Annual Activity Report 2019 Summary
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Annual Activity Report 2019 Summary PROFILE DPEF Editorials 2 Business card 4 Business model 6 INFORMATION ON THE SHARE 6 CAPITAL 117 HIGHLIGHTS OF 6.1 Structure and evolution of the Company’s 1 THE FINANCIAL YEAR DPEF 9 sharecapital 118 1.1 Highlights of the financial year 10 6.2 Shareholding structure and voting rights 119 1.2 Other highlights of the financial year 10 MISCELLANEOUS INFORMATION 121 SITUATION AND ACTIVITIES 7 7.1 Statutory Auditors 122 2 OFǭTHE COMPANY AND 7.2 Review of regulated agreements ITS SUBSIDIARIES DURING andcommitments 123 THE PAST FINANCIAL YEAR DPEF 13 7.3 Injunctions or fines for anti-competitive 2.1 Simplified organization chart of the group– practices 124 subsidiaries, interests and branch offices 14 7.4 Observations of the Works Council 124 2.2 The group’s businesses 16 7.5 Information on payment terms 125 2.3 Research and Development activities 28 7.6 Information on loans granted to other 2.4 Financial situation of the Company companies covered by ArticlesL. 511-6 andgroup during the past financial year 29 and R.511-2-1-1-II of the French Monetary 2.5 Foreseeable developments and future and Financial Code 125 prospects 39 2.6 Significant events since the closing date 40 APPENDICES TO THE ANNUAL 8 ACTIVITY REPORT 127 RISKS AND SAFEGUARDS DPEF 41 8.1 Consolidated financial statements – 3 3.1 System of internal controls 42 financial year ended December31, 2019 128 3.2 Risk mapping process and risk management 45 8.2 Company financial statements – financialyearended December31, 2019 197 3.3 Risk factors 48 8.3 Statutory Auditors’ report on the 3.4 Corporate duty of care plan 59 consolidated financial statements for the financial year ended December31, 2019 221 8.4 Statutory Auditors’ report on the company SOCIAL, ENVIRONMENTAL financial statements for the financial year 4 ANDǭSOCIETAL COMMITMENTS DPEF 65 ended December31, 2019 227 4.1 Harnessing the skills of proud 8.5 Five-year financial summary 230 andcommitted teams 66 8.6 Subsidiaries and associates 231 4.2 An unwavering commitment to the 8.7 List of French companies controlled safetyof our operations and the limitation indirectly byOrano as at December31, 2019 232 ofourenvironmental footprint 73 8.8 Report of the Board of Directors 4.3 Being committed and acting responsibly ontheprinciples and criteria for within our ecosystem 78 determining, distributing and allocating the fixed, variable and exceptional components of the total compensation and benefits REPORT OF THE BOARD OF of any kind attributable to the corporate 5 DIRECTORS ON CORPORATE officers oftheCompany 234 GOVERNANCE 85 8.9 Cross-reference table of the data 5.1 Preparation and organization of the Board required inthestatement of non-financial ofDirectors’ work 86 performance (Articles L.225-102-1 5.2 Committees of the Board of Directors 102 andR.225-104 to R.225-105-2 of theFrench Commercial Code) and 5.3 Other committee 107 those required by the French corporate 5.4 Executive corporate officers 108 Duty of Care law (Article L.225-102-4 5.5 Compensation attributed to corporate offi cers 109 of the FrenchCommercial Code) 238 5.6 Reference Corporate Governance Code 114 8.10 Reporting methodology for the statement 5.7 General Meetings 115 ofnon-financial performance 239 5.8 Agreements referred to in ArticleL.225-37-4 8.11 Report by the independent third party on of the French Commercial Code 116 the statement of non-financial performance 241 5.9 Elements likely to have an impact in 8.12 Code of Ethics 244 theevent ofa public offer 116 8.13 Financial glossary 251 Elements of the Statement of non-financial performance are identified by the pictogram DPEF Annual Activity Report 2019 THIS ANNUAL ACTIVITY REPORT OF ORANO FOR 2019 INCLUDES: ● the management report of the Company’s Board of Directors including the management report of Orano, including: ● the group’s duty of care plan and the report on its implementation (ArticleL.225-102-4 of the French Commercial Code), ● the statement of non-fi nancial performance (ArticleL.225-102-1 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 Appendix8.9, ● the report of the Board of Directors on corporate governance (ArticleL.225-37 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 corporate offi cers of the Company. The purpose of this report is to present the situation of Orano and its subsidiaries during the fi nancial year running from January1 to December31, 2019. The terms “group” or “Orano” refer to the group of companies formed by Orano and its subsidiaries and interests, both direct and indirect. 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 - 2019 Annual Activity Report 1 Editorials “There will be renewables, that is a fact, and we will need nuclear power, that is an imperative.” “The challenge of climate change is so immense thatǾweǾcannot afford to exclude low-carbon technologies.” InǾa single sentence on February 12, 2020, Fatih Birol, theǾExecutive Director of the International Energy AgencyǾ(IEA), announced how to achieve the goal of carbon neutrality by 2050. he challenge is immense because it means no morenor lessthan converting 80% of energy used Tby the human race (nearlyeight billion of us) within 30 years, transitioning from fossil fuels to low-carbon energies. With the stakes so high, the time has run out for Philippe Varin opposing renewable energies and nuclear power. There willbe renewables, thatis a fact, and we will need nuclear Chairman of the Board ofDirectors power, that is animperative, for three reasons. Firstly, a developed society needs energy in general, andelectricity inparticular, 24 hours a day to produce goods, move around, and stay warm… So, we need power generation sources that are available ondemand. Nuclearpower meets that need. Secondly, in a world where the population is growing, protecting theclimate and resources (in particular raw materials) becomes akey issue. Here, too, nuclear power checks the box because itislow-carbon (40 times less carbon than natural gas and even fourtimes less than solar) and uses fewer raw materials (100 grams ofuranium produces as much energy as one metric tonofoil). Lastly, everyone on this planet aspires to development, forthemselves and their children. Is the negative growth advocated by some compatible with this aspiration? I don’tthink it is. Development can’t come from negative growth - but it can come from science, from industry, frominnovation. And it can come from nuclear power with, notably in France and especially at Orano, skilled jobs, long-term industrial basins in the regions, and experienced men and women inventing the technology of tomorrow and keeping our faith in the future. 2 Orano - 2019 Annual Activity Report PROFILE Editorials With sound results in 2019, Orano is confi rming that it is a major player in the nuclear industry. This industry contributes toǾlow-carbon power generation and has its part to play inǾtheǾfi ght against climate change. rano is a transformed and solid group, with more than 16,000employees across the world helping to “Orano contributes to Oproduce low-carbon power. In 2019, thanks to the commitment of those employees, we upheld high safety low-carbon power generation standards in our nuclear facilities while delivering improved economic results.. and plays its part inǾthe fi ght Consistent with our targets, against a background in which against climate change.” indicators on the uranium market, and especially the conversion and enrichment market, recovered, revenue was up again in 2019 to 3.8 billion euros (+3.7% like-for-like). Order intake amounted to 1.9billion euros. Spread across all of our operations and all regions (Europe, Americas andAsia), orders were renewed forshort-cycle service operations (transport, dismantling and engineering). Thebacklog represents more than eight years inrevenue. Additionally, the group generated +408 millioneuros innetincome, an increase of nearly 1 billioneuros on 2018. Thisperformance isaresult of positive operating profi t andagood return onassets earmarked for end-of- lifecycle operations. Onthestrength of these results, Orano was abletoreduce itsfi nancial debt. The beginning of 2020 has been shaken by the major health crisis of COVID-19, which continues to spread and has now reached all continents. It will have a major impact on the global economy. Against this backdrop, and in view of persistent uncertainties as to the scope and duration ofthis crisis, onMarch20, Orano has suspended the fi nancial targets it had reportedfor 2020: long-term positive net cash flow, an upward adjustment of its EBITDA margin, and continued growth in revenue. Inthis crisis, Orano’s top priority is the health and safety of its employees, while also maintaining its strategic operations for power generation, such as uranium conversion and enrichment, the production of fuel derived from recycled uranium, transport of nuclear materials, and support services for operation of the nuclear fleet and cycle plants. Thanks to its committed teams and a robust production plant - as well as suffi cient cash flow and secure funding sources, Orano has the strengths it needs to overcome this crisis, demonstrating the resilience of its model, and continuing to bring its customers solutions for climate and environmental protection and for economic development.