Annual Activity Report 2018 Summary
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Annual Activity Report 2018 Summary PROFILE SNFP INFORMATION ONǭTHEǭSHARE E ditorials 2 6 CAPITAL 103 Business card 4 6.1 Structure and evolution ofǾtheǾCompany’s Business model 6 share capital 104 6.2 Allocation of capital andǾvotingǾrights 105 MISCELLANEOUS INFORMATION 107 HIGHLIGHTS OF THE YEAR 9 7 7.1 Statutory Auditors 108 1 1.1 Highlights of the year 10 7.2 Review of regulated agreements 1.2 Other highlights of the year 11 andǾcommitments 109 7.3 Injunctions and fi nes forǾanti-competitive practices 111 SITUATION AND ACTIVITIES 7.4 Observations of the Works Council 111 2 OF THE COMPANY AND ITSǭSUBSIDIARIES DURING THE 7.5 Payment terms 112 7.6 Information on loans granted to other PAST YEAR SNFP 13 companies covered byǾarticlesǾ 2.1 Simplifi ed organization chart of the group – L.Ǿ511-6 andǾR. 511-2-1-1-II ofǾtheǾFrench Subsidiaries, interests and branch offi ces 14 Monetary andǾFinancial Code 112 2.2 The group’s businesses 16 2.3 Research and Development activities 28 2.4 Financial position of the Company and the APPENDICES TO THE ANNUAL group during the past year 29 8 ACTIVITY REPORT 113 2.5 Foreseeable developments and future 8.1 Consolidated fi nancial statements – prospects 39 YearǾendedǾDecemberǾ31, 2018 114 2.6 Signifi cant events since the date of closing 40 8.2 Company fi nancial statements – Year ended DecemberǾ31, 2018 187 8.3 Statutory Auditors’ report on the RISKS AND SAFEGUARDS SNFP 41 consolidated fi nancial statements for the 3 3.1 Risk mapping and risk management year ended DecemberǾ31, 2018 209 processes 42 8.4 Statutory Auditors’ report on the company 3.2 System of internal controls 45 fi nancial statements for the year ended DecemberǾ31, 2018 215 3.3 Risk factors 47 8.5 Five-year fi nancial summary 218 8.6 Subsidiaries and associates 219 SOCIAL, SOCIETAL, AND 8.7 List of French companies controlled 4 ENVIRONMENTAL ISSUES SNFP 59 indirectly byǾOrano as at DecemberǾ31, 2018 220 4.1 Workforce present in France andǾ 8.8 Report of the Board of Directors on the internationally 60 principles and criteria for determining, distributing and allocating the fi xed, 4.2 Societal issues 67 variable and exceptional components of 4.3 Environmental issues 72 the total compensation and benefi ts of any kind attributable to the offi cers of the Company (articleǾL.Ǿ225-37-2 of the French BOARD OF DIRECTORS’ CORPORATE Commercial Code) 222 5 GOVERNANCE REPORT 77 8.9 Cross-reference table of the data 5.1 Preparation and organization ofǾthe Board required inǾthe statement of non-fi nancial ofǾDirectors’ work 78 performance (articlesǾL.Ǿ225-102-1 and 5.2 Committees of the Board ofǾDirectors 89 R. 225-104 to R.Ǿ225-105-2 of the French Commercial Code) andǾthose required 5.3 Other committee 93 by the French Corporate Duty of Care 5.4 Offi cers 94 law (articleǾL.Ǿ225-102-4 of the French 5.5 Compensation of corporate offi cers 95 Commercial Code) 225 5.6 Reference Corporate GovernanceǾCode 100 8.10 Reporting methodology for the statement 5.7 General Meetings 101 ofǾnon-fi nancial performance 226 5.8 Agreements referred to inǾarticleǾ 8.11 Report of the independent third party L.Ǿ225-37-4 ofǾtheǾFrench Commercial Code 102 onǾtheǾstatement of non-fi nancial performance 228 5.9 Elements likely to have anǾimpactǾ in the event ofǾa publicǾoffering 102 8.12 Code of Ethics 231 8.13 Financial glossary 238 Elements of the Statement of non-fi nancial performance are identifi ed by the pictogram SNFP Annual Ac tivity Report 2018 THE ANNUAL ACTIVITY REPORT OF ORANO FOR 2018 INCLUDES: ● the management report of the Company’s Board of Directors including the management report of Orano, including: ● the group’s vigilance plan and the report on its implementation (a rticleǾL.Ǿ225-102-4 of the French Commercial Code), ● the statement of non-fi nancial performance (a rticleǾL.Ǿ225-102-1 of the French Commercial Code). ● A cross-reference table of the data required in the statement of non-financial performance and the data required by the French Duty of Care law is provided in Appendixb8.9; ● the report of the Board of Directors on corporate governance (a rticleǾL.Ǿ225-37 of the French Commercial Code); and ● the Board of Directors’ report on the principles and criteria for determining, distributing and allocating the fi xed, variable and exceptional components of the total compensation and benefi ts of any kind attributable to the offi cers of the Company (a rticleǾL.Ǿ225-37-2 of the French Commercial Code). The purpose of this report is to present the situation of Orano (the Company, previously known as New AREVA Holding) and its subsidiaries during the fi nancial year running from January 1 to DecemberǾ31, 2018. The terms “group” or “Orano” refer to the group of companies formed by Orano and its subsidiaries and interests, both direct and indirect. The change of the Company’s name took place on JanuaryǾ22, 2018. A French law public limited company entitled to issue fi nancial securities admitted for trading on a regulated market, the Company is subject to the obligation to draw up a management report including the information stipulated by the French Commercial Code, as well as the specifi c information required of a company issuing debt instruments listed for trading on a regulated market. Orano - 2018 Annual Activity Report 1 Editorials “Orano is a major player in the nuclear industry, producing the low-carbon energy of the future.” The latest IPCC report published in October 2018 Philippe Varin confi rmed that there is an urgent need for action on Chairman of the Board of DIrectors a global scale to tackle climate change effectively. It is a simple equation: the rise in temperatures must be limited to a maximum of +1.5°C, with the aim of being “carbon-neutral” by 2050. he solutions already exist, such as implementing aǾ low-carbon electricity mix based on renewables Tand nuclear energy. France is at the forefront ofǾ this, with electricity that is already more than 95%Ǿ carbon-free. The decisions taken by the French President last November as part of the Multiannual Energy Program confirm this strategy: nuclear energy, which has the dual advantage of not producing CO2Ǿ emissions and of being continuously available, willǾ serve as the backbone for power generation in France. ItǾ will be supported by an industry with more than 220,000 employees and 2,500 companies across France, to which Orano brings its recognized know-how in fuel production and the recycling of nuclear materials. 2 Orano - 2018 Annual Activity Report PROFILE Editorials “In 2018 , Orano has confi rmed both its recovery At a time when nuclear energy is becoming and its ability to perform increasingly essential for power generation, over the long term.” Orano outperformed its targets in its fi rst year of trading. here has been a marked improvement in the key performance indicators for safety and security. TI n economic terms, Orano’s fi rst year saw a return toǾ positive net cash flow of €158 million in 2018 – higher than the target set – and the start of the group’s deleveraging. In parallel with the recovery of the uranium and conversion markets, our group secured nearly €2Ǿ billion in new orders across all of its businesses, particularly in Asia, which now accounts forǾ24% of our revenue. Earnings from the Group’s operating performance rose sharply, with operating income of €517 Ǿmillion in 2018. The net income has been impacted by the negative performance of the fi nancial markets. Lastly, allǾ of our teams rallied behind the “ValueǾ2020” performance plan to deliver €102Ǿmillion in savings. With these results, Orano confi rms its recovery, but its ability to perform over the long term. It is backed by a diversifi ed mining portfolio, the most modern conversion and enrichment facilities in the world, flagship recycling plants and internationally renowned expertise inǾ services (transportation, manufacturing of packages , dismantling , operations support and engineering). It relies upon the confi dence of its customers, the know-how of its people, who contribute onǾ a daily basis to producing safe, sustainable nuclear electricity. Philippe Knoche Chief Executive Offi cer Orano - 2018 Annual Activity Report 3 Business card BREAKDOWN OF 2018 REVENUE BY REGION 17 % Americas €31. 8 bn Order baklog i.e. nearly 9 years of revenue €3, 623 M in revenue 16, 000 TOPb3 employees worlwide across the world in our key activities 4 Orano - 2018 Annual Activity Report PROFILE Business card NON-FINANCIAL INDICATORS More than 800 12 % 1. 5 new hires on Greenhouse gas Accident frequency permanent contracts emissions reduced rate with lost time in France in 2018 in 2018 in 2018 10 % Europe excl. France 47 % France 24 % 2 % Asia -Pacific Africa and Middle East BREAKDOWN OF 2018 REVENUE BY BUSINESS 1 % 31 % 45 % 23 % Mining Back End Front End Other Orano - 2018 Annual Activity Report 5 Business model Safe, competitive solutions thanks to unique know-how and updated industrial assets NUCLEAR, AN APPROPRIATE RESPONSE TO CLIMATE AND ENERGY CHALLENGES Need to cut CO2 emissions Low-carbon, competitive, in half by 2050 to limit the and continuously CO 2 temperature increase to 1.5°C operated power- Emission ÷2 generation technology Demand for power doubling Nuclear is a key energy by 2050 440 for limiting Demand x2 Reactors in the temperature operation increase to 1.5°C 40% of CO emissions 2 worldwide (Source: IPCC report, Oct. 2018) Worldwide come from power generation NUCLEAR, A GROWING MARKET ON THE FRONT AND BACK ENDS OF THE CYCLE Projected nuclear capacity to 2035 (GW) +2%/year An increase in the global nuclear fl eet driving