
are regularly monitored by an occupational health physician.

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176

LEAD
Occupational lead exposure represents a potential health risk mainly in the business group
Recycling. In total, 26 of the 1,315 occupationally exposed employees exceeded the target valueof 30μg/100ml, bringing the excess rate for lead exposure to 2.0% compared to 0.5% in 2017.
The majority of the excess readings were in the lead refinery at the Hoboken site
(Belgium, Precious Metal Recycling). The increase is explained by the high number of new
employees resulting in a poor compliance with local personal protective equipment policies.
training programs have been implemented to reduce the lead exposure. In addition, the site
continued to improve its ventilation systems.
ARSENIC
Occupational exposure to arsenic is possible in the business groups Energy & Surface
Technologies and Recycling. In total, 11 employees or 1.2% of the 951 occupationally exposed
had an excess reading during 2018 compared to 1.0% in 2017.
All workers occupationally exposed to arsenic are submitted to a medical surveillance program
to closely follow-up their health condition.
COBALT
In total, 1,834 employees are occupationally exposed to cobalt, mainly in the business group
Energy & Surface Technologies. The number of employees exceeding the target value was 92,
resulting in an excess rate of 5.0%, down from 6.0% in 2017.
In the business unit Rechargeable Battery Materials, the number of exposed people rose by
more than 127%. Despite this, we noticed a significant decrease in excess readings in thisbusiness unit from 3.6% in 2017, down to 2.6 in 2018.
The excess readings in the business unit Cobalt & Specialty Materials increased from 11.1% in2017 to 12.7% in 2018.
During the past year, the sites in Cheonan (Korea, Rechargeable Battery Materials) andJiangmen (China, Rechargeable Battery Materials) developed a comprehensive dust abatement
program as part of their operational excellence approach. This ‘zero dust’ program focuses on
equipment improvements and workers behavior. Concrete actions include awareness programs,
regular industrial hygiene campaigns, excellent housekeeping and improved maintenance of
critical equipment.
The higher number of excess readings in the business units Cobalt & Specialty Materials
was mainly caused by increased exposures at the sites in Olen (Belgium, Energy & Surface
Technologies), Fort Saskatchewan (Canada, Energy & Surface Technologies) and Grenoble(France, Energy & Surface Technologies). The business unit is developing an action plan
focusing on technical improvements, housekeeping and personal behavior of workers to again

decrease the exposures. Regular workshops are organized to evaluate progress and share ideas
and experiences.
For workers exposed to cobalt, both business units Cobalt & Specialty Materials andRechargeable Battery Materials have implemented Umicore’s occupational health guidance forcobalt, including biological monitoring and medical surveillance.
CADMIUM
Occupational exposure to cadmium represents a potential health risk in the business groups
Energy & Surface Technologies and Recycling. Cadmium in urine is an excellent biomarker for
lifetime exposure. In 2018, a total of 433 employees had an occupational exposure to cadmium.
Only 2 employees recorded a cadmium in urine reading in excess of the target value, comparedto 3 in 2017. This resulted in an excess rate of 0.5% compared to 0.7%% in 2017.
NICKELThe business groups Energy & Surface Technologies and Recycling have occupational exposure
to nickel. In 2018, a total of 2,157 employees were exposed to nickel, an increase of about 50%
compared to 2017. In 2018, 57 of the exposed workers exceeded the target level resulting in anexcess level of 2.6%, compared to 1.4% in 2017.
In the business unit Rechargeable Battery Materials, we noticed an increase in excess readings
from 0.7% in 2017 to 2.2% in 2018 mainly related to an increased exposure at the site in
Jiangmen (China, Energy & Surface Materials). The measures to reduce cobalt exposure (seeabove) obviously also apply to nickel.
The excess readings in the business unit Cobalt & Specialty Materials rose from 6.7% in2017 to 11.1% in 2018 are due to a higher number of excess readings at the sites in Wickliffe(USA, Energy & Surface Technologies) and Subic (Philippines, Energy & Surface Technologies).
These sites are further implementing their dust management programs including ventilation
systems improvements and personal protective equipment programs.
For workers exposed to nickel, both business units Cobalt & Specialty Materials andRechargeable Battery Materials have implemented Umicore’s occupational health guidance fornickel, including biological monitoring and medical surveillance.
INDIUM
Peer reviewed literature clearly demonstrates that occupational exposure to indium andindium tin oxide may result in health effects 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 healthhazard assessment program (2012-2016) at the site in Providence (USA, Energy & Surface

Umicore Integrated Annual Report 2018

177

Technologies). Based upon these scientific data, Umicore defined a target level for indium inplasma of 1 microgram per liter of plasma. Indium in plasma is a biomarker of lifetime exposure.
In 2018, 249 employees were exposed to indium compared to 324 in 2017. This decreaseis explained by the discontinuation of activities at the site in Providence (USA, Energy &Surface Technologies). As a result, the excess rate dropped from 14.8% in 2017 to 2.8% in
2018. The excess readings for indium in plasma are reported mainly at the site in Balzers(Liechtenstein, Energy & Surface Technologies). Following these results, the working conditions
at the bonding workplaces have been improved and an extensive medical surveillance program
has been initiated.
PLATINUM SALTS
The business groups Catalysis and Recycling have workplaces with exposure to platinum salts.
In 2018, we had 3 newly diagnosed employee with a platinum salt sensitization, 2 at the sitein Hoboken (Belgium, Recycling) and one at the site in Hanau (Germany, Catalysis). All workers
exposed to platinum salts are monitored through an occupational health program following a
Umicore health guideline and regularly checked for platinum salt sensitization.
OTHER OCCUPATIONAL RELATED DISEASESIn 2018, 3 employees were diagnosed with an occupationally induced contact dermatitis and6 developed a musculoskeletal disorder due to their occupation. All people concerned arefollowed by an occupational health physician.
In 2018, the medical departments of the Umicore sites in Belgium together with the humanresources organization continued a program to raise awareness and lift the taboo on burnout. 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 organization.
The program consists of primary prevention of burn-out combined with early recognition ofsymptoms and case management support. Concrete actions included awareness campaigns via
leaflets, and well attended workshops and training for supervisors. Similar programs have been
implemented at Umicore sites in other countries such as Germany.

S7 OCCUPATIONAL SAFETY

In total for 2018, 90 consolidated sites, of which 57 are industrial sites, are included in the safety
reporting. This number also includes commercial offices.
Additional information on Umicore’s approach to safety can be found in the corresponding
section of Management Approach, p. 72.
The Umicore information in this note only relates to Umicore’s employees. Data on subcontractors’
occupational safety are reported separately. It is Umicore’s objective to have zero lost time
accidents by 2020.

GROUP DATA

UNIT

2014

2015

2016

2017

2018

Fatal accidents

N°

2

0

1

0

0

Fatal accidents sub-contractors

N°

0

0

0

0

1

Lost Time Accidents (LTA)

N°

37

47

59

51

61

Lost Time Accidents (LTA) sub-contractors

N°

LTA frequency rate
Calendar days lostN°

LTA severity rate
Recordable Injuries (RI)

N°

Recordable Injuries frequency rate

11

9

15

22

21

2.16

2.66

3.34

3.01

3.36

16,122

2,134

9,848

1,590

1,830

0.94

0.12

0.56

0.09

0.10

112

148

127

138

158

6.53

8.38

6.78

8.15

8.70

Ratio N° of sites with no LTA/total N° of sites reporting

%

84

84

84

84

84

Sites OHSAS 18001 certified

%

40.0

36.6

41.7

51.0

51.9

Umicore employee: a person belonging to Umicore’s total workforce. A Umicore employee canbe 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 lostfrom work.
Recordable injury (RI): a work-related injury resulting in more than one first aid treatment orin a modified working program but excluding lost time accidents.
Frequency rate: number of lost time accidents per million hours worked.
Severity rate: number of lost calendar days due to a lost time accident per thousand hours
worked. Accidents to and from work are not part of the scope of the safety data.

FREQUENCY RATESEVERITY RATE

5.0

1.00 0.94

4.0

3.34

3.0
2.0

2.66

3.01

3.36

0.56
0.50

2.16

0.12

0.25

1.0
0

0.75

‘14

‘15

‘16

‘17

‘18

0

‘14

‘15

‘16

0.9

0.10

‘17

‘18

Umicore Integrated Annual Report 2018

178

REGIONAL DATA
UNIT
Lost Time Accidents (LTA)

N°

NORTH
SOUTH
EUROPE AMERICA AMERICA
53

BUSINESS GROUP DATA
UNIT
Fatal accidents

N°

1

ASIAPACIFIC

061

RECYCLING CORPORATE

UMICORE
GROUP

0

CATALYSISENERGY &SURFACETECHNOLOGIES00

UMICOREAFRICA
GROUP

7

0

0

0

Lost Time Accidents (LTA)

N°

10

8

41

2

61

Calendar days lost

N°

340

368

983

139

1,830

In 2018, a total number of 61 lost time accidents was recorded, compared to 51 in 2017. This resulted
in a frequency rate of 3.36, up from 3.01 in 2017, and in a severity rate of 0.10. The number of reported
recordable injuries increased from 138 in 2017 to 158 in 2018. The recordable injury frequency rate
for 2017 was 8.70 compared to 8.15 in 2017. A total of 21 lost time accidents was registered forcontractors compared to 22 in 2017.
An accident at the site in Arab (USA, Energy & Surface Materials) cost the life of one contractor
worker. The accident was due to an unexpected accumulation of hydrogen in a former storage tankon which the contractor worker was carrying out hot repair work.
During 2018, 84% of the reporting sites that were operational throughout the year operated withouta lost time accident, the same percentage as in 2017. 52% of the sites were certified using theoccupational health and safety management system OHSAS 18001, compared to 51% in 2017.
53 lost time accidents, or 86% of the total number of lost time accidents, occurred in Europe.
Of these, 41 lost time accidents occurred on Belgian sites and 10 on German sites. The Asia-Pacificsites accounted for 7 accidents while no accidents occurred in the Americas.
In 2018, the business group Catalysis recorded 10 lost time accidents compared to 4 in 2017.
Besides continued technical improvements, the business unit Automotive Catalysts continues
the SafeStart® behavioural safety program in all its operating sites. In addition, some sites have
implemented a risk behaviour training program for supervisors and operators. 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 nolost time accident to contractors on site. The site in Rayong (Thailand) recorded more than 3 years(including the site construction) without a lost time accident or recordable injury to Umicore staff andno lost time accident to contractors on site.

The business group Energy & Surface Technologies recorded 8 lost time accidents compared to
12 in 2017. The business units continue their actions to reinforce their safety leadership programs
based on a behavior observation and risk intervention techniques. The site in Dundee (UK) has beenrecognized for its excellent and sustained safety performance, recording over 10 years with no losttime accident or recordable injury to Umicore staff and no lost time accident to contractors. Beijing(China), Balzers (Liechtenstein) and Tsukuba ( Japan) operated more than 5 years with no lost time
accident or recordable injury to Umicore staff and no lost time accidents to contractors.
The business group Recycling had 41 lost time accidents. The business unit Precious Metal Refining
recorded a disappointing safety performance with 35 lost time accidents. 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.
Two lost time accidents occurred in general services and corporate offices including Group Research& Development.

S8 PROCESS SAFETY

In 2018, the Umicore Group process safety activities have been focused on executing process risk
assessment studies to ensure that all our processes are operated in the acceptable risk zone. At year
end, more than 50% of the production processes have received specific process hazard and risk
assessment compliant to Umicore standards. Moreover, a detailed timeline has been defined forcompletion of the remaining studies in the coming years, giving priority to the processes with highrisk profiles.
To ensure sufficient quality of the process risk assessment studies, experts conduct detailed
technical process risk assessment reviews of processes with major risk scenarios. These reviews
are in addition to the Group environment, health and safety audit program evaluating the sites’
compliance of the process safety management system.
An internal HAZOP leader training has increased process safety knowledge throughout the Company.

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179

VALUE CHAIN STATEMENTS
V1 Scope of value chain statements

180

V2
V3
V4
V5
V6

180
181
181
182
184

Critical raw materials
Conflict minerals
Indirect procurement
Products and services
DonationsUmicore Integrated Annual Report 2018

180

V1 SCOPE OF THE VALUE CHAIN STATEMENTS

The value chain and society theme focuses on potential impacts on society that we have as acompany through our activities, products and services. For reporting, all entities of the Groupare considered.

V2 CRITICAL RAW MATERIALSAs supply risks and opportunities can change the identification of the critical raw materials is a
dynamic process. In 2018 all business units have updated their mapping.
MITIGATION ACTIONS
It is particularly important to define actions to mitigate the risk of critical materials
supply disruption.

Securing adequate volumes of raw materials is an essential factor in the ongoing viability of our
product and service offering and in being able to achieve our Horizon 2020 growth objectives.
The risks and opportunities vary considerably from one business unit to another and for thisreason we have taken a decentralized approach to risk and opportunity management. We havedetermined to seek a competitive edge in terms of our access to critical raw materials and in
our ability to secure these raw materials in an ethical and sustainable way.

Mitigation actions can vary depending on the materials and the position of the business unit in
the market. Action plans and dedicated mitigation measures must be in line with the identified
risks and opportunities and are therefore regularly updated. The reviewing frequency andprocess vary from business unit to business unit depending on the specific supply conditions.

SCOPE
The indicator presented covers all activities that were still part of Umicore on 31 December 2018.

The Sustainable Procurement Framework for Cobalt covers Umicore’s cobalt purchases
worldwide. The Framework is aligned with the OECD Due Diligence Guidance for Responsible
Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Umicore obtained, forthe fourth year in a row, third party assurance from PwC that its cobalt purchases in 2018
are carried out in line with the conditions set out in the framework. The share of cobalt fromrecycled origin was also reviewed by PwC as part of the assurance process and was 6.1% for2018. The figure is reported in the compliance report.

The reporting is done according to the business units reported in Group structure on page 3.
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 theselected criteria into account;–– Calculation of the impact on the Horizon 2020 objectives of the supply risk identified.
21 supply criteria, covering various aspects of sustainability, have been offered to the business
units as input for the mapping. 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

Umicore uses cobalt in materials that go into rechargeable batteries, tools, catalysts and several
other applications. The approach on cobalt sourcing further evolved in 2018.

The compliance report for 2018 can be found here: https://www.umicore.com/en/cases/sustainable-procurement-framework-for-cobalt/compliance-report.
Umicore supported the development of the Cobalt Industry Responsible Assessment Framework(CIRAF) within the Cobalt Institute. The CIRAF is a management framework for risk assessmentand mitigation aiming at ensuring responsible cobalt production and sourcing.
Within the World Economic Forum’s “Global Battery Alliance”, Umicore took a leading role inthe circular economy working group that focused in 2018 on the analysis of the gaps to close
the battery loop. We also contributed to another important project within the Global Battery
Alliance, that aims at the development of a standard for Artisanal Small-scale Mining.
Next to its continued engagement for sustainable cobalt sourcing Umicore implemented in 2018
due diligence in the supply of the other raw materials for batteries, ie nickel, manganese andlithium. The approach taken in this risk assessment is directly inspired by the experience withthe cobalt and follows the basic steps of the Sustainable Procurement Framework for Cobalt.
Specific mitigation actions have been defined for these metals depending on the identified risk.

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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 thetrade in 4 minerals – tin, tantalum, tungsten and gold – that sometimes finance armed conflictor are mined using forced labor.
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 and high-risk areas, available
at: https://www.umicore.com/en/media/topics-of-interest/conflict-minerals/.
In 2018, 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-free status of our
products. The Umicore internal “Metals and Minerals” working group streamlines and optimizes
the efforts required for this growing customer demand through best practices sharing.
The Precious Metals Refining operations in Hoboken and Guarulhos are certified as conflict-freesmelters for gold by the London Bullion Market Association (LBMA). In 2018, UPMR Hoboken
successfully passed the LBMA conflict-free silver audit of its 2017 activities for the first time.
Such audits are voluntary for 2017 but will be mandatory for the LBMA accredited silver refiners
in the future. In 2019 UPMR Hoboken will be subject to a LBMA audit for compliance against the
Responsible Platinum/Palladium Guidance.
The Jewelry & Industrial Metals operations in Pforzheim, Vienna and Bangkok are certified
as part of the Responsible Jewelry 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 sitesof Pforzheim and Vienna are also certified for palladium and rhodium. 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. In 2019 Jewelry & Industrial
Metals operations in Pforzheim will be submitted to a LBMA audit for compliance against the
Responsible Silver Guidance.
For an overview of the Umicore certificates, please visit https://pmm.umicore.com/en/
sustainability/#certificates.

The Responsible Minerals Initiative is used by many customers to streamline the process toguarantee 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 elements of a car canbe certified as not containing conflict minerals sourced from non-certified origins. This procedure
is not a ban on those materials (tin, tantalum, tungsten and gold), but is a process to createtransparency 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.

V4 INDIRECT PROCUREMENT

While the metal-bearing raw materials are purchased directly by the business units (direct
procurement, see notes V2 and V3 for specific sustainable supply related actions), Umicore’spurchasing and transportation teams worldwide take care of the energy and other goods andservices which is referred to as indirect procurement. Indirect procurement represents roughly
10% of the total spend, half of which is being handled by the Procurement & Transportation
teams in Belgium and Germany.
SCOPE
The indicators presented are based on 2018 data from our Procurement & Transportation teams
in Belgium and Germany. EcoVadis is now also being used by local procurement team in Brazil.
ASSESSMENT OF SUPPLIERS
Since 2017, a quick scan based on criteria such as size, geographical location and type of productor service provided is systematically used for the assessment of new suppliers. This tool
determines the need for an EcoVadis assessment. This tool was implemented first by the teams
in Belgium and Germany. In 2018, the first full year of implementation, 249 quick scans havebeen initiated. The goal is to roll out to other teams worldwide in the future.
Sustainability performance of specific suppliers is assessed by EcoVadis, a well-known
collaborative platform providing Supplier Sustainability Ratings.
62 assessment scores were made available to the teams in 2018, including the requests fromthe Procurement & Transportation teams in Brazil. The total number of scores received since
the start of our collaboration with EcoVadis amounts to 355. This represents the number of
unique suppliers that have been assessed and does not consider the regular re-assessment of
a supplier. This number has been quite stable over the last 3 years and shows that all criticalsuppliers have now been covered.

The business units purchasing one the 4 conflict minerals for manufacturing their final products
use the Conflict Mineral Reporting Template from the Responsible Minerals Initiative for theirdue diligence on the purchased raw materials.

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AVERAGE SCORE OF SUPPLIERS BY TOPIC IN 2018
75% of the assessed suppliers in 2018 reach a score of 45 or higher, so-called suppliers “engaged
in CSR” (Corporate Social Responsibility).
None of the scores received in 2018 are indicating a “high risk”.
In November 2018, the Umicore Group was re-evaluated by Ecovadis and was scored 70,
which confirms the gold recognition level. This result includes our Company among the top 5%
performers evaluated by EcoVadis.

SUPPLIERS’ SCORE INECOVADIS ASSESSMENT

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 2nd, 3rd…life of the substance.
Incoming materials are regarded as primary by default if their origin is unknown. The collected
data are expressed in terms of total tonnage of incoming material.

RESOURCE EFFICIENCY
21%

24%

25-44: some basic steps
made on sustainability issues

11%45-64: appropriate sustainability
management system
65-84: advanced practices
on sustainability

42%

Primary materials
Secondary materials
End-of-life materials

55%
47%

AVERAGE SCORE
Environmental

56.3

Labour practices

52.6

Fair business practices

50.6

Suppliers

47.9

Overall

52.9

More information on Umicore’s relationship with suppliers can be found in Stakeholder
Engagement, p. 63, and in the Value Chain and Society performance review, p.24.

In 2018, 58% of the materials were from end-of-life or secondary origin while 42% were ofprimary origin, compared to 62% and 38% in 2017, respectively. The shift towards more primary
raw materials is mainly due to the capacity expansion for rechargeable battery materials.
PRODUCTS AND SERVICES CONTRIBUTING TO SPECIFIC SUSTAINABILITY ASPECTS
Our primary focus in terms of sustainable products and services is to leverage activities
that provide solutions to the megatrends of clean mobility and resource scarcity. For more
information, see Value chain and society, p.24.
We developed an indicator to underline our focus on clean mobility and recycling. In 2018 thecriteria for inclusion in this category were re-assessed and the figures for the previous years
have been re-calculated considering the new criteria.

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In 2018, the revenues of those activities that deliver products or services that are directly linked
to one of these two megatrends was 71.8% of 2018 Group revenues up from 67.2% in 2017.
The increase is the result of a higher activity both in recycling and clean mobility. As we work
towards our Horizon 2020 goals and bring even more focus to our business, we would expect
this percentage to continue to increase.
Please that many of the materials and services making up the remaining 28.2% of revenues
are from products answering 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
%
100
90
80
70
60
50
40
30
20
10
0

65

67

72

MANAGEMENT OF PRODUCT REGULATIONWorldwide, changes to existing product related legislation as well as the introduction of newlegislation might impact our business.
Umicore monitors closely all changes in interpretation as well as guidance documents which might
affect its REACH implementation strategy. Umicore is actively involved in industry association
working groups to make sure a consistent approach is followed and that the metal specifics areunderstood by the regulators and the companies.
Umicore supports the engagement of the metals sector with ECHA in the Metals/inorganics
sectorial approach (MISA).
Umicore engaged with cobalt industry in managing 2 specific processes under REACH: the cobalt
metal harmonized classification and labelling, and the Annex XV proposal on restriction of fivecobalt salts. These processes have no final outcome yet and continue into 2019.
Umicore successfully achieved the third and last REACH registration deadline on 31/05/2018.
In total we have submitted 216 registrations for this deadline. The need to register additional
substances continues due to new business developments.
In 2018 Umicore has submitted in total 112 registrations.
As part of regular maintenance, 40 REACH dossiers were updated among others to increase thetonnage band, reply to ECHA requests and to include with new information, eg on composition
or uses.

‘16

‘17

‘18

Business units continue to develop specific solutions for sustainability aspects of our products
and their applications in close relationship with customers. Typical subjects dealt with in suchdevelopments are the reduction of risks related to the use of products, reduction of the hazard of
products or a higher material efficiency in the delivery or the use of our products.

The Korean REACH alike regulation was significantly amended in 2018 and has introduced an
obligatory pre-notification phase which runs until 30/06/2019 to pre-notify existing substances> 1 t/a in order to profit from the transition phases for the registration. Deadlines depend on thetonnage band and CMR classification and vary between end 2021 and end 2030. Umicore will
prepare accordingly.
Umicore has submitted 4 registrations in Korea for the June 2018 deadline of priority chemical
substances and has submitted 2 new substance registrations. Another 3 registrations are ongoing.

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V6 DONATIONSSCOPE
The indicators presented are based on data from fully consolidated companies.

REGIONAL DATA

The historical numbers (2016 and before) were not restated.
Total donations

GROUP DATA
2014

2015

2016

2017

2018

Cash donations

Thousands of Euros

UNIT

1,103.47

1,034.91

1,078.03

1,151.46

1,287.22

Donations in kindThousands of Euros

200.88135.11167.47

60.47

66.10

Staff freed timeThousands of Euros

104.99

49.36

44.17

87.40

78.34

Total donations

Thousands of Euros

1,409.35

1,219.38

1,289.68

1,299.34

1,431.66

DONATIONS
Thousands of Euros
1,600
Cash
donations‘14 | 1,103.47‘15 | 1,034.91‘16 | 1,078.03‘17 | 1,151.46‘18 | 1,287.22

1,200
800
400
0

‘14

‘15

‘16

‘17

Donationsin kind‘14 | 200.88‘15 | 135.11‘16 | 167.47‘17 | 60.47‘18 | 66.10

Staff freedtime‘14 | 104.99‘15 | 49.36‘16 | 44.17‘17 | 87.40‘18 | 78.34‘18

Donations are subdivided into cash donations, donations in kind and staff time. Group level donations
are coordinated by a committee reporting to the CEO.

UNIT

EUROPENORTHAMERICASOUTH
AMERICAASIAPACIFIC

AFRICA

UMICOREGROUP

Thousandsof Euros

1,195.50

118.08

47.61

55.11

15.36

1,431.66

RECYCLINGCORPORATEUMICORE
GROUP

244.50723.391,431.66

BUSINESS GROUP DATA
UNIT
Total donations

Thousandsof Euros

ENERGY &SURFACECATALYSIS TECHNOLOGIES
142.39321.38In 2018, Umicore contributed a total of € 1,432 thousand in donations. For the business units, thetotal amount of € 708 thousand is in line with the guidance of approximately one third of 1%
of each unit’s average annual recurring consolidated EBIT for the past 3 years. Additional Grouplevel donations were made for an amount of € 724 thousand.
Most of the donations from the business 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 areas for Group level donations in2018 included support for two major UNICEF educational projects in Madagascar and in India,
three projects coordinated by Entrepreneurs for Entrepreneurs (in Mali, Ecuador and Bolivia) andsupport for student sustainable mobility projects.
For a more on Umicore corporate philanthropy, see Giving Back to Society, p. 28.

Each business unit is expected to allocate an annual budget that provides sufficient donations andsponsorship support to each site’s community engagement program. By way of guidance, thisbudget should equate to an amount corresponding to a third of a percent of the business unit’s
average annual consolidated recurring EBIT (ie excluding associates) for the 3 previous years.

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ASSURANCE REPORTS

185

STATUTORY AUDITOR’S REPORT TO THE GENERAL SHAREHOLDERS’ MEETING OF THE COMPANY UMICORE ON THE CONSOLIDATEDACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2018

We present to you our statutory auditor’s report in the context of our statutory audit of theconsolidated accounts of Umicore (the “Company”) and its subsidiaries (jointly “the Group”).
This report includes our report on the consolidated accounts, as well as the other legal andregulatory requirements. This forms part of an integrated whole and are indivisible.
We have been appointed as statutory auditor by the general shareholders’ meeting of
25 April 2017, following the proposal formulated by the board of directors and following therecommendation by the audit committee and the proposal formulated by the workers’ council.
Our mandate will expire on the date of the general shareholders’ meeting which will deliberateon the annual accounts for the year ended 31 December 2019. We started the statutory audit of
the consolidated accounts of Umicore before 1993.

REPORT ON THE CONSOLIDATED ACCOUNTSUNQUALIFIED OPINION
We have performed the statutory audit of the Group’s consolidated accounts, which comprisethe consolidated balance sheet as at 31 December 2018, the consolidated income statement,
the consolidated statement of comprehensive income, the consolidated statement of changes
in equity and the consolidated statement of cash flow for the year then ended, and notes to theconsolidated financial statements, including a summary of significant accounting policies andother explanatory information, and which is characterised by a consolidated balance sheet totalof EUR 6.053,3 million and a profit for the year (Group share) of EUR 316,9 million.
In our opinion, the consolidated accounts give a true and fair view of the Group’s net equity
and consolidated balance sheet as at 31 December 2018, and of its consolidated financial
performance and its consolidated cash flows for the year then ended, in accordance with
International Financial Reporting Standards as adopted by the European Union and with thelegal and regulatory requirements applicable in Belgium.

BASIS FOR UNQUALIFIED OPINION
We conducted our audit in accordance with International Standards on Auditing (ISAs) as
applicable in Belgium. Furthermore, we have applied the International Standards on Auditing(ISAs) as approved by the IAASB for the years ending as from 31 December 2018, which are
not yet approved at the national level. Our responsibilities under those standards are further
described in the “Statutory auditor’s responsibilities for the audit of the consolidated accounts”
section of our report. We have fulfilled our ethical responsibilities in accordance with the ethicalrequirements that are relevant to our audit of the consolidated accounts in Belgium, including
the requirements related to independence.
We have obtained from the board of directors and Company officials the explanations andinformation necessary for performing our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the consolidated accounts of the current period. These matters wereaddressed in the context of our audit of the consolidated accounts as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
ACCOUNTING TREATMENT OF HEDGING TRANSACTIONSDESCRIPTION OF THE KEY AUDIT MATTERThe companies of the Umicore Group use a number of different derivative financial instruments
to hedge against currency and commodity price risks associated with ordinary business activities.
Management’s hedging policy is documented in corresponding internal guidelines and serves
as the basis for these transactions. Currency and commodity price risks arise primarily fromrevenue, sales and procurement transactions (in particular commodities).

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The cash flow hedges (also labelled as strategic hedges in the annual report) do meet thecriteria for hedge accounting under IFRS 9, consequently the effective portion of the changes
in fair value of the underlying derivative financial instruments are recognized directly in equity
until the underlying hedged cash flows realise. As of the balance sheet date, a cumulative EUR
0,3 million were recognized in the fair value reserves in equity as disclosed in note F 33.1.
A part of the fair value (also labelled as transactional hedges in the annual report) hedges domeet the criteria for fair value hedge accounting under IFRS 9 as disclosed in the accounting
policies under note F 2.21.1. The hedged item and the underlying instruments are both
recognized at fair value through the income statement.
There is still a part of the transactional hedging for commodities for which under IFRS 9 no fairvalue hedge accounting can be applied, consisting mainly of physical back-to-back hedging
set-ups without any derivative financial instruments involved. As disclosed under note F 2.21.1.,
a “lower of cost or market” approach is applied on the physical future sales and purchasecommitments with customers and suppliers.
The accounting treatment of the hedging transactions was a topic of particular importancedue to the changes resulting from the implementation of IFRS 9 including the extensive
accounting and disclosure requirements, their high complexity and the increase in the numberof hedging transactions.
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTERAs part of our audit and with the help of our internal treasury experts, we assessed thecontractual and financial parameters and reviewed the accounting treatment, including theeffects on equity and profit or loss, of the various hedging transactions. Together with theseexperts, we also assessed the Company’s internal control system with regard to derivative
financial instruments, including the internal activities to monitor compliance with the hedging
policy. Furthermore, we used market data to review the method applied to measure the fairvalue of the financial instruments. In addition, we obtained bank and broker confirmations
in order to assess the completeness and accuracy of the fair values of the recorded hedging
transactions. With regard to the expected cash flows and the assessment of the effectivenessof hedges, we essentially reviewed the prospective testing. We verified that hedges were
accounted for and measured in accordance with IFRS 9. In view of the transactional hedges
we audited the accuracy and completeness of the related derivative financial instruments via
external confirmations and the review of the method applied to measure the fair value via
market data. Moreover, for the part on which no fair value hedge accounting can be applied,the “lower of cost or market” approach applied on the physical future sales and purchasecommitments with customers and suppliers have been audited on a sample basis.

186

OUR FINDINGSKey assumptions and hedge accounting documentation were supported by available evidence.
The measurement methods applied for the fair value determination and the disclosures innotes F 33.1 and F. 33.2 are appropriate.
UNCERTAIN (DEFERRED) TAX POSITIONSDESCRIPTION OF THE KEY AUDIT MATTERThe Company has extensive international operations and is present in many different tax andlegal jurisdictions where a.o. transfer pricing assessments could be challenged by the tax
authorities in the different countries. The accounting for these uncertain tax positions comprisesignificant judgement by management mainly in the area whether to recognise these uncertain
tax positions and to adequately determine (deferred) tax assets and liabilities. Referring tonote F 3.6. management performed a detailed assessment of the uncertain tax positions which
resulted in appropriate provisions for these uncertainties.
Income tax was significant to our audit because the assessment process is complex and theamounts involved are material to the consolidated accounts as a whole.
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
We have tested the completeness and accuracy of the amounts reported for current and deferredtax, including the assessment of disputes with tax authorities, based on the developments in 2018.
In this area our audit procedures included, amongst others, assessment of correspondence withthe relevant tax authorities. In addition we have evaluated the tax opinions of management’s
experts which have been obtained by Umicore on the respective cases. We also involved our
local component auditors including tax specialists in those countries with significant tax risks.
In respect of deferred tax assets, we analysed and tested management’s assumptions used
to determine the probability that deferred tax assets recognized in the balance sheet will berecovered through taxable income in the countries where the deferred tax assets originatedand during the periods when the deferred tax assets become deductible.
OUR FINDINGSThe judgements in respect of the Group’s position on uncertain tax items are consistent and inline with our expectations. Uncertainties have been properly taken into account when assessing
the (deferred) tax liabilities and assets positions in the consolidated accounts.

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POST-EMPLOYMENT BENEFITS AND PENSION ACCOUNTINGDESCRIPTION OF THE KEY AUDIT MATTERAs described in note F 2.16 (accounting policies, employee benefits) and note F27 (provisions
for employee benefits) to the consolidated accounts, the employee benefits are split in four
different categories, amongst which post-employment defined benefit schemes are included.
Referring to note F4 (Critical accounting estimates and judgements), the post-employment
defined benefit obligation is seen as a critical accounting estimate by management. The grouphas several post-employment defined benefit schemes in place resulting in a net liability
amounting to EUR 289,1 million at 31 December 2018.
The procedures over the post-employment defined benefit provisions were significant to our
audit because the assessment process is complex, involves significant management judgement
and is based on actuarial assumptions such as discount rate, compensation increase, priceinflation expectations and pension age increase rate assumptions, as disclosed in note F27 tothe consolidated accounts.
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTERIn testing the post-employment defined benefit provision, we –assisted by our actuarial
experts- have evaluated management’s actuarial assumptions and valuation methodologies
and we assessed the objectivity and competence of the company’s external actuaries used forthe calculation of the post-employment benefit provisions. We have performed independent
testing of the assumptions used by management and prepared by the company’s external
actuaries, and compared those assumptions to the published actuarial tables, amongst other.
Furthermore, we have also assessed the adequacy of the company’s disclosure on assumptions
in note F27 of the consolidated accounts.
OUR FINDINGS
Based on the evidence obtained, we found that the assumptions used by management in
the valuation of the post-employment benefit provision were within a range considered to bereasonable using an internally developed range of acceptable assumptions for valuing pension
liabilities, based on our view of various macro economic indicators.

RESPONSIBILITIES OF THE BOARD OF DIRECTORS FOR THE
PREPARATION OF THE CONSOLIDATED ACCOUNTS

The board of directors is responsible for the preparation of consolidated accounts that give atrue and fair view in accordance with International Financial Reporting Standards as adopted
by the European Union and with the legal and regulatory requirements applicable in Belgium,and for such internal control as the board of directors determines is necessary to enable thepreparation of consolidated accounts that are free from material misstatement, whether due
to fraud or error.

187

In preparing the consolidated accounts, the board of directors is responsible for assessing theGroup’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the board of directors either
intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

STATUTORY AUDITOR’S RESPONSIBILITIES FOR THE AUDITOF THE CONSOLIDATED ACCOUNTS

Our objectives are to obtain reasonable assurance about whether the consolidated accounts as
a whole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these consolidated accounts.
In performing our audit, we comply with the legal, regulatory and normative framework
applicable to the audit of the consolidated accounts in Belgium.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:– Identify and assess the risks of material misstatement of the consolidated accounts, whether
due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
– Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
– Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the board of directors.
– Conclude on the appropriateness of the board of directors’ use of the going concern basisof accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our statutory auditor’s report to the related disclosures in
the consolidated accounts or, if such disclosures are inadequate, to modify our opinion.

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ASSURANCE REPORTS
Our conclusions are based on the audit evidence obtained up to the date of our statutory
auditor’s report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.
– Evaluate the overall presentation, structure and content of the consolidated accounts,
including the disclosures, and whether the consolidated accounts represent the underlying
transactions and events in a manner that achieves fair presentation.
– Obtain sufficient and appropriate audit evidence regarding the financial information of theentities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of
the Group audit. We remain solely responsible for our audit opinion.
We communicate with the audit committee regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.
From the matters communicated with the audit committee, we determine those matters thatwere of most significance in the audit of the consolidated accounts of the current period andare therefore the key audit matters. We describe these matters in our auditor’s report unlesslaw or regulation precludes public disclosure about the matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

188

ASPECTS RELATED TO THE DIRECTORS’ REPORT ON THE CONSOLIDATED ACCOUNTS
In our opinion, after having performed specific procedures in relation to the directors’ report on
the consolidated accounts, this report is consistent with the consolidated accounts for the year
under audit, and it is prepared in accordance with article 119 of the Companies’ Code.
In the context of our audit of the consolidated accounts, we are also responsible for considering,in particular based on the knowledge acquired resulting from the audit, whether the directors’
report is materially misstated or contains information which is inadequately disclosed orotherwise misleading. In light of the procedures we have performed, there are no material
misstatements we have to report to you.
The non-financial information required by virtue of article 119, §2 of the Companies’ Code isincluded in the directors’ report on the consolidated accounts. The Company has prepared thenon-financial information, based on the reference framework Global Reporting Initiative (GRI)
Standards. However, in accordance with article 148, §1, 5° of the Companies’ Code, we do
not express an opinion, in this report, as to whether the non-financial information has been
prepared in accordance with the Global Reporting Initiative (GRI) Standards as disclosed in the
consolidated accounts.
STATEMENT RELATED TO INDEPENDENCE– Our registered audit firm and our network did not provide services which are incompatible
with the statutory audit of the consolidated accounts, and our registered audit firm remained
independent of the Group in the course of our mandate.
– The fees for additional services which are compatible with the statutory audit of theconsolidated accounts referred to in article 134 of the Companies’ Code are correctlydisclosed and itemized in the notes to the consolidated accounts.

RESPONSIBILITIES OF THE BOARD OF DIRECTORSThe board of directors is responsible for the preparation and the content of the directors’ reporton the consolidated accounts.

OTHER STATEMENTS
This report is consistent with the additional report to the audit committee referred to in article
526 bis, §6, 4° of the Companies Code referring to article 11 of Regulation (EU) N° 537/2014.

STATUTORY AUDITOR’S RESPONSIBILITIESIn the context of our mandate and in accordance with the Belgian standard (revised in 2018)
which is complementary to the International Standards on Auditing (ISAs) as applicable inBelgium, our responsibility is to verify, in all material respects, the directors’ report on the
consolidated accounts and to report on these matters.

SINT-STEVENS-WOLUWE,
20 March 2019
The statutory auditor
PwC Bedrijfsrevisoren cvba / Reviseurs d’Entreprises scrl
represented by
KURT CAPPOEN
Bedrijfsrevisor/Réviseur d’Entreprises

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189

INDEPENDENT LIMITED ASSURANCE REPORT ON THE ENVIRONMENTAL, SOCIAL AND VALUE CHAIN STATEMENTS OF
THE INTEGRATED ANNUAL REPORT 2018 OF UMICORE AND ITS SUBSIDIARIESThis report has been prepared in accordance with the terms of our engagement contract dated
29 June 2017, whereby we have been engaged to issue an independent limited assurance reportin connection with the Environmental, Social and Value Chain Statements in the accompanying
Integrated Annual Report 2018 of Umicore and its subsidiaries (the “Company”) as of and for theyear ended 31 December 2018 (the “Report”).

RESPONSIBILITY OF BOARD OF DIRECTORSThe Board of Directors of the Company is responsible for the preparation of the informationand data in the Environmental, Social and Value Chain Statements set forth in the Integrated
Annual Report of Umicore and its subsidiaries and the declaration that its reporting meetsthe requirements of the Global Reporting Initiative (GRI) Standards – Core as set out on pages
159 to 184 (“the Subject Matter Information”), in accordance with the criteria stated in theEnvironmental, Social and Value Chain Statements and with the recommendations of GRI(“the Criteria”).
This responsibility includes the selection and application of appropriate methods for the
preparation of the Subject Matter Information, for ensuring the reliability of the underlying
information and for the use of assumptions and estimates for individual sustainability
disclosures, which are reasonable in the circumstances. Furthermore, the responsibility of
the Board of Directors includes the design, implementation and maintenance of systems andprocesses relevant for the preparation of the Subject Matter Information that is free frommaterial misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an independent conclusion about the Subject Matter Information
based on the procedures we have performed and the evidence we have obtained. We conducted
our work in accordance with the International Standard on Assurance Engagements (ISAE)
3000 (Revised) “Assurance Engagements other than Audits or Reviews of Historical Financial
Information”. This standard requires that we comply with ethical requirements and that we planand perform the engagement to obtain limited assurance as to whether nothing has come toour attention that causes us to believe that the Subject Matter Information is not fairly stated,in all material respects, based on the Criteria.
The objective of a limited-assurance engagement is to perform the procedures we consider
necessary to provide us with sufficient appropriate evidence to support the expression of aconclusion in the negative form on the Subject Matter Information.
The procedures performed in a limited assurance engagement vary in nature and timing from,and are less in extent than for, a reasonable assurance engagement. Consequently, the level ofassurance obtained in a limited assurance engagement is substantially lower than the assurance
that would have been obtained had a reasonable assurance engagement been performed.

Umicore Integrated Annual Report 2018

ASSURANCE REPORTS
The selection of such procedures depends on our professional judgment, including theassessment of the risks of management’s assertion being materially misstated. The scope of
our work comprised the following procedures:– assessing and testing the design and functioning of the systems and processes used fordata-gathering, collation, consolidation and validation, including the methods used for
calculating and estimating the Subject Matter Information as of and for the year ended
31 December 2018 presented on pages 159 to 184 of the Report;– conducting interviews with responsible officers including site visits;– inspecting internal and external documents.
We have evaluated the Subject Matter Information against the Criteria. The accuracy andcompleteness of the Subject Matter Information are subject to inherent limitations given theirnature and the methods for determining, calculating or estimating such information. Our Limited
Assurance Report should therefore be read in connection with the Criteria.

190

CONCLUSION

Based on the procedures performed, as described in this Independent Limited Assurance Report,
and the evidence obtained, nothing has come to our attention that causes us to believe thatthe information and data presented in the Environmental, Social and Value Chain Statements
as of and for the year ended 31 December 2018 on pages 159 to 184 of the Integrated Annual
Report of Umicore and its subsidiaries, and Umicore’s assertion that the Report meets therequirements of GRI Standards – Core, is not fairly stated, in all material respects, in accordancewith the Criteria.

RESTRICTION ON USE AND DISTRIBUTION OF OUR REPORTOur assurance report has been made in accordance with the terms of our engagement contract.
Our report is intended solely for the use of the members of board of directors of Umicore, inconnection with their Environmental, Social and Value Chain Statements as of and for the year
ended 31 December 2018 and should not be used for any other purpose. We do not accept, orassume responsibility to anyone else for this report or for the conclusions that we have reached.

OUR INDEPENDENCE AND QUALITY CONTROL

We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the International Ethics Standards Board for
Accountants (IESBA), which is founded on fundamental principles of integrity, objectivity,
professional competence and due care, confidentiality and professional behavior. Our audit
firm applies International Standard on Quality Control (ISQC) n° 1 and accordingly maintains
a comprehensive system of quality control including documented policies and procedures
regarding compliance with ethical requirements, professional standards and applicable legal
and regulatory requirements.

SINT-STEVENS-WOLUWE,
20 March 2019
PwC Bedrijfsrevisoren bcvba

Represented by
MARC DAELMAN*
Registered auditor*Marc Daelman BVBA
Board Member, represented by its fixed representative, Marc Daelman

VISIT ANNUALREPORT.UMICORE.COM

Umicore Integrated Annual Report 2018

GRI CONTENT INDEXGRISTANDARDSREFERENCEDISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2018

GRI 102: GENERAL DISCLOSURESGRI
STANDARDSREFERENCEDISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2018

102-21

Consulting stakeholders on
economic, environmental,
and social and societal topics

63 (Stakeholder engagement); 68 (Materiality)

102-22Composition of the highest
governance body andits committees

52 (Board of Directors); 77 (Corporate governancestatements: G2)

102-23Chair of the highest
governance body

52 (Board of Directors); 77 (Corporate governancestatements: G2)

102-24

Nominating and selecting thehighest governance body78 (Corporate governance statements: G4)

102-25

Conflicts of interest

81-82 (Corporate governance statements: G7, G9-G11);
Corporate Governance Charter; Code of Conduct

102-26

Role of highest governance bodyin setting purpose, values, andstrategy

77 (Corporate governance statements: G2)

ORGANISATIONAL PROFILE
102-1

Name of the organisation

Front cover

102-2

Activities, brands, products,
and services

2-3 (About Us); 12 (Business model)

102-3

Location of headquarters

Inside back cover; back cover

102-4

Location of operations

6 (Umicore at a glance); 170 (Social statements: S2)

102-5

Ownership and legal form

Back cover

191

102-6

Markets served

6 (Umicore at a glance); 14 (Economic review)

102-7

Scale of the organisation

6 (Umicore at a glance); 170 (Social statements: S2); 97(Financial statements: consolidated balance sheet)

102-8

Information on employees
and other workers

170 (Social statements: S2)

102-9

Supply chain

24 (Value chain and society review),
180-181 (Value chain statements: V2-V4)

102-27

Collective knowledge of highest
governance body78 (Corporate governance statements: G4)

102-10Significant changes tothe organisation and its
supply chain

14 (Economic review),
182 (Value chain statements: V5)

102-28

Evaluating the highest
governance body’s performance78 (Corporate governance statements: G4)

102-11

Precautionary principle
or approach

43 (Risk management and internal control);
44-50 (Key risks and opportunities)

102-29Identifying and managing economic,43 (Risk management and internal control); 42 (Key risks
environmental, and social andand opportunities); 63 (Stakeholder engagement); 68
societal impacts(Materiality); 73 (Management approach)102-12External initiatives

COSO; OECD Guidelines; ILO Human Rights; SRI, FTSE;
PACI; GRI; IIRC

102-30Effectiveness of risk
management processes

43 (Risk management and internal control)

102-13

Membership of associations

66 (Stakeholder engagement:Public sector & authorities)

102-3144-50 (Key risk and opportunities); 73 (Management
approach); 78 (Corporate governance statements: G4)

102-14

A statement from the mostsenior decision-maker ofthe organisation

7 (CEO and Chairman’s review)

Review of economic,
environmental, and Socialand societal topics

102-32Highest governance body’srole in sustainability reporting

72-75 (Management approach)102-15Key impacts, risks,and opportunities

44-50 (Key risks and opportunities)

102-33

Communicating critical concerns

63 (Stakeholder engagement); 77-82 (Corporate
governance statements: G1, G3, G9, G10, G11); Corporate
Governance Charter; Code of Conduct102-34Nature and total numberof critical concerns

not reported

102-35

Remuneration policies

83 (Remuneration report); Corporate Governance Charter;
Code of Conduct102-36

Process for determining
remuneration

83 (Remuneration report); Corporate Governance Charter;
Code of Conduct102-37

Stakeholders’ involvement
in remuneration

83 (Remuneration report); Corporate Governance Charter;
Code of Conduct102-38Annual total compensation ratio

not reported

102-39Percentage increase in annual
total compensation ratio

not reported

STRATEGYETHICS AND INTEGRITY
102-16102-17

Values, principles, standards,
and norms of behaviour

The Umicore Way; Code of Conduct; 43 (Risk management
and internal control); 63 (Stakeholder engagement);
77 (Corporate governance statements: G1); 82 (Corporate
governance statements:G9); 175 (Social statements: S5)

Mechanisms for advice andconcerns about ethics

Code of Conduct; 175 (Social statements: S5); 82(Corporate governance statements:G9)

Governance structure

77-80 (Corporate governance statements: G2, G4, G5);
72-75 (Management approach)

GOVERNANCE
102-18102-19Delegating authority

72-75 (Management approach)102-20Executive-level responsibility
for economic, environmental,
and social and societal topics

56 (Executive Committee); 73 (Management approach)Umicore Integrated Annual Report 2018

GRI CONTENT INDEXGRISTANDARDSREFERENCEDISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2018

GRI
STANDARDSREFERENCE
201-1

Direct economic value generated
and distributed

62 (Key figures); 6 (Umicore at a glance); 67 (Stakeholder
engagement); 119-120,154 (Economic and financial
statements: F8, F9, F39)

201-3

Defined benefit plan obligations
and other retirement plans

136 (Economic and financial statements: F27)

201-4

Financial assistance received
from government

63 (Stakeholder engagement)

STAKEHOLDER ENGAGEMENT
List of stakeholder groups

63-66 (Stakeholder engagement)

102-41

Collective bargaining agreements

174 (Social statements: S4)

102-42

Identifying and selecting
stakeholders

63 (Stakeholder engagement)

102-43

Approach to stakeholder
engagement

63 (Stakeholder engagement)

102-44

Key topics and concerns raised

63 (Stakeholder engagement); 68 (Materiality)

REPORTING PRACTICE
102-45

Entities included in the
consolidated financial statements

6 (Umicore at a glance); 14 (Economic Performance); 77(Corporate governance statements: G2); 113,
127 (Economic and financial statements: F5, F17)102-46

Defining report content andtopic boundaries

68 (Materiality); 72 (Management approach)102-47

List of material topics

68 (Materiality); 72 (Management approach)102-48

Restatements of information

72-75 (Management approach); 180 (Environmental
statements: E1); 170, 175-177 (Social statements: S1, S6, S7);
181 (Value chain statements: V4); 195 (About this report)

102-49Changes in reporting

170, 175-177 (Social statements: S1, S6, S7); 160-163(Environmental statements: E1, E2, E3); 181-182 (Value chain
statements: V1, V4, V6); 195 (About this report)

102-50

Reporting period

Front cover; Inside front cover; 195 (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; About the report: natalia.agueros@
eu.umicore.com; General: annualreport@eu.umicore.com;
Economic: evelien.goovaerts@eu.umicore.com;
Human Resources: eline.vanhaute@eu.umicore.com;
Environmental, Health & Safety: bert.swennen@
eu.umicore.com; Value Chain: wouter.ghyoot@eu.umicore.com

Claims of reporting in accordancewith the GRI Standards

DISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2018

GRI 201: ECONOMIC PERFORMANCE

102-40102-54

192

Inside front cover; 195 (About this report)

102-55

GRI content index

This section; 195 (About this report)

102-56External assurance

185 (Assurance report)

GRI 103: MANAGEMENT APPROACH
103-1

Explanation of the material topic
and its boundary

72-75 (Management approach)103-2

The management approach andits components

72-75 (Management approach)

103-3

Evaluation of the management
approach72-75 (Management approach)GRI 202: MARKET PRESENCE
202-2

Proportion of senior management
hired from the local community

Similar scope covered in 170 (Social statements: S2)

GRI 203: INDIRECT ECONOMIC IMPACTS
203-1

Infrastructure investments
and services supported

62 (Key figures); 63 (Stakeholder engagement);
166 (Environmental statements: E7); 184 (Value chain
statements: V6)

GRI 205: ANTI-CORRUPTION
205-1

Operations assessed for risks
related to corruption

42 (Risk management and internal control)

205-2

Communication and training
about anti-corruption policies
and procedures

All employees receive informal training on the Code of
Conduct when joining the company

GRI 206: ANTI-COMPETITIVE BEHAVIOR
206-1

Legal actions for anti-competitive
behaviour, anti-trust, andmonopoly practices

152 (Financial statements: F36)

GRI 301: MATERIALS
301-2

Recycled input materials used

6 (Umicore at a glance); 182 (Value chain statements: V5)

Energy consumption within
the organisation

164 (Environmental statements: E4)

302-3

Energy intensity

164 (Environmental statements: E4)

302-4

Reduction of energy consumption

164 (Environmental statements: E4)

GRI 302: ENERGY
302-1

GRI 305: EMISSIONS
305-1

Direct (Scope 1) GHG emissions

163 (Environmental statements: E3)

305-2

Energy indirect (Scope 2)
GHG emissions

163 (Environmental statements: E3)

305-7

Nitrogen oxides (NOx),sulphur oxides (SOx), and othersignificant air emissions

162 (Environmental statements: E2)

Umicore Integrated Annual Report 2018

GRI CONTENT INDEXGRISTANDARDSREFERENCEDISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2018

GRI 308: SUPPLIER ENVIRONMENTAL ASSESSMENT
308-2

Negative environmental impacts
in the supply chain and actions
taken
New employee hires
and employee turnoverDISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2018

GRI 416: CUSTOMER HEALTH AND SAFETY
24 (Value chain and society review), 180-181 (Value chain
statements: V2-V4)

416-1

6 (Umicore at a glance); 62 (Key figures); 34 (Great place
to work review); 170-173 (Social statements: S2; S3)

417-1

GRI 401: EMPLOYMENT
401-1

GRI
STANDARDSREFERENCE

193

Assessment of the health andsafety impacts of product andservice categories

182 (Value chain statements: V5)

GRI 417: MARKETING AND LABELLING
Requirements for product andservice information and labelling

182 (Value chain statements: V5)

OTHER MATERIAL TOPICS REPORTED

GRI 403: OCCUPATIONAL HEALTH AND SAFETY
403-1

Workers representation in formal
joint management–worker healthand safety committees

174 (Social statements: S4)

403-2

Types of injury and rates of
injury, occupational diseases,
lost days, and absenteeism, andnumber of work-related fatalities

62 (Key figures); 34 (Great place to work review);
175-177 (Social statements: S6, S7)

403-4

Health and safety topics covered in 174 (Social statements: S4); Global framework Agreement
formal agreements with trade unions on Sustainable Development

GRI 404: TRAINING AND EDUCATION
404-1

Average hours of training
per year per employee

62 (Key figures); 34 (Great place to work review);
173 (Social statements: S3)

404-2

Programmes for upgrading
employee skills and transition
assistance programmes

34 (Great place to work review);
173 (Social statements: S3)

404-3

Percentage of employees
receiving regular performanceand career development reviews

173 (Social statements: S3)

Criticality of raw materials

To complement the reporting on GRI 308: Supplier
Environmental Assessment and GRI 414: Supplier Social
Assessment. See 24 (Value chain and society review),
180-181 (Value chain statements: V2-V4)

Sustainable products
and services

To complement reporting on GRI 301: Materials.
See 24 (Value chain and society);180-181 (Value chain statements: V5)

Process safety

To complement reporting on GRI 403: Occupational
Health and Safety. See 178 (Social statements: S8)

Metal emissions to air and water

To complement reporting on GRI 305: Emissions.
See 162 (Environmental statements: E2)

GRI 405: DIVERSITY AND EQUAL OPPORTUNITY
405-1

Diversity of governance bodies
and employees

34 (Great place to work review);
78 (Corporate governance statements: G4);
170 (Social statements: S2)

GRI 408: CHILD LABOR
408-1

Operations and suppliers at
significant risk for incidents
of child labour

This element is taken into account as part of theobjective on “Sustainable supply”; see 24 (Value chain
and society review); 180-181 (Value chain statements
V2-V4 for approach toward sustainable supply)

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 24 (Value chain and society
review); 180-181 (Value chain statements V2-V4)

GRI 414: SUPPLIER SOCIAL ASSESSMENT
414-2

Negative Social and societal
impacts in the supply chain
and actions taken

24 (Value chain and society review),
180 (Value chain statements: V2-V4)

Umicore Integrated Annual Report 2018

REFERENCES & KEY LINKS

194

UMICORE www.umicore.com

OTHER REFERENCES & LINKS

ANNUAL REPORT annualreport.umicore.com

CORPORATE GOVERNANCE COMMITTEE www.corporategovernancecommittee.be/en

ANNUAL REPORT GLOSSARY annualreport.umicore.com/glossary

ECOVADIS www.ecovadis.com

THE UMICORE WAY www.umicore.com/en/about/values/#materialsforabetterlife

FINANCIAL SERVICES AND MARKETS AUTHORITY www.fsma.be/en

CODE OF CONDUCT www.umicore.com/en/governance/code-of-conduct

OECD 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

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 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

RESPONSIBLE GLOBAL SUPPLY CHAIN OF MINERALSFROM 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

Umicore Integrated Annual Report 2018

ABOUT THIS REPORTThe Umicore Annual Report offers a comprehensive and integrated view of our economic,
financial, environmental, value chain and social performance for 2018.
This report consists of two sections: an annual review and a statements section, also available
as two distinct booklets. The annual review (Book 1, pp. 1-62) provides a Umicore overview andfocuses on the key performance aspects of 2018 as they relate to our Horizon 2020 strategy.
The statements (Book 2, pp. 63-195) include a thorough description of the materiality 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 2018 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 reportfurther refines the approach based on elements from the “International Integrated Reporting
Framework” developed by the International Integrated Reporting Council, which requires amore complete disclosure and discussion of the material factors influencing our business andthe risks and opportunities linked to our Horizon 2020 strategy.
REPORTING SCOPE
This report covers our operations for the 2018 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 are reported with a comparison base going back 5 years.
The economic scope of this report covers all fully consolidated operations and the financial
contributions of all associate and joint venture companies.
The environmental and social scope is limited to all fully consolidated – any divergence fromthis scope is explained in the relevant chapter or note in the report.

195

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 full set of IFRS consolidated financial
statements and the auditor’s report thereon, can be found on pp. 95-158 and p. 185.
The social, value chain and environmental information included in this report has been preparedon the basis of the same recognition and measurement principles that have been used toprepare the social, environmental and value chain statements, pp. 159-184. PwC’s report on thesocial, value chain and environmental statements can be found on p. 189.
This report has been prepared in accordance with the GRI Standards: Core option. A full
GRI index can be found on pp. 191-193. The Global Reporting Initiative (GRI) is a networkbased organisation that pioneered the world’s most widely used sustainability reporting
framework. The GRI Standards, launched in October 2016, are the first global standards forsustainability 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 engagementand dialogue. The key social elements of the report are presented to the international tradeunions during the joint monitoring committee in March, while the entire document is presented
to shareholders at the Annual General Meeting in 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 boththe print and online 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.

DATA
The economic and financial data are collected through our financial management andconsolidation process. The environmental and social data are collected through environmental
and social data management systems and integrated into a central reporting tool, along withthe economic and financial data.

Umicore Integrated Annual Report 2018

FINANCIAL CALENDAR1

ADDITIONAL INFORMATION

25 APRIL 2019

STOCK
Euronext Brussels

General meeting of shareholders(financial year 2018)29 APRIL 2019

Ex-dividend trading date

30 APRIL 2019
Record date

2 MAY 2019

Payment date for dividend

31 JULY 2019

Half year results 2019

7 FEBRUARY 2020
Full year results 2019

ABOUT THIS REPORT
Natalia Agüeros-Macario+32 2 227 71 02
natalia.agueros@eu.umicore.com
ECONOMIC INFORMATION
Evelien Goovaerts+32 2 227 78 38
evelien.goovaerts@eu.umicore.com
HUMAN RESOURCES INFORMATION
Céline Van Haute+32 2 227 72 67
celine.vanhaute@eu.umicore.com
ENVIRONMENT, HEALTH & SAFETYINFORMATION
Bert Swennen+32 2 227 74 45
bert.swennen@eu.umicore.com
VALUE CHAIN INFORMATION
Wouter Ghyoot+32 2 227 75 41
wouter.ghyoot@eu.umicore.com

LANGUAGESThis report is also available
in French and Dutch.
INTERNET
Download this report at:
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+32 2 227 72 21
christopher.smith@eu.umicore.com
DESIGN & EXECUTION
Radley Yeldar – ry.com
PHOTOGRAPHY
Jean-Michel Byl, Umicore

FEEDBACKLet us know what you think about this report.
Send an e-mail to annualreport@eu.umicore.com

1

Dates are subject to change. Please check the Umicore website for updates to the financial calendar.

umicore.com

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