Advanced batteries. Designed for industry. ANNUAL REPORT 2013 REGISTRATION DOCUMENT INCLUDING ANNUAL FINANCIAL REPORT

Transcription

1 Advanced batteries. Designed for industry. ANNUAL REPORT 2013 REGISTRATION DOCUMENT INCLUDING ANNUAL FINANCIAL REPORT

2 Contents 1 Group presentation Group profile Group strategy and competitive advantages Activities Sustainable development Organisation and locations Key figures Shareholders and stock market information 18 2 Risk Factors Risks related to the market environment and the Group s activities Operational risks Credit and counterparty risks Liquidity risk Market risks Contractual and legal risks Risks related to the impact of the Group s business on the environment, human health and safety Insurance 32 3 Sustainable Development Environmental responsibility Social responsibility Corporate social responsibility Statutory Auditors independent third-party report on consolidated social, environmental and societal information published in the management report 47 4 Corporate Governance Management and Supervisory Boards Remuneration and shareholding of the Management and Supervisory Board members Report of the Chairman of the Supervisory Board Statutory Auditors report, prepared in compliance with article L of the French Commercial Code on the report prepared by the Chairman of the Supervisory Board of Saft Groupe SA Main provisions of the Supervisory Board bylaws 80 5 Comments on the 2013 financial year Activity and consolidated results Earnings per division Other items of consolidated income Research and development Investments and fixed assets Cash flow and financing Statement of financial position Other key events in financial year Related-party transactions Change in scope Basis of preparation of the consolidated financial statements Recent events and 2014 outlook Saft Groupe SA activity and results Activity of Saft Groupe SA subsidiaries and controlled entities 95 LABEL TRANSPARENCE labeltransparence.com This label recognises the most transparent Registration Documents according to the criteria of the Annual Transparency Ranking.

3 consolidated financial statements Consolidated statement of financial position Consolidated income statement and consolidated statement of comprehensive income Consolidated statement of cash flows Statement of changes in equity Notes to the consolidated financial statements Statutory Auditors report on the consolidated financial statements Parent company Certified Financial Statements Balance sheet Assets Balance sheet Equity and liabilities Income statement Notes to the parent company Financial Statements Parent company Financial summary for the last five years Statutory Auditors report on the financial statements for the year ended 31 December Annual General Meeting Overview of key resolutions Statutory Auditors special report on regulated agreements and commitments with third parties Additional information Documents accessible to the public Officers responsible for the annual report The Saft Group Auditors and related fees Registration document cross-reference Table Annual financial report cross-reference table Management report cross-reference table Cross-reference table for environmental, social and corporate social information Information about the Company and its share capital General information about the Company Group history Group organisation chart Significant contracts and commitments Main statutory provisions Capital and shareholding of SAFT Groupe SA 178 The information contained in the management report relating to the financial year ended December 31, 2013, presented in this document has been prepared by the Management Board and approved by the Supervisory Board of Saft. Certain statements contained herein are forward-looking statements relating, in particular, to future events, trends, plans or objectives. By their nature, these forecasts are subject to known or unknown risks and uncertainties could cause Saft s actual results and objectives to differ materially from those expressed or implied in these forwardlooking statements. The French version of the 2013 Registration Document has been registered with the AMF. It is therefore the only version that is binding in law. This Registration Document was registered with the Autorité des marchés financiers (AMF) on February 18, 2014, in accordance with the article of the AMF s General Regulations. It may be used in support of a financial transaction if accompanied by a transaction circular approved by the AMF. The annual Registration Documents are available on the Company s website: Copies of the Registration Documents may also be obtained at the Company s registered office at 12 rue Sadi Carnot, Bagnolet France. SAFT REGISTRATION DOCUMENT / 1

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5 Chairman s message 2013 was a year of contrasts for Saft. During the first half the performance was rather disappointing with no sales growth and reduced profitability. This reduction of profitability was due to a number of factors; unfavorable product mix, planned increases in research and development costs, and the purchase of a Li-ion cell production facility in France which added costs. This purchase was the final part of the agreement signed with Johnson Controls Inc. in 2011 to resolve the dispute on the future of Johnson Controls-Saft. However, after this slow start the Group reported significant commercial successes which drove excellent sales growth in the second half-year and which had a positive impact on H2 profitability. Finally the Group achieved sales growth of 7.5% in the year at constant exchange rates and a strong recovery in profitability in H2. Among the noteworthy successes in 2013 were the major breakthroughs we made in the telecoms market for our nickel-based batteries in the US and the Evolion lithium-ion batteries in India. During the year as a whole the transportation activity, batteries for trains and aviation, registered strong growth, with numerous successes in the Chinese rail market. Of course, there were some markets where progress was slower than we had expected, notably in the emerging energy storage business where we encountered delays in securing contracts. In addition, our Specialty Battery division had a challenging year notably in the US where demand for our products was lower than expected. The year ended on a stronger note in civil markets. In June last year we completed our sale of the Small Nickel Battery business based in Nersac, France, which marked our final exit from this activity, which is now operating under the name of Arts Energy. Looking forward, our strategy is to secure growth through continued commercial success for our nickel and primary lithium products which have been key to our past successes coupled with the rapid growth in sales of our new technology lithium-ion battery systems. These new systems are targeted at new applications, energy storage for electricity utilities and vehicles and as a high performance option in many existing applications, telecom back-up power, motive power, satellites and launchers, and longer term for aircraft and new rail applications. I am confident that Saft is well-positioned with its products and market experience to be one of the most successful advanced battery manufacturers in the world in the years to come. John Searle Chairman of the Management Board Saft Groupe SA SAFT REGISTRATION DOCUMENT / 3

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7 1 Group presentation 1.1 Group profile 6 Saft, the world leader in advanced and innovative battery systems Group strategy and competitive advantages Activities Technologies Applications and markets Research & development Sustainable development Organisation and locations An organisation and international presence supporting the Group s development Corporate governance ensuring the balance of powers Key figures Shareholders and stock market information 18 SAFT REGISTRATION DOCUMENT / 5

8 1 Group GROUP PRESENTATION profile 1.1 GROUP PROFILE Saft in brief 624.2m sales in ,856 staff worldwide 18 countries around the world 9.3% of sales invested in Research and Development in manufacturing sites worldwide SAFT, THE WORLD LEADER IN ADVANCED AND INNOVATIVE BATTERY SYSTEMS* Created in 1918, Saft is the world s leading designer, developer and manufacturer of advanced technology batteries for industry. Its multi-technology battery systems meet the needs of a wide variety of customers worldwide: nickel-based and primary lithium batteries in industrial infrastructure, transportation, civil and military electronics; lithium-ion solutions in energy storage, telecoms, marine, vehicles, space and defence. Saft s customers include original equipment manufacturers (OEMs), distributors, and final end users. Saft manufactures batteries to meet the requirements of specific applications, developing batteries in close cooperation with the industrial clients who use Saft batteries in their equipment. Saft continues to develop new generations of batteries for new applications, helping customers develop innovative products and services. On most of the advanced-technology battery markets targeted by Saft, the Saft brand is a key criterion in the customers purchase decisions. However, Saft also markets products under other wellknown brands: Alcad, Tadiran, Eternacell, Nife and Ferak. This strategy enables the Company to leverage its position on certain specialized markets throughout the world and meet the diverse needs of its customers. With a consolidated turnover of 624.2m in 2013, Saft operates through two divisions: the Industrial Battery Group (IBG), which manufactures rechargeable batteries for transportation, stationary backup power and energy storage systems. In 2013, IBG sales represented 59% of the Group consolidated turnover; the Specialty Battery Group (SBG), which manufactures primary and rechargeable batteries for civil and military electronics activities, space and defence. In 2013, SBG sales represented 41% of the Group consolidated turnover key events are presented in the management report in chapter 5 of the Registration Document. Key dates of Saft history are presented in chapter 8 of the Registration Document. * Management estimation. 6 / SAFT REGISTRATION DOCUMENT

9 GROUP PRESENTATION Group strategy and competitive advantages GROUP STRATEGY AND COMPETITIVE ADVANTAGES Because energy consumption in the world is increasing and its production cost is also growing, the energy storage market and therefore the battery market have a promising future. Its potential has also increased thanks to the awareness of the need for a more responsible economic growth, in which energy wastage is limited and emissions of greenhouse gases are reduced. Saft s strategy is to address the market segments where its advanced technologies provide a significant advantage over alternative technologies. This strategy is therefore based on: the focus on Research and Development. Saft invests significant resources in its research and development activities. Saft employs approximately 465 engineers and technicians working in applied research, development of new battery technologies, and optimization of existing products and the adaptation of various batteries to specific customer specifications; a wide range of technologies. The Group filed ten new patents in 2013 divided into 141 patent families related to its battery technologies; the identification of markets and advanced industrial applications with a high growth potential where customers require products designed for their specific needs. To this effect Saft works in close collaboration with its key customers; a requirement for high quality products. Saft supplies batteries for applications where the cost of failure can be high to end users, particularly in the aviation, defence, and space industries. With nearly one hundred years experience in the battery market, Saft s reputation for making reliable, safe, and high performance products represents a significant competitive advantage in these markets; the development of solid customer relationships. Those relationships have enabled Saft to work with its main customers in the development phase for new applications which in turn leads to opportunities for new supply contracts; global c apabilities. Saft is present in 18 countries. Its 14 manufacturing facilities worldwide at sites in nine countries, and its broad sales network, enable Saft to service customers all over the world. The Group s ability to service its customers in strategic markets on a local basis is also a key competitive advantage. These principles of the Group s strategy are competitive advantages and enable the Group to achieve high margins justified by the technology used and the technical know-how. In addition, this strategy enables the Group to have diversified customers and to limit its exposure to cyclical fluctuations which may affect certain industries. Finally, it enables the Group to hold significant market shares worldwide in most of its markets and to implement a premium pricing policy for its products. Saft intends to maintain this strategy and take full advantage from its competitive advantages, in order to increase its market shares in the strategic markets where it operates, to gain new markets and new industrial applications with lithium-ion technology developed by the Group, to increase sales and, finally, to increase its operating margins. To achieve these objectives, Saft implements the following strategies: investment in lithium-ion technology and in new markets; continue to expand its commercial presence with regards to the market s needs. Thus, Saft has opened a commercial unit in Brazil in 2010 and Russia in 2013; exited non-core markets. With the sale of the SNB activity in June 2013, the Group has left the small nickel battery market; cut production costs. Saft is continuously seeking opportunities to reduce component and manufacturing costs in order to improve its competitiveness. Among others, through its World Class Manufacturing Program for continuous improvement, Saft employs an efficient methodology to continue reducing its costs while maintaining a high level of quality. SAFT REGISTRATION DOCUMENT / 7

10 GROUP PRESENTATION 1 Activities 1.3 ACTIVITIES Saft s strategy is to propose a portfolio of advanced technologies to multiple industrial markets TECHNOLOGIES Batteries are stand-alone power sources that convert chemical energy into electrical energy through a chemical reaction when the battery is discharged. There are two main types of batteries produced by Saft: non rechargeable batteries (primary) and rechargeable batteries (secondary): the active materials in a non-rechargeable battery are irreversibly converted during the chemical reaction which produces energy. The principal primary battery technologies Saft s uses are lithium-based; rechargeable batteries are batteries which can be used (charged and discharged) repeatedly. The achievable number of recharge cycles varies among technologies and is an important competitive factor. The main rechargeable battery technologies used by Saft are nickel and Liion. Rechargeable batteries based on these advanced technologies offer better and more reliable performance, especially under extreme conditions, and have a longer life, reducing replacement frequency and related costs, than batteries based on lead acid technology, an alternative technology used in industrial batteries. A description of the main technologies used by Saft is set forth below: nickel-based technology was developed in 1910 and remains, with lead acid, the main technology for industrial batteries. Nickel technology based batteries accounted for approximately 48% of the Group s combined revenues in 2013; primary lithium. Non-rechargeable lithium batteries, which were first developed in the 1960s, possess high end storage and performance capabilities over a large range of formats. Primary lithium batteries accounted for approximately 30% of the Group s combined revenues in 2013; rechargeable lithium (Li-ion). Li-ion is a rechargeable lithium technology, developed in the early 1990s, that Saft expects will be increasingly used in advanced applications in the aviation, defence and hybrid vehicle markets. Li-ion technology based batteries accounted for approximately 18% of the Group s combined revenues in 2013; other technologies. Silver-based technologies are used to manufacture batteries used in missiles and torpedoes. These batteries accounted for approximately 4% of the Group s combined revenues in APPLICATIONS AND MARKETS Industrial Battery Group (IBG) Presentation Nickel-based batteries represent the traditional expertise of Saft s Industrial Battery Group (IBG). On the foundations of this long heritage, the Group has successfully developed lithium-ion technology in order to meet the ever diversified requirements of its customers, whose applications benefit from the smaller, lighter, longer-life and versatile batteries that Li-on offers. IBG is now going that extra mile in satisfying customer needs by offering not only systems integration, for example in energy storage systems, but also full turnkey solutions that include services such as installations, commissioning and training across all its markets and segments. Industrial Battery Group in 2013 The industrial Battery Group is the division which provided the growth for Saft in The telecom network back-up power segment made major breakthroughs with Li-ion batteries in India and a high level of sales of nickel batteries to US operators. The transportation activity also registered strong growth in both rail and aviation. Rail batteries destined for the Chinese mass transport and high speed train market were particularly successful in The Energy storage battery market experienced contract delays this year although this segment remains very attractive for Saft for the future. The Group s growth strategy for the IBG division is based on continued success in nickel-based batteries and faster growth in new technology Li-ion battery systems which are opening up new opportunities in many of Saft s industrial markets. 8 / SAFT REGISTRATION DOCUMENT

11 GROUP PRESENTATION Activities 1 Market segments Stationary backup power Industrial standby Saft designs and manufactures batteries for industrial standby applications. These batteries are generally robust, have a long life and can perform under extreme conditions. Product applications are principally emergency power backup systems in the following markets: oil and gas, power generation and distribution, railway signalling systems, in which the Group delivers the products directly to the end customers. Growth in this sector is generally correlated with GDP growth, and in particular with capital expenditures in the industrial sector. Telecommunications networks Saft manufactures backup power stationary nickel or Li-ion batteries, in case of grid failure. Installed mostly in outdoor telecommunications terminals, these batteries face extreme conditions and/or for which maintenance is difficult and costly due to their remote location. Growth in this market is generally driven by levels of capital expenditure in the telecommunications industry. Energy storage systems (ESS) Essential for the stability of the grid, energy storage also helps to smooth the peaks and troughs of renewable energy generation. Saft offers battery solutions to ensure the constant reliability required to better integrate this intermittent energy. With high energy efficiency, the range of Saft Li-ion batteries for these applications offers high performance, long life and a limited maintenance. Transportation Rail transport Saft supplies railway and mass transit operators as well as train manufacturers primarily with nickel-based batteries for back-up power communication, lighting, air-conditioning and critical safety applications such as emergency bracking and for door opening systems. Batteries supplied to the rail market must be reliable and able to withstand extreme conditions. They generally have a life of 10 to 15 years. The rail market is also demanding increasingly compact batteries with reduced maintenance requirements. The replacement and refurbishment of rolling stock as well as investments in mass transport systems drive growth in this market. Aviation Saft is the world s leading supplier of battery systems for the aeronautics industry (OEMs, distributors and airlines) and its batteries on board two thirds of the worldwide fleet of civil and military aircraft. Saft nickel batteries are utilized mainly for power back-up and emergency systems, as well as for engine and turbine starting and flight preparation. Since the consequences of power failure are significant for aircraft operators, batteries supplied to the aviation market must be highly reliable and durable, especially in extreme conditions. Although most of the batteries used in the aviation market are nickel-based batteries, Li-ion is an emerging technology in this market. Vehicles In this innovative sector, Saft develops and provides Li-ion battery solutions for both motorsports and industrial vehicles, such as forklift trucks in industrial infrastructure. Both sectors require high performance and efficiency and Saft battery systems are particularly well suited to these innovative vehicles to optimize their duty cycle. IBG competitive environment For its nickel battery activity, Saft IBG is the leader on all its markets and faces competition mainly coming from Europe and India with smaller production capacity than Saft. However the main competition the Group faces is from lead-acid technology which has lower performance and a shorter life than nickel batteries, especially in difficult climatic conditions but also a lower initial cost. For Li-ion, the range of competitors is wider and comes mainly from US and Asia. The Group s financial strength gives it the power to constantly develop new products and be present worldwide to keep its leadership position. With its deep knowledge of high value-added markets for nickel-based activities, exciting new Li-ion opportunities, two new world class factories and its extensive sales network, Saft has a unique multi technology offer of high performance and competitive products. Specialty Battery Group (SBG) Presentation Saft s Specialty Battery Group is acknowledged as the world s leader in the design, development and manufacture of high-performance primary lithium and lithium-ion (Li-on) battery systems. Those systems tend to be small, lightweight, resistant, reliant, powerful and long lasting, and they are developed to meet customer needs in the civil and military electronics industry, defence and space industries. Saft SAFT REGISTRATION DOCUMENT / 9

12 GROUP PRESENTATION 1 Activities develops batteries for applications in cooperation with OEMs, which typically leads to a supply contract with an OEM and subsequent replacement sales to end users. The division also supplies silver-based batteries for conventional defence applications such as electric torpedoes. Specialty Battery Group in 2013 The Specialty Battery Group had a more challenging year in 2013, with the civil electronics activity encountering lower demand for Saft s high performance primary and rechargeable batteries for the utility meter markets, in particular in the US, and lower sales to the space and defence segment. This division is also very well-positioned to benefit from new opportunities opening up for new technology lithium-ion battery systems, in the space and defence markets, the o il and g as markets, marine applications and medical equipment for example. Saft s strategy for growth in this division is also based on offering a range of high performance battery systems to multiple end markets requiring the technological advantages Saft s products bring. Market segments Civil electronics With its two major brands, Saft and Tadiran, the Saft Group continues to be the world s leading supplier of primary lithium technologies for the main targeted market segments. Generally speaking, Saft designs and manufactures lightweight, highperformance, highly reliable batteries tailored to the demands of OEMs. Customers in this market include both specialized OEMs and distributors. Temperature resistance, long life, reliability and small size are among the most valued technical capabilities for batteries in this market. In general, prototypes are prepared to meet the specifications of the application and there is a period of tests before the batteries are selected by the OEM client. The qualification and testing period can take up to two years before production begins. Given these requirements, once a battery manufacturer is qualified as the supplier, it is generally in a strong position to remain the supplier for the life of the product. Sales to distributors involve standardized products and permits wider geographic coverage of sales. Space Saft is the world s leading company for the design, development and manufacture of Li-ion batteries for satellites used in communications, scientific and defence applications and is continually breaking new ground in this area. Satellites represent the major share of Saft s space activity. However, the Company also equips satellite launchers, where it has pioneered solutions based on lithium-ion technology combining lighter weight with improved thermal management. Saft remains the only manufacturer with a complete range of battery technologies for the space market. Satellites require batteries that can withstand extreme conditions such as temperature variations and vibrations, operate reliably throughout the entire mission, and comply with strict size and weight constraints. Saft produces specialized batteries customized for the particular needs of each satellite. The development and production of a satellite battery typically takes approximately three years from initial inquiry to launch of a satellite. Demand is driven by telecommunications investment, defence budgets and scientific and special projects. Since it is impossible to replace a faulty item on a satellite, reliability and long life are the most important characteristics valued by customers. Military activities Saft is a leading designer, developer and manufacturer of highperformance lithium solutions for defence applications. These batteries power equipment ranging from communications systems, night-vision goggles to thermal-imaging cameras, missile launchers and military vehicles. Military lithium (batteries used in portable devices) requires highly technical batteries that provide reliable power under extreme conditions with strict size and weight constraints. Sales of lithium batteries to the defence market are predominantly driven by sales of replacement batteries directly to armed forces. Once a battery supplier has qualified with an OEM for an initial sale, replacement sales are made directly to the end-user, generally pursuant to multi-year contracts which are submitted for bids to qualified suppliers. Long term customer relationships are particularly important because there is a need to collaborate with OEM customers to continually reduce the size and weight of batteries for these mainly portable applications. In the defence market, Saft designs and manufactures silver-based batteries. These batteries are required to be robust, have a long shelf life and be resistant to shocks, and must be customized to each application: Saft has a strong position in the silver based applications market, mainly silver-zinc batteries for torpedoes and missiles. Saft s customers for applications using silver based batteries are mainly European OEMs that manufacture 10 / SAFT REGISTRATION DOCUMENT

13 GROUP PRESENTATION Activities 1 torpedoes, and with whom the Group has concluded longterm sales contracts. Shelf life and reliability are key purchasing considerations in this market. I n the new defence systems market, Saft is developing batteries, in collaboration with OEMs, for advanced applications in the defence market based upon high performance Li-ion technology. Advanced defence systems are typically applications that require reliable, lightweight and high-energy power sources, such as smart weaponry, hybrid military vehicles and mini-submarines. By working with OEMs to develop applications for new defence systems, Saft, as a general rule, is able to secure supply contracts with OEMs for successful applications. SBG Competitive environment In primary lithium products, lithium batteries division of Saft SBG offers a wide portfolio of technologies and has a leading position in its strategic markets. It faces competition mainly from Asian companies a Korean company plus more than a dozen of small or middle sized Chinese companies - offering a significantly smaller choice of technologies with more limited performance. Only one or two of them are qualified suppliers and all of them stay behind Saft s brands in terms of technical capacity. In the military market segment, Saft has only one smaller competitor with a rather limited offer. Saft s brands are leaders in all key segments of this market. In rechargeable Li-ion, Saft SBG mainly addresses technicallydriven niche markets, offering complete battery solution. Competition varies depending on the market and is based in the United States, Europe and Asia. Asia, including Korea, China and Japan, has many manufacturers of cells dedicated to consumer products with which Saft does not compete. Saft has positioned itself on the segments with technically complex products and the highest requirements in terms of battery capacity or cell performance. Unlike many of its competitors who must incorporate cells into their products from various manufacturers, Saft can provide its strategic markets with complete in-house battery solutions, ensuring a strong position on the market. In space activities, Saft is mainly competing with a large Asian company and a small European manufacturer. Its market share illustrates the weakness of these two competitors, Saft holding a position forefront with its higher technology and its capability to manufacture complete cells and batteries both in Europe and the United States. In defence activities, Saft has no major competitor able to reach all regions and markets, but two serious competitors in the silver-based technology. However, Saft remains the leader through its technical expertise and significant productivity efforts. In Lithium-ion products, Saft faces multiple small to medium sized manufacturers of cells and batteries, most of the time regional manufacturers. With its two manufacturing centres of large capacity in Nersac and Jacksonville, Saft is able to offer competitive prices in this segment for highvolume operations using their cells or their complete battery solutions RESEARCH & DEVELOPMENT If Saft has succeeded in establishing itself as a world leader in cell and battery systems, it is in large part thanks to the company s long-term commitment to research and development. Almost 500 engineers work on multiple R&D programs basic electrochemistry research, new materials, improved production processes, design, development and enhancement, systems and software, data management, maintainability, and more. A major portion of Saft s R&D work is dedicated to creating new, cost-competitive products meeting specific customer application needs and offering very near-term benefits. In 2013, Saft again invested more than 55 million in research and development, representing more than 9% of sales. R&D headcount further increased to 465. In 2013, ten new patents were filed, adding to Saft s portfolio of patent families of around 141. Li-ion technologies, the major growth area for Saft, represent some 70% of the Company R&D investment, in the quest for new chemistries and new cell formats for next generation solutions and systems integration. P rimary lithium represents another area of significant growth opportunities for Saft in the future. Therefore the R&D team also works on improving traditional primary lithium products as well as bringing new products to market. F inally, R&D engineers continue to enhance Saft s nickelbased products to bring greater benefits to customers. To be efficient, R&D teams work closely with the Group s sales and marketing services that are deployed in 30 sales offices located on five continents. SAFT REGISTRATION DOCUMENT / 11

14 GROUP PRESENTATION 1 Activities Li-ion, a promising future Thanks to its R&D advances, Saft is now a multi-chemistry lithium-based battery provider. Our lithium-ion chemistries are now in production and shipping from the Jacksonville and Cockeysville plants in the USA and from the Bordeaux and Nersac factories in France. So today, Saft is meeting multiple needs thanks to its portfolio of technologies. Other Li-ion chemistries are under development and coming out of the pipeline. Considerable development effort has gone into Super-Phosphate TM lithium-ion technology, including software to predict and manage performance, lifetime and safety. Cell and system development Of Saft s overall R&D investment, around 10% is dedicated to long-term research, where the Company continues to focus on new materials, new chemistries and new processes. This will lead to improved performance and lower cost products for the future. In addition, research is also expanding the work on models and algorithms to support system development. In the shorter term, the R&D teams have further intensified their systems development activity to integrate power electronics and software so as to offer customers complete, customised solutions. The Systems Development Unit (SDU based in Bordeaux) is the fastest growing team in Saft s R&D community, and a SDU unit has also been created at the Jacksonville lithium-ion plant in the United States, whose engineers have the task of integrating specific US needs into the systems. SDU continues to work on several programmes to improve the system content of Energy Storage Systems, offering more energy and more power at a more competitive price in the market. In further developing systems, the R&D teams enable Saft to deliver more content to more applications, and therefore expand the product portfolio. Turnkey solutions, which customers increasingly demand, are high on the priority list of Saft R&D. Much of the focus here is on maintainability. With systems that have a service life of 20 years or more, maintenance is important. Maintainability needs to be integrated in initial design so that the electronics are easily accessible for service technicians and safe to handle. This requires new and more stringent modular design criteria that the R&D engineers are developing for future products. 12 / SAFT REGISTRATION DOCUMENT

15 GROUP PRESENTATION Sustainable development SUSTAINABLE DEVELOPMENT In designing and manufacturing products that contain chemicals, Saft strives to make efficient use of resources and reduce the environmental impact to a minimum. This is achieved by improving performance, extending lifetime and reducing the weight and footprint of the products. It can also be enhanced by saving energy and minimising the CO 2 emissions of its factories. Saft supports end-of-life battery recycling and the use of recycled materials. These actions are all included in programmes Saft has introduced to preserve the environment. Saft continues to make every effort to protect people and the planet, while bringing benefits to the users of its products. The Group uses a set of Key Performance Indicators (KPIs) to monitor the environmental performance. These KPIs assist the Group in monitoring the impact of its activity on the environment and the results of the Group s efforts. In most cases, these KPIs show the Group is making good progress. In addition, all Saft sites in Europe and China are now ISO certified. The Company contributes to protecting the environment through its end-of-life programmes, where Saft is fully compliant with national laws. An important element is the Saft take-back programme. For many years, Saft has encouraged, on a voluntary basis, that used Saft nickel-based batteries be returned by end users to bring-back points for recycling. Now that this is an EU wide requirement, Saft goes beyond the legal demands. The programme has been extended geographically to cover 31 countries, well beyond the EU-27 area. Re-cycling and life cycle assessment Recycling has long been a policy at Saft. All products are recycled back into the manufacturing process. With nickelbased batteries, for example, recycled cadmium is used to produce new batteries, while nickel is re-used either in batteries or in other industries. The Group also carried out a full Life Cycle Assessment (LCA) on primary lithium batteries for metering devices. LCA involves measuring impacts at different phases of a component or system life to detect where improvements are needed to reduce (inter alia) CO 2 emissions or energy usage. This can lead to changes in design or materials or in the manufacturing process. Saft is the first battery supplier to conduct such an LCA, and utility companies appreciate the initiative. Plants and products Saft actively promotes the principles of sustainable development, organised into three areas: society, economy and environment. A reporting process on indicators has been set up to measure the Group s performance in these areas. Data is collected on these non-financial indicators every year and published in this Registration Document. In order to show its commitment and give more weight to these indicators, Saft began in 2011 to have them audited externally. In 2012, Saft has completed a greenhouse gas audit on its French sites. This audit covers direct emissions and indirect emissions linked to energy. In 2013, Saft had the 42 social, societal and environmental indicators audited as part of the French Grenelle 2 law. Saft is also very involved in the practice of eco-design. Product developers are co-operating with recyclers to understand the constraints and costs of design to recyclers. Developers are seeking to include recycling-related constraints in initial design without impacting products performance. In 2013, Saft joined the new programme of the European Commission which aims at establishing a single market for green products and to facilitate improvement of information on the environmental performance of products and organizations. Saft is expert and very active in the Rechargeable Batteries project, led by the Association RECHARGE. Health and safety The Group makes every effort to fully comply and exceed legal health and safety requirements to reduce risks and uses a number of indicators which demonstrate risks are controlled. These indicators continue to show progress year on year. SAFT REGISTRATION DOCUMENT / 13

16 1 Organisation GROUP PRESENTATION and locations 1.5 ORGANISATION AND LOCATIONS AN ORGANISATION AND INTERNATIONAL PRESENCE SUPPORTING THE GROUP S DEVELOPMENT The Group is organised around the holding Saft Groupe SA. The Group organisation chart at December 2013 is detailed in chapter 8 of the Registration Document. AN INTERNATIONAL PRESENCE AND AN ORGANISATION ADAPTED TO CUSTOMERS NEEDS Specialty Battery Group production site Industrial Battery Group production site Saft sales network ASB (50% Saft, 50% EADS) In total, Saft employs 3,856 people across 18 countries, with: 14 production sites; 30 sales offices. Saft has been historically present in Europe and the United States, but is constantly developing in emerging countries, including Asia, South America and Russia. Each Saft division has its own sales team, though if the customer situation demands, one division can work with the other in certain markets. The Industrial Battery Group (IBG) sales and marketing teams comprise 213 people. They are organised by geographic zone, whereas the Specialty Battery Group (SBG) sales teams of 77 people are structured by brand. In certain markets or regions, the sales teams are complemented by agents or distributors with whom the Company has been working for several years. 14 / SAFT REGISTRATION DOCUMENT

17 GROUP PRESENTATION Organisation and locations CORPORATE GOVERNANCE ENSURING THE BALANCE OF POWERS The Saft Group has governance bodies whose operating principles are transparency and dialogue. It is guided by the applicable recommendations and stipulations of Afep-Medef consolidated Code of Corporate Governance for listed companies issued in June 2013 and of AMF. The Saft management team is driven by a long-term vision. It is recognised for its stability and its international experience. Since Saft has been listed on the Eurolist market of Euronext in June 2005, the Group has had a Supervisory Board and a Management Board: The Management Board is appointed by the Supervisory Board. It has the most extensive powers to act under any circumstances in the Company s name. It decides the strategy and priorities for Saft s activities. It is composed of five members: John Searle, Chairman; Thomas Alcide, General Manager of SBG and President of Saft America Inc.; Eliz abeth Ledger, Director Corporate Communications & Institutional Relations; Bruno Dathis, Chief Financial Officer; Xavier Delacroix, General Manager of IBG. The Supervisory Board exercises permanent control over management of the Board of Directors and its members are appointed by the Shareholders General Meeting for a threeyear term. It is composed of five members: Yann Duchene, Chairman; Jean-Marc Daillance, Vice-chairman; Charlotte Garnier-Peugeot; Bruno Angles; Ghislain Lescuyer. The Supervisory Board is assisted in its functions by an Audit Committee, a Remunerations and Nominations Committee and a Strategy and Technology Committee. A Management Committee also exists within the Group, which serves as a forum for discussing and for implementing the Group s strategy. In addition to the members of the Management Board, the Management Committee comprises: François Bouchon, Director of the Energy Storage Unit; Igal Carmi, General Manager of Tadiran Batteries Ltd.; Franck Cecchi, Director Li-ion Operations; Kamen Nechev, Chief Technology Officer. Information relating to Saft Group governance is described in chapter 4 of this Registration Document. SAFT REGISTRATION DOCUMENT / 15

18 1 Key GROUP PRESENTATION figures 1.6 KEY FIGURES ANNUAL SALES GROWTH OF 7.5% AT CONSTANT PERIMETER AND EXCHANGE RATES. NET INCOME UP 5.2% TO 36.5 MILLION. SALES (in million) 2013 CONSOLIDATED SALES BY MARKET SEGMENT % Space & defense 22% Transportation 25% Civil electronics 37% Stationary* *Including sales of electrodes to Arts Energy CONSOLIDATED SALES BY ACTIVITY (in million) Industrial Battery Group Specialty Battery Group 16 / SAFT REGISTRATION DOCUMENT

19 GROUP PRESENTATION Key figures 1 EBITDA (in million) EBIT (in million) NET INCOME FROM CONTINUING OPERATIONS (in million) NET INCOME (in million) SHAREHOLDER S EQUITY (in million) NET DEBT (in million) SAFT REGISTRATION DOCUMENT / 17

20 1 Shareholders GROUP PRESENTATION and stock market information 1.7 SHAREHOLDERS AND STOCK MARKET INFORMATION DIVIDEND FOR THE YEAR SAFT SHARE PRICE INCREASED BY MORE THAN 41% IN 2013, OVER PERFORMING MAJOR PARIS STOCK EXCHANGE INDICES Saft will propose an ordinary dividend of 0.78 per share to shareholders at their annual General Meeting in May IDENTIFICATION Listing: Euronext Paris Market: Eurolist Compartiment B Indexes: SBF 120, CAC Mid 60, CAC IT, CAC Industrial Index ISIN code: FR Eligible security for French equity saving plan (PEA) and for deferred settlement service (SRD) for long positions. CAPITAL DISTRIBUTION* FINANCIAL CALENDAR 2013 Q1 turnover April 24, 2014 Shareholders general annual meeting May 12, 2014 Q2 turnover and half year earnings July 23, 2014 Q3 turnover October 23, 2014 THE SPLIT BY REGION IS AS FOLLOWS: 33.4% North America 32.0% France 14.6% United Kingdom 18.9% Other Europe 1.1% Rest of the world MAIN SHAREHOLDERS Harris Associates: 8.42% Schroders Investment Mgt: 5.98% Carmignac Gestion: 4.34% Caisse des Dépots et Consignation: 4.10% 84.6% Institutional shareholders 15.1% Individual shareholders including management of the Group 0.3% Treasury stock * Based on an analysis of shareholdings as of January 2, / SAFT REGISTRATION DOCUMENT