Staying the course
Integrated Annual Report 2019

CONTENTS

2019 Annual review
Introduction

1 Materiality

21 Management approach

78

About us2 Giving back to society

25 Governance statements, notes G1-G15

82

Horizon 2020

4 Driving economic performance

26 Economic statements

95

Umicore at a glance

6 Value chain and society

36 Financial statements, notes F1-F41

102

CEO and chairman’s review

7 Eco-efficiency

42 Environmental statements, notes E1-E8 167

Global trends

10 Research, development & innovation

46 Social statements, notes S1-S8

177

Business model

12 Great place to work

49 Value chain statements, notes V1-V5

187

Stakeholder engagement

14 Risks & opportunities

56 About this report193

Advocacy for Impact

20 Leadership

67 Key figures

204

About this report
Our 2019 Annual Report consists of the following documents, which can be downloaded in pdf format:

2019 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, andoutlines our strategy and the progress we have madetowards achieving our goals.

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

ANNUALREPORT.UMICORE.COM

Front cover image: Thia Elena Zhou and Melanie Gross working at our site Sample Lab Hanau, Germany

Umicore Integrated Annual Report 2019

1

Umicore’s response to COVID-19
THE FOLLOWING TEXT WAS PUBLISHED BY UMICORE ON MARCH 26 2020
KEEPING OUR PEOPLE HEALTHY, ENSURING SAFE
WORKING CONDITIONS AND PRESERVING CASH
In recent weeks the novel coronavirus (COVID-19)
has become a pandemic, severely affecting people,
society and industries globally. In response to
the COVID-19 outbreak, Umicore has rolled out its
business continuity plans and has taken precautionary
measures to keep its people healthy, to ensure thatthe workplace is safe and to preserve cash.
Umicore’s priority is the health and safety of its
employees. Since Lunar New Year, Umicore has
implemented strict hygiene and other precautionary
measures such as home working and social distancing
in all its facilities in Asia and later in the rest of the world,in line with recommendations and guidelines issued
by governments and the World Health Organization,
to protect its employees’ health and wellbeing andhelp contain the further spread of the virus.
COVID-19 IMPACT ON UMICORE’S OPERATIONS
While Umicore’s activities were off to a strong start thisyear, the virus outbreak caused a serious slowdown inUmicore’s automotive catalyst and battery materials
activities in Asia at the time of the Lunar New Yearholidays and in the following weeks. Demand andproduction levels for both automotive catalysts andbattery materials in Asia are now gradually picking
up. However, as the contagion of the virus spread tothe rest of the world, the automotive industry has
been forced to shut down most of its assembly lines
outside Asia, in many cases for an undefined periodof time. Until automotive OEMs restart production
again, Umicore is temporarily shutting down mostof its catalyst production capacity outside Asia andis resorting to temporary unemployment whereapplicable. Umicore has adjusted the inflow of raw
materials accordingly and is reducing other costs.
The Hoboken plant, together with the majorityof Umicore’s other recycling facilities, iscontinuing operations.
In response to the changed business context, Umicore
is also delaying certain capital expenditures programs.
STRONG FUNDING STRUCTURE IN PLACE
Umicore has a strong balance sheet and ample liquidity
with € 1 billion of immediate cash availability, of
which approximately half is cash on balance sheet andthe other half corresponds to the unused portion of its
committed syndicated loans. In addition, Umicore has
well over € 0.5 billion of unused, uncommitted credit
lines with its core relationship banks.
Next to significant liquidity, Umicore has a well balanced
debt structure with no material maturities prior to2023 and has ample headroom compared to its credit
covenants. In recent years it secured € 1.1 billion of
medium- and long-term, fixed-rate private placement
debt with a phased maturity profile between 2023 and2031. Its two syndicated loan facilities from a total of
twelve banks expire in 2022 and 2025.
DECISION TO REDUCE THE DIVIDEND IN RESPECT
OF THE FULL YEAR 2019As a matter of prudence and in light of the extreme
unpredictability of the global situation, Umicore’s Boardof Directors has decided to propose a dividend of € 0.375
per share in respect of the full year 2019. This proposal

replaces the proposal initially made on 7 February 2020of € 0.75 per share and corresponds to the amount of theinterim dividend of € 0.375 per share which was alreadypaid out on 27 August 2019. This decision is also to be
seen as a way for Umicore’s management and Board of
Directors to share the efforts among its stakeholders.
Umicore will assess the appropriate amount to be
returned to shareholders in 2020 once it gains moreclarity around the full impact of COVID-19.
WITHDRAWAL OF FULL YEAR 2020 OUTLOOKPROVIDED IN FEBRUARY 2020
Results in the first two months of 2020 were wellahead of the prior year.
However, the magnitude and the duration of the
impact of COVID-19 are presently highly uncertain andthe situation is evolving rapidly with many automotive
customers shutting down their operations for an
undetermined period of time. Hence, it is impossible
at present to predict its full impact on the automotive
market and Umicore’s activities. Umicore therefore
withdraws the outlook given on 7 February 2020
which guided for growth in revenues and earnings
for the full year 2020 as it assumed at that time thatthe virus outbreak would not result in a protracted ormaterial effect on the economy in 2020.
Umicore is monitoring the situation closely and willcontinue to respond as required to help safeguard its
people and help contain the spread of the pandemic,
while adjusting its operations and preserving its
cashflows. Umicore will provide further updates at thetime of its AGM which will be held on 30 April 2020.

Umicore Integrated Annual Report 2019

ABOUT US

2

The global materials technology & 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 is ourpowerful differentiator and it will continue to be thebasis on which we carry out our business and build
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 andfor static or industrial applications.

FULL ELECTRIC VEHICLE

Umicore provides:
Battery cathode materials

FUEL CELLS

Umicore provides:
Electro-catalyst andbattery cathode materials

We develop custom materials and ensure thatprocesses take account of health and safety,
recyclability, cost efficiency, waste reduction andenergy efficiency, both in our own facilities and acrossthe 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 notjust about minimizing the impact of our industrial
operations: our commitment to ethical and responsible
sourcing distinguish us from our competitors 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 and powering thecars of the future.

Umicore operates one of the world’s most sophisticatedprecious metals recycling facilities 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.
The recovered materials are then transformed into
pure metals or new products.

Umicore Integrated Annual Report 2019

ABOUT US

3

OUR COMPLEMENTARY BUSINESS GROUPS ENABLE A MORE SUSTAINABLE WORLD COMBINING
CUTTING-EDGE TECHNOLOGIES AND RECYCLING TO GIVE NEW LIFE TO USED METALSCATALYSISREDUCING HARMFUL EMISSIONSAUTOMOTIVE CATALYSTS
We are one of the leading producers of emission
control catalysts for gasoline and diesel on-roadand non-road applications, power generationand industrial processes to meet environmental
standards around the world.
PRECIOUS METALS CHEMISTRY
We are experts in metals-based catalysis forlife-enhancing applications. Emission treatment
technologies, cancer treatments, the productionof fine chemicals and advanced electronics –all are made possible by our organometallic
technology know-how.

ENERGY & SURFACETECHNOLOGIESPOWERING THE FUTURE
COBALT & SPECIALTY MATERIALSWe are experts in sourcing, production anddistribution of cobalt and nickel products.
Our materials are at the heart of everyday
products such as rechargeable batteries, tools,
paints and tyres. Our recycling and refining
processes, including our proprietary lithium-ion
rechargeable battery recycling technology, givenew life to cobalt and other metals.
RECHARGEABLE BATTERY MATERIALSWe are a pioneer in battery materials and aleading cathode material supplier for rechargeable
lithium-ion batteries, giving added range andperformance to electric vehicles, and longer
battery life for portable electronics.
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
for fiber optics.

RECYCLING
GIVING NEW LIFE TO USED METALSPRECIOUS METALS REFINING
We operate the world’s most sophisticatedprecious metals recycling facility and we areexperts in treating the most complex materials.
Our refining and recycling technology gives
used metals a new lease of life. Our processes
help bring value to the circular economy.
PRECIOUS METALS MANAGEMENT
We supply and handle all precious metals,
ensuring physical delivery by using both theoutput of our precious metals refineries andour network of industrial partners and banks.
We offer our customers tailor-made solutions fordelivering, 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
and responsible sourcing of these metals andclosed-loop recycling.

Umicore Integrated Annual Report 20194

Horizon 2020 progress
ECONOMIC PERFORMANCEOUR OBJECTIVES

WHY THEY AREIMPORTANTKEY PERFORMANCE
INDICATORSSTRENGTHENLEADERSHIPDOUBLE THE
EARNINGS

To 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.

GROUP REVENUESANNUAL GROWTHOBJECTIVE ACHIEVED
2019 REBIT+3%€ 509mVALUE CHAIN AND SOCIETYREBALANCEPORTFOLIO

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

OBJECTIVE ACHIEVED:2019 REBIT SPLITSUSTAINABLE
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.

33% CATALYSISFULLY ALIGNED WITH OECD
E NERGY & SURFACE DUE DILIGENCE GUIDANCE
33% TECHNOLOGIESFOR RESPONSIBLE SUPPLYCHAINS OF MINERALS
34% RECYCLING

2019 REVENUES
43% CATALYSISFROM CONFLICT-AFFECTED
AND HIGH-RISK AREAS

OF TOTALREVENUES FROM
CLEAN MOBILITY
AND RECYCLING

MUCH OF THE REST IS FROMSOLUTIONS SUCH AS IMPROVINGCONNECTIVITY OR REDUCING
ENERGY CONSUMPTION

37% E NERGY & SURFACETECHNOLOGIES
20% RECYCLING

READ MORE ABOUT ECONOMICPERFORMANCE ON PAGE 26

75%

READ MORE ABOUT VALUE CHAIN
AND SOCIETY ON PAGE 36

Umicore Integrated Annual Report 2019

5

OUR OBJECTIVESECO-EFFICIENCYGREAT PLACE TO WORKEFFICIENTOPERATIONS

WHY THEY AREIMPORTANTKEY PERFORMANCE
INDICATORS

To make sustainability anirrefutable competitive
advantage for Umicore.

ENERGY CONSUMPTION-23%

vs 2015 benchmark,adjusted for intensity

READ MORE ABOUT
ECO-EFFICIENCY ON PAGE 42

SAFETY

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

NUMBER OF
ACCIDENTS

90

HEALTHTo monitor, manage andprotect from exposure risks.

PEOPLEENGAGEMENTTo ensure Umicore’s status
as an employer of choice in all
the regions where we operate.
To manage talent as a driverfor reaching our desired
business growth.

EXCESS READINGS*TOTAL EMPLOYED

1.8%

11,152* based on internal target values

RETENTION RATE

94%

READ MORE ABOUT GREAT PLACETO WORK ON PAGE 49

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 localized
approach to stakeholder
engagement and manages
stakeholder relationships in linewith our decentralized approachto unit management.

READ MORE ABOUT THIS ON PAGES
14 AND 21

Umicore Integrated Annual Report 2019

6

Umicore at a glance
WE ARE A GLOBAL GROUP FOCUSED ON MATERIALS TECHNOLOGY AND RECYCLING. OUR WORK HELPSIMPROVE AIR QUALITY, MAKES ELECTRIFIED TRANSPORT POSSIBLE AND TACKLES RESOURCE SCARCITYREVENUES

R&D EXPENDITURE€ 3,361m

6%

RECURRING EBIT

RECURRING EPS€ 509mREVENUES BY GEOGRAPHY

of revenue

COLLEAGUES

11,152PRODUCTION SITES

50

15€ 1.30per share

RESOURCE EFFICIENCY

4% 3%
14%
40%

40%

6,159
19
6

826
11
2

3,306
14
6

60%
39%

Europe | 40%
Asia-Pacific | 39%
North America | 14%
South America | 4%
Africa | 3%

R&D | TECHNICAL CENTRES

Primary materials | 40%
Secondary & end-of-Lifematerials | 60%

617
5
1

244
1

Umicore Integrated Annual Report 2019

7

CEO & Chairman’s review
MARC GRYNBERG AND THOMAS LEYSEN LOOK BACK ON 2019 AND EVALUATE THE OUTLOOK FOR UMICOREMARC GRYNBERG CEO& THOMAS LEYSEN CHAIRMAN
Umicore posted a strong performancein 2019 in a challenging market
environment, particularly in theautomotive sector.
Revenues for the full year grew by 3% to € 3.4 billion
and recurring EBITDA increased 5% to € 753 million,
while recurring EBIT was € 509 million, close to therecord levels of 2018. Return on Capital Employed was
down from 15.4% in 2018 to 12.6%, impacted by theweight of our growth investments.
The demand patterns for cathode materials
deteriorated in the course of 2019, particularly in the
Chinese electric vehicles market following an abrupt
cut in government subsidies. This deterioration camein a context of an overall weak automotive market
which saw global car production decline by close to 7%
year on year. Against this challenging market backdrop
we nonetheless delivered a strong performance,reaching the original financial target of our Horizon
2020 strategic plan, while making significant strides
in the execution of our growth strategy in all threemajor activities.
Marc Grynberg and Thomas Leysen at Umicore’s Brussels headquarters

In Catalysis we grew revenues and recurring EBIT andsignificantly outperformed the car market as a resultof market share gains in gasoline catalyst applications.
This trend was most pronounced in China, the world’s
largest car market, where we became the leading
light-duty catalyst provider. We also recorded strong
growth in the demand for fuel cell catalysts and forpharmaceutical and fine chemicals applications.
The performance in Energy & Surface Technologies
was well below the record levels of 2018 due to atemporary market slowdown as well as the impact
of depressed cobalt prices and competition fromunethically sourced cobalt from artisanal mining.
In addition, the performance reflected higher
depreciation charges and upfront costs related toour greenfield investments. We recorded a verystrong performance in Recycling. While processedvolumes in Hoboken were lower due to the extended
scheduled maintenance shutdown in the first half andthe fire incident in July, we were able to offset mostof the volume shortfall by optimizing the feed mix.
The business group also benefitted from favorable
supply terms and higher precious metals prices.
Investments in our strategic growth projects
continued in 2019 with capital expenditure increasing
to € 553 million. The two greenfield projects in Chinaand Poland for cathode material production took up

Umicore Integrated Annual Report 2019

CEO & CHAIRMAN’S REVIEW
the majority of the 60% of investments carried out
in Energy & Surface Technologies. Expenditure also
included the investments made during the extended
maintenance shutdown in Hoboken, where the multiyear expansion program has now been completed,and the expansion investment in Korea for fuelcell catalysts.
Operating cash flows reached € 549 million comparedwith € 92 million in 2018. Working capital increasedby € 78 million in the second half, with PGM pricefluctuations the dominant driver. Another key useof cash in 2019 was the acquisition of the Kokkola
operations for € 188 million. Overall, net debt
increased by € 582 million over the year to a level of€ 1.4 billion at year-end, corresponding to 1.9 times
recurring EBITDA. This includes the new € 390 million
long-term US private debt placement drawn in
September. We continue to maintain sufficient funding
headroom to execute our growth strategy and to
remunerate shareholders.
Our ambition remains to turn sustainability into agreater competitive edge and we continue to pursue
goals in areas such as safety, great place to work,
eco-efficiency, sustainable sourcing and supply chain,although with varied progress in 2019.
Despite our determination to turn around the safety
performance in recent years, our results in 2019 wereagain disappointing. We have still not made sufficient
progress in our pursuit of accident-free workplaces
and have even regressed in certain business units.
The group recorded 90 lost time accidents in 2019
compared to 61 in 2018. The frequency rate increased
from 3.36 to 4.6 over the same period and the severity
rate from 0.1 to 0.2. There is a clear need to change
behavior and mindset in order to install a true safety
culture across the company and this will guide us in
our relentless efforts to turn the tide, with specific andtargeted measures for those business units and sites
where safety performance remains unsatisfactory.
Our effort in 2019 to make Umicore a great place towork focused on recruiting for our growing businessand preparing the integration of colleagues fromnewly acquired businesses. Total headcount increased
by 7% from 10 420 at the end of 2018 to 11 152 at
the end of 2019, primarily reflecting increases in
Rechargeable Battery Materials in China, Korea andBelgium, as well as additional new colleagues from theactivities in Kokkola, Finland, acquired in December.
Diversity was a mixed story in 2019, with an increasein the proportion of women in senior management,
but a small decrease overall. With 11% of women insenior management, Umicore remains committed toreach the voluntary target of 15% as early as possible.
Umicore has a promising pool of more diversified
and inclusive talent which is expected to reach thesenior management echelons over the coming years.
In October 2019 we renewed our agreement with
IndustriALL Global Union for a four-year period.
We have also introduced far-reaching policy changes
in terms of our operational environmental profile.
A new Responsible Business Travel Policy commits
Umicore to significantly reduce air travel. In summer
2019 we initiated the Umicore Climate Action program
to collect and implement innovative ideas from allcolleagues to reduce our carbon footprint in all areas.
Starting in Belgium in 2020, we are also changing thecompany car policy to exclusively allow the use ofelectrified vehicles in our fleet.
Our eco-efficiency is measured against our Horizon
2020 goal of performing equally well or better thanin 2015, with values adjusted for activity levels.
The impact of our metal emissions to water was
57% lower than 2015 levels but increased yearon-year by 15%, mainly due to temporary issues

8with management of the water treatment plant in
Hoboken. Metal emissions to air, expressed in impact
units, were down 41% year on year and 54% lower
than 2015 levels. Energy consumption remained at
the same level as in 2018, despite expansion andproduction ramp-up. Using values corrected for activity
levels, energy consumption was 23% down compared
to 2015.
We pursue our unwavering stance on the ethicalsupply of raw materials and our OECD-compliant
cobalt procurement framework, covered by third
party assurance, remains a prime example of oursustainable sourcing. Umicore remains the firstand so far only cathode material producer to offer
certified materials from a clean and ethical origin to its
customers. In 2019 we concluded a long-term supply
partnership for sustainable cobalt with Glencore and asimilar agreement with CMOC in January 2020.
The Global Battery Alliance, of which Umicore is afounding member, has now issued clear sustainability
principles for the rechargeable battery industry.
The alliance will develop a battery passport which
will trace the origins of materials and monitor
them throughout the entire lifecycle of batteries.
This passport, which would act as a quality seal
on a global digital platform, should help eradicate
unacceptable practices from a social or environmental
viewpoint and establish a level playing field. We willseek widespread support from automotive producers
for its implementation.
The gradual year-on-year increase in the percentage
of end-of-life materials in our supply chain
demonstrates the growing added value of oursustainability approach. Future sourcing for catalysts,
fuel cells and batteries alike, will only be possible
by closing the loop and recovering the scarce metals
used in these products when they reach end of life.

Umicore Integrated Annual Report 2019

CEO & CHAIRMAN’S REVIEWThe 3 megatrends that we identified in our Horizon
2020 strategy remain our drivers for long-term
structural growth.
The long-term prospects for electrified vehicles
are stronger than ever as the authorities in several
regions are pushing for an accelerated transition
to decarbonized mobility. In 2019 we continued
to position Umicore to benefit from this trend andcapture significant future growth. We signed multiyear agreements with leading EV battery producers LG
Chem and Samsung SDI for deliveries from our plants
in Korea, China and Europe. Umicore commissioned
its new Process competence center in Olen, Belgium.
Another milestone was the award of grants for someof our innovation programs under the umbrella ofImportant Projects of Common European Interest(IPCEI), which has created a framework for European
Union member states to provide financial support
to projects aiming to establish a sustainable andinnovative battery value chain for EVs in Europe.
The accelerated trend to cleaner mobility was also
confirmed in 2019 by the early introduction of China
6 emission norms in some cities. More stringent
norms in Europe and India will provide continued
value growth in automotive catalysts, especially given
our leading position in particulate filters for gasoline
engines and the emerging fuel cell business served by
our newly extended plant in Korea.

The increase in capacity at our Hoboken plant goessome way to answering resource scarcity concerns
and will continue to support our closed loop
business model.
The geo-political environment was a major driverin 2019 and many of the sources of the turbulencein 2019 – such as trade tensions, political change inEurope, and an evolving automobile industry – remainunresolved and limit visibility. We remain committed
to our strategic goals and we are convinced that the
major steps taken in 2019 have prepared us wellto capture future growth, while we will continue toremain agile in the face of evolving market needs.
Technology innovation remains key to our success,with R&D expenditure increasing by 8% in 2019 to€ 211 million, equivalent to 6.2% of our revenues.
This year’s report highlights innovation and fit-forfuture R&D.
This year, we have reorganized the annual report intoa single volume to give readers a clearer pathway
through our integrated reporting. We are also sharing
additional information on value chain and society,including on human rights and on our cobalt supply
chain, while improving our on-line presence.

9

We are proud of our performance and results in 2019and confident that our long term growth strategy
will continue to deliver value. As we write this, themagnitude and the duration of the impact of COVID-19
are highly uncertain and the situation is evolving
rapidly with many automotive customers shutting
down their operations for an undetermined periodof time. It is impossible at present to predict its full
impact on the automotive market and Umicore’s
activities. Umicore therefore withdraws the outlook
given on 7 February 2020 which guided for growth
in revenues and earnings for the full year 2020 as it
assumed at that time that the virus outbreak would
not result in a protracted or material effect on theeconomy in 2020. All of us at Umicore are working
hard to mitigate the negative impacts as much as
is feasible.
MARC GRYNBERG CEO& THOMAS LEYSEN CHAIRMAN

We would like to express our thanks to all the
stakeholders for their contribution to our performancein the face of fluctuating conditions in 2019.

Umicore Integrated Annual Report 2019

10

Global trends
CLEAN AIR

We reduce harmful industrial
and vehicle emissions toprovide cleaner air

We are a technology leader
in emission control catalysts
for light-duty and heavy-duty
vehicles and for all fuel types

Automotive emission legislations and public advocacy
for clean air continue to increase. In Europe andin Asia, legislators are developing clean mobility
policies to reduce SOx, NOx and CO2 emissions andstrengthening emission standards to push industry todesign innovative emission control systems, including
catalysts and catalytic filters.
VEHICLE ELECTRIFICATION

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

We are an innovative leader in cathodematerials for lithium-ion batteries inelectrified transportation, portableelectronics and energy storage

The transport sector is the fastest growing source of
global greenhouse gases, with the largest share fromroad transport. Electrified transport is essential tomeet ambitions of reduced emissions and clean air by
combining energy efficient systems with renewableenergy sources. Incentives favoring electric vehicles
are increasing globally.
RESOURCE SCARCITY

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

We are a quality leader inrecycling complex waste streams
containing precious metals andother valuable materials

Developing technologies, such as increasingly powerfulrechargeable batteries to reduce the environmental
impacts of society, increases the demand for specialty
and precious metals. Mining metals from primarysources has significant environmental impacts,
including a high carbon footprint. Easy-to-mine deposits
are increasingly scarce and ore bodies poorer.

Umicore Integrated Annual Report 2019

GLOBAL TRENDS

11

Taking on the big challenges
OUR BUSINESS MODEL AND HORIZON 2020 STRATEGY ARE
FOCUSED ON ADDRESSING 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 and futureenvironmental standards. Our products have prevented
hundreds of million tonnes of harmful pollutants frombeing emitted into the air.

Umicore fosters sustainable growth and champions
its circular business model. Our Hoboken facility is
the world’s largest and most complex precious metals
recycling operation, processing over 200 types ofraw material – from mining and industrial residues
to “End-of-life” materials, such as electronic scrap
and spent rechargeable batteries – and recoveringover 20 different metals. As part of our closed-loopbusiness model, most of our business units recycle
industrial residues from customers. Umicore is growing
its capacity to cater to rising demand.

We strive to deliver environmentally friendly
technologies that ensure resource efficiency andsustainability in industry’s supply chain.

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 referencein the industry. To meet growing market demand,
we announced significant investments from 2017
to 2019 to further increase our production of NMC
cathode materials.
We provide solutions for a cleaner and more
resilient future.

Umicore is determined to be a preferred employer
wherever we operate and is 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 94%
retention rate.
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 2019

BUSINESS MODEL

12

Turning sustainability into a greater 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 waste metals
into a resource. Our ethical sourcing
and closed-loop approach distinguishus from our competitors.

application
know-howmetalsChemistry
Material science
Metallurgy

recyclingmaterial
solutions

MATERIAL SOLUTIONS
We transform metals into functional materials thatare integrated into products by our customers, usuallycompanies making products for consumer or industrialuse. Our catalysis materials provide clean air andhealth solutions, while our battery materials give
added range and performance to electric vehicles
and increased battery life to portable electronics.
Our materials are also inside computer motherboards
and in the fiber optics and satellites that keep
you connected.
APPLICATION KNOW-HOW
We take metal and apply our expertise in metallurgy,
chemistry, engineering and materials science skills,
we add our product, process and market know-how
and offer solutions that enable our customers todevelop better, more sophisticated and safer products.

RECYCLING
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 andresidues from customers and other industries, andend-of-life materials through our closed-loop services.
Our recycling operations can recover 28 metals.
Our precious metals recycling operation in Hoboken,
Belgium, is built to recycle and refine the mostcomplex materials and to recover a broad spectrumof metals. Using our Sustainable Procurement Charterand our framework for Cobalt, we purchase theremainder of our metal supplies from sustainably andethically vetted primary sources.

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 2019

BUSINESS MODELSKILLS AND EXPERTISE
Our employees contribute their expertise andcommitment to Umicore. 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 this means agreater focus on attracting talent for positions ranging
from production operators, engineers, researchscientists, to commercial and administrative 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,
specialized 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 minimize 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 our operations, there
is limited choice in terms of energy sourcing. For thisreason, our priority is to maximise energy and auxiliarymaterials 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 cash-flow generated by our own operations.
Indebtedness is kept at reasonable levels, as we aim
to retain an investment-grade credit status at all times.

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 thatmake day-to-day life more comfortable and contributeto a cleaner, more efficient world. We work closelywith our customers to develop customized materials orprocesses that consider health and safety, recyclability,
cost efficiency, waste reduction and energy efficiency
both in our own facilities and in the value chain.
We continuously search for innovative solutions for ourcustomers and work to meet the needs of a rapidlychanging and more demanding 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 long-term
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 Integrated Annual Report 2019

14

Stakeholder
engagement

PUBLIC SECTOR
AND AUTHORITIESCUSTOMERSSHAREHOLDERS
AND INVESTORSEMPLOYEESASSOCIATE AND JOINTVENTURE COMPANIESSOCIETY

SUPPLIERS

Customers
Employees
Society
Suppliers
Associate and joint venture companies
Shareholders and investors
Public sector and authorities
Advocacy for impact
Materiality
Giving back to society

16
16
17
17
18
18
19
20
21
25

Umicore Integrated Annual Report 2019
From left to right: Ignace de Ruijter (SVP Human Resources), Marc Grynberg (CEO),Guy Ryder (Director General of the International Labour organization,
Valter Sanches, Secretary General of IndustriALL Global UnionSTAKEHOLDER ENGAGEMENT

15

Engaging with our stakeholders
OUR RELATIONSHIP WITH OUR STAKEHOLDERS HAS A DIRECT IMPACT ON OUR SUCCESS€ 776mIN SALARIES & OTHER BENEFITS€ 102mIN SOCIAL SECURITY PAYMENTS€ 117mIN TAXES

Umicore is a publicly listed company.
As such, we interact with many parties
who have an interest in the way weconduct business. The relationshipthat we foster with these parties or
stakeholders has a direct impact on
our success.

The executive committee receives feedback fromstakeholders in several ways, ranging from direct
feedback from visits to customers, suppliers,
employees and investors, to information provided
by the business units, departments or workers’
representatives during their regular briefings to senior
management. Other forms of input include periodic
employee survey results.

Stakeholder engagement at Umicore is based on a
localised approach whereby all sites are required to
identify their respective stakeholders and establish
suitable ways of engaging with them. In many cases,
such as the dialogue with customers and suppliers,
the stakeholder relationships are primarily managed
by the business units themselves, in line with ourdecentralised approach to unit management.

The Horizon 2020 strategy represents a strong focus
on what is of material importance for Umicore in the
coming years. The development of the strategy has
involved a specific stakeholder approach, describedin the materiality assessment process in this chapter.

On a less formal level, members of our senior
management are often called upon or volunteer toparticipate in public forums to discuss our businessstrategy and sustainable development approach.
Such events provide the opportunity to interact withvarious groups including business leaders, academics
and civil society.
Umicore’s main stakeholder groups are highlighted
and have been categorised in broad terms, using
generic stakeholder categories that apply to mostindustrial organisations. Also shown are the nature of
the transactions that occur and a brief description of
the dialogue between Umicore and the stakeholders.

Umicore is an active participant in various industry
associations through which we engage with policy
makers to contribute to a better understandingof industry-related issues. These associations
are also important platforms for Umicore tocontribute to broader, industry-wide action onsustainable development.

Umicore Integrated Annual Report 2019

STAKEHOLDER ENGAGEMENTCUSTOMERSCUSTOMERS

16

EMPLOYEES

Revenues

Materials
and services

Remuneration

SkillsUMICOREEMPLOYEES

Training

Competences

Learning
opportunities

Productivity

UMICORE

Umicore materials can be found in a variety of applications that deliver solutions for cleaner
air and increased e-mobility. Umicore’s unique closed-loop services turn waste metals into a
resource. To be the preferred partner of our customers, we work closely with them to develop,
produce and recycle metal-related materials for material-based solutions tailored to their needs.

Umicore employs 11,152 people worldwide. Because our employees are key to our success, weinvest significant resources in ensuring we are an employer of choice in all the regions where
we operate. In 2019, Umicore paid a total of € 776 million in salaries and other benefits to theemployees of fully consolidated companies. Social security payments totaled € 102 million.

We provide advanced products that are built on our customers’ specific performance,
environmental and sustainable sourcing needs, including development of bespoke solutions
when needed. Beyond this customer-oriented approach, we provide close collaboration acrossall regions to deliver a sustainable and secure supply of high-quality products and services.
Umicore has an international customer base and the presence to support them in bothgrowing and established markets. Our high investments in R&D provide advanced and efficient
production and process technologies that enable our customers to meet the most stringent
sustainability demands and ambitions.

Umicore is committed to providing competitive salaries and working conditions to its employees
and to providing occupational and professional training opportunities. Employees are expectedto adhere to the principles and policies outlined in The Umicore Way and Code of Conduct.
Open dialogue is promoted within the company and includes an opinion survey every 3 years.

Ongoing interaction with customers is managed by the business units. In addition to thisclose contact, all business units have a customer feedback process to periodically gauge
customer satisfaction.

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. In 2019, Umicore renewed
the sustainable development agreement with the international union IndustriALL on the global
implementation of its policies on human rights, equal opportunities, labor conditions, ethicalconduct and environmental protection. The agreement allows trade unions to participate
constructively in the pursuit of these objectives. A joint monitoring committee composed ofboth parties oversees the implementation of the agreement.
Company-wide communication channels include intranet and company and business unit
newsletters. Umicore operates a Group-wide learning management platform called “MyCampus”.
In the last quarter of 2019 Umicore also deployed MS Teams which will be used as a social
collaboration tool to facilitate knowledge sharing through the company.

83

Jodie Finkbiner at the site in Tulsa (OK)COUNTRIES WITH
UMICORE CUSTOMERS€ 776mLiang Z at the Jiangmeng site

IN SALARIES& OTHER BENEFITS TO EMPLOYEES

Umicore Integrated Annual Report 2019

STAKEHOLDER ENGAGEMENT
SOCIETY

SUPPLIERS
Raw materials

WealthSOCIETY

17

Licence to operate

Innovative
products &processes

UMICORE

Umicore can only continue operating if it has the licence to do so from society and we dothe utmost to operate in a way that promotes sustainable development, going beyond thelegally defined boundaries set for all companies. We set our own standards, applicable
across the Group, often surpassing the legislative demands in many areas where we operate.
Umicore also strives to develop materials that enhance quality of life and specificallyaddressing 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.
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. We strive to be top employer wherever we operate.
Civil society groups periodically declare a stake in our operations and the way we do business.
Umicore welcomes such interest and attempts to engage openly and constructively.
Umicore makes voluntary contributions at site and Group-level to a range of charitable causes.
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.
For information on these initiatives in 2019 see Giving Back to Society, p. 25.

SUPPLIERS

Transportation

Revenues

EnergyOther 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 2019, Umicore paid these suppliers € 15.6 billion (including
the metal content of raw materials).
We are engaged in a constant dialogue with our 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. The business units are responsible forthe purchase of raw materials while the corporate Purchasing and Transportation department
works to ensure that transportation, energy and other provisioning needs are met.
Our approach is shaped by our Sustainable Procurement Charter. This charter is complemented
by specific approaches or frameworks for some critical raw materials.
Our Horizon 2020 strategy includes an objective on sustainable supply that builds on theexperience gained through our previous objective on sustainable procurement. For information,
see Value Chain & Society, p. 36€ 1.6mVisit to the Hall O learning center at Olen

DONATED TO CHARITABLE CAUSES(INCLUDING STAFF FREED TIME)

UMICORE

Kenya Lashway at the site in Glen Falls (NY)€ 15,600m

PAID TO SUPPLIERS WORLDWIDE

Umicore Integrated Annual Report 2019

STAKEHOLDER ENGAGEMENTASSOCIATE AND JOINT VENTURE COMPANIESASSOCIATE AND
JOINT VENTURECOMPANIES

Contribution to
Umicore profits
Technologicalcomplementarities

18

SHAREHOLDERS AND INVESTORS
Investment
Guidance

UMICORESHAREHOLDERS
AND INVESTORS

Shareholder
value

CapitalFunds

Superior
returns

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 ownershipof between 20% and 50% of the voting rights, while joint ventures usually entail a 50:50 splitin ownership and control. Joining forces is a way to speed up technological developments orgain access to specific markets.
Where management control is not exercised by Umicore, we are able to guide and control
the management and monitor business developments through representation on the boardof directors. 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), our expectations
that the operations be run in accordance with the principles of the Umicore Way areclearly communicated.
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 note F17.

UMICORE

Umicore strives to provide timely and accurate information on its strategy, performanceand prospects to its shareholders. Next to the publication of press releases and the Annual
Report, Umicore’s management and Investor Relations team communicated in 2019 withinvestors during roadshows in North America, Europe and Asia, as well as through regular site
visits, investor conferences, webcasts, conference calls and the annual general meeting ofshareholders. Main topics covered included the strides made in the execution of the growthstrategy in clean mobility materials and recycling, the financial performance and outlook aswell as sustainability and social corporate responsibility themes.
Umicore has a high free float with a broad base of international shareholders which at the endof 2019 were primarily situated in Europe and North America. The overview of shareholders
holding voting rights equal to 3% or more and analyst research and consensus information canfound on our website under Share Information. 23 brokerage firms cover and publish equity
research notes on Umicore, reflecting strong and global interest from the financial market in
Umicore’s equity story and growth opportunities.
Umicore’s disclosure covers both financial and Environmental, Social and Governance (ESG)
performance and we regularly engage with our investors on those topics.

Umicore Shokubai Japan Co. Ltd.
is a 60%-owned joint venture

4

ASSOCIATE COMPANIESCapital markets day in Korea, 201817

MANAGEMENT ROADSHOWS

Umicore Integrated Annual Report 2019

STAKEHOLDER ENGAGEMENTPUBLIC SECTOR AND AUTHORITIESPUBLIC SECTOR
AND AUTHORITIESServices
Formal licenceto operate

KEY MEMBERSHIPS

Taxes
Industry insightand experience

UMICORE

Umicore aims to increase understanding of our technologies and contribute to the discourse on
materials-related issues. In 2019 our efforts to foster contacts with public authorities worldwide,
coordinated by the Government Affairs department, focused primarily on North America,
China and Europe, where efforts centered on three main topics: resource efficiency, including
waste and raw materials policies and ongoing developments for a Circular Economy in the EU;advanced materials as a key enabler for low carbon technologies; and material technologies
for the purification of exhaust gases from combustion engines. Our initiatives also include
access to EU and national government funding and innovation networks, particularly programs
that support the development of breakthrough technologies with environmental benefits.
Umicore experts are often invited as members of working groups and panels initiated by
European or national authorities. Umicore is also a member of the Knowledge and Innovation
Community on Raw Materials, a consortium of over 100 partners addressing the accessibility,
availability and efficient use of raw materials in Europe.
Umicore is mindful of the sensitivity of taking positions on issues of public interest and has
developed guidelines to do so responsibly through the industry groups to which we are affiliated.
Umicore paid € 117 million in taxes on our 2019 operations and with our employees contributed€ 102 million in social security payments. Umicore periodically enters partnerships withpublic institutions such as universities with the primary aim of furthering research projects.
Partnerships and research grants are occasionally contracted with public organizations.
As a matter of policy, Umicore does not make donations to political parties or organization.

The European parliament, Brussels

19

A3M (L’Alliance des Minerais, Minéraux et Métaux); Agoria (Belgian multi-sector federation for thetechnology industry); American European Community Association (AECA); Bebat; Belgian Indian
Chamber of Commerce and Industry (BICC&I); Belgian industrial Research and Development (BiR&D);
Belgium-Japan Association & Chamber of Commerce (BJA); Eurometaux (European Non-Ferrous
Metals Association); European Industrial Research Management Association (EIRMA); European
Round Table of Industrialists (ERT); ETION; Federation of Belgian Industrial Energy Consumers(FEBELIEC); Flemish Aerospace Group (FLAG); Flemish Network of Enterprises (Voka); FlandersChina Chamber of Commerce; Metalle pro Klima (a WirtschaftsVereinigung Metalle initiative);
TransAtlantic Business Council; Vlaamse Technische Kring (VTK); World Economic Forum.
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);
Manufacturers of Emission Controls Association (MECA); Verband der Automobilindustrie (VDA);
Verband der Chemischen Industrie e.V. (VCI).
Cobalt 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.
European Battery Recycling Association (EBRA); European Electronics Recyclers Association (EERA);
European Precious Metals Federation; Fachvereinigung Edelmetalle (German Precious Metals
Association); Global Battery Alliance (GBA); International Platinum Group Metals Association (IPA);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).
European Innovation Partnership (EIP) on Raw Materials, B20-G20; the High-Level Group (HLG)
on Key Enabling Technologies (KET); the Steering Committee of Energy Materials Industrial
Research Initiative (EMIRI); the ERA-MIN network on industrial handling of raw materials for
European Industries.

€ 117mTAXES PAID ON OUR 2019 OPERATIONS

Umicore Integrated Annual Report 2019

STAKEHOLDER ENGAGEMENT

20

Advocacy for impact
CORPORATE
The World Economic Forum’s Global Battery Alliance
was launched in September 2017. This global publicprivate partnership comprises over 40 internationalorganizations to establish 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 2019, we
worked toward ensuring that the cobalt extractionindustry is free of child labor and that alternative
livelihoods for cobalt-dependent households are madeavailable, 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 facilitatecross-border transport of spent batteries, the collectionof end-of-life portable electronics to increase battery
recycling and the creation of economic value forinnovative projects supporting mining communities.
CATALYSISAs air quality concerns, especially in cities, continue toincrease, legislation aiming to minimize 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 through which, in close
collaboration with automotive engineering companies,
we aim to provide an option in the portfolio of
ultra-clean transportation of the future using themost advanced emission control technologies.

ENERGY & SURFACE TECHNOLOGIES
Accelerating the transition to a low-carbon society
requires driving down the cost of clean energy andclean mobility technologies. Advanced materials
represent a sizeable part of the cost of these clean
technologies and are key enablers of the low-carbon
society. The advanced materials path from lab tomarket 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 (the Energy Materials Industrial Research
Initiative) works to increase awareness about therole of advanced materials in everyday life andin the European economy, and advocates for stronger
EU-level innovation support.
RECYCLING
The European Union is striving to establish a Circular
Economy. Umicore, a frontrunner with our “closed loop”
business model, contributes to numerous conferencesand 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 our experienceto promote electromobility as a gateway to Circular
Economy in Europe.

In 2019, Umicore contributed to the Global Battery
Alliance report “A Vision for a Sustainable Battery Value
Chain in 2030”, detailing how batteries contribute tomeeting the Paris climate agreement and empowersocial, environmental and economic change by 2030.
To view the report, go to:

UMICORE.COM/GLOBAL-BATTERYALLIANCE-REPORT-2019

Umicore Integrated Annual Report 2019

MATERIALITY

21

Materiality
SETTING THE COURSE WITH OUR STAKEHOLDERS FROM 2015 THROUGH 2020

1

2

3

4

VALIDATINGGLOBAL MEGATRENDS
AND ASSESSINGVISION 2015

IDENTIFYINGAND CHOOSING
MATERIAL TOPICS
FOR HORIZON 2020

DEFINITION
OF OBJECTIVES ANDREPORTING SCOPE

VALIDATIONBY THEEXECUTIVE COMMITTEE

Umicore strives to plan for the best
possible future by remaining in ahealthy and competitive position whilst
considering global economic, socialand environmental megatrends.
Our Vision 2015 strategy built on existing competencies,
market positions and our long-standing expertise inmetallurgy, materials science, application know-how
and recycling, and combined them with our closedloop business model to give us strong growth potential
in clean air, clean energy, vehicle electrification andaddressing resource scarcity.
Horizon 2020, launched in 2015, represents continuity
in Umicore’s strategic choices over the past decadeand sets out further economic, environmental, value
chain and society challenges. The definition of theenvironmental, value chain and society objectives
for the Horizon 2020 strategy involved a materiality
assessment to identify areas with the potential toturn sustainability into a greater competitive edge,
as follows:

1

VALIDATING GLOBAL MEGATRENDS AND
ASSESSING VISION 2015 ACHIEVEMENTS

In 2014-15, the executive committee scanned in detailthe four megatrends that underpin Umicore’s growthambitions. The results clearly showed that three of thefour 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 a lessfavourable market for Umicore’s higher-end solutions.
Based on the results, the executive committee elected
to focus Umicore’s Horizon 2020 growth ambitions
on activities that are linked to clean air (automotive
catalysts), vehicle electrification (rechargeable battery
materials) and resource efficiency, ensuring preciousand specialty metals recycling through our closedloop business model. These activities are therefore at
the heart of our ambition to double Umicore earnings
by 2020.
In 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 inall three cases.
We also made strides in personnel development andstakeholder engagement. By 2015, the vast majority of
Umicore employees had received an annual appraisaland development plan and we had further reduced
exposure levels of our employees to various metals.
Our last People Survey in 2018 confirmed that we hadachieved several of our Horizon 2020 objectives.

Umicore Integrated Annual Report 2019

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-freecertifications for our smelters.
Safety was the sole area where performance wasless than satisfactory. We set ourselves the targetof becoming an accident-free company by 2015 and,while our safety performance improved, we fell shortof 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 and stakeholder
engagement. Although we will not set further
objectives for these themes, we will continue tomeasure and report on the impact and performance
when relevant from a materiality point of view.
IMPROVE safety and occupational exposure. We willcontinue to pursue the zero accident and zero excess
readings goals.
SECURE COMPETITIVE ADVANTAGE through sustainablesourcing. Thanks to the implementation of the Umicore
Sustainable Procurement Charter, we have developed
a reputation for ethical sourcing. This approach isaligned with Umicore’s values and ethics but comesat a cost that is only gradually accepted by customers.
Horizon 2020 seeks to leverage this sustainable sourcing
approach to generate an enhanced competitive edge.

22

IDENTIFYING AND CHOOSING
MATERIAL TOPICS FOR HORIZON 2020
With the activities linked to clean air, vehicle
electrification and recycling defined as the main levers
for Umicore’s growth, we screened for other topics ofmaterial importance to our business units and to ourmain stakeholder groups.

Based on the feedback received, a revised version of
the Umicore Group materiality matrix was compiled
consisting of top quartile topics. These 25 topics were
the basis of the materiality testing and for ease ofreference were clustered into five categories: Supply,
Products, Operational Excellence, Human Resources,
Health and Safety.

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 fromstakeholders, including the findings of the annualinternal business risk assessment, the results from the2014 People Survey for all employees, the data fromthe implementation of Umicore’s APS (Assessment of
Product and services Sustainability) tool from 2012 to2015 and direct questions submitted to Umicore or its
business units by customers.

The list of material topics was then tested using an
online survey that was sent to 48 stakeholders.
These stakeholders – investors, customers andemployees – ranked the topics.

2

At corporate level, we screened material issues at
peer companies and customers, as well as potentiallyrelevant topics discussed by international businessgroups, research groups and media.
All topics identified in the materiality screening phasewere used to produce a draft materiality matrix.
The relevance of these topics for Umicore was assessedby a project team and discussed with the Environment,
Health and Safety (EHS) and Human Resources (HR)corporate teams. The starting matrix, containing about
65 topics, was submitted for further refining with thebusiness unit management teams.

DEFINITION OF OBJECTIVESAND REPORTING SCOPE
Based on the results of the first two phases, weestablished the scope of the objectives for Horizon
2020. We clustered our objectives in four main themes.
Three of the Vision 2015 themes were kept – Economic
Performance, Eco-Efficiency and Great Place to Work– but “Stakeholder Engagement” was replaced by“Value Chain and Society” to highlight our ambition of
adopting a more holistic view of Umicore’s presence inand impact on the overall value chain. This constitutes
Umicore’s main focus through 2020.

3

The process for defining the environmental, value
chain and society objectives within Horizon 2020
involved a structured dialogue with the managementof each business unit to determine the social andenvironmental topics that could generate a greater
competitive edge.
To ensure a degree of alignment with external
expectations, we also conducted an online stakeholder
survey. The objectives were debated and ratified by
the executive committee in February 2016.

Umicore Integrated Annual Report 2019

MATERIALITY
We also identified a range of issues that Umicore
and our stakeholders identified as important for
management purposes, which should remain partof the report, albeit not part of any specific Horizon
2020 objective.
One example is CO2 emissions: in our Vision 2015
review, we assessed that the absolute level of our
CO2 emissions was dependent on the energy mix ofthe countries in which we operate, a roadblock to
pursuing a specific CO2 emission reduction objective.
We therefore chose to pursue energy, operationaland materials efficiency instead. However, many
stakeholders expect Umicore to report CO2 emission
and this data remains part of the reporting scope.
VALIDATION BY THE
EXECUTIVE COMMITTEE
The matrix and its translation into specificenvironmental, value chain and society objectives
were validated by the executive committee in February
2016. The economic objectives and growth ambitions
had been previously validated in 2015.

423

UPDATES
Following the 2019 review, the board of directors
confirmed that Operational Excellence, Supply,
Products, Human Resources and Health and Safety
remain Umicore’s material issues. We continue tofollow our Horizon 2020 objectives and the associatedmateriality in determining the content and disclosurein this report.
As preparation for future strategic planning, in 2019
Umicore conducted a preliminary study to assess ourmateriality approach and select possible themes forapplication to the next strategic round. Meanwhile, themethodology used served as inspiration to the Cobalt
Institute Risk Assessment framework (see Value Chain
and Society chapter).
In 2019 Umicore also mandated a preliminary reporton climate change-related risks and opportunities anda first approach was made to determining Scope 3
emissions for the Umicore Group. Further analysis onthese topics will be undertaken in 2020.

As a result, we believe that our Horizon 2020
objectives and the information that we report in thisdocument represent a balanced reflection of externalrequirements and our own internal needs, and enablea balanced appreciation of our performance.
You will find the strategic targets associated with thismateriality assessment on the following page.

Umicore Integrated Annual Report 2019

MATERIALITY

24

HORIZON 2020 TARGETSECONOMIC PERFORMANCEVALUE CHAIN AND SOCIETY

ECO-EFFICIENCYGREAT PLACE TO WORKSTRENGTHENLEADERSHIPSUSTAINABLE
SUPPLYEFFICIENTOPERATIONSSAFETY

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

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

Main material topics: Criticality of raw materials,
Recyclability and potential to close the loop,
Recycled input materials use, Resource scarcity,
Supplier screening, Supply disruptions, Sustainabilityof supply chain/responsible sourcing

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

REBALANCEPORTFOLIOSUSTAINABLE
PRODUCTS AND SERVICES

Ensure a more balanced distribution of earnings
among the three business groups

Develop products that create sustainable value
for our customers or society

DOUBLE THE
EARNINGS

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

Become a zero-accident workplace
Main material topics: Occupational safety,
Process safety

HEALTH
Reduce employee exposure
to specific metals
Main material topics:
Occupational health
PEOPLEENGAGEMENT
Further improve people engagement withspecific focus on talent attraction & retention,
diversity management and employability
Main material topics: Diversity and inclusion,
Employee training and development,
Talent attraction 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.

Umicore Integrated Annual Report 2019

STAKEHOLDER ENGAGEMENT
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.

Quentin Poncelet and Ella Pei visiting the UNICEF education project in Madagascar

Giving back to society
UMICORE.COM/GIVING-BACK-TO-SOCIETY

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.

25

At corporate level, the emphasis is on projects withan international scope. Priority is given to initiatives
with a clear educational component and that link withsustainable 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, contributing in 2019 to
the Doctors without Borders/Médecins sans Frontières
fund for a maternal healthcare program in Afghanistan.
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 201926

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 57

CASE STUDY

Gasoline particulate filters
Strong sales of Umicore’s catalyst technologies
include a growing contribution from state-of-the-art
gasoline particulate filters (GPFs), especially in Europe
and China.
GPFs reduce vehicle particulate emissions; adding
advanced coatings enhances the functions of the

ANNUALREPORT.UMICORE.COM/STORIES

Thia Elena Zhou and Martin Schmidt at the Hanau siteexhaust system. Coating GPFs with three-way catalytic
materials contributes to the reduction of emissions
such as hydrocarbons, carbon monoxide (CO), andnitrogen oxides (NOx). The resulting catalyzed GPFs
are increasingly important as conformity factors
decrease, emission regulations tighten, and future
emissions limits may include ultrafine particles.

Umicore Integrated Annual Report 2019

27

Economic review€ 509mGROUP REBIT

RECURRING EBITDA

RECURRING EBIT

RETURN ON CAPITAL EMPLOYED (ROCE)

Millions of Euros

Millions of Euros

%

800

600
500

600

€ 553mGROUP CAPEX

12.6%
ROCE

‘15 | 505
‘16 | 527
‘17 | 599
‘18 | 720
‘19 | 753

400
200
0

‘15 | 330
‘16 | 351
‘17 | 410
‘18 | 514
‘19 | 509

400
300
200
100

‘15

‘16

‘17

‘18

‘19

We have selected 3 key performance indicators tomeasure our success in the execution of our Horizon
2020 growth strategy and our progress towards ourlonger-term targets and objectives:– Recurring EBITDA gives a clear indication on
earnings and profitability, and is a good proxy for
generated operating cashflows (cashflow fromoperations before change in cash working capital).
– As part of our Horizon 2020 strategy we had
set a 2020 recurring EBIT target of doubling the2014 figure.
– We want our investments to create value by
generating attractive returns and have set a Group
ROCE target of 15%+.

0

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‘16

‘17

‘18

‘19

Umicore posted a strong performance in 2019 against
a backdrop of persisting headwinds in key markets,in particular the automotive sector. Revenues for thefull year grew by 3% to € 3.4 billion and recurring
EBITDA increased 5% to € 753 million, while recurring
EBIT was € 509 million, close to the record levels of
2018. After a somewhat softer first half performance,
revenues and recurring EBIT in the second half posted
strong sequential growth and were up 6% and
12% respectively. Over the course of 2019 Umicore
made important strides in the execution of our
growth strategy.
While the EV market was in the spotlight, the strengthof Umicore’s position as a supplier of materials
technologies to all types of clean mobility solutions
was confirmed. In Catalysis, this was demonstrated
by several successes in catalyst technologies suchas particulate filters for gasoline engines and theopening of the new plant for fuel cells catalysis in

20
18
16
14
12
10
8
6
4
2
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Korea. In Energy & Surface Technologies, we continued
to invest in the growth of our business, albeit at an
adjusted pace in line with current market demand.
We commissioned a new Process CompetenceCenter in Belgium, ramped up production in the
new plant in China and started construction of thegreenfield plant in Poland. We continued to promotea global sustainable battery materials value chain, as
evidenced by the acquisition of the cobalt refineryand cathode precursor operations in Finland and thelong-term partnerships for sustainable cobalt supply.
Finally, Umicore signed sizeable multi-year strategic
supply agreements with LG Chem and Samsung SDI for
NMC cathode materials which demonstrate the qualityof our technology offering. In Recycling, Umicore
completed the multi-year expansion program at the
Hoboken plant and carried out various investments tofurther improve our environmental performance.

Umicore Integrated Annual Report 2019

ECONOMIC REVIEW28

CATALYSISRECURRING EBITDA

RECURRING EBIT

RETURN ON CAPITAL EMPLOYED (ROCE)

Millions of Euros

Millions of Euros

%

300

200

250
‘15 | 172‘16 | 203
‘17 | 224
‘18 | 237
‘19 | 264

200
150
100
50
0

‘15

‘16

‘17

‘18

‘19

In 2019, Catalysis recorded revenues of € 1,460 million,
up 7% from 2018, despite a steep decline in global
car production. Umicore continued to outperform thelight-duty vehicles market as a result of market sharegains in light duty gasoline applications. In China,
Umicore benefitted from the early launch of China
6-compliant platforms and continued to record solid
growth. Revenues in Precious Metals Chemistrywere also higher from 2018, due to growing salesof compounds used in pharmaceutical and finechemical applications as well as fuel cell catalysts.
Recurring EBIT for the Catalysis business group was€ 185 million, up 10% from 2018, and recurring EBITDA
was € 264 million, up 11%. Higher rhodium andpalladium prices resulted in a significant increase in
net working capital requirements in the second halfof 2019.
While there are no signs of an imminent recovery
in the automotive market, Catalysis is expected tocontinue to benefit from our strong market position ingasoline catalyst applications and a further penetrationof higher value gasoline particulate filters in Europe
and China. Fuel cell catalysts production will continue
to ramp up in Korea.

20

150

‘15 | 124
‘16 | 152
‘17 | 165
‘18 | 168‘19 | 185

100
50
0

17

16

15 13

14

14

‘18

‘19

10
5

‘15

‘16

‘17

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‘19

Revenues for Automotive Catalysts increased
compared to 2018, despite a global recession in theautomotive market. In the light-duty vehicles segment,
Umicore continued to outperform the market both interms of volumes and revenues, particularly in China.
This trend was more pronounced in the second halfof 2019. We also grew volumes and revenues in a
subdued heavy-duty diesel segment. Global light-duty
vehicle production dropped by 6.3% from 2018, withall key markets posting a decline compared to 2018.
Falling car production in China (-8.9%) was the largest
factor behind the worldwide decline. The European
and North American markets contracted by 5.0%
and 4.4% respectively. In this challenging context,
Umicore grew volumes and revenues reflecting
market share gains in gasoline catalyst technologies
and an increasing penetration of higher value gasoline
particulate filters in China and Europe. In 2019, 40%of Umicore’s light-duty catalyst volumes were soldin the Asian car market, with China representing the
majority of that share. Europe and the Americas eachaccounted for 30% of the sales volumes of our global
light-duty catalysts.

0

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‘16

‘17

In China, Umicore’s volumes increased significantly
driven by the ramp-up of recently won gasoline
platforms and a strong exposure to international car
manufacturers. Umicore is now the leading lightduty catalyst producer in the region. The increase
in revenues was even more pronounced due to theearly implementation of China 6 emission norms incertain large cities as well as the growing penetrationof gasoline platforms that require particulate filters.
This strong performance was in stark contrast with
the Chinese car market, which shrank for the second
year in a row in 2019. After a steep contraction of
the car market in the first half of 2019, the pace of
decline eased somewhat in the second half, reflecting
a traditionally stronger fourth quarter and a morefavorable year-on-year comparison with a particularly
weak demand in the second half of 2018.
In Japan, Umicore’s volumes were slightly down inan overall stagnating market, while in Korea andSouth-East Asia, our volumes were adversely impacted
by the timing of certain platform changes.

Umicore Integrated Annual Report 2019

ECONOMIC REVIEWThe European car market declined by 5% from 2018,
due mainly to a strong decrease in the productionof diesel cars (-12%) which represented 35% of the
car market in 2019. Umicore is less exposed to thelight-duty diesel segment and outperformed theEuropean car market both in volumes and revenues
as a result of our strong market position in gasoline
catalyst technologies and a growing contribution fromgasoline particulate filters.
In North America, Umicore posted stronger revenues
despite a declining car market, benefitting from theintroduction of new platforms, an increased exposure
to the SUV segment and a favorable customer mix.
Our volumes were down in South America, in linewith the car production in the region, while revenues
benefitted from a good platform mix.

29

Revenues for Precious Metals Chemistry were
well up from 2018, driven by increased customer
demand for Umicore’s homogeneous catalysts usedin pharmaceutical and fine chemical applications, as
Umicore successfully expanded our customer baseand portfolio of innovative solutions. Revenue growth
was also supported by a significant increase indemand for Umicore’s fuel cell catalysts used in thetransportation segment. The demand for fuel celldrive trains is gaining momentum both for light andheavy-duty applications. To support the rapid growthof our automotive customers, we have expanded our
production capacity for fuel cell catalysts in Korea.
The new facility was inaugurated in October andproduction is ramping up.

To cater for the growing demand for our catalysts,
Umicore expanded capacity in key regions where
legislation changes require more complex catalyst
systems. In Poland, additional production lines cameon stream in the second quarter of 2019, ahead ofEuro 6d final. Production capacity was also expandedin the second half of 2019 in China, to fulfill stronger
customer orders for China 6 compliant platforms,
and in India to support the upcoming Bharat State
6 legislation.

Umicore Integrated Annual Report 2019

ECONOMIC REVIEW30ENERGY & SURFACE TECHNOLOGIESRECURRING EBITDA

RECURRING EBIT

RETURN ON CAPITAL EMPLOYED (ROCE)

Millions of Euros

Millions of Euros

%

350

300

300

250

250

‘15 | 113
‘16 | 132
‘17 | 198
‘18 | 323
‘19 | 271

200
150
100

17
‘15 | 70
‘16 | 82
‘17 | 141
‘18 | 257
‘19 | 183

200
150
100

‘15

‘16

‘17

‘18

‘19

Revenues in Energy & Surface Technologies amounted
to € 1,225 million, down 5% from the record levels
in 2018, reflecting the impact of lower metal prices,
reduced sales of high cobalt containing products andlower sales of cathode materials for high-end portableelectronics and energy storage. Sales of Umicore’s
cathode materials used in automotive applications,however, grew in line with the global EV market,
which was up 7.7%, supported by our exposure toa diverse mix of EV platforms with OEMs globally.
Revenues and margins were severely impacted by thecollapse of the cobalt price, which on average morethan halved compared to 2018 and drove the cobalt
refining, recycling and distribution margins much
lower compared to the historically high levels of 2018.
We integrated the cobalt and nickel refining activities
that directly feed the cathode materials production
plants in our Rechargeable Battery Materials business
unit. The inflow of cheaper cobalt units unethicallysourced from artisanal mining, which put ourhigh cobalt-containing products at a competitive
disadvantage, continued to impact the performanceof the business group.
Recurring EBIT was well under the levels achievedin 2018 (-29%) and amounted to € 183 million.

0

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11

12
9

10
5

50

50
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This decrease also reflects higher depreciation charges
from recent investments and costs related to greenfield
investments in China and Poland. Recurring EBITDA
was € 271 million, down 16% from 2018.
Visibility remains limited, in particular in China where
EV demand is not expected to materially recover in
2020. We anticipate benefitting from the consolidationof the recently acquired cobalt refining and cathodeprecursor activities in Kokkola, Finland. At the sametime, the performance of the business group willreflect higher fixed costs, such as depreciation charges
and upfront costs, related to the ongoing investments
in capacity as well as higher R&D spending.
To align with the metric most commonly used in therechargeable battery market and incorporate theevolution of the chemistry mix, we decided to express
our projections in GWh rather than in tons of cathodematerials. We expect to reach 60 GWh of cathodematerials capacity by mid-2021 and 100 GWh by mid2023, in line with the revised projections.
Revenues in Rechargeable Battery Materials were
down compared to 2018 due to lower sales of highenergy LCO cathode materials for high-end portableelectronics and reduced demand for NMC cathode

0

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materials used in energy storage applications.
Sales volumes of NMC cathode materials to power
EV applications grew in line with the global EV
market, supported by our exposure to a diverse mixof EV platforms with OEMs globally. Our overall sales
volumes of cathode materials in the second half of2019 exceeded both the levels of the first half of 2019
and the second half of 2018.
In 2019, the global EV market slowed down withdemand for full electric and plug-in hybrid vehicles
up 7.7% after an impressive 62% year-on-year growthin 2018. While EV sales continued to grow in the firsthalf of 2019, albeit at a slower pace than in the second
half of 2018, sales decreased in the second half of2019 due to an abrupt decline of EV demand in China
once the subsidy cuts had taken their full effect at
the end of June. The new subsidy regime was alsoless supportive for the use of NMC cathode material
in e-buses for shorter distance public transport.
Despite the near-term weakness in demand, EV sales
in the region are expected to increase substantiallyover the next years, as the Chinese government
remains fully committed to pushing forward
electrified transportation. The Ministry of Industry
and Information Technology recently proposed a new

Umicore Integrated Annual Report 2019

ECONOMIC REVIEW
target penetration rate of 25% NEVs in 2025 (up from
20% previously and compared with a penetration rateof less than 5% in 2019) combined with an increase of
the NEV credit targets for the period 2021-2023.
EV sales in Europe continued to grow strongly by
30% in 2019 with car OEMs increasingly electrifying
their products to anticipate new CO2 emission
regulation and super credits both phasing-in in 2020.
Europe accounted for 26% of EVs sold globally andits share is expected to increase over the coming
years. The proposed European Green Deal provides
another strong push towards electrification with
the introduction of more stringent CO2 targets toensure a clear pathway from 2025 towards zeroemission mobility.
2019 was a challenging year in terms of EV demand
but several regions are transitioning to electrified
mobility. We reached major milestones that strengthen
our global positioning as a battery materials supplierto support this transition. Umicore commissioned the
new Process Competence Center in Olen, Belgium andstarted construction of our greenfield production site
in Poland, due to start production by the end of 2020.
Umicore also started commissioning our new sitein China, with an adjusted schedule for further line
additions due to the current market slowdown. We also
signed multi-year agreements with leading EV battery
makers LG Chem and Samsung SDI for the supplyof respectively 125,000 and close to 80,000 metrictons of cathode materials, starting in 2020. In 2019
we expanded our integrated and sustainable battery
materials value chain by acquiring Freeport Cobalt’s
cobalt refining and cathode precursor activities in
Kokkola, Finland, in early December, and by concluding
a long-term partnership with Glencore for the supplyof sustainable cobalt. Our suppliers source Cobalt
from state-of-the-art industrial-scale concessions
in the DRC, which operate in full conformity with31

our Sustainable Procurement Framework for Cobalt
and supply our refineries worldwide, including the
Kokkola refinery.

market today. Margins in the distribution activity werealso impacted by the lower cobalt price while volumes
grew thanks to a successful geographical expansion.

Umicore obtained support for 3 projects within theframework of Important Projects of Common European
Interest (“IPCEI”1F) for batteries. The Umicore IPCEIprojects are focused on research, innovation andfirst industrial deployment for new products andprocesses that are crucial to produce high-quality andaffordable batteries that can be recycled in a safe andenvironmentally friendly way.

Revenues for nickel compounds used in the battery,
plating and catalyst industries were slightly higher
than 2018. Due to a challenging market environment,
Umicore decided to discontinue operations at ourcobalt, nickel and rhenium refining and recycling
plant in Wickliffe, OH, US. The plant transformed these
metals into compounds for the catalyst, petrochemicalrefining and aviation industries. The recycling of cobaltcontaining scrap will be taken over by the refining andrecycling plant in Olen, Belgium. The other activities
will be phased out in the course of 2020.

Demand for NMC materials used in energy storage
applications in Korea came to a complete standstillin the first half of 2019 when the government halted
the production of new systems after a series of safetyincidents. Demand for cathode materials going into
this application has remained subdued since then.
Umicore’s sales of High Energy LCO cathode materials
for batteries in high-end portable electronics decreased
due to high inventory levels in the supply chain andcompetition from products containing cheaper cobalt
sourced unethically from artisanal operations.
Revenues and margins of Cobalt & Specialty Materials
were significantly impacted by the lower cobalt priceand the impact of cheaper cobalt from unethicalartisanal mining which led to lower volumes andmargins in most cobalt-related activities. Demand forcobalt-containing products was weak as customers
were reducing excess inventories built up in 2018
when the cobalt price averaged more than double theprice in 2019. Volumes and premiums of these products
were impacted by the inflow of cheaper cobalt whichis unethically sourced from artisanal mining, enabling
several competitors to sell at a lower price. While thelow cobalt price encouraged some diggers to stepaway from artisanal cobalt mining, a large stock
overhang of such cobalt units is still feeding the

Revenues for Electroplating were slightly up from 2018
benefitting from higher demand for our technologicallyadvanced precious metal-based electrolytes usedin portable electronics. Demand for jewelry anddecorative applications, however, was substantiallylower due to the economic slowdown and as theseindustries reduced their metal consumption owing tofast-rising precious metal prices.
Revenues for Electro-Optic Materials were roughly
stable compared to 2018. A higher contribution torevenues from finished infrared optics and germanium
recycling and refining compensated for the impactof lower demand for thin film products from themicroelectronics industry. Revenues for substrates
remained broadly stable.

Umicore Integrated Annual Report 2019

ECONOMIC REVIEW

32

RECYCLING

RECURRING EBITDA

RECURRING EBIT

RETURN ON CAPITAL EMPLOYED (ROCE)

Millions of Euros

Millions of Euros%300‘15 | 204‘16 | 187
‘17 | 189
‘18 | 195
‘19 | 250

200

100

0

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Recycling recorded revenues of € 681 million and arecurring EBIT of € 188 million in 2019, an increaseof 9% and 40% respectively compared to 2018.
The business group results were supported by higher
metal prices. In addition, Precious Metals Refining
benefitted from a favorable supply environment andoptimized our input mix, offsetting most of the impactof the extended shutdown and the fire incident inJuly. Recurring EBITDA amounted to € 250 million, an
increase of 29% compared to 2018.
Revenues and earnings for Precious Metals Refining
were well up from 2018 benefitting from improved
market conditions in certain supply segments andhigher metal prices. Processed volumes were lower
than in 2018 due to the extended maintenanceshutdown of the Hoboken plant in the beginningof 2019. In addition, the overall availability of thesmelter was affected by the fire incident in July.
Umicore was able to offset most of the volume
shortfall by optimizing the input mix.
The metal price environment was supportive in 2019,with increasing prices for certain precious and platinumgroup metals, particularly in the second half of 2019.
While Umicore had already locked in a significant

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portion of our exposure to these metals in the firsthalf of 2019 and could therefore not fully benefit fromthe rise in the second half of 2019, average received
prices for these metals in 2019 were nevertheless well
above the levels of 2018.
The availability of complex secondary materials
increased, in particular end-of-life materials suchas spent automotive catalysts with a higher metalloading than previous generations and a growing
portion of diesel particulate filters. More printed circuitboards were available for recycling as a result of thestricter enforcement by the Chinese government of
the Green Fence. We made full use of our distinctive
technological capabilities to recycle a higher proportionof such complex materials. This optimization of themix offset most of the volume shortfall in 2019.

0

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Umicore carried out several investments aimed at
upgrading existing plant facilities.
Revenues for Jewelry & Industrial Metals remained
stable compared to 2018. The activity benefitted
from higher market demand for silver coins, market
share gains in our refining and recycling activities
and continued strong demand for our performance
catalysts. Order levels for our jewelry and industrial
products were lower from 2018.
The earnings contribution from Precious Metals
Management increased substantially compared to2018 as the business unit benefitted from favorable
trading conditions for precious and certain platinumgroup metals.

The multi-year capacity expansion program at the
Hoboken plant has now been completed and thefocus will be to ensure maximum availability of theequipment and optimize the use of this expanded
capacity in line with the supply opportunities in themarket. As part of our continuous programs to improvethe environmental performance of the Hoboken plant,

Umicore Integrated Annual Report 2019

ECONOMIC REVIEWFINANCIAL REVIEWNON-RECURRING ITEMS
Non-recurring items had a negative impactof € 30 million on EBIT over the period.
Restructuring charges accounted for € 26 million andwere mainly related to the discontinuation of theactivities at the Wickliffe site in the business unit
Cobalt & Specialty Materials. Umicore’s definition of
non-recurring items also includes impairments ofpermanently tied-up metal inventories. As previously
mentioned, Umicore is applying as from 1 January
2019 the IAS 16 and IAS 36 principles to value
our permanently tied-up metal inventories which
implies that these inventories are part of our annual
impairment testing of the businesses (cash generating
units) that carry those inventories. The close of
31 December 2019 identified no need for impairmentson the permanently tied-up metal inventories.
The impact of non-recurring charges on the net result(Group share) amounted to € 24 million.
HEDGING
Over the course of 2019, Umicore entered into
additional forward contracts to secure a substantial
portion of our structural price exposure for certain
precious metals, providing increased earnings visibility.
In particular for gold and palladium, Umicore locked in
more than half of our 2020 and 2021 exposure.
Umicore also hedged a significant portion of ourplatinum exposure for 2020. In the absence of a paper
market, no forward contracts were entered into
for rhodium.
FINANCIAL RESULT AND TAXATIONNet recurring financial charges totaled € 83 million,
compared to € 69 million in 2018, mainly due tohigher forex costs and net interest charges. The latterreflect higher financial debt, including an increased
portion of local funding in Asia.

The recurring tax charge for the period amounted
to € 103 million, which is in line with 2018 andcorresponds to a recurring effective tax rate of 24.7%(24.4% in 2018). The total tax paid in cash over theperiod amounted to € 87 million, which is € 41 million
lower than the same period last year. The Groupapplied the IFRIC 23 interpretation retrospectively
with the cumulative effect of initially applying theInterpretation recognized as an adjustment to the
opening balance of the reserves on 1 January 2019.
CASHFLOW
Cashflow generated from operations, including changes
in net working capital, amounted to € 549 million
compared to € 92 million in 2018. After deduction of€ 588 million of capital expenditures and capitalized
development expenses, this corresponds to a negative
free cash flow from operations over the period of€ 39 million, compared to a negative free cashflow of€ 406 million last year.
Recurring EBITDA amounted to € 753 million, up 5%
compared to € 720 million in the same period lastyear, and corresponds to a recurring EBITDA marginof 22.1 % compared to 21.9% in 2018. The adoptionof the new IFRS 16 lease standard had a positiveeffect of € 17 million on recurring EBITDA over theyear. Net working capital for the Group increased€ 78 million compared to end of 2018. This reflects apronounced increase in working capital needs in theCatalysis business group in the second half of 2019
due to higher PGM prices, partly offset by a release ofworking capital in the Recycling business group.
Capital expenditures totaled € 553 million, up from€ 478 million in 2018 reflecting higher investments
in all business groups. Energy & Surface Technologies
accounted for close to two thirds of the amount, withinvestments primarily linked to the ongoing major
greenfield expansion programs in cathode materials
in China and Poland.

33

The higher investments in Catalysis reflect thecapacity expansions in China, Poland and India as
well as the expansion of fuel cell catalyst capacity
in Korea. In Recycling, capital expenditures comprisethe investments carried out during the extended
maintenance shutdown of the Hoboken plant aswell as the investments to further improve theenvironmental performance of the plant.
The acquisition of the cobalt refining and cathodeprecursor activities at Kokkola, Finland, was completed
early December, resulting in a net cash out of€ 188 million. Dividends paid to Umicore shareholders
over the period amounted to € 186 million and thenet cash outflow related to the purchase of treasury
shares to cover stock options and share grants was€ 29 million.
FINANCIAL DEBTNet financial debt at 31 December 2019 stood at€ 1,443 million, up from € 861 million at the end of
2018, largely driven by our capital expenditures andthe Kokkola acquisition. The recognition of operatingleases in financial debt following the applicationof the new IFRS 16 lease standard had an impactof € 46 million. Net financial debt at the end of
the period corresponded to 1.9x recurring EBITDA.
Group shareholders’ equity stood at € 2,593 million
resulting in a net gearing ratio (net debt / net debt +equity) of 35.2%.
The net financial debt includes the € 390 million
long term US private debt placement issued inJune 2019, which was drawn upon in September
2019. It complements the existing long-term private
debt placements which were issued in 2017 fora total amount of € 690 million, two undrawn
Syndicated Bank Credit Facilities of a total amount of€ 795 million and substantial additional shorter-term
funding instruments.

Umicore Integrated Annual Report 2019

ECONOMIC REVIEW

34

Investing in Umicore€ 1.30EARNINGS PER SHARE

DENOMINATOR ELEMENTS
2019
Total shares issued as at 31 Decemberof which treasury shares

246,400,000
5,624,550

of which shares outstanding

240,775,450

Weighted average numberof outstanding shares

240,558,659

Potential dilution due to stock option plans
Adjusted weighted average
number of outstanding shares

INDEXES & RATINGS

RETURNS TO SHAREHOLDERSEURONEXT

BEL20; Euronext 100

1.6

AS YOU SOW

1.4
Recurring
EPS (€/share)
Dividend(€/share)
Payout ratio

1.2
1.0
0.8
0.6

1,354,110

0.4

241,912,769

0.2

Investing in Umicore is an investmentin producing materials for a better life
– our mission – and supporting our
growth strategy.
We have a healthy capital structure with funding
headroom to execute our growth strategy whileremaining within the equivalent of an investment
grade credit status territory.
THE UMICORE SHARE
Umicore shares are listed on the Euronext stock
exchange. The total number of outstanding and fully
paid-up shares, and the number of voting rights,
are 246,400,000. Umicore bought back 1,275,871
of its own shares in 2019. During the year, 936,604
shares were used in the context of exercised stock
options. On 31 December 2019 Umicore held 5,624,550
shares in treasury, representing 2.28% of the Group’s
outstanding shares.

0

Carbon Clean 200 – 1st in Materials sector,
14th overall

CORPORATE KNIGHTSGLOBAL 100 – 1st in Materials sector, 7th overall

ECPI

‘15

‘16

‘17

‘18

‘19

Euronext recognized Umicore as a leader in sustainablegrowth with the “Sustainable Growth company of thedecade 2009-2019” award. The Sustainable Growth award
is granted to the company with the strongest stock priceperformance over the past decade among Belgian stocks
present in at least one Euronext sustainability index.
SHAREHOLDER RETURNS
Umicore aims to create value for its shareholders.
There is no fixed pay-out ratio.
As a matter of prudence and in light of the extreme
unpredictability of the global situation due to COVID-19,
Umicore’s Board of Directors has decided to propose adividend of € 0.375 per share in respect of the fullyear 2019. This proposal replaces the proposal initiallymade on 7 February 2020 of € 0.75 per share andcorresponds to the amount of the interim dividendof € 0.375 per share which was already paid out on
27 August 2019. This decision is also to be seen as away for Umicore’s management and Board of Directors
to share the efforts among its stakeholders.

EMU Ethical Equity; Euro ESG Equity;
World ESG Equity

FORUM ETHIBEL

Sustainability Index Excellence Europe
Sustainability Index Excellence Global
Ethibel PIONEERFTSE RUSSELL

FTSE4GOOD; FTSE Environmental Opportunities 100

ISS OEKOM

PRIME ESG Rating

MSCI

ACWI Sustainable Impact Index
ACWI Low Carbon Target
Belgium IMI Index
EMU ESG Enhanced Focus Index
Global Pollution Prevention Index
World ESG Leaders Index
AAA ESG Rating (Leader)STOXXSTOXX Europe 600; STOXX Europe Mid 200

VIGEO EIRIS

Benelux 20; Eurozone 120

Umicore Integrated Annual Report 2019

ECONOMIC REVIEW
2019 marked several key milestones in the consistentexecution of Umicore’s long-term growth strategy,
shaping a sustainable battery value chain andsupporting the growing penetration of Electrical
Vehicles (EV) globally. Battery materials customers,
wherever they are located, will be supplied withmaterials of the highest quality with a certified andclean origin.

The Kokkola cobalt refinery joined Umicore on December 2 2019, with 255 new colleagues

Sustainable battery
materials supply chain

On 30 November 2019 Umicore acquired Freeport
Cobalt’s cobalt refining and cathode precursor activities
in Kokkola, Finland. The state-of-the-art Kokkola cobalt
refinery is one of the world’s largest. Its refining andprecursor know-how ideally complements Umicore’s
and the expertise and experience of its 255 employees
are highly regarded in the battery materials industry.
Both Kokkola and Umicore’s Olen refinery are thirdparty assessed as compliant by the Raw Materials
Initiative’s Responsible Minerals Assurance process.
The acquired operations will supply precursors forcathode materials production, including to the new
Umicore plant in Nysa, Poland, which is due to start in
the second part of 2020.
The Kokkola refinery will be supplied throughUmicore’s long-term agreements which source
cobalt raw materials exclusively from best-in-classindustrial scale cobalt mining operations, in full
conformity with Umicore’s sustainable procurement
framework for cobalt, the third-party validated due
diligence system created to avoid any link between
the cobalt and unsustainable practices, including any
form of child labor. One example is the long-term
revolving agreement with Glencore for the supply ofcobalt hydroxide to Umicore which was announced
in May 2019 and guarantees Umicore’s security ofsupply for a substantial part of its longer-term needs.
The cobalt will be sourced from Glencore’s stateof-the art industrial mining operations in the DRC.
Umicore has assessed each operation in line with its

35sustainable procurement framework for cobalt
and in 2019 performed a full compliance audit of
Glencore’s DRC facility. In January 2020, Umicore also
signed a long-term supply agreement with CMOC for
sustainable cobalt.
During 2019 Umicore also announced partnerships
for the supply of Nickel Manganese Cobalt (NMC)
cathode materials.
Umicore and LG Chem concluded a multi-year strategic
supply agreement for cathode materials to serve LG
Chem’s needs from Umicore plants in Poland, Korea
and China. The agreement takes effect in 2020 andcovers a total volume of 125,000 metric tonnes over
several years. The companies are also entering atechnology licensing arrangement.

Umicore will be the first company tosupply cathode materials to its global
customers with identical quality andperformance from different production
plants across regions.
Umicore is also assisting LG Chem in closing the loop
by recycling its production residues and a long-termcooperation in battery recycling is under discussion.
Umicore also signed a multi-year strategic agreementwith Samsung SDI for the supply of close to80,000 metric tonnes of high-performance NMC
cathode materials starting in 2020. These materials
will be supplied from Umicore plants in different
regions with most volumes initially produced in Korea.
A vast portion is intended for automotive applications
and a smaller part for energy storage systems.
The sizeable volume commitment offers criticalpredictability and visibility along the EV supply chain.

Umicore Integrated Annual Report 2019

36

Value chain and society
2020 Target
SUSTAINABLE
SUPPLYSUSTAINABLE
PRODUCTS & SERVICESKEY RISKS & OPPORTUNITIESSecure materials supply and promote
our closed loop business offer.
Develop products that create sustainablevalue for our customers and society.

1

Regulatory and legal context

2 Sustainable and ethical supply
3 Technology and substitution
4

Market7

Climate and environment

SEE RISKS ON PAGE 57

CASE STUDYFormula E: from cathodeproduction to battery recycling
Umicore is working in partnership with Mahindra Racingin the Formula E Championship, undertaking a technology
development programme. As an example we enhance
the performance of the 12V battery which runs all missioncritical systems on Mahindra Racing’s Formula E cars.
Umicore is also the official battery recycling supplierof the ABB FIA Formula E Championship to recycle

ANNUALREPORT.UMICORE.COM/STORIESFormula E race in Marrakech on 1 March 2020 © Spacesuit

the lithium-ion battery units and cells. The recovered
metals lose none of their properties and aretransformed into active cathode materials that canbe used again in new rechargeable batteries for thesame application. This closed-loop approach results ina dramatically lower environmental footprint of theresulting battery materials.

Umicore Integrated Annual Report 2019

VALUE CHAIN & SOCIETY
Human rights are fundamental to
Umicore.
We want Umicore to be a leader in providing andcreating material-based solutions to contribute to
fundamental improvements in the quality of life.
Human rights within the Umicore organization
are enshrined in The Umicore Way which is thecornerstone of everything we do at Umicore,
representing our organization’s values. All Umicore
personnel commit to upholding these values under
the following key statement:

Marc Grynberg, Valter Sanches, Secretary General of IndustriALL Global Union
Guy Ryder, Director-General of the International Labour Organization

Value chain and society
UMICORE.COM/INDUSTRIALL“
We uphold fundamental human rights
and respect those rights in conducting
our operations throughout the world.
We engage with the communities
around our operations and communicate
transparently with our stakeholders”
Our success is measured in our ability to provide
environmental and ethical sourcing benefits of scarce
raw materials and to deliver products and services thatcreate sustainable value for our customers and society.
Umicore’s Horizon 2020 objectives reflect a proactive
view of our role in the overall value chain.
Upstream, we have placed greater emphasis on
the management of key raw materials supply
requirements. We have also sought to ensure that
Umicore’s efforts in the field of ethical sourcing can
generate a competitive edge for the company.
Downstream, we have a strong portfolio of products
and services that offer specific sustainability
advantages to our customers and society. We use
our long-standing and growing experience in ethicalsourcing and sustainably managing raw materials to
advocate for better practices.

37

On 17 October 2019, Umicore and IndustriALL Global
Union renewed their Global framework Agreement on
Sustainable Development for 4 years. The agreement
reaffirms Umicore’s commitment to sustainable
development, embracing economic, environmental
and social objectives. More specifically, it covers
human rights, including collective bargaining and equal
opportunities, safe and healthy working conditions,environmental and supply chain matters and digitaltransformation. All parties have undertaken to pursue
the constructive dialogue they initiated in 2007 toensure successful implementation of the agreement.
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, and
our Sustainable Procurement Charter. Umicore fully
supports the United Nations Universal Declarationof Human Rights. We are committed to upholdfundamental human rights and respect those rights
in conducting our operations throughout the world.
This commitment applies to all Umicore employees,
all subsidiaries and joint ventures where we haveoperational control and all subcontractors working on
our sites.
Our success depends on a relationship of trust
and professionalism with employees, commercial
partners, shareholders, government authorities andthe public. These principles are embedded in our
Code of Conduct which sets the framework for ethicalbehavior and respect of the rule of law, including
regarding anticorruption and bribery. It incorporates
whistle blowing procedures (Integrity Hotline) andsupports our commitment to equal opportunities
and diversity. All employees have access to, and are
required to comply with, the Code of Conduct and The
Umicore Way.

Umicore Integrated Annual Report 2019

VALUE CHAIN & SOCIETYSUSTAINABLE & ETHICAL SUPPLY

We aim to leverage our sustainability
approach in the value chain, both
upstream with our suppliers anddownstream with our customers.
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 turn sustainability into agreater competitive edge.
Our Sustainable Procurement Charter mitigates the
supply chain risks, including human rights. 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.
We are determined to ethically and sustainably secure
a competitive edge in our approach to critical raw
materials. To avoid misuse of precious metals andminerals to finance armed conflict, cause humanrights abuses, draw upon forced or child labor or
support corruption and money laundering, we ensurethat conflict minerals procurement is in line with
Umicore’s values through our policy for Responsible
global supply chain of minerals from conflict
affected and high-risk areas which is based on theOECD guidelines.

38

Umicore also continues to ensure that gold production
operations are certified as conflict-free. Our customers
are increasingly requesting such guarantees and we
provide them with the necessary documentation toassure the conflict-free status of our products.
Our Hoboken and Guarulhos sites are certified asconflict-free smelters by the London Bullion Market
Association (LBMA), and in 2019, our Hoboken smelter
successfully passed the LBMA voluntary conflict-freesilver audit of its 2019 activities. Umicore is certified
by the Responsible Jewellery Council’s Chain of
Custody program. For more information on our many
accreditations see note V2.
We expect our suppliers to be committed to businessintegrity, to promote the principles of sustainableprocurement in their supply chain, to be compliant withlocal environmental laws and to respect international
human rights law on their own sites and from theirown suppliers, including to abolish child and forcedlabor and eliminate discrimination.

Umicore Sustainable Procurement Charter available at:

UMICORE.COM/SUSTAINABLEPROCUREMENT-CHARTER

Overall, we have over 18,000 suppliers worldwide
to which we paid over € 15.6 billion (including themetal content of raw materials) in 2019. Umicore’s
Purchasing & Transportation teams worldwide manage
indirect procurement processes for energy and othergoods and services (accounting for 10% of our spend)
while the metal-bearing raw materials are purchased
directly by the business units (accounting for 90% of
our spend).
In 2019, EcoVadis continued to assess indirect
procurement streams for Umicore.

Umicore Responsible global supply chain of minerals
from conflict affected and high-risk areas available at:

UMICORE.COM/RESPONSIBLESUPPLY-CHAIN-POLICY

Umicore Integrated Annual Report 2019

VALUE CHAIN & SOCIETYSUSTAINABLE COBALT
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
with challenges, giving rise to unethical practices suchas 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 validationfor our approach in this area.
The various sustainability aspects of the battery supply
chain include the conditions under which raw materials
are extracted and processed. Umicore is aware of thesustainability risks that are linked to the sourcing
of cobalt particularly in the Democratic Republic ofCongo. Often, artisanal and small-scale mining (ASM)
activities are linked to issues such as human rights
abuses, child labor, poor occupational health andsafety conditions. In 2004 Umicore decided to exclude
cobalt obtained from ASM from its supply chain.
Umicore is the first company in the world to haveintroduced a Sustainable Procurement Framework
for Cobalt and to obtain external validation for its
ethical procurement approach in this area. It aims
to minimize the risk of any connection between
the cobalt in its supply chain – and subsequently
that of its customers – and human rights abuses orunethical business practices. Building on the specificapproach to sustainable and ethical cobalt sourcingthat Umicore introduced in 2004, the framework has
evolved to address specific risks linked to unethicalmining practices, such as child labor and poor healthand safety conditions. Regular independent audits
ensure that Umicore’s supply chain remains compliant
with these policies.
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 2019, Umicore again performed due diligence
activities for all its purchased cobalt materials usedin rechargeable batteries, tools, catalysts and several
other applications. We also piloted a new third-partysite audit protocol on our largest cobalt supplier andwill continue with other suppliers starting in 2020.
Our cobalt refinery in Olen became the first
Responsible Minerals Initiative-conformant cobalt
refinery worldwide. Our newly acquired cobalt
operations in Kokkola were the second recognizedrefinery. The Responsible Minerals Initiative aims totackle conflict materials issues and set sustainability
standards for industry.
Umicore also supports the development of traceability
projects across the industry. In 2019, the Cobalt
Institute launched the Cobalt Industry Responsible
Assessment Framework (CIRAF), a management
framework which strengthens the ability of cobalt
producers and buyers to assess, mitigate, and reporton responsible production and sourcing risks in theiroperations and supply chain. For the first time, Umicore
is also reporting on our supply chain using the CIRAF,
which we helped develop. The CIRAF gives industry
a first opportunity to take joint action to report onsustainable cobalt. For more, see note V2.
Within the Battery Alliance, Umicore is supporting
the development of a battery passport to ensuretransparency on the origin of the raw materials, their39

transformation, use and end of life. The passport will
trace the origins of battery materials and monitor
them throughout their entire lifecycle on a global
digital platform, to help eradicate unacceptable social
or environmental practices and push unsustainable
materials out of the market.
Umicore obtained, for the fifth year in a row, third-party
assurance from PwC that our 2019 cobalt purchases arecarried out in line with the conditions set out in the
Framework. The share of cobalt from recycled origin
was also reviewed as part of the assurance process
and was 9% for 2019, up from 6% in 2018.
The 2019 Due Diligence Compliance Report for Cobalt
Procurement, as well as previous years’ reports areavailable online.
UMICORE.COM/SUSTAINABLE-COBALT

Umicore Sustainable Procurement Framework for Cobalt
available at:

UMICORE.COM/SUSTAINABLEPROCUREMENT-CHARTER-COBALT

Umicore Integrated Annual Report 2019

VALUE CHAIN & SOCIETYSUSTAINABLE PRODUCTS AND SERVICES

CLEAN MOBILITY & RECYCLING REVENUES
%
100
90
80
70
60
50
40
30
20
10
0

65

67

‘16

‘17

72

‘18

75

‘19

Umicore’s Horizon 2020 objective is to generate further
competitive advantage through the development of
products that have specific sustainability benefits.

Our primary focus is on activities thatprovide solutions for clean mobility andresource scarcity.
In 2019, 75% of Group revenues were from activities
that deliver products or services that are directly
linked to clean mobility or recycling, up from 72% in2018. Many of the materials and services making up
the remaining 25% 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).
To be a preferred sustainable supplier, we
work directly with our customers to meet theirenvironmental requirements and disclose our own
performance and ambitions. In recent years, somecustomers have opted for a third party sustainablesupplier assessment. For these customers, Umicore
discloses to the Carbon Disclosure Project (CDP).
Umicore has fully monitored and reported onemissions since 1999 and included reduction targets
in our strategic approach in 2010. We delivered
emissions reductions beyond our targets then, andtoday are committed to continuous improvement of
our environmental performance even as we continue
to grow through 2020.
To support our ambition to turn sustainability intoa greater competitive advantage, it is essential todevelop a full understanding of the impact that our
products have on the world and use it as a lever for
improving the footprint of our products and services.
At Umicore, the business units work with corporate
EHS on life cycle assessments (LCA) to identify theenvironmental impact of their products and services
and set a baseline against which improvements canbe measured. We share our learning and participate inassociation-driven efforts, such as those of the Nickel
Institute, the International Platinum Association and
the Cobalt Institute.
In 2019 we performed an LCA on our cathodematerials and had our data verified by a third party.
Using the opportunities identified in this new robust
data, Umicore can leverage our unique combination ofmaterials chemistry, energy mix and raw and recycledmaterials for improved overall environmental impact
and a lower-carbon mobility. Umicore will continue
to develop selective products and services thathave specific sustainability benefits and answer thegrowing sustainability needs of our clients.

40

supply. For years EOM has been successful in offering
germanium recycling services to its customer base,who return germanium-containing waste streams to
Umicore for reprocessing into new products.
In 2019 the EOM team harnessed the closedloop model by installing state-of-the-art Umicore
technology at selected customers’ facilities.
Onsite germanium recycling provides significant
financial and environmental advantages in terms of
avoided sourcing and shipping costs and impact, in
addition to increased resource efficiency. This typeof innovation, which requires a close collaboration
between multidisciplinary teams, will increase
Umicore’s growing sustainable germanium supply inthe years to come.

We develop specific sustainability solutions
for our products and their applications byworking closely with customers.
In 2019, Audi and Umicore successfully completed thetest phase of a strategic research partnership, having
successfully recovered over 90% of the cobalt andnickel in Audi e-tron high-voltage batteries. In thesecond phase of this project, we will cooperate ona closed loop for cobalt and nickel. The recoveredmaterials will be used in new battery cells.

An LCA study we published in 2015(1) revealed that the
global warming potential of germanium extracted
from recycled sources is significantly lower thanthat of primary germanium sources. The Umicore
ElectroOptic Materials (EOM) business unit wasdetermined to maximize its sustainable germanium(1) Robertz, B., Verhelle, J. & Schurmans, M. JOM (2015)
67: 412. https://doi.org/10.1007/s11837-014-1267-6

Umicore Integrated Annual Report 2019

VALUE CHAIN & SOCIETY
CLEAN AIR IS OUR BUSINESS
Clean air is at the core of Umicore’s vision. We are
one of the world’s leading producers of catalysts usedin automotive emission systems and, with over 2000
installations worldwide, we are a leading supplierof Selective Catalytic Reduction (SCR) systems forstationary use (industrial plants and ships).
POWER GENERATIONPower generation from gas turbines, biomass, waste
to energy and engines also generates harmful
emissions. Using an emission control catalyst,
most of these emissions can be reduced or, insome cases, completely neutralized. Umicore’s DNX
and DNO catalysts are responsible for reducing
harmful emissions for over 100 gigawatts of power
production worldwide.

Horizontal DNX module being hoisted for DeNox installation

Stationary
catalysis
UMICORE.COM/INDUSTRIESMARINE PROPULSION
As of 2021, the majority of new ship engines will
be equipped with SCR systems to reduce NOx
emissions. Strict demands for reduction of SOx, CO2
and particulate matter emissions are also increasing.
Umicore has supplied SCR systems and catalysts formarine engines since 1988. Today, a dedicated focus
on the challenges in the marine industry enables us
to provide SCR catalyst and technical assistance forall existing fuels and configurations. Umicore Marine
SCR DNX® catalyst is optimized for eliminating NOx
from engines of all sizes. We have introduced new
catalytic products, uniquely designed for marine
applications, that are vibration resistant and perform
well within regulations.
REFINING AND PETROCHEMICAL
Refined and processed petroleum products, suchas plastics, affect almost every aspect of daily life.
Umicore’s DNX and DNO catalysts play an important

41

role in reducing harmful emissions in this industry,helping customers meet strict air emission limits
while minimizing downtime and limiting impact onplant operations.
CHEMICAL AND INDUSTRIAL
Umicore’s catalysts enable industrial plants to improve
air quality in their communities. This is the widest
area of application with many different requirements.
Plants producing nitric acid, sulfuric acid, food &beverage, specialty chemicals, alumina, glass, steel
and cement are just a few examples for which Umicore
supplies SCR catalyst for emission control.
ON THE ROAD OR IN INDUSTRY, UMICORE
DELIVERS CLEAN AIR TECHNOLOGY
Umicore’s highly efficient Nitrogen Oxide (NOx)catalysts can reduce over 95% of NOx emissions
while our carbon monoxide (CO) and Volatile
Organic Compounds (VOC) reduction catalysts can
reduce both CO and VOCs emissions by more than
99%. Both catalyst types can be combined into asingle product, ensuring energy-efficient removal ofNOx, CO and VOC from air and waste gas streams.
Our catalysts and particulate filters have prevented
hundreds of millions of tonnes of harmful pollutantsfrom being emitted into the air.
A GROWTH MARKET
Annual growth in the market for emission control
catalysts in industrial applications is assessed at 9%
globally. A significant part of this growth is in China
where the government is determined to win the battleof protecting the blue sky. In China new emission
control systems will be installed in large-scale
manufacturing industry, vessels built in China and thepower segment.

Umicore Integrated Annual Report 2019

42

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 and environment

SEE RISKS ON PAGE 57

CASE STUDY

Energy storageat Umicore’s Olen site
In October 2019 Umicore implemented an industrial
battery system on our Olen site, demonstratingenergy storage on a large industrial scale, with asystem consisting of 48 used batteries from electriccars, now forming one large storage battery of 1.2 MW
or 720 kWh.

ANNUALREPORT.UMICORE.COM/STORIES

Energy storage installation in Olen

Umicore is pursuing three goals with this project:supporting the cradle-to-cradle principle and circular
economy, learning and identifying opportunities in thebalancing market, frequency containment market or
smart energy management and aiming for a healthy
Internal Rate of Return (IRR).

Umicore Integrated Annual Report 2019

43

Eco-efficiency
WE AIM TO OPTIMIZE THE SUSTAINABILITY PERFORMANCE OF OUR OWN OPERATIONS, FOCUSING ON ENERGY EFFICIENCY-23%

ENERGY CONSUMPTION VS 2015

Our success is measured in our ability to makesustainability a competitive advantage by being
increasingly energy and material efficient comparedwith our 2015 baseline.

RESOURCE EFFICIENCY
%
100
80
60

-59%

METAL EMISSIONS TO AIR VS 2015-57%
METAL EMISSIONSTO WATER VS 2015

52

55

‘15

‘16

62

58

60

40

Secondary andend-of-lifematerials

Umicore is a world leader in theeco-efficient recycling and refining of
precious metal-bearing materials.

20
0

‘17

‘18

‘19

As a materials technology company, we
aim to drive an even more efficient useof metals, energy and other inputs inour operations to balance environmental
and economic factors and work toincrease closed-loop relationships withour customers.
As part of our commitment to sustainability, we take into
account the environmental impact of our operations,and strive to continuously improve our environmental
performance, implement risk management strategies
based on valid data and sound science, actively
participate in the management and remediation ofrisks that are the result of historical operations andfacilitate and encourage responsible design, use,
re-use, recycling and disposal of our products.

These materials include by-products from other nonferrous industries, end-of-life consumer and industrial
products and e-scrap. Our eco-efficient process
entails maximizing both the physical recycling ofmaterials and the revenue obtained, while minimizing
the associated environmental burden and total cost.
We recover and sell precious, special, secondary andbase metals and our closed-loop business 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 2019, despite an
ongoing expansion and capacity ramp-up requiring
additional primary raw materials, we still secured overhalf our materials supply from non-primary sources:
60% of the materials we used were from end-of-lifeor secondary origin, while 40% were of primary 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.

We continue to invest in research to innovate
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 2019

ECO-EFFICIENCYNORMALIZED ENERGY CONSUMPTIONMETAL EMISSION REDUCTION
TO WATERMETAL EMISSION REDUCTION
TO AIR

%

%

%

100

100

100

94
79

80

71

77

60

99

100

80

40

20

20
‘15

‘16(1)‘17(2)‘18(3)

‘19

0

100

80

60

40

0

100

44

70

60
43

‘15

‘16(3)

31

29‘17(4)‘18(5)

59

40

54
41

20
‘19

0

‘15

‘16(3)‘17(4)‘18(5)‘19(1) and (2) see note E4 in Environmental Statements(3), (4) and (5) see note E2 in Environmental Statements(3), (4) and (5) see note E2 in Environmental Statements

ENERGY EFFICIENCY

reduction in energy consumption compared to the 2015baseline, correcting for production intensity. This result
is the combination of improvements in productivity andthe implementation of energy efficiency projects.

water 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.

When looking at our direct carbon emissions, despite
our continued growth, we only register a 3% increasein comparison with 2018.

The aim for 2020 is to reduce metal emissions impacts
while considering growing volumes of production.
While monitoring continues on all sites, reporting
focuses on the 10 or fewer sites that contribute to 95%
of the emissions expressed in impact.

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.
Several Umicore sites have implemented the ISO
50001 energy efficiency standard and the 2 largest
sites in Belgium have been part of the energy
efficiency covenant with the Flemish government
since 2004.
In 2019, 27 sites accounted for 95% of the Group’s
energy consumption with a total of 34 energy efficiency
projects implemented over the course of the year.
By the end of 2019, Umicore had achieved a 23%

In recent years, as part of our commitment tosustainable operations, we began examining theshare of renewable energy in our purchased energy
mix. 2019 marks the first year in which we havesystematically collected that information from oursites and can report the result: 14% of Umicore’spurchased electricity was sourced from wind, solar
and/or biomass energy.
While choosing the share of renewables in ourpurchased energy mix is a challenge in some of theregions where we are most active, Umicore is actively
pursuing an increase in the share of renewables inour purchased energy mix.
METAL EMISSIONS
We monitor and take steps to reduce the impact
of metals emissions on the environment – both toCompared to 2015, after correction for activity levels,
the impact of metal emissions to water in 2019 fellby 57% largely thanks to improvement projects on oursites. Compared to 2018, short-term and temporarily
reduced efficiency at the Hoboken treatment plantin 2019, combined with higher activity levels, led to
an increased impact to water. Our overall reduction
compared to 2015 shows that we remain committed
to the continuous improvement goals defined in
Horizon 2020.
In 2019, the impact of metal emissions to air fellby 59% compared to 2015, mainly thanks to further
efforts to improve filtration and process efficiency.
For more, see note E2.

Umicore Integrated Annual Report 2019

ECO-EFFICIENCYSTEWARDSHIP
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
the need for cleaner air and resource stewardship,and environmental performance and safety are at
the heart of our process designs.
Umicore continues to provide advanced emission
control and battery material technologies while
advocating for a ramp-up of clean energy andclean mobility technologies. We also emphasize thelinks between a Circular Economy and responsible
sourcing, resource efficiency, waste management
and high-quality recycling. We aspire to turnsustainability into a greater competitive edge throughour unique business model and our commitment
to ethical and responsible sourcing.
Part of our commitment to sustainability is to take into
account the environmental impact of our operations
with growing and expanding capacity. Many factors
are considered in choosing to build new sites or to
expand existing sites.
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 makeuse of wind, hydro and photovoltaic energy.
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.
For more, see note E7.

45

PROJECTED SHARE OF EVS IN FLEETPROJECTED AVERAGE FLEET EMISSIONS%

Grams of CO 2 per kilometer

100

120

80

100
80

60

No action
New car policy

40

99

96

90

‘20

‘21

‘22

‘23

‘24

‘25

‘26

‘27

60

0

78

69

69

62

57

0
‘26

0
‘27

52

No action
New car policy

31

20
‘19

82

84

40

20
0

105

‘19

‘20

‘21

‘22

‘23

9
‘24

2
‘25

Graphs compare 2 scenarios : one in which no change is made to the existing Umicore car policy, and the other representing
an intake of plug-in hybrids and full EVs until 2022, followed by a gradual move to full EVs only in the subsequent years

SUSTAINABLE OPERATIONS: UMICORE UPDATES TRAVEL POLICY AND FLEET MIX
As a leader in sustainability, Umicore seeks to lead byexample and to make a real difference by striving to
reduce our environmental impact in everything we do.
To this end, in 2019 Umicore revised company travel andcar policies.
The overriding aim of Umicore’s new Responsible businesstravel policy is to reduce our environmental impact
through a substantial reduction in air travel. One solution
is to reduce travel to essential business needs andmaximize use of modern communication technologies, inparticular for internal meetings. When travel cannot be
replaced by video or voice communication, employees
take account of the carbon footprint when choosing thebest way to travel. High speed trains, now available inmany regions, are the preferred solution for destinations
within a range of approximately 500 km, while public
transport is preferred to cars and taxis in urban areas.
Umicore employees are expected to re-examine andchange their habits – such as driving frequency and style– in order to contribute to a cleaner environment withoutcompromising safety, cost or quality.

Umicore has also decided to accelerate the greening of
its own company car fleet. Starting in Belgium, where
Umicore headquarters has its largest company car fleet,car policy was redefined in 2019, aiming to reduce ourcarbon emissions rapidly and drastically. This new policy
came into effect on 1 January 2020. Other countries will
apply this example to local legislative conditions in 2020.
The main principles of the new car policy are that Umicore
will only lease or buy full electric vehicles (EV) or plugin hybrid vehicles (PHEV). Eventually, only EV models will
be authorized. Umicore sites will provide appropriate
charging facilities. Employees will be able to opt out of
the company car system and receive a compensation in
the form of gross salary. Umicore will of course continue
to promote the use of public transport.
In 2019 Umicore also created a voluntary Umicore
Climate Action Program for employees, aiming to collectand implement ideas to reduce the carbon footprint ofUmicore’s non-industrial activities. Proposals should
contribute to carbon emission reduction, focusing on
employees’ behavior and changes in the working
environment. Successfully implemented proposals will be
eligible for Umicore Awards.

Umicore Integrated Annual Report 2019

ECO-EFFICIENCY€ 211m2019 R&D SPEND

Research, development & innovation
R&D EXPENDITURE

intellectual property with patents. 56 patents werefiled in 2019.

Millions of Euros
250
200‘15 | 144
‘16 | 156
‘17 | 175
‘18 | 196
‘19 | 211

150

15
R&D SITES

1,214
R&D EMPLOYEES

46

100
50
0

‘15

‘16

‘17

‘18

‘19

Technology is at the core of our success.
As a materials technology company, our future successdepends on our ability to develop and market innovative
products and services. We strive to meet the needsof a rapidly changing 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.
We have prioritized our R&D programs to support our
Horizon 2020 ambitions, focusing on the developmentof closed-loop material solutions. We are working
to meet growing demand by consistently investing inresearch for clean mobility materials and for recycling
precious and other valuable metals.
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

Umicore continues to invest in R&D and to attract
international scientific talent to develop the next
generation of sustainable products and process
technologies for our customers. Umicore R&D
employees cover 34 nationalities in 15 locations,and in 2019, 1 in 4 were women. Over the past 4
years, the R&D investments increased by 40%.
In 2019 Umicore invested € 211 million on R&D with asignificant increase in rechargeable battery materials
development. The R&D spend represented 6% ofrevenues and capitalized development costs accountedfor € 35 million.
CLEAN MOBILITY INNOVATIONThe clean mobility trend, toward zero well-to-wheel
emission standards, points to a combination of electricand hybrid vehicles, fuel cells vehicles and carbon
neutrally fueled internal combustion engines.
Umicore has a unique position in clean mobility
materials across all drive-train technologies. It is oneof three global leaders in emission control catalysts
for internal combustion engines, a leading supplier ofmaterials for rechargeable batteries used in electricvehicles and catalysts for fuel cell applications.
Recent legislation will require gasoline vehicles to beequipped with particulate filters. Our work focuses on
improved catalyst technologies for gasoline and diesel
vehicles and for fuel cells to meet these increasingly
stringent regulations. For gasoline particulate filters(GPF), Umicore is optimizing the distribution of thecatalytic material in the pores of the filter so that an
optimal balance of backpressure, filtration efficiency

and chemical reactivity is obtained. Using x-ray
tomography on automotive exhaust through a catalyst,
in combination with flow simulations on the resulting
data, Umicore R&D developed targeted optimizationof the catalyst distribution to improve the coating ofnext generation GPFs. This work was performed incollaboration with Polytechnique Montreal and the
Fraunhofer institute IWTM in Kaiserslautern.

Umicore’s battery materials innovation
pipeline spans the next 20 years driving
energy density in today’s and tomorrow’s
Li-Ion and solid state batteries.
Our competencies and expertise in materials scienceand deep understanding of battery applications
form a sound basis for this materials research anddevelopment. These new developments entail bothcathode and anode materials. To enable advanced Liion technologies we are developing silicon composite
anode material. In combination with high nickel
cathode materials, this will allow for high volumetricenergy densities, long cycle life and fast charging.
Looking further in the future of battery technologies,
solid-state batteries that no longer use liquid
electrolytes offer great prospects for increasing energy
density and safety. Umicore R&D is developing next
generation active cathode materials tuned for different
solid electrolyte chemistries.

Hydrogen is a promising future clean fuelwhich is converted into clean electricity byfuel cells.

Umicore Integrated Annual Report 2019

ECO-EFFICIENCY
Umicore‘s Proton Exchange Membrane fuel cell
catalysts use hydrogen in stationary and mobility
applications on the path to zero emissions. Our fuelcell catalyst portfolio covers all relevant technologies
for both anode and cathode electrode applications.
Working with platinum and platinum alloy on carbon
catalysts as well as special protective additives,
Umicore R&D improves the robustness of the fuelcell under critical operating conditions to achieve
performance requirements in vehicle applications
INNOVATION IN RECYCLING
Umicore is the world’s leading recycler of complex
waste streams containing precious and other valuable
metals, including from batteries and catalysts. Umicore’s
closed-loop business model will be a powerful strategic
differentiator for the foreseeable future.
Umicore’s urban mine to wheel cycle starts byensuring responsible sourcing, either from sustainablesources or from recycled feed from our own recycling
facilities. Our innovative state-of-the art recycling
plants meet the highest environmental standards
and can recover high percentage yields of nonferrous metals that are then used in our production
processes. We produce best-in-class high technology
materials for a range of clean mobility applications.
Any production scrap created during production goes
directly back into the cycle, including intermediates
and production scrap created along the value chain.
The loop starts again once Umicore receives end-oflife products.

47

The efficient recycling of precious metals bearing
catalysts from automotive applications and fromchemical processes has always been a corecompetence of Umicore Precious Metals Refining.
The continuous growth of the catalyst market has led toincreasing complexity in catalyst composition, physicalstate and variety of catalyst types. This creates newchallenges for the effective recycling of these catalysts
and initiated a number of research programs to treat
increased and more complex volumes of recyclable
material more efficiently.
DIGITAL TRANSFORMATION
Umicore’s digital strategy is focused on four highvalue opportunity domains: digital manufacturing,
digital supply chain, product and process innovationand digital enterprise. Thanks to centralized digital
expertise centers, synergies across all domains andbusiness units are maximized.
In our data science expertise center, a wide variety
of data sources, from raw materials to production
and quality data, are connected and analyzed using
machine learning techniques, to distil new insights toimprove the quality of the final product.

Digitalization provides a competitive
advantage in innovation and operational
excellence.

Umicore Integrated Annual Report 2019

ECO-EFFICIENCY
A carbon neutral economy by 2050 will require further
adoption of clean mobility solutions and renewableenergy sources for electricity such as hydrogen andother alternative fuels with zero carbon footprint(synthetic fuels, e-fuels, biofuels, etc.). Clean cities
with zero local emission and with zero-waste streams
are the ultimate goal. The evolution towards zerowaste streams will put even more emphasis on
circular economy to address resource scarcity in all
smart sectors (mobility, IoT, Industry 5.0, etc.).

“Growing our technical competences forour current markets and expanding thatknow-how into new markets, is thebasis of our future success.”–An Steegen, CTO

Fuel cell testing environment

R&D fit for
future growthTechnology innovation and differentiation remains key
for our future growth.
Innovation is value creation through knowledge.
We continuously strengthen our in-house competenceexpertise in metallurgy, chemistry and materialscience, while constantly expanding our external
collaboration network.
Our core competences provide fundamental insights
about materials, their critical properties, and how
they can be tuned to drive performance. A deeprooted fascination for how materials function at an
atomic scale in their respective applications allows us
to develop predictive power for their efficient andtargeted improvement.

48

Our forward-looking approach for materials R&D istherefore based more than ever on expanding our
expertise in the synthesis of novel materials, theirmodeling, advanced characterization, and testing bymeans of relevant proxies that enable fast and reliable
feedback loops.
In collaboration with a world-class research
institution, for example, we develop optimized
catalyst materials with unique features, supported
by highly advanced materials characterization,such as unique solid-state magnetic resonancespectroscopy. This technology is applied for studying
the local structures and electronic properties ofbattery materials as a function of their state of charge.
This work takes many years to materialize but is abreeding ground for ideas, insights, novel materials
and corresponding IP. Our ambition for the future is tosteadily grow our portfolio of collaborative programswith research institutes and universities worldwide
that focus on measuring and understanding materials
functionality, leading to better product design.
Umicore supports open innovation and the creationof materials technologies through joint development
programs focusing on rechargeable batteries, catalysis
or digital connectivity. In 2019 we structured our
venture capital approach to enable selective direct
investments in start-up companies with which wehave such collaborations.

Umicore Integrated Annual Report 2019

49

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 57

CASE STUDY

Cultivating Young Talent
As part of our contribution to the well-being of thecommunities in which we operate, Umicore provides
dual training programs, allowing students to acquire
professional experience in a real work environment
during their studies. For Umicore the program is an
opportunity to develop a pool of talent while helping
students start their professional careers.

ANNUALREPORT.UMICORE.COM/STORIESJohann Lindenmayer, dual learning student, with his mentor Thomas Müller, in Hanau, Germany

At the Hoboken plant in Belgium, the dual
learning program was launched 2 years ago inclose collaboration with several different schools.
This initiative is also present in countries outside
Belgium such as Germany, Austria and Liechtenstein.

Umicore Integrated Annual Report 2019

50

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

11,152
GROUP EMPLOYEESTOTAL WORKFORCEWORKFORCE BY REGION

16,000Fully
consolidated Associatedcompanies
companies‘15 | 3,301‘15 | 10,429‘16 | 3,196‘16 | 9,921‘17 | 3,360‘17 | 9,769‘18 | 3,180‘18 | 10,420‘19 | 2,976‘19 | 11,152

12,00094%
RETENTION RATEWORKFORCE BY BUSINESS GROUPNUMBER OF EMPLOYEES

8,000
4,000
0

‘15

‘16

‘17

‘18

2%

10%

30%
55%
6%

Europe | 55%
North America | 7%
South America | 6%
Asia-Pacific | 30%
Africa | 2%

7%

29%
26%

Catalysis | 29%
Energy & Surface
Technologies | 36%
Recycling | 26%
Corporate | 10%

36%

‘19

Our success is measured by 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 a disruptive industry, we need to continue
innovating, challenging the status quo and growing,
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. 11,152 employees currently
work at Umicore, across 50 production sites, 15
research & development centers and in supporting
offices including our global headquarters in Brussels.

Our Horizon 2020 strategy is designed to consider the
future trends that impact Umicore, the labor market
and societal expectations. Our objectives are centeredon health and safety, talent management, diversity
and employability – 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 our longterm goals of eliminating lost-time accidents andoccupational-related ill-health and to seek new waysof engaging colleagues by promoting safety andwellbeing in the workplace.

Umicore Integrated Annual Report 2019

GREAT PLACE TO WORKEXPOSURE RATIO‘ALL BIOMARKERS AGGREGATED’HEALTH & SAFETYLOST TIME ACCIDENTS
100

90

80
60

59
47

51

4.0
3.2

3.0

61

2.7

2.8

2.3
1.8

2.0

40
1.0

20
0

‘15

‘16

‘17

‘18

‘19

ZERO ACCIDENTS

The safety of our people is a key priority
for management.
In 2019, while 83% of the reporting sites operated
without a lost time accident, our overall safety results
were again disappointing.
We recorded 90 lost time accidents in 2019 compared
to 61 in 2018. The frequency rate increased from
3.36 to 4.6 over the same period and the severity
rate from 0.1 to 0.2. 91% of those accidents occurredin Europe, mostly at Belgian sites.
There is a clear need to change behavior and mindset
to install a true safety culture. Cultural change isan endeavor over time and Umicore is committed
to creating a safe and great place to work. We willcontinue our ongoing efforts and are implementing
new specific and targeted measures, including
awareness campaigns and specific programs aimed
at changing mindset and creating a more prominent
safety culture.

0

‘15

‘16

‘17

‘18

‘19

In 2019, process safety activities focused on executing
process risk assessment studies. At year end, 60%of the production processes had received specificprocess hazard and risk assessments compliant with
Umicore standards. A detailed timeline for completionof the remaining studies over the coming years
gives priority to processes with high risk profiles.
Umicore continues our internal HAZOP leader
training program to increase and secure process
safety knowledge.

51

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 2019, a total of 7,481 biological samples were takenfrom employees with occupational exposure to at least
one of the metals mentioned above (platinum salts
excluded). 135 readings showed a result in excess of
the internal target value, bringing the total excess rate
to 1.8%, down from 2.8% in 2018. All occupationally
exposed employees are regularly monitored by an
occupational health physician.

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.

Umicore Integrated Annual Report 2019

GREAT PLACE TO WORK52

TALENT MANAGEMENTWORKFORCE BY REGIONVOLUNTARY LEAVERSRATIO BY REGIONAVERAGE NUMBER
OF TRAINING HOURS PER EMPLOYEENUMBER OF EMPLOYEES%HOURS/EMPLOYEE

7,000

15

50
45
40
35
30
25
20
15
10
5
0

6,000
5,000
4,000
3,000
2,000

Africa | 244
Asia-Pacific | 3,306
South America | 617
North America | 826
Europe | 6,159

10

5

Africa | 5
Asia-Pacific | 12
South America | 2
North America | 7
Europe | 3

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 11,152 at the end of 2019 from
10,420 in 2018, in line with Umicore’s growth trajectoryand primarily reflecting new hires in China, Korea andBelgium and the acquisition of a new site in Kokkola,
Finland. This growth shows that Umicore continues
to be an attractive employer with wide recognition of
its pioneering role in sustainability.

0

Umicore can attract, develop andretain high caliber leaders byoffering attractive and challenging
leadership roles.
In 2019, we implemented new measures to improve
both the candidate and the new hire onboarding
experiences, and a new Learning & Development
curriculum for both managerial and non-managerial
staff. These efforts are positively reflected in ouroverall retention rate of 94%, up from 92% in 2018.

‘15 | 45
‘16 | 41
‘17 | 45
‘18 | 43
‘19 | 49

‘15

‘16

‘17

‘18

‘19

Umicore provides managers with a training curriculumaligned across all regions and promotes careerdevelopment using an internal online vacancies tool,promoting greater internal mobility. Training at Umicore
encompasses traditional classroom-type modules,
e-learning and in-service instruction.
In 2019, the average training hours per employee
reached 48.7 hours, an increase from 2018.
While overall managers’ training hours (43 hours)
are up from 2018, they remain lower than for other
employees (49.5 hours).

Significant regional differences in retention rates
continue, with Asia-Pacific reporting the highest
voluntary leaver rate at 11.87%, an improvementfrom 16.55% in 2018. This is not unique to Umicore
and is due to the highly competitive and fluid labormarket in the region.

Umicore Integrated Annual Report 2019

GREAT PLACE TO WORK

53

DIVERSITY

57%

200
150

10

100

20.88
23.13
14.90

15.08

5

50
0

9.70

15

6.77

250

15.55

20

300

14.27

Employee age< 30 years | 19%
Employee age between
30 and 50 years | 57%
Employee age> 50 years | 24%

21.92
22.37

25

350

9.09

24%

21.60
22.11

400
19%

10.96

%
21.30
22.98

WOMEN AT UMICORENUMBER OF EMPLOYEES

21.72
22.18

WORKFORCE AGE DISTRIBUTION (1)9.49

WORKFORCE AGE SPLIT

15

20

25

30

35

40

45

50

55

60

65

70

0

‘15

‘16

‘17

‘18

‘19

Amongst all
employees
Amongst all
managers
Amongst senior
management
In “business
operations”
management(since 2016)(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 theirdiverse 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 our management teams. Currently,
18.49% of the top management positions in Umicore
are filled by non-Europeans, up from 2018.
Considering that 60% 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 cover 74 nationalities, and in 2019,42 nationalities were included among our new hires,both up from 2018 levels.
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, the career prospects for talented womencan still be improved within Umicore. In 2019, only
20.88% of Umicore employees were female, a slight
drop from 2018. This is attributed to our growth inindustrial operations, where candidates are usually
male. Women continue to be more prevalent in
administrative, support and commercial functions
than in industrial operation roles.

Women in senior management increased to 10.96%
in 2019, up from 9.7% in 2018. In 2015 we set theambition of reaching 15% of women in senior
management functions by 2020 and we will strive toreach this goal at the earliest possible date.
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 2019, 18 managers participated in the program.

Women in management roles have steadily increased
from 18.65% in 2010 to 23.13%. in 2019. While there
was an increase in the overall number of womenmanagers in “business operations” functions compared
to 2018, the total number of managers in thesefunctions also grew, leading to a slightly decreased
share of women in these roles from 15.08% in 2018
to 14.90% in 2019. These functions are considereda pipeline for senior leadership positions.

Umicore Integrated Annual Report 2019

GREAT PLACE TO WORK54

EMPLOYEE ENGAGEMENT
In today’s dynamic environment, digital literacy anda mindset focused on collaboration, transparency andself-organized learning are crucial. If applied correctly,
digital tools can improve efficiency, productivity andinnovation. But it isn’t enough just to provide tools andtraining. The most difficult and most important stepis to change familiar patterns and ways of thinking.
Employees need to break out of their comfort zone,
share successes and failures transparently, try out new
approaches, network across regions and departments,
take the initiative and be empowered to do all thisthrough an appropriate environment.

The vision of our digital workplace
is to enable everyone within Umicore
to collaborate from anywhere in
the world.
Our colleagues will share their experiences andknowledge through a worldwide network andlearning will become part of our daily routine.
Everyone will feel empowered to work in an
increasingly complex and fast-changing world.

The project approach was also unique by
delivering digital content on a personal level.
So that employees can find experts in their“normal” working environment who are familiar
with both the specific local procedures and the
new tools, we created an ambassador communityof “digital heroes”. Various local live events led bydigital heroes help inform colleagues all over theworld. For top management, we initiated a reverse
mentoring program to allow learning in a confidential
and customized setting.
Another special feature was the feedback-based
structure of the project: both in terms of technology
and content, the digital workplace and the associatedcommunication and training materials were
tested by digital heroes before the project launch.
The communication and training materials wereadapted and optimized before the launch, based on
their experience.

In 2019, an interdisciplinary team started to turnthis vision into reality, taking an important step
forward in Umicore’s digital journey. In December 2019,the Digital Workplace project was launched globallywith the slogan “Stay up to date. Let’s upgrade”.
All communication, from news articles to training
materials, was provided in 8 languages, so thatover 90% of Umicore employees were addressedin their native tongue. Time-critical activities, suchas webinars, were provided at different times tocover all time zones.

Umicore Integrated Annual Report 2019

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
and disruptive 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
we have already achieved.
Bertrand Hurault and Gatien Feat at the site in Acigné, France

Working at Umicore
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 from clean
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.

55

Leading for Excellence (L4E) is offered to a selectedgroup of managers in the Asia Pacific region to drive
performance in the region by fostering collaborationand engagement across sites and sharpening
leadership skills.
Entrepreneurs for Tomorrow (E4T) is offered to aselected group of middle 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.

The Junior Management Programme ( JUMP) is offered
to a selected group of junior managers using a“twin-coaching” format, bringing together twoparticipants from different regions and business
units, but within the same function family, to developinternational thinking, shadow best practices andprovide exposure to other business units.

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RISK MANAGEMENT AND INTERNAL CONTROL

56

Opportunities & risks
RISK MANAGEMENT & INTERNAL CONTROL57

KEY RISKS & OPPORTUNITIESRegulatory and legal context
Sustainable and ethical supply
Technology and substitution
MarketMetal priceTalent attraction and retention
Climate and environment

59
60
61
62
63
64
65
66

Umicore Integrated Annual Report 2019

RISK MANAGEMENT AND INTERNAL CONTROL
Each business unit operates in an environment which
carries specific growth expectations and differing
degrees of market and technological uncertainty
that could impact strategic objectives. As such, theprimary source of risk and opportunity identification
lies within the business units.
Similarly, each business unit is responsible for
mitigation of its own risks. Mitigating actions
are systematically reported corresponding to therespective strategic objectives and identified risks.
Specific corporate departments are also tasked withmanaging and mitigating certain risks under the
auspices of the Executive Committee. These risks
cover Group-wide elements that extend beyond thepurview of individual business units. These include
environmental risks, financial risks etc.

Michael Kupgisch and Phillip Diaz in Bayport (TX)

Risk management
and internal control

OUR INTERNAL CONTROL SYSTEM
Internal control mechanisms exist throughout Umicore
to provide management with reasonable assuranceof our ability to achieve our objectives. They cover:– Effectiveness and efficiency of operations– Reliability of financial processes and reporting– Compliance with laws and regulations– Mitigation of errors and fraud risks
Umicore adopted the COSO framework for its
Enterprise Risk Management and has adapted its
various constituents within its organization andprocesses. “The Umicore Way” and the “Code of
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.

57

Specific internal control mechanisms have beendeveloped by business units at their level ofoperations, while shared operational functions andcorporate services provide guidance and set controls
for cross-organizational activities. These give riseto specific policies, procedures and charters covering
areas such as supply chain management, humanresources, information systems, environment, healthand safety, legal, corporate security and researchand development.
Umicore operates a system of Minimum Internal
Control Requirements (MICR) to specifically address
the mitigation of financial risks and to enhance
the reliability of financial reporting. Umicore’s MICR
framework requires all Group entities to comply
with a 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, 4 cycles (Internal Control
Environment, Tax, Inventory Management and Hedging)were reviewed and assessed in the course of2019 by the 99 control entities currently in scope.
The Minimum Internal Control Requirements inInformation Technology Management have beenreviewed and updated. The assessment of thiscycle is planned for the year 2020. 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 complianceassessments during its missions.

Umicore Integrated Annual Report 2019

RISK MANAGEMENT AND INTERNAL CONTROL58

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 developmentsor regulatory changes against thebusiness strategy 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 2019

59

Managing risk effectively
WE TAKE A BALANCED APPROACH TO MANAGING RISK AND SEIZE 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 64

READ MORE ON PAGE 65

VALUE CHAIN
AND SOCIETY
ECO-EFFICIENCYCHANGE INRISK PROFILECHANGE IN
OPPORTUNITY
PROFILEMORE
INFORMATIONREAD MORE ON PAGE 60

READ MORE ON PAGE 61

READ MORE ON PAGE 62

READ MORE ON PAGE 63

READ MORE ON PAGE 66

Key:   increase   no change

Umicore Integrated Annual Report 2019

KEY RISKS AND OPPORTUNITIES

60

Identifying the main issues that could impact our business
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 standto benefit from certain regulatory trends, notably those regarding
more stringent emission controls for vehicles, low carbon mobility
and enforced recycling of end-of-life products.
Some regulations, such as environmental or product-related laws,
can present operational challenges, higher costs and a potentially
uneven competitive environment.
Data protection, IP and IP protection-related matters impact technologydriven businesses.

CHANGE IN RISK PROFILE

Increase
CHANGE IN
OPPORTUNITY PROFILENo change

CHANGE IN CONTEXTWorldwide, changes to existing product-related legislation andthe introduction of new legislation might impact our business.
Although the European REACH regulation is still the most relevantfor Umicore, Korean REACH 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
and catalytic filters, and increase the demand for electric vehicles.
Geopolitical conditions, trade and tariffs continue to be a factor in
Umicore’s trans-border activities.

MEASURES TAKEN BY UMICORETo ensure ongoing compliance with environmental legislation on
our industrial sites, Umicore has a well-established EHS compliance
audit 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 legislators ofvarious 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 or establish
production capacity of cathode materials in China and Europe,
respectively, is on track.
We monitor that our products have the freedom to operate and we
proactively manage our patent portfolio.
Umicore trade compliance closely follows and responds to global
trade conditions.
Umicore monitors closely all changes in interpretation as well as
guidance documents that might affect its REACH implementation
strategy. In 2019 we submitted 28 additional substances for registration
under REACH due to new business developments. As part of regular
maintenance, we updated 47 REACH dossiers. Umicore has submitted
5 registrations in Korea in 2019 for priority chemical substances andhas submitted 2 new substance registrations.

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KEY RISKS AND OPPORTUNITIES261

SUSTAINABLE AND ETHICAL SUPPLYSTRATEGIC FOCUS AREAECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY

CHANGE IN RISK PROFILE

Increase
CHANGE IN
OPPORTUNITY PROFILE

Increase

POTENTIAL IMPACT
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. Obtaining adequate supplies of these materials
is important for the ongoing success and growth of our business.
Some metals are also found in regions facing social challenges.
Trading in precious metals and minerals can be used to financearmed conflict, cause human rights abuses, draw upon forced or childlabor and support corruption and money laundering. We ensure thatprocurement 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 CONTEXTExisting and upcoming laws aiming to drive the responsible sourcing
of conflict minerals (tin, tantalum, tungsten and gold), have increased
the visibility and concern on the conditions around conflict mineralsourcing in public discourse.

MEASURES TAKEN BY UMICORE
Umicore has implemented policies and measures covering humanrights, the right for workers to organize, collective bargaining, equal
opportunities and non-discrimination, banning of child labor, banningof 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 which was renewed in 2019.
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 of minerals from conflict-affected and high-risk areas”.
In 2019, 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 Chainsfrom Conflict-Affected and High-Risk Areas’. Umicore continues toensure that its production operations are certified as conflict-free andreceives site and metal-specific responsible sourcing certifications
from the LBMA and RJC. For more information, see note V3.
We use our long-standing and growing experience in sustainablesourcing to advocate for more responsible sourcing. To read more aboutsome of our advocacy work, see Stakeholder Engagement p. 20

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KEY RISKS AND OPPORTUNITIES

362

TECHNOLOGY AND SUBSTITUTIONSTRATEGIC FOCUS AREAECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY
ECO-EFFICIENCYCHANGE IN RISK PROFILE

Increase
CHANGE IN
OPPORTUNITY PROFILE

Increase

POTENTIAL IMPACT
Umicore is a materials technology group with a strong focus on
the development of innovative materials and processes. The choice
and development of these technologies represents the single biggest
opportunity and risk for Umicore.
Umicore’s production plants and services highly depend on theavailability of IT services.
Unavailability of services, disruption of the supply chains or interruptionof our production facilities by cyber-attacks could have a major impact
on our customers. A compromise in the confidentiality of intellectual
property would negatively impact our competitive advantage.
Unauthorized modification of financial data would jeopardize accurate
reporting to shareholders.
Achieving the best cost-performance balance for materials is a priority
for Umicore and its customers. There is always a risk that customers
will seek alternative materials for their products should those of
Umicore not provide this optimum balance. The risk is especiallypresent in businesses producing materials containing expensive metals(especially those with historically volatile pricing characteristics).
CHANGE IN CONTEXT
Cyber-attacks may be very focused and advanced. The expanding threat
landscape and expanding digital footprint is leading to an increase incyber-attacks. Several cases of industrial manufacturing businesses
being interrupted for several weeks as the result of a cyber incident
have been extensively covered in the media.

In vehicle emission control, regulatory debates have reinforced theneed for a broad spectrum of technologies for both gasoline anddiesel applications.
MEASURES TAKEN BY UMICORE
Umicore assessed the state of cyber resilience of its IT landscapeagainst the current cyber threats. Our findings were translated ina cyber security roadmap. Progress is reported to the Executive
Committee semi-annually. Execution of the cyber security roadmap
is ongoing, awareness campaigns for the entire staff are organized
and the IT security organization has been extended.
Every year, the Executive Committee identifies innovation projects(“Top 10”) which are key to achieving Horizon 2020 (and beyond)growth ambitions and cover product and process developments.
A selection of these projects is reviewed during the year either
through dedicated technology reviews or as part of strategic
business reviews.
Previous years’ R&D investments have brought great success andcreated a space to shift R&D positioning. Umicore invested selectively
in new fields relevant to core activities in 2019. Overall spend wasequivalent to 6.2% of revenues and in 2019, the Innovation Fit for
Future program was launched to protect technology leadership andfuture growth.
Umicore patents disruptive technologies. In 2019, Umicore registered
56 new patent families.
For more information, see Innovation and R&D, p. 46.

Trends in rechargeable battery materials for automotive applications
have underscored that NMC materials with increasing nickel content
are the technology 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 and environmental impact across the entire battery value chain.

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KEY RISKS AND OPPORTUNITIES

463

MARKETSTRATEGIC FOCUS AREAECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY

CHANGE IN RISK PROFILE

Increase
CHANGE IN
OPPORTUNITY PROFILE

Increase

POTENTIAL IMPACT
The main industries served by Umicore are automotive (clean
mobility materials, recycling), consumer electronics (rechargeable
battery materials, recycling, coating and electroplating solutions) andnon-ferrous metal mining and refining industries (recycling activities).
Umicore is sensitive to any major growth or global reduction in activity
levels or market disruptions in these industries.
CHANGE IN CONTEXT
The global macro-economic outlook deteriorated significantly in
2019, particularly in the automotive sector. Trade and consumer
confidence continued to decline given geo-political and trade tensions,
uncertainty about Brexit, the slowdown of subsidy schemes andtariff implementations.

In recycling our process remains unique, giving a stable outlook in thishigh-value market, especially with increasing availability of complex
secondary materials. Also, China’s green fence policy resulted in higher
availability of end-of-life materials, such as printed circuit boards.
MEASURES TAKEN BY UMICORE
Umicore is delivering on its growth strategy in clean mobility materials
and recycling. As a result, Umicore delivered strong results in 2019
despite unfavorable conditions, having already reached the Horizon
2020 targets two years ahead of schedule. In recycling, a continuous
program of new investments optimizes performance and enhances
environmental impact.
For more information, see Driving Economic Performance, p. 26.

There was a significant contraction in global car production in 2019
– the strongest decline in car production since the 2008 recession.
The biggest reduction was observed in the world’s largest car market,
China, which contracted for the second consecutive year. Diesel car
production continued to decline in Europe. More stringent vehicle
emission legislation coming into force in key regions and the market
share of gasoline particulate filters increasing in Europe and China
should provide a longer-term uplift.
The risk profile reflects growing exposure to the automotive
industry and to Asia, in both cases driven by the sales of cathodematerials for use in electrified vehicles. Umicore should continue
to benefit disproportionally from the accelerating penetration ofelectrified vehicles given our broad portfolio of cathode material
technologies certified for the most stringent automotive requirements,
our industrial-scale production capabilities and our qualifications onover 20 platforms.
In consumer electronics there was also a slowdown in demand
which was caused by destocking across the value chain. In the energy
storage market in Korea, demand was very much down, owing tosafety incidents on certain installations.

Umicore Integrated Annual Report 2019

KEY RISKS AND OPPORTUNITIES

564

METAL PRICESTRATEGIC FOCUS AREAECONOMICPERFORMANCECHANGE IN RISK PROFILE

Change in perimeter(see Change in context)

CHANGE IN
OPPORTUNITY PROFILENo change

POTENTIAL IMPACT
Umicore’s earnings are exposed to risks relating to the prices of themetals which we process or recycle. These risks relate mainly to theimpact that metal prices have on the surplus metals recovered frommaterials 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.
Umicore also faces transactional price risks on metals. The majorityof its metal-based transactions use global metal market references.
If the underlying metal price were constant, the price Umicore pays
for the metal contained in the raw materials purchased would betransferred to the customer as part of the price charged for the product.
However, because of the lapse of time between the conversion ofpurchased raw materials into products and the sale of products, thevolatility in the reference metal price creates differences between theprice paid for the contained metal and the price received. Accordingly,
there is a transactional exposure to any ﬂuctuations in price between
the time raw materials are purchased (when the metal is “priced in”)
and the time the products 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.

CHANGE IN CONTEXT
Prices for precious metals strengthened in 2019, particularly in thesecond half of the year. Prices for palladium and rhodium increased
significantly, while gold, silver and platinum prices showed a moremodest increase over the full year cycle.
Demand for cobalt containing products was weak in 2019, as customers
were reducing excess inventories built up in 2018, when the cobalt
price was more than double the price of 2019. This more moderate
global demand resulted in continued pressure on the price.
MEASURES TAKEN BY UMICOREOver the course of 2019, Umicore entered into additional forward
contracts securing a substantial portion of its structural price exposurefor certain precious metals and base metals in 2020 and 2021, thereby
increasing earnings predictability. In particular for gold and palladium,
Umicore locked in more than half of its 2020 and 2021 exposure.
Umicore also hedged a significant portion of its platinum exposurefor 2020. In the absence of a paper market, no forward contracts
were entered into for rhodium.
For cobalt, Umicore’s transactional hedging policy aims to match toa maximum extent the pricing in and pricing out of the contracted
metal. Such physical back-to-back hedging in 2019 enabled Umicore to
manage transactional risks related to cobalt.

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
and in 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
and inventory risk related to the metal prices, see Statements, note F3.

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KEY RISKS AND OPPORTUNITIES665

TALENT ATTRACTION AND RETENTIONSTRATEGIC FOCUS AREA
GREAT PLACETO WORKPOTENTIAL IMPACT
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 do so would compromise our ability to deliver on our goals.
Horizon 2020 is predicated on disproportionate growth for Umicore
in Asia – a region characterized by highly competitive and fluidlabor markets. Umicore’s challenge is to attract and retain talent in
the region on a sufficient scale and at an appropriate pace.

CHANGE IN RISK PROFILENo change

CHANGE IN CONTEXTOur expansion, combined with competitive labor markets, has increased
our recruitment needs.

MEASURES TAKEN BY UMICORE
We continued to successfully recruit and retain employees in 2019,building on the strengths of our global employer brand. To bringon a large number of new talented people Umicore focused on an
improved candidate experience, an expanded onboarding approachand the implementation of retention measures.
To attract employees, we participate in job fairs, in campus events atuniversities and use professional recruitment and social media channels.
We address retention, especially challenging in Asia, with initiatives toimprove the well-being of our employees, by assessing and improving
our positioning of compensation and benefits and by offering learning& development opportunities for our employees.
We also ensure leadership development and give special attention to
the development of identified top talent through different initiatives
and are very well positioned in terms of employee engagement
and empowerment.

CHANGE IN
OPPORTUNITY PROFILE

Increase

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KEY RISKS AND OPPORTUNITIES

766

CLIMATE AND ENVIRONMENTSTRATEGIC FOCUS AREAECONOMICPERFORMANCEVALUE CHAIN
AND SOCIETY
ECO-EFFICIENCYPOTENTIAL IMPACT
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, environmentally-friendly technologies can only be obtained
as a by-product of other metals. Treating complex materials fromabove-ground sources, such as industrial residues and end-of-lifematerials, is increasingly important.
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.

CHANGE IN RISK PROFILE

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

No change

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

CHANGE IN
OPPORTUNITY PROFILENo change

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

into new products. In total we recover 28 metals from our closed loop
activities. Our high yield recycling process continues to be a driving
force in resource efficiency and contributing to the circular economy.
In 2019 Umicore carried out several studies to feed our processof climate and environment-related strategy for the future, theseinclude studying our scope 3 emissions and climate related risks andopportunities. Umicore performed a life cycle assessment on the
production of cathode materials and has identified the leverage it
can have for a lower carbon mobility through the right choice of thecathode chemistry, energy mix, and raw materials, including recycledmaterials. For the new battery production plant in Poland, Umicore
ensured that electricity will be from renewable sources.
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. For more information, see notes E2 through E6.
Our global footprint and diverse site locations reduce our exposure
to physical risks. New sites have been chosen considering proximity
to customers, access to skilled workforce, excellent logistics, infrastructureand green energy.
Umicore manages its historical environmental legacy, ensuring
adequate financial provisions that are reviewed twice a year. For more
information, see notes E7 and F29.

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 ahigh volume of our metals come from secondary sources – production
scraps, residues and end-of-life materials. We can also recycle
customers’ residues and production scrap to help them maximize
their material efficiency and then transform the recovered materials

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KEY RISKS AND OPPORTUNITIES

67

Leadership
Board of directors
Executive committee
Senior management
Management approach

68
73
76
78

Umicore Integrated Annual Report 2019

68

Board of directors
BOARD DIVERSITY
Tenure2

3(0-2 years) | 2(3-5 years) | 5(6+ years) | 3
5

Independence

4

Independent | 6
Non-independent | 4

6

Gender4
Male | 9
Female | 4
9Nationalities

Australia

Belgium

FranceGermany

Switzerland USA

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

Umicore Integrated Annual Report 2019

BOARD OF DIRECTORSTHOMAS LEYSEN

MARC GRYNBERGCHAIRMAN
Belgian, 59

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 froma non-ferrous company into an international
materials technology group called Umicore. He
joined Umicore in 1993 as member ofthe Executive Committee, and successively managed
several industrial divisions.
EXTERNAL APPOINTMENTS

69

LIAT BEN-ZUR

CHIEF EXECUTIVE OFFICER, EXECUTIVE DIRECTOR

INDEPENDENT NON-EXECUTIVE DIRECTOR

Belgian, 54

American, 43

DATE APPOINTED TO BOARD
19 November 2008

DATE APPOINTED TO BOARD
25 April 2017

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

EDUCATION
Electrical engineering – UC Davis, USA

EXPERIENCE
Marc Grynberg was appointed Chief Executive Officerof Umicore in November 2008 after heading theAutomotive Catalysts business unit from 2006 to2008 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 DuPontde Nemours in Brussels and Geneva.

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

EXTERNAL APPOINTMENTS
Non-Executive Director, Nexans SA, France

Chair, KBC Group, banking and insurance group, Belgium
Chair, Mediahuis, a major newspaper publishing group in
Belgium and The Netherlands

Business Administration – UCLA Anderson, USA

Chair, King Baudouin Foundation, Belgium

Key:

NR Nomination & remuneration committee (Chair)

NR Nomination & remuneration committee (Member)A

Audit committee (Chair)A

Audit committee (Member)

Umicore Integrated Annual Report 2019

BOARD OF DIRECTORSFRANÇOISE CHOMBARKOENRAAD DEBACKEREINDEPENDENT NON-EXECUTIVE DIRECTOR
Belgian, 57

MARK GARRETT

INDEPENDENT NON-EXECUTIVE DIRECTOR
NR

70

INDEPENDENT NON-EXECUTIVE DIRECTOR

Belgian, 58

A

Australian/Swiss, 57

NR

DATE APPOINTED TO BOARD
26 April 2016

DATE APPOINTED TO BOARD
26 April 2018

DATE APPOINTED TO BOARD
28 April 2015

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

EDUCATION
Engineering – Ghent University, Belgium

EDUCATION
Economics – University of Melbourne, Australia

Management – Ghent University, Belgium

Applied Information Systems – Melbourne Institute ofTechnology, Australia

EXPERIENCE
Françoise Chombar is co-Founder, Chief Executive
Officer and Managing Director of Melexis, aproducer 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 Elexgroup. Françoise was a mentor in the Belgian
women’s network Sofia for 17 years and is committed
to STEM and gender balance advocacy, for which
she received a Flemish Community Honour in 2019.
In 2018, she received the title of Science Fellow
by the VUB, University of Brussels.

Management – MIT Sloan School of Management,
USA
EXPERIENCE
Prof. Dr. Ir. Koenraad Debackere has been with KU
Leuven since 1995, where he teaches Technology& Innovation Management and Policy. He has won
numerous awards for his research, and in 2010 wasawarded a Francqui Lecture Chair in economics
and business. Since 2005 he has been the generalmanager of KU Leuven and member of the Board of
KU Leuven.

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, aposition he had held since 2007. Prior to that, he built
an extensive career in the chemical industry working
with companies such as Ciba-Geigy and DuPont.

EXTERNAL APPOINTMENTS

EXTERNAL APPOINTMENTS

Non-Executive Director, Cera Beheersmaatschappij NV,
BelgiumCEO, Chairman of the Executive Board, Marquard & Bahls AG,
Germany
Non-Executive Chairman, Board of Directors, Axalta Coating
Systems Ltd., USA

EXTERNAL APPOINTMENTS

Non-Executive Director, KBC Group NV, Belgium

CEO and Director, Melexis NV, Belgium

Non-Executive Director, Group Joos NV, Belgium

Chairwoman, Flemish STEM Platform, an independent advisorygroup to the government of Flanders

Non-Executive Director, LRM (Limburgse Reconversie
Maatschappij) NV, Belgium

Independent Director, Soitec S.A., France

Member Board of Governors, RWTH Aachen
University, Germany
Non-Executive Director, Televic Group NV, Belgium

Key:

NR Nomination & remuneration committee (Chair)

NR Nomination & remuneration committee (Member)A

Audit committee (Chair)A

Audit committee (Member)

Umicore Integrated Annual Report 2019

BOARD OF DIRECTORSINES KOLMSEEGÉRARD LAMARCHE

INDEPENDENT NON-EXECUTIVE DIRECTOR
German, 49

ERIC MEURICE

NON-EXECUTIVE DIRECTOR
A71

INDEPENDENT NON-EXECUTIVE DIRECTOR

Belgian, 58

A

French, 63

DATE APPOINTED TO BOARD
26 April 2011

DATE APPOINTED TO BOARD
25 April 2017

DATE APPOINTED TO BOARD
28 April 2015

EDUCATION
Process and Energy Engineering – Technische
Universität Berlin, Germany

EDUCATION
Economic Sciences – Louvain, Belgium

EDUCATION
Economics – Sorbonne, France

Advanced Management Program for Suez Executives,
INSEAD Business School, France

Mechanical Engineering – École Centrale Paris, France

Industrial Engineering – École nationale supérieuredes Mines de Saint-Étienne, France
Business Administration – INSEAD Business School,
FranceEXPERIENCE
Ines Kolmsee has been Chief Executive Officer
of Services & Solutions at Aperam since October
2017. She previously served as CEO of SKW StahlMetallurgie Group, a specialty chemicals company
with operations worldwide, COO and CTO at German
utility EWE AG and CFO at Arques Industries AG.
EXTERNAL APPOINTMENTS
CEO of Services & Solutions, Aperam SA, Luxembourg

EXPERIENCE
Gerard Lamarche built an extensive career, startingat Deloitte Haskins & Sells in Belgium, then Société
Générale de Belgique as Investment Manager,
Controller and Advisor to the Strategy and Planning
Department, and Suez, as Secretary of the Executive
Committee, then SVP in charge of Planning, Control
and Accounting. In 2000, Gérard Lamarche joined
NALCO as General Managing Director. He wasappointed CFO of the Suez Group in 2003.
In 2012, he joined Groupe Bruxelles Lambert as
Co-CEO until April 2019. He currently serves as asenior advisor to corporations, families and theirrelated entities.

Business Administration – Stanford Graduate Schoolof Business, USA
EXPERIENCE
Eric Meurice was formerly President and Chief
Executive Officer of Netherlands-based ASML Holding,a major provider of advanced technology systems forthe semiconductor industry. He was previously EVP
in charge of Thomson Multimedia TV Division andheld senior positions in several technology groups
such as Intel, ITT, and Dell Computer.
EXTERNAL APPOINTMENTS
Non-Executive Director, Global Blue Group S.A., Switzerland
Non-Executive Director, IPG Photonics Corp, USA
Non-Executive Chairman, Board of Directors, Soitec S.A., France

EXTERNAL APPOINTMENTS
Non-Executive Director, Audit Committee, SGS, Switzerland
Non-Executive Director, Standing Committee, Groupe Bruxelles
Lambert, Belgium

Key:

NR Nomination & remuneration committee (Chair)

NR Nomination & remuneration committee (Member)A

Audit committee (Chair)A

Audit committee (Member)

Umicore Integrated Annual Report 2019

BOARD OF DIRECTORSLAURENT RAETSMARC VAN SANDEGÉRALDINE NOLENSNON-EXECUTIVE DIRECTOR

BOARD ADVISOR
Formerly EVP Energy & Surface Technologies

BOARD SECRETARY

Belgian, 40

Belgian, 68

Belgian, 48

DATE APPOINTED TO BOARD
25 April 2019
EDUCATION
Commercial Engineering – Solvay Brussels School of
Economics & Management, Belgium
EXPERIENCE
Laurent Raets joined Groupe Bruxelles Lambert (GBL)
in 2006 and became Deputy Head of Investments
in 2016. He began his career in 2002 as an M&A
consultant at Deloitte Corporate Finance, where he
was involved in buy and sell mandates, due diligenceand valuation assignments.
EXTERNAL APPOINTMENTS
Censor of the Board of Directors of Imerys S.A., France

72(see Executive Committee)

KAREL VINCKEDUCATION
Physics – University of Antwerp, Belgium

HONORARY CHAIRMAN

Business Administration
School, Belgium

Belgian–AntwerpManagement

EXPERIENCE
Marc Van Sande was appointed Executive VicePresident Energy & Surface Technologies in June 2010,
after serving as CTO from 2005 to 2010 and as EVPAdvanced Materials from 1999 to 2005. Marc joined
Umicore in 1980, and held several positions inresearch, marketing and production. He was also
responsible for the Energy & Surface Technologies
business group and China.

ABOUT THE BOARD
The board’s cumulative industry experience is broad,covering automotive, electronics, chemicals, metals,
energy and finance sectors in addition to the fields ofacademia and science.
It also includes people experienced in the public andprivate sector and members with experience in the
different regions in which Umicore is active.
Collectively, the board possesses strong experience ofmanaging industrial operations and counts 8 active orformer CEOs in its ranks.
The board also has collective experience in disciplinesthat are specifically relevant to Umicore’s non-financial
Horizon 2020 goals such as health and safety, talentattraction and retention and supply chain sustainability.

READ MORE ABOUT CORPORATE
GOVERNANCE ON PAGE 83

Key:

NR Nomination & remuneration committee (Chair)

NR Nomination & remuneration committee (Member)A

Audit committee (Chair)A

Audit committee (Member)

Umicore Integrated Annual Report 2019

73

Executive committee

Left to right: Stephan Csoma, Géraldine Nolens, Denis Goffaux, Marc Grynberg, Ralph Kiessling, Filip Platteeuw, An Steegen.

Umicore Integrated Annual Report 2019

EXECUTIVE COMMITTEE
MARC GRYNBERG

FILIP PLATTEEUWAN STEEGEN74

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

Belgian, 54

Belgian, 47

Belgian, 49

Belgian, 48

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

EDUCATION
Applied Economics – Ghent University, 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
and digital technology innovation.

European Economic Law – Julius Maximilians
Universität Würzburg, Germany

EXPERIENCE
Marc Grynberg was appointed Chief Executive
Officer in November 2008 after heading
the Automotive 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.

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 internationallaw firm Cleary Gottlieb Steen & Hamilton
before joining GDF Suez (now Engie) in
2001, where she was Electrabel’s Chief
Legal Officer for Southern Europe, France
and new European markets. Géraldine’s
career includes periods working and livingin the US, Germany, Italy and Belgium.

Umicore Integrated Annual Report 2019

EXECUTIVE COMMITTEEDENIS GOFFAUXSTEPHAN CSOMARALPH KIESSLINGEXECUTIVE VICE-PRESIDENT
ENERGY & SURFACE TECHNOLOGIESEXECUTIVE VICE-PRESIDENTRECYCLINGEXECUTIVE VICE-PRESIDENTCATALYSIS

Belgian, 51

Belgian, 55

German, 54

EDUCATION
Mining Engineering – Université de Liège,
Belgium

EDUCATION
Economics – UC Louvain, Belgium

EDUCATION
Chemical Engineering – University of Erlangen,Germany

EXPERIENCE
Denis was appointed Executive Vice-President
Energy & Surface Technologies in 2018, after
serving as Chief Technology Officer from2010 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.

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

Mandarin – Fudan University Shanghai, China

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.

75

EXPERIENCE
Ralph Kiessling was appointed Executive VicePresident Catalysis on 1 February 2019, after
serving as Senior Vice President Operations
for Automotive Catalysts since 2015.
He
previously
occupiedsuccessive
management functions in process technology,
production and business controlling, including
5 years in China. In 2012 he moved to
India where he built Umicore’s automotive
catalyst plant. Prior to joining Umicore,
Ralph held management positions in the
Degussa group from 1995.

READ MORE ABOUT OUR MANAGEMENTAPPROACH ON PAGE 78

Umicore Integrated Annual Report 2019

76

Senior management

AN STEEGEN

CHIEF TECHNOLOGY OFFICER
Corporate Research& Development

FILIP PLATTEEUWMARC GRYNBERGCHIEF EXECUTIVE OFFICERCHIEF FINANCIAL OFFICER
FinanceGÉRALDINE NOLENSEXECUTIVE VICE-PRESIDENT
Chief Counsel

STEPHAN CSOMAEXECUTIVE VICE-PRESIDENT
Recycling

DENIS GOFFAUXEXECUTIVE VICE-PRESIDENT
Energy & Surface Technologies

IGNACE DE RUIJTER
SVP Human Resources

CHRISTOPHER SMITH
Director of Group
Communications

RALPH KIESSLINGEXECUTIVE VICE-PRESIDENT
Catalysis

Umicore Integrated Annual Report 2019

SENIOR MANAGEMENTEGBERT LOX
SVP Government Affairs

JOHAN RAMHARTERSVP Electro
Optic Materials

KURT VANDEPUTTESVP New
Business Incubation

77

YVES VAN ROMPAEY
SVP Corporate
Research & Development

THOMAS JANSSEUNEVP Digitalization & VP
Corporate Development
PATRICK VERMEULEN
SVP Information Systems

ALAIN BYLVP Group Treasurer

ERIK BRIJSVP Accounting & Control

FLAVIA LEONE
VP Group Tax

GUY BEKESVP Strategic Projects

PIERRE VAN DE BRUAENE
SVP Environment,
Health & Safety

MARK CAFFAREY
President Umicore USA

SYBOLT BROUWER
VP Purchasing& Transport

GEERT BENS
VP Strategic Projects

JENS BLECHSCHMIDTHead of Internal Audit

THOMAS ENGERTSVP Electroplating

DAVID FONG
SVP Umicore
Greater China

BERNHARD FUCHSSVP Precious Metals
Management & UMS

LUC GELLENSSVP Precious
Metals Refining

CARSTEN GERLEMANSVP Umicore
South America

FRANZ-JOSEF KRONSVP Jewelry &Industrial Metals

FRANK STREIGNART
SVP RBM Operations

GUY ETHIER
SVP Sustainability

JUNDONG LU
SVP RBM Sales

BART SAPSVP CSM & Supply

DONG-JOON IHM
Executive Chairman
Umicore Korea

ENRICO CISCOVP Control

BERNARD TONNON
VP RBM Process
Technology & Engineering

GEON-SEOG SON
VP RBM Research& Development

WILFRIED MÜLLER
SVP AC Global Research& Development

LOTHAR MUSSMAN
SVP Precious
Metals Chemistry

MICHAEL NEISELSVP AC Control,
Purchasing, IT & BD

JÖRG VON RODENSVP AC Global
Sales & Marketing

ATSUYA HANAZAWA
President Umicore Japan

STEPHANIE DAM
VP AC Operations

JOAKIM REIMER
THOGERSEN
VP Stationary Catalysis

GEERT OLBRECHTS
VP Research & Technology AC

EVELIEN GOOVAERTS
Head ofInvestor Relations

KRISTL MATTON
Corporate Security

Umicore Integrated Annual Report 2019

MANAGEMENT APPROACH

78

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, thatthey are at the core of today’s life and will continue to be enablers for future wealth creation.
We believe that metal-related materials have a vital role to play, as they can be efficiently andinfinitely recycled, which makes them the basis for sustainable products and services. We want
Umicore to be a leader in providing and creating material-based solutions to contribute to
fundamental improvements in the quality of life.
The overarching principles guiding our “Materials for a better life” mission are:
VALUES
We hold the values of openness, respect, innovation, teamwork and commitment to be crucial
to our success.
ENVIRONMENT AND SOCIETY
We recognise that our commitment to financial success must also take into account the broader
economic, environmental and social impact of our operations.
EMPLOYEESWe strive to be a preferred employer of both current and potential employees.
BUSINESS INTEGRITY
Wherever we operate, our reputation is a most valuable asset, and it is determined by how
we act. We avoid any action that would jeopardise our reputation.
UMICORE.COM/EN/ABOUT/THE-UMICORE-WAY
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.
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.
The supporting components of our Horizon 2020 strategy (see Materiality, p.21) described inthis chapter, including policies, responsibilities and evaluation, ensure a close monitoring of
our economic, environmental and social performance.
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
the business units and sites, ensuring a collective understanding of concepts, definitions, roles
and responsibilities. Regular workshops and meetings are organised each year at various levelsof 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

Umicore Integrated Annual Report 2019

MANAGEMENT APPROACH

79

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.

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.

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 itssocial 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,
as part of a continuous improvement process.

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 generated from operations, allows
us to self-fund the majority of our growth initiatives.

ECONOMIC & FINANCIAL PERFORMANCERESEARCH 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.

GOALS AND PERFORMANCE 2016-2020
Based on the validity analysis of the megatrends relevant for Umicore’s Vision 2015 strategy,
we identified specific growth areas where Umicore can contribute to solve certain societal
and environmental problems. These growth areas form the basis of the Horizon 2020 strategy
and are expected to enable Umicore to double its recurring EBIT between 2014 and 2020.
OPERATIONAL RETURNS
Umicore seeks to generate economic value through our existing businesses and any
acquisitions or organic growth initiatives that 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 can vary 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 for the Group 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

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 50 production sites in 33 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 oversightof Umicore’s financial and economic performance and is supported by a Corporate Financeteam that includes specific expertise centres covering aspects such as tax, treasury, accounting

Umicore Integrated Annual Report 2019

MANAGEMENT APPROACH& 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.

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
in terms of environmental performance. These underlying performance indicators, detailed in
the Environmental 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 organizational
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.

80

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, while increasing the diversity of our workforce is 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
to Work, p. 49.
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 2019

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
best practices. 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.

81

The performance review of these material topics is reported in the Value Chain andSociety, p. 36.
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. 14. In addition, we report on the following topics in the Value
Chain Statements section:– Monitoring of the supplier assessment for indirect procurement, note V3– Product regulatory compliance, note V4– Monitoring of our donations, note V5
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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Governance statements
G1 Corporate governance framework
G2 Corporate structure
G3 Shareholders
G4 Board of directors
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
G9 Code of conduct
G10 Market manipulation and insider trading
G11 Compliance with the 2009 Belgian code on corporate governance
G12 Remuneration policy
G13 Remuneration report

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CORPORATE GOVERNANCE REPORTG1 CORPORATE GOVERNANCE FRAMEWORK

During the financial year 2019, Umicore (also the “Company”) was subject to the 2009 Belgian
Code on Corporate Governance, which it had adopted as its reference code. From 1 January
2020 onwards, Umicore will be subject to the new Belgian Code on Corporate Governance 2020
pursuant to Article 1 of the Royal Decree of 12 May 2019 laying down the corporate governancecode to be complied with by listed companies.
The English, Dutch and French versions of the 2009 and 2020 Codes on Corporate Governancecan be found on the website of the Belgian Corporate Governance Committee.
CORPORATEGOVERNANCECOMMITTEE.BE
The Umicore Corporate Governance Charter describes in detail the governance structureof the Company and the policies and procedures of the Umicore group. The Charter isavailable on the Umicore website and may be obtained on request from Umicore’s Group
Communications Department.
UMICORE.COM/EN/GOVERNANCE/CORPORATE-GOVERNANCE-CHARTER
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
a necessary condition to ensure its long-term success. This implies an effective decisionmaking process based on a clear allocation of responsibilities. This approach must ensure an
optimal balance between a culture of entrepreneurship at the level of the business units andeffective steering and oversight processes. The Umicore Corporate Governance Charter deals
in more detail with 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& remuneration committee. The present statements provide information on governance issues
which relate primarily to the financial year 2019.

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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(1) or
Umicore’s articles of association. The board is assisted in its role by an audit committee anda nomination & remuneration committee. The day-to-day management of Umicore has beendelegated to the CEO, who also chairs the executive committee. The executive committee is
responsible for devising the overall strategy of Umicore and for submitting it to the board forreview and approval. It is also entrusted with the implementation of this strategy and with theeffective oversight of the business units and corporate functions. The executive committee isfurthermore responsible for screening the various risks and opportunities that Umicore may
encounter in the short, medium or longer term (see Risk Management section) and for ensuringthat adequate systems are in place to address these. The executive committee is responsiblefor defining and applying 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 center
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 2019 there were 246,400,000 Umicore shares in issue.
The identity of shareholders having declared a participation of 3% or more as of 31 December
2019 can be found in the chapter “Parent Company Separate Summarized Financial Statements”
p.164.

(1) From 1 January 2020 onwards, the new Belgian Code of companies and associations will replace
the Belgian Companies Code as far its mandatory provisions are concerned; the same is true its
other provisions, but only to the extent that the articles of association of the Company do not containconflicting provisions. As announced in a press release dated 14 October 2019, Umicore will convene
an extraordinary shareholders’ meeting in the first half of 2020 in order to propose a full alignment of
its articles of associations with the new Code of companies and associations and, in the same context,
a shift to a genuine two-tier management structure with a supervisory board and a management
board, in replacement of respectively the current board of directors and the executive committee.
In the proposed two-tier governance structure, the management board would be vested with all
powers not explicitly conferred to the supervisory board or the shareholders’ meeting.

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CORPORATE GOVERNANCE REPORT
Also on 31 December 2019 Umicore owned 5,624,550 of its own shares representing 2.28%
of its capital. Information concerning the shareholders’ authorization for Umicore to buy backits own shares and the status of such buy-backs can be consulted in the Umicore Corporate
Governance Charter and on Umicore’s website.
During the year 936,604 own shares were used in the context of the exercise of employee stock
options and 71,300 shares were used for share grants, of which 10,000 to the board members,
51,100 to the executive committee members and 10,200 following a partial conversion intoshares of the bonus of the CEO.
3.2 DIVIDEND POLICY AND PAYMENT
Umicore’s policy is to pay a stable or gradually increasing dividend. There is no fixed pay-out
ratio. The dividend is proposed by the board at the ordinary (or annual) shareholders’ meeting.
No dividend will be paid which would endanger the financial stability of Umicore.
In 2019, Umicore paid a gross dividend of € 0,75 per share relating to the financial year 2018.
This was an increase by € 0.05 compared to the gross dividend paid in 2018 in respect of thefinancial year 2017.
In July 2019 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 € 0.375 per share was paid on 27 August 2019.
3.3 SHAREHOLDERS’ MEETINGS 2019
The annual shareholders’ meeting was held on 25 April 2019. On this occasion, the shareholders
approved the customary resolutions regarding the annual accounts, the appropriation of theresults and the discharges to the directors and to the statutory auditor regarding their respective
2018 mandates. At the same meeting, the shareholders appointed Mr Laurent Raets as new
director for a period of 3 years. Furthermore, the mandate of Mrs Françoise Chombar as director
was renewed for 3 years. The annual shareholders’ meeting also approved the remunerationof the board for 2019. Details of the fees paid to the directors in 2019 are disclosed in the
remuneration report.
Also on 25 April 2019, a special shareholders’ meeting was held, which approved a change ofcontrol clause in accordance with Article 556 of the Belgian Companies Code.

G4 BOARD OF DIRECTORS

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

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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 thedefinitive appointment of the above director. The new director completes the term of office of
his or her predecessor.
On 31 December 2019, 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.(2)In terms of gender and cultural diversity, the Board counts 3 women and 5 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 8 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 change in 2019:– Mr Laurent Raets was appointed director for a period of three years at the annual
shareholders’ meeting held on 25 April 2019;– Mr Colin Hall resigned as director with effective date 25 April 2019.
– Furthermore, the mandate of Mrs Françoise Chombar as independent director was renewed
for three years in 2019.
4.2 MEETINGS AND TOPICS
The board of directors held seven regular meetings in 2019. On two occasions the board also
took decisions by unanimous written consent.
The matters reviewed by the board in 2019 included:– financial performance of the Umicore group;(2) The provisions were replaced by provision 3.5 of the 2020 Belgian Code on Corporate Governance effective
1 January 2020.

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CORPORATE GOVERNANCE REPORT– approval of the annual and half-year financial statements;– adoption of the statutory and consolidated annual accounts and approval of the statutory
and consolidated annual reports (including the remuneration report);– approval of the agenda of an ordinary and a special shareholders’ meeting and calling ofthese meetings;– innovation strategy;– investment and divestment projects;– funding mandates;– audit committee reports;– strategic opportunities and operational challenges;– business risk assessment;– business and technology reviews, and market updates;– corporate governance;– mergers & acquisitions projects;– IT security;– 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 Specialty Powders site in Grenoble (France).
4.3 PERFORMANCE REVIEW OF THE BOARD AND ITS COMMITTEES
Every two years, the chairman conducts a performance review of the board and its committees.
The last performance review took place in 2018.
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.(3)(3) As from 1 January 2020, these provisions were replaced by respectively Art. 7:99 of the Code of companies
and associations and the 2020 Code on Corporate Governance.

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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 2019: Mr Colin Hall was
replaced by Mr Laurent Raets with effective date 25 April 2019.
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 2019 and held 3 conference calls. Apart from the review of the 2018
full year and the 2019 half year accounts, the audit committee reviewed reports and discussed
matters related to internal audit, financial reporting and related internal controls, cyber security
and group auditor succession. The 2020 internal audit plan was validated. The committee met
with the group’s auditor and reviewed and approved provided non-audit services.
4.5 NOMINATION & REMUNERATION COMMITTEEThe 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 no changes in 2019.
3 nomination & remuneration committee meetings were held in 2019. 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 2019. The committee also discussed the succession planning at the level of the board
and the executive committee.

G5 EXECUTIVE COMMITTEE

5.1 COMPOSITION
The executive committee has the form of a “comité de direction”/directiecomité” as defined
under Article 524bis of the Belgian Companies Code(4).
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 underwent the following changes in 2019:– Mr Pascal Reymondet, former EVP Catalysis, left the executive committee effective
1 February 2019;(4) As previously indicated, an extraordinary shareholders’ meeting will be convened in the first half of 2020
in order to propose, inter alia, the adoption of a genuine two-tier governance structure, which would
entail the replacement of the executive committee by a management board.

Umicore Integrated Annual Report 2019

CORPORATE GOVERNANCE REPORT– Mr Ralph Kiessling was appointed EVP Catalysis and member of the executive committeewith effective date 1 February 2019.
On 31 December 2019 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 by the board of directors.
The board also meets annually in a non-executive session (i.e. without the CEO being present)in order to discuss and review the performance of the CEO.
The above performance reviews took place on 7 February 2019.

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 Companies Code(5) .
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.
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.

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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 windingup – if at least 50% of the subscribed capital is represented. If the above attendance quorum
is not reached, a new extraordinary shareholders’ meeting must be convened, which will
deliberate regardless of the portion of the subscribed capital represented. As a general rule,amendments to the articles of association are only adopted if approved by 75% of the votes
cast. The Companies Code(7) provides for more stringent majority requirements in specificinstances, such as the modification of the corporate object or the company form.
The Company’s articles of association were not amended in 2019.
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.
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 2019, the board had not used this renewed
authorization. The authorization will lapse on 28 May 2023.

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 2019, save for the 5,624,550 shares held by
the Company itself on that date (Article 622 §1 of the Belgian Companies Code(6)).

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 1,275,871 own shares in 2019 in implementation of theabove authorization.

(5) Replaced by the Code of companies and associations as of 1 January 2020.
(6) Article 7:217 §1 of the Code of companies and associations as of 1 January 2020.

(7) The Code of companies and associations, which has replaced the old Companies Code effective 1 January 2020,
contains similar provisions on this subject.

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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
Some 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.91.

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

On 7 February 2019, 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.
The above decisions had/will have the following financial consequences:A) FIXED AND VARIABLE REMUNERATIONThe CEO received a fixed gross remuneration of € 700,000 in 2019. Also, in 2019, he received agross variable cash remuneration totaling € 220,000 as non-deferred part of his variable cash
remuneration for the reference year 2018.
Furthermore he received in 2019 a gross amount of € 144,450 as second half of the deferredpayment of his variable remuneration for the reference year 2016 based on (1) the 3-year
average Umicore group profitability criterion, i.e. the average return on capital employed(ROCE) for the reference years 2016, 2017 and 2018 (i.e. 15% giving rise to a percentage pay-out
of 75%) and (2) the 3-year average EBIT growth for the same reference years 2016, 2017 and2018 multiplied by 2 (i.e. 16.2% giving rise to a percentage pay-out of 32%).
The ROCE range is set between a minimum of 7.5% (= pay-out of 0%) and a maximum of
17.5% (= pay-out of 100% of the target). When the achieved ROCE percentage falls between
the minimum and the maximum, the pay-out will be pro-rated. The impact of the EBIT
growth is calculated by multiplying the average percentage of the EBIT growth for thereference years by 2. The Group EBIT growth incentive only applies for a minimum compounded
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 shares87

in its portfolio until the delivery date of the shares granted or the option’s exercise date, or 2)
if and to the extent that Umicore sells such shares at a later date: the difference on the 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 2019, 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
affiliated companies on the other hand.

G8 STATUTORY AUDITORAt the annual shareholders’ meeting held on 25 April 2017 the statutory auditor’s mandateof PricewaterhouseCoopers 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.
Following the new applicable legislation on auditing services, the mandate of the current
statutory auditor, who was initially appointed in 1993, will only be renewable once, i.e. in 2020
(the latter provided it occurs before 17 June 2020).
The Umicore policy detailing the independence criteria for the statutory auditor may berequested from Umicore.

G9 CODE OF CONDUCT

Umicore operates a Code of Conduct for all its employees, representatives and board members.
This Code of Conduct is fundamental to the task of creating and maintaining a relation of trust
and professionalism with its main stakeholders namely its employees, commercial partners,
shareholders, government authorities and the public.
The main purpose of Umicore’s Code of Conduct is to ensure that all persons acting on behalfof Umicore carry out their activities in an ethical way and in accordance with the laws andregulations 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 andexpressions of concern by employees and “whistleblower” protection.
The Code of Conduct is published in Appendix 4 to the Umicore 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 Umicore Corporate
Governance Charter.

Umicore Integrated Annual Report 2019

CORPORATE GOVERNANCE REPORTG11 COMPLIANCE WITH THE 2009 BELGIAN CODE ON
CORPORATE GOVERNANCE

At all times during the financial year 2019, Umicore’s corporate governance systems andprocedures were in line with the 2009 Belgian Code on Corporate Governance.

G12 REMUNERATION POLICY

On 6 February 2020 the Nomination and Remuneration Committee presented the Remuneration
Policy (the “Policy”) to the Board of Directors for discussion and approval. This Policy outlines
the remuneration principles for the Umicore’s Non-Executive Directors and the members of
the Executive Committee and is in accordance with the Belgian Code of companies andassociations and the 2020 Belgian Code on corporate governance.
While consistent with the remuneration practice in 2019, this Policy is effective as of 1 January
2020 and will be submitted to Umicore’s Annual Shareholders’ Meeting on 30 April 2020.

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All members of the Board receive an annual fixed fee. Members of the Audit Committee
receive a supplementary fixed fee. The fixed fees can vary based on the specific mandate andare pro-rated in case of appointment or end of mandate in the course of the year.
In addition to the fixed fees, the Non-Executive Directors receive an attendance fee for eachmeeting of the Board of Directors and of its committees attended. A member of the Board
residing outside Belgium receives an additional attendance fee for each meeting attended
in person. All reasonable travel and other expenses incurred while performing their duties
are reimbursed.
In addition to the cash compensation, the members of the Board of Directors receive a numberof Umicore shares depending on their role in the Board. The shares granted as of 2020 have tobe held until at least one year after the member leaves the Board and at least 3 years after the
moment of grant. The number of shares is pro-rated in case of appointment or end of mandatein the course of the year. No performance criteria apply to the grant of the shares.

The Nomination and Remuneration Committee is composed exclusively of members of theBoard and a majority of its members qualify as independent members. This helps to prevent theoccurrence of conflicts of interest regarding the setting up, amendments and implementationof this Policy in relation to the Chief Executive Officer (“CEO”) and the other members of the
Executive Committee – together “Members of the Executive Committee”. The Members of the
Executive Committee do not take part in any discussions of the Nomination and Remuneration
Committee related to their remuneration. As regards the remuneration of the Non-Executive
Directors, all decisions are adopted by the Shareholders’ Meeting.

A company car is provided to the Chairman of the Board.

The Policy aims to ensure that the Company can attract, motivate and retain the right talent for
the Board of Directors and the Executive Committee. It focuses on delivering competitive, fairand responsible remuneration driving the achievement of the Company’s long-term interests,
sustainability and strategic objectives.

Fixed compensation
The fixed remuneration of the Members of the Executive Committee is determined annuallyby the Board of Directors upon recommendation of the Nomination and Remuneration
Committee. In making its decision, the Board of Directors takes into account the scope andlevel of responsibility, the experience, prevailing market conditions, as well as the personal andCompany performance.

The remuneration for the Non-Executive Directors and the Members of the Executive Committee
is assessed annually by the Board of Directors on the basis of recommendations from theNomination and Remuneration Committee. The remuneration components are benchmarked
against companies which are part of the BEL20 index, as well as European companies of similar
size operating in the Chemicals, Metals and Materials sectors.

The remuneration of the Non-Executive Directors is approved by the shareholders at theCompany’s Annual Shareholders’ Meeting.
REMUNERATION FOR THE CEO AND THE OTHER MEMBERS OF THE EXECUTIVE COMMITTEE
The remuneration of the Members of the Executive Committee comprises a base remuneration,a short-term and multi-year variable cash compensation, long-term share-based incentives andother usual benefits.

The general principles for the remuneration of the Members of the Executive Committee areconsistent with the overall remuneration philosophy of the Company.
REMUNERATION FOR THE NON-EXECUTIVE DIRECTORSThe remuneration for the Non-Executive Directors takes into account their responsibilities
and commitment in time. They are rewarded for their services through cash and fixed sharebased compensation.

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Variable cash compensation
A strong focus on performance and achievements at Company and individual level is reflected in
the variable compensation program. This program aims at aligning the interests of the Membersof the Executive Committee with the sustainable value-creation objectives of the Company.

Share-based compensation
To ensure a direct correlation with the long-term value creation benefitting shareholders andstakeholders, a long-term incentive program consisting of Umicore shares and stock options
has been put in place.

The annual variable cash remuneration potential for the Members of the Executive Committee
amounts to at least 75% of their fixed compensation and is composed as follows:

Umicore shares are granted annually to the Members of the Executive Committee at thediscretion of the Board of Directors in recognition of services rendered in the previous year.
The shares are subject to a 3-year lock-up and are not subject to forfeiture conditions.

– A 50% undeferred part based on individual performance:
At the beginning of every performance year, the individual objectives of the CEO are discussed
during a Nomination and Remuneration Committee, followed by a discussion and approvalby the members of the Board. The annual individual objectives of each member of the
Executive Committee are fixed by the CEO on basis of their areas of responsibility. The annual
individual objectives take into account financial performance, the progress achieved against
Company strategic and sustainable development objectives, and adherence to the values of
the Company. Financial criteria include ROCE, recurring EBIT and EBITDA with budget and yearon-year progress being used as reference. Strategic and sustainable development objectives
are tied to economic performance, value chain and society, eco-efficiency and great place towork. The annual performance of the CEO is assessed by the Nomination and Remuneration
Committee and the results of this assessment are presented by the Chairman and discussedwith the members of the Board. The annual performance of each member of the Executive
Committee is initially assessed by the CEO. The results of the assessments and the individual
variable cash remuneration proposals are presented by the CEO to the Nomination andRemuneration Committee before approval by the members of the Board.
– A 50% deferred part based on multi-year Company performance, to reward forthe quality of the results (Group ROCE criterion) and to provide an incentive for growth(Group recurring EBIT growth criterion). This variable component applies a deferment of 3
years with a pay-out after 3 years, based upon a 3-year average ROCE and recurring EBIT
growth. The Group EBIT growth incentive only applies for a minimum compounded average
recurring EBIT growth of 10%. The ROCE range is set between a minimum of 7.5% (= payout of 0%) and a maximum of 17.5% (= pay-out of 100% of the target). When the achieved
ROCE percentage falls between the minimum and the maximum, the pay-out will be prorated. In case the 10% compounded average recurring EBIT growth threshold is reached,
the compounded average recurring EBIT growth percentage will be doubled and added to
the ROCE pay-out percentage.
The Members of the Executive Committee have the possibility to receive their variable cash
compensation, if any, partly or totally in the form of Umicore shares.

The Members of the Executive Committee are also granted stock options for the ongoing year
as part of the annual Umicore Incentive Stock Option Plan, subject to an annual approval of theBoard of Directors. Each accepted option entitles the holder to acquire one existing share of theCompany against payment of the exercise price. The Umicore Incentive Stock Option plan for
the Members of the Executive Committee holds a duration of 7 years including a 3-year waiting
period before exercise. Stock options that have not been exercised by the expiry of the exercise
period will lapse automatically and without compensation. In case of dismissal for serious
cause the non-exercised options become void (see section “Agreement related to the mandateof the CEO” regarding the CEO).
Should the Company carry out a corporate change having an impact on its capital and an
adverse effect on the exercise price of the stock options and/or the number of shares to which
the options give right, the Board of Directors, at its sole discretion, may adapt such price and/or the number of shares to which the stock options holders are entitled.
Pension and other benefits
The Members of the Executive Committee are entitled to retirement, death-in-service anddisability benefits. The CEO and the other members of the Executive Committee appointed
before 1 July 2018 are enrolled in a defined benefit plan and a supplementary defined
contribution plan. For the Members of the Executive Committee joining as of 1 July 2018 a
defined contribution plan applies.
In addition the Members of the Executive Committee are entitled to the usual benefits such as
a company car, medical insurance and representation allowance. They also have the possibility
to enroll in the Belgian Umicore mobility scheme such as the bike lease program.
Additional benefits
The Board of Directors may decide to grant Members of the Executive Committee individual
additional fringe benefits where deemed appropriate, such as for instance a mobility premiumor housing for cross-border assignments. Such additional remuneration will be disclosed in theannual remuneration report.

Umicore Integrated Annual Report 2019

REMUNERATION REPORT
Summary of the remuneration for the Members of the Executive Committee
The below table provides a summary of the remuneration structure for the Members of the
Executive Committee, showing also the cash time line.
TIME TO CASH CONVERSIONREMUNERATIONCOMPONENT

Year of reference (y)Fixed compensation

Based on the scope and level of responsibility,
experience, prevailing market conditions,as well as the personal and Company
performance.
Annual review based on market practices
BEL 20 and European peer companies.

y+1

Undeferred variable 50%

Based on individual performance.

y+3

Deferred variable 50%

Based on multi-year Company performance,
taking into account a 3-year average Group
ROCE and compounded average recurring
EBIT growth% (y, y+1, y+2).

y+4

SharesGrant in recognition of services rendered in
the reference year (previous year) – not linked
to individual or business performance criteria –subject to a 3 year lock-up.

y+3 to y+7

Stock options

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

Year of reference (y) – retirementage (pension)

Benefits

Retirement, death-in-service and disability
benefits, and other market common benefits.

90

MAIN FEATURES OF THE AGREEMENTS WITH THE NON-EXECUTIVE DIRECTORS AND MEMBERS
OF THE EXECUTIVE COMMITTEE
General features
All Non-Executive Directors and Members of the Executive Committee have self-employed status.
Agreements related to the mandate of the members of the Board
The maximum duration of the mandate of the members of the Board is 4 years. This mandate
can be renewed. Members of the Board are not entitled to any notice period or severance
indemnity in relation to the termination of their mandate.
Agreement related to the mandate of the CEO
Taking into account Marc Grynberg’s seniority in the Company, the Company resolved as follows
in 2008:– In case of termination of the contract by the Company, a total compensation equivalent to18 months of his annual base salary will be paid.
– A total compensation of 3 years of annual base salary as minimum indemnity will be paid to
the CEO if his employment as CEO would be terminated 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 Director’s discretion to determine whether the variable cash
remuneration would form part of any final indemnity.
– Stock options vest upon grant, subject to a 3-year waiting period for exercise.
Agreement related to the mandate of the other members of the Executive Committee

MINIMUM SHAREHOLDING REQUIREMENT
As per decision of the Board on 6 February 2020, the CEO is required to build up, within 3 years
from the date of appointment, and to retain minimum 30,000 Umicore shares throughout his
tenure. This requirement is also applicable to the other members of the Executive Committee,
in respect of a minimum of 15,000 shares.

The agreements with the other members of the Executive Committee appointed before
1 July 2018 include a compensation equivalent to 18 months of the annual base salary in case ofcontract termination.

MALUS AND CLAW BACK PROVISIONSThe Nomination and Remuneration Committee has discretion to adjust (malus) or reclaim(claw back) performance related payments of the past 3 reference years, in the event of fraud
or a misstatement of the results leading to undue paid variable compensation, insofar as
enforceable by law.

It is at the Board of Director’s discretion as to whether the variable cash remuneration would form
part of any final indemnity.

This clause will be systematically applicable to contracts entered in with Members of the
Executive Committee as of December 2019.

For the other members of the Executive Committee appointed after 1 July 2018, a 12 months
compensation of the annual base salary will apply in case of contract termination.

DEVIATIONS TO THE REMUNERATION POLICY
In exceptional circumstances, the Board of Directors may decide to derogate from any itemsof the Policy if necessary to serve the long-term interests and sustainability of the Company.
Any such deviation must be discussed at the Nomination and Remuneration Committee whowill provide a substantiated recommendation to the Board of Directors. Any deviation from the
Policy will be described and explained in the Company’s annual remuneration report.

Umicore Integrated Annual Report 2019

REMUNERATION REPORTAPPROVAL AND PUBLICATIONThe Board of Directors, with support from the Nomination and Remuneration Committee,
is responsible for the compliance with this Policy and for completing an annual review ofthis Policy.
This Policy is submitted to the Annual Shareholders’ Meeting at least every fourth year andupon any proposed material change of the Policy.
The Policy has been approved by the Board of Directors on 6 February 2020 and will be
submitted on the Annual Shareholders’ Meeting of 30 April 2020. .

2019 Remuneration Overview Non-Executive Directors
All components of the Non-Executive Directors’ remuneration for the reported year are detailed
in the table below:(IN €)
Thomas Leysen (Chairman)(non-executive director)

G13 REMUNERATION REPORT– 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
Audit Committee– Chairman: annual ﬁxed fee: € 10,000 + € 5,000 per meeting attended– Member: € 3,000 per meeting attended

Board
Fixed annual fee Chairman

60,000Fee per attended meeting

5,000

Value of 2,000 granted shares

52,860Fee per attended meeting Chairman
Total remuneration
Benefit in kind company car
Marc Grynberg(executive director)

7/7

5,000
162,860

Liat Ben-Zur(independent,
non-executive director)

Françoise Chombar(independent,
non-executive director)

3/3

2,377

Board
No remuneration as a director

7/7(see hereafter 2019 CEO
remuneration)– Member: annual ﬁxed fee: € 5,000 + € 3,000 per meeting attended
Nomination and Remuneration Committee– Chairman: € 5,000 per meeting attended

MEETINGSATTENDED

Nomination andRemuneration Committee

REMUNERATION FOR THE NON-EXECUTIVE DIRECTORSThe remuneration of the Non-Executive Directors was as follows in 2019, in accordance with the2019 remuneration principles and unchanged versus the previous year:
Board– Chairman: annual ﬁxed fee: € 60,000 + € 5,000 per meeting attended + 2,000 Umicore
shares + company car

91

Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares

26,430Total remuneration

77,930

7/7

Board
Fixed annual fee

27,000Fee per attended meeting

2,500

Value of 1,000 granted shares

26,430Nomination andRemuneration Committee
Fee per attended meeting

3,000

Total remuneration

79,930

7/7

3/3

Umicore Integrated Annual Report 2019

REMUNERATION REPORT(IN €)
Koenraad Debackere(independent,
non-executive director)

MEETINGSATTENDED

Board
Fixed annual fee

27,000Fee per attended meeting

2,500

Value of 1,000 granted shares

26,430(IN €)
Gérard Lamarche(non-executive director)

7/7

Audit Committee
Fixed annual fee

Mark Garrett(independent,
non-executive director)

5,000

Fee per attended meeting

3,000

Total remuneration

99,9308/8

Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares

26,4307/7

Nomination andRemuneration Committee

Colin Hall
(non-executive director)
End of mandate:
AGM of 25 April 2019

Fee per attended meeting

3,000

Total remuneration

86,9303/3

8,507

Fee per attended meeting

3,500

Value of 315 granted shares
retroceded to GBL

8,325

Fee per attended meeting
Total remuneration

3/3

Ines Kolmsee(independent,
non-executive director)

1,575
3,000

4/4

40,908Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares

26,430Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares
retroceded to GBL

26,430Total remuneration

77,930

7/7

Board
Fixed annual fee

27,000Fee per attended meeting

3,500

Value of 1,000 granted shares

26,430Total remuneration

77,930

7/7

Board
Fixed annual fee

18,493

Fee per attended meeting

2,500

Value of 685 granted shares
retroceded to GBL

18,105

Fixed annual fee

Audit Committee
Fixed annual fee

Laurent Raets(non-executive director)
Appointed by the AGM
of 25 April 2019

MEETINGSATTENDED

4/4

Audit Committee

Board
Fixed annual fee

Eric Meurice(independent,
non-executive director)

92

7/7

3,425

Fee per attended meeting

3,000

Total remuneration

62,022

4/4

REMUNERATION FOR THE CEO AND OTHER MEMBERS OF THE EXECUTIVE COMMITTEE
The remuneration of the CEO and the other members of the Executive Committee was reviewed
by the Board of Directors on 7 February 2019, on the basis of recommendations from theNomination and Remuneration Committee following a comparison survey with BEL20 andEuropean peer companies.
The remuneration for the CEO and other members of the Executive Committee included in2019 the following components: fixed remuneration, variable compensation, share-based
compensation, pension plans and other benefits.

Audit Committee
Fixed annual fee Chairman

10,000Fee per attended meeting

5,000

Total remuneration

8/8

127,930

Umicore Integrated Annual Report 2019

REMUNERATION REPORT

93

Remuneration CEO
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, and to decrease the number of stock options from 150,000 to 140,000.
The fixed remuneration was not adjusted.

Remuneration other members of the Executive Committee
The Board of Directors of 7 February 2019 decided to adjust the annual fixed remunerationby € 20,000 and to increase the annual variable cash remuneration potential by € 80,000 to€ 380,000 as of 1 January 2019, half of which is deferred over 3 years. The number of stock
options decreased from 35,000 to 30,000.

The Board of Directors of 6 February 2020 decided to grant 10,000 Umicore shares for services
rendered in the reported year. These shares are subject to a 3 year lock-up and are not subject
to forfeiture conditions.

The Board of Directors of 6 February 2020 decided to grant 7,000 Umicore shares for services
rendered in the reported year. These shares are subject to a 3 year lock-up and are not subject
to forfeiture conditions.

All components of the remuneration earned by the CEO for the reported year are detailed in
the table below:

All components of the remuneration earned by the other members of the Executive Committee
for the reported year are detailed in the table below:(IN €)

CEO
2018

CEO
2019

Fixed compensation

700,000

700,000

Undeferred Variable 50% (1)220,000

87,500

Deferred Variable 50% (2)144,450

256,500

Shares (3)354,432

420,500

1,033,500

712,600

Stock options (4)PensionDefined contribution plan

51,15654,410Defined benefits plan (service cost)

117,241

158,669

Other
Representation allowance, benefit in kind company car, insurance benefits…
Total

51,631

51,921

2,672,410

2,442,100(1) The undeferred variable 2019 relates to the reference year 2019, pay out in 2020.
(2) The deferred variable 2019 relates to the reference year 2017, pay out in 2020. This variable takes into
account an average ROCE of 14,4%, resulting in a pay-out of 69% of the 2017 deferred target, and acompounded average EBIT growth% (over the years 2017-2018-2019) of 13,2%, resulting in a pay-outof 26% of the 2017 deferred target.
(3) The 2019 share grant relates to the reference year 2019, granted in 2020.
(4) The 2019 stock option grant relates to the reference year 2019, granted in 2019, and is based on a
notional value of € 5,09 according to the Black & Scholes formula (notional value of € 6,89 in 2018).

MEMBERS OF
MEMBERS OF
THE EXECUTIVE
THE EXECUTIVECOMMITTEE 2018 COMMITTEE 2019
(IN AGGREGATE) (IN AGGREGATE)(IN €)
Fixed compensation

2,306,250

Undeferred Variable 50% (1)662,500

570,000

Deferred Variable 50% (2)481,500

855,000

Shares (3)1,381,284

1,764,218

Stock options (4)1,266,038

908,565

Defined contribution plan

149,452

291,506

Defined benefits plan (service cost)

512,156

371,9312,525,417

Pension

Other (5)Representation allowance, benefit in kind company car, insurance benefits…
Total

123,293

209,223

6,882,473

7,495,860(1) The undeferred variable 2019 relates to the reference year 2019, pay-out in 2020.
(2) The deferred variable 2019 relates to the reference year 2017, pay-out in 2020. This variable takes into
account an average ROCE of 14,4%, resulting in a pay-out of 69% of the 2017 deferred target, and acompounded average EBIT growth% (over the years 2017-2018-2019) of 13,2%, resulting in a pay-outof 26% of the 2017 deferred target.
(3) The 2019 share grant relates to the reference year 2019, granted in 2020.
(4) The 2019 stock option grant relates to the reference year 2019, granted in 2019, and is based on a
notional value of € 5,09 according to the Black & Scholes formula (notional value of € 6,89 in 2018).
(5) Includes additional benefits for Denis Goffaux following his foreign assignment in Korea.

Umicore Integrated Annual Report 2019

REMUNERATION REPORTBoard of Directors share ownership 2019 (on 31 December 2019)SHARE AND SHARE OPTION OWNERSHIP AND TRANSACTIONS 2019
Executive Committee share option ownership and transactions 2019

NAME

OPTIONS AT
31 DEC 2018

OPTIONSGRANTEDIN 2019

NUMBER OF
OPTIONS
EXERCISEDIN 2019

AVERAGEEXERCISE
PRICE(IN €)

94

YEAR OFGRANT OF NUMBER OF
OPTIONSOPTIONS
EXERCISED FORFEITEDOPTIONSAT 31 DEC
2019*

Thomas Leysen

SHARESOWNED AT
31/12/2018

SHARESOWNED AT
31/12/2019

806,000

918,000

Liat Ben-Zur

1,688

2,688

2,684

3,684
13,386870,000

140,000

120,000

18.1872013

0

890,000

Françoise Chombar

Stephan Csoma

105,000

30,00035,00016.6322016

0

100,000

Mark Garrett

3,666

Denis Goffaux

140,000

30,00027,50017.2892015

0142,500

Ines Kolmsee

6,610

7,610

Géraldine Nolens

129,000

30,00000–

0

159,000

Gérard Lamarche

3,000

3,000

Filip Platteeuw

140,000

30,00020,00017.2892015

0

150,000

Eric Meurice

3,666

4,666

684

1,684

Marc Grynberg

An Steegen
Ralph Kiessling*

030,00000–030,000Koenraad Debackere

47,00028,5005,000

16.1432014

070,500Laurent Raets

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

Details of all options exercised and other share-related transactions can be found on the
FSMA website.
Executive Committee share ownership 2019 (on 31 December 2019)SHARESOWNED AT
31/12/2018

SHARESOWNED AT
31/12/2019

Marc Grynberg

813,700

914,300

Stephan Csoma

36,60022,200Denis Goffaux

49,60077,000Géraldine Nolens

19,50026,900Filip Platteeuw

37,60045,000An Steegen

–

1,850

Ralph Kiessling

–

1,000

957,000

1,088,250

Total

Total

–

–

827,998

954,718

CHANGES TO REMUNERATION SINCE THE END OF 2019
Remuneration for the Non-Executive Directors
Based on the review of the overall compensation of the members of the Board and of eachelement of the compensation, the Nomination and Remuneration Committee concluded that thecompensation is appropriate, with exception of one small change in relation to the additional
attendance fee for members of the Board residing outside Belgium. This additional attendance
fee will apply also for the Committee meetings, attended in person and not combined with a
Board meeting.
Remuneration for the CEO
On 5 February 2020, the Nomination and Remuneration committee reviewed the remunerationof the CEO based on a comparison survey with European peer companies and BEL20 index
companies. On proposal of the Nomination and Remuneration committee, the Board of
Directors of 6 February 2020 decided to increase the fixed remuneration of the CEO by € 20,000
to € 720,000 as of 1 January 2020, and to grant 10,000 shares for the services rendered in thereported year (versus 10,400 shares for the reference year 2018).
Remuneration for the other members of the Executive Committee
On 5 February 2020, the Nomination and Remuneration Committee reviewed the remunerationof the other members of the Executive Committee based on a comparison survey with
European peer companies and BEL20 index companies. On proposal of the Nomination andRemuneration committee, the Board of Directors of 6 February 2020 decided to increase their
fixed remuneration by € 20,000 as of 1 January 2020, and to grant 7,000 shares for the services
rendered in the reported year (versus 7,400 shares for the reference year 2018).

Umicore Integrated Annual Report 2019

ECONOMIC STATEMENTS

95

Economic statements
Group
Catalysis
Energy & Surface Technologies
Recycling
Distribution of economic benefits

97
98
99
100
101

Umicore Integrated Annual Report 2019

ECONOMIC STATEMENTSGROUP

KEY FIGURESDATA PER SHARENOTE(in Euros/share)
NOTE

2015

2015

2016

2017

2018

2019

Turnover10,442

11,086

12,277

13,717

17,485Recurring EPS

F39

1.13

Revenues (excluding metal)

2,629

2,667

2,916

3,271

3,361

EPS – basic

F39

0.78

F39

0.78
0.60

(in million Euros unless stated otherwise)

96

2016

2017

2018

2019

1.07

1.22

1.36

1.30

0.60

0.97

1.33

1.20

0.60

0.96

1.31

1.19

0.65

0.70

0.75

0.375

Earnings per share

Recurring EBITDA

F9

505

527

599

720

753

EPS – diluted

Recurring EBIT

F9

330

351

410

514

509

Gross dividendof which associates

F9

14

18

30

5

11

Net cash flow before financing, basic

0.55

0.65

(1.74)(2.53)(1.13)

Non-recurring EBIT

F9

(75)

(110)

(46)

(14)

(30)

18.65

18.96

23.31

25.11

29.17

F9

253

232

343

500

479

Total assets of continued operations,end of period

8.01

8.18

8.21

10.83

10.77
43.85

Total EBIT

12.0

12.5

13.1

15.5

14.8

Group shareholders’ equity, end of period

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

13.7

14.6

15.1

15.4

12.6

Shareprice

F34

Effective recurring tax rate (in %)

F13

21.4

25

25.7

24.4

24.7

High

22.78

29.36

39.88

53.14

Recurring net profit, Group share

F9

246

233

267

326

312

Low

15.91

16.19

24.28

34.17

25.11

Net profit, Group share

F9

169

131

212

317

288

Average

19.56

23.89

31.45

45.01

34.24

Close

19.34

27.08

39.46

34.86

43.36

R&D expenditure

F9

144

156

175

196

211

Capital expenditure

F34

240

287

365

478

553

Net cash flow before financing

F34

Total assets, end of period
Group shareholders’ equity, end of period

119

141.9

(381)

(604)

(271)

4,030

4,146

5,116

6,053

7,023

1,732

1,790

1,803

2,609

2,593

Consolidated net financial debt of continued
operations, end of period

F24

321

296

840

861

1,443

Gearing ratio, end of period (in %)

F24

15.3

13.8

31.1

24.4

35.2

64

56

140

119

192

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

F31

2,414

2,397

3,003

3,802

4,442

Capital employed, average

F31

2,402

2,399

2,710

3,344

4,048

On 16 October 2017 each Umicore share was split into 2 new shares. On 8 February 2018 Umicore
placed 22,400,000 new shares, admitted to trading on Euronext Brussels on 12 February 2018.
As a result, as from that date, Umicore’s capital is represented by 246,400,000 fully paid-up
shares without nominal value, each representing 1/246,400,000 of the capital. All data in thistable were updated accordingly.
NUMBER OF SHARES
Total number of issued
shares, end of period

NOTE

2015

2016

2017

2018

2019

F39

224,000,000

224,000,000

224,000,000

246,400,000

246,400,000
240,775,450

of which shares outstanding

F39

216,144,932

218,653,700

219,494,433

241,043,417

of which treasury shares

F39

7,855,068

5,346,300

4,505,567

5,356,583

5,624,550

Average number of shares
outstanding, basic

F39216,890,256

217,775,656

219,079,587

239,202,537

240,558,659

Average number of shares
outstanding, diluted

F39

217,854,490

219,370,320

221,148,890

241,686,593

241,912,769

Umicore Integrated Annual Report 2019

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

‘15 | 2,629‘16 | 2,667‘17 | 2,916‘18 | 3,271‘19 | 3,361

2,000
1,500
1,000

600
500
400
300
200

0.8
0.6
0.4

100

0.2

0

0

0

‘16

‘17

‘18

‘19

‘15

‘16

‘17

‘18

‘19

0.6

‘15 | 1.13
‘16 | 1.07
‘17 | 1.22
‘18 | 1.36
‘19 | 1.30

1.0

500
‘15

0.7

1.2

‘15 | 505
‘16 | 527
‘17 | 599
‘18 | 720
‘19 | 753

97

‘15 | 0.60
‘16 | 0.65
‘17 | 0.70
‘18 | 0.75
‘19 | 0.375

0.5
0.4
0.3
0.2
0.1

‘15

‘16

‘17

‘18

0

‘19

‘15

‘16

‘17

‘18

‘19

‘18

0

‘19

‘15

‘16

‘17

‘18

CAPITAL EXPENDITURE

NET FINANCIAL DEBT

Million Euros

Million Euros

600
500‘15 | 240
‘16 | 287
‘17 | 365
‘18 | 478
‘19 | 553

400
300
200
100
0

‘15

‘16

‘17

‘18

‘19

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

‘19

‘15 | 321
‘16 | 296
‘17 | 840
‘18 | 861
‘19 | 1,443

‘16

‘17

‘18

‘19

14.6

15.1

‘16

‘17

RECURRING TAX RATE

%

%

60

250

50

192 200

40

140

20
10
0

31
64
15

56
14

‘15

‘16

119

35

150
100

24

30

20

15.4
12.6

GEARING RATIO & AVERAGENET DEBT/RECURRING EBITDA30‘1531/12/2019‘17

30/11/2019‘16

31/10/2019‘15

30/09/2019

100
50

100
0

150

31/07/2019200‘15 | 144
‘16 | 156
‘17 | 175
‘18 | 196
‘19 | 211

31/08/2019

300

200

31/05/2019‘15 | 330
‘16 | 351
‘17 | 410
‘18 | 514
‘19 | 509400

30/06/2019

20
18
16
14 13.7
12
10
8
6
4
2
0
‘15

250

500

31/03/2019

50
45
40
35
30
25
20
15
10
5
0

600

30/04/2019

RETURN ON CAPITAL EMPLOYED (ROCE)%

31/01/2019

SHARE PRICE
Euros

28/02/2019

R&D EXPENDITURE
Million Euros

31/12/2018

RECURRING EBIT
Million Euros

25.0

25.7

‘16

‘17

‘18

‘19

24.4

24.7

‘18

‘19

21.4

10

50
‘17

‘18

‘19

0

0

‘15

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

Umicore Integrated Annual Report 2019

ECONOMIC STATEMENTS
CATALYSIS

2018

2019

REVENUES (EXCLUDING METAL)

RECURRING EBITDA

Million Euros

Million Euros

3,091

3,311

4,539

1,600

300

1,253

1,360

1,460

1,400

203

224

237

264

1,200

152

165

168

185

1,000

(in millions of Euros unless stated otherwise)

2015

2016

2017

Total turnover

2,749

2,779

Total revenues (excluding metal)

1,094

1,163

Recurring EBITDA

172

Recurring EBIT

124
8.8

9.2

0.4

0

0

Total EBIT

of which associates

116

126

161

162

185

Recurring EBIT margin (in %)

10.6

12.3

13.2

12.4

12.7

R&D expenditure

91

102

120

135

147

Capital expenditure

79

46

45

79

104

Capital employed, end of period

968

911

1,150

1,265

1,537

Capital employed, average

930

918

1,014

1,200

1,358

Return on Capital Employed (ROCE) (in %)

13.4

16.6

16.3

14

13.6

Workforce, end of period (fully consolidated)

2,443

2,464

2,952

3,070

3,190

168

177

–

–

–

Workforce, end of period (associates)

250‘15 | 1,094‘16 | 1,163‘17 | 1,253‘18 | 1,360‘19 | 1,460

800
600
400

‘15 | 172‘16 | 203
‘17 | 224
‘18 | 237
‘19 | 264

200
150
100
50

200
0

98

‘15

‘16

‘17

‘18

0

‘19

‘15

‘16

‘17

RECURRING EBIT

R&D EXPENDITURE

Million Euros

Million Euros

200

160

‘18

‘19

140
150

120

‘15 | 124
‘16 | 152
‘17 | 165
‘18 | 168‘19 | 185

100
50

‘15 | 91
‘16 | 102
‘17 | 120
‘18 | 135
‘19 | 147

100
80
60
40
20

0

‘15

‘16

‘17

‘18

0

‘19

‘15

‘16

‘17

‘18

‘19

CAPITAL EXPENDITURE

RETURN ON CAPITAL EMPLOYED (ROCE)

Million Euros

%

120

20

100

16.6
‘15 | 79
‘16 | 46
‘17 | 45
‘18 | 79
‘19 | 104

80
60
40

14.0

13.6

‘18

‘19

10
5

20
0

16.3

15 13.4

‘15

‘16

‘17

‘18

‘19

0

‘15

‘16

‘17

Umicore Integrated Annual Report 2019

ECONOMIC STATEMENTS(in millions of Euros unless stated otherwise)

2015

2016

2017

2018

2019

REVENUES (EXCLUDING METAL)

RECURRING EBITDA

Million Euros

Million Euros

ENERGY & SURFACE TECHNOLOGIES

Total turnover

1,475

1,469

2,392

3,650

2,938

1,400

350

Total revenues (excluding metal)

587

610

894

1,289

1,225

1,200

Recurring EBITDA

113

132

198

323

271

300

1,000

Recurring EBIT

70

82

141

257

183

800

(3.5)

1.0

10.5

0.9

5

600

37

74

110

251

154

Recurring EBIT margin (in %)

12.6

13.2

14.6

19.8

14.5

400

R&D expenditure

20

20

30

39

46

Capital expenditure

42

144

225

316

348

Capital employed, end of period

633

752

1,206

1,769

2,324

of which associates
Total EBIT

Capital employed, average

640

695

978

1,469

2,014

Return on Capital Employed (ROCE) (in %)

11.0

11.7

14.4

17.5

9.1

Workforce, end of period (fully consolidated)

2,258

2,357

2,716

3,447

3,997

936

847

917

782

751

Workforce, end of period (associates)‘15 | 587
‘16 | 610
‘17 | 894
‘18 | 1,289‘19 | 1,225‘15 | 113
‘16 | 132
‘17 | 198
‘18 | 323
‘19 | 271

250
200
100
50

200
0

‘15

‘16

‘17

‘18

0

‘19

‘15

‘16

‘17

RECURRING EBIT

R&D EXPENDITURE

Million Euros

Million Euros

300

50
45
40
35
30
25
20
15
10
5
0

250
‘15 | 70
‘16 | 82
‘17 | 141
‘18 | 257
‘19 | 183

200
150
100
50
0

99

‘15

‘16

‘17

‘18

‘19

‘18

‘19

‘15 | 20
‘16 | 20
‘17 | 30
‘18 | 39
‘19 | 46

‘15

‘16

‘17

‘18

‘19

CAPITAL EXPENDITURE

RETURN ON CAPITAL EMPLOYED (ROCE)

Million Euros

%

400

20

350
300

‘15 | 42
‘16 | 144
‘17 | 225
‘18 | 316
‘19 | 348

250
200
150
100

11.0

11.7

9.1

10
5

50
0

17.5
14.4

15

‘15

‘16

‘17

‘18

‘19

0

‘15

‘16

‘17

‘18

‘19

Umicore Integrated Annual Report 2019

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

2015

2016

2017

2018

2019

Total turnover

6,252

6,886

7,327

7,625

11,320Total revenues (excluding metal)

663

641

650

626

681

Recurring EBITDA

204

187

189

195

250

Recurring EBIT

141

125

128

135

188

Total EBIT

132

115

121

126

190

Recurring EBIT margin (in %)

21.3

19.5

19.7

21.5

27.6

21

23

19

15

8

R&D expenditure
Capital expenditure

83

72

79

68

82

Capital employed, end of period

466

498

474

546

405

Capital employed, average

460

474

495

483

479

Return on Capital Employed (ROCE) (in %)

30.7

26.3

25.8

27.9

39.3

Workforce, end of period (fully consolidated)

3,211

3,170

3,092

2,832

2,849

–

–

–

–

–

Workforce, end of period (associates)

REVENUES (EXCLUDING METAL)

RECURRING EBITDA

Million Euros

Million Euros

800

300

600

‘15 | 663
‘16 | 641
‘17 | 650
‘18 | 626
‘19 | 681

400
200
0

‘15

‘16

‘17

‘18

‘15 | 204‘16 | 187
‘17 | 189
‘18 | 195
‘19 | 250

200

100

0

‘19

‘15

‘16

‘17

‘18

RECURRING EBIT

R&D EXPENDITURE

Million Euros

Million Euros

210

‘19

30

180

25

150

‘15 | 141
‘16 | 125
‘17 | 128
‘18 | 135
‘19 | 188

120
90
60

‘15 | 21
‘16 | 23
‘17 | 19
‘18 | 15
‘19 | 8

20
15
10
5

30
0

100

‘15

‘16

‘17

‘18

0

‘19

‘15

‘16

‘17

‘18

‘19

CAPITAL EXPENDITURE

RETURN ON CAPITAL EMPLOYED (ROCE)

Million Euros

%

100
80

‘15 | 83
‘16 | 72
‘17 | 79
‘18 | 68
‘19 | 82

60
40
20
0

‘15

‘16

‘17

‘18

‘19

40
36
32 30.7
28
24
20
16
12
8
4
0
‘15

39.3

26.3

25.8

‘16

‘17

27.9

‘18

‘19

Umicore Integrated Annual Report 2019

ECONOMIC STATEMENTS
DISTRIBUTION OF ECONOMIC BENEFITS101

MILLIONS OF EUROS

2019

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 € 1,234 million.

Economic value distributed (including contribution from associates)

17,615

Raw materials cost (excluding water, gas & electricity)

15,539Depreciation & impairments

307

The biggest portion (€ 776 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.

Other costs (net)434

Direct economic value generated

1,234

MILLIONS OF EUROS

2019

Net interest to creditors was € 41 million, while taxes to the governments and authorities in theplaces where we operate, were € 117 million. The earnings attributed to minority shareholders
were € 11 million.

Direct economic value generated

1,234

As a matter of prudence and in light of the extreme unpredictability of the global situation
due to COVID-19, Umicore’s Board of Directors has decided to propose a dividend of € 0.375
per share in respect of the full year 2019. This proposal replaces the proposal initially made on
7 February 2020 of € 0.75 per share and corresponds to the amount of the interim dividendof € 0.375 per share which was already paid out on 27 August 2019. This decision is also to be
seen as a way for Umicore’s management and Board of Directors to share the efforts amongits stakeholders. Umicore will assess the appropriate amount to be returned to shareholders in2020 once it gains more clarity around the full impact of COVID-19.

Minority shareholders

11

Shareholders (dividends only)

180

Retained by the Company

107

Water, gas & electricity cost

100

Total taxes

117

Creditors

41

Charitable donations (excluding staff freed time)

1.5

Employee compensation & benefits776

In 2019, Umicore made charitable donations totalling € 1.51 million (excluding staff freed time,
for more information see note V5).

Umicore Integrated Annual Report 2019

102

Financial statements
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flow

103
103
104
105
106

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F1
F2
F3
F4
F5
F6
F7
F8
F9
F10
F11
F12
F13
F14
F15
F16
F17

Basis of preparation
Accounting policies
Financial risk management
Critical accounting estimates and judgments
Group companies
Foreign currency measurement
Segment information
Business combinations and acquisitions of associates
and joint ventures
Result from operating activities
Payroll and related benefits
Finance cost – net
Income from other financial investments
Income taxes
Intangible assets other than goodwill
Goodwill
Property, plant and equipment
Investments accounted for using the equity method

107
107
118
121
122
123
124
128
129
131
132
132
132
133
134
135
136

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
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

137
137
138
139
140
141
142
143
144
145
149
150
150
151
152
157
160
161
161
162
162
163
163
163

PARENT COMPANY SEPARATE SUMMARIZED FINANCIAL STATEMENTS

164

MANAGEMENT RESPONSIBILITY STATEMENT

166

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTSCONSOLIDATED INCOME STATEMENTCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
NOTES

2018

2019

TurnoverF9

13,716,737

17,485,080

Profit (loss) of the period from continuing operations

Other operating income

F9

Items in other comprehensive income that will not bereclassified to P&L

Thousands of Euros

Operating income

101,559

121,078

13,818,296

17,606,158

Raw materials and consumables

F9(11,855,284)(15,639,139)

Payroll and related benefits

F10(731,054)(775,919)

Depreciation and impairments

F9(227,162)(307,567)

Other operating expenses

F9(516,593)(413,795)(13,330,094)(17,136,420)

Operating expenses
Income (loss) from other financial assets

F12

RESULT FROM OPERATING ACTIVITIES

5,044

706

493,246

470,444

Financial income

F11

5,805

4,808

Financial expenses

F11(47,847)(56,427)

Foreign exchange gains and losses

F11(26,840)(31,618)

Share in result of companies accounted for using
the equity method

F17

6,720

8,705

431,083

395,912F13(103,240)(96,692)

Profit (loss) from continuing operations

327,843

299,220

PROFIT (LOSS) OF THE PERIOD

327,843

299,220

Profit (loss) before income tax
Income taxesof which minority share

10,86011,429of which Group share

316,984

287,791(EUR)

Basic earnings per share from continuing operations

F39

1.33

1.20

Total basic earnings per share

F39

1.33

1.20

Diluted earnings per share from continuing operations

F39

1.31

1.19

Total diluted earnings per share

F39

1.31

1.19

0.75

0.375

Dividend per share

103

NOTES

2018

2019

327,843

299,220

Changes due to remeasurements of post employment
benefit obligations(7,611)(71,921)

Changes in deferred taxes directly recognized in othercomprehensive income

583

19,869Thousands of Euros

Items in other comprehensive income that may besubsequently reclassified to P&L
Changes in financial assets at FV through OCI reserves(2,699)(9)Changes in cash flow hedge reserves(30,180)(27,958)

Changes in deferred taxes directly recognized in othercomprehensive income

10,1698,897

Changes in currency translation differences
Other comprehensive income fromcontinuing operations
Total comprehensive income for the period

F23(4,129)9,444(33,868)(61,678)

293,975

237,541of which Group share

283,454

225,312of which minority share

10,521

12,230The deferred tax impact on the consolidated statement of comprehensive income is due to the
cash flow hedge reserves for € 8.9 million and to employee benefit reserves for € 19.9 million.
The notes on pages 107 to 164 are an integral part of these consolidated financial statements.

The notes on pages 107 to 164 are an integral part of these consolidated financial statements.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

104

CONSOLIDATED BALANCE SHEET
31/12/2018

31/12/2019

Thousands of Euros

31/12/2018

31/12/2019

2,246,215

2,810,228

Equity of the Group

2,659,336

2,660,464

F14, F15

337,305

370,859

Group shareholders’ equity

2,609,408

2,593,467

Property, plant and equipment

F161,601,892

2,094,672

Share capital and premiums

1,384,273

1,384,273

Investments accounted for using the equity method

F17151,372

150,642

Retained earnings

1,610,882

1,678,348

Thousands of Euros

NOTES

Non-current assets
Intangible assets

Financial assets at fair value through Other Comprehensive Income

F18

8,028

10,897

Currency translation differences and other reserves

Loans granted

F18

2,627

2,192

Treasury shares

Trade and other receivables

F20

12,134

12,038

Minority interest

Deferred tax assets

F21

132,855

168,927

Non-current liabilities

Current assets

3,807,095

4,213,162

F18

6,270

2

Inventories

F19

2,308,094

Trade and other receivables

F20

1,145,980
61,67245,447

Provisions

285,079

271,724

Current liabilities

6,053,310

7,023,390

Loans granted

Income tax receivables
Cash and cash equivalents
TOTAL ASSETS

F22

NOTES

F23

(227,644)(284,453)(158,103)(184,701)

49,927

66,997

1,185,381

1,686,801

Provisions for employee benefits

F27

333,791

392,651

Financial debt

F24

708,846

1,151,083

2,462,330

Trade and other payables

F25

24,391

24,1201,433,659

Deferred tax liabilities

F21

6,225

11,461

F29, F30

112,128

107,487

2,208,593

2,676,124

Financial debt

F24

436,760

564,063

Trade and other payables

F25

1,589,360

1,916,348

74,500131,483

F29, F30

107,973

64,2306,053,310

7,023,390

Income tax payable
Provisions
TOTAL EQUITY & LIABILITIESThe notes on pages 107 to 164 are an integral part of these consolidated financial statements.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

105

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYRESERVES

CURRENCY
TRANSLATION &OTHER RESERVESTREASURY
SHARESMINORITY
INTERESTTOTAL FORCONTINUINGOPERATIONS

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

59,603

1,862,636(2,369)––144(2,225)502,862

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

59,747

1,860,411

Result of the period–

316,984––

10,860327,844

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

Total comprehensive income for the period–

316,984(33,529)–

10,521

293,976

Thousands of Euros
Balance at the beginning of 2018

SHARE CAPITAL& PREMIUMS
502,862–

Change in accounting policies
Restated balance at the beginning of 2018

Changes in share-based payment reserves––

11,150––

11,150881,410–––

10,874892,284

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

Transfers–(20)(2,981)

3,001

–

–

Changes in treasury shares

–

–

–

(79,350)–(79,350)

Capital increase

Changes in scope
Balance at the end of 2018–

(112,811)

233–(11,104)(123,682)

1,384,273

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

49,9272,659,336

544(33,566)(227,644)(158,103)

50,471

2,625,770
299,220

Change in accounting policies–(34,110)

1,384,273

1,576,772

Result of the period–

287,791––

11,428Other comprehensive income for the period––(62,480)–802(61,678)

Total comprehensive income for the period–

287,791(62,480)–

12,231

237,543

Changes in share-based payment reserves

–

–

8,211

–

–

8,211

Capital increase

–

–

–

–

15,541

15,541Dividends–(186,394)––(11,246)(197,640)

Transfers–

179(2,540)

2,361

–

–

Changes in treasury shares

–

–

–

(28,959)–(28,959)

1,384,273

1,678,348(284,453)(184,701)

66,9972,660,464

Restated balance at the beginning of 2019

Balance at the end of 2019

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 2019 was composed of 246,400,000 shares with no par value.
The capital increase in 2018 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 amount of € 891.5 million (€ 881 million net of transaction costs)
The change in scope in 2018 for € 123.7 million is related to the increase of Umicore’s interest in its Chinese cathode material production entity from 70% to 90%.
For the impact on changes in accounting policy, please refer to Note 2.23.
The notes on pages 107 to 164 are an integral part of these consolidated financial statements.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

106

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

2018

2019

Thousands of Euros

327,844299,220

Capital increase

881,364–(6,720)(8,705)

Capital increase (decrease) minority

10,794

15,541(79,350)(28,959)–(16,536)

Adjustment for non-cash transactions

F34

348,280

207,302

Own shares djustments for items to disclose separately or underA
investing and financing cash flows

F34

130,369

129,568

Change in lease liability

Change in working capital requirement

F34

4,608

(37,615)(44,158)

Interest paid

Cash flow generated from operations

91,756548,946

New loans and repayments

Dividend received

8,392

11,454(127,446)(86,661)

Dividends paid to minority shareholders

–

5,444

NET CASH FLOW GENERATED BY (USED IN)
FINANCING ACTIVITIESNET OPERATING CASH FLOW

F24

Dividends paid to Umicore shareholders
F34

F34

(27,299)

479,182

Acquisition of property, plant and equipment

F16(465,989)(529,487)

Effect of exchange rate fluctuations

Acquisition of intangible assets

F14(31,758)(58,362)

TOTAL NET CASH FLOW OF THE PERIOD

Acquisition of new subsidiaries, net of cash acquired

F8

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

Acquisition in additional shareholdings in subsidiaries(24,188)(188,138)(123,384)–

Acquisition of financial assets

F18(2,480)(2,375)

New loans extended

F18(2,524)(126)(650,324)(778,489)

6,182

11,777

Disposal of intangible assets

12,071

9,329

Disposal of subsidiaries and associates, net of cash disposed

35,701910

Sub-total acquisitions
Disposal of property, plant and equipment

Disposal of financial fixed assets
Repayment of loans

F18Internal transfers

F34

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

F34

17,398

–

3,634

6,442

(1,620)(0)73,36628,457(576,958)(750,032)

2019

5,936

(78,441)

Government grants received

F24

2018

Interest received(708,017)

Tax paid during the period

NOTES

120,310517,106(175,347)(186,387)(20,110)(11,246)

705,982249,969

(508)

2,997

101,217(17,884)F22

155,897

257,114F22

257,114239,230of which cash and cash equivalents

285,079

271,724of which bank overdrafts(27,965)(32,493)

The notes on pages 107 to 164 are an integral part of these consolidated financial statements.

Umicore Integrated Annual Report 2019

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 to 166, for the year
ended 31 December 2019 were authorized for issue by the Board of Directors on 26 March 2020.
They have been prepared in accordance with the legal and regulatory requirements applicableto the consolidated financial statements of Belgian companies. They include those of thecompany, its subsidiaries and its interests in companies accounted for using the equity method.

107

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 recognized in proﬁt
or loss.

The Group presents its annual consolidated ﬁnancial statements in accordance with all
International Financial Reporting Standards (IFRS) adopted by the European Union (EU).

F1 BASIS OF PREPARATION

Any contingent consideration to be transferred by the group is recognized 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 recognized in proﬁt or loss. Contingent considerationthat is classiﬁed as equity is not re-measured, and its subsequent settlement is accounted forwithin equity.

The consolidated ﬁnancial statements are presented in thousands of euros, rounded to thenearest thousand, and have been prepared on a historical cost basis, except for those items
that are measured at fair value.

Inter-company transactions, balances and unrealized gains on transactions between groupcompanies are eliminated. Unrealized losses are also eliminated. When necessary, amounts
reported by subsidiaries have been adjusted to conform with the group’s accounting policies.

F2 ACCOUNTING POLICIESIFRS 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 not to 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 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 recognizes 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 recognized amounts of acquiree’s identiﬁable net assets. Acquisition-related costs
are expensed as incurred.

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 remeasured toits fair value at the date when control is lost, with the change in carrying amount recognizedin 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 recognized 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 recognized in other comprehensive income are reclassiﬁed to
proﬁt or loss.

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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 recognized at cost, and the carrying amount is increased or decreased
to recognize 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 recognized in other comprehensive income is reclassiﬁed to
proﬁt or loss where appropriate. The group’s share of post-acquisition proﬁt or loss is recognizedin the income statement, and its share of post-acquisition movements in other comprehensive
income is recognized 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 recognize 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 recognizes 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 recognized in the group’s ﬁnancial statements only to the extent of unrelated
investor’s interests in the associates. Unrealized 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 recognized 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 recognized at cost and adjusted thereafter to recognize 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

108

net investment in the joint ventures), the group does not recognize further losses, unless it has
incurred obligations or made payments on behalf of the joint ventures.
Unrealized gains on transactions between the group and its joint ventures are eliminated to theextent of the group’s interest in the joint ventures. Unrealized 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 organizedin 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-road vehicles. The business group alsooffers 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

109

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.

2.5 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.

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 euros which is the functional currency of the parent. To consolidate the Group andeach of its subsidiaries, the ﬁnancial statements are translated as follows:

Borrowing costs that are directly attributable to investments are capitalized together with thecosts of the assets in accordance with IAS 23. All borrowing costs that cannot be linked directly
to an investment are recognized as expenses in the period when incurred.

– 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 recognized in the income statement as part of the gain or loss on sale.

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 customized
industrial assets, typically do not have an individual resale value if put outside the overall
context of the operations. Therefore, no residual value is taken into account when determining
the depreciable value.
The typical useful life per main type of property, plant and equipment are as follows:

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.

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.

2.4 FOREIGN CURRENCY TRANSACTIONS
Foreign currency transactions are recognized 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.

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 thanpreviously estimated, or it will write-off or write-down technically obsolete or non-strategic
assets that have been abandoned or sold.

Subsequently, monetary assets and liabilities denominated in foreign currencies are translated
at the closing rate at the end of the reporting period.
Gains and losses resulting from the settlement of foreign currency transactions, and from thetranslation of monetary assets and liabilities denominated in foreign currencies, are recognizedin 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 Note F2.21, Financial instruments).

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FINANCIAL STATEMENTS
Land use rights are part of the Property, Plant and Equipment and are typically amortized 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 recognized 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 recognized in
the income statement. These impairment losses are never reversed.
The excess of the Group’s interest in the fair value of the net identiﬁable assets acquired overthe cost of acquisition is recognized in the income statement immediately.

110

2.6.3 RESEARCH AND DEVELOPMENT
Research costs related to the prospect of gaining new scientiﬁc or technological knowledge andunderstanding are recognized 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 capitalized 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 capitalized they are amortized using astraight-line method over the period of their expected beneﬁt, in general five years.
2.6.4 CO 2 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 recognizes 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.
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 witha minimum of 5% (in general over 5 years).
– Customer portfolios: are typically amortized over a period of five years.
– ERP software is typically amortized over a period of ten years.

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FINANCIAL STATEMENTS

111– Smaller software is typically amortized over a period of five years.

Loans and receivables are carried at amortized cost less any impairment.

In case of an earn-out component, a remeasurement is foreseen, adapting the carrying amountof the asset and the amortization accordingly.

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.

Umicore has currently no intangible asset with an indefinite useful live.

2.9 INVENTORY
Inventories are carried at the lower of cost or net realizable value, except for the permanently tied
up metal inventories where the historical cost method is applied (see further). Cost comprises
direct purchase or manufacturing costs and an appropriate allocation of overheads.

2.7 LEASEIFRS 16 sets out the principles for the recognition, measurement, presentation, and disclosureof leases and requires lessees to account for all leases under a single on-balance sheet model,
similar to the accounting for finance leases under IAS 17. At the commencement date of a lease,lessees recognize a lease liability (i.e. a liability to make lease payments), and a right-of-use
asset (i.e. an asset representing the right to use the underlying asset over the lease term).
The lease liabilities are recognized at the present value of the remaining lease payments.
The right-of-use asset is depreciated over the term of the lease. Interest expense is recognizedon the lease liability. The lease liability is remeasured upon the occurrence of certain events(e.g. a change in the lease term or a change in future lease payments resulting from a change
in index). Such remeasurements of the lease liability will generally be recognized as an
adjustment to the right-of-use asset.
The Group applies the lease recognition exemptions for short-term leases and leases for which
the underlying asset is of low value. The Group elects, by class of underlying asset, not toseparate non-lease components from lease components and instead accounts for each lease
component and any associated non-lease component as one single lease component.
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 still reported as off-balance sheet commitments,
as not in the scope of IFRS 16.
2.8 FINANCIAL ASSETS AT FAIR VALUE THROUGH OCI, LOANS AND
NON-CURRENT RECEIVABLES
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. Unrealized gains and losses
from changes in the fair value of such assets are recognized 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 derecognized 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.

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 minimize the potential adverse effects of market price ﬂuctuations
on the ﬁnancial performance of the Group.
Within this inventory class, the metal contents are classiﬁed in inventory categories that reﬂect
their speciﬁc nature and business use: such as permanently tied up metal inventories andcommercially available metal inventories amongst others. Depending on the metal inventory
category, appropriate hedging mechanisms are applied.
A weighted average is applied per category of inventory.
In view of their permanent nature, Umicore opted to apply as from 1 January 2019 themeasurement and recognition rules of Property, Plant and Equipment (IAS 16) and Impairmentof Assets (IAS 36) to all of its permanently tied-up metal inventories category. As a consequence,the valuation principle for such inventories changed from LOCOM (lower of cost or net realizablevalue principle) to the “historical cost less any accumulated depreciation and accumulated
impairment” principle. As the inventories are considered to have an unlimited useful life, nodepreciations are applied. Instead they are subject to Umicore’s annual impairment testing of
the CGUs carrying these inventories.
Base products without metal hedging and consumables are valued using the weighted-average
cost method. 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

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FINANCIAL STATEMENTS
progress are valued using the percentage-of-completion method. Write-downs on inventories
are recognized when turnover is slow or where the carrying amount is exceeding the net
realizable value, meaning the estimated selling price less the estimated costs of completionand the estimated cost necessary to make the sale. Write-downs are presented separately.
2.10 TRADE AND OTHER RECEIVABLES
Trade and other receivables are measured at amortized cost, i.e. at the net present value ofthe receivable amount. Unless the impact of discounting is material, the nominal value istaken. Receivables are written down for irrecoverable amounts. All write-downs are recorded
on a separate account and are netted with the carrying amounts when all chances of recovery
are depleted.
Trade receivables of which substantially all the risks and rewards have been transferred are
derecognized from the balance sheet. The positive fair value of derivative 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 amortized 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.
The recoverable amount is the higher of an asset’s net selling price and value in use. To estimate
the recoverable amount of individual assets the company often determines the recoverable
amount of the cash-generating unit (CGU) to which the asset belongs.
Whenever the carrying amount of an asset exceeds its recoverable value, an impairment loss
is recognized as an expense immediately.

112

A reversal of impairment losses is recognized when there is an indication that the impairment
losses recognized for the asset or for the CGU no longer exist or have decreased. An impairment
loss is reversed only to the extent that the asset’s carrying amount does not exceed thecarrying amount that would have been determined, net of depreciation or amortization, if noimpairment loss had been recognized.
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 recognized 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 recognized 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
recognized 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 recognized 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.
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 expectation that
it will discharge those responsibilities.
The amount recognized as a provision is the best estimate of the expenditure required to settle
the present obligation at the end of the reporting period and taking into account the probabilityof the possible outcome of the event. Where the effect of the time value of money is material,

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FINANCIAL STATEMENTS
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 NOTE F2.16, 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 recognized at the moment the event occurs.
When the obligation is production/activity related, the provision is recognized graduallydepending on normal usage/production level.
3. OTHER PROVISIONS
These include provisions for litigation, onerous contracts, warranties, exposure to equity
investments and restructuring. A provision for restructuring is recognized when the company has
approved a detailed and formal restructuring plan and the restructuring has either commenced
or has been announced publicly before the end of the reporting period. Any restructuringprovision 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 recognized as an expense,
based on an estimation made at the end of the reporting period.
2.16.2 POST-EMPLOYMENT BENEFITS (PENSIONS, MEDICAL CARE)
The company has various pension and medical care schemes in accordance with the conditions
and practices of the countries it operates in. The schemes are generally funded throughpayments to insurance companies or trustee-administered funds.
2.16.2.1 DEFINED BENEFIT PLANS
The company has accounted for all legal and constructive obligations both under the formal
terms of deﬁned beneﬁt plans and under the company’s informal practices.
The amount presented in the balance sheet is based on actuarial calculations (using the projected
unit credit method) and represents the present value of the deﬁned beneﬁt obligations andreduced by the fair value of the plan assets.

113

The past service costs are immediately recognized 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 recognized through other comprehensive income (OCI) in the
period in which they occur and are disclosed in the statement of comprehensive income as
post-employment beneﬁt reserves.
2.16.2.2 DEFINED CONTRIBUTION PLANS
The company pays contributions to publicly or privately administered insurance plans.
The payments are recognized as expenses as they fall due and as such are included 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 recognized 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 recognized.
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 recognized in theincome statement.
2.16.5 EQUITY AND EQUITY-RELATED COMPENSATION BENEFITS (SHARE-BASED PAYMENTSIFRS 2)Different stock option and share programs allow company employees and company senior
management to acquire or obtain shares of the company.
The option or share exercise price equals the market price of the (underlying) shares at 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.

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FINANCIAL STATEMENTS

114

The options and shares are typically vested at the moment of the grant and their fair value
is recognized as an employee beneﬁt expense with a corresponding increase in equity asshare based payment reserves. For the options, the expense to be recognized is calculatedby an actuary, using a valuation model which takes into account all features of the stock
options, the volatility of the underlying stock and an assumed exercise pattern.

interpretation of complex tax laws. Furthermore, some subsidiaries within the Group canbe involved in tax audits, usually in relation to prior years, that can take time to conclude.
The Group assesses its tax position individually and on a regular basis and if the tax payablediffers from the amounts initially estimated then the difference is charged or credited in theaccounts for the year in which it is determined.

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’.

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 of the country
where the Company operates.

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.

Deferred tax assets are only recognized to the extent that it is probable that future taxable
proﬁt will be available, against which the temporary differences can be utilized.

2.17 FINANCIAL LIABILITIESAll movements in ﬁnancial liabilities are accounted for at trade date.

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.

Borrowings are initially recognized as proceeds received, net of transaction costs.
Subsequently they are carried at amortized cost using the effective interest rate method.
Amortized cost is calculated by taking into account any issue costs, and any discount or premium
on issue. Any differences between cost and redemption value are recognized in the income
statement upon redemption.

2.20 REVENUE RECOGNITION
2.20.1 REVENUE RECOGNITION FROM CONTRACTS WITH CUSTOMERS
Despite the complexity of several processes within each business unit, the performanceobligations are rather straightforward, those being:

As from 2019, the financial debt also contains the lease liability as per IFRS 16 (see note F2.23.1).
2.18 TRADE AND OTHER PAYABLES
Trade payables are measured at amortized cost, i.e. 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.
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.
Current tax is the expected tax payable on the taxable income of the year, using tax rates
enacted at the end of the reporting period, and any adjustment to tax payable (or receivable)
in respect of previous years.
The tax payable is determined based on tax laws and regulations that apply in each of 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– 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 a significant 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 ofmetal (including boni) towards the customers.
– 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 recognized at a point of time when the control
transfers to the customer. Despite the products being customized, 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 be 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.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
For sales within Recycling, the revenue is recognized 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 recognized 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.

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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 or the net position approach for the fair value hedge on groups of closed
portfolios of foreign exchange risk and commodity risk exposures are applied.

Some of the contracts do contain commercial discounts and rebates, however frequency isrelatively low, and magnitude is not significant. If applicable, these are recognized in the same
period the sale is established.

Under the bottom layer approach, a layer representing the nominal amount of an exposurethat has historically been present on a constant and continuous basis is defined. This layer isfurther split into smaller unit of accounts, sublayers, which are designated as hedged items.
The sublayers are then hedged by hedging instruments that are designated as hedging
multiples of such sublayers

There are no additional warranty agreements sold to clients on top of legal requirements,
therefore these are not considered as a separate performance obligation.

Under the net position approach, hedging is applied based on a group of items with offsetting
risk positions, the net position being the hedged item hedged by a hedging instrument.

Consequently, the transaction price identified within the agreement is allocated in full to theperformance obligation.

In both approaches, it regards closed hedged portfolios in which items cannot be added,
removed or replaced without treating each change as the transition to a new portfolio.

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.

In both approaches the exposures cover a group of both on balance and off balance foreignexchange and commodity positions, that is, either trade payables, inventories and purchasecommitments or trade receivables and sales commitments exposed to the variability of foreign
currencies or commodity prices.

The revenue from contracts with customers is 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 recognized in the income statement over the period
necessary to match them with the costs they are intended to compensate.
2.21 FINANCIAL INSTRUMENTS
The company uses derivative ﬁnancial and commodity instruments primarily to reduce 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 recognized initiallyat fair value at trade date. The hedged items (physical commitments and commercially available

For commodity risk exposures, IFRS 9 bottom layer or net position based fair value hedge
accounting is applied to the extent there are market-based derivatives available forthat commodity.
In the absence of reaching the IFRS 9 bottom layer criteria or the net position criteria for closed
portfolios or in the absence of 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 aresubmitted to the valuation rules applicable to similar non-hedged items, i.e. the recognition at
the lower of cost or market (IAS 2) for inventories, or the recognition of provisions for onerous
contracts (IAS 37) for physical commitments.
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.

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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 recognized in
the shareholders equity as hedging reserves until the underlying forecasted or committed
transactions occur (i.e. affect the income statement). At that time the recognized gains 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 recognized 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 recognized 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 recognized 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 ADOPTION OF IFRS 16 – LEASE ACCOUNTINGIFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a
Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions
Involving the Legal Form of a Lease. The new standard sets out the principles for the recognition,

116

measurement, presentation and disclosure of leases and requires lessees to account for mostleases under a single on-balance sheet model.
IFRS 16 impacts Umicore acting as a lessee under agreements previously classified as operatinglease contracts and mainly consisting of car leases and a limited number of rental agreementsof warehouses and offices.
Umicore adopted IFRS 16 on 1 January 2019, in accordance with its transitional provisions, using
the modified retrospective approach. Hence, Umicore opted to measure the right-of-use asset
at an amount equal to the lease liability at opening (no prepaid or accrued lease expenses),
without restatement of the comparative figures.
The lease liabilities were measured at the present value of the remaining lease payments,
discounted to 1 January 2019 using a weighted average incremental borrowing rate set at 1.8%.
Umicore has applied the following practical expedients, as permitted by IFRS 16, on thetransition date:– No reassessment of all contracts whether they are or contain a lease at the date of initial
application. Instead, the Group applied IFRS 16 to contracts that were previously identified
as leases applying IAS 17 and IFRIC 4.
– The Group applies a single discount rate to a portfolio of leases with reasonably similar
characteristics (such as leases with a similar remaining lease term for a similar class ofunderlying asset in a similar economic environment).
– Reliance on previous assessments on whether leases are onerous instead of performing an
impairment review at opening.
Umicore has applied the lease recognition exemptions for short-term leases and leases forwhich the underlying asset is of low value (mainly printers and underlying assets having avalue of less than USD 5,000). Umicore elected, by class of underlying asset, not to separate
non-lease components from lease components and instead accounts for each lease component
and any associated non-lease component as one single lease component. There are no materialintercompany subleases.
The effect of adopting IFRS 16 is as follows:
1. Effect on the consolidated balance sheet:
As per note F35 on rights and commitments in 2018, non-metal operating leases amounted to€ 44.9 million in 2018, out of which € 6.9 million represented low value or short-term leases which
are both recognized on a straight-line basis as expense in profit and loss. After discounting theimpact is an increase of property, plant and equipment and (net) financial debt by € 37.3 million

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
on 1 January 2019 and by € 46.2 million on 31 December 2019 (see Note F16 and F24 for the
impacts on Property, plant and equipment and on Financial debt respectively).
2. Effect on the consolidated statement of comprehensive income
The net profit before tax has not been materially impacted. The other operating expenses
decreased by € 17.5 million offset by an increase in the depreciations of the right-of-use assets
and in interests for a total amount of respectively € 16.8 million and € 0.9 million. (see notes
F9 and F10 respectively)
3. Effect on the cashflow statement
The interests and the reimbursement of the lease liability are both classified as financing cash
flows (€ -16.5 million under Change in Liability and €-0.9 million as interests paid) whereas
before the operating lease rents were part of the operating cash flows (positive impact on
operating cash flow of € 17.5 million). (see Note F34)
2.23.2 ADOPTION OF IFRIC 23 – UNCERTAINTY OVER INCOME TAX TREATMENTS
The IFRIC 23 interpretation clarifies accounting for uncertainties in income taxes and is to be
applied when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits and tax rates, in case of uncertainty over whether Umicore’s position will be acceptedby tax authorities. It is applicable to both current and deferred tax items.
Umicore made a detailed assessment of all tax uncertainties within the Group, thereby:– considering uncertainties individually or collectively, based on which approach provided
the best predictions of the resolution of the uncertainties with the tax authorities;– assuming that the tax authority will examine the position (if entitled to do so) and will havefull knowledge of all the relevant information;– recognizing an Uncertain Tax Position or UTP (or group of UTPs) using either the most likely
amount or the expected value, depending on which is thought to give a better predictionof the resolution of each (group of) UTP(s), to reflect the likelihood of an adjustment being
realized on examination.
The Group applied IFRIC 23 retrospectively with the cumulative effect of initially applying theInterpretation recognized as an adjustment to the opening balance of the reserves on 1 January
2019. In accordance with the transitional provisions of IFRIC 23 it has opted not to restatecomparative information.
The total impact of applying IFRIC 23 on Umicore’s reserves as at 1 January 2019 amounted
to € 42.2 million, as a result of the provisions recorded for tax uncertainties increasing from€ 32.4 million to € 74.6 million. The impact on Umicore’ income statement during the year of2019 amounted to € -16.4 million. The total provisions for € 91 million are booked under theline “Income tax payable” of the balance sheet.

117

2.23.3 CHANGE IN ACCOUNTING POLICY WITH REGARDS TO PERMANENTLY TIED-UP
METAL INVENTORIESIn line with Umicore’s accounting policies related to inventories (note 2.9 “Inventory” in the2018 annual report), metals are classified in inventory categories that reflect their specificnature and business use. As from its adoption of IFRS in 2003, Umicore classifies permanently
tied-up metal inventories as a separate inventory category. These inventories consist of metal
stocks required to run operations without business interruption (“Core Inventories” concept).
As mentioned under note 3.2.3. “Metal inventory risk”, Umicore faces metal price risks on its
permanently tied-up metal inventories arising from a market price for a given permanently
tied-up metal inventory potentially falling below its carrying value. Such risk is irrelevant toUmicore’s cash flows or operational and commercial performance.
Until 31 December 2018, Umicore valued these permanently tied-up metal inventories following
the lower of cost or net realizable value principle (LOCOM). This principle implied that a noncash impairment charge is recognized in operating income in case the market price of suchinventories on closing date falls below its carrying value. Such impairment was reversed incase of a subsequent recovery in the closing market price. Umicore consistently reported
and disclosed these impairment movements under non-recurring items. In the past, suchnet impairments remained limited in size (since 2010 the largest reported net impairment
amounted to € 26 million in 2015).
Umicore’s permanently tied-up cobalt and nickel metal inventories increased substantially inrecent years on the back of the expansion in battery materials. In addition, the recent market
price of cobalt showed very strong volatility and dropped substantially since 1 January 2019.
Applying the LOCOM principle on permanently tied-up metal inventories on 31 December
2019 would have given rise to a non-cash impairment charge of € 122 million for the Group,
partly offset by a positive tax impact of € 30.5 million. Taking into account the permanent
nature of such inventories, Umicore reviewed its related accounting policy aimed at reducing
potential future non-recurring result volatility triggered by fluctuations in the market price ofrespective metals that do not reflect current or future underlying cash flows or commercial andoperational performance.
While these permanently tied-up inventories are as such recoverable, as long as there is no
structural change to the prevailing flowsheet or business set-up, they are expected to be used
for an indefinite period of time. Consequently, their carrying amount is expected be recovered
through the cash flows generated by the cash generating units (“CGUs”) for which they areused, rather than through a sale.
In view of their permanent nature, Umicore opted to apply as from 1 January 2019 themeasurement and recognition rules of Property, Plant and Equipment (IAS 16) and Impairmentof Assets (IAS 36) to all of its permanently tied-up metal inventories. As a consequence, theUmicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
valuation principle for such inventories changed from LOCOM to the “historical cost less any
accumulated depreciation and accumulated impairment” principle. As the inventories are
considered to have an unlimited useful life, no depreciations are applied. Instead they will be
subject to Umicore’s annual impairment testing of the CGUs carrying these inventories. In viewof their physical characteristics and related processes and systems, these metals will remainclassified under Inventories.

118

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

As of 1 January 2019, the cumulative “lower of cost or net realizable value” provision amounted
to € 8.5 million. The change in accounting policy has been retrospectively applied as from
1 January 2019 representing the release of this cumulative “lower of cost or net realizable value”
provision, to the opening balance sheet reserves. During 2018 this provision had been increasedby € 6.0 million presented under non-recurring items. Due to the immaterial impact Umicore
decided not to adjust the comparative financial information of prior periods.

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.

As from the moment there are material changes in the prevailing business set-up due towhich the related permanently tied-up metal inventories would no longer be required, suchinventories will be reclassified from “held to carry” to “held for sale” assets. Any inventories
held for sale are valued at the lower of the carrying amount and fair value less cost to sell.

In relation to the structural risk, the Group assesses the hedge effectiveness through a criticalterms match between the hedged item (future probable cash flows) and the hedging instrument
including amount and maturity. The Group applies a prudent approach in the application of
structural hedging, never up to 100 %, avoiding thereby ineffectiveness arising from differencein maturity between hedged item and hedging instrument or changes in exposure amounts.

The total gross book value of Umicore’s permanently tied-up metal inventories at 31 December
2019 amounted to € 862 million (versus € 791 million on 1 January 2019) which compares to avalue of € 2,135 million when applying the 31 December market prices.

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 program seeks
to minimize the adverse effects on the ﬁnancial performance of the Group by hedging most ofthese 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 manyof our related operations are located outside the USD zone (particularly in Europe and Asia).
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 and refining operations.

At the end of 2019, Umicore had structural currency hedging in place relating to its non-metal
related currency sensitivity including 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, i.e. the risk ofcurrency exchange rates ﬂuctuating between the time the price is ﬁxed with a customer or
supplier and the time the transaction is settled. The Group’s policy is to hedge the transactionalrisk 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 including amount and maturity. The Group hedges transactional risks
to the maximum extent up to 100 %. Any ineffectiveness can arise from difference in maturity
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 variationsin the value of such local currencies against the EUR, predominantly the KRW, CNY, USD, BRL

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
and ZAR. While Umicore does not systematically hedge its translational currency exposures,
it may enter into ad hoc translational hedges.
3.2 METAL PRICE RISK
Umicore’s metal price risk can be split into three distinct categories: structural, transactional
and inventory risks.
In relation to the structural and transactional risk, for the purpose of assessing our hedge
effectiveness we apply a critical terms match between the hedged item and the hedging
instrument including in terms of quantity and maturity. Hedge ratio is 100% whereby oursources of ineffectiveness could be a difference in maturity between hedged item and financial
instrument or a change in exposure.
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 hedging
of 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 2019, the outstanding hedge contracts relate to some precious
metals (i.e. gold, platinum and palladium) and some base metals (i.e. nickel, copper and lead).

119

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
the application of structural hedging, never up to 100 %, avoiding thereby ineffectivenessarising from difference in maturity between hedged item and hedging instrument or changes
in exposure amounts.
3.2.2 TRANSACTIONAL RISKThe Group faces transactional price risks on metals. The majority of its metal-based transactions
use global metal market references, such as 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 (i.e., when the metal is “priced in”) and the moment the products
are sold (i.e. when the metal is “priced out”).
The Group’s policy is to hedge the transactional risk to the maximum extent possible, primarily
through forward contracts.
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 differencein maturity between hedged item and hedging instrument or changes in exposure amounts,
but this will never be material.
The accelerating growth in battery materials in recent years substantially increased the exposure
to specific related metals such as cobalt or nickel. Increasing volumes, the vulnerability to theassociated price volatility and in the case of certain metals such as cobalt the absence of aliquid 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 thecontracted metal. Such physical back-to-back hedging allows management of transactionalrisks related to cobalt 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.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
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 2019, the Group’s gross ﬁnancial debt stood at € 1,715 million, of which€ 1,061 million at ﬁxed rate. The outstanding interest rate swaps totaled € 52 million at the endof the period and included a € 40 million contract that will expire in 2023.
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.
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 inplace on a world-wide basis. This contract protects the insured activities against insolvency,
political and commercial risks with an individual deductible per invoice of 5% and foresees anindemniﬁcation cap set at regional or country levels. A second policy covers a more selective
group of trade receivables and foresees 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, characterized 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 such as banks and brokers, Umicore is alsoestablishing internal credit lines. Speciﬁc limits are set, per ﬁnancial instrument, covering thevarious risks to which it is exposed when transacting with such 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, three committed long-term private placements and acommercial paper programme.

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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
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 in line with IFRIC 23.
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.
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 less cash and cash equivalents.
The ﬁgures for the presented periods are detailed under the note F24 on Financial Debt.
In an ordinary course of business operating environment, the group aims for a capital structure
equivalent to investment-grade credit rating status. The group could consider temporarily
exceeding 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 referto the Risk Management pages of the Corporate Governance section (pages 83 to 88) 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.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
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.
Assumptions and estimates are applied when:– 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, onerous contracts and restructuring.
– Determining inventory write-downs.
– Assessing the extent to which deferred tax assets will be realized.
– 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, defined as 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 internallygenerated estimates and data from external sources. As at 31 December 2019, the carrying
amount of the goodwill for the consolidated entity was € 156.7 million (€ 142.5 million in 2018).
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

121

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
2019, the carrying amount of rehabilitation provisions was € 58.0 million (€ 60.8 million in 2018).
4.3 DEFINED BENEFIT OBLIGATIONS
An asset or liability in respect of deﬁned beneﬁt plan is recognized 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 2019, a liability with respect to employee beneﬁt obligations of€ 392.6 million was recognized (€ 333.8 million in 2018).
4.4 RECOVERY OF DEFERRED TAX ASSETS
Deferred tax assets are recognized for deductible temporary differences, unused tax losses
and fair value reserves entries only if it is probable that future taxable proﬁts (based on Group
operational plans) are available to use those temporary differences and losses. The actual tax
results in future periods may differ from the estimate made at the time the deferred taxes
are recognized.
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 such market-based
derivatives or in the absence of obtaining fair value hedge accounting at all, the hedged items,
including physical metal commitments, are kept at cost and are subject to the IAS 37 principles
for onerous contracts. The onerous contract provision decision is based on an assessment of thelevel 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) thanthe contracted metal price in the case of Umicore purchases (sales)). Both in 2018 and in 2019,the market volatility in the cobalt price in particular triggered such risk assessments. If insteadof IAS 37 principles, IFRS 9 based fair value hedge accounting would have applied, a significant
portion of such provisions would be recognized as mark-to-markets under Other Receivables
or Payables.
The fast growth of Umicore’s battery materials sales for transport applications in particular isincreasing the group’s exposure to the automotive industry end market. This industry has apractice of applying warranty and recall settlements related to potential product quality events

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS(irrespective of whether any legal obligation exists). In view thereof, Umicore continued in 2019its dedicated provisioning model for battery materials as introduced in 2018.
As at 31 December 2019, the carrying amount of the provisions for other liabilities and charges
amount to € 80.7 million (€ 119.9 million in 2018).
4.6 PROVISIONS FOR UNCERTAINTY OVER INCOME TAX TREATMENTS
As mentioned under note F2.23.2, Umicore made a detailed assessment of all tax uncertainties
within the Group as per IFRIC 23. The total impact of applying IFRIC 23 on Umicore’s reserves
as at 1 January 2019 amounted to € 42.2 million, as a result of the provisions recorded fortax uncertainties increasing from € 32.4 million to € 74.6 million. The total provisions for€ 91.4 million are booked under the line “Income tax payable” of the balance sheet.

F5 GROUP COMPANIES

Below is a list of the main operating companies included in the consolidated ﬁnancial statements.

For continuing operations
Argentina
Umicore Argentina S.A.
Australia
Umicore Marketing Services Australia Pty Ltd.
Austria
Oegussa GmbH
Belgium
Todini (BE 0834.075.185)
Umicore Financial Services (BE 0428.179.081)
Umicore Marketing Services Belgium (BE 0402.964.625)
Umicore Specialty Materials Brugge (BE 0405.150.984)
BrazilCoimpa Industrial Ltda
Umicore Brasil Ltda
Clarex
Umicore Shokubai Brasil Industrial Ltda
Umicore Catalisadores Ltda.
CanadaUmicore Canada Inc.
Umicore Autocat Canada Corp.
Umicore Precious Metals Canada Inc.
China
Umicore Marketing Services (Shanghai) Co., Ltd.
Umicore Marketing Services (Hong Kong) Ltd.
Umicore Autocat (China) Co. Ltd.
Umicore Changxin Surface Technology ( Jiangmen) Co., Ltd.
Jiangmen Umicore Changxin New Materials Co., Ltd.
Umicore Jubo Thin Film Products (Beijing) Co., Ltd.
Umicore Shokubai (China) Co Ltd
Umicore Platinum Engineered Materials (Suzhou) Co., Ltd.
Umicore Catalyst (China) Co., Ltd.
DenmarkUmicore Denmark ApS% INTEREST IN
2018% INTEREST IN
2019

100.00100.0091.29
100.00100.00100.00100.00100.00100.00100.0060.00
100.00100.00100.00100.00100.00100.00100.0080.00
90.00
100.0060.00
100.00100.00100.00100.00100.0091.29
100.00100.00100.00100.00100.00100.00100.0060.00
100.00100.00100.00100.00100.00100.00100.0080.00
90.00
100.0060.00
100.00100.00100.00FinlandFranceUmicore Finland OY
Umicore France S.A.S.
Umicore IR Glass S.A.S.
Umicore Autocat France S.A.S.
Umicore Specialty Powders France S.A.S.
Umicore Marketing Services France
Todini France S.A.S.
Germany
Umicore AG & Co. KG (*)
Allgemeine Gold- und Silberscheideanstalt AG
Umicore Galvanotechnik GmbH
Todini Deutschland GmbH
Umicore Shokubai Germany GmbH
Italy
Todini and CO. S.P.A.
India
Umicore Autocat India Pvt LTD
Umicore India Private Limited
Todini Metals and Chemicals India Private LimitedJapan
Umicore Japan KK
Umicore Shokubai Japan Co Ltd
South Korea
Umicore Korea Ltd.
Umicore Marketing Services Korea Co., Ltd.
Umicore Materials Korea Ltd
Ordeg Co.,Ltd.
Liechtenstein
Umicore Thin Film Products AG
Luxemburg
Umicore International
Umicore Autocat Luxembourg
MexicoTodini Atlántica S.A. de C.V.
Netherlands
Schöne Edelmetaal BV
Philippines
Umicore Specialty Chemicals Subic Inc.
PolandUmicore Autocat Poland sp. z o.o.
Todini Europe sp. z o.o.
Umicore Poland Sp. z o.o.
PortugalUmicore Marketing Services Lusitana Metais Lda
South Africa
Umicore Marketing Services Africa (Pty) Ltd.
Umicore Catalyst South Africa (Pty) Ltd.
Spain
Todini Quimica Ibérica, S.L.
SwedenUmicore Autocat Sweden AB
Switzerland
Allgemeine Suisse SA
TaiwanUmicore Thin Film Products Taiwan Co Ltd
ThailandUmicore Precious Metals Thailand Ltd.
Umicore Autocat (Thailand) Co., Ltd.
Umicore Shokubai (Thailand) Co., Ltd.
United Kingdom Umicore Coating Services Ltd.

122

% INTEREST IN
2018% INTEREST IN
2019

0.00
100.00100.00100.00100.00100.00100.00100.0091.21
91.21
100.0060.00
100.00100.00100.000.00
100.0060.00
100.00100.00100.00100.00100.00100.00100.00
70.00
91.21
78.20
100.0070.00
100.00100.00100.0065.00
100.00100.0091.21
100.0091.21
100.0060.00
100.00100.00100.00100.00100.00100.00100.00100.00100.0091.21
91.21
100.0060.00
100.00100.00100.0070.00
100.0060.00
100.00100.00100.00100.00100.00100.00100.00
70.00
91.21
78.20
100.0070.00
100.00100.00100.0065.00
100.00100.0091.21
100.0091.21
100.0060.00
100.00Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

USA

Umicore Marketing Services UK Ltd
Umicore USA Inc.
Umicore Autocat USA Inc.
Umicore Precious Metals NJ LLC
Umicore Precious Metal Chemistry USA LLC
Umicore Precious Metals USA Inc.
Umicore Optical Materials USA Inc.
Umicore Shokubai USA Inc
Palm Commodities International
Umicore Electrical Materials USA Inc.
Umicore Specialty Materials Recycling, LLC.
Umicore Catalyst USA, LLC% INTEREST IN
2018% INTEREST IN
2019

100.00100.00100.00100.00100.00100.00100.0060.00
100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.0060.00
100.00100.00100.00100.00(*) 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).

123

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

2018

2019

2018

2019

American Dollar

USD

1.145

1.123

1.181

1.119

UK Pound Sterling

GBP

0.895

0.851

0.885

0.878

Canadian Dollar

CAD

1.561

1.460

1.529

1.485

Swiss Franc

CHF

1.127

1.085

1.155

1.112

Japanese Yen

JPY125.850

121.940130.396122.006

Brazilian Real

BRL

4.437

4.528

4.316

4.416

South African Rand

ZAR

16.45915.777

15.61916.176Chinese Yuan

CNY

7.875

7.821

7.808

7.735

Thai Baht

THB

37.05233.41538.16434.757

Korean Won (100)KRW

12.77912.96312.99113.053

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

124

F7 SEGMENT INFORMATION

BUSINESS GROUP INFORMATION 2018
CATALYSISENERGY &SURFACETECHNOLOGIESRECYCLINGCORPORATE &UNALLOCATEDELIMINATIONSTOTAL CONTINUED

TOTAL

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

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)F9

69,08866,27459,873

11,343–

206,577

206,577

69,08866,27459,873

11,343–

206,577

206,577F9

231,417317,552

185,674(28,099)–

706,544706,544

Thousands of Euros

NOTES

Inter-segment turnover

Inter-segment revenues
Operating result

Equity method companies

EBIT

Depreciation and amortisation

F9

F9

F9

Recurring
EBITDA

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 recognized in operating expenses

F9

120,51433,60815,196

6,875–

176,193

176,193

R&D capitalized as intangible assets

F34

15,010

5,237

–

–

–

20,247

20,247

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

125

BUSINESS GROUP INFORMATION 2019
CATALYSISENERGY & SURFACETECHNOLOGIESRECYCLINGCORPORATE &UNALLOCATEDELIMINATIONSTOTALCONTINUED

TOTAL

Total segment turnover

4,539,213

2,938,485

11,319,935

58,778(1,371,330)

17,485,081

17,485,081

External turnover

4,444,620

2,877,280

10,104,403

58,778–17,485,081

17,485,081

94,593

61,2051,215,532–(1,371,330)––

Total segment revenues (excluding metals)

1,459,902

1,225,408

680,981–(5,667)3,360,624

3,360,624

External revenues

1,458,227

1,225,242

677,155––

3,360,624

3,360,624

1,675

166

3,826

–

(5,667)––

184,884

149,065

190,086(53,588)–

470,447

470,447

185,270

177,164

188,069(52,371)–498,131

498,131(386)(28,099)

2,017(1,217)–(27,684)(27,684)

–

5,382

–

3,323

–

8,705

8,705

–

5,382

–

5,407

–

10,78910,789Thousands of Euros

NOTES

Inter-segment turnover

Inter-segment revenues
Operating result

F9

Recurring operating result
Non-recurring operating result
Equity method companies

F9

Recurring–––(2,084)–(2,084)(2,084)

184,884

154,447

190,086(50,265)–

479,152

479,152

185,270

182,546

188,069(46,964)–

508,920

508,920(386)(28,099)

2,017(3,301)–(29,768)(29,768)F978,50788,30062,313

14,918–244,038

244,038

78,50788,30062,313

14,918–244,038

244,038F9263,390242,747

252,399(35,346)–

723,190

723,190

263,776

270,846

250,382(32,045)–752,959

752,959

Consolidated total assets

2,747,773

3,781,786

1,345,517

808,926(1,660,612)

7,023,390

7,023,390

Segment assets

2,747,773

3,747,271

1,345,517

692,799(1,660,612)

6,872,748

6,872,748

Non-recurring
EBIT

F9

Recurring EBIT
Non-recurring EBIT
Depreciation and amortisation
Recurring
EBITDA
Recurring EBITDA

Investments in associates
Consolidated total liabilities–

34,515–

116,127–

150,642

150,642

1,254,284

1,435,241

947,340

2,386,672(1,660,612)

4,362,925

4,362,925
3,802,414

Capital Employed at 31/12 of previous year

F31

1,264,885

1,769,135

546,396

221,997–

3,802,413

Capital Employed at 30/06F311,314,779

1,982,482

481,776

195,514–3,974,551

3,974,551

Capital Employed at 31/12

F311,536,950

2,323,770

405,422

175,849–

4,441,991

4,441,991

Average Capital Employed in first half yearF31

1,289,832

1,875,809

514,086

208,756–

3,888,482

3,888,482

Average Capital Employed in second half year

F31

1,425,864

2,153,126

443,599

185,682–

4,208,271

4,208,271

Average Capital Employed in the year

F31

1,357,848

2,014,467

478,842

197,219–

4,048,377

4,048,377

ROCE

F31

13.64%

9.06%

39.28%(23.81%)

0.00%

12.57%

12.57%

Capital expenditure

F34

103,960

348,21782,02318,990–553,189

553,189

Total R&D expenditure

F9

146,624

45,619

8,313

9,989

–

210,546

210,546

R&D recognized in operating expenses

F9132,01130,687

8,313

4,875

–

175,885

175,885

R&D capitalized as intangible assets

F34

14,614

14,933

–

5,114

–

34,66034,660Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
RECURRING EBIT PER
BUSINESS GROUPGEOGRAPHICAL INFORMATION 2018
Thousandsof Euros

EUROPE

OF WHICHBELGIUM

Total segment
turnover6,443,219

117,143

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

CapitalexpenditureNOTES

ASIAPACIFICNORTHAMERICASOUTH
AMERICA

4,140,094

2,528,858

441,024

AFRICA

TOTAL

163,541 13,716,737
34%

33%

EUROPE

OF WHICHBELGIUM

ASIAPACIFICNORTHAMERICASOUTH
AMERICA

Total segment
turnover8,061,295

149,183

4,850,973

3,862,500

528,751

Total non-current
assets1,311,600

576,778

1,115,273

144,541

48,186

7,438

2,627,038

206,051

156,049

316,729

18,012

12,3952553,189

Capitalexpenditure

NOTES

F34

REVENUES (EXCLUDING METAL)PER BUSINESS GROUPAFRICA

TOTAL

181,563 17,485,081

33%

50%

CAPITAL EXPENDITURE PER
BUSINESS GROUP

15%

3%

6%
5%

Catalysis | 33%
Energy & Surface
Technologies | 33%
Recycling | 34%
Corporate not included

33%

GEOGRAPHICAL INFORMATION 2019
Thousandsof Euros

CAPITAL EMPLOYED, AVERAGE PER
BUSINESS GROUP

12%

F34

126

Catalysis | 33%
Energy & Surface
Technologies | 50%
Recycling | 12%
Corporate& Unallocated | 5%

R&D EXPENDITURE PER
BUSINESS GROUP
4% 5%

19%
Catalysis | 19%
Energy & Surface
Technologies | 63%
Recycling | 15%
Corporate& Unallocated | 3%

RECURRING EBITDA PER
BUSINESS GROUP

22%

69%

Catalysis | 69%
Energy & Surface
Technologies | 22%
Recycling | 4%
Corporate& Unallocated | 5%

63%
20%
43%

37%

Catalysis | 43%
Energy & Surface
Technologies | 37%
Recycling | 20%
Corporate not included

32%

34%

34%

Catalysis | 34%
Energy & Surface
Technologies | 34%
Recycling | 32%
Corporate not included

TURNOVER BY REGIONNON-CURRENT ASSETS BY REGION
1%

1%
28%
46%
3%
22%

Europe | 46%
North America | 22%
South America | 3%
Asia-Pacific | 28%
Africa | 1%

42%

50%

Europe | 50%
North America | 5%
South America | 2%
Asia-Pacific | 42%
Africa | 1%

2% 5%

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
CAPITAL EXPENDITURE
BY REGIONEMPLOYEE COMPENSATION & BENEFITSBY REGION

0%

16%
37%

57%

Europe | 37%
North America | 4%
South America | 2%
Asia-Pacific | 57%
Africa | 0%

4%
2%

6%
27%
48%

4%

4%
10%
69%

Europe | 69%
North America | 10%
South America | 4%
Asia-Pacific | 16%
Africa | 1%

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

15%

1%

127

Europe | 48%
North America | 4%
South America | 15%
Asia-Pacific | 27%
Africa | 6%

The Group’s business segments have no single external customer that amounts to 10 per centor more of the Group’s revenue.
BUSINESS GROUPSThe Group is organized into the following reporting segments:
CATALYSISThe segment includes 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 fuel cell applications and in the pharmaceutical and finechemicals industries.
ENERGY & SURFACE TECHNOLOGIESThe segment includes the Cobalt & Specialty Materials, Electro-Optic Materials, Electroplating
and Rechargeable Battery Materials business units. Energy & Surface Technologies’ products
are found in applications used in the production and storage of clean energy and in a range ofapplications 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 2019

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 shareholdings in Element Six Abrasives and Ieqsa
are also included in Corporate.
In the geographical segment information, the ﬁgures presented as non-current assets exclude
the amounts for long-term investments, non-current loans granted, non-current receivables,
deferred tax assets and assets for employee beneﬁts as required by IFRS 8. Performance ofthe segments is reviewed by the chief operating decision maker based on the recurring EBIT/
operating result. As illustrated in the table above, the difference between the recurring
operating result and the operating result as presented in the Income Statement consists of
the non-recurring operating result for which deﬁnitions are given in the glossary.

128

The closing of the transaction was completed at the end of November 2019 and a preliminary
opening balance sheet has been prepared as of 1 December but may still be subject toadjustments on a number of restatements (purchase price and fair value exercise of the
non-current assets mainly) before end of November 2020. The main fair value adjustmentsin the opening balance sheet concerned the line Property, Plant and Equipment, Intangible
assets, Inventories and deferred taxes. The total purchase price including the net cash position
amounted to € 241.9 million, and the net value of the assets bought was € 227.3 million
resulting in a goodwill of € 14.6 million. No result has been considered for the December
closing, taking into account the materiality as the closing was made at year end.
Thousands of EurosNOTES FAIR VALUE 2019

Intangible assets

8,223

Property, plant & equipment

130,904

Non-current assets

139,128

Inventories

84,314

Accounts receivables

22,213

Cash and cash equivalent

53,742Current assets

160,269

Non-current financial debt

3,181

Deferred tax liabilities

14,972

Associate companies are allocated to the business group with the closest ﬁt from a market
segment perspective.

Environmental provisions

3,438

Non-current liabilities

21,590Trade and other payables

50,477F8 BUSINESS COMBINATIONS AND ACQUISITIONS OF
ASSOCIATES AND JOINT VENTURES

Current liabilities

50,477At the end of November 2019, Umicore completed the acquisition of the cobalt refining andcathode precursor activities in Kokkola, Finland, from Freeport Cobalt. The acquisition of the
Kokkola refinery and cathode precursor production marks an important step in expanding
Umicore’s battery materials value chain. With R&D, refining, precursor production, cathodematerials production and battery recycling operations located in Europe, Umicore will be ideallyplaced to serve the European operations of its battery cell and automotive customers with afully integrated, sustainable and local battery materials supply chain. Through this European
battery materials supply chain, Umicore will contribute significantly to the European Union’splans to create a competitive and sustainable battery ecosystem in Europe. This activity is
integrated in Umicore’s Rechargeable Battery Materials unit, within the segment “Energy &Surface Technologies”.

Group share purchase price in cash

Net assets acquired
Goodwill
Net cash & cash equivalent acquired
Net cash out for acquisition of subsidiaries

227,330F15

14,549(241,880)
53,742(188,138)

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
F9 RESULT FROM OPERATING ACTIVITIES
2018

2019

Sales

13,602,160

17,305,098

Services

114,576

179,983

13,716,736

17,485,081

Thousands of Euros

Turnover (1)Other operating income (2)101,559

121,078

OPERATING INCOME OF CONTINUING OPERATIONS

13,818,295

17,606,159

Raw materials and consumables used (3)(11,855,284)(15,639,139)

Payroll and related benefits(731,054)(775,919)

Depreciation of fixed assets(206,577)(244,038)

Impairment loss on fixed assets(6,780)(23,602)

Inventory and bad debt provisions(13,805)(39,926)

Depreciation and impairment results (4)(227,162)(307,567)

Services and outsourced refining and production costs(412,970)(421,547)

Royalties, licence fees, consulting and commissions(33,808)(41,347)

Other operating expenses(6,664)(3,515)

Increase and decrease in provisions(78,546)

28,458Use of provisions

17,131

26,413

Capital losses on disposal of assets(1,736)(2,258)(516,593)(413,795)(13,330,093)(17,136,420)

Other operating expenses (5)OPERATING EXPENSES OF CONTINUING OPERATIONS

129

Taxes other than income taxes included in other operating expenses amount to € 20.8 million(€ 30.2 million in 2018) for continuing operations.
R&D EXPENDITURE
Thousands of Euros

NOTES

R&D recognized in Other operating expenses
R&D capitalized as intangible assets
Total R&D expenditure for continuing operations

F14

2018

2019

176,193

175,885

20,247

34,660196,440

210,546

Total R&D expenditure for continuing operations was € 210.6 million in the fully consolidated
companies. The part of the R&D expenditures that is directly recognized in the other operating
expenses amounts to € 175.9 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 recognized at apoint 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 (€ 39.2 million in 2019 and € 44.9 million in 2018), operating grants (€ 10.3 million in 2019and € 8.9 million in 2018), royalties and license fees (€ 9.0 million in 2019 and € 9.1 million in 2018),
income linked to emission rights (€ 5.5 million in 2019 and € 2.8 million in 2018), insurance recovery(€ 27.0 million in 2019 and € 2.0 million in 2018), various interest and penalties for late payments(€ 1.2 million in 2019 and € 6.9 million in 2018) and gains on disposal of assets (€ 9.7 million in 2019and € 2.8 million in 2018).
3) Raw materials and consumables used include water, gas and electricity for € 100.2 million in 2019(€ 95.8 million in 2018) for continuing operations.
4) Depreciation increased mainly due to the depreciation related to the right of use asset accounted forlease as per IFRS 16 (€ 16.8 million in 2019) and to higher depreciation charges from recent investments
in Energy and Surface Technologies. Impairments of ﬁxed assets have been taken and transferred in
non-recurring result. Those are mainly related to the discontinuation of the activities in Wickliffe (US).
The movements in provisions are related to environmental provisions and provisions for other liabilities
and charges as per notes F29 and F30.
5) The introduction of IFRS 16 (see note F2.23.1) resulted in a decrease of the rental expenses recognizedin the other operating expenses (€ 17.5 million in 2019).

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

130

NON-RECURRING ELEMENTS INCLUDED IN THE RESULT, INCLUDING DISCONTINUED OPERATIONSRECURRING NON-RECURRING

TOTALRECURRING

13,716,737–

17,485,080

17,485,080–

101,559

93,7597,800

121,078

118,217

2,861

Operating income

13,818,296

13,810,496

7,800

17,606,158

17,603,297

2,861

Raw materials and consumables used

(11,855,284)(11,851,572)(3,712)(15,639,139)(15,639,139)–(731,054)(730,844)(210)(775,919)(775,701)(218)(23,877)

Turnover
Other operating income

Payroll and related benefits
Depreciation and impairment resultsof which depreciation and amortisation
Other operating expenses
Operating expenses
Income from other financial investments
Result from operating activities
Net contribution from equity method companies
EBIT
EBITDATOTAL

2019
NONRECURRING

13,716,737

Thousands of Euros

NOTES

2018

(227,162)(216,195)(10,966)(307,567)(283,690)(206,577)(206,577)–(244,038)(244,038)–(516,593)(503,826)(12,767)(413,795)(407,708)(6,087)(13,330,094)(13,302,438)(27,655)(17,136,420)(17,106,238)(30,182)

5,044

147

4,896

706

1,069

(363)

493,246508,205(14,959)

470,444498,129(27,684)

6,720

5,358

1,362

8,705

10,789(2,084)499,967

513,564(13,597)479,152

508,920(29,768)(29,768)

706,544

720,141(13,597)

723,190752,959

Finance cost

F11

(68,883)(68,883)–(83,238)(83,238)–

Income taxes

F13(103,240)(107,238)

3,998(96,692)(102,538)

5,846(23,923)

Net result

327,843

337,442(9,599)299,219

323,142of which minority shares

10,86011,012(152)

11,428

11,428–of which group shares

316,984

326,430(9,447)287,791

311,714(23,923)

Non–recurring items had a negative impact of € 30 million on EBIT. Restructuring charges
accounted for € 26 million and were mainly related to the discontinuation of the activities
at the Wickliffe site in the business unit Cobalt & Specialty Materials. Umicore’s definition of
non-recurring items also includes impairments of permanently tied-up metal inventories.
As mentioned in the accounting policies, Umicore applies as from 1 January 2019 the IAS 16 andIAS 36 principles to value its permanently tied-up metal inventories which implies that theseinventories are part of Umicore’s annual impairment testing of the business (cash generating
units) that carry those inventories. The close of 31 December 2019 identified no need for
impairments on the permanently tied-up metal inventories. The impact of non-recurring
charges on the net result (Group share) amounted to € 24 million.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
F10 PAYROLL AND RELATED BENEFITS
Thousands of Euros

SHARE-BASED PAYMENTS
2018

2019

Wages, salaries and direct social advantages(538,855)(576,097)

Other charges for personnel(34,211)(40,318)

Temporary staff(13,058)(10,781)

Share-based payments(11,150)(8,211)

Employee salaries(597,274)(635,407)

Employer’s social security(101,028)(102,364)

Defined benefit contributions(15,602)(28,833)

Contribution to defined contribution plan

(15,781)(19,664)

Employer‘s voluntary contributions (other)(3,956)(4,120)Pensions paid directly to beneficiaries(3,598)(3,974)

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

131

6,185

18,444

Pensions and other benefits(32,752)(38,147)

PAYROLL AND RELATED BENEFITS OF CONTINUING OPERATIONS(731,054)(775,919)

AVERAGE HEADCOUNT IN CONSOLIDATED COMPANIES

2018

2019

Executives and managerial staff

1,816

1,934

Non-managers

8,276

8,852

Total for continuing operations

10,092

10,786The line “Provisions for employee benefits” also includes contribution of the employer todefined benefit plans, mainly in Belgium.

Thousands of Euros
Number of stock options granted
Valuation model

NOTES

2018

2019

F28

1,182,625

1,221,000

Present Economic Value

Assumed volatility (% pa)

25.00

25.00

Risk-free interest rate (% pa)

0.120(0.370)

Dividend increase (% pa)

10.00

10.00

Rate of pre-vesting forfeiture (%pa)

NA

NA

Rate of post-vesting leaving (%pa)

10.00

7.50

Minimum gain threshold (% pa)

30.00

15.00

Proportion who exercise given minimum gain achieved (% pa)

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

6.89

5.09

Total fair value of options granted

8,148

6,211

54,800 shares granted at 40.90 EUR

2,241

–

10,002 shares granted at 49.84 EUR

498–

5,700 shares granted at 45.87 EUR

261–

43,700 shares granted at 34.08 EUR

–

1,489

7,400 shares granted at 33.30 EUR–

246

10,000 shares granted at 26.43 EUR–

264

Total fair value of shares granted

3,001

2,000

TOTAL SHARE-BASED PAYMENTS CONTINUING OPERATIONS

11,1508,211

The Group recognized a share-based payment expense of € 8.2 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 2019, shares have been granted to top management resulting in an extra charge of€ 2.0 million for continuing operations.
The cash discounts that the authorities give back to Umicore Belgium on the social security
contributions, relating to incentives regarding shift premiums, overtime and R&D, amongst
others, are disclosed under the item “Employer’s social security”.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
F11 FINANCE COST – NET

132

F13 INCOME TAXES

Thousands of Euros

2018

2019

Thousands of Euros

Interest income

5,842

4,585

INCOME TAX EXPENSE

2018

2019

(113,229)

Interest expenses(39,059)(45,627)

Discounting of non-current provisions(3,394)(5,942)Current income tax(112,599)

Foreign exchange gains and losses(26,840)(31,618)

Deferred income tax

9,359

16,537–

222(103,240)(96,692)(5,432)(4,858)(68,883)(83,238)

Result from operating activities

493,246

470,444

Financial result(68,883)(83,238)

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

424,363387,206

Other financial income
Other financial expenses
Total of continuing operations

The net interest charge in 2019 totaled € 41.0 million, in line with the increase of theindebtedness. The net interest charge contains € 0.8 million interest related to leases as per
IFRS 16 (see note F2.23.1).
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 2019 were booked
in Germany and to a lesser extent in Belgium and Brazil.
Foreign exchange results include realized exchange results and the unrealized 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.
They also include fair value gains and losses on other currency ﬁnancial instruments(see Note F33). Other ﬁnancial expenses include payment discounts, bank expenses and otherﬁnancial fees incurred.

F12 INCOME FROM OTHER FINANCIAL INVESTMENTS
Thousands of Euros

2018

2019

Capital gains and losses on disposal of financial investments

4,925

547

124

133

Dividend income
Interest income from financial assets
Total for continuing operations

(6)

26

5,044

706

Recognized in the Income Statement

Total tax expense for continuing operations
RELATIONSHIP BETWEEN TAX EXPENSE (INCOME) AND ACCOUNTING PROFIT

Weighted average theoretical tax rate (%)
Income tax calculated at the weighted average theoretical tax rate forcontinuing operations(24.13)(24.81)(102,385)(96,076)(2,009)(4,276)

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

551

4,797

Dividends from consolidates companies & Associates(1,798)(1,596)

Tax incentives deductible from the taxable base

17,383425

Tax computed on other basis(799)(1,377)

Utilisation of previously unrecognized tax losses
Write-down (or reverse of previous write-down) of DTA

8,321

1,443

(14,579)(3,817)

Change in applicable tax rate

1,732

3,720

Tax holidays

13,675

15,333

Other tax credits (excluding R&D tax credits)

4,575

585

Non recoverable foreign withholding taxes(10,325)(11,552)

Previous years adjustments(13,589)

(114)

Other

(3,993)(4,187)(103,240)(96,692)

Tax expense at the effective tax rate for the year

The weighted average theoretical tax rate evolved from 24.1% in 2018 to 24.8% in 2019 for thecontinuing operations.
Excluding the impact of non-recurring items, the recurring effective tax rate for 2019 was 24.7%.
This compares to the 24.4% in 2018.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

133

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

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 beginning of previous year

42,88784,71829,751

7,382

21,385

186,122

–

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)(9,027)–(6,341)(36,878)

(376)

–

(371)

–

–

(747)

–

–

–

795

–

795

637

(1)

(32)

–

464

1,069

acquisition through business combinations

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

–

3,611

–

2,252

621

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 at the end of previous year

47,353

69,68025,930

11,10640,745

194,814acquisition through business combinations

–

–

–

–

8,223

8,223

34,660

1,495

1,115

4,925

16,16758,362other movements
At the end of previous year

additions–(6,483)–––(6,483)amortisation charged (included in “Depreciation and impairments”)(11,129)(9,878)(9,464)–(5,742)(36,214)

impairment losses recognized (included in “Depreciation and impairments”)(2,771)

–

(497)

–

–

(3,268)

–

–

–

3,184

–

3,184

282

5

82

(2)

251

619

(14,627)

(90)

9,783

0

(150)

(5,085)

disposalsemission rights allowancestranslation differences
other movements
At the end of the year

53,76854,73026,94919,21359,494

214,154

Gross value

151,880

101,229

149,792

19,213

85,216507,329

Accumulated amortisation(98,113)(46,499)(122,842)–(25,721)(293,176)

Net book value for continuing operations

53,76854,73026,94919,21359,494

214,154“Additions” are mainly explained by capitalized expenses in new information systems andinternally generated developments. € 29.2 million are linked to own productions, of which€ 19.3 million are development expenses. The acquisitions through business combination are
related to the acquisition of cobalt refining and cathode precursor activities at Kokkola (Finland).

The line ‘other movements’ mainly includes the transfer between intangible assets in progress(included under “other intangible assets”) and the other categories of intangible assets.
The other intangible assets contain intangible assets in progress but also the IP and businessportfolio acquired through business combinations (Materia in 2018, Kokkola in 2019).

The line “disposals” includes the re-evaluation of the earnout related to the acquisition in 2016of 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 2019

FINANCIAL STATEMENTS
F15 GOODWILL
Thousands of Euros

The goodwill has been allocated to the primary segments as follows:
31/12/2018

31/12/2019

158,536

158,457

At the end of the previous year
Gross value
Accumulated impairment losses(15,851)(15,966)

Net book value at the end of previous year

142,685

142,491acquisition through business combinations
adjustment from subsequent identification of fair value of assets and liabilities
impairment losses (included in “Depreciation and impairment results”)

134–

14,549(1,701)––(1,422)translation differences

1,507

1,087

At the end of the year

142,491

156,705

Gross value

158,457

169,915

Accumulated impairment losses(15,966)(13,210)

Net book value for continuing operations

142,491

156,705

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 mainly to the goodwill booked on the acquisition in Finland(see Note F8).

CATALYSISENERGY &SURFACETECHNOLOGIESRECYCLING

TOTAL

31/12/2018

50,012

74,232

18,247

142,491

31/12/2019

50,03788,35718,311

156,705

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 2019 modelling used an average tax rate of 25.0% (in 2018 average tax rate of 25.5% wasused) and a weighted average cost of capital post-tax of 8.5% (same as in 2018). Terminal values
were determined on the basis of a perpetual growth rate of on average 2% (same as in 2018).
Inﬂation rates were based on guidance from national and international institutes such as the
NBB or ECB.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
F16 PROPERTY, PLANT AND EQUIPMENT
Thousands of Euros
At the beginning of previous year
Gross value
Accumulated depreciation
Net book value at the beginning of previous year
acquisition through business combinations
additionsdisposals
depreciations (included in “Depreciation and impairments”)
net impairment losses recognized (included in “Depreciation and impairments”)
translation differences
other movements
At the end of previous yearof which leasing
Gross value
Accumulated depreciation
Net book value at the end of previous year for leases
At begin of the year without leases
Gross value
Accumulated depreciation
Net book value at the end of previous year without leases
acquisition through business combinations
additionsdisposals
depreciations (included in “Depreciation and impairments”)
net impairment losses recognized (included in “Depreciation and impairments”)
translation differences
other movements
At the end of the financial year
Gross value
Accumulated depreciation
Net book value for continuing operations without lease
Leasing at begining of the year
Gross value
Accumulated amortisation
Net book value for leasingchange in accounting policies
acquisition through business combinations
additionsdepreciations (included in “Depreciation and impairments”)
translation differences
At the end of the financial year for leasing
Gross value
Accumulated amortisation
Net book value for leasing
Tangible asset including leasing
Gross value
Accumulated amortisation
Net book value for continuing operations including leasing

LAND AND PLANT, MACHINERY
BUILDINGSAND EQUIPMENT135

FURNITURE AND
VEHICLESOTHER TANGIBLEASSETSCONSTRUCTION IN
PROGRESS AND
ADVANCE PAYMENTS

TOTAL

859,433(452,186)
407,247
16,282
4,418(1,276)(32,772)(1,513)
1,465
91,501
485,351

1,817,170(1,281,251)
535,919
8,840
21,958(2,684)(120,434)(4,192)(1,196)
220,937
659,148

212,731(156,368)
56,36320
10,313(300)(16,082)
(273)
(158)
17,75567,63815,305(14,298)
1,007
548
142
(13)
(163)
(1)
22
(577)
964

300,874–
300,874149
429,158(604)––(1,060)(339,726)
388,791

3,205,515(1,904,103)
1,301,411
25,838465,989(4,877)(169,452)(5,980)(928)(10,111)1,601,891

3,300
(399)
2,901

43
(20)
23

31
(31)
–

–
–
–

–
–
–

3,374
(450)
2,924

973,873(491,424)
482,450
31,63816,393(1,509)(37,030)(2,454)
1,642
168,212659,342
1,189,490(530,148)
659,343

2,090,262(1,431,137)
659,125
75,142
36,164(2,772)(135,690)(16,169)
944
231,710
848,457
2,402,378(1,553,922)
848,457

226,496(158,858)
67,638
517
9,535
(419)
(18,086)(289)
71
16,53475,500242,362(166,862)
75,50014,678(13,715)
964
–
69
(10)
(228)
–
12
314
1,120
15,070(13,950)
1,120

388,791–
388,791
20,426467,326(2,369)––(1,844)(410,962)
461,368
461,369–
461,3693,694,100(2,095,133)
1,598,967
127,724
529,487(7,079)(191,035)(18,911)825
5,809
2,045,788
4,310,669(2,264,881)
2,045,788

3,300
(399)
2,901
25,7882,681
15,466(11,063)72
35,84547,341(11,496)
35,845

43
(20)
23
77
–
21
(44)
–
77
135
(58)
77

31
(31)
–
11,396–
6,780(5,722)
8
12,462
18,175(5,713)
12,462

–
–
–
–
500
–
–
–
500
500
–
500

–
–
–
–
–
–
–
–
–
–
–
–

3,374
(450)
2,924
37,262
3,181
22,266(16,829)80
48,884
66,152(17,268)
48,884

1,236,831(541,644)
695,188

2,402,514(1,553,980)
848,534

260,537(172,575)
87,962

15,570(13,950)
1,620

461,369–
461,369

4,376,821(2,282,149)
2,094,672

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
The higher additions to property plant and equipment reflect higher investments in all businessgroups. The business group Energy & Surface Technologies accounted for close to two thirdsof the amount, with investments primarily linked to the ongoing major greenfield expansion
programs in cathode materials in China and Poland. The higher investments in Catalysis reflect
the capacity expansions in China, Poland and India as well as the expansion of fuel cell catalyst
capacity in Korea. In Recycling, capital expenditures comprise the investments carried out
during the extended maintenance shutdown of the Hoboken plant as well as the investments
to further improve the environmental performance of the plant.
The acquisitions through business combination are related to the opening balance sheet of theacquired cobalt refining and cathode precursor activities at Kokkola (Finland) (see note F8).
The changes in accounting policies are related to the introduction of IFRS 16 as explained in
Note F2.23.
Impairments on fixed assets are mainly related to the discontinuation of the activities in
Wickliffe (US).
The line ‘other movements’ mainly includes the transfer between tangible assets in progress
and the other categories.
There are no pledges on, or restrictions to, the title on property, plant and equipment, otherthan disclosed in note F35.

F17 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

136

Investments in associates are accounted for in accordance with the equity method and represent
approximately 2.1% 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 mostsigniﬁcant 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, theUK, 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 theaudit committee of Element Six Abrasives, which enables sufﬁcient protection of its interest in thisassociate. 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 (see note F36
for new pending file qualified as contingent liability at Element Six Abrasives).
Thousands of Euros
At the end of previous year

NET BOOKVALUEGOODWILL

TOTAL

105,580

45,793

151,372

profit for the year

8,705

–

8,705

dividends(11,321)–(11,321)change in other reserves

1,049

–

1,049

translation differences

642

196

837

104,653

45,989150,642At the end of the year for continuing operations

The investments in companies accounted for using the equity method are composed mainly of
the following associates and joint ventures:
COUNTRY

MEASUREMENTCURRENCY PERCENTAGE PERCENTAGE
2018

2019

For continuing operations
ASSOCIATES
IEQSA

Peru

PEN

40.00

40.00

Ganzhou Yi Hao Umicore Industries

China

CNY

40.00

40.00

UnitedKingdom

USD

40.22

40.22

China

CNY

40.00

40.00

Element Six Abrasives
Jiangmen Chancsun Umicore Industry Co.,LTD

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.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
Umicore’s share in the aggregated balance sheet and profit and loss items of the associates andjoint ventures would have been as follows:
31/12/2018

31/12/2019

Assets249,274

231,747

Liabilities

125,299

108,620

Turnover279,920

251,313

Net result

6,720

8,705

Thousands of Euros

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

Thousands of Euros

FINANCIAL ASSETS AT
FV THROUGH OCILOANSGRANTED

22,331

11,285

NON-CURRENT FINANCIAL ASSETSAt the beginning of previous year
acquisition through business combinations

233–

increase

2,481

1,738

decrease(17,461)

(126)

(7)

(7)

translation differences
fair value recognized in equity
other movements
At the end of previous year

(2,699)–3,150(10,263)

8,028

2,627

increase

2,375

126

decrease–(114)

translation differences

3

72

fair value recognized in equity
other movements
At the end of the financial year for continuing operations

F19 INVENTORIES
31/12/2018

31/12/2019

Base product eligible for metal hedging – gross value

2,088,873

2,293,070

Base product without metal hedging – gross value

199,410

176,562

Consumables – gross value

79,02587,030

Write-downs(69,771)(101,960)

Thousands of EurosANALYSIS OF INVENTORIESAdvances paid

7,983

6,173

Contracts in progress

2,573

1,454

2,308,094

2,462,330

Total inventories for continuing operations

F18 FINANCIAL ASSETS AT FAIR VALUE THROUGH OCI AND
LOANS GRANTED

(9)

–

500

(520)

10,897

2,192

137

Inventories have increased by € 154.2 million compared with December 2018. This increase ismainly due to higher metal prices.
Base product eligible for metal hedging contains the permanently tied up metal inventories.
As per the change in accounting policy with regards to permanently tied-up metal inventories(see note F2.23.3), the permanently tied-up metal inventories are considered to have an
unlimited useful life (no depreciations are applied) and are instead subject to Umicore’s annual
impairment testing of the CGUs carrying these inventories. No impairment has been taken
in 2019.
The total gross book value of Umicore’s permanently tied-up metal inventories at 31 December
2019 amounted to € 862 million (versus € 791 million on 1 January 2019) which compares to avalue of € 2,135 million when applying the 31 December market prices.
The expenses are recognized in Raw Materials and Consumables in the income statement
amounts as disclosed in note F9.
There are no pledges on, or restrictions to, the title on inventories.

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

–

6,270

–

(6,328)

–

58

–

–

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.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
F20 TRADE AND OTHER RECEIVABLESCREDIT RISK – TRADE RECEIVABLES
NOTES

31/12/2018

31/12/2019

Cash guarantees and deposits

9,912

8,893

Other receivables maturing > 1 year

1,049

1,972

Assets employee benefits

1,172

1,173

12,133

12,038

Thousands of Euros
NON-CURRENT

Total for continuing operations
CURRENT
Trade receivables (at cost)

893,621

1,171,835

Trade receivables (write-down)(22,576)(22,983)

Other receivables (at cost)

221,162

180,336

Other receivables (write-down)

(246)

(207)

Interest receivable

177

156

Fair value receivable financial instruments held for cash flow hedging

F33

17,184

19,699Fair value receivable – financial instruments related to FV hedging

F33

18,84447,495

17,81337,327

1,145,979

1,433,658

Deferred charges and accrued income
Total for continuing operations

OVERDUE BETWEEN
TOTAL

NOT
DUE

0-30
DAYS

30-60
DAYS

60-90
DAYS

> 90
DAYS

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

859,577615,298

166,279

55,65014,3208,029

Thousands of Euros

138

AGEING BALANCE ANALYSIS AT THE
BEGINNING OF THE YEAR

Other receivables – at cost

221,162

216,234

51

3,147

67

1,663

Loss allowance

13,948

8,076

1,195

685

–

3,992

Expected loss rate

1.29%

0.97%

0.72%

1.17%

0.00%

41.19%

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

1,131,666

928,369

160,856

22,261

5,549

14,632AGEING BALANCE ANALYSIS AT THE END
OF YEAR

Other receivables – at cost

180,336

179,925

595

(340)

–

157

Loss allowance

12,794

5,431

901

17

1,497

4,948

Expected loss rate

0.98%

0.49%

0.56%

0.08%

26.98%

33.46%TRADE
OTHER
RECEIVABLESRECEIVABLES(WRITE-DOWN) (WRITE-DOWN)

Thousands of Euros
AT THE BEGINNING OF PREVIOUS YEAR

TOTAL

(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)

Change in accounting policies

Impairment losses recognized in P&L
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

At the end of previous year

(22,577)(247)(22,824)

AT THE BEGINNING OF THE FINANCIAL YEAR

(22,577)(247)(22,824)

Impairment losses recognized in P&L(9,373)–(9,373)

Reversal of impairment losses

9,705

39

9,744

83

–

83

(850)

–

(850)

Impairment written off against asset carrying amount
Other movements
Translation differences
At the end of the financial year for continuing operations

30

1

31

(22,983)(207)(23,190)

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 2019 or 1 January 2019 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.
In principle, Umicore uses credit insurance as a means to mitigate the credit risk related to tradereceivables. In 2019, two credit policies with two different insurers were in place. At closing,€ 407 million of the group trade receivables of the continuing operations were covered by apolicy where indemniﬁcation in case of non-payment amounts to 95% with an indemniﬁcation
cap set at regional or country level. The other policy covered € 168 million of trade receivables
with a global annual deductible of € 5 million, a maximum indemnity per year of € 70 million

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
and an indemnification in case of non-payment of 90%. This specific insurance policy is linked
to a sales without recourse of trade accounts receivable program in Europe.
Specifically related to the use of bank acceptance drafts as payment instrument in China,
Umicore mitigates the payment risk on receivables covered by such drafts by entering into
discounting arrangements with selected banks for certain received bank acceptance drafts.
Finally, some of our businesses function without credit insurance and instead internal credit
limits are set based on available ﬁnancial information and business knowledge. These limits
are duly reviewed and approved by management.

F21 DEFERRED TAX ASSETS AND LIABILITIES
31/12/2018

31/12/2019

Income tax receivables

61,67245,447

Deferred tax assets

132,855

168,927

Income tax payable(74,500)(131,483)

Deferred tax liabilities(6,225)(11,461)

Thousands of Euros
Tax assets and liabilities

ASSETS
Thousands of Euros
At the end of preceding financial year

LIABILITIES

NET

2018

2019

2018

2019

2018

2019
126,630

114,686

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

Change in accounting policies

1,313

–

(1,077)–

236–

Deferred tax recognized in the P&L

15,722

15,207(6,363)

1,330

9,359

16,537

Deferred tax recognized in equity

12,05721,502(1,201)

7,276

10,856

28,778

(348)

–

(832)

(14,972)(1,181)(14,972)(3,605)–108–(3,496)–

Acquisitions through business combination
Change in scope
Translation adjustments
Transfer
Other movements
At the end of financial year forcontinuing operations

(633)

142

(122)

(152)

(755)

(10)

(5,896)(1,201)

6,802

1,201

905

–

(440)

421

–

82

(440)

503

132,855

168,927(6,225)(11,461)

126,630

157,466ASSETS
Thousands of Euros

139

LIABILITIES

NET

2018

2019

2018

2019

2018

2019

15,541

16,412(16,425)(17,894)(884)(1,482)

–

–

(605)

(561)

(605)

(561)

7,793

11,554(16,926)(33,516)(9,133)(21,962)

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

747

1,087

(135)

(31)

612

1,056

Inventories

Long-term receivables

47,62972,552(18,983)(37,403)

28,64635,149Trade and other receivables

9,820

8,424

(10,163)(11,930)(343)(3,506)

Group Shareholder’s equity––(4,234)(4,032)(4,234)(4,032)Long-Term Financial Debt and other payable

5,446

9,109

(1,446)(5,172)

4,000

3,937

Provisions Employee Benefits

60,121

81,392(2,624)(8,245)57,497

73,147

Provisions for Environment

12,16912,697

(461)

(384)

11,70812,313

Provisions for other liabilities and charges

12,062

9,480(3,195)

(463)

8,867

9,017

Current Financial Debt

1,039

539

(29)

(344)

1,010

195

Current Provisions for Environment

2,990

2,323

–

–

2,990

2,323

Current Provisions for Other Liabilities& Charges

12,247

9,079

(8)

(8)

12,2399,071(9,906)(5,262)

14,134

31,169(85,140) (125,245)

126,504

145,834
56,598Trade and other payables

24,04036,431

Total deferred tax due to temporary
differences

211,644

271,079

Tax losses to carry forward

40,32356,598––40,323

Investments deductions

1,889

1,156

–

–

1,889

1,156

Other

2,957

5,002

–

–

2,957

5,002

–

Deferred tax assets not recognized(45,043)(51,124)–(45,043)(51,124)

Total tax assets/liabilities

211,770

282,711(85,140) (125,245)

126,630

157,466

Compensation of assets and liabilities
within same entity(78,915)(113,784)

78,915

113,784–

Net amount

132,855

168,927(6,225)(11,461)

126,630

157,466

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

Thousands of Euros

2018

2019

2018

2019

BASE

BASE

TAX

TAX

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

140

F22 NET CASH AND CASH EQUIVALENTS
Thousands of Euros

31/12/2018

31/12/2019

13,68725,524

CASH AND CASH EQUIVALENTS
Short-term investments: bank term deposits
163,421

187,883

45,04351,124The changes of the period in temporary differences are charged to the income statement except
those arising from events that were recognized directly in the other comprehensive income.
The main movements in deferred tax recognized directly in the other comprehensive income
are deferred taxes generated by temporary differences included within the lines “Trade andother receivables” (negative by € 0.8 million), “Provisions for employee beneﬁts” (positive by€ 20.4 million) and “Trade and other payables” (positive by € 9.2 million).
Deferred tax assets are only recognized to the extent that their utilization is probable, i.e. if a
tax beneﬁt is expected in future periods. The Group assesses a recoverability in a range of 5 to
10 years. The actual tax results in future periods may differ from the estimate made at the timethe deferred taxes are recognized.

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

7271,392

246,192

285,079

271,724

Bank overdrafts

27,96532,493

Net cash as in Cash Flow Statement for continuing operations

257,114239,231

All cash and cash equivalents are fully available for the Group.
Liquidity risk management implies maintaining sufﬁcient cash and marketable securities, theavailability of funding through an adequate amount of committed and uncommitted credit
facilities and the ability to close out market positions.
Due to the dynamic nature of the underlying businesses, the group aims to maintain funding
ﬂexibility through 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.

Unrecognized deferred tax assets of € 51.1 million mainly arise from tax losses (€ 44.0 million),deductions for investments (€ 1.2 million), and temporary differences on property, plant andequipment (€ 5.2 million).
In accordance with IAS 12, a deferred tax liability on untaxed reserves of the Belgian companies,
amounting potentially to € 37.5 million, has not been recognized as management anticipatesthat this liability will not be incurred in a foreseeable future.
The IFRIC 23 interpretation clarifies accounting for uncertainties in income taxes and is to be
applied when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits and tax rates, in case of uncertainty over whether Umicore’s position will be accepted by
tax authorities. It is applicable to both current and deferred tax items. The impact of IFRIC 23 isdeveloped under the Note F2.23.2.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

141

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 –COMMODITIESBalance at the beginning of previous year

3,849

10,456

19,675(625)

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

4,650

Remeasurements derecognized out of othercomprehensive income

–

4,441

Transfer from/to retained earnings–

Change in scope–

Exchange differences–

Balance at the end of previous year

1,150

Balance at the beginning of the year
Remeasurements recognized in othercomprehensive income

Thousands of Euros

Remeasurements derecognized out of othercomprehensive income
Transfer from/to retained earnings

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

CURRENCY
TRANSLATIONDIFFERENCES

TOTAL

47,862(219,923)

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

39

7,876

(6,390)

11,150–(3,769)(20,736)

–

2,930

–

–

–

(13,365)

–

–

–

–

–

(2,981)–(2,981)

(426)

–

–

(38)

697

–

–

233

–

(179)

–

32

(1,268)–(3,831)(5,245)(3,925)

3,411

(586)

58,663(226,884)

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

1,150(3,925)

3,411

(586)

58,663(226,884)

31,600(91,073)(227,644)(129)(28,728)

1,937

(101)

28,587(70,605)

8,211–(60,828)–(1,212)

174

–

(145)

–

–

–

(1,182)(2,540)

–

–

–

–

–

–

(2,540)–

Other movements

120

–

–

–

–

–

–

–

120

Exchange differences

–

–

(29)

–

(11)

(539)

–

8,200

7,622

1,141

(33,865)

5,492

(686)

87,093(298,028)

37,272(82,873)(284,452)

Balance at the end of the year

The net losses recognized in the OCI regarding cash ﬂow hedges (€ 26.9 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 derecognized from OCI (€ 1.0 million)
are the fair values of the cash-ﬂow hedging instruments existing at the opening which expired
during the year. A loss of € 10.8 million was recognized in the income statement, as a result of
expired cash-ﬂow hedges.

New net remeasurements as a result of changes in the actuarial assumptions on the deﬁned
post-employment beneﬁt plans have been recognized in OCI for € -70.6 million.
The 2019 shares and stock option plans have led to a share-based payment reserve increase of€ 8.2 million (refer to note F10 on employee beneﬁts). € 2.5 million, linked to exercised options
and free shares plans, have been transferred to retained earnings.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
F24 FINANCIAL DEBT
BANK
LEASE
LOANS LIABILITY

Thousands of Euros

OTHER
LOANS

TOTAL

NON-CURRENTAt the beginning of previous year

690,000

4,106

694,104

Increase

55,133–55,133

Decrease

–

(258)

(258)

(129)

(2)

(131)

(40,000)(3)(40,003)

Translation differences
Transfers
At the end of previous year

705,004–

3,843

708,846

Change in accounting policies–

37,262–37,262Acquisition through business combinations

–

3,181

–

3,181

Increase

400,579

22,266

6422,852

Decrease–(16,536)(291)(16,827)

37

89

1

127

(4,354)–(4)(4,358)

1,101,266

46,262

3,555

1,151,083

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

–

–

56

56

Increase/decrease

(770)

–

–

(770)

Translation differences

4,354

–

4

4,358

(39)

–

95

56

3,545

–

154

3,700

Transfers
At the end of the financial year for continuing operations

Thousands of Euros

SHORT-TERM
LOAN:
SHORT-TERM
BANK COMMERCIALBANK LOANS OVERDRAFTS
PAPER

142

Net financial debt at 31 December 2019 stood at € 1,443.4 million, up from € 860.6 million
at the start of the year and largely driven by Umicore’s capital expenditures and the Kokkola
acquisition. The recognition of operating leases in financial debt following the application of the
new IFRS 16 lease standard (see F2.23 Impact of changes in accounting policies and F2.7 Lease)
had an impact of € 46.3 million on net debt at the end of December 2019.
The net financial debt includes the € 390 million long-term US private debt placements
issued in June 2019, which was drawn upon in September 2019 (fair value of € 397 million).
It complements the existing long-term private debt placements which were issued in 2017 fora total amount of € 690 million (fair value of € 721 million), two undrawn Syndicated Bank
Credit Facilities of a total amount of € 795 million and substantial additional shorter-term
funding instruments.
On 31 December 2019, there were no outstanding advances under the € 300 million SyndicatedBank Credit Facility maturing in October 2022 and no outstanding advances under the€ 495 million Syndicated Bank Credit Facility maturing in April 2025.
The aforementioned Syndicated Bank Credit Facilities and the three long-term private debt
placements require the Company to comply with certain ﬁnancial covenants. Umicore has not
faced any breach of those covenants in 2019 or in previous years.
The long-term debts mainly include debts in EUR.
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.
The net gearing ratio end of 2019 of 35.2% (24.4% in 2018) is well within the group’s targeted
capital structure limits.

TOTAL

CURRENTAt the end of the preceding financial year
Increase/decrease (including CTD’s)
Translation differences
At the end of the financial year forcontinuing operations

367,723

27,96541,016436,704(125,479)

4,943

241,920

121,384

2,689

(415)

–

2,274

244,933

32,493282,936560,363

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTSOTHEREUROS CURRENCIES

Thousands of Euros

TOTAL

Analysis of long-term debts by currencies (including current portion)
Bank loans

1,080,000

24,811

1,104,811

Other loans

3,710

–

3,710

Non-current financial debts (including current portion)

1,083,710

24,811 1,108,521
2018

2019

708,846

1,151,083

56

3,700

Current financial debt

436,704

560,363

Cash and cash equivalents(285,079)(271,724)

Net financial debt

860,527 1,443,422

Thousands of Euros
Non-current financial debt
Current portion of non-current financial debt

GROSS OUTSTANDING DEBT
2%

3%2% 14%

16%

63%

NOTES

31/12/2018

31/12/2019

Long-term trade payables

9,653

2,579

Other long-term debts

3,768

5,520

Investment grants and deferred income from grants

10,971

16,021

Total for continuing operations

24,392

24,1201,102,383

1,466,140

NON-CURRENT

CURRENT
Trade payables
Advances received on contracts in progress

46,383

15,448

Tax payable (other than income tax)

37,00526,190

Payroll and related charges

122,762

125,252

Other amounts payable

80,84556,399Dividends payable

11,655

11,657

Accrued interest payable

6,497

7,856

16,844

48,829Fair value payable financial instrument held for cash flow hedging

F33

Fair value payable – financial instruments related to FV hedging

F33

Total for continuing operations

11,844

18,670153,140

139,907

1,589,360

1,916,348

The tax payables (other than income tax) mainly include VAT payables.

Millions of Euros

2018

2019

Net financial debt including discontinued operations

860.5

1,443.4

Equity2,659.3

2,660.5

Total

3,519.9

4,103.9

24.4

35.2

Gearing ratio (%)

F25 TRADE DEBT AND OTHER PAYABLES
Thousands of Euros

Accrued charges and deferred income
Short-term bank loans | 14%
Long-term bank loans | 63%
Commercial paper | 16%
Bank overdrafts | 2%
Lease liability | 3%
Other bank facilities | 2%

143

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
F26 LIQUIDITY OF THE FINANCIAL LIABILITIES144

FINANCIAL 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

FINANCIAL DEBT

288,938

46,566

101,256 708,828

18

1,145,607

TOTAL

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

Non-current––– 708,828

18

708,846

Bank loans

–

–

–

705,005–

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

Accrued charges and deferred income––

11,844

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

10,971Thousands of Euros<1
1 TO 3 3 MONTHSMONTH MONTHS– 1 YEAR

1 TO 5
YEARS

>5
YEARS

TOTAL

FINANCIAL DEBT

153,186

192,344

218,525

349,908

801,174

1,715,137

Current

153,186

192,344

218,525––564,055

Short-term bank loans

130,764

56,37057,799––244,933

Bank overdrafts

21,188–11,305––32,493–

134,155

148,781––282,936

Short-term loan: commercial paper

(7)

–

–

–

–

(7)

Current portion of other long-term loans

1,229

1,793

523

–

–

3,545

Current portion of other long-term loans

13

26

116

–

–

154

–

–

–

349,908

801,174

1,151,082

Other loans

Non-current
Bank loans

–

–

–

308,267

793,000

1,101,267

Lease liability

–

–

–

38,087

8,174

46,261Other loans

–

–

–

3,555

–

3,555

TRADE AND OTHER PAYABLES

1,343,059

323,292

231,717

29,51012,891

1,940,469

Current

1,343,059

323,292

231,717

18,281–

1,916,349

1,113,438

216,335

136,367––

1,466,140

5,092

8,720

1,636

–

–

15,448Trade payables
Advances received on contracts inprogressTax payable (other than income tax)

22,491

3,700

–

–

–

26,190

Payroll and related charges

43,063

26,40955,780––125,252

Other amounts payable

25,106

16,656

14,638––56,400

Dividends payable

11,657––––

11,657

Accrued interest payable, third parties

6,165

1,390

300

–

–

7,856

Fair value payable financial instrument
held for cash flow hedging

399

9,372

20,77818,281–

48,829Fair value payable – financial instruments
related to FV hedging

8,198

8,252

2,219

–

–

18,670Accrued charges and deferred income

107,450

32,457–––

139,907

Non-current

–

–

–

11,22912,891

24,120Long-term trade payables

–

–

–

–

2,579

2,579

Other long-term debts

–

–

–

1,192

4,328

5,520

Investment grants and deferred income
from grants

–

–

–

10,037

5,984

16,021

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
F27 PROVISIONS FOR EMPLOYEE BENEFITS

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

The 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 EMPLOYEE& SIMILAROTHER& SIMILARBENEFITS

TOTAL

289,124

3,788

27,324

13,554

333,790

Increase (included in “Payroll andrelated benefits”)

25,129

251

4,130

1,638

31,148

Reversal (included in “Payroll andrelated benefits”)

124

–

–

(163)

(39)

Use (included in “Payroll andrelated benefits”)(41,956)(83)(7,125)(390)(49,555)

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

5,267

25

121

197

5,610

162

98

(120)

(2)

138

Transfers(1,610)

(272)

2,217

(308)

643

Recognized in othercomprehensive income

70,883–––70,882

Translation differences

Other movements
At the end of the financial year forcontinuing operations

Thousands of Euros
Belgium

37

–

–

(4)

33

347,160

3,806

26,54615,137

392,650

31/12/2018

MOVEMENTS
2019

31/12/2019

62,964

4,514

67,478Germany

245,548

52,105

297,653

Subtotal

308,51256,619365,131

Other entities
Total for continuing operations

145

25,2782,240

27,519333,790

58,859392,650

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 “Recognized 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 following disclosure requirements under IAS 19 amended were derived from the reports
obtained from external actuaries.

BELGIUM

Characteristics of the Deﬁned Beneﬁt plans
Umicore companies in Belgium operate deﬁned beneﬁt plans that provide
retirement beneﬁts which are related to salary and age or length of service.
These retirement plans represent a deﬁned beneﬁt obligation of € 227.9 million
and assets for € 210.4 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 analyzed 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 beneﬁttype providing retirement, disability and death beneﬁts. All beneﬁt plans are based
on ﬁnal or ﬁnal average pay beside the deferred compensation plan. The beneﬁts
of the deferred compensation plan are based on annual converted salary andprovide a guaranteed interest of 3.0% p.a. (6.0% p.a. for salary conversions before2014). All retirement plans represent a deﬁned beneﬁt obligation of € 305.3 million
and assets for € 7.6 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 Integrated Annual Report 2019

FINANCIAL STATEMENTS

146

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
to corporate bond yields; if plan assets underperform this yield, this will create a deﬁcit.

– Because of the Belgian legislation applicable to 2nd pillar pension plans (so-called “Law
Vandenbroucke”), all Belgian Deﬁned Contribution plans have to be considered under
IFRS as Deﬁned Beneﬁt plans. Law Vandenbroucke states that in the context of deﬁned
contribution plans, the employer must guarantee a minimum return of 3.75% on employee
contributions and 3.25% on employer contributions. However, shortly before year-end 2015,a change in the Belgian Law was enacted resulting in a decrease of the guaranteed returnfrom 3.25 % to a minimum interest rate defined based upon the Belgian 10-year interest
rate but within the range 1.75% – 3.25%. The new rate (currently 1.75%) applies for theyears after 2015 on future contributions and also on the accumulated past contributionsas at 31 December 2015 if the financing organization does not guarantee a certain result
on contributions until retirement age. If the organization does guarantee such a result, therates 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 i.e. 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 notfully borne by the “Pensionskasse” and therefore can result in an additional unfundedpension 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 the additional obligation expected until end of 2022 has been included in thepension 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 wasclosed on 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 € 120.6 million as at the endof December 2019 and related plan assets to € 114.9 million.
2018

2019

Benefit obligation at beginning of the year

552,021549,052

Current service cost

28,92032,958Interest cost

9,359

9,908

Thousands of Euros
CHANGE IN BENEFIT OBLIGATION

Plan Participants’ Contributions

861

946

Remeasurements – changes in demographic assumptions

4,678

1,133

Remeasurements – changes in financial assumptions(7,727)

81,769Remeasurements – experience adjustments

5,967

3,032

(28,913)(24,272)

Expenses paid

(2,101)(3,773)

Plan combinations(14,915)

74

902

858

549,052

651,685

Benefits paid from plan/Company

Exchange rate changes
Benefit obligation at end of the year

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

147

2018

2019

209,774

216,101

Expected return on plan assets

3,668

3,740

Change in scope

(697)

–

Remeasurements on plan assets(4,410)17,138Remeasurements of the year

6,225

70,882

Employer contributions

34,67149,291

Minorities

57

(772)

Member contributions

861

946

Exchange differences50

23

Benefits paid from plan/Company(28,913)(24,272)

Total recognized in the OCI at subsidiaries

199,949

270,082

Expenses paid

(2,151)(3,823)Remeasurements at associates and joint ventures

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

1,630

87

Total recognized in the OCI

971

744

Remeasurements (recognized in other comprehensive income)

216,101

259,952

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

Exchange rate changes
Fair value of plan assets at the end of the year

2018

2019
651,685

AMOUNT RECOGNIZED IN THE BALANCE SHEET
Defined benefit obligations

549,052

Fair value of plan assets

216,101

259,952

Funded Status

332,951

391,733

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

Cumulative remeasurements at opening

2019

194,314

199,949

26,932

27,944

226,882

298,027

Effect of changes in demographic assumptions

4,358

1,070

Effect of changes in financial assumptions(7,579)80,772

Effect of experience adjustments

5,121

5,859

(Return) on plan assets (excluding interest income)

4,329(17,015)

Total remeasurements included in Other Comprehensive Income

6,229

70,686The interest cost and return on plan assets as well as the discount rate impact on the nonpost-employment beneﬁt plans, are recognized under the ﬁnance cost in the income statement(see note F11). All other elements of the expense of the year are classiﬁed under the operating
result in the “wages, salaries and direct social advantages”.

––

332,951

391,733

Remeasurements of the year recognized 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.

28,92032,958PRINCIPAL ACTUARIAL ASSUMPTIONS
Weighted average assumptions to determine benefit obligations at year end

COMPONENTS OF PENSION COSTS

2018

Amounts recognized in profit and loss statement
Current service cost2018

Amounts recognized in other comprehensive income

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

Thousands of Euros

2019

Interest cost

9,359

9,908

Interest income on plan assets(3,668)(3,740)Discount rate (%)

1.85

0.95

Remeasurement of Other Long-Term Benefits

1,099(1,890)Rate of compensation increase (%)

2.85

2.60

Administrative expenses and taxes
Total pension cost recognized in P&L account

50

51

35,76037,287

Rate of price inflation (%)

1.78

1.78

Rate of pension increase (%)

1.36

1.30

Weighted average assumptions used to determine net cost
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

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
2019

Thousands of Euros

FAIR VALUE
OF ALL PLANASSETSFAIR VALUE OF PLANASSETS WITH QUOTEDMARKET PRICE

Plan assets
Cash and cash equivalents

8,830

8,825

Equity instruments

43,45643,445

Debt instruments

109,432

109,318

Real estate

8,961

8,956

Assets held by insurance company

85,72473,154

Other

3,548

2,329

259,951

246,027

Total plan assets

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.
2019

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)

613,630

660,862

12.86

13.92

624,950597,359643,294

626,388

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

148
2018

2019

Balance sheet liability (asset) as of previous year

342,247

332,951

Pension expense recognized in P&L in the financial year

35,76037,287

Amounts recognized in SoCI

6,229

70,686

Thousands of Euros
BALANCE SHEET RECONCILIATION

Employer contributions via funds in the financial year

(23,174)(37,964)

Employer contributions paid directly in the financial year

(11,497)(11,327)

Amounts recognized due to plan combinations(16,545)

(13)

(69)

114

332,951

391,734

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

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

2015

2016

2017

2018

2019

469,027

521,153552,021549,052

651,685

Fair value of plan assets

156,670

183,246

209,774

216,101

259,952

Deficit (surplus) in the plan

312,357

337,907342,247

332,951

391,733

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

4,410(17,138)

Experience adjustments on plan liabilities

5,399

14,861

4,611

5,967

3,032

Thousands of Euros2019

EXPECTED CASH FLOWS FOR FOLLOWING YEAR
Expected employer contributions

34,899

Expected total benefit payments
Year 1

27,057

Year 2

29,402

Year 325,658Year 426,556

Year 5

19,423

Next 5 years

136,523

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
F28 STOCK OPTION PLANS GRANTED BY THE COMPANY
PLAN

EXPIRY DATEEXERCISE

ISOP 201312/02/2020

all working days ofEuronext Brussels

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

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

18.19

61,50019.34–

The 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.
2018

61,500ISOP 2014

ISOP 2015

10/02/2021

09/02/2022

all working days ofEuronext Brussels

all working days ofEuronext Brussels

16.14

394,250

15.80

24,00016.49

10,00017.29

04/02/2023

all working days ofEuronext Brussels

13/02/2024

all working days ofEuronext Brussels

NUMBEROF SHARE
OPTIONSWEIGHTEDAVERAGEEXERCISEPRICE

NUMBEROF SHARE
OPTIONSWEIGHTEDAVERAGEEXERCISE
PRICE

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

5,218,199

18.98

5,356,854

24.14

596,000

Granted during the year

1,182,625

40.90

1,221,000

34.09

Exercised during the year

1,037,470

17.31

936,604

17.37

6,500

–

–

–

18.90

10,000

Expired during the year

19.50

29,875

Outstanding at the end of the year

5,356,854

24.14

5,641,250

27.42

Exercisable at the end of the year

5,356,854

24.14

5,641,250

27.42

16.63

942,000
942,000

ISOP 20172019428,250

635,875
ISOP 2016

149

25.50
27.04

1,122,250
47,750The options outstanding at the end of the year have a weighted average contractual life until
January 2024.
The details concerning the calculation of the fair value of the options granted are detailed undernote F10 on Payroll and related Benefits.

1,170,000
ISOP 201808/02/2025

all working days of

40.90

1,182,625

Euronext Brussels
1,182,625
ISOP 201910/02/2026

all working days ofEuronext Brussels

34.08
36.78

1,216,000
5,000
1,221,000

Total

5,641,250

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
F29 ENVIRONMENTAL PROVISIONS
Thousands of Euros
At the end of previous year
Acquisition through business combinations

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

TOTAL

60,755

3,481

64,236

–

3,438

3,438

Increase

6,637

5,465

12,102

Reversal(2,645)–(2,645)Use (included in “Other operating expenses”)(8,052)(2,294)(10,346)

Discounting (included in “Finance cost – Net”)

1,333

–

1,333

(36)

–

(36)

At the end of the financial year for continuing operations

57,992

10,08968,081

Of which – Non-current

54,032

3,518

57,550

3,960

6,572

10,532

Translation differences– Current

150

Provisions for environmental legal and constructive obligations are recognized 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 recognized.
Provisions increased overall by € 3.8 million, with additional provisions which are higher thanthe uses and reversals of existing provisions.
The acquisitions through business combinations are related to the acquisition in Finland(note F8).
The new provisions for soil and groundwater remediation are mainly related to new provisions
taken in France and in Brazil. In Brazil, new provisions were foreseen for the closure costs of
the industrial activities in Guarulhos and the related costs for demolition and remediation.
Most of the uses of provisions for soil and groundwater remediation for the period are linked to
the realization of site remediation programs in Brazil, in the USA and in Belgium. Most of thereversals of provisions for soil and groundwater remediation for the period are taken in Belgium.
No major movements occurred in 2019 on the provisions that were taken to address the historical
radioactive waste material in Belgium (Olen). Further negotiation with all competent authorities
to ﬁnd a sustainable and acceptable storage solution are on-going, however, at a slow pace.
The movements of the other environmental provisions are mainly related to the need for andadjustment of CO2 emission rights in Belgium.

PROVISIONS FOR PROVISIONS FORREORGANISATION OTHER LIABILITIES& RESTRUCTURING
AND CHARGES

Thousands of Euros
At the end of the previous year

35,928

119,936

TOTAL
155,859

Increase

2,683

11,992

14,675

Reversal(2,946)(40,859)(43,805)

Use (included in “Other operating expenses”)(12,011)(12,864)(24,875)

Discounting (included in “Finance cost -Net”)

–

(299)

(299)

Translation differences

(66)

(143)

(209)

Transfers

(643)

2,988

2,345

–

(60)

(60)

At the end of the financial year for continuing operations

22,94580,691

103,631

Of which – Non-current

17,62332,31449,937

5,321

48,37753,698Other movements– Current

Provisions for reorganization and restructuring and other liabilities and charges (mainly coveringtax, warranty and litigation risks, onerous contract risks and product returns) are recognized andmeasured by reference to an estimate of the probability of future outﬂow of cash as well as tohistorical data based on the facts and circumstances known at the end of the reporting period.
The actual liability may differ from the amounts recognized.
Provisions decreased overall by € 52.2 million.
Additional provisions for reorganization and restructuring have been taken in the US, related to thediscontinuation of the activities at the Wickliffe site in the business unit Cobalt & Specialty Materials.
The uses and reversals of provisions for reorganization and restructuring relate to the execution ofpreviously announced restructurings in Brazil and Germany.
€ 25.5 million of the decrease of the provisions for other liabilities and charges are related to theintroduction of IFRS 9 for fair value hedging where under the revised standard for some commodities
no fair value hedge accounting could be obtained and consequently, IAS 37 principles for onerous
contracts were applied (see Note F4.5). This decrease represents movements stemming from theunderlying realization or recalculation of mark to markets on commercial commitments. Some usesof the provisions relate to onerous contract events occurring.
Other increases, reversals and uses of the provisions for other liabilities and charges relate to warranty(see Note F4.5 as well) and litigation risks in Belgium, Germany, Denmark, Korea and China.
No reliable estimation could be made regarding the expected timing of cash outflows related to thenon‑current part of the provisions for other liabilities and charges.

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

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
F31 CAPITAL EMPLOYED
Thousands of EurosNOTES

Intangible assets

31/12/2018 30/06/2019

31/12/2019

F14, F15

337,305

345,000

370,859

Property, plant and equipment

F161,601,892

1,770,931

2,094,672

Investments accounted for under the equity method

F17151,372

156,517150,642

Financial assets at FV through OCI

F18

8,028

9,160

10,897

Inventories

F19

2,308,094

2,102,222

2,462,330

Non-current receivable (excluding assets
employee benefits)

F20

10,962

10,26910,865

1,123,503

1,276,802

1,405,810

61,67236,65445,447

5,602,829

5,707,555

6,551,521

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

F25

Adjusted current accounts payable
Translation reserves

24,391

25,24524,1201,572,515

1,507,144

1,867,518

F23(91,075)(92,770)(82,870)

Non-current provisions

F29, F30

112,128

115,484

107,487

Current provisions

F29, F30

107,973

86,44564,23074,50095,589131,483

Income tax payable
Liabilities included in capital employed

1,800,432

1,737,137

2,111,969

Capital employed

3,802,397

3,970,418

4,439,552

16

4,133

2,439

Capital employed as published

Eliminations

3,802,413

3,974,551

4,441,991

Average Capital Employed in half year
preceding closing date

3,543,894

4,208,271

Average Capital Employed in year precedingclosing date

3,344,176

4,048,377

513,564

508,920

15.36%

12.57%

Recurring EBIT in year preceding closing date
ROCE in year preceding closing date

F9

151

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 2019

FINANCIAL STATEMENTS

152

F32 FINANCIAL INSTRUMENTS BY CATEGORYAS AT THE END OF PREVIOUS YEAR
Thousands of EurosCARRYING AMOUNTLEVELFAIR VALUEHELD FOR
TRADING – FVHEDGING

8,028
8,028

CASH
FLOW HEDGINGLOANS,RECEIVABLES
AND PAYABLESFINANCIALASSETS AT FVTHROUGH OCI

–

–

–

8,028

–

–

–

8,028

8,897

–

–

8,897

–

8,897

–

–

8,897

–

1,158,112

18,844

17,184

1,122,084–

ASSETS
Financial assets at fair value through Other Comprehensive Income
Financial assets at fair value through Other Comprehensive Income – Shares

1

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

–

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––

Fair value receivable – financial instruments related to FV hedging

18,844

18,844–––

Deferred charges and accrued income

17,813––

17,813––

Cash and cash equivalents

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

LIABILITIES

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
AS AT THE END OF PREVIOUS YEAR
Thousands of Euros153

CARRYING AMOUNTLEVELFinancial debt

FAIR VALUEHELD FOR
TRADING – FVHEDGINGCASH
FLOW HEDGINGLOANS,RECEIVABLES
AND PAYABLESFINANCIALASSETS AT FVTHROUGH OCI

1,151,608––

1,145,607–

Non-current
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–

Current

Other loans

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–

Trade and other payables
Non-current

Current
Trade payables

1,102,383––

1,102,383–

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

–

Advances received on contracts in progress

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
TOTAL OF FINANCIAL INSTRUMENTS (LIABILITIES)

153,140––

153,140–

2,765,358

11,844

16,8442,730,669–

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
AS AT THE END OF THE FINANCIAL YEAR154

CARRYING AMOUNTFAIR VALUEHELD FOR
TRADING – FVHEDGING

10,897
10,897

CASH
FLOW HEDGINGLOANS,RECEIVABLES
AND PAYABLESFINANCIALASSETS AT FVTHROUGH OCI

–

–

–

10,897–––

10,897

2,192

–

–

2,192

–

2,192

–

–

2,192

–

1,445,696

47,495

19,6991,378,502–

Cash guarantees and deposits

8,893

–

–

8,893

–

Other receivables maturing in more than 1 year

1,972

–

–

1,972

–

Assets employee benefits

1,173

–

–

1,173

–

Thousands of EurosLEVEL

ASSETS
Financial assets at fair value through Other Comprehensive Income
Financial assets at fair value through Other Comprehensive Income – Shares

1

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

Current
Trade receivables (at cost)

1,171,835––

1,171,835–

Trade receivables (write-down)(22,983)––(22,983)–

Other receivables (at cost)

180,336––

180,336

–

(207)

–

–

(207)

–

Other receivables (write-down)Interest receivable

156

–

–

156

–

Fair value of financial instruments held for cash flow hedging

219,699–19,699––Fair value receivable – financial instruments related to FV hedging

247,49547,495–––37,327––37,327–

271,723––

271,723–

25,524––25,524

–

7

–

–

7

–

Cash-in-hand and bank current accounts

246,192––

246,192–

TOTAL OF FINANCIAL INSTRUMENTS (ASSETS)

1,730,508

47,495

19,6991,652,417

10,897

Deferred charges and accrued income
Cash and cash equivalents
Short-term investments: bank term deposits
Short-term investments: term deposits (other)

LIABILITIES

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
AS AT THE END OF THE FINANCIAL YEAR155

CARRYING AMOUNTFAIR VALUEHELD FOR
TRADING – FVHEDGING

1,753,145

Bank loans
Lease liability
Other loans

CASH
FLOW HEDGINGLOANS,RECEIVABLES
AND PAYABLESFINANCIALASSETS AT FVTHROUGH OCI––

1,715,146–

1,139,266––

1,101,266–

46,262––

46,262

–

3,555

–

–

3,555

–

Short-term bank loans

248,478––

248,478–

Bank overdrafts

32,493––32,493–

Short-term loan: commercial paper

282,936––

282,936

–

155

–

–

155

–

1,940,468

18,67048,8291,872,969–

Long-term trade payables

2,579

–

–

2,579

–

Other long-term debts

5,520

–

–

5,520

–

Investments grants and deferred income from grants

16,021––

16,021–Thousands of Euros

LEVEL

Financial debt
Non-current

Current

Other loans
Trade and other payables
Non-current

Current
Trade payables

1,466,140––

1,466,140–

Advances received on contracts in progress

15,448––15,448–Tax – other than income tax – payable

26,190––26,190–

Payroll and related charges

125,252––

125,252–

Other amounts payable

56,399––56,399–Dividends payable

11,657––

11,657–

Accrued interest payable

7,856

–

–

7,856

–

Fair value financial instrument held for cash flow hedging

248,829–48,829––Fair value payable – financial instruments related to FV hedging

218,67018,670–––Accrued charges and deferred income

139,907––

139,907–

Total of financial instruments (Liabilities)

3,693,613

18,67048,8293,588,115–

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
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 of ﬁnancial instruments traded in active markets is based on quoted market
prices at the end of the reporting period.
The fair value of ﬁnancial instruments that are not traded in an active market is determinedusing valuation techniques, mainly discounted cash-ﬂow, using market assumptions prevailingat the end of the reporting period.
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 theasset 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.

156

32.2.1 COMMODITY PRICESThe fair value on ﬁnancial instruments related to cash ﬂow hedging sales would have been
€ 22.8 million lower/higher if the metal prices would strengthen/weaken by 10%.
The fair value on ﬁnancial instruments related to cash ﬂow hedging purchases would have been
€ 1.7 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 € 7.4 million
higher/lower if the metal prices would strengthen/weaken by 10%.
The fair value on other commodity sales ﬁnancial instruments would have been € 38.3 million
lower/higher and the fair value on other commodity purchases ﬁnancial instruments would
have been € 38.6 million higher/lower if the metal prices would strengthen/weaken by 10%.
32.2.2 FOREIGN CURRENCY
The fair value of forward currency contracts related to cash ﬂow hedging would have been
€ 2.0 million lower if the EUR would strengthen against USD by 10% and would have been
€ 2.4 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
€ 1.9 million lower if the EUR would strengthen against ZAR by 10% and would have been
€ 2.3 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
€ 8.0 million lower if the USD would strengthen against KRW by 10% and would have been
€ 9.7 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
€ 2.3 million higher if the EUR would strengthen against CNY by 10% and would have been
€ 2.8 million lower if EUR would weaken against CNY by 10%.
The fair value of forward currency contracts related to cash flow hedging would have been
€ 4.8 million lower if the USD would strengthen against CNY by 10% and would have been
€ 5.9 million higher if USD would weaken against CNY by 10%.
The fair value of other forward currency contracts sold would have been € 69.7 million higher if
the EUR would strengthen against USD by 10% and would have € 85.2 million lower if the EUR
would weaken against USD by 10%.
The fair value of other forward currency contracts bought would have been € 26.3 million lower
if the EUR would strengthen against USD by 10% and would have been € 32.2 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
€ 15.2 million lower if the EUR would strengthen against USD by 10% and would have been
€ 18.5 million higher if the EUR would weaken against USD by 10%.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

157

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.

F33 FAIR VALUE OF FINANCIAL INSTRUMENTS

negative impact on the fair value reserves in equity at end of 2019. Most of the fair values of
the hedging instruments are not significant as the closing rates do not materially differ from thestrike rates. Only for the commodities sold the fair values are significant. These concern metal
hedging instruments of which most have their maturity within the next two years.

33.1 FINANCIAL INSTRUMENTS RELATED TO CASH-FLOW HEDGING

33.2 FINANCIAL INSTRUMENTS RELATED TO FAIR VALUE HEDGINGNOTIONAL OR
CONTRACTUAL AMOUNT
Thousands of Euros

31/12/2018

31/12/2019

31/12/2018

31/12/2019

Forward commodities sales

22,498186,117(5,779)(41,403)

Forward commodities purchases(101,452)(76,930)

1,854

7,538

Forward currency contracts sales

486,796

319,897

1,060

(829)

Forward currency contracts purchases(89,545)(64,264)

3,790

6,250

Forward IRS contracts

64,29040,000

(586)

(687)

340

(29,130)

Recognized under trade and other receivables

17,184

19,699Total fair value impact subsidiaries

NOTIONAL OR
CONTRACTUAL AMOUNTFAIR VALUE

Recognized under trade and other payables(16,844)(48,829)

Total fair value impact associates and joint ventures(1,440)72

Total(1,100)(29,058)

Thousands of Euros

31/12/2018

31/12/2019

FAIR VALUE
31/12/2018

31/12/2019
28,666

Forward commodities sales

194,909389,955

3,101

Forward commodities purchases(234,618)(390,761)

4,861

(937)

Forward currency contracts sales

1,350,314

1,346,766(3,741)

2,818

Forward currency contracts purchases(669,549)(613,466)

Total fair value impact subsidiaries

2,779(1,723)7,000

28,824

Recognized under trade and other receivables

18,84447,495

Recognized under trade and other payables(11,844)(18,670)

Total

7,000

28,824

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
and the commodity nickel. The forward currency contracts are set up to hedge USD towards
EUR, KRW, CNY, BRL and CAD as well as EUR towards ZAR and CNY. The terms and conditionsof the forward contracts are common market conditions. In those circumstances whereby thehedge 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 to hedge future probable cash-ﬂows andare not speculative in nature. Umicore did not face any ineffectiveness on cash ﬂow hedging
in P&L in 2018 and 2019.

The fair values of the hedging instruments reflect the difference between the contract rates andthe closing rates. The booking of the fair value movements on financial instruments under fairvalue hedging had a positive impact on the operating income at the end of 2019. Most of the fairvalues of the hedging instruments are not significant as the closing rates do not materially differ
from the strike rates. Only for the commodities sold the fair values are significant. These concern
metal hedging instruments of which most have their maturity within the next year. However,in view of the intent of the Group policy on hedging, the net impact on operating income offair value movements on both hedging instruments and hedged items is neutral. 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 nickel and copper. The forward currency contracts
are set up to hedge USD towards EUR, KRW, CNY, BRL and CAD as well as EUR towards CNY,
ZAR, CAD, CHF, JPY, THB, DKK and PLN. The principles and documentation related to the Group’stransactional hedging are included in note F3 “Financial risk management”. The Group’s fairvalue hedging of currencies and commodities comply with IFRS 9 fair value hedge accounting
rules (see also note F2.21.1). In the absence 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 tocover existing transactions and ﬁrm commitments and are not speculative in nature.

The fair values of the hedging instruments reflect the difference between the contract rates
and the closing rates. The total fair value of financial instruments for cash-flow hedging has a

The fair values are immediately recognized in the income statement under Other operating
income for the commodity instruments and the Net Finance cost for the currency instruments.

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 recognized in thefair value reserves recorded in equity and are derecognized when the underlying forecasted orcommitted transactions occur (see note F23).

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

158

AS AT THE END OF PREVIOUS 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 (FAIR VALUE)
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 LIABILITIES (FAIR VALUE)
Interest 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 2019

FINANCIAL STATEMENTS

159

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)

1,099

2,078

9,231

2,286

14,694

119

245

1,002

25

1,391

–

–

–

64,26464,264

–

–

–

9,764

9,764

Total forward sales (FV Hedging)

49,07659,043

131,159–

239,279

8,620

10,327

14,812–

33,760Total forward purchases (FV Hedging)

16,865

270,499––

287,364

233

7,370

–

–

7,603

3,828

7,480

33,93367,372

112,613

77

153

680

1,383

2,294

–

–

–

64,26464,264

–

–

–

6,250

6,250

Forward currency contracts sales (FV Hedging)

621,600

85,064

170,640–

877,304

3,608

760

1,053

–

5,421

Forward currency contracts purchases (FV Hedging)

244,968

9,171

593

–

254,732

567

140

4

–

711

–

–

–

40,00040,000

–

–

–

(687)

(687)

Total forward sales (CFH)–

26,94453,907

90,572

171,423–(8,634)(16,467)(17,694)(42,795)

Total forward purchases (CFH)––

10,372

2,295

12,667––(2,125)(101)(2,226)

Total forward sales (FV Hedging)

20,221

82,057

48,397–

150,676(372)(3,303)(1,418)–(5,094)

Total forward purchases (FV Hedging)

45,29438,073

20,030–103,397(4,700)(3,849)9–(8,540)FX Risk
Forward currency contracts sales (CFH)
Forward currency contracts purchases (CFH)

FINANCIAL INSTRUMENTS LIABILITIESInterest Rate Risk
Interest rate swaps
Commodity risk

FX Risk
Forward currency contracts sales (CFH)

15,41930,481

125,662

35,723

207,284

(399)

(738)

(2,186)200(3,123)Forward currency contracts sales (FV Hedging)

313,853

145,539

10,071–

469,462(1,543)

(949)

(110)

–

(2,603)Forward currency contracts purchases (FV Hedging)

237,483

22,17098,779301

358,733(1,582)

(151)

(701)

–

(2,434)

Umicore Integrated Annual Report 2019

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:– the effects of non-cash transactions such as provisions, impairment losses, mark to market,
etc., and the variance in operating capital requirements.
– items of income or expense associated with investing or ﬁnancing cash ﬂows.
Thousands of Euros

2018

2019

206,577

244,038

Adjustments for non-cash transactions
Depreciations(Reversal) Impairment charges

6,780

23,602

Mark to market of inventories and commitments

53,081(38,277)(395)(1,946)Inventories and bad debt provisions

13,80539,926

Depreciation on government grants(1,236)(904)

Share-based payments

11,1508,211

Exchange difference on long-term loans

Change in provisions
Total

58,518(67,349)

348,280

207,302

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

103,240

96,691

Interest (income) charges

33,21741,042(Gain) loss on disposal of fixed assets(5,963)(8,033)

Dividend income

(124)

(133)

130,369

129,568

Inventories(679,671)(154,236)

Trade and other receivables

166,200(271,357)

Trade and other payables(54,837)

383,700

As in the consolidated balance sheet(568,308)(41,893)

Non-cash items (*)(133,286)(10,329)

12,451(79,639)

Impact of business combination(6,885)56,050Currency translation differences(11,991)(2,630)(708,017)(78,441)

Total
CHANGE IN WORKING CAPITAL REQUIREMENT ANALYSIS

Items disclosed elsewhere (**)

As in the consolidated cash flow statement

Thousands of Euros

NET CASH
LOANS
AND CASH(W/O BANKEQUIVALENT OVERDRAFTS)

160
NET
FINANCIALDEBTAt the end of previous year

257,114

1,117,641

Cash flow of the period(17,883)

565,012860,527
582,895

At the end of the financial year

239,231

1,682,653

1,443,422

34.2 NET CASH FLOW GENERATED BY OPERATING ACTIVITIESOperating cash ﬂow after tax from continuing operations is € 479.2 million. The net working
capital requirements for continuing operations increased with € 78.4 million in 2019 compared
to 2018, reflecting a pronounced increase in working capital needs in the Catalysis businessgroup in the second half of the year due to higher PGM prices, partly offset by a release ofworking capital in the Recycling business group.
34.3 NET CASH FLOW USED IN INVESTING ACTIVITIESNet cash used in investing activities for continuing operations increased by € 173.0 million
in 2019. Capital expenditure for continuing operations reached € 553.2 million if capitalized
R&D costs are excluded as per Umicore’s deﬁnition of capital expenditures (refer to Glossary).
The higher capital expenditure spending reflects higher investments in all business groups.
The business group Energy & Surface Technologies accounted for close of two thirds ofthe amount, with investments primarily linked to the ongoing major greenfield expansion
programs in cathode materials in China and Poland. The higher investments in Catalysis reflect
the capacity expansions in China, Poland and India as well as the expansion of fuel cell catalyst
capacity in Korea. In Recycling, capital expenditures comprise the investments carried out
during the extended maintenance shutdown of the Hoboken plant as well as the investments
to further improve the environmental performance of the plant.
The acquisition in additional shareholdings in subsidiaries for € 188.1 million is related to theacquisition of the cobalt refining and cathode precursor activities at Kokkola (Finland) completed
early December (see note F8).
34.4 NET CASH FLOW USED IN FINANCING ACTIVITIESThe cash generated in ﬁnancing activities is mainly the consequence of the capital increase
from minorities (€ 15.5 million) and the net increase of the indebtedness (€ 517.1 million).
The cash used in financing activities is mainly related to the purchase and use of own shares
to cover the exercise of options (€ 29.0 million), and the payment of dividends (€ 197.6 million)
and of interest (€ 39.6 million).

(*) Non-cash items are mainly linked to mark to market of inventories and commitments, strategic
and transactional hedging and inventories, impairments in inventories and bad debt provisions.
(**) Item disclosed elsewhere are mainly due to changes in interest, dividend and tax receivableand payable and government grants.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
Since the introduction of IFRS 16 on leases, the interests and the reimbursement of the leaseliability are both classified as financing cash flows (€ -16.5 million under the line Change inlease liability and € -0.9 million under the line interests paid) whereas before the operatinglease rents (€ 17.5 million) were part of the operating cash flows.
2018

2019

Acquisition of tangible assets

466,078

529,487

Acquisition of intangible assets

31,75858,362497,836

587,849

Thousands of Euros

Acquisitions of assets
Capitalized R&D

20,247

34,660Capital expenditure for continuing operations

477,589

553,189

F35 RIGHTS AND COMMITMENTS
Thousands of Euros

2018

2019

Guarantees constituted by third parties on behalf of the Group

85,28924,802

Guarantees constituted by the Group on behalf of third parties
Guarantees received

551

10,903

127,423

130,005

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

474,563515,254

Commercial commitments for commodities purchased (to be received)

582,971679,569

Commercial commitments for commodities sold (to be delivered)

1,112,482

1,213,465

Goods and titles of third parties held by the Group2,650,255

3,635,638

Miscellaneous rights and commitments
Total

4,814

567

5,038,348

6,210,203

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.

161

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 much lesser extent some non-metal leases that are not in thescope of IFRS 16 because of lower values or short-term.
The Group leases metals (particularly gold, silver, platinum and palladium) from and to banks andother third parties for speciﬁed, mostly short term, periods and for which the group pays or receives
fees. As at 31 December 2019, there was a net lease-in position of € 1,088 million vs. € 1,121 million
at end of 2018. This decrease is mainly caused by lower volumes compensating higher metal prices.
As detailed in Note F2.7, those metal leases are not under the scope of IFRS 16.

F36 CONTINGENCIESThe Group has a pending file that can be qualified as a contingent liability according to thedefinition of IFRS. A subsidiary of Element Six Abrasives received notice of a local tax assessment
for USD 29 million. Having taken expert advice, its management has submitted an appeal
contesting the assessment and recognized this as a contingent liability. Umicore retains 40.22%
interest in Element Six Abrasives and accounts for the company using the equity method.
The Group is the also subject of a number of other claims and legal proceedings incidental
to the normal conduct of its business. Management does not believe that such claims andproceedings are likely to have a material adverse effect on the financial condition of Umicore.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
F37 RELATED PARTIES

Thousands of Euros

162

2018

2019

10,996,814

11,565,086

EXECUTIVE COMMITTEE

2018

2019

Operating income

263,197

109,636

Short-term employee benefits

3,766,440

5,071,742

Operating expenses(290,356)(208,746)

Post-employment benefits

1,167,807

1,002,259

Other long-term benefits

1,260,250

1,773,124

Share-based payments

4,802,317

3,717,961

Thousands of Euros

Salaries and other benefits

TRANSACTIONS WITH JOINT VENTURES AND ASSOCIATES

Financial income

180–

Dividends received(8,366)(11,321)

Thousands of Euros

2018

2019

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

48,93924,457

Current trade and other payables

78,49334,855The 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

2018

2019

1,036,151

896,677

296,088

296,000

BOARD OF DIRECTORS
Salaries and other compensation
Fixed portion
Variable portion (based on attended meetings)

239,000

334,000

Value of the share grant498,500

264,300

2,563

2,377

Benefit in kind company car chairman

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 2019 for services rendered in
2018. The remuneration Report shows the value of the shares granted in 2020 or services
rendered in the reporting year i.e. 2019.
The ﬁgures related to the undeferred part of the variable cash remuneration linked to theindividual performance for the reference year 2019, 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 with respect to the reference year 2019.
Accruals booked for the deferred parts of the variable cash remuneration for the reference
year 2019 are included in the other long-term beneﬁts. The amounts to be paid in 2022 will
depend on long-term performance measures and the exact amounts paid will be included in
the Remuneration Report of 2021.

F38 EVENTS AFTER THE REPORTING PERIOD

In its full year results 2019 press release of February 7 2020, Umicore highlighted the risks
related to the impact of the coronavirus outbreak on its 2020 outlook. Umicore provided an
update of the impact, including on its operations, on 26 March 2020 through a press release,stating that the magnitude and the duration of the impact of COVID-19 make it impossible topredict its full impact on Umicore’s market and activities. Umicore therefore withdraws theoutlook given on 7 February 2020 which guided for growth in revenues and earnings for the fullyear 2020 as it assumed at that time that the virus outbreak would not result in a protracted ormaterial effect on the economy in 2020. The COVID-19 outbreak is a non-adjusting subsequent
event only having an impact on the balance sheet and income statement of 2020 without
having any impact on the financial statements of 2019.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
As a matter of prudence and in light of the extreme unpredictability of the global situation,
Umicore’s Board of Directors has decided to propose a dividend of € 0.375 per share in respectof the full year 2019. This proposal replaces the proposal initially made on 7 February 2020 of€ 0.75 per share and corresponds to the amount of the interim dividend of € 0.375 per share
which was already paid out on 27 August 2019. This decision is also to be seen as a way for
Umicore’s management and Board of Directors to share the efforts among its stakeholders.
Umicore will assess the appropriate amount to be returned to shareholders in 2020 once it
gains more clarity around the full impact of COVID-19.

F39 EARNINGS PER SHARE
2018

Euros

2019

Excluding discontinued operations
EPS – basic

1.33

1.2

EPS – diluted

1.31

1.19

1.33

1.20

EPS – diluted

1.31

1.19

Recurring EPS

1.36

1.3

Including discontinued operations
EPS – basic

The following earnings ﬁgures have been used as the numerator in the calculation of basic anddiluted earnings per share:
NUMERATOR ELEMENTS
2018

2019

Without discontinued operations

316,984

287,791

With discontinued operations

316,984

287,791

326,430

311,714

Thousands of Euros
Net consolidated profit, Group share

Recurring net consolidated profit, Group share

NOTES
F9

F9

The following numbers of shares have been used as the denominator in the calculation of basic
and diluted earnings per share:
DENOMINATOR ELEMENTS
2018
Total shares issued as at 31 December

2019

246,400,000 246,400,000

of which treasury shares

5,356,583

5,624,550

of which shares outstanding

241,043,417

240,775,450

Weighted average number of outstanding shares
Potential dilution due to stock option plans
Adjusted weighted average number of outstanding shares

239,202,537 240,558,659
2,484,056

1,354,110

241,686,593

241,912,769

163

Total outstanding shares are after deduction of treasury shares, which are held to cover existing
stock option plans or are available for resale. The denominator for the calculation of diluted
earnings per share takes into account an adjustment for stock options.
During 2019, no new shares were created as a result of the exercise of stock options with linked
subscriptions rights. During the year Umicore used 936,604 of its treasury shares in the context
of the exercise of stock and 71,300 for shares granted. In the course of 2019, Umicore boughtback 1,275,871 own shares. On 31 December 2019, Umicore owned 5,624,550 of its own shares
representing 2.28 % of the total number of shares issued as at that date.

F40 IFRS DEVELOPMENTS

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 tomake a distinction between a finance lease (on balance sheet) and an operating lease(off balance sheet). IFRS 16 requires lessees to recognize a lease liability reflecting futurelease payments and a ‘right-of-use asset’ for virtually all lease contracts. For lessors, theaccounting stays almost the same. However, as the IASB has updated the guidance on
the definition of a lease (as well as the guidance on the combination and separation ofcontracts), lessors will also be affected by the new standard. Under IFRS 16, a contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.
– 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 determinationof 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.
For both standards, the impacts are developed in the Note F2.23 Impact of changes inaccounting policies.
For all other new interpretations and standards not yet mandatory as from 1 January 2019,
management has no indications that this will result in a material impact on the Group’s
consolidated financial statements.

F41 AUDITORS’ REMUNERATION

The world-wide remuneration for the statutory auditor and its afﬁliated companies totaled€ 2.4 million, including an amount of € 1.7 million for the statutory audit missions (€ 0.5 million
for the audit of the mother company) and € 0.7 million for non-statutory audit services including
audit-related and other attestation services (€ 0.4 million) and other non-audit related services(€ 0.3 million).

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
PARENT COMPANY SEPARATE SUMMARIZEDFINANCIAL STATEMENTS

The annual accounts of Umicore are given below in summarized form.
In accordance with the Companies code, the annual accounts of Umicore, together with the
management report and the statutory auditor’s report will be deposited with the National 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

164

31/12/2017

31/12/2018

31/12/2019

4,117,701

2,121,852

2,885,295

–

8,256

6,066

110,018

114,447

114,726

SUMMARIZED BALANCE SHEET AT 31 DECEMBER
1. ASSETS
Fixed assets
I. Formation expenses
II. Intangible assets
III. Tangible assets

398,464

425,814

467,458

IV. Financial assets

3,609,219

1,573,335

2,297,045

950,746

1,696,083

1,748,153

373

362,679

449,366

VI. Stocks and contracts in progress

339,484

641,452

534,771VII. Amounts receivable within one year

381,570

502,354519,135

VIII. Investments

200,213

158,103

184,701

Current assets
V. Amounts receivable after more than one year

IX. Cash at bank and in hand

780

3,937

2,190

28,32627,55857,9905,068,447

3,817,935

4,633,448

1,210,824

2,148,879

2,268,310

500,000

550,000

550,000

6,610

848,130

848,130

91

91

91

IV. Reserves

281,908

363,257

389,855

V. Result carried forward

264,486

152,409262,604

Vbis. Result for the period

149,816

227,001

209,258

7,913

7,991

8,372

X. Deferred charges and accrued income
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

117,426

125,326

123,600

3,740,197

1,543,730

2,241,539

VIII. Amounts payable after more than one year

1,693,125

692,996

1,082,864

IX. Amounts payable within one year

1,973,777

758,721

1,076,244

X. Accrued charges and deferred income

73,29592,01382,431

Total liabilities and shareholders’ equity

5,068,447

3,817,935

4,633,449

Creditors

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS
THOUSANDS
OF EUROSNUMBER OF
SHARESAt the end of the preceding financial year

550,000

246,400,000

At the end of the financial year

550,000

246,400,000

550,000

246,400,000

31/12/2017

31/12/2018

31/12/2019

I. Operating income

2,960,635

3,628,486

3,489,297

A. Share capital

II. Operating charges(2,900,861)(3,532,944)(3,494,693)

1. Issued capital

III. Operating result

59,77495,542(5,396)

IV. Financial income

161,063

193,305259,275

V. Financial charges(69,747)(59,393)(41,210)

2. Structure of the capital

VI. Result on ordinary activities before taxes

151,090

229,454

212,669

2.1. Categories of shares(1,274)(2,453)(3,411)

XI. Result for the period

149,816

227,001

209,258

XII. Result for the period available

149,816

227,001

209,258

Thousands of Euros
INCOME STATEMENT

165

STATEMENT OF CAPITAL

X. Income taxes

Ordinary shares
2.2. Registered shares or bearer shares
Registered

48,472,816

Bearer197,927,184

2017

2018

2019

A. Profit (loss) to be appropriated568,719

641,302588,668

1. Profit (loss) for the financial year

149,816

227,001

209,258

2. Profit (loss) carried forward

418,903414,301

379,410

G. SHAREHOLDER BASE(1)7,862(81,349)(26,598)

Family Trust Desmarais, Albert Frère and Groupe Bruxelles Lambert S.A.

18.62

45,871,052

07/12/2018–(5,000)–BlackRock Investment Management

5.33

13,131,678

30/12/2019

Baillie Gifford & Co and Baillie Gifford Overseas Ltd.

6.46

15,918,969

07/10/2019

Thousands of Euros
APPROPRIATION ACCOUNT

C. Appropriation to equity
2. To the legal reserve

E. Authorized unissued capital

55,000% CAPITALNUMBER OF NOTIFICATIONSHARES
DATE

3. To the reserve for own shares

7,862(76,349)(26,598)

D. Profit (loss) to be carried forward(1)414,301

379,410

471,861

2. Profit (loss) to be carried forward

414,301

379,410

471,861

Others

67.31

165,853,751

31/12/2019

2.28

5,624,550

31/12/2019

100.00246,400,000

100.00246,400,000

F. Profit to be distributed(1)(162,280)(180,543)(90,209)

Own shares held by Umicore(162,280)(180,543)(90,209)of which free float

1. Dividends
Ordinary shares(1) The total amount of these two items will be amended to allow for the amount of the company’s own
shares held by Umicore on the date of the Annual General Meeting of Shareholders on 30 April 2020;
the gross dividend of EUR 0.375 will not change.

(1) At 31 December 2019, 5,641,250 options on Umicore shares are still to be exercized. This amount includes
5,641,250 acquisition rights of existing shares held by Umicore.

Umicore Integrated Annual Report 2019

FINANCIAL STATEMENTS

166

MANAGEMENT RESPONSIBILITY STATEMENT

We hereby certify that, to the best of our knowledge, the Consolidated Financial Statements
as of 31 December 2019, prepared in accordance with the International Financial ReportingStandards (IFRS) as adopted by the European Union, and with legal requirements applicablein Belgium, give a true and fair view of the assets, liabilities, ﬁnancial position and proﬁt orloss of the Group and the undertakings included in the consolidation taken as a whole, andthat the management report includes a fair review of the development and performance of thebusiness and the position of the group and the undertakings included in the consolidation taken
as a whole, together with a description of the principal risks and uncertainties that they face.
26 March 2020,
MARC GRYNBERGCHIEF EXECUTIVE OFFICER

Umicore Integrated Annual Report 2019

ENVIRONMENTAL STATEMENTS

167

Environmental statements
ENVIRONMENTAL KEY FIGURESNOTES TO THE ENVIRONMENTAL KEY FIGURESE1 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

168
168
169
171
171
173
174
174
176

Umicore Integrated Annual Report 2019

ENVIRONMENTAL STATEMENTS
ENVIRONMENTAL KEY FIGURES*
UNIT

NOTES

2015

2016

2017

2018

2019

Metal emissions to water (load) kg

E2

4,459

3,738

1,437

1,861

2,052

Metal emissions to water(impact units)

E2

328,013339,001

125,688

144,657

174,725

Metal emissions to air (load)kg

Metal emissions to air(impact units)

E2

14,544

1,761

1,829

1,564

864

E2

135,660

86,09884,46388,04452,492

1,197

892

661

657

531

SOx emissions

tonne

E2

NOx emissions

tonne

E2

452

365

320

304

280

CO2e emissions (scope1+2)

tonne

E3

710,143

662,059

633,704

767,702791,816

tonne

E3

–

735,065

663,307785,789

815,175
7,476– Market-based**
CO2e emissions (scope1+2)– Location-based**
Energy consumption

terajoules

E4

7,742

6,737

6,532

7,458

Renewable energy

%

E4

–

–

–

–

14

Water usethousand m3

E5

4,904

4,851

4,755

5,885

6,208

Total waste produced

tonne

E7

72,66377,62572,80478,77868,317

Hazardous waste

tonne

E7

51,52559,43755,44258,75947,589

%

E7

7.8

3.8

4.3

5.3

7.9

of which recycled

tonne

E7

21,13818,18817,37320,01820,728of which recycled

%

E7

56.3

57.8

58.2

62.2

59.4

Compliance excess rate

%

E9

0.8

0.9

0.1

0.1

0.1

Environmental complaints

N°

E9

25

19

34

29

33

Sites ISO 14001 certified

%

E9

92

88

92

91

95

Non-hazardous waste

168

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 site of Kobe ( Japan, Automotive Catalysts) was added to thereporting scope in 2019. This brings the total number of consolidated industrial sites that reportenvironmental data to 55, up from 54 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,
the forecasted values are checked by the sites for significant deviations and, if needed, corrected.
The 6 sites with the largest environmental impact for 2019 are: Hanau (Germany; Catalysis,
Recycling), Olen (Belgium; Energy & Surface Technologies, Corporate 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 2019 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 2018 annual report has been restated in the 2019 report. Unless mentioned otherwise,
environmental key performance indicators (KPIs) for 2015 include the business unit Zinc
Chemicals that was divested during 2016, while 2016-2019 KPIs do not include Zinc Chemicals.
Likewise, environmental KPIs for 2015-2016 include the business unit Building Products thatwas divested during 2017, while 2017-2019 KPIs do not include Building Products.

*

Data for 2015 includes the divested business unit Zinc Chemicals, while data for 2016-2019 does not.
Data for 2016 and previous years includes the divested business unit Building Products, while data for2017-2019 does not.
** CO 2 e emissions’ data for 2015 is an aggregation of market-based and location-based scope 2 emissions.
A direct comparison to 2016-2019 data is not possible. If such comparison were to be made, the mostmeaningful approximation is to use the market-based 2016-2019 figures (see section E3 for details).

Umicore Integrated Annual Report 2019

ENVIRONMENTAL STATEMENTS
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 as 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
of metal emissions while considering growing volumes of production. In practice, this meansthat we aim to at least maintain the level of metals emitted to water and air in terms of impactthat 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”.

169

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 (i.e. 2019) 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 2019, 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 2019 is then: activity level of 2019 (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 2019 represents a
reduction of 10% compared to what it would have been under 2015 operating conditions.
The 2015 baseline is recalculated yearly (2016-2019 and the following years). It is defined as themetal emissions that would have been expected with the activity volumes of the reporting year
(i.e. 2019), 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
and activities that are part of the Group during the reporting year (2016-2019 and thefollowing years) and that were also part of the Group in 2015. Performance is reported only forthe total of the material sites for each KPI.
SOx and NOx emissions are expressed in absolute numbers in tonnes/year.

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 2019was 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.
The improvement on 2015 levels of metal emissions to water and air is measured by comparing
emissions of the current reporting year (i.e. 2019) with those of the reference year 2015 andusing the same scope of activities as 2015 for the material sites.

Umicore Integrated Annual Report 2019

ENVIRONMENTAL STATEMENTS
GROUP DATA – EMISSION SCOPE METAL EMISSIONS TO AIR AND WATERUNIT

BASELINE 2015 IN
RELATION TO 2019

2016

2017

2018

2019

Metal emissions to water

impact units

356,940

339,001

125,688

131,723

152,105

Metal emissions to air

impact units

124,403

86,09884,46387,66451,541METAL EMISSION REDUCTIONPERFORMANCE (TO WATER)METAL EMISSION REDUCTIONPERFORMANCE (TO AIR)

%

%

100

100

99

100

80

80

60

60
43

40

29
31

20
0

‘15

‘16(1)‘17(2)

70
54
41

40
20

‘18(3)

‘19

0

‘15

‘16(4)‘17(5)‘18(6)

When comparing the impact of our metals emissions to water with 2018, a short-term andtemporary lowered efficiency at the Hoboken water treatment plant in 2019 is the main
contributing reason for the observed increase year-on-year, while the 43% reduction between
2015 and 2019 shows that we continue to be well on track to meet our Horizon 2020 goal of
maintaining and improving on our 2015 emissions levels.
METAL EMISSIONS TO AIR
The metal emissions to air in 2019, using the defined scope, resulted in 51,541 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 2019activity was 124,403 impact units. In 2019, we have therefore achieved a 59% reduction of
metal emissions to air in terms of impact for the defined scope.

100

59

170

‘19

(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 2018 was 453,075, leading to a reduction of 71% in 2018 in comparison with 2015(4) Baseline 2015 in relation to 2016 was 123,831, leading to a reduction of 30% in 2016 in comparison with 2015(5) Baseline 2015 in relation to 2017 was 144,049, leading to a reduction of 41% in 2017 in comparison with 2015(6) Baseline 2015 in relation to 2018 was 163,101, leading to a reduction of 46% in 2018 in comparison with 2015

METAL EMISSIONS TO WATER
The metal emissions to water in 2019, using the defined scope, resulted in 152,105 impact units.
Metal emissions to water in 2015, using the defined scope, resulted in 290,714 impact units.
To assess progress on our commitment, this 2015 metal emissions level normalized for 2019activity levels was 356,940 impact units. In 2019, we have therefore achieved a 57% reductionof metal emissions to water in terms of impact for the defined scope compared to 2015.
This evolution between 2015 and 2019 can be largely attributed to our Hoboken plant (Belgium,
Recycling), where 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. In addition,some efficiency improvements and scale-effects – after further capacity increase of precursor
production at our Cheonan UMAK site (Korea, Energy & Surface Technologies) – have contributed
to the decrease of the emission intensity in terms of impact by metals emissions to water.

The reductions are observed across many sites in scope to a varying degree and can be ascribed
for the most part to further efforts that improved air filter efficiency and to improvements inoverall 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 a year by the local authorities.
During the 2019 fall blood sampling campaign, the average lead levels among children in theneighborhood decreased to 3.37 microgram/dl blood. 18% of the children still had levels oflead in blood above the reference value of 5 µg/dl, compared to 23% in 2018 and 32% in 2017.
The site continues its emission reduction action plan to further reduce the number of children
who show levels of lead in blood above the reference value.
GROUP DATA – OTHER EMISSIONS
UNIT

2015

2016

2017

2018

SOx emissions

tonne

1,197

892

661

657

2019
531

NOx emissions

tonne

452

365

320

304

280

The SOx emissions for the Group reduced by 19% from 657 t in 2018 to 531 t in 2019, mainly due
to changes to input materials at Hoboken (Belgium, Recycling). The NOx emissions decreased
from 304 t in 2018 to 280 t in 2019, an 8% reduction.

Umicore Integrated Annual Report 2019

ENVIRONMENTAL STATEMENTS
E3 GREENHOUSE GASES

The introduction of our energy efficiency and carbon footprint policy in 2011 guided us to a 26%
reduction in CO2 equivalent (CO2e) 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 CO2eemission volumes are calculated using the Greenhouse Gas Protocol definition and reporting
methodology for scope 1 and 2 (WBCSD and WRI 2004 and amendment for scope 2 of 2015).
Scope 2 for Umicore includes not only purchased electricity but also steam and compressed airpurchased from third parties (e.g. from industrial parks). CO2e includes the greenhouse gases
CO2, CH4 and N2O for scope 1 and major process emissions. Other greenhouse gases are not
relevant in Umicore’s operations. The scope 2 emissions take only CO2 into account.
The calculation of scope 2 emissions for each site is done in 2 ways: once using market-based
CO2 emission factors and once using location-based CO2 emission factors. The market-based
emission factors allow calculating the CO2 emissions based on the specific contracts that sites
have in place with their energy suppliers, considering the relevant energy mix for these contracts(including green energy attributes, where applicable). The location-based CO2 emission factors
facilitate calculating the CO2 emissions based on the residual energy mix in a country/region(where this data is available), thus explicitly excluding green energy attributes that are soldby the power producers in dedicated supply contracts. The total CO2 emissions for the Groupare then presented as 2 separate values based on this differentiation and the metrics areabbreviated as: CO2e market-based and CO2e location-based.

171

Total CO2e market-based emissions in 2019 were 791,816 t. Total CO2e location-based emissions
were 815,175 t. The difference between these 2 figures, 23,359 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 2018 were 767,702 t, and total CO2e location-based
emissions in 2018 were 785,789 t.
For market-based CO2e emissions, the 2019 emission levels are comparable to those of 2018,
showing a slight increase year-on-year of 3%. Various changes in production capacity, activity
levels and process setup have led to a net balancing of increasing and decreasing emissions
trends at several sites.
BUSINESS GROUP DATAUNITENERGY &SURFACECATALYSIS TECHNOLOGIESRECYCLING

UMICOREGROUP(1)CO2e emissions (scope1+2)– Market-based

tonne

142,680

332,731315,836

791,816CO2e emissions (scope1+2)

tonne

161,093

347,437

306,175

815,175– Location-based(1) Umicore Group data includes the data for Corporate Headquarters in Brussels, Belgium.

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 reporting. Umicore has
implemented these guidelines already since the 2012 reporting. The publication of the sector
guidelines can be found on their website.

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.

GROUP DATAIn 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 continue to be done at all sites. The larger contributors are
additionally encouraged and required to report on their energy efficiency projects.

CO2e emissions (scope1+2)

UNIT

2015

2016

2017

2018

2019

tonne

710,143

662,059

633,704

767,702791,816

tonne–

735,065

663,307785,789

815,175– Market-based
CO2e emissions (scope1+2)– Location-based

An analysis of the contributions of the sites to the energy consumption at Group level identified
27 sites that contributed more than 95% to the 2019 total.

Umicore Integrated Annual Report 2019

ENVIRONMENTAL STATEMENTS
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 (i.e. 2019) with the energy consumption of
the reference year 2015 and using the same scope of activities as 2015.
To calculate the change in energy consumption in comparison with the reference year 2015, a
baseline has been established for each site in scope. The baseline is established by multiplying
the actual activity level of the current reporting year (i.e. 2019) 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 2019, site A produced 220 t of product X and consumed
80,000 GJ, resulting in an energy intensity of 364 GJ/t of product X.
The 2015 baseline reported in 2019 is then: activity level of 2019 (220 t) x 2015 energy intensity(400 GJ/t) = 88,000 GJ.
Therefore, the 80,000 GJ consumed in 2019 represents an improvement of 10% compared towhat it would have been under 2015 operating conditions.
The baseline 2015 is recalculated yearly (2016-2019 and the following years). It is defined as theenergy consumption that would have been expected with the activity volumes of the reporting
year (i.e. 2019), 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 (2016-2019 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, none of which are with Umicore anymore,are not in the reporting scope of this KPI. Likewise, several sites that joined Umicore in 20162019 are therefore also not included in the reporting scope for this KPI. The energy consumption
data also include our corporate headquarters in Brussels (Belgium).

172

ENERGY EFFICIENCY OBJECTIVE
UNIT
Energy consumption

BASELINE 2015 IN
RELATION TO 2019

2016

2017

2018

2019

7,946

6,241

6,082

6,183

6,138

terajoules

NORMALISED ENERGY CONSUMPTION
%
100

100

94
79

80

71

77

60
40
20
0

‘15

‘16(1)‘17(2)‘18(3)‘19(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
(3) Baseline 2015 in relation to 2018 was 8,692 TJ, leading to a reduction of 29% in 2018 in comparison with 2015

The energy consumption in 2019, using the defined scope, was 6,138 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 2019 activity was 7,946 TJ. This means thatfor equivalent production levels, we consumed 23% less energy. In other words, the energy
efficiency has improved by 23% in 2019 compared to the reference year 2015.
This improvement is mainly due to scale effects in connection with the ongoing capacity
increase at our Rechargeable Battery Materials’ sites 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 2019, 27 sites represented
more than 95% of the Group’s energy consumption. At 15 of these sites, 34 energy efficiency
projects have been reported as being implemented during 2019 and contributed significant
energy savings.

Umicore Integrated Annual Report 2019

ENVIRONMENTAL STATEMENTS
ABSOLUTE ENERGY CONSUMPTION

The definition of renewable energy as given in the Greenhouse Gas Protocol Scope 2 Guidance(2015 amendment) has guided us in defining the scope of this indicator. Only the following
energy sources are considered in scope for this KPI: wind energy, solar energy, energy
from biomass (including bio- and other naturally produced gas), hydropower (including
marine hydro) and geothermal energy.

ENERGY CONSUMPTION (ABSOLUTE)
terajoules
10,0008,000

In 2019, the share of renewable energies for purchased electricity was 14%. We will track andreport on this KPI in 2020 and beyond.

‘15 | 7,742‘16 | 6,737‘17 | 6,532‘18 | 7,458‘19 | 7,476

6,000
4,000

E5 WATER USE

2,000
0

173

GROUP DATA
‘15

‘16

‘17

‘18

WATER USE

‘19

thousand m 3

Total energy consumption remained stable at 7,476 TJ in 2019, compared to 7,458 TJ in 2018.
Various changes in production capacity, activity levels and process setup have led to a net
balancing of increasing and decreasing energy consumption trends at several sites.
Indirect energy consumption by primary energy source (purchased electricity, steam andcompressed air) for production sites and office buildings in 2019 was 3,621 TJ. Direct energy
consumption by primary energy source (fuel, gas oil, natural gas, LPG, coal and cokes)
was 3,855 TJ.
BUSINESS GROUP DATA
UNIT
Energy consumption

terajoules

ENERGY &SURFACECATALYSIS TECHNOLOGIES
1,327

3,466

RECYCLING

UMICOREGROUP (1)

2,674

7,476

(1) Umicore Group data includes the data for Corporate Headquarters in Brussels, Belgium.

RENEWABLE ENERGY
As part of Umicore’s drive to reduce our environmental footprint in the light of continuously
striving for more sustainable operations, Umicore is tracking the contribution of renewableenergy sources in purchased energy. While some indicators for renewable energy have beenused in recent years for internal evaluation, 2019 marks the first year in which we havesystematically obtained information from our sites on the percentage of renewable energy
in the energy mix used for purchased electricity, based on the particular purchase agreementin place at each reporting entity.

7,000
6,000
5,000

‘15 | 4,904‘16 | 4,851‘17 | 4,755‘18 | 5,885‘19 | 6,208

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

‘15

‘16

‘17

‘18

‘19

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.
The total water use for the Group increased from 5,885 thousand m³ in 2018 to 6,208 thousand
m³ in 2019, an increase of 5%. The increase in water use is mainly due to new capacity being
added and higher production levels, mostly in Energy & Surface Technologies.

BUSINESS GROUP DATA
UNIT
Water usethousand m3

ENERGY &SURFACECATALYSIS TECHNOLOGIES
573

3,941

RECYCLING

UMICORE
GROUP

1,694

6,208

Umicore Integrated Annual Report 2019

E6 WASTEENVIRONMENTAL STATEMENTS

174

ENERGY &SURFACECATALYSIS TECHNOLOGIESRECYCLING

UMICOREGROUP

BUSINESS GROUP DATAGROUP DATAUNITHAZARDOUS WASTE
tonne
60,000

tonne

8,113

29,54630,65868,317

Hazardous waste

tonne

5,180

18,706

23,70247,589

%

15.56

5.92

7.75

7.88

tonne

2,933

10,840

6,955

20,728

%

40.17

46.80

87.21

59.42

of which recycled

50,000Non-recycled‘15 | 47,514‘16 | 57,150‘17 | 53,067‘18 | 55,638‘19 | 43,837

40,00030,00020,00010,0000Total waste produced

‘15

‘16

‘17

‘18

Recycled‘15 | 4,011‘16 | 2,287‘17 | 2,375‘18 | 3,121‘19 | 3,751‘19

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 2019, a total of 68,317 tonnes of waste were generated compared to 78,778 tonnes in 2018,
a decrease of 13%. This decrease is due to a combination of improved process conditions andlower material throughput at various sites.
The total volume of hazardous waste decreased from 58,759 tonnes in 2018 to 47,589 tonnes
in 2019, a decrease of 19%. The recycling rate of hazardous waste has slightly increased from
5% in 2018 to 8% in 2019.
The total volume of non-hazardous waste slightly increased from 20,018 tonnes in 2018 to
20,728 tonnes in 2019, an increase of 4%.

Non-hazardous wasteof which recycled

E7 HISTORICAL POLLUTION

The history of Umicore goes back more than 200 years. It all started with the coming togetherof a number of mining and smelting companies, which gradually evolved into the materials
technology and recycling company Umicore is today. In the mid-1990s, Umicore started aprocess 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
legislation and in compliance with the environmental standards valid at the time these mines
were operational. The closure of the mines and the restitution of mining concessions to therelevant state authorities has consistently been carried out in collaboration with the competentauthorities and local stakeholders. This process takes into account the specific circumstances ofeach site. Regarding the downstream industrial smelting and refining installations, remediation
projects have been 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, where necessary, remediating soil and groundwater contamination has madesignificant progress. The following section illustrates the main ongoing programs and theprogress made during 2019.

The recycling rate of non-hazardous waste has slightly decreased from 62% in 2018 to 59%
in 2019.

Umicore Integrated Annual Report 2019

ENVIRONMENTAL STATEMENTS

175

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. Four concessions were officially transferred back to the Government,
the retrocession of the others is being processed.

Between 1922 and 1980, radium and uranium were also produced in Olen. Some of the radiumthat was produced for cancer treatment purposes at this site was offered to Nobel laureate
Marie Curie for her first experiments with radioactive material. The radium production plant
was demolished during the 1970s, 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 is carrying out safety and monitoring works to guaranteethat no risks are emanating from those remnants, neither for the workers on site, nor for thesurrounding population.

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 neighboring lands.
In November 1997, Umicore concluded a voluntary agreement with the Flemish Regionof Belgium to address 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, 2 ofwhich – 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 historical pollution in the
additional areas surrounding the industrial sites, defined as a 9 km perimeter, over 10 years.
Both parties contributed €15 million to a new fund for the remediation works. In 2014, OVAM
and Umicore agreed to extend the program an additional 5 years. The covenant came to an
end in 2019. While the remedial efforts at the Umicore sites will continue as long as necessary,
Umicore signed a final agreement whereby it is released from all duties and liabilities, including
potential future third party claims.

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 Southern France,
during the 1990s. All former mining concessions in France have been returned to the Frenchgovernment, the last being confirmed by ministerial decree in 2005.

In Hoboken, what started 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
contaminated topsoil by clean soil and remediated the historical contamination in the adjacentresidential area. In 2017, an agreement was reached with the local authorities to extend theon-site storage facility, so that on-site topsoil remediation works could restart. A new
groundwater remediation system is planned for 2020.
In Olen, the pollution in and around the site is the result of historical production activities
of mainly copper and cobalt. As soon as the Covenant was signed, the remediation works
on the Olen site began. An on-site groundwater remediation program started in 2007 and is
still ongoing. In 2019, contaminated soil and buried waste were further excavated at various
locations where infrastructure works were needed.

Mining activities in Saint-Félix-de-Pallières started in the 19th century to exploit a subsoil richin zinc 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 compliedwith. Despite ending its mining activities, Umicore never left the area and regularly monitors
the state of a landfill containing flotation residue, which is still Umicore’s property. To guarantee
safe and stable conditions of the landfill on a long-term basis, Umicore will start extensive
refurbishment works to be carried out in 2020. In recent years, more attention has been focusedby 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 timeof the termination of the mining activities, in 2019 Umicore received official notices to tackle
3 other areas at Saint-Félix, which are not under the ownership of Umicore. Although Umicore
appealed against the notices, at the end of November 2019 we presented a feasibility study
to address the 3 areas as requested.
In Viviez, the pollution in and around the site is the result of historical production activities
related to zinc production that started in 1855. Umicore invested € 40 million in completinga large-scale decontamination program from 2011 to the end of 2016 and has transferred thepost-remedial obligations to a third party. Although soil contamination results from various
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 have been defined by a dedicatedexpert panel that was put in place by the competent authorities. Umicore is currently preparing
the works that will be executed in 2021.

Umicore Integrated Annual Report 2019

ENVIRONMENTAL STATEMENTS
USA
In 1980, Umicore’s predecessor company acquired an abandoned silver-gold mine at Platoro in
the Rocky Mountains in Colorado. Subsequent exploration drillings were unsuccessful and any
attempts 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 treats drainage water to meet the stringent environmental requirements.
Umicore built a new modern waste water treatment facility in 2018 to further decrease themetal concentrations in the discharge and decrease the volume of solid waste produced.
In 2019 Umicore/Union Gold received a proposal for a new effluent permit, including very
stringent limits for arsenic, to be attained in 2024. Union Gold took immediate action to contest
the proposal arguing that reaching such limits is not technically feasible. The competentauthorities accepted the arguments and recommended a permit variance. At the same time,
Union Gold tested extra polishing steps in the waste water treatment plant in preparation for
the application of a permit variance by 2023.
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 tofully address the issue by 2033. A comprehensive groundwater remediation scheme throughpump and treat has been put in place and is showing its effectiveness to reach the forecasted
end date.
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. The future closure of the industrial activities and thepartial demolition of the buildings at the Guarulhos site will allow the core of the contamination
to be tackled even better.

176

E8 REGULATORY COMPLIANCE AND MANAGEMENT SYSTEMGROUP DATACOMPLIANCE EXCESS RATE
%
5
4
3
2
1
0

0.8

0.9

‘15

‘16

0.1

0.1

0.1

‘17

‘18

‘19

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
the region where the reporting entity is operating. The total number means the number ofmeasurement events multiplied by the number of parameters per measurement event.
In 2019, about 49,000 environmental measurements were carried out at all of Umicore’s
industrial sites compared to about 48,000 the year before.
The number of measurements that did not meet the regulatory or permit requirements is very
low at 0.13% for the Group, compared to 0.14% in 2018.
Of the 55 consolidated industrial sites, 52 have put in place an environmental management
system certified against ISO 14001. The remaining 3 sites are acquisitions and new sites thatjoined Umicore reporting between 2014-19, and all 3 sites are planning the implementation of anenvironmental management system during 2020. All major sites with significant environmental
impacts are certified against the ISO 14001 management system.
In total, 33 environmental complaints were received in 2019, most of which were related tonoise, agent release and odor. 17 of the complaints are ongoing.

Umicore Integrated Annual Report 2019

SOCIAL STATEMENTS

177

Social statements
SOCIAL KEY FIGURESNOTES TO THE SOCIAL KEY FIGURESS1 Scope of social statements
S2 Workforce
S3 People engagement
S4 Employee relations

178

S5
S6
S7
S8

183
183
185
186

Code of conduct
Occupational healthOccupational safety
Process safety

178
178
181
182

Umicore Integrated Annual Report 2019

SOCIAL STATEMENTS
SOCIAL KEY FIGURES

UNIT

NOTES

2015

2016

2017

2018

2019

Workforce (fully consolidated companies)

N°

S2

10,429

9,921

9,769

10,420

11,152

Temporary contracts% ofworkforce

S2

3.91

3.45

3.86

3.13

3.31

Women amongst all employees% ofworkforce

S2

21.72

21.6

21.92

21.30

20.88

Women amongst all managers% ofworkforce

S2

22.18

22.11

22.37

22.98

23.13

Women amongst senior management% ofworkforce

S2

9.49

9.09

6.77

9.70

10.96

Women in “business operations”
management functions%

S2

Non-European representationin senior management functions

%

S2

–

16.67

18.05

Average training hours per employee

hours/
employee

S3

45.06

41.49

Employees having a yearly appraisal% ofworkforce

S3

95.97

Voluntary leavers – ratio% ofworkforce

S3

Employees represented by unionor Collective Labour Agreement (CLA)% ofworkforce

S4

Exposure ratio “all biomarkers
aggregated” (1)%S6

Number of occupational linked diseases

N°

S6

12

12

11

12

18

People with platinum sensitisation

N°

S6

0

1

1

3

1

178

NOTES TO THE SOCIAL KEY FIGURESS1 SCOPE OF SOCIAL STATEMENTS

In total, 90 consolidated sites are included in the HR related notes of the social reporting(S2 to S5). This is an increase of 1 site from 2018, and attributed to the addition of 3 sites, Nysa,
Mumbai (Todini), and the acquisition of Kokkola in December 2019, as well as 2 site closures:
Yverdon-Les-Bains and Seoul (Ordeg) which relocated to active site Songdo. The sites reportfull year data for the social indicators. The indicators presented are based on data from fully
consolidated companies.

S2 WORKFORCE

14.90

GROUP DATA

17.91

18.49

Workforce (fully consolidated companies) N°
Workforce from associated companies

45.33

43.10

48.73

Employees men
Employees women

96.03

98.29

96.15

94.00

Full-time equivalent
Employees < 30 years

N°

–

1,620

1,697

1,980

2,141

3.35

4.10

5.03

7.18

5.99

Employees between 30 and 50 years

N°

–

5,605

5,504

5,939

6,363

Employees > 50 years

N°

–

2,696

2,568

2,501

2,648

71.11

69.41

65.41

64.49

65.60

Temporary contracts% of workforce

3.91

3.45

3.86

3.13

3.31

Women amongst all employees% of workforce

21.72

21.60

21.92

21.30

20.88

–

2.3

14.27

3.2

15.55

2.7

15.08

2.8

1.8

Fatal accidents

N°

S7

0

1

0

0

0

Fatal accidents for sub-contractors

N°

S7

0

0

0

1

0

UNIT

2015

2016

2017

2018

2019

10,429

9,921

9,769

10,420

11,152

N°

3,301

3,196

3,360

3,180

2,976

N°

8,164

7,778

7,628

8,201

8,823

N°

2,265

2,143

2,141

2,219

2,329

N°

–

9,716

9,574

10,224

10,956

Women amongst all managers% of workforce

22.18

22.11

22.37

22.98

23.13

Women amongst senior management% of workforce

9.49

9.09

6.77

9.70

10.96

Women in “business operations”
management functions

%

–

14.27

15.55

15.08

14.90

Non-European representation in senior
management functions

%

–

16.67

18.05

17.91

18.49

Lost Time Accidents (LTA)

N°

S7

47

59

51

61

90

Lost Time Accidents (LTA) for
sub-contractors

N°

S7

9

15

22

21

25

LTA frequency rate

LTA/million
hours worked

S7

2.66

3.34

3.01

3.36

4.6

LTA severity rate

lost days/
thousandhours worked

S7

0.12

0.56

0.09

0.10

0.2

Temporary contract: Umicore employees with a temporary contract, included in the workforceof fully consolidated companies.

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

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.

Workforce: Number of employees on Umicore payroll at the end of the period in fully consolidated
companies. The number includes part-time and temporary employees but excludes employeeswith a dormant contract, employees on long-term illness and sub-contracted employees.

Umicore Integrated Annual Report 2019

SOCIAL STATEMENTS
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‘15 | 3,301‘15 | 10,429‘16 | 3,196‘16 | 9,921‘17 | 3,360‘17 | 9,769‘18 | 3,180‘18 | 10,420‘19 | 2,976‘19 | 11,152

12,000
8,000
4,000
0

‘15

‘16

‘17

‘18

‘19

WOMEN REPRESENTATION
20.88
23.13
10.96

14.90

15.08

6.77

9.70

14.27
9.09

9.49

10

15.55

20
15

21.30
22.98

21.92
22.37

21.60
22.11

25

21.72
22.18

%

5
0

‘15

‘16

‘17

‘18

‘19

Amongst all
employees
Amongst all
managers
Amongst senior
management
In “business
operations”
management(since 2016)

24%

19%
Employee age< 30 years | 19%
Employee age between
30 and 50 years | 57%
Employee age> 50 years | 24%
57%

179

TOTAL WORKFORCE
The total workforce increased by 528 employees to a total of 14,128. For the fully consolidated
companies, the workforce increased by 732 people to 11,152, mainly due to the growth in China,
Korea, Belgium, and acquisition of a new site in Kokkola, Finland.
Amongst the associated companies there was a decrease of 204 employees due to the
reductions in personnel at a few sites in Ireland and South Africa in Element Six and Peru
in IEQSA.
The FTE of 10,956 (consolidated) comes very close to the reported headcount of 11,152,
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 3.31% in 2019.
GENDER SPLIT
The percentage of women was 20.88% as a proportion of the workforce of fully consolidated
companies. It has dropped slightly from 2018. This is attributed to our growth in industrial
operations where typically candidates are predominantly male. Women continue to be
more prevalent in administrative, support and commercial functions than in industrial
operation functions.
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 23.13%
in 2019. The percentage of women in senior management increased to 10.96%, a good gainfrom 9.7% in 2018. We have set the ambition to reach 15% of women in senior management
functions by end of 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 generalmanagement. These are functions that present a pipeline of talent to senior management.
Within the senior management group, the business operation functions represent 54% of thegroup in 2019.
We have monitored the share of women managers in “business operations” functions since 2016.
In 2019, the share of women within this management group employed in business operations
functions decreased slightly to 14.9% compared to 15.08% in 2018. While there was an increasein the number of women managers in these “business operations” functions, with the growthof the Company the number of male counterparts also grew more in these functions.

Umicore Integrated Annual Report 2019

SOCIAL STATEMENTS
NON-EUROPEAN REPRESENTATION IN SENIOR MANAGEMENT FUNCTIONS
Since 2016 we have also monitored the share of non-European representation in senior
management functions, as an indicator for diversity. In 2019, this share increased to 18.49%,
from 2018 at 17.91%.
REGIONAL DATA
UNIT

NORTH
SOUTH
EUROPE AMERICA AMERICAASIAPACIFIC

UMICOREAFRICA
GROUP

Total workforce

N°

7,232

842

983

4,159

912

14,128Workforce (fully
consolidated companies)

N°

6,159

826

617

3,306

244

11,152

Workforce fromassociated companies

N°

1,073

16

366

853

668

2,976

Employees men

N°

4,897

638

469

2,663

156

8,823

Employees women

N°

1,262

188

148

643

88

2,329

Full-time equivalentN°

5,972.71

819.50617

3,302.79

244

10,956

Temporary contracts% ofworkforce

3.82

1.33

1.78

3.39

0

3.31

180

PRODUCTION
SITES

R&D |
TECHNICALCENTRESOTHER SITESEMPLOYEES

Germany

5(1)

2

1

1,696(371)

Ireland

(1)

(516)

Italy
Liechtenstein

1

2

34

1

10

1

Luxembourg
Netherlands

77
1

7

1

188

Portugal

1

6

Russia

1

6

Spain

1

6

(1)

35 (3)

PolandSweden2

1

Switzerland
United Kingdom

1

(1)

3(1)

48(183)

China

5 (3)

1

5 (1)

1,547(841)

India

1

2

86

Japan

2

3

2(1)

186(8)

Philippines

1

South Korea

3

2

2

1,191

Asia-Pacific
Australia

BUSINESS GROUP DATAUNITENERGY &SURFACECATALYSIS TECHNOLOGIESRECYCLING CORPORATE

UMICORE
GROUP

Total workforce

N°

3,190

4,748

2,849

3,341

14,128Workforce (fully
consolidated companies)

N°

3,190

3,997

2,849

1,116

11,152

Workforce fromassociated companies

N°

2,225

2,976

Employees men

N°

649

8,823

751
2,540

3,223

2,411

Employees women

N°

650

774

438

467

2,329

Full-time equivalentN°

3,164.20

3,988.97

2,809.80

993.03

10,956

Temporary contracts% ofworkforce

6.02

2.75

1.65

1.79

3.31

8

84

TaiwanThailand

2

United Arab Emirates

2

27

1

177

(1)

(4)

North America
Canada3

236

MexicoUnited States

8

2

1

1

3(1)

589(16)South America

GENERAL OVERVIEW OF SITES AND EMPLOYEESPRODUCTION
SITES

R&D |
TECHNICALCENTRESOTHER SITESEMPLOYEES

EuropeAustria

1

142

Belgium

31

Denmark

1

1

1

111

Finland

1

1

255

France

3

2

3,284

254

Argentina

1

Brazil

4

Peru

(1)

62
1

555
(366)

AfricaSouth Africa

1 (1)

Total

50(7)

15(1)

1

244(668)34(6)11,152(2,976)

Figures in brackets denotes “of which associates and joint venture companies”. Where a site has bothproduction facilities and offices (eg Hanau, Germany), it is classified as a production site only. Some ofour production sites and R&D/technical centers are located on the same site but are counted separately.

Umicore Integrated Annual Report 2019

SOCIAL STATEMENTS
S3 PEOPLE ENGAGEMENTGROUP DATA

UNIT

2015

2016

2017

2018

2019

Employees having a yearly appraisal% ofworkforce

95.97

96.03

98.39

96.15

94

Average number of training hours
per employee

hours/
employee

45.06

41.49

45.33

43.10

48.73

Average number of training hours
per employee – Menhours/
employee

45.32

Average number of training hours
per employee – Women

hours/
employee

47.39

38.28

41.01

37.29

50.48

Average number of training hours
per employee – Managers

hours/
employee

34.24

41.03

38.54

37.59

43.01

Average number of training hours per
employee – Other employee categories

hours/
employee

46.09

41.52

46.44

42.94

49.51

Voluntary leavers ratio% ofworkforce

3.35

Voluntary leavers men

N°

280

309

404

619

521

Voluntary leavers women

N°

69

97

70

110

126

VOLUNTARY LEAVERS RATIO

Hours/employee

%

42.38

4.10

46.53

5.03

44.68

7.18

48.26

5.99

10

60
50
40

8

Men | 48.26
Women | 50.48

7.18
5.99

6

30

4

20
10

3.35

4.10

5.03

2

0

0

‘15

‘16

‘17

‘18

‘19

NORTH
SOUTH
AMERICA AMERICAASIAPACIFIC

AFRICA

UMICOREGROUPVOLUNTARY LEAVERS RATIO, BY REGION% of workforce
20

Training hours: Average number of training hours per employee, including all types of training(formal, training on the job, E-learning, etc.) in which the Company provides support, and which
are relevant to the business unit or the Company. The total number of training hours is divided
by the total workforce of fully consolidated companies.
Voluntary leavers: Number of employees leaving the Company of their own will (excluding
retirement and the expiry of a fixed-term contract). This figure is related to the workforce fromfully consolidated companies.

AVERAGE NUMBER OF TRAINING
HOURS PER EMPLOYEEAVERAGE NUMBER OF TRAINING HOURSPER EMPLOYEE CATEGORY

Hours/employee

Hours/employee

50
45
40
35
30
25
20
15
10
5
0

50

‘15 | 45.06‘16 | 41.49‘17 | 45.33‘18 | 43.10‘19 | 48.73

AVERAGE NUMBER OF TRAINING HOURSPER EMPLOYEE – GENDER SPLIT

181

40
30

Managers | 43.01
Other employee categories | 49.51

15

Africa | 4.86
Asia-Pacific | 11.87
South America | 2.00
North America | 6.81
Europe | 3.18

10
50

REGIONAL DATAUNITEUROPE

Average number of training

hours/

42.05

54.6

72.32

56.80

21.83

48.73

hours per employee

employee

Employees having
a yearly appraisal% ofworkforce

92.66

98.57

94.46

94.85

98.38

94

Voluntary leavers ratio% ofworkforce

3.18

6.81

2

11.87

4.86

5.99

20
10

‘15

‘16

‘17

‘18

‘19

0

Umicore Integrated Annual Report 2019

SOCIAL STATEMENTS
BUSINESS GROUP DATA
UNIT

182

S4 EMPLOYEE RELATIONSCATALYSISENERGY &SURFACETECHNOLOGIESRECYCLINGCORPORATEUMICORE
GROUP

Average number of training
hours per employee

hours/
employee

42.24

63.31

40.24

41.51

48.73

Employees having
a yearly appraisal% ofworkforce

95.52

94.2

92.56

92.76

94

Voluntary leavers ratio% ofworkforce

5.84

9.15

3.15

3.44

5.99

TRAINING HOURS
In 2019, the average training hours per employee increased to 48.73 hours from the previous
year. The training hours for “on the job learning” are not consistently captured or registered inall sites. The Kokkola, Finland site is not in scope for 2019.
Data shows that managers training hours (43.01 hours) are lower than for other employees(49.51 hours).
YEARLY APPRAISAL
In 2019, almost all employees (94%) from fully consolidated companies have an appraisal
interview to discuss their development at least once a year. The Kokkola, Finland site is not in
scope for 2019.
VOLUNTARY LEAVERS
In 2019, after 3 years of increased voluntary leaver rates, the rate has decreased to 5.99% from
7.18% in 2018. Significant regional differences can be observed with Asia Pacific reporting thehighest voluntary leaver rate (11.87%) and South America (2%) the lowest. The high voluntary
leaver rate in Asia Pacific is not unique to Umicore and can be explained by a highly competitiveand fluid labor market. The Kokkola, Finland site is not in scope for 2019.
VOLUNTARY LEAVERS – GENDER
Of the 5.99% of voluntary leavers worldwide, 19.47% were women, up from 15.09% in 2018.
While the overall voluntary leaver rate decreased overall, 2 industrial sites ( Jiangmen andPort Elizabeth) contributed the most to the increased female leaver rate and mainly operators
in both cases. The shiftwork and physical demands of operator work mean that the share offemale employees in these functions is already low. Umicore strives to continuously improve
the work environment to reduce heavy work and, in the case of Jiangmen, is encouraging
female operators to retrain for other operation occupations, such as shift leaders, as analternative solution.

GROUP DATA

Employees represented by union orCollective Labour Agreement (CLA)

UNIT

2015

2016

2017

2018

2019

% of
workforce

71.11

69.41

65.41

64.49

65.60

ASIAPACIFIC

AFRICA

UMICORE
GROUP

39.66

36.07

65.60

RECYCLINGCORPORATEUMICORE
GROUP

87.68

77.69

65.6

EMPLOYEES REPRESENTED BY UNION OR
COLLECTIVE LABOUR AGREEMENT (CLA)% of workforce
100
80

71.11

69.41

65.41

64.49

65.60

‘15

‘16

‘17

‘18

‘19

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
85.68

8.96

91.73

ENERGY &SURFACECATALYSIS TECHNOLOGIES
46.99

61.35

UNION AND COLLECTIVE LABOR AGREEMENT
In total, 65.6% 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.

Umicore Integrated Annual Report 2019

SOCIAL STATEMENTSSUSTAINABLE DEVELOPMENT AGREEMENT
In 2007, Umicore signed a Sustainable Development Agreement with the International union
IndustriALL, which was renewed for 4 years in 2015 and in 2019. In this agreement, Umicorecommits to a number of principles including: the banning of child labor and forced labor, recognizing
the right to its employees to organize themselves and to participate in collective bargaining.
All sites are screened internally each year. This screening showed that none of Umicore’s sites
demonstrated a particular risk of infringement in any of the principles of the agreement.

S5 CODE OF CONDUCT

Umicore has a systematic Group-wide internal reporting on Code of Conduct issues since 2011.
In 2019 a total of 22 cases were reported, involving a total of 24 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 2018, 1 site was added to the scope:
Kobe ( Japan, Automotive Catalysts). This brings the total number of reporting sites to 55.
The information in this note only relates to Umicore employees. Data on subcontractors’
occupational health are not included. Additional information on Umicore’s approach tooccupational health can be found in the corresponding section of Management Approach, p.78.
GROUP DATA

UNIT

2015

2016

2017

2018

Exposure ratio “all biomarkers aggregated” (1)

%

2.3

3.2

2.7

2.8

2019
1.8

Exposure ratio lead (blood) (2)

%

0.8

0.5

0.5

2.0

0.9

Exposure ratio arsenic (urine) (2)

%

1.3

2.0

1.0

1.2

0.8

Exposure ratio cobalt (urine) (2)

%

8.7

9.0

6.0

5.0

3.4

Exposure ratio cadmium (urine) (2)

%

1.1

1.4

0.7

0.5

0.2

Exposure ratio nickel (urine) (2)

%

1.3

2.0

1.4

2.6

1.8

Exposure ratio indium (blood) (2)

%

–

11.3

14.2

2.8

1.9

People with platinum salts sensitisation

N°

0

1

1

3

1

People with noise induced hearing loss

N°

2

4

0

0

5

People with contact dermatitis

N°

3

0

2

3

4

People with occupational asthma other than Pt-salts

N°

1

0

0

0

0

People with musculoskeletal ailments

N°

7

7

8

6

8

(1)	Ratio between the number of monitoring results exceeding the Umicore target value, defined forrelevant hazardous 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 witha biological monitoring result exceeding the Umicore target value for that specific metal and the total
number of employees exposed to that metal. The Umicore target values are based upon recent peer
reviewed scientific data and regularly re-evaluated in the context of new evidence.

183

By 2020, it is Umicore’s objective to have 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 in urine– 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 year.
In 2019, a total of 7,481 biological sampling procedures took place from employees with an
occupational exposure to at least one of the metals mentioned above (platinum salts excluded).
135 readings showed a result in excess of the internal target value. This brings the total excess
rate to 1.8%, comparable to the 2.8% excess rate of 2018. All occupationally exposed employees
are regularly monitored by an occupational health physician.
LEAD
Occupational lead exposure represents a potential health risk, mainly in the business group
Recycling. In total, 13 of the 1,441 occupationally exposed employees exceeded the target valueof 30μg/100ml, decreasing as such the excess rate for lead exposure to 0.9% compared to 2%
in 2018.
The decrease in excess readings is the result of improved workplace hygiene measures atthe lead refinery at the Hoboken site (Belgium, Recycling). The site improved its ventilation
systems, while instructions and training resulted in better compliance with personal protective
equipment requirements.
ARSENIC
Occupational exposure to arsenic is possible in the business groups Energy & Surface
Technologies and Recycling. In total, 9 employees or 0.8% of the 1,110 occupationally exposed
workers had an excess reading during 2019 compared to 1.2% in 2018.
All workers occupationally exposed to arsenic are submitted to a medical surveillance program
to closely monitor their health condition.

Umicore Integrated Annual Report 2019

SOCIAL STATEMENTS
COBALT
In total, 1,948 employees are occupationally exposed to cobalt, mainly in the business group
Energy & Surface Technologies. The number of employees exceeding the target value was 66,
resulting in an excess rate of 3.4%, down from 5% in 2018.
In the business unit Rechargeable Battery Materials we noticed a further decrease in excess
readings from 2.6% in 2018 to 1.2% in 2019.
The excess readings in the business unit Cobalt & Specialty Materials decreased from 12.7% in2018 to 11.1% in 2019.
The sites in Cheonan (Korea, Rechargeable Battery Materials) and Jiangmen (China,
Rechargeable Battery Materials) continued to implement 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 business unit Cobalt & Specialty Materials has implemented a dust reduction programwith focus on equipment improvement, personal behavior and intensified workplace sampling.
Regular workshops among the sites are organized to evaluate progress and to share ideas andexperiences. While a decrease in the number of excess readings has been observed, additional
actions are being pursued in the sites in Olen (Belgium, Energy & Surface Technologies),
Fort Saskatchewan (Canada, Energy & Surface Technologies) and Grenoble (France, Energy &Surface Technologies),

184

NICKELThe business groups Energy & Surface Technologies and Recycling have occupational exposure
to nickel. In 2019, a total of 2,309 employees were exposed to nickel. In 2019, 42 of the exposed
workers exceeded the target level resulting in an excess level of 1.8% compared to 2.6%
in 2018.
In the business unit Rechargeable Battery Materials, we noticed a decrease in excess readings
from 2.2% in 2018 to 0.9% in 2019, mainly related to a decreased exposure at the site
in Jiangmen (China, Energy & Surface Technologies). The measures to reduce cobalt exposure(see above) obviously also apply to nickel.
The excess readings in the business unit Cobalt & Specialty Materials increased from 11.1% in2018 to 12.2 % in 2019, mainly due to a higher exposure at the site in Subic (Philippines, Energy& Surface Technologies). The site is further implementing its dust management programs
including ventilation systems’ improvements and personal protective equipment programs.
Also, the site in Wickliffe (USA, Energy & Surface Technologies) has a high number of excess
readings. The operations at this sites are being discontinued.
For workers exposed to nickel, both business units Cobalt & Specialty Materials and Rechargeable
Battery Materials have implemented Umicore’s occupational health guidance for nickel,
including biological monitoring and medical surveillance.
INDIUM
The business group Energy & Surface Technologies has exposure to indium. Indium in plasma is
an excellent biomarker for lifetime exposure.

For workers exposed to cobalt, both business units Cobalt & Specialty Materials andRechargeable Battery Materials have implemented Umicore’s occupational health guidancefor cobalt, including biological monitoring and medical surveillance. For the site in Jiangmen(China, Energy & Surface Technologies), a dedicated occupational health center has been set up
in line with Umicore’s internal guidelines and compliant with Chinese regulatory requirements.

In 2019, 210 employees were exposed to indium. 4 employees had an excess reading forindium in plasma, at the site in Balzers (Liechtenstein, Energy & Surface Technologies). All theseworkers had a current or former exposure at the bonding workplace. The working conditions
at this workplace have been improved and an extensive medical surveillance program, in linewith Umicore occupational health guidelines, has been implemented.

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 2019, a total of 463 employees had an occupational exposure to cadmium.

PLATINUM SALTS
The business groups Catalysis and Recycling have workplaces with exposure to platinum salts.

Only 1 employee recorded a cadmium in urine reading in excess of the target value, comparedto 2 in 2018. This resulted in an excess rate of 0.2% compared to 0.5 % in 2018.

In 2019, we had 1 newly diagnosed employee with a platinum salt sensitization at the site in
Tulsa (USA, Catalysis). The worker has been removed from the workplace. All workers exposed
to platinum salts are being monitored through an occupational health program, following a
Umicore health guideline and are being regularly checked for platinum salt sensitization.

Umicore Integrated Annual Report 2019

SOCIAL STATEMENTS
OTHER OCCUPATIONAL RELATED DISEASESIn 2019, 4 employees were diagnosed with an occupationally induced contact dermatitis and8 developed a musculoskeletal disorder due to their occupation. 5 employees developed anoise-induced hearing loss. All people concerned are being followed-up by an occupational
health physician.
Over the past years, Umicore has been confronted with several burn-out cases that led tolong-term sickness with impact on both the individual and the organization. The Umicore
sites in Belgium have implemented a program consisting of primary prevention of burn-out
combined with early recognition of symptoms and case management support. Concrete actions
included awareness campaigns via leaflets, e-learning, workshops, training for supervisors andindividual coaching in case of burn-out symptoms. Similar programs have been implemented
at Umicore sites in other countries such as Germany.

S7 OCCUPATIONAL SAFETY

In 2019, 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 retrieved in the corresponding
section of Management Approach, p. 78.
The Umicore information in this note only relates to Umicore employees. Data on subcontractors’
occupational safety are being reported separately. Umicore strives towards an accidentfree workplace.
GROUP DATA

UNIT

2015

2016

2017

2018

0

1

0

0

0

0

0

0

1

0

Lost Time Accidents (LTA)

N°

47

59

51

61

90

Lost Time Accidents (LTA) sub-contractors

N°

9

15

22

21

25

2.66

3.34

3.01

3.36

4.6

2,134

9,848

1,590

1,830

3,893

0.12

0.56

0.09

0,10

0.2

Calendar days lostN°

Recordable Injuries (RI)

N°

Recordable Injuries frequency rate

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 RATE

148

127

138

158

158

8.38

6.78

8.15

8.7

8.07

Ratio N° of sites with no LTA/total N° of sites reporting

%

84

84

84

84

83

Sites OHSAS 18001 certified

%

36.6

41.7

51

51.9

52.6

SEVERITY RATE

5.0

1.00

4.60

4.0

3.34

3.0 2.66

3.01

0.75

3.36

0.56
0.50

2.0

0

N°
N°

LTA severity rate

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

1.0

Fatal accidents

LTA frequency rate

Umicore employee: a person belonging to Umicore’s total workforce. A Umicore employee canbe a full-time, part-time or temporary employee

2019

Fatal accidents sub-contractors

185

0.25

‘15

‘16

‘17

‘18

REGIONAL DATA
UNIT
Lost Time Accidents (LTA)

N°

0

‘19

‘15

0.9

0.10

‘17

‘18

‘19

ASIAPACIFIC

AFRICA

UMICORE
GROUP

5

0

90

RECYCLING CORPORATE

UMICORE
GROUP

‘16

NORTH
SOUTH
EUROPE AMERICA AMERICA
82

BUSINESS GROUP DATA
UNIT

0.20

0.12

CATALYSIS

30

ENERGY &SURFACETECHNOLOGIES

Fatal accidents

N°

0

0

0

0

0

Lost Time Accidents (LTA)

N°

11

14

62

3

90

Calendar days lost

N°

229

561

3,009

94

3,893

Umicore Integrated Annual Report 2019

SOCIAL STATEMENTS
In 2019, 90 lost time accidents have been recorded, compared to 61 in 2018. This resulted in afrequency rate of 4.6, up from 3.36 in 2018. In total 3,893 calendar days were lost due to losttime accidents, resulting in a severity rate of 0.2, a doubling compared to 2018. There were 158
reported recordable injuries, the same number as in 2018. The RI frequency rate for 2019 was
8.07 compared to 8.7 in 2018. 25 lost time accidents were registered for contractors compared
to 21 in 2018.
During 2019, 83% of the reporting sites that were operational throughout the year operated
without a lost time accident, a slight decrease compared to 2018 (84%). 52% of the sites werecertified using the occupational health and safety management system OHSAS 18001, of which
6 had already transitioned to the new ISO 45001 health and safety management system.
82 lost time accidents, or 91% of lost time accidents, occurred in Europe. Of these, 67 lost time
accidents occurred at Belgian sites and 8 at German sites. The Asia-Pacific sites accounted for 5
accidents, while the American sites counted 3.
In 2019, the business group Catalysis recorded 11 lost time accidents compared to 10 in 2018.
At the end of 2019, the business unit Automotive Catalysts has conducted a safety culture
survey in selected European sites. The results will serve as basis for improvement actionsin the course of 2020. All Automotive Catalysts production plants are required to be certified
against the ISO 45001 or OHSAS 18001 management system. At year-end, the sites in Port
Elizabeth (South-Africa), Tsukuba, Himeji ( Japan) and Rayong (Thailand), had operated over 5
years without lost time accident or recordable injury to Umicore staff and no lost time accident
to contractors on site. The sites in Americana (Brazil), Auburn Hills (USA), Manaus (Brazil) andTokoname ( Japan) recorded more than 3 years without a lost time accident or recordable injury
to Umicore staff and no lost time accident to contractors on site.
The business group Energy & Surface Technologies recorded 14 lost time accidents comparedto 8 in 2018. The business units continue their actions to reinforce their safety programs withfocus on safety behavior, technical, organizational and administrative improvement. The site in
Dundee (UK) has been recognized for its excellent and sustained safety performance, recording
over 10 years without any lost time accident or recordable injury to Umicore staff and nolost time accident to contractors. Beijing (China), Balzers (Liechtenstein) and Tsukuba ( Japan)
operated more than 5 years without any lost time accident or recordable injury to Umicore
staff and no lost time accidents to contractors. The site in Manaus operated more than 3 years
without any lost time accident or recordable injury to Umicore staff and no lost time accidents
to contractors.

186

The business group Recycling had 62 lost time accidents. The site in Hoboken (Belgium,
Recycling) recorded a disappointing safety performance with 57 lost time accidents andcontributes heavily to the poor Group safety performance. The site management continues its“Safety@ Precious Metals Refining“ campaign. The campaign’s main pillars consist of passion
for safety, caring for each other and teamwork. In addition, the site has implemented “8 cardinalsafety rules” to be complied with at all times by all employees. A safety steering committee
under the leadership of senior site management has been put in place to follow up on thesafety actions and performance. Concrete actions for 2020 include enhanced safety observation
tours and intensified ergonomic programs.
3 lost time accidents occurred in general services and corporate offices, including Corporate
Research & Development.

S8 PROCESS SAFETY

In 2019, the Umicore Group process safety activities focused on executing process risk
assessment studies to ensure that all our processes are being operated in the acceptable riskzone. At year end, over 60% of the production processes had received specific process hazard
and risk assessments compliant with Umicore standards, compared to 50% in 2018. A detailed
timeline has been reviewed for completion of the remaining studies in the coming years, giving
priority to the processes with high risk profiles.
To ensure sufficient quality of the process risk assessment studies, experts conducted detailed
technical process risk assessment reviews of processes with major risk scenarios. Actions havebeen identified to improve the quality of the process risk assessments. These reviews arebeing conducted in addition to the Group Environment, Health and Safety audit program, which
includes an evaluation of the sites’ compliance with the process safety management system.
Umicore continues its internal HAZOP leader training program to increase and secure process
safety knowledge.

Umicore Integrated Annual Report 2019

VALUE CHAIN STATEMENTS

187

Value chain statements
V1

Scope of value chain statements

188

V2
V3
V4
V5

Critical raw materials
Indirect procurement
Products and services
Donations

188
190
191
192

Umicore Integrated Annual Report 2019

VALUE CHAIN STATEMENTS
V1 SCOPE OF THE VALUE CHAIN STATEMENTS

The value chain and society theme focuses on potential impacts on society that we experience
as a company through our activities, products and services. For reporting matters, all entitiesof the Group are considered.

V2 CRITICAL RAW MATERIALS

Securing adequate volumes of raw materials is an essential factor in the ongoing viability of our
product and service offering and in achieving our Horizon 2020 growth objectives. The risks andopportunities vary considerably from one business unit to another and for this reason, we havetaken a decentralized approach to risk and opportunity management. We have determined toseek a competitive edge in terms of our access to critical raw materials and in our ability tosecure these raw materials in an ethical and sustainable manner.
In 2016, each business unit was asked to identify the raw materials that are critical inachieving the Horizon 2020 objectives using a 3-step process. The process consisted of thefollowing elements:
1. Definition of the criteria applicable to the raw materials specific to the business unit’s activity
2. 	Identification of the raw materials with a high probability of restrictions in supply, considering
the selected criteria
3. Calculation of the impact of the supply risk identified on the Horizon 2020 objectives
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 into the following themes:– EHS or regulatory aspects of the raw materials– 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 materials– Unavailability due to end-of-life of the mineral source– Physical constraints at origin
As supply risks and opportunities can change, the identification of the critical raw materials isa dynamic process. In 2019 all business units updated their mapping. Business units purchasing
1 of the 4 conflict minerals to manufacture their products, use the Conflict Mineral Reporting
Template from the Responsible Minerals Initiative for their due diligence on the purchased
raw materials.

188

It is particularly important to define actions to mitigate the risk of critical materials supply
disruption. Mitigation actions can vary depending on the materials and the position of thebusiness unit in the market. Action plans and dedicated mitigation measures must be in linewith the identified risks and opportunities and are therefore updated regularly. The reviewing
frequency and process vary from business unit to business unit depending on the specificsupply conditions. Mitigation measures beyond responsible sourcing include ensuring criticalmaterials can be supplied from several reliable suppliers, looking for secondary raw materials
sources and ensuring the responsible and conflict-free status of the raw materials.
On 1 January 2021, the Conflict Minerals Regulation will come into full force across the EU.
This law is similar in scope to the US Dodd Frank Act of 2012. The new law aims to help stem
the trade in 4 minerals – tin, tantalum, tungsten and gold (also known as 3TG)– that sometimes
finance armed conflict, are mined in unacceptable conditions and/or 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.
UMICORE.COM/RESPONSIBLESUPPLYCHAIN-POLICY
Today, responsible mineral sourcing goes beyond conflict minerals. Umicore pursues responsible
sourcing certification wherever appropriate to highlight our best practices and to provide thenecessary documentation to the increasing number of customers seeking assurance on our
products. The Umicore internal “Metals and Minerals” working group streamlines and optimizes
the efforts required for this increasing customer demand through best practices sharing.
The London Bullion Market Association (LBMA) manages the accreditation process for all Good
Delivery listed refiners for gold and silver. The Responsible Jewelry Council’s (RJC) Chain of
Custody (CoC) Standard is applicable to gold and platinum group metals (platinum, palladium
and rhodium).
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 acar can be 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 a process
to create transparency in the supply chain to ensure conflict-free minerals can be sourced.
Other industries, such as the electronics industry, implement the same or similar processes.

Umicore Integrated Annual Report 2019

VALUE CHAIN STATEMENTS
In May 2019, Umicore Olen was approved as the first Responsible Minerals Initiative-conformant
cobalt refinery worldwide. Umicore’s newly acquired Kokkola’s cobalt operations were thesecond recognized refinery. The refineries must undergo a yearly certification process.

LBMA
GOLD

LBMA
SILVERRJC CHAIN OF
CUSTODY
RECYCLED GOLD,PLATINUM,
PALLADIUM
AND/OR
RHODIUM

RMICONFORMANTCOBALT
REFINERSRMICONFORMANTGOLD
SMELTERS AND
REFINERS

Bangkok
Guarulhos
HobokenKokkolaOlen
Pforzheim
ViennaBoth the RJC Chain of Custody and LBMA Good Delivery accreditations qualify the accreditedsites for listing in the Responsible Minerals Initiative conformant smelters and refiners.
For more information, please visit:
LBMA.ORG.UK/GOOD-DELIVERY-LIST-REFINERS-GOLD-CURRENT
LBMA.ORG.UK/GOOD-DELIVERY-LIST-REFINERS-SILVER-CURRENTRESPONSIBLEJEWELLERY.COM/MEMBERS/CHAIN-OF-CUSTODY-CERTIFIED-ENTITIESRESPONSIBLEMINERALSINITIATIVE.ORG/GOLD-REFINERS-LISTRESPONSIBLEMINERALSINITIATIVE.ORG/RESPONSIBLE-MINERALS-ASSURANCEPROCESS/SMELTER-REFINER-LISTS/COBALT-REFINERS-LIST/CONFORMANTCOBALT-REFINERS
COBALT
Umicore uses cobalt in materials that are used in rechargeable batteries, tools, catalysts
and several other applications. The Sustainable Procurement Framework for Cobalt covers

189

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, for the fifth year in a row, third party assurance from PwC that its cobalt
purchases in 2019 are carried out in line with the conditions set out in the framework. The shareof cobalt from recycled origin was also reviewed by PwC as part of the assurance process andwas 9.2% for 2019. The figure is reported in the compliance report.
A dedicated cobalt sourcing committee, referred to as the Approval Committee, is responsible
for the principles and guidelines in the framework and has overall control and decision-making
power. The Approval Committee includes a member of the Umicore Executive Committee andthe Senior Vice-Presidents Sustainability and Supply.
In 2019, Umicore performed a third-party audit at one of its cobalt suppliers based on aninternally developed EHS and Social protocol. The report findings will lead to the definition of
mitigation actions by the supplier and follow-up by Umicore.
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. As part of
the CIRAF, risks regarding own operations and supply chain must be analyzed. 2019 was
the first year for implementing the Framework by the member companies. Following therecommendations of the framework, Umicore performed a risk analysis of its 8 cobalt-related
operations considering the risks identified by the CIRAF and the results of our own materiality
analysis and of our internal Business Risk Assessment. The material risks for our operations are(1) Air-water-soil pollution & energy efficiency; (2) OHS and working conditions; (3) Conflict &financial crime; (4) Human rights abuses. Umicore has policies and measures in place covering
these risk areas (see Management Approach). Key performance indicators are reported yearly(see Environmental and Social statements). With respect to “supply chain”, Umicore’s approachis aligned with the level 2 requirements of the CIRAF.
The compliance report for 2019, the CIRAF report, and the due diligence report for the 2019activities of the Kokkola, Finland refinery acquired in December 2019 are all available online.
UMICORE.COM/SUSTAINABLE-COBALT
Umicore contributed to the Global Battery Alliance report on “A Vision for a Sustainable Battery
Value Chain in 2030. Unlocking the Full Potential to Power Sustainable Development andClimate Change Mitigation” that was published in September 2019. The report identified 3 ways
for batteries to empower social, environmental and economic change in the world by 2030.
UMICORE.COM/GLOBALBATTERYALLIANCE-REPORT-2019

Umicore Integrated Annual Report 2019

VALUE CHAIN STATEMENTS
In May 2019 Umicore and Glencore announced a long-term revolving agreement for the
supply of cobalt hydroxide (cobalt) to Umicore’s battery materials value chain. The agreement
guarantees Umicore’s security of supply for a substantial part of its longer-term cobalt needs
for its expanding global battery materials value chain. The agreement also provides Glencore
long-term market access for its cobalt raw materials in line with Umicore’s growing cathodematerials sales.
Besides its continued engagement in sustainable cobalt sourcing, in 2018 Umicore implemented
due diligence in the supply of the other raw materials for batteries, i.e. nickel, manganese andlithium. The approach is directly inspired by the experience with cobalt and follows the basic
steps of the Sustainable Procurement Framework for Cobalt. Specific mitigation actions havebeen defined for these metals depending on the identified risk.
GOLD AND SILVER
In 2019, Umicore continued to ensure that operations with a production of gold are certified
as conflict-free. Umicore operations in Hoboken, and Guarulhos and Pforzheim are certified asconflict-free smelters for gold by the London Bullion Market Association (LBMA). The LBMA also
provides certification for responsible silver and the sites of Hoboken, Pforzheim and Bangkok
are accredited refiners by the LBMA. 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 for gold.
PLATINUM, PALLADIUM & RHODIUM
In 2019, UMPR Hoboken operations successfully passed the voluntary LBMA audit for complianceagainst the Responsible Platinum and Palladium Guidance. This audit does not lead to any
specific certification. Such audits are voluntary for 2018 but will be mandatory in the future forthe London Platinum and Palladium Market (LPPM) accredited platinum and palladium refiners.
The Jewelry & Industrial Metals operations in Pforzheim, Vienna and Bangkok are certified aspart of the Responsible Jewelry Council’s (RJC) Chain of Custody program for recycled platinum,
palladium and/or rhodium.

V3 INDIRECT PROCUREMENT

While the metal-bearing raw materials are purchased directly by the business units (direct
procurement, see note V2 for specific sustainable supply related actions), Umicore’s worldwide
purchasing and transportation teams take care of the energy and other goods and services
which are referred to as indirect procurement. Indirect procurement represents roughly 10% of
the total spend, half of which is handled by the Procurement & Transportation teams in Belgium
and Germany.

190

SCOPE
The indicators presented are based on 2019 data from our Procurement & Transportation teams
in Belgium and Germany and, since November 2019, also including Poland. EcoVadis, a wellknown collaborative platform providing Supplier Sustainability Ratings, is now also used by the
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 first implemented by the teams
in Belgium and Germany. The team in Poland started using it in November 2019. In 2019, 562
quick scans have been initiated. The goal is a roll-out to more teams worldwide in the future.
Sustainability performance of specific suppliers is assessed by EcoVadis.
79 assessment scores were made available to the teams in 2019, including the requests fromthe Procurement & Transportation teams in Brazil. A total of 386 scores have been received since
the start of our collaboration with EcoVadis. This represents the number of unique suppliers thathave been assessed and does not consider the regular re-assessment of a supplier.
AVERAGE SCORE OF SUPPLIERS BY TOPIC IN 2019
80% of the assessed suppliers in 2019 reached a score of 45 or higher, suppliers “engaged in
CSR” (Corporate Social Responsibility).
None of the scores received in 2019 indicates a “high risk”.
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 evaluatedby EcoVadis.

SUPPLIERS’ SCORE IN ECOVADIS ASSESSMENT

20%

24%

25-44: some basic steps madeon sustainability issues | 20%
45-64: appropriate sustainability
management system | 56%
65-84: advanced practices
on sustainability | 24%
56%

Umicore Integrated Annual Report 2019

VALUE CHAIN STATEMENTS
AVERAGE SCORE
Environment

57.5

Labour & human rights

55.8

Ethics

51.1

Sustainable procurement

48

Overall

54.5

The overall score is a weighted average of the 4 theme scores.
More information on Umicore’s relationship with suppliers can be found in the Stakeholder
Engagement, p. 15 and in the Value Chain and Society performance review, p.36.

V4 PRODUCTS AND SERVICESRESOURCE EFFICIENCY
Primary raw materials: are materials that have a direct relation to their first lifetime hereby
excluding streams of by-products
Secondary raw materials: are by-products of primary material streams
End-of-life materials: are materials that have ended at least a first life cycle and will be
re-processed through recycling leading to a second, third… life of the substance
Incoming materials are regarded as primary by default if their origin is unknown. The collected
data are expressed in terms of total tonnage of incoming material.

RESOURCE EFFICIENCY
13%40%

Primary materials | 40%
Secondary materials | 47%
End-of-life materials | 13%

47%

191

We developed an indicator to underline our focus on clean mobility and recycling.

REVENUES FROM CLEAN MOBILITY
AND RECYCLING
%
100
90
80
70
60
50
40
30
20
10
0

65

67

‘16

‘17

72

75

‘18

‘19

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 hazardof products or a higher material efficiency in the delivery or the use of our products.
MANAGEMENT OF PRODUCT REGULATIONWorldwide, Umicore ensures regulatory compliance for the products it puts on the market.
Changes to existing product related legislation as well as the introduction of new legislation,
might impact our business. In terms of the REACH legislation in the EU, Umicore closely
monitors all changes in interpretation as well as guidance documents that might affect its
REACH implementation strategy. Umicore is actively involved in industry association working
groups to ensure a consistent approach is followed and the metal specifics are understood by
the regulators and the companies.
Umicore actively supports the engagement of the metals sector with ECHA in the Metals/
inorganics sectorial approach (MISA).
Umicore engaged with the cobalt industry in managing two specific processes under REACH:
the cobalt metal harmonized classification and labelling and the Annex XV proposal on the
restriction of 5 cobalt salts. These processes have no final outcome yet and continue into 2020.

In 2019, 60% of the materials were from end-of-life or secondary origin while 40% were ofprimary origin, respectively, compared to 58% and 42% in 2018.

In 2019, we submitted 28 additional substances for registration under REACH due to new
business developments.

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, please refer to Value chain and society, p. 36.

As part of regular maintenance, we updated 47 REACH dossiers among others to increase thetonnage band, to reply to ECHA requests and to include new information.

Umicore Integrated Annual Report 2019

VALUE CHAIN STATEMENTS

192

The Korean REACH alike regulation was significantly amended in 2018 and has introduced an
obligatory pre-notification phase which ran 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 itself accordingly.

Each business unit is expected to allocate an annual budget that provides sufficient donations
and sponsorship support to each site’s community engagement program. By way of guidance,
this budget should equal to an amount corresponding to one third of 1% of the business unit’s
average annual consolidated recurring EBIT (i.e. excluding associates) for the 3 previous years.
The Kokkola, Finland site is not in scope for 2019.

Umicore has submitted 5 registrations in Korea in 2019 for priority chemical substances and has
submitted 2 new substance registrations.

REGIONAL DATA

V5 DONATIONS

Total donations

SCOPE
The indicators presented are based on data from fully consolidated companies. The historicalnumbers (2016 and before) were not restated.
2015

2016

2017

2018

2019

Thousands of Euros

UNIT

1,034.91

1,078.03

1,151.46

1,287.22

1432.68

Donations in kindThousands of Euros

135.11167.47

60.47

66.10

78.95

Staff freed timeThousands of Euros

49.36

44.17

87.40

78.34

102.02

Total donations

Thousands of Euros

1,219.38

1,289.68

1,299.34

1,431.66

1,613.65

1,600
Cash
donations‘15 | 1,034.91‘16 | 1,078.03‘17 | 1,151.46‘18 | 1,287.22‘19 | 1,432.68

1,200
800
400

‘15

‘16

NORTH
AMERICASOUTH
AMERICAASIAPACIFIC

AFRICA

UMICOREGROUP

Thousandsof Euros

1,311.03

125.86

77.72

78.24

20.81

1,613.65

RECYCLINGCORPORATEUMICORE
GROUP

229.72803.45

1,613.65

UNIT
Total donations

Thousandsof Euros

ENERGY &SURFACECATALYSIS TECHNOLOGIES
211.19369.29In 2019, Umicore contributed € 1.6 million in donations. For the business units, the total amountof € 810,200 is in line with our guidance. Additional Group level donations of € 803,454
were made.
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.

DONATIONS
Thousands of Euros0

EUROPE

BUSINESS GROUP DATAGROUP DATACash donations

UNIT

‘17

‘18

Donationsin kind‘15 | 135.11‘16 | 167.47‘17 | 60.47‘18 | 66.10‘19 | 78.95

Staff freed
time‘15 | 49.36‘16 | 44.17‘17 | 87.40‘18 | 78.34‘19 | 102.02

At Group level, the donations have a global reach. The main areas for Group level donationsin 2019 included support for 2 major UNICEF educational projects in Madagascar and in India,
3 projects coordinated by Entrepreneurs for Entrepreneurs (in Mali, Ecuador and Bolivia) andsupport for student sustainable mobility projects.
UMICORE.COM/EN/MEDIA/PRESS/GIVING-BACK-TO-SOCIETY-IN-MADAGASCAR‘19

ONDERNEMERSVOORONDERNEMERS.BE
Donations are subdivided into cash donations, donations in kind and staff time. Group level
donations are coordinated by a committee reporting to the CEO.

Umicore Integrated Annual Report 2019

193

About this report
About this report
Assurance reportGRI Index
References & key links
Key figures

194
195
200
203
204

Umicore Integrated Annual Report 2019

ABOUT THIS REPORT194

THE UMICORE ANNUAL REPORT OFFERS A COMPREHENSIVE AND INTEGRATED VIEW
OF OUR ECONOMIC, FINANCIAL, ENVIRONMENTAL, VALUE CHAIN AND SOCIAL PERFORMANCE FOR 2019

This report is divided in 2 parts: an annual review of key performance aspects as they relate
to our Horizon 2020 strategy, followed by the full financial, environmental, value chain, socialand governance statements and notes. All elements of the Annual Report can be consulted atannualreport.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 2019 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.
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.

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. 103 – 166 and p. 195
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. 167 – 192. PwC’s report on
the social, value chain and environmental statements can be found on p.199.
This report has been prepared in accordance with the GRI Standards: Core option. A full GRI
index can be found on pp. 200 – 202. The Global Reporting Initiative (GRI) is a networkbased organization 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
both the print and online versions of the report. Feedback received on our previous reports has
been considered in the preparation of this report.

Umicore Integrated Annual Report 2019

ASSURANCE REPORTS

195

STATUTORY AUDITOR’S REPORT TO THE GENERAL SHAREHOLDERS’ MEETING ON THE CONSOLIDATED ACCOUNTSFOR THE YEAR ENDED 31 DECEMBER 2019

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 is indivisible.

in the “Statutory auditor’s responsibilities for the audit of the consolidated accounts” sectionof 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 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 works’ council.
Our mandate will expire on the date of the general meeting which will deliberate on theannual accounts for the year ended 31 December 2019. We started the statutory audit of theconsolidated accounts of Umicore before 1993.

We have obtained from the board of directors and Company officials the explanations andinformation necessary for performing our audit.

REPORT ON THE CONSOLIDATED ACCOUNTS

As far as the outbreak of COVID 19 is concerned, we draw your attention to Note F38 (“Events
after the reporting period”) of the consolidated accounts in which the board of directors
expresses their view that, although the consequences thereof may have a significant impact
on the Group’s operations in 2020, such consequences do not have a material impact on theGroup’s financial position for the year ended 31 December 2019. Our opinion is not qualified in
respect of this matter.

UNQUALIFIED OPINION
We have performed the statutory audit of the Group’s consolidated accounts, which comprisethe consolidated balance sheet as at 31 December 2019, 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 7.023,4 million and a profit for the year (Group share) of EUR 287,8 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 2019, 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 which are applicable to the year-end and which are not yet
approved at the national level. Our responsibilities under those standards are further described

We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.

EMPHASIS OF MATTER – SUBSEQUENT EVENTKEY 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 MATTER
Umicore uses 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 thesetransactions. Currency and commodity price risks arise primarily from revenue, sales andprocurement transactions (in particular commodities).

Umicore Integrated Annual Report 2019

ASSURANCE REPORTS
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 29 million were recognized in the fair value reserves in equity as disclosed in note F 33.1.
A part of the fair value hedges (also labelled as transactional hedges in the annual report) 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.
We believe that these matters were of most significance in our audit due to the high complexity
and number of transactions as well as the extensive accounting and reporting requirements
under IFRS 9.
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTERAs part of our audit and with the help of our internal treasury experts, we assessed the contractualand financial parameters and reviewed the accounting treatment, including the effects on equity
and profit or loss, of the various hedging transactions. Together with these experts, we also assessed
Umicore’s internal control system with regard to derivative financial instruments, including theinternal activities to monitor compliance with the hedging policy. Furthermore, we used market data
to review the method applied to measure the fair value 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 andthe assessment of the effectiveness of hedges, we essentially reviewed the prospective testing.
We verified that hedges were accounted for and measured in accordance with IFRS 9. In view of thetransactional 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 fairvalue via market data. Moreover, for the part on which no fair value hedge accounting can beapplied, 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.
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.

196

UNCERTAIN (DEFERRED) TAX POSITIONSDESCRIPTION OF THE KEY AUDIT MATTER
Umicore has extensive international operations and is present in many different tax and legal
jurisdictions where amongst others 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 to note
F 3.6 and F.2.23.2 management performed a detailed assessment of the uncertain tax positions
which resulted in appropriate provisions for these uncertainties.
The accounting treatment of uncertain tax positions was a topic of most significance in our audit
due to the introduction of IFRIC 23 in 2019.
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
We assessed the process of Umicore to gather the tax exposures of all the legal entities of the
Umicore Group. Together with our tax experts we also assessed the probability assessment
prepared by Umicore for every exposure identified. Moreover we have analysed the methods
applied by management, being the most likely amount or the expected value of the tax
treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused
tax credits and tax rates if it’s not probable that an uncertain tax position will be sustained infull. In this context we have evaluated tax memorandums of management’s experts on therespective cases and exposures together with our tax experts. Moreover we have analysed
the consistency of tax treatments between subsidiaries and based on experiences of Umicore
in the past. We have also tested the completeness and accuracy of the amounts reported for
current and deferred tax, including the assessment of audits by tax authorities. In this area our
audit procedures included, amongst others, an assessment of correspondence with the relevant
tax authorities. In respect of deferred tax assets, we analysed and tested management’s
assumptions used to determine the probability that deferred tax assets recognized in thebalance sheet will be recovered through taxable income in the countries where the deferred
tax assets originated and during the periods when the deferred tax assets become deductible.
OUR FINDINGS
Uncertain tax positions have been properly taken into account when assessing the (deferred)
tax liabilities and assets positions in the consolidated accounts, in accordance with therequirements of IFRIC 23.
CHANGE IN ACCOUNTING POLICY ON PERMANENTLY TIED UP METAL INVENTORIESDESCRIPTION OF THE KEY AUDIT MATTER
Umicore faces metal price risks on its permanently tied up metal inventories (non current
inventory or “NCI”). The risk is related to the market metal price moving below the carrying
value of these inventories. Until 31 December 2018, NCI was valued at a separate historicalUmicore Integrated Annual Report 2019

ASSURANCE REPORTS
weighted average cost, applying a lower of cost or market (“LOCOM”) adjustment whennecessary. As from 2019, the accounting for NCI follows the measurement and recognition rulesof IAS 16 on property, plant and equipment, since these metals are constantly held for use in
the production and logistic flows, and are not expected to be sold or consumed. Due to the factthat permanently tied up materials are considered as indefinite life assets, these assets are
subject to Umicore’s annual impairment analysis as part of the cash generating units to which
they belong. As from the moment there are changes in the prevailing business set-up and theNCI can no longer be substantiated, these inventories will be treated as assets held for sale atthe lower of the carrying amount and fair value less cost to sell. The change in accounting policy
was approved by the board of directors in 2019.
We believe this change in accounting policy is of most significance in our audit due to thesignificant impact on the consolidated accounts. Note 2.23.3 of the consolidated accounts explainsthat the non-cash impairment charge would be EUR 122 million in the income statement if theprevious accounting policy would still have been applied as of 31 December 2019. Referring to thesame note as of 1 January 2019, the cumulative “lower of cost or net realizable value” provision
amounted to EUR 8,5 million. The change in accounting policy has been retrospectively applied
as from 1 January 2019 representing the release of this cumulative “lower of cost or net realizablevalue provision”, to the opening balance sheet reserves. During 2018 this provision had been
increased by EUR 6,0 million presented under non-recurring items. Due to the immaterial impact
Umicore decided not to adjust the comparative financial information of prior periods.
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Together with our IFRS specialists we have analysed whether this change in accounting policy iscompliant with IAS 16, general IFRS principles and the IFRS Interpretation Committee (“IFRIC”) staff
paper issued in July 2014. We verified that the LOCOM adjustments of the past, detailed above,
have been appropriately reversed and that all NCI was valued at its carrying value at 31 December
2019. Furthermore, we have also assessed the adequacy and completeness of the disclosures in
the consolidated accounts on this change in accounting policy in accordance with IAS 8.
OUR FINDINGSThe new accounting policy is compliant with IAS 16, IFRS principles and the IFRIC staff paper.
The disclosures on this change in accounting policy included in note 2.23.3 are appropriate.

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 the197

preparation of consolidated accounts that are free from material misstatement, whether due
to fraud or error.
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
AUDIT OF 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. A statutory audit does
not provide any assurance as to the Company’s future viability nor as to the efficiency oreffectiveness of the board of directors’ current or future business management.
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 thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theGroup’s 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.

Umicore Integrated Annual Report 2019

ASSURANCE REPORTS– 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.
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.

198

our responsibility is to verify, in all material respects, the directors’ report on the consolidated
accounts and to report on these matters.
ASPECTS RELATED TO THE DIRECTORS’ REPORT ON THE CONSOLIDATED ACCOUNTS
In our opinion, after having performed specific procedures in relation to the directors’ reporton the consolidated accounts, this report is consistent with the consolidated accounts for theyear under audit, and it is prepared in accordance with article 3:32 of the Companies’ andAssociations’ 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.

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.

The non-financial information required by virtue of article 3:32, §2 of the Companies’
and Associations’ Code is included in the directors’ report on the consolidated accounts.
The Company has prepared the non-financial information, based on the reference framework
Global Reporting Initiative (GRI) Standards. However, in accordance with article 3:80, §1, 5° of
the Companies’ and Associations’ Code, we do not express an opinion as to whether the nonfinancial information has been prepared in accordance with the Global Reporting initiative (GRI)
Standards as disclosed in the consolidated accounts.

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.

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.

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.

– The fees for additional services which are compatible with the statutory audit of theconsolidated accounts referred to in article 3:65 of the Companies’ and Associations’ Codeare correctly disclosed and itemized in the notes to the consolidated accounts.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTSRESPONSIBILITIES OF THE BOARD OF DIRECTORSThe board of directors is responsible for the preparation and the content of the directors’ reporton the consolidated accounts.
STATUTORY AUDITOR’S RESPONSIBILITIESIn the context of our mandate and in accordance with the Belgian standard which iscomplementary to the International Standards on Auditing (ISAs) as applicable in Belgium,

OTHER STATEMENTS
This report is consistent with the additional report to the audit committee referred to in article
7:99 §6, 4° of the Companies’ and Associations’ Code referring to article 11 of Regulation (EU)N° 537/2014.
SINT-STEVENS-WOLUWE, 27 March 2020
The statutory auditor
PwC Bedrijfsrevisoren BV / PwC Reviseurs d’Entreprises SRL Represented by
KURT CAPPOEN
Bedrijfsrevisor/Réviseur d’Entreprises

Umicore Integrated Annual Report 2019

ASSURANCE REPORTS

199

INDEPENDENT LIMITED ASSURANCE REPORT ON THE ENVIRONMENTAL, SOCIAL AND VALUE CHAIN STATEMENTS OF THE
INTEGRATED ANNUAL REPORT 2019 OF UMICORE AND ITS SUBSIDIARIESThis report has been prepared in accordance with the terms of our three year engagement contract
dated 29 June 2017, whereby we have been engaged to issue an independent limited assurance
report in connection with the Environmental, Social and Value Chain Statements in the accompanying
Integrated Annual Report 2019 of Umicore and its subsidiaries (the “Company”) as of and for the year
ended 31 December 2019 (the “Report”).

RESPONSIBILITY OF BOARD OF DIRECTORSThe Board of Directors of the Company is responsible for the preparation of the information and datain the Environmental, Social and Value Chain Statements set forth in the Integrated Annual Report2019 of Umicore and its subsidiaries and the declaration that its reporting meets the requirementsof the Global Reporting Initiative (GRI) Standards – Core as set out on pages 167 to 192 (“the Subject
Matter Information”), in accordance with the criteria stated in the Environmental, Social and Value
Chain Statements and with the recommendations of GRI Standards (“the Criteria”).
This responsibility includes the selection and application of appropriate methods for the preparationof the Subject Matter Information, for ensuring the reliability of the underlying information and forthe use of assumptions and estimates for individual sustainability disclosures, which are reasonable
in the circumstances. Furthermore, the responsibility of the Board of Directors includes the design,
implementation and maintenance of systems and processes relevant for the preparation of the
Subject Matter Information that is free from material 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. Our assurance
report has been prepared in accordance with the terms of our engagement contract.
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 to ourattention that causes us to believe that the Subject Matter Information is not fairly stated, in allmaterial respects, in accordance with the Criteria issued by the Company.
The objective of a limited-assurance engagement is to perform the procedures we consider necessary
to provide us with sufficient appropriate evidence to support the expression of a conclusion in thenegative form on the Subject Matter Information.
The procedures performed in a limited assurance engagement vary in nature and timing from, andare less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance
obtained in a limited assurance engagement is substantially lower than the assurance that would
have been obtained had a reasonable assurance engagement been performed.
The selection of such procedures depends on our professional judgment, including the assessmentof 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 for datagathering, collation, consolidation and validation, including the methods used for calculatingand estimating the Subject Matter Information as of and for the year ended 31 December 2019presented on pages 167 to 192 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 and completenessof the Subject Matter Information are subject to inherent limitations given their nature and themethods for determining, calculating or estimating such information. Our Limited Assurance Report
should therefore be read in connection with the Criteria.

OUR INDEPENDENCE AND QUALITY CONTROL

We have complied with the independence and other ethical requirements of the Code of Ethics forProfessional 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 andregulatory requirements.

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 that the
information and data presented in the Environmental, Social and Value Chain Statements as of andfor the year ended 31 December 2019 on pages 167 to 192 of the Integrated Annual Report of Umicore
and its subsidiaries, and Umicore’s assertion that the Report meets the requirements of GRI Standards– Core, is not fairly stated, in all material respects, in accordance with 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, in connection
with their Environmental, Social and Value Chain Statements as of and for the year ended 31 December
2019 and should not be used for any other purpose. We do not accept or assume and deny any liabilityor duty of care to any other party to whom this report may be shown or into whose hands it may come.
SINT-STEVENS-WOLUWE, 20 March 2020,

PwC Bedrijfsrevisoren BV Represented by
MARC DAELMAN
Registered auditor

Umicore Integrated Annual Report 2019

GRI CONTENT INDEXGRISTANDARDSREFERENCEDISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2019

GRI 102: GENERAL DISCLOSURESGRI
STANDARDSREFERENCE

200

DISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2019102-21

Consulting stakeholders on
economic, environmental,
and social and societal topics

14-19 (Stakeholder engagement); 21-24 (Materiality)

102-22Composition of the highest
governance body andits committees

68-72 (Board of Directors); 82 (Corporate governancestatements: G2)

102-23Chair of the highest
governance body

68-72 (Board of Directors); 82 (Corporate governancestatements: G2)

ORGANISATIONAL PROFILE
102-1

Name of the organisation

Front cover

102-2

Activities, brands, products,
and services

2-3 (About us); 6 (Umicore at a glance);
12 (Business model)

102-3

Location of headquarters

Inside back cover; back cover

102-4

Location of operations

6 (Umicore at a glance); 178-180 (Social statements: S2);

102-5

Ownership and legal form

Back cover102-24Markets served

2-3 (About us); 6 (Umicore at a glance);
26-35 (Economic review)

Nominating and selecting thehighest governance body84 (Corporate governance statements: G4)

102-6

102-25

Conflicts of interest

102-7

Scale of the organisation

6 (Umicore at a glance); 178-180 (Social statements: S2);104 (Financial statements: consolidated balance sheet)

87-88 (Corporate governance statements :G7, G9-G11);
Corporate Governance Charter; Code of Conduct

102-2682 (Corporate governance statements: G2)

102-8

Information on employees
and other workers

178-180 (Social statements: S2)

Role of highest governance bodyin setting purpose, values, andstrategy102-9Supply chain

36-41 (Value chain and society review),
188-191 (Value chain statements: V2-V4)

102-27

Collective knowledge of highest
governance body84 (Corporate governance statements: G4)

102-10Significant changes tothe organisation and its
supply chain

26-35 (Economic review), 191 (Value chain statements: V4)

102-28

Evaluating the highest
governance body’s performance84 (Corporate governance statements: G4)

102-29102-11

Precautionary principle
or approach

57-58 (Risk management and internal control);59-66 (Key risks and opportunities)

Identifying and managing economic, 14-19 (Stakeholder engagement); 21-24 (Materiality); 57-58
environmental, and social and(Risk management and internal control); 59-66 (Key risks
societal impacts
and opportunities); 78-81 (Management approach)102-12External initiatives

COSO; OECD Guidelines; ILO Human Rights; SRI, FTSE; PACI;
GRI; IIRC

102-30Effectiveness of risk
management processes

57-58 (Risk management and internal control)

102-13

Membership of associations

14-19 (Stakeholder engagement)

102-31

Review of economic,
environmental, and Socialand societal topics

59-66 (Key risks and opportunities); 78-81 (Management
approach); 84 (Corporate governance statements: G4)

102-14

A statement from the mostsenior decision-maker ofthe organisation

7-9 (CEO and Chairman’s review)102-32Highest governance body’srole in sustainability reporting

78-81 (Management approach)102-33

Communicating critical concerns

102-15Key impacts, risks,and opportunities

59-66 (Key risks and opportunities)

14-19 (Stakeholder engagement); 83-88 (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

91-94 (Remuneration report); Corporate Governance
Charter; Code of Conduct102-36

Process for determining
remuneration

91-94 (Remuneration report); Corporate Governance
Charter; Code of Conduct102-37

Stakeholders’ involvement
in remuneration

91-94 (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
102-16

Values, principles, standards,
and norms of behaviour

The Umicore Way; Code of Conduct; 57-58 (Risk
management and internal control); 14-19 (Stakeholder
engagement); 83,87 (Corporate governance statements:
G1, G9); 183 (Social statements: S5)

102-17

Mechanisms for advice andconcerns about ethics

Code of Conduct; 183 (Social statements: S5)

Governance structure

82-85(Corporate governance statements: G2, G4, G5);78-81 (Management approach)102-19Delegating authority

78-81 (Management approach)102-20Executive-level responsibility
for economic, environmental,
and social and societal topics

73-75 (Executive Committee);78-81 (Management approach)

GOVERNANCE
102-18

Umicore Integrated Annual Report 2019

GRI CONTENT INDEXGRISTANDARDSREFERENCEDISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2019

STAKEHOLDER ENGAGEMENT
List of stakeholder groups

14-19 (Stakeholder engagement)

102-41

Collective bargaining agreements

182 (Social statements: S4)

102-42

Identifying and selecting
stakeholders

14-19 (Stakeholder engagement)

102-43

Approach to stakeholder
engagement

14-19 (Stakeholder engagement)

102-44

Key topics and concerns raised

14-19 (Stakeholder engagement); 21-24 (Materiality)

REPORTING PRACTICE

102-46

Entities included in the
consolidated financial statements
Defining report content and topic
boundaries

DISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2019

GRI 201: ECONOMIC PERFORMANCE

102-40102-45GRI
STANDARDSREFERENCE

2-3 (About us); 6 (Umicore at a glance); 26-55 (Performance
review); 82 (Corporate governance statements: G2);
122,136 (Financial statements: F5, F17)
21-24 (Materiality); 78-81 (Management approach)102-47

List of material topics

21-24 (Materiality); 78-81 (Management approach)102-48

Restatements of information

78-81 (Management approach); 168 (Environmental
statements: E1); 178, 183-186 (Social statements: S1, S6, S7);190 (Value chain statements: V4); 188 (About this report)

102-49Changes in reporting

2-3 (About us); 6 (Umicore at a glance); 168-171(Environmental statements: E1, E2, E3); 188-191 (Value chain
statements: V1, V2, V4); 194 (About this report)

102-50

Reporting period

Front cover; Inside front cover; 194 (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; natalia.agueros@eu.umicore.com

102-54Claims of reporting in accordancewith the GRI Standards

Inside front cover; 194 (About this report)

102-55

GRI content index

This section; 194 (About this report)

102-56External assurance

195-199 (Assurance reports)

201-1

Direct economic value generated
and distributed

6 (Umicore at a glance); 14-19 (Stakeholder engagement);
101 (Distribution of economic benefits) 128-130,163(Financial statements: F8, F9, F39); 204 (Key figures)

201-3

Defined benefit plan obligations
and other retirement plans

145-148 (Financial statements: F27)

201-4

Financial assistance received
from government

106 (Consolidated statement of cash flow)

GRI 202: MARKET PRESENCE
202-2

Proportion of senior management
hired from the local community

Similar scope covered in 178-180 (Social statements: S2)

GRI 203: INDIRECT ECONOMIC IMPACTS
203-1

Infrastructure investments
and services supported

14-19 (Stakeholder engagement); 174-176 (Environmental
statements: E7); 192 (Value chain statements: V5);
204 (Key figures)

GRI 205: ANTI-CORRUPTION
205-1

Operations assessed for risks
related to corruption

57-58 (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

161 (Financial statements: F36)

GRI 301: MATERIALS
301-2

Recycled input materials used

6 (Umicore at a glance);
191-192 (Value chain statements: V4)

Energy consumption within
the organisation

171-173 (Environmental statements: E4)

302-3

Energy intensity

171-173 (Environmental statements: E4)

Reduction of energy consumption

171-173 (Environmental statements: E4)

GRI 302: ENERGYGRI 103: MANAGEMENT APPROACH

302-1

103-1

Explanation of the material topic
and its boundary

78-81 (Management approach)

302-4

103-2

The management approach andits components

78-81 (Management approach)305-1

Direct (Scope 1) GHG emissions

171 (Environmental statements: E3)

Evaluation of the management
approach78-81 (Management approach)

305-2

Energy indirect (Scope 2)
GHG emissions

171 (Environmental statements: E3)

305-7

Nitrogen oxides (NOx),sulphur oxides (SOx), and othersignificant air emissions

169-170 (Environmental statements: E2)

103-3

201

GRI 305: EMISSIONS

Umicore Integrated Annual Report 2019

GRI CONTENT INDEXGRISTANDARDSREFERENCEDISCLOSURE

PAGE REFERENCE IN ANNUAL REPORT 2019

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 2019

GRI 414: SUPPLIER SOCIAL ASSESSMENT
36-41 (Value chain and society review),
188-191 (Value chain statements: V2-V4)

414-2

6 (Umicore at a glance); 49-55 (Great place to work
review); 178-181 (Social statements: S2; S3);204 (Key figures)

416-1

417-1

GRI 401: EMPLOYMENT
401-1

GRI
STANDARDSREFERENCE

202

Negative Social and societal
impacts in the supply chain
and actions taken

36-41 (Value chain and society review),
188-191 (Value chain statements: V2-V4)

GRI 416: CUSTOMER HEALTH AND SAFETY

GRI 403: OCCUPATIONAL HEALTH AND SAFETY

Assessment of the health andsafety impacts of product andservice categories

191-192 (Value chain statements: V4)

GRI 417: MARKETING AND LABELLING

403-1

Workers representation in formal
joint management–worker healthand safety committees

182 (Social statements: S4)

403-2

Types of injury and rates of injury,
occupational diseases, lost days,
and absenteeism, and number ofwork-related fatalities

49-55 (Great place to work review) 183-185 (Social
statements: S6, S7); 204 (Key figures)

403-4

Health and safety topics covered in
182 (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

49-55 (Great place to work review); 181-182 (Social
statements: S3); 204 (Key figures)

404-2

Programmes for upgrading
employee skills and transition
assistance programmes

49-55 (Great place to work review); 181-182 (Social
statements: S3);

404-3

Percentage of employees
receiving regular performanceand career development reviews

181-182 (Social statements: S3)

Requirements for product andservice information and labelling

191-192 (Value chain statements: V4)

OTHER MATERIAL TOPICS REPORTED
Criticality of raw materials

To complement the reporting on GRI 308: Supplier
Environmental Assessment and GRI 414: Supplier Social
Assessment. See 36-41 (Value chain and society review),
188-191 (Value chain statements: V2-V3)

Sustainable products
and services

To complement reporting on GRI 301: Materials see
36-41 (Value chain and society); 191-192 (Value chain
statements: V4)

Process safety

To complement reporting on GRI 403: Occupational Healthand Safety see 186 (Social statements: S8)

Metal emissions to air and water

To complement reporting on GRI 305: Emissions see
169-170 (Environmental statements: E2)

GRI 405: DIVERSITY AND EQUAL OPPORTUNITY
405-1

Diversity of governance bodies
and employees

49-55 (Great place to work review);
84 (Corporate governance statements: G4);
178-180 (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 the objective
on “Sustainable supply”; see 236-41 (Value chain andsociety review), 188-191 (Value chain statements: V2-V4);
Ensuring sustainable cobalt sourcing online case study

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 236-41 (Value chain andsociety review), 188-191 (Value chain statements: V2-V4);
Ensuring sustainable cobalt sourcing online case study

Umicore Integrated Annual Report 2019

REFERENCES & KEY LINKS

203

UMICORE www.umicore.com

OTHER REFERENCES & LINKS

ANNUAL REPORT annualreport.umicore.com

BELGIAN CORPORATE GOVERNANCE COMMITTEE www.corporategovernancecommittee.be

ANNUAL REPORT GLOSSARY annualreport.umicore.com/glossary

ECOVADIS www.ecovadis.com

ANNUAL REPORT STORIES annualreport.umicore.com/stories

FINANCIAL SERVICES AND MARKETS AUTHORITY www.fsma.be

THE UMICORE WAY umicore.com/en/about/the-umicore-way

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

CODE OF CONDUCT umicore.com/en/governance/code-of-conduct
HORIZON 2020 umicore.com/en/cases/horizon-2020
GLOBAL FRAMEWORK AGREEMENT ON SUSTAINABLE DEVELOPMENT
umicore.com/industriALLSUSTAINABLE PROCUREMENT CHARTER umicore.com/sustainableprocurement-charter
RESPONSIBLE GLOBAL SUPPLY CHAIN OF MINERALS FROM CONFLICT-AFFECTED AND
HIGH-RISK AREAS umicore.com/responsiblesupplychain-policy
SUSTAINABLE PROCUREMENT FRAMEWORK FOR COBALT
umicore.com/sustainableprocurementcharter-cobalt
DUE DILIGENCE COMPLIANCE REPORT COBALT PROCUREMENT
umicore.com/sustainable-cobalt
CORPORATE GOVERNANCE CHARTER
umicore.com/en/governance/corporate-governance-charter
UMICORE CAREERS umicore.com/careers
INVESTOR RELATIONS umicore.com/investorsRESPONSIBLE MINERALS INITIATIVE, FORMERLY CONFLICT-FREE SOURCING INITIATIVE
www.responsiblemineralsinitiative.org
www.responsiblemineralsinitiative.org/gold-refiners-list
www.responsiblemineralsinitiative.org/responsible-minerals-assurance-process/smelterrefiner-lists/cobalt-refiners-list/conformant-cobalt-refiners
WBCSD GUIDANCE FOR ACCOUNTING AND REPORTING CORPORATE GHG EMISSIONS IN THE
CHEMICAL SECTOR VALUE CHAIN www.wbcsd.org/contentwbc/download/2831/35596
GLOBAL BATTERY ALLIANCE : A VISION FOR A SUSTAINABLE BATTERY VALUE CHAIN IN 2030
umicore.com/globalbatteryalliance-report-2019
THE PRIMARY AND SECONDARY PRODUCTION OF GERMANIUM : A LIFE-CYCLE ASSESSMENT
OF DIFFERENT PROCESS ALTERNATIVES doi.org/10.1007/s11837-014-1267-6
LONDON BULLION MARKET ASSOCIATION (LBMA)
www.lbma.org.uk/good-delivery-list-refiners-gold-current
www.lbma.org.uk/good-delivery-list-refiners-silver-current

SHAREHOLDER RIGHTS umicore.com/en/governance/shareholder-rights

RESPONSIBLE JEWELLERY COUNCIL
www.responsiblejewellery.com/members/chain-of-custody-certified-entities

UMICORE NEWS umicore.com/en/investors/news-results/press-releases

ENTREPENEURS FOR ENTREPENEURS ondernemersvoorondernemers.be

GIVING BACK TO SOCIETY umicore.com/giving-back-to-society
umicore.com/en/media/press/giving-back-to-society-in-madagascar

Umicore Integrated Annual Report 2019

204

Key figures
2015

2016

2017

2018

2019

2,629.0

2,667.5

2,915.6

3,271

3,361

330.3

350.7

410.3

514

509

ECONOMIC PERFORMANCE (in millions of Euros unless stated otherwise)

Revenues (excluding metal)
Recurring EBIT
Return on Capital Employed (ROCE) (in %)

13.7

14.6

15.1

15.4

12.6

R&D expenditure

144.5

155.9

175.2

196

211

Capital expenditure

240.3

287.3

365.3

478

553

Recurring EPS (in €/share)

1.13

1.07

1.22

1.36

1.30

Gross dividend (in €/share)

0.60

0.65

0.70

0.75

0.375

–

65

67

72

75

1,219

1,290

1,299

1,432

1,614

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

710,143

662,059

633,704

767,702791,816

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

735,065

663,307785,789

815,175

Energy consumption (in terajoules)

7,742

6,737

6,532

7,458

7,476

Workforce (fully consolidated companies)

10,429

9,921

9,769

10,420

11,152

47

59

51

61

90

LTA frequency rate

2.66

3.34

3.01

3.36

4.60

LTA severity rate

0.12

0.56

0.09

0.10

0.20

Exposure ratio ‘all biomarkers aggregated’ (in %)

2.3

3.2

2.7

2.8

1.8

Average number of training hours per employee

45.06

41.49

45.33

43.10

48.73

Voluntary leavers ratio

3.35

4.10

5.03

7.18

5.99

SOCIAL, ENVIRONMENTAL AND VALUE CHAIN PERFORMANCE

Revenues from clean mobility and recycling (in %)Total donations, including staff freed time (in thousands of Euros)

Lost Time Accidents (LTA)

Umicore Integrated Annual Report 2019

205

IF OUR TECHNOLOGIESCAN TACKLE SOME OF
THE WORLD’S MOSTPRESSING CHALLENGES

UMICORE.COM/CAREERS

FINANCIAL CALENDAR1

ADDITIONAL INFORMATION

30 APRIL 2020

STOCK
Euronext Brussels

General meeting of shareholders(financial year 2019)31 JULY 2020

Half year results 2020

UMICORE.COM/INVESTORSABOUT 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
BUSINESS ETHICS & SECURITY
Kristl Matton – Baudouin Caeymaex+32 2 227 78 37 – +32 2 227 73 32
grievances@umicore.com

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

umicore.com

LANGUAGESThis report is also available
in French and Dutch.
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
ONLINE
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