2013 REGISTRATION DOCUMENT and annual fi nancial report Contents Profi le 2 2013 Highlights 4 1 5 Persons responsible for the Registration Risk factors 101 Document and fi nancial audit 7 5.1 Main risks 102 1.1 Person responsible for the Registration Document 8 5.2 Risk management 112 1.2 Statement by the person responsible for the Registration 5.3 Insurance: Group policy 113 Document 8 1.3 Persons responsible for the fi nancial audit 9 1.4 Person responsible for the Group’s legal affairs 10 6 1.5 Person responsible for the communication of fi nancial information 10 Assets, fi nancial position and results 115 6.1 Consolidated fi nancial statements 116 2 6.2 Parent company fi nancial statements 194 General information on Vallourec and its capital 11 7 2.1 General information on Vallourec 12 Corporate governance 209 2.2 General information about the share capital 13 7.1 Composition and operation of the Management 2.3 Distribution of capital and voting rights 21 and Supervisory Boards 210 2.4 Market for Vallourec’s shares 24 7.2 Compensation and benefi ts of all kinds 242 2.5 Dividend policy 27 7.3 Managers’ interests and employee profi t sharing 252 2.6 Financial disclosure policy 27 Appendices 269 3 8 Information on Vallourec Group activities 31 Information on recent trends and outlook 299 3.1 Presentation of Vallourec and its Group 32 8.1 Oil & Gas 300 3.2 Investment policy 57 8.2 Power Generation 301 3.3 Research and Development – Industrial property 59 8.3 Other applications 302 8.4 Raw Materials 302 8.5 Currency 302 4 8.6 Market trends and outlook in 2014 302 Corporate social responsibility 63 4.1 Social information 64 9 4.2 Environmental information 80 4.3 Civic responsibility 89 Additional information 303 Appendices 91 9.1 Management Board Reports 304 9.2 Statutory Auditors’ reports for fi scal year 2013 315 9.3 Subsidiaries and directly-held equity interests at 31 December 2013 322 9.4 Five-year fi nancial summary 323 9.5 Concordance tables and information incorporated by reference 324 9.6 Other periodic information required under the AMF’s General Regulations 329 Registration Document and Annual Financial Report Year ended 31 December 2013 The original version of this Registration Document (document de référence) in French was fi led with the Autorité des Marchés Financiers – AMF (the French securities regulator) on 14 April 2014 in accordance with Article 212-13 of its general regulations. It may be used in connection with a fi nancial transaction if supplemented by an Information Notice authorized by the AMF. This document was prepared by the issuer and is the responsibility of those who signed it. Copies of this Registration Document are available free of charge from Vallourec (27, avenue du Général Leclerc, Boulogne-Billancourt, 92100, France), Vallourec’s website (http://www.vallourec.com) and the AMF’s website http://www.amf-france.org). This Registration Document includes all the elements of the annual fi nancial report mentioned in Section I of Article L.451-1-2 of the French Code monétaire et fi nancier and Article 222-3 of the AMF’s general regulations. A concordance table showing documents referred to in Article 222-3 of the AMF’s general regulations and the corresponding sections of this Registration Document is included on page 284. 2013 Registration Document l VALLOUREC 1 Profi le World leader in premium tubular solutions serving primarily the energy markets (Oil & Gas, Power Generation), Vallourec also provides its expertise to the industry sector. Tubes, connections and premium solutions for the exploration and exploitation ➜ OIL & GAS of oil & gas deposits: ® Z OCTG*: tubes and connections for equiping oil and gas wells (casing, tubing, VAM premium connections, accessories) ® Z Drill pipe, bottom hole assembly, VAM premium connections and accessories for drill strings Z Line pipe and accessories for transporting hydrocarbons offshore and onshore Z Super duplex welded tubes for umbilicals Z Pipe and fi ttings for hydrocarbon processing units Z Vallourec Global Solutions: products and services offer (well design, training, logistics, repair and fi eld services…) Z Welding solutions and service for offshore and onshore projects VAM® is a registered trademark of Vallourec Group. * Oil Country Tubular Goods (OCTG). The entire range of tubes needed to build conventional and nuclear power plants: ➜ POWER GENERATION Z Seamless tubes and pipe for boiler applications Z Seamless tubes for nuclear power plants Z Welded tubes for heat exchangers Hollow sections, tubes and hollow bars for: ➜ INDUSTRY Z mechanical engineering: cranes, hydraulic cylinders, agricultural machinery, OCTG* mechanical parts, etc. Z automotive: light and heavy vehicles Z construction: bridges, stadiums, airport terminals, exhibition halls, offshore structures, etc. * Oil Country Tubular Goods (OCTG). ➜ KEY EVENTS IN 2013 January 2013 February 2013 May 2013 Vallourec’s main frame agreement with Located in Dammam, Saudi Arabia, Vallourec adopted a single brand and a the Brazilian national oil company Vallourec’s new finishing unit which new visual identity to strenghten its world Petrobras to supply premium OCTG is dedicated to the heat treatment and leadership and accompany its growth products was renewed for a period of 5 threading of the entire range of premium strategy. years. VAM® connections, was qualifi ed to supply Saudi Aramco, the national oil company. 2 VALLOUREC l 2013 Registration Document Europe 19% North America 26% Asia and Middle East 26% South America 21% Main Vallourec locations Finishing lines Tube mills Sales offi ces and services % Breakdown of sales by geographic region Steel mills Plantation and Mine R&D Centers ➜ COMMITMENT ➜ OPERATIONS WORLDWIDE Vallourec’s Code of Ethics, deployed throughout the whole With over 24,000 employees, sales of €5.6 billion in 2013, 81% of which company, illustrates its desire to engage with its stakeholders, were realized outside Europe, and integrated manufacturing facilities in its customers and its employees with mutual respect. The Group more than 20 countries, Vallourec is conducting an ambitious strategy of considers its activities as part of a sustainable development local development with new plants in Brazil, the United States, the Middle approach by offering solutions that allow for the responsible use East and China, enabling it to provide solutions closer to its clients and of resources and by improving its own energy effi ciency. improve its competitiveness. Vallourec has six R&D centers around the world and over 500 researchers to maintain its technological leadership and provide innovative solutions to meet its clients’ needs. July 2013 October 2013 December 2013 Vallourec strengthened its R&D capacities, The Vallourec Group’s new plant in China, Vallourec finalized its employee share inaugurating a new research center in Rio specialized in the manufacture of tubes for ownership plan "Value 13". Nearly 15,000 de Janeiro dedicated to drilling in a pre- nuclear plants, produced its fi rst tubes. employees, representing 68% of the eligible salt environment. staff, subscribed for this sixth worldwide employee share ownership operation. As at 31 December 2013, employee shareholders held 7.37 % of the share capital. 2013 Registration Document l VALLOUREC 3 2013 Highlights Sales volume SALES VOLUME SALES kt (in Kt) (in € million) 2,159 2,500 5,600 5,578 2,251 2,159 5,296 5,326 2,092 5,200 2,000 Sales million 4,800 €5,578 1,500 4,400 1,000 EBITDA 4,000 million 500 €920 3,600 0 3,200 2011 2012* 2013 2011 2012* 2013 Employees 24,053 SALES BY GEOGRAPHIC REGION IN 2013 (in %) 21.2% 7.3% South America Rest of the world 19.1% Europe 26.2% Asia and Middle East 26.2% North America SALES BY ACTIVITY IN 2013 (in %) 10.3% Power Generation 5.5% Petrochemicals 7.4% Mechanical 65.8% Engineering Oil & Gas 4.1% Automotive 6.9% Construction & other * Figures for the year 2012 have been restated with the impact of the change in method of accounting for actuarial gains and losses on employee benefi ts (revised standard IAS 19). 4 VALLOUREC l 2013 Registration Document EBITDA EBITDA MARGIN OPERATING INCOME (in € million) (in %) (in € million) 1,000 940 920 20 800 17.7 693 16.5 788 800 14.8 15 600 534 476 600 10 400 400 5 200 200 0 0 0 2011 2012* 2013 2011 2012* 2013 2011 2012* 2013 NET INCOME - GROUP SHARE EARNINGS PER SHARE GROSS CAPITAL EXPENDITURES (in € million) (in €) (in € million) 500 4 1,000 909 3.4 402 803 400 800 3 567 300 262 2.1 600 221 2 1.8 200 400 1 100 200 0 0 0 2011 2012* 2013 2011 2012* 2013 2011 2012* 2013 FINANCIAL INVESTMENTS NET DEBT EQUITY (in € million) (in € million) (in € million) 250 6,000 223 5,210 5,144 1,800 4,986 1,614 1,631 5,000 200 1,500 1,193 4,000 150 1,200 3,000 900 100 2,000 600 50 300 1,000 0 0 0 0 0 2011 2012* 2013 2011 2012* 2013 2011 2012* 2013 * Figures for the year 2012 have been restated with the impact of the change in method of accounting for actuarial gains and losses on employee benefi ts (revised standard IAS 19). 2013 Registration Document l VALLOUREC 5 6 VALLOUREC l 2013 Registration Document 1.1 Person responsible for the Registration Document 8 1.2 Statement by the person responsible 1 for the Registration Document 8 1.3 Persons responsible for the fi nancial audit 9 Persons responsible 1.3.1 Statutory Auditors 9 for the Registration 1.3.2 Alternate Statutory Auditors 9 1.4 Person responsible for the Group’s legal Document and affairs 10 fi nancial audit 1.5 Person responsible for the communication of fi nancial information 10 2013 Registration Document l VALLOUREC 7 Persons responsible for the Registration Document and fi nancial audit 1 Person responsible for the Registration Document 1.1 Person responsible for the Registration Document Mr.