Financial statements

Thousands of Euros

Notes

2020

2021

Turnover

F9

20,710,116

24,054,439

Other operating income

F9

80,602

176,919

Operating income

20,790,718

24,231,358

Raw materials and consumables

F9

(18,819,323)

(21,644,346)

Payroll and related benefits

F10

(798,481)

(853,140)

Depreciation and impairments

F9

(362,496)

(338,777)

Other operating expenses

F9

(506,587)

(517,313)

Operating expenses

(20,486,887)

(23,353,576)

Income (loss) from other financial assets

F12

761

1,156

Result from operating activities

304,592

878,938

Financial income

F11

4,044

13,904

Financial expenses

F11

(77,802)

(80,716)

Foreign exchange gains and losses

F11

(30,445)

(23,480)

Share in result of companies accounted for using the equity method

F17

(5,332)

17,347

Profit (loss) before income tax

195,057

805,993

Income taxes

F13

(59,130)

(179,044)

Profit (loss) from continuing operations

135,927

626,949

Profit (loss) of the period

135,927

626,949

of which minority share

5,397

7,990

of which Group share

130,530

618,959

(EUR)

Basic earnings per share from continuing operations

F39

0.54

2.57

Diluted earnings per share from continuing operations

F39

0.54

2.56

Dividend pay-out per share

0.25

0.75

On 30 April 2020 the ordinary shareholders’ meeting approved to reduce the dividend for 2019 to 0.375 per share, which corresponded to the amount of the interim dividend for 2019 which had been already paid out in the second half of 2019. Therefore, there was no dividend payout in the first half of 2020. The Supervisory Board proposed a gross annual dividend for the financial year 2020 of 0.75 per share at the Annual General Meeting on 29 April 2021. Taking into account the interim dividend of 0.25 per share paid out on 25 August 2020, a gross amount of 0.50 per share was paid out on 5 May 2021 after shareholder approval. Taking into account the interim dividend of 0.25 per share paid out on 24 August 2021 and subject to shareholder approval, a gross amount of 0.55 per share will be paid out on 4 May 2022.

The notes F1 through Parent company separate summarized financial statements are an integral part of these consolidated financial statements.

Thousands of Euros

Notes

2020

2021

Profit (loss) of the period from continuing operations

135,927

626,949

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

Changes due to remeasurements of post employment benefit obligations

(25,198)

46,007

Changes in deferred taxes directly recognized in other comprehensive income

7,258

(11,838)

Items in other comprehensive income that may be subsequently reclassified to P&L

Changes in financial assets at FV through OCI reserves

(4,193)

43

Changes in cash flow hedge reserves

17,321

65,732

Changes in deferred taxes directly recognized in other comprehensive income

(3,456)

(19,811)

Changes in currency translation differences

(122,257)

86,663

Other comprehensive income from continuing operations

F23

(130,525)

166,796

Total comprehensive income for the period

5,402

793,745

of which Group share

2,952

784,177

of which minority share

2,450

9,568

The deferred tax impact on the consolidated statement of comprehensive income is due to changes in the cash flow hedge reserves for -19.8 million and in the employee benefit reserves for -11.8 million.

The notes F1 through Parent company separate summarized financial statements are an integral part of these consolidated financial statements.

Thousands of Euros

Notes

31/12/2020

31/12/2021

Non-current assets

2,895,694

3,102,769

Intangible assets

F14, F15

346,888

339,848

Property, plant and equipment

F16

2,163,660

2,351,133

Investments accounted for using the equity method

F17

139,839

155,140

Financial assets at fair value through Other Comprehensive Income

F18

8,352

14,120

Loans granted

F18

3,252

2,608

Trade and other receivables

F20

11,765

20,672

Deferred tax assets

F21

221,938

219,248

Current assets

5,445,199

5,942,472

Loans granted

F18

80

169

Inventories

F19

2,718,092

2,869,071

Trade and other receivables

F20

1,677,167

1,832,033

Income tax receivables

F21

39,553

46,762

Cash and cash equivalents

F22

1,010,307

1,194,437

Total assets

8,340,893

9,045,241

Equity of the Group

2,621,856

3,167,274

Group shareholders' equity

2,557,182

3,112,882

Share capital and premiums

1,384,273

1,384,273

Retained earnings

1,749,655

2,151,292

Currency translation differences and other reserves

F23

(367,825)

(196,370)

Treasury shares

(208,921)

(226,313)

Minority interest

64,674

54,392

Non-current liabilities

2,359,901

2,398,400

Provisions for employee benefits

F27

426,356

387,206

Financial debt

F24

1,705,154

1,724,037

Trade and other payables

F25

23,505

47,361

Deferred tax liabilities

F21

22,846

24,294

Provisions

F29, F30

182,040

215,502

Current liabilities

3,359,136

3,479,567

Financial debt

F24

719,177

430,847

Trade and other payables

F25

2,418,929

2,807,966

Income tax payable

F21

160,734

197,488

Provisions

F29, F30

60,296

43,266

Total equity & liabilities

8,340,893

9,045,241

The notes F1 through Parent company separate summarized financial statements are an integral part of these consolidated financial statements.

Thousands of Euros

Share capital & premiums

Reserves

Currency translation & other reserves

Treasury shares

Minority interest

Total for continuing operations

Balance at the beginning of 2020

1,384,273

1,678,348

(284,453)

(184,701)

66,997

2,660,464

Result of the period

-

130,530

-

-

5,397

135,927

Other comprehensive income for the period

-

-

(127,578)

-

(2,947)

(130,525)

Total comprehensive income for the period

-

130,530

(127,578)

-

2,450

5,402

Changes in share-based payment reserves

-

-

10,108

-

-

10,108

Convertible Bond - conversion rights*

-

-

37,743

-

-

37,743

Capital increase

-

-

-

-

27

27

Dividends

-

(60,141)

-

-

(4,800)

(64,942)

Transfers

-

917

(3,645)

2,727

-

-

Changes in treasury shares

-

-

-

(26,947)

-

(26,947)

Changes in scope

-

-

-

-

-

-

Balance at the end of 2020

1,384,273

1,749,655

(367,825)

(208,921)

64,674

2,621,856

Result of the period

-

618,959

-

-

7,990

626,949

Other comprehensive income for the period

-

-

165,218

-

1,578

166,796

Total comprehensive income for the period

-

618,959

165,218

-

9,568

793,745

Changes in share-based payment reserves

-

-

14,255

-

-

14,255

Convertible Bond - conversion rights*

-

-

-

-

-

-

Capital increase

-

-

-

-

-

-

Dividends

-

(180,530)

-

-

(6,008)

(186,538)

Transfers

-

1,137

(5,904)

4,767

-

-

Changes in treasury shares

-

-

-

(22,159)

-

(22,159)

Changes in scope

-

(37,930)

(2,115)

-

(13,841)

(53,885)

Balance at the end of 2021

1,384,273

2,151,292

(196,370)

(226,313)

54,392

3,167,274

The legal reserve of €55.0million which is included in the retained earnings is not available for distribution. The share capital of the Group as at 31 December 2021 was composed of 246,400,000 shares with no par value.

*The conversion rights embedded in the 500 million convertible bond issued on 23 June 2020 were valued at 37.7 million net of transaction costs and deferred taxes. This value according to IFRS rules will not be remeasured over time, nor at conversion nor at maturity.

The change in scope movements over the year are mainly related to the squeeze-out to acquire the remaining 8.8 % of the shares in Agosi (Allgemeine Gold- und Silberscheideanstalt AG, Germany) for 53.9 million.

The notes F1 through Parent company separate summarized financial statements are an integral part of these consolidated financial statements.

Thousands of Euros

Notes

2020

2021

Profit (loss) from continuing operations

135,927

626,949

Adjustments for profit of equity companies

5,332

(17,347)

Adjustment for non-cash transactions

F34

449,022

399,936

Adjustments for items to disclose separately or under investing and financing cashflows

F34

116,051

228,573

Change in working capital requirement

F34

(103,756)

167,154

Cashflow generated from operations

602,576

1,405,265

Dividend received

2,026

5,018

Tax paid during the period

(78,955)

(174,990)

Government grants received

2,673

23,287

Net operating cashflow

F34

528,320

1,258,580

Acquisition of property, plant and equipment

F16

(391,475)

(379,572)

Acquisition of intangible assets

F14

(44,060)

(36,854)

Acquisition of new subsidiaries, net of cash acquired

F8

(156)

-

Acquisition in additional shareholdings in subsidiaries

-

(53,870)

Acquisition of financial assets

F18

(1,633)

(5,014)

New loans extended

F18

(752)

(170)

Sub-total acquisitions

(438,076)

(475,480)

Disposal of property, plant and equipment

1,475

1,994

Disposal of intangible assets

6,620

623

Disposal of subsidiaries and associates, net of cash disposed

518

1,417

Sub-total disposals

8,613

4,034

Net cashflow generated by (used in) investing activities

F34

(429,463)

(471,446)

Capital increase (decrease) minority

27

-

Own shares

(26,947)

(22,159)

Payment of lease liabilities

F24

(19,801)

(19,534)

Interest received

3,392

12,098

Interest paid

(59,689)

(54,510)

New loans and repayments

F24

806,035

(331,718)

Dividends paid to Umicore shareholders

(60,141)

(180,537)

Dividends paid to minority shareholders

(4,800)

(6,007)

Net cashflow generated by (used in) financing activities

F34

638,076

(602,367)

Effect of exchange rate fluctuations

25,466

(20,081)

Total net cashflow of the period

762,399

164,686

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

F22

239,230

1,001,630

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

F22

1,001,630

1,166,316

of which cash and cash equivalents

1,010,307

1,194,437

of which bank overdrafts

(8,678)

(28,122)

The notes F1 through Parent company separate summarized financial statements are an integral part of these consolidated financial statements.

The company’s consolidated financial statements and the management report prepared in accordance with article 3:33 of the Belgian Companies and Associations Code set forth in the sections labelled About us through Management Responsibility Statement for the year ended 31 December 2021 were authorized for issue by the Supervisory Board on 11 March 2022. They have been prepared in accordance with the legal and regulatory requirements applicable to the consolidated financial statements of Belgian companies. They include those of the company, its subsidiaries and its interests in companies accounted for using the equity method.

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

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

Umicore is a Société Anonyme - Naamloze vennootschap company with its registered office in Brussels, Belgium at Rue du Marais 31 (Broekstraat 31) B - 1000 Brussels (Belgium) and has following LEI code 529900F3AIQECS8ZSV61 .
Umicore operates its business from Belgium. UmicoreNV-SA is the ultimate parent company of the Umicore group.
Umicore group did not change his name compared to previous year.

Umicore is a global materials technology and recycling group. It focuses on application areas where its expertise in materials science, chemistry and metallurgy makes a real difference. Its activities are organised in three business groups: Catalysis, Energy & Surface Technologies and Recycling. Each business group is divided into market-focused business units offering materials and solutions that are at the cutting edge of new technological developments and essential to everyday life. Umicore generates the majority of its revenues and dedicates most of its R&D efforts to clean mobility materials and recycling. Umicore’s overriding goal of sustainable value creation is based on an ambition to develop, produce and recycle materials in a way that fulfils its mission: materials for a better life. Umicore’s industrial and commercial operations as well as R&D activities are located across the world to best serve its global customer base.

F2.1 Principles of consolidation and segmentation
F2.1.1 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 is transferred 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 consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values 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.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized in profit or loss.

Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in profit or loss. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies. The line “other operating income” and “other financial income” of the income statements include, depending on the nature of the underlying transactions, the currency translation differences due to intercompany transactions to be translated from the transaction currency into functional currency which may differ from euro for some entities and regions.

IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations) does not specify the treatment for the elimination of inter-company transactions between discontinued and continued 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.

F2.1.2 Changes in ownership interests in subsidiaries without change of control

Transactions 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 acquired of 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.

F2.1.3 Disposal of subsidiaries

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognized in 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 are accounted 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.

F2.1.4 Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates 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 ownership interest 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 recognized in 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 the carrying 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 Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable 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 and its 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 the Group. Dilution gains and losses arising in investments in associates are recognized in the income statement.

F2.1.5 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 the contractual 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 for using 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 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 the extent of the Group’s interest in the joint ventures. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

F2.1.6 Segment reporting

Note F7 provides the Company’s segment information, in line with IFRS 8. Umicore is organized in 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 also offers stationary catalysis for industrial emissions control and produces precious metals based 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 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 covers corporate activities, shared operational functions and the Group’s Research, Development & Innovation unit. Umicore’s minority share in Element Six Abrasives and Ieqsa is also included in Corporate.

Operating segments are reported in a manner consistent with the internal reporting provided to the supervisory board and the management board.

The segment results, assets and liabilities include items directly attributable to the segment as well 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 the absence 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.

F2.2 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 the Group, this is not material for IAS 29 to be applied.

F2.3 Foreign currency translation

Functional currency: items included in the financial statements of each entity in the Group are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity. The consolidated financial statements are presented in euros which is the functional currency of the parent. To consolidate the Group and each of its subsidiaries, the financial statements are translated as follows:

  • 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 of the shareholders’ equity under “currency translation differences”.

When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognized in the income statement as part of the gain or loss on sale.

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.

F2.4 Foreign currency transactions

Foreign currency transactions are recognized during the period in the functional currency of each entity at exchange rates prevailing at the date of transaction. The date of a transaction is the date at which the transaction first qualifies for recognition. For practical reasons a rate that approximates the actual rate at the date of the transaction is used at some operations, for example, an average rate for the week or the month in which the transactions occur.

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 the translation of monetary assets and liabilities denominated in foreign currencies, are recognized in 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).

F2.5 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is recorded at historical cost, less accumulated depreciation and impairment losses. Cost includes all direct costs and appropriate allocation of indirect costs incurred to bring the asset to working condition for its intended use.

Borrowing costs that are directly attributable to investments are capitalized together with the costs 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.

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 of items 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, plant and 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 per table below. 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.

Management determines the estimated useful lives and related depreciation charges for property, plant and equipment. Management uses standard estimates based on a combination of physical durability and projected product life or industry life cycles. These useful lives could change significantly as a result of technical innovations, market developments or competitor actions. Management will increase the depreciation charge where useful lives are shorter than previously estimated, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold.

Land use rights are part of the Property, Plant and Equipment and are typically amortized over the contractual period.

years

Land

Non-depreciable

Buildings

- Industrial buildings

20

- Improvements to buildings

10

- Offices and laboratories

40

Plant, machinery and equipment

10

- Furnaces

7

- Small equipment

5

Furniture and vehicles

- Vehicles

5

- Mobile handling equipment

7

- Computer equipment

3 - 5

- Furniture and office equipment

5 - 10

F2.6 Intangible assets & equity transaction expenses
F2.6.1 Equity transaction expenses

Expenses for formation and capital increase are deducted from the share capital.

F2.6.2 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 and liabilities of the acquired entity at the date of acquisition. Goodwill is recognized at cost less any 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 to determine 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 over the cost of acquisition is recognized in the income statement immediately.

F2.6.3 Research and development

Research costs related to the prospect of gaining new scientific or technological knowledge and understanding 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 and reliably 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 a straight-line method over the period of their expected benefit, in general five years.

F2.6.4 CO2 emission rights

Within the framework of the Kyoto protocol, a third emission trading period started, covering 2013-2020 and the fourth phase started on January 1, 2021 (till 2030). Therefore, the Flemish Government granted emission rights to the Flemish sites of certain companies, including Umicore. Each year, at the end of February, one fifth of these emission rights is put on an official registry account. The release of emission rights to this registry account entails the capitalization in the intangible assets, which is in line with the guidance 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 the closing 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 the rights 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 the release of deferred revenue. Historically, Umicore owns the required rights to ensure its normal operating activities.

F2.6.5 Other intangible assets

All the following types are recorded at historical cost, less accumulated amortization and impairment losses:

  • Concessions, patents, licenses: are amortized over the period of their legal protection with a 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.

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

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

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

F2.7 Lease

IFRS 16 sets out the principles for the recognition, measurement, presentation, and disclosure of 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 (see note F24) in non-current liabilities (including the current portion of the lease liabilities) which is considered immaterial in view of the financial statements as a whole.

The right-of-use asset is depreciated over the term of the lease (see note F16). Interest expense is recognized on the lease liability (see note F11). 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 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.

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.

F2.8 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 at fair 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 expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

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

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.

F2.9 Inventory

Inventories are classified as:

  1. Base products (gross values)

    1. Permanently tied up metal inventories (not hedged)

    2. Commercially available metal inventories (hedged)

    3. Other base products inventories (not hedged)

  2. Consumables (gross values)

  3. Write down and impairments

  4. Advances paid

  5. Contracts in progress

Inventories are carried at cost. Cost comprises direct purchase or manufacturing costs and an appropriate allocation of overheads.

Base products (gross values) are mostly metal-containing products on which Umicore is exposed to price fluctuation risks. Most of these inventories follow Umicore’s metal accounting rules and are classified in two inventory categories that reflect their specific nature and business use: the permanently tied up metal inventories and the commercially available metal inventories. The latter inventories are subject to an active and systematic hedging process to minimize the effects of market price fluctuations on the financial performance of the Group. Conversely, the permanently tied up metal inventories are typically not hedged. Next to these categories, the other base product inventories consist of materials used in the manufacturing processes to obtain the marketable basis products. These inventories are also typically not hedged. More details on the hedging mechanisms can be found in note F3.

Individualized or weighted average valuation is applied on the initial at cost valuation per category of inventory complemented with the following fair value principles:

  • On the permanently tied up metal inventories : In view of their permanent nature, Umicore opted to apply the measurement and recognition rules of Property, Plant and Equipment (IAS 16) and Impairment of Assets (IAS 36). The valuation is based on 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 are subject to Umicore’s annual impairment testing of the CGUs carrying these inventories. Any impairments booked are classified under the caption Write downs & Impairments.

  • On the commercially available metal inventories : These inventories are economically hedged. For the part of the inventory where Umicore obtained IFRS 9 Fair Value hedge accounting, Umicore applies the mark-to-market valuation principles. When IFRS 9 Fair Value hedge accounting cannot be obtained (see note F2.21.1 transactional risks – fair value hedging), LOCOM (lower of cost or net realizable value, meaning the estimated selling price less the estimated costs of completion and the estimated cost necessary to make the sale) is applied.

  • On the other Base products, LOCOM and slow moving principles are applied. Any write-downs booked are classified under the caption Write downs & Impairments.

Consumables (gross values) are products that are not used in a direct way in the manufacturing processes (for example: packaging material). They are valued using the weighted-average cost method and are submitting to LOCOM. Any write-downs booked are classified under the caption Write downs & Impairments

Write-downs & Impairments are any impairments or write downs booked on the Base products and Consumables are captured under this line item.

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 progress are valued using the percentage-of-completion method.

F2.10 Trade and other receivables

Trade and other receivables are measured at amortized cost, i.e. at the net present value of the receivable amount. Unless the impact of discounting is material, the nominal value is taken. 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 an 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 historical loss patterns.

The Group may undertake certain linked contracts to sell or buy metal and commit to repurchase or sell the metal in the future. An asset representing the metal which the Group has committed to sell or a liability representing the obligation to repurchase the metal are recognized in trade and other receivables or trade and other payables, respectively. Accordingly, principal cash flows in respect of sale and repurchase agreements are shown as cash flows from operating activities in the cash flow statement rather than cash flows from financing activities as long the financing is short term in time and the underlying transactions are not rolled over. Consistently interest paid and received are shown as cash flows from operating activities and presented as other income in the income statement in line with lease and factoring fees. No revenues are recognized in respect of the sale leg or costs are recognized in respect of the purchase leg if it regards the same metals and quantities engaged with the same party.

F2.11 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 of three 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.

F2.12 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 or changes 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.

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 the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

F2.13 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 a deduction 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.

F2.14 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 with the appropriate proportion of subsequent profits and losses.

In the income statement, the minority share in the Group’s profit or loss is presented separately from the Group’s consolidated result.

F2.15 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 an established 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 probability of the possible outcome of the event. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle 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:

F2.15.1 Provisions for employee benefits (See note F2.16 - Employee benefits)
F2.15.2 Environmental obligations

Environmental provisions are based on legal and constructive obligations from past events, in accordance 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 gradually depending on normal usage/production level.

F2.15.3 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 restructuring provision only includes the direct expenditure arising from the restructuring which is necessarily entailed and is not associated with the ongoing activities of the Company.

F2.16 Employee benefits
F2.16.1 Short-term employee benefits

These include wages, salaries and social security contributions, paid annual leave and sick leave, 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.

F2.16.2 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 through payments 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 netted with the fair value of the plan assets.

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-employment defined 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.

In Belgium, in line with the Belgian legislation applicable to 2nd pillar pension plans (so-called “Law Vandenbroucke”), all Belgian Defined Contribution plans, for which the legal minimum guaranteed return is applicable have to be considered under IFRS as Defined Benefit plans. Liabilities and costs of these plans are therefore calculated following the Projected Unit Credit Method.

In Germany two defined contribution pension plans exist which are externally financed via the “Pensionskasse Degussa” (PKD) or the support fund “Unterstützungskasse Degussa” (RUK).The PKD and RUK plans secure only the inflation and guaranteed interest rate adjustments of the benefits. In recent years, due to the low interest rate environment, there is a risk of shortfalls in the self-funding at the DKP and RUK to honor these adjustments. In case of such shortfalls the PKD and RUK would call upon Umicore to contribute the extra funding required. For this reason, the inflation and guaranteed interest rate adjustments for the PKD and RUK plans are recognized as defined benefit obligation plans under IFRS. Management applied a best estimate simplified method to calculate the shortfall risk and recognized this as an additional obligation.

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 in personnel costs.

F2.16.3 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 are in general valued annually by independent qualified actuaries. All remeasurements as a result of changes in the actuarial assumptions are immediately recognized in the income statement.

F2.16.4 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 in accordance 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, these obligations are valued annually by independent qualified actuaries. All remeasurements as a result of changes in the actuarial assumptions are immediately recognized in the income statement.

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 the date 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.

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 as share based payment reserves. For the options, the expense to be recognized is calculated by 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.

As long as the options granted have not been exercised, their value is reported in the Statement of Changes in Equity as ‘share based payments reserve’. The value of the options exercised during the period is transferred to ‘retained earnings’.

F2.16.6 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 under financial results.

F2.17 Financial liabilities

All movements in financial liabilities are accounted for at trade date.

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.

As from 2019, the financial debt also contains the lease liability as per IFRS 16 (see note F2.7).

The convertible bond is considered as a compound instrument. It contains a liability and a equity component. This instrument is convertible into shares at the option of the holder. Each component is, therefore, accounted for separately. The liability element is determined by fair valuing the cash flows excluding any equity component. The residual is assigned to equity. The equity component is not remeasured, nor at conversion nor at maturity. Note, finally, that the convertible bond is a zero coupon instrument.

F2.18 Trade and other payables

Trade payables are measured at amortized cost, i.e. at the net present value of the payable amount. Unless the impact of discounting is material, the nominal value is taken.

The Group may undertake certain linked contracts to sell or buy metal and commit to repurchase or sell the metal in the future. An asset representing the metal which the Group has committed to sell or a liability representing the obligation to repurchase the metal are recognized in trade and other receivables or trade and other payables, respectively. Accordingly, principal cash flows in respect of sale and repurchase agreements are shown as cash flows from operating activities in the cash flow statement rather than cash flows from financing activities as long the financing is short term in time and the underlying transactions are not rolled over. Consistently interest paid and received are shown as cash flows from operating activities and presented as other income in the income statement in line with lease and factoring fees. No revenues are recognized in respect of the sale leg or costs are recognized in respect of the purchase leg if it regards the same metals and quantities engaged with the same party.

The negative fair value of derivative financial instruments is included under this heading.

F2.19 Income taxes

Taxes on profit or loss of the year include current and deferred tax. Such taxes are calculated in accordance 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 the numerous 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 interpretation of complex tax laws.

Tax provisions are recognized where the precise impact of the tax law and regulations on taxes payable with respect to profit arising in those jurisdiction is unclear and could trigger a tax adjustment represented by a future flow of funds to a tax authority or a consequent adjustment to a deferred tax asset. Uncertain tax positions are assessed periodically, implying a detail assessment following the interpretation of IFRIC 23, 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 have full knowledge of all the relevant information; and 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 prediction of the resolution of each (group of) UTP(s), to reflect the likelihood of an adjustment being realised on examination. The estimation and judgements in relation to uncertain tax positions are reassessed if the facts and circumstances on which those estimates and judgements were based have changed or as a result of new information that affects the initial assessments. In the measurement of the Uncertain tax positions, the Group considers the statute of limitation applicable in each jurisdiction, addionally interest and penalties are included in the assessment.

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 in the country the Company operates in.

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.

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.

F2.20 Revenue recognition
F2.20.1 Revenue recognition from contracts with customers

Despite the complexity of several processes within each business unit, the performance obligations are rather straightforward, those being:

  • 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 contract either in their pure metal content or as part of a (semi)finished product and the sale of metal (including boni) towards the customers.

  • Energy and Surface Technologies: the delivery of the products according to specification agreed 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 over time 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 the goods upon delivery.

For sales within Recycling, the vast majority of revenue is recognized at a point in time when the control of the refined products or metal is back in the hands of the customers (refinery) or in the hands of the customers (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.

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

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

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

There are no significant contract balances where either the Group has performed the performance obligation for which no billing occurred yet, or alternatively has received advance payments for which the performance obligation has not been satisfied.

The revenue from contracts with customers is further detailed in note F7 and F9.

The assessment in view of impairment losses is captured under the expected credit loss model as detailed in note F20.

F2.20.2 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 with the 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.

F2.21 Financial instruments

The company uses derivative financial and commodity instruments primarily to reduce the exposure 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.

F2.21.1 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 initially at fair value at trade date. The hedged items (physical commitments and commercially available inventory, primarily) are, under Umicore’s economical hedging policies, initially valued at fair value by applying mark-to-market.

Where possible Umicore documents hedge accounting 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. Under the bottom layer approach, a layer representing the nominal amount of an exposure that has historically been present on a constant and continuous basis is defined. This layer is further 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.

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.

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

In the absence of reaching IFRS 9 hedge accounting as the bottom layer or net position criteria are not met or when no market-based derivatives are available, Umicore recognizes the hedged items at cost. Since under Umicore economical hedging policy, all transactional hedging positions are marked to market for operational risk monitoring purposes, this consists in reversing any positive fair value on these hedged items to keep them at cost (in case of inventories) or off-balance (in case of commitments). Hedges in this category are labeled as economical hedges and are not considered speculative instruments.

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 fair value through the income statement.

F2.21.2 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 and losses 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.

F2.21.3 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 expected from the host contract, to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, or another variable. If it is concluded that such a derivative is not closely related to the host contract, it is separated from the host contract and accounted for under the rules of IFRS 9 (fair value through profit or loss). The host contract is accounted for using the rules applicable to executory contracts, which effectively means that such a contract is not recognized in the balance sheet or profit and loss before delivery on the contract takes place.

F2.22 Adjustments

The adjustments to the result relate to restructuring measures, impairment of assets linked to restructuring measures and other income or expenses arising from events or transactions that are clearly distinct from the ordinary activities of the company such as discontinuation of activities and environmental provisions that relate to historical pollution or linked to non-active sites.

Each of the Group’s activities is exposed to a variety of risks that are financial or non-financial in nature but have the potential to impact the financial performance of the Group. Financial risks include changes in metal prices, in foreign currency exchange rates, in certain market-defined commercial conditions, and in interest rates as well as credit and liquidity risks. The Group’s overall risk management program seeks to mitigate risks and potential adverse effects on the financial performance of the Group, including through the use of hedging and insurance instruments.

F3.1 Currency risk

Umicore’s currency risk can be split into three distinct categories: structural, transactional and translational risks.

F3.1.1 Structural risk

A portion of Umicore’s revenues are structurally denominated in US dollar (USD), while many of the 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 the results.

A large portion of such structural currency exposure derives from US dollar denominated metal prices linked to the recycling and refining operations.

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), the Polish Zloty (PLN) and the Brazilian real (BRL).

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 a currency exchange rate or a metal price denominated in EUR is above its historical average and at a level where attractive margins can be secured.

In relation to the structural risk, the Group assesses the hedge effectiveness through a critical terms 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 difference in maturity between hedged item and hedging instrument or changes in exposure amounts.

At the end of 2021, 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/PLN and USD/CAD.

F3.1.2 Transactional risk

The company is also subject to transactional risks in respect of currencies, i.e. the risk of currency 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 transactional risk to the maximum extent possible, primarily through forward contracts.

In relation to the transactional risk, the Group assesses the hedge effectiveness through a critical terms match between the hedged item (Balance sheet items and commitments) and the 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 is not expected to be material.

F3.1.3 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 are consolidated into Umicore’s Group accounts the translated amount is exposed to variations in the value of such local currencies against the EUR, predominantly the KRW, CNY, USD, BRL and ZAR. While Umicore does not systematically hedge its translational currency exposures, it may enter into ad hoc translational hedges.

F3.2 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 our sources of ineffectiveness could be a difference in maturity between hedged item and financial instrument or a change in exposure.

F3.2.1 Structural risk

Umicore is exposed to structural metal related price risks. Those risks relate mainly to the impact that 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 particularly material. However, given the variability of the raw-material feed over time and the variable duration of the supply contracts negotiated, it is not suitable to provide a fixed sensitivity to any particular metal. In general terms, higher metals prices tend to be earnings enhancing for the Recycling business (and vice versa). Umicore also has a metal price sensitivity in its other business segments (Catalysis, Energy & Surface Technologies) linked primarily to the revenue components that are metal price related and depending on 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 (and vice versa). However, other commercial conditions which are largely independent of the metal price, such as product premiums, are also significant and independent drivers of revenues and profitability. Finally, sustained high metal prices could in some cases increase other risks such as the risk of substitution or the risk of supply chain disruptions.

Structural metal price hedging

For some metals Umicore hedges part of its forward metal exposure. This hedging is based on documentation demonstrating a high probability of future metal price based cash flows originating from commercial contracts. Umicore hedged part of its forward metal exposure. Over the course of 2021, Umicore entered into additional forward contracts to cover a substantial part of its expected structural price exposure to certain precious metals for 2022, 2023 and 2024. For 2022, based on the respective currently expected exposures, the following lock-ins have been secured: close to two thirds for palladium, more than half for gold, somewhat less than half for silver and close to one third for platinum and rhodium. For 2023, the expected lock-in ratios are: close to a third for gold, silver and palladium and a minor portion for platinum and rhodium. For 2024, only a minor portion was locked-in for the expected gold, silver and palladium exposures. Finally, Umicore also has hedges in place for a portion of its expected lead and copper exposure for 2022 and 2023.

In relation to the structural risk, the Group assesses the hedge effectiveness through a critical 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 ineffectiveness arising from difference in maturity between hedged item and hedging instrument or changes in exposure amounts.

F3.2.2 Transactional risk

The Group faces transactional price risks on metals. The majority of its metal-based transactions use third party 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 price creates 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 a critical terms match between the hedged item (Balance sheet items and commitments) and the hedging instrument amongst others amount and maturity. The Group hedges transactional risks to the maximum extent up to 100 %. Any ineffectiveness of such hedges can arise from difference in maturity between hedged item and hedging instrument or changes in exposure amounts, but this is not expected to 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 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 cobalt, Umicore’s transactional hedging policy aims to match to a maximum extent the pricing in and pricing out of the contracted metal. Such physical back-to-back hedging allows management of transactional risks related to cobalt in a volatile market.

The Group’s economical transactional metal hedging policy prescribes that mark-to-market valuation principles are initially applied on all elements of the transactional hedging position, hedging instruments as well as hedged items. Where possible this happens under IFRS 9 hedge accounting criteria. When IFRS 9 hedge accounting cannot be applied or obtained, Umicore reverses positive mark-to-markets (see note F2.21.1 – Transactional risks – fair value hedging).

F3.2.3 Metal inventory risk

The Group faces metal price risks on its permanently tied up metal inventories. This risk is related to the market metal price moving below the carrying value of these inventories.

Umicore tends not to hedge against this risk.

F3.3 Interest rate risk

Interest rate risks arise from changes in prevailing market interest rates, which can lead to changes in the fair value of fixed-rate debt instruments and in changes in interest payments for variable-rate debt instruments. This risk is managed by regularly assessing the debt profile of the Group and by entering into interest rate swaps. At the end of December 2021, the Group’s gross financial debt stood at 2,155 million, of which 1,621 million carrying a fixed interest rate. The outstanding interest rate swaps totaled 40 million and will expire in 2023.

F3.4 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 or metal lease operations. In order to manage its credit exposure, Umicore has determined a credit 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 several credit insurance agreements with different insurers. One global credit insurance contract has been put in place 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 an indemnification cap set at regional or country levels. 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. Umicore may further limit selected credit risks by entering into without recourse receivables discounting arrangements or particularly in China by without recourse bank draft discounting. Regarding its risk exposure to financial institutions such as banks and brokers, Umicore is also establishing internal credit lines. Specific limits are set, per financial instrument, covering the various risks to which the Group is exposed when transacting with such counterparties. In accordance with IFRS 9, impairments for expected credit losses on receivables are measured and recognized, applying a simplified approach.

F3.5 Liquidity risk

Liquidity risk relates to the ability to service and refinance debt (including notes issued) and to fund operations. The Group manages liquidity risk by maintaining adequate sources of funding, by ensuring a very wide diversification of such funding sources (in terms of instruments, lending banks and other institutions and in terms of geography), by matching as close as possible the maturity profiles of financial assets and liabilities and by staggering the maturities of financing sources. Sources of funding include a.o. operating cash flows, committed and uncommitted bank facilities including Chinese bank draft lines, metal lease lines, commercial paper issuance and long term private debt placements.

Please refer to note F20 and F24 for further details.

F3.6 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 and regulation 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 these tax risks described, management performed a detailed assessment for uncertain tax positions which resulted in provisions recorded for these uncertainties in line with IFRIC 23.

F3.7 Capital risk management

The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, to provide returns for shareholders and benefits for other stakeholders, and to maintain 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 the amount 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 adjusted 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.

F3.8 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 a.o. technology risks, supply risks, the risk of product substitution by customers, security of supply related risks (such as for selected critical metals), operational risks related to critical production installations, information system availability and cyber security risks, risks from legal disputes and proceedings, risks related to metal trading activities, asset impairment risks due to a change in the asset’s underlying business context & outlook, etc. In some cases a direct link exists between financial and operational risks. For example, a potential continuity of supply risk for certain critical raw materials or metals due to sudden or extreme physical supply tightness could substantially enhance financial risks and in particular metal price-related risks. In the past, certain metals such as for example rhodium or cobalt showed high price volatility related to supply tightness considerations. Please refer to the chapter about Managing Risk Effectively for a description of some of these risks and an outline of Umicore’s general approach to risk management.

We refer to our note on events after the reporting date (F38) for additional insight over the crisis in Ukraine.

The liquidity risks that arose in 2020 related to the Covid-19 pandemic gradually declined during 2021. Consequently, and without hampering the wide diversity of accessible funding of Umicore, the Covid-19 specific short term fundings have not been extended beyond their original expiry dates in 2021. We refer to note F24 for further details. Credit risks were closely monitored and the Group did not face material credit losses.

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 and that 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.

F4.1 Impairment testing

The Group performs an impairment test on the carrying value of its cash generating units whenever certain external or internal triggering events suggest a potential impairment risk for such unit. The Group performs annual impairment tests on the goodwill carried by its cash generating units. An impairment loss is recognized when the carrying value exceeds the recoverable amount in a structural way. The recoverable amount is the higher of the fair value less costs to sell and its value in use in accordance with the accounting policy. This value in use is calculated by discounting related future free cash flows (DCF model) to calculate their present value. These calculations require the use of and are sensitive to 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 internally-generated estimates and data from external sources.

As at 31 December 2021, the carrying amount of the goodwill for the consolidated entity was 158.6 million (156.0 million in 2020). We refer to note F15 Goodwill for more details on the annual goodwill impairment testing.

F4.2 Rehabilitation obligations

Provision is made for the anticipated costs of future rehabilitation of industrial sites and surrounding areas to the extent that a legal or constructive obligation exists in accordance with accounting policy 2.15. These provisions include future cost estimates associated with reclamation, 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 technologies and engineering cost estimates and specifically related to the Hoboken Green Zone, the purchase cost of houses. A change in any of the assumptions used may have a material impact on the carrying value of rehabilitation provisions.As at 31 December 2021, the carrying amount of rehabilitation provisions was 109.8 million (108.2 million in 2020). We refer to note F29 Environmental provisions for more details.

F4.3 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 of each year. The consolidated entity’s employee benefit obligations are discussed in more detail in Note F27. At 31 December 2021, a liability with respect to employee benefit obligations of 387.2 million was recognized (426.4 million in 2020).

F4.4 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.

F4.5 Provisions for other liabilities and charges

The fast growth of Umicore’s battery materials sales for transport applications in particular is increasing the Group’s exposure to the automotive industry end market. This industry has a practice of applying warranty and recall settlements related to potential product quality events (irrespective of whether any legal obligation exists). In view thereof, Umicore continued in 2021 its dedicated provisioning model for battery materials as introduced in 2018.

Additional significant provisions for other liabilities and charges are related to onerous contracts. An onerous contract provision is recognised when the unavoidable cost of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

As at 31 December 2021, the carrying amount of the provisions for other liabilities and charges amount to 89.4 million (80.1 million in 2020).

F4.6 Provisions for uncertainty over income tax treatments

As mentioned under the note F.2.19, Umicore makes a detail assessment of all tax uncertainties within the Group as per IFRIC 23. In the measurement of the uncertain tax positions, the Group has considered the statute of limitation taking into account the tax law and regulations that are applied in the correspondent country, resulting in a range of three to eight years. The resolution of the tax positions taken by the Group can take considerable period of time to conclude and, in some cases, it is difficult to predict the outcome. The estimates made reflects where the Group: is involved in routine tax audits; has identified potential tax exposures related to transfer pricing ; or is involved in discussions with tax authorities. The estimation of the tax liability and income tax expense includes the corresponding penalties and late payment interests. Most of the uncertain tax positions are measured using the expected value, consisting to the sum of the probability - weighted outcome of a range of potential outcomes, nevertheless the most likely amount has also been used in a limited number of uncertain tax positions. The large majority of the provision for uncertainty over tax treatments is related to various individual uncertainties whether the tax authority will accept a certain applied transfer pricing methodology or to various individual uncertainties related to the deductibility of an amount for tax purposes. Group provision for uncertainty over tax treatments at December 2021 amounting to 101.1 million (2020 : 114.9 million) results in a decrease of those liabilities by 13.8 million. This provision was booked under Income Tax Payable in the consolidated balance sheet. The movement of the year corresponds from remeasurement and roll-forward of existing uncertain tax positions; reversal of uncertain tax position based on mitigation actions taken and on the expiration of the statute of limitation; and the recognition of newly uncertain tax positions. The decrease during the year 2021 mainly corresponds to conclusion of tax audits in Europe mainly related to Transfer Pricing.

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

% interest in

% interest in

2020

2021

For continuing operations

Argentina

Umicore Argentina S.A.

100.00

100.00

Australia

Umicore Marketing Services Australia Pty Ltd.

100.00

100.00

Austria

Oegussa GmbH

91.29

100.00

Belgium

Todini (BE 0834.075.185)

100.00

100.00

-

Umicore Financial Services (BE 0428.179.081)

100.00

100.00

-

Umicore Marketing Services Belgium (BE 0402.964.625)

100.00

100.00

-

Umicore Specialty Materials Brugge (BE 0405.150.984)

100.00

100.00

-

Umicore Holding Belgium (BE 0731.571.921)

100.00

100.00

Brazil

Coimpa Industrial Ltda

100.00

100.00

-

Umicore Brasil Ltda

100.00

100.00

-

Clarex S.A.

100.00

100.00

-

Umicore Shokubai Brasil Industrial Ltda

60.00

60.00

-

Umicore Catalisadores Ltda.

100.00

100.00

Canada

Umicore Canada Inc.

100.00

100.00

-

Umicore Autocat Canada Corp.

100.00

100.00

-

Umicore Precious Metals Canada Inc.

100.00

100.00

China

Umicore Marketing Services (Shanghai) Co., Ltd.

100.00

100.00

-

Umicore Marketing Services (Hong Kong) Ltd.

100.00

100.00

-

Umicore Autocat (China) Co. Ltd.

100.00

100.00

-

Umicore Changxin Surface Technology (Jiangmen) Co., Ltd.

80.00

80.00

-

Jiangmen Umicore Changxin New Materials Co., Ltd.

90.00

90.00

-

Umicore Shokubai (China) Co Ltd

60.00

60.00

-

Umicore Platinum Engineered Materials (Suzhou) Co., Ltd.

100.00

100.00

-

Umicore Catalyst (China) Co., Ltd.

100.00

100.00

Denmark

Umicore Denmark ApS

100.00

100.00

Finland

Umicore Finland OY

100.00

100.00

France

Umicore France S.A.S.

100.00

100.00

-

Umicore IR Glass S.A.S.

100.00

100.00

-

Umicore Autocat France S.A.S.

100.00

100.00

-

Umicore Specialty Powders France S.A.S.

100.00

100.00

-

Umicore Marketing Services France S.A.S.

100.00

100.00

-

Todini France S.A.S.

100.00

100.00

Germany

Umicore AG & Co. KG (*)

100.00

100.00

-

Allgemeine Gold- und Silberscheideanstalt AG (**)

91.21

0.00

-

Agosi AG (**)

100.00

100.00

-

Umicore Galvanotechnik GmbH

91.21

100.00

-

Todini Deutschland GmbH

100.00

100.00

-

Umicore Shokubai Germany GmbH

60.00

60.00

Italy

Todini and CO. S.P.A.

100.00

100.00

India

Umicore Autocat India Pvt LTD

100.00

100.00

-

Umicore India Private Limited

100.00

100.00

-

Todini Metals and Chemicals India Private Limited

70.00

70.00

Japan

Umicore Japan KK

100.00

100.00

-

Umicore Shokubai Japan Co Ltd

60.00

60.00

South Korea

Umicore Korea Ltd.

100.00

100.00

-

Umicore Marketing Services Korea Co., Ltd.

100.00

100.00

-

Umicore Catalysis Korea Co.,Ltd. (previously: Ordeg Co, Ltd,)

100.00

100.00

Liechtenstein

Umicore Thin Film Products AG

100.00

100.00

Luxemburg

Umicore International

100.00

100.00

-

Umicore Autocat Luxembourg

100.00

100.00

-

Umicore Shokubai

60.00

60.00

Mexico

Todini Atlántica S.A. de C.V.

70.00

70.00

Netherlands

Schöne Edelmetaal BV

91.21

100.00

Philippines

Umicore Specialty Chemicals Subic Inc.

78.20

78.20

Poland

Umicore Autocat Poland sp. z o.o.

100.00

100.00

-

Todini Europe sp. z o.o.

70.00

70.00

-

Umicore Poland Sp. z o.o.

100.00

100.00

Portugal

Umicore Marketing Services Lusitana Metais Lda

100.00

100.00

South Africa

Umicore Marketing Services Africa (Pty) Ltd.

100.00

100.00

-

Umicore Catalyst South Africa (Pty) Ltd.

65.00

65.00

Spain

Todini Quimica Ibérica, S.L.

100.00

100.00

Sweden

Umicore Autocat Sweden AB

100.00

100.00

Switzerland

Allgemeine Suisse SA

91.21

100.00

Taiwan

Umicore Thin Film Products Taiwan Co Ltd

100.00

100.00

Thailand

Umicore Precious Metals Thailand Ltd.

91.21

100.00

-

Umicore Autocat (Thailand) Co., Ltd.

100.00

100.00

-

Umicore Shokubai (Thailand) Co., Ltd.

60.00

60.00

United Kingdom

Umicore Coating Services Ltd.

100.00

100.00

-

Umicore Marketing Services UK Ltd

100.00

100.00

USA

Umicore USA Inc.

100.00

100.00

-

Umicore Autocat USA Inc.

100.00

100.00

-

Umicore Precious Metals NJ LLC

100.00

100.00

-

Umicore Precious Metal Chemistry USA LLC

100.00

100.00

-

Umicore Precious Metals USA Inc.

100.00

100.00

-

Umicore Optical Materials USA Inc.

100.00

100.00

-

Umicore Shokubai USA Inc

60.00

60.00

-

Palm Commodities International

100.00

100.00

-

Umicore Electrical Materials USA Inc.

100.00

100.00

-

Umicore Catalyst USA, LLC

100.00

100.00

(*) Umicore AG & Co. KG, with its registered office in Hanau, Germany, is exempt from its obligation to prepare, audit and publish annual and consolidated financial statements and a management and group management report in accordance with sections 264b and 291 of the German Commercial Code (HGB).

(**) In 2021, Allgemeine Gold- und Silberscheideanstalt AG was merged with its shareholder Umicore International AG after the acquisition of the remaining 8.8% of minority shares. Umicore International AG was subsequently renamed into Agosi AG.

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 the currency of the country in which they operate, except for Element Six Abrasives (United Kingdom) where the functional currency is the US dollar.

CLOSING RATES

AVERAGE RATES

2020

2021

2020

2021

American Dollar

USD

1.227

1.133

1.142

1.183

UK Pound Sterling

GBP

0.899

0.840

0.890

0.860

Canadian Dollar

CAD

1.563

1.439

1.530

1.483

Swiss Franc

CHF

1.080

1.033

1.071

1.081

Japanese Yen

JPY

126.490

130.380

121.846

129.877

Brazilian Real

BRL

6.377

6.320

5.889

6.381

South African Rand

ZAR

18.022

18.063

18.765

17.477

Chinese Yuan

CNY

8.023

7.195

7.875

7.628

Thai Baht

THB

36.727

37.653

35.708

37.837

Korean Won (100)

KRW

13.360

13.464

13.456

13.541

Polish Zloty

PLN

4.560

4.597

4.443

4.565

BUSINESS GROUP INFORMATION 2020

Thousands of Euros

Notes

Catalysis

Energy & Surface Technologies

Recycling

Corporate & Unallocated

Eliminations

Total Continued

Total segment turnover

5,916,870

2,811,050

13,903,640

25,676

(1,947,120)

20,710,116

External turnover

5,783,840

2,750,410

12,150,190

25,676

-

20,710,116

Inter-segment turnover

133,030

60,640

1,753,450

-

(1,947,120)

-

Total segment revenues (excluding metals)

1,364,210

1,045,040

836,000

-

(6,530)

3,238,720

External revenues

1,362,640

1,044,940

831,140

-

-

3,238,720

Inter-segment revenues

1,570

100

4,860

-

(6,530)

-

Operating result

F9

96,338

(41,118)

310,900

(61,528)

-

304,592

Adjusted

153,688

70,422

361,815

(57,894)

-

528,030

Adjustments

(57,350)

(111,539)

(50,915)

(3,634)

-

(223,438)

Equity method companies

F9

-

4,874

-

(10,206)

-

(5,332)

Adjusted

-

4,874

-

3,457

-

8,331

Adjustments

-

-

-

(13,663)

-

(13,663)

EBIT

F9

96,338

(36,244)

310,900

(71,734)

-

299,260

Adjusted

153,688

75,295

361,815

(54,437)

-

536,361

Adjustments

(57,350)

(111,539)

(50,915)

(17,297)

-

(237,101)

Depreciation and amortisation

F9

80,496

110,457

62,949

14,040

-

267,941

Adjusted

80,496

110,457

62,949

14,040

-

267,941

EBITDA

F9

176,834

74,213

373,849

(57,694)

-

567,201

Adjusted

234,184

185,752

424,764

(40,397)

-

804,302

Consolidated total assets

3,447,098

3,376,191

1,643,894

1,568,336

(1,694,627)

8,340,892

Segment assets

3,447,098

3,337,762

1,643,894

1,466,927

(1,694,627)

8,201,054

Investments in associates

-

38,429

-

101,410

-

139,839

Consolidated total liabilities

1,814,687

1,260,177

1,215,316

3,123,485

(1,694,627)

5,719,038

Capital Employed at 31/12 of previous year

F31

1,536,950

2,323,770

405,422

175,849

-

4,441,991

Capital Employed at 30/06

F31

1,560,188

2,189,523

578,205

124,696

-

4,452,611

Capital Employed at 31/12

F31

1,727,443

2,133,138

446,861

149,138

-

4,456,580

Average Capital Employed in first half year

F31

1,548,569

2,256,646

491,813

150,273

-

4,447,301

Average Capital Employed in second half year

F31

1,643,815

2,161,330

512,533

136,917

-

4,454,596

Average Capital Employed in the year

F31

1,596,192

2,208,988

502,173

143,595

-

4,450,948

ROCE

F31

9.63%

3.41%

72.05%

-37.91%

0.00%

12.05%

Capital expenditure

F34

63,798

251,688

71,577

16,105

-

403,169

Total R&D expenditure

F9

138,742

58,269

10,186

15,766

-

222,964

R&D recognized in operating expenses

F9

125,275

43,636

10,186

11,499

-

190,596

R&D capitalized as intangible assets

F34

13,468

14,633

-

4,267

-

32,368

BUSINESS GROUP INFORMATION 2021

Thousands of Euros

Notes

Catalysis

Energy & Surface Technologies

Recycling

Corporate & Unallocated

Eliminations

Total Continued

Total segment turnover

8,154,850

3,533,830

15,609,350

34,849

(3,278,440)

24,054,439

External turnover

7,989,680

3,478,360

12,551,550

34,849

-

24,054,439

Inter-segment turnover

165,170

55,470

3,057,800

-

(3,278,440)

-

Total segment revenues (excluding metals)

1,687,430

1,173,660

1,108,140

-

(5,920)

3,963,310

External revenues

1,685,690

1,173,420

1,104,200

-

-

3,963,310

Inter-segment revenues

1,740

240

3,940

-

(5,920)

-

Operating result

F9

307,811

132,841

528,640

(90,355)

-

878,938

Adjusted

326,365

131,522

572,927

(79,981)

-

950,833

Adjustments

(18,554)

1,319

(44,287)

(10,374)

-

(71,896)

Equity method companies

F9

-

7,659

-

9,688

-

17,347

Adjusted

-

7,659

-

12,884

-

20,543

Adjustments

-

-

-

(3,197)

-

(3,197)

EBIT

F9

307,811

140,500

528,640

(80,668)

-

896,284

Adjusted

326,365

139,181

572,927

(67,097)

-

971,377

Adjustments

(18,554)

1,319

(44,287)

(13,571)

-

(75,092)

Depreciation and amortisation

F9

75,180

122,613

66,921

14,811

-

279,526

Adjusted

75,229

122,613

66,921

14,811

-

279,576

EBITDA

F9

382,991

263,114

595,562

(65,856)

-

1,175,810

Adjusted

401,595

261,795

639,848

(52,286)

-

1,250,952

Consolidated total assets

3,356,473

4,364,500

1,426,498

1,825,075

(1,927,305)

9,045,241

Segment assets

3,356,473

4,316,864

1,426,498

1,717,571

(1,927,305)

8,890,101

Investments in associates

-

47,636

-

107,504

-

155,140

Consolidated total liabilities

1,858,320

2,075,177

973,614

2,898,161

(1,927,305)

5,877,967

Capital Employed at 31/12 of previous year

F31

1,727,443

2,133,138

446,861

149,138

-

4,456,580

Capital Employed at 30/06

F31

1,846,061

2,191,046

236,829

77,507

-

4,351,443

Capital Employed at 31/12

F31

1,551,494

2,275,465

460,723

89,213

-

4,376,895

Average Capital Employed in first half year

F31

1,786,752

2,162,092

341,845

113,323

-

4,404,011

Average Capital Employed in second half year

F31

1,698,778

2,233,255

348,776

83,360

-

4,364,169

Average Capital Employed in the year

F31

1,742,765

2,197,674

345,310

98,341

-

4,384,090

ROCE

F31

18.73%

6.33%

165.92%

-68.23%

0.00%

22.16%

Capital expenditure

F34

70,052

218,674

83,097

16,774

-

388,596

Total R&D expenditure

F9

141,592

63,518

13,164

26,939

-

245,213

R&D recognized in operating expenses

F9

132,726

49,903

13,164

21,590

-

217,383

R&D capitalized as intangible assets

F34

8,867

13,614

-

5,349

-

27,830

GEOGRAPHICAL INFORMATION 2020

Thousands of Euros

Notes

Europe

of which Belgium

Asia-Pacific

North America

South America

Africa

Total

Total segment turnover

11,115,296

156,181

5,016,465

3,881,278

561,411

135,667

20,710,116

Total non current assets

1,389,895

564,209

1,109,045

112,075

45,590

4,726

2,661,333

Capital expenditure

F34

274,403

100,914

104,880

8,829

14,750

306

403,169

Employee compensation & benefits

573,311

317,820

124,557

72,255

20,139

8,220

798,481

Income taxes

44,445

596

1,776

(6,601)

16,447

3,064

59,131

GEOGRAPHICAL INFORMATION 2021

Thousands of Euros

Notes

Europe

of which Belgium

Asia-Pacific

North America

South America

Africa

Total

Total segment turnover

12,676,355

213,003

6,422,284

3,761,205

1,010,605

183,991

24,054,439

Total non current assets

1,487,101

592,688

1,200,470

122,993

51,229

4,283

2,866,076

Capital expenditure

F34

253,053

102,104

108,851

16,984

9,213

496

388,596

Employee compensation & benefits

613,163

329,680

138,417

71,916

21,497

8,147

853,140

Income taxes

88,603

42,066

40,374

17,440

28,557

4,070

179,044

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 as well 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 the absence of relevant market price references, ‘cost plus’ mechanisms are used. Segment turnover and revenue (without metals) 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 position.

The Group’s business segments have no single external customer that amounts to 10 per cent or more of the Group’s revenue.

Umicore determined segments as the accurate level of detail to split the product sales since the underlying business, competences and technologies, application and product characteristics and customer portfolio within each individual segment are similar. Moreover, obtaining information at a more disaggregated level would result in excessive costs and efforts compared to the added value for an external reader of the consolidated financial statements.

BUSINESS GROUPS

The Group is organized into the following reporting segments:

CATALYSIS

The segment in 2021 includes the Automotive Catalysts, Precious Metals Chemistry and Fuel Cell & Stationary Catalysts 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 also offers 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 fine chemicals industries.

ENERGY & SURFACE TECHNOLOGIES

The segment includes the Cobalt & Specialty Materials, Electro-Optic Materials, Metal Deposition Solutions 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 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. This segment includes the associates Ganzhou Yi Hao Umicore Industries and Jiangmen Chancsun Umicore Industry.

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, deferred tax assets and assets for employee benefits as required by IFRS 8. Performance of the segments is reviewed by the chief operating decision maker based on the adjusted EBIT/ operating result. As illustrated in the table above, the difference between the adjusted operating result and the operating result as presented in the Consolidated income statement consists of the adjustments for which definitions are given in the glossary.

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

There were no business combination during the year 2021.

Thousands of Euros

2020

2021

Sales

20,565,648

23,901,842

Services

144,468

152,597

Turnover

20,710,116

24,054,439

Re-invoicing of costs to third parties

42,654

61,307

Operating grants

19,865

26,031

Royalties and license fees

6,168

11,264

Emission rights income

5,207

8,945

Insurance recovery

21,580

18,406

Various interests and penalties for late payments

1,167

880

Gains on disposals of assets

2,647

1,057

Translation difference on intercos Elimination

(25,567)

(1,361)

Tax incentive

4,247

5,294

Tax credit

-

39,779

Other

2,633

5,318

Other operating income

80,602

176,919

Operating income of continuing operations

20,790,718

24,231,358

Raw materials and consumables used

(18,819,323)

(21,644,346)

Payroll and related benefits

(798,481)

(853,140)

Depreciation of fixed assets

(267,941)

(279,526)

Impairment loss on fixed assets

(87,543)

(48,504)

Inventory and bad debt provisions

(7,013)

(10,747)

Depreciation and impairment results

(362,497)

(338,777)

Services and outsourced refining and production costs

(370,526)

(422,798)

Royalties, licence fees, consulting and commissions

(41,606)

(57,820)

Taxes other than income taxes

(19,332)

(22,960)

Provisions (increase/use and reversals)

(74,128)

(13,477)

Capital losses on disposal of assets

(996)

(258)

Other operating expenses

(506,588)

(517,313)

Operating expenses of continuing operations

(20,486,888)

(23,353,576)

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 a point in time. The increase in turnover in 2021 is mainly related to the increase of metal prices and a volume effect.

Services mainly include the revenues from tolling contracts.

Tax credit in 2021 mainly concerns the tax credit received in Brazil resulting from a landmark ruling by the Brazilian Supreme Court in May of this year covering multiple years.

The increase in raw materials and consumables used is mainly related to the increase of metal prices and a volume effect. Raw materials and consumables used include primarily the value of the purchased metals. Utilities (water, gas and electricity) represent for 144.2 million in 2021 (99.7 million in 2020) for continuing operations.

The impairment losses of fixed assets have decreased compared to 2020. In 2021, those impairments are mainly related to the decision to stop a development program in Precious Metals Chemistry linked to the semiconductor industry and to impairment of Intellectual Properties linked to the closure of Automotive Catalysts' heavy-duty diesel operations in Frederikssund, Denmark.

The line provisions contains the movements in the environmental provisions and in the provisions for other liabilities and charges which are detailed in the notes F29 and F30.

R&D EXPENDITURE

Thousands of Euros

Notes

2020

2021

R&D recognized in Other operating expenses

190,596

217,383

R&D capitalized as intangible assets

F14

32,368

27,830

Total R&D expenditure for continuing operations

222,964

245,213

Total R&D expenditure for continuing operations was 245.2 million in the fully consolidated companies in 2021 (223.0 million in 2020). The part of the R&D expenditures that is directly recognized in operating expenses amounts to 217.4 million in 2021 (190.6 million in 2020).

ADJUSTMENTS INCLUDED IN THE RESULT

2020

2021

Thousands of Euros

Notes

Total

Adjusted

Adjustments

Total

Adjusted

Adjustments

Turnover

20,710,116

20,710,116

-

24,054,439

24,054,439

-

Other operating income

80,602

79,494

1,108

176,919

137,133

39,786

Operating income

20,790,718

20,789,611

1,108

24,231,358

24,191,572

39,786

Raw materials and consumables used

(18,819,323)

(18,781,872)

(37,451)

(21,644,346)

(21,644,346)

-

Payroll and related benefits

(798,481)

(798,131)

(350)

(853,140)

(852,147)

(993)

Depreciation and impairment results

(362,496)

(274,435)

(88,062)

(338,777)

(298,187)

(40,590)

of which depreciation and amortisation

(267,941)

(267,941)

-

(279,526)

(279,576)

50

Other operating expenses

(506,587)

(407,485)

(99,102)

(517,313)

(446,256)

(71,057)

Operating expenses

(20,486,887)

(20,261,923)

(224,964)

(23,353,576)

(23,240,935)

(112,641)

Income from other financial investments

761

342

419

1,156

196

959

Result from operating activities

304,592

528,030

(223,438)

878,938

950,833

(71,896)

Net contribution from equity method companies

(5,332)

8,331

(13,663)

17,347

20,543

(3,197)

EBIT

299,260

536,361

(237,101)

896,284

971,377

(75,092)

EBITDA

567,201

804,302

(237,101)

1,175,810

1,250,952

(75,142)

Finance cost

F11

(104,202)

(104,202)

-

(90,292)

(99,586)

9,294

Income taxes

F13

(59,131)

(102,729)

43,598

(179,044)

(196,309)

17,266

Net result

135,927

329,430

(193,503)

626,949

675,482

(48,533)

of which minority shares

5,397

7,023

(1,626)

7,990

7,990

-

of which group shares

130,530

322,407

(191,877)

618,959

667,492

(48,533)

ADJUSTMENTS PER SEGMENT AND NATURE INCLUDED IN THE RESULT

2020

2021

Thousands of Euros

Total

Catalysis

Energy & Surface Technologies

Recycling

Corporate & Unallocated

Total

Catalysis

Energy & Surface Technologies

Recycling

Corporate & Unallocated

Other operating income

1,108

-

1,108

-

-

39,786

30,312

1,877

7,597

-

Operating income

1,108

-

1,108

-

-

39,786

30,312

1,877

7,597

-

Raw materials and consumables used

(37,451)

-

(37,451)

-

-

-

-

-

-

-

Payroll and related benefits

(350)

-

(350)

-

-

(993)

(993)

-

-

-

Depreciation and impairment results

(88,062)

(36,565)

(51,161)

27

(362)

(40,590)

(40,406)

-

(185)

-

Other operating expenses

(99,102)

(20,785)

(23,781)

(50,942)

(3,594)

(71,057)

(7,467)

(1,522)

(51,699)

(10,370)

Operating expenses

(224,964)

(57,350)

(112,743)

(50,915)

(3,957)

(112,641)

(48,866)

(1,522)

(51,883)

(10,370)

Income from other financial investments

419

-

96

-

322

959

-

964

-

(4)

Result from operating activities

(223,438)

(57,350)

(111,539)

(50,915)

(3,634)

(71,896)

(18,554)

1,319

(44,287)

(10,374)

Net contribution from equity method companies

(13,663)

-

-

-

(13,663)

(3,197)

-

-

-

(3,197)

EBIT

(237,101)

(57,350)

(111,539)

(50,915)

(17,297)

(75,092)

(18,554)

1,319

(44,287)

(13,571)

Related to restructuring

(128,190)

(22,702)

(99,960)

-

(5,528)

(33,879)

(31,281)

41

110

(2,749)

Related to environment

(55,788)

-

-

(50,915)

(4,873)

(58,251)

-

-

(48,836)

(9,415)

Related to asset impairments

(45,303)

(28,628)

(8,219)

-

(8,456)

(17,857)

(17,585)

-

-

(272)

Other

(7,820)

(6,020)

(3,360)

-

1,560

34,895

30,312

1,278

4,439

(1,134)

Adjustments had a negative impact of 75 million on EBIT of which 39 million was already accounted for in the first half. Environmental-related provisions took up 58 million of this total with additional provisions for the creation of a green zone neighboring the Hoboken plant accounting for the bulk. This reflects the success of the voluntary offer to purchase neighboring houses. The creation of the green zone is a key building block of the site’s plan to further reduce the impact on its neighbors. Taking into account the use of the provision over the period, the total provision for the creation of the green zone as at 31 December 2021 amounted to 44 million.

EBIT adjustments also include 34 million of restructuring charges of which 23 million have been accounted for in the second half and are mainly related to a decision to stop a development program in Precious Metals Chemistry linked to the semiconductor industry.

Impairment charges took up 18 million of the total EBIT adjustments and were close to entirely accounted for in the first half and were mostly linked to the closure of Automotive Catalysts’ heavy-duty diesel operations in Frederikssund, Denmark as well as the impairment of certain related IP.

A positive EBIT adjustment of 40 million was recognized related to a tax credit in Brazil resulting from a landmark ruling by the Brazilian Supreme Court in May of this year covering multiple years.

Including positive adjustments to financial and tax items of 9 million and 17 million respectively, the total adjustments to the Group's net result over the period corresponded to a negative impact of 49 million.

Thousands of Euros

2020

2021

Wages, salaries and direct social advantages

(589,707)

(640,870)

Other charges for personnel

(50,594)

(28,834)

Temporary staff

(7,607)

(10,189)

Share-based payments

(10,108)

(14,255)

Employee salaries

(658,016)

(694,148)

Employer's social security

(97,698)

(108,765)

Defined benefit contributions

(21,438)

(20,581)

Contribution to defined contribution plan

(10,299)

(16,893)

Employer's voluntary contributions (other)

(4,381)

(3,064)

Pensions paid directly to beneficiaries

(3,486)

(3,628)

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

(3,164)

(6,063)

Pensions and other benefits

(42,768)

(50,229)

Payroll and related benefits of continuing operations

(798,481)

(853,140)

AVERAGE HEADCOUNT IN CONSOLIDATED COMPANIES

2020

2021

Executives and managerial staff

2,009

2,045

Non managers

8,997

8,910

Total for continuing operations

11,006

10,955

SHARE-BASED PAYMENTS

Thousands of Euros

Notes

2020

2021

Date of grant

10-02-2020

11-02-2021

Share price at the date of grant (Belgium & Other)

F28

42.05

47.47

Share price at the date of grant (France)

F28

NA

NA

Number of stock options granted

F28

1,168,375

1,108,500

Valuation model

Present Economic Value

Assumed volatility (% pa)

25.00

27.50

Risk-free interest rate (% pa)

(0.620)

(0.710)

Dividend increase (% pa)

10.00

10.00

Rate of pre-vesting forfeiture (%pa)

NA

NA

Rate of post-vesting leaving (%pa)

7.50

5.00

Minimum gain threshold (% pa)

15.00

15.00

Proportion who exercise given minimum gain achieved (% pa)

100.00

100.00

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

6.46

8.56

Total fair value of options granted

7,548

9,489

52.000 shares granted at 42,05 EUR

2,187

-

10.000 shares granted at 37,33 EUR

373

-

10.000 shares granted at 49,72 EUR

-

497

52.000 shares granted at 47,08 EUR

-

2,448

48.500 shares granted at 37,55 EUR

-

1,821

Total fair value of shares granted

2,560

4,767

Share-based payments

10,108

14,255

The Group recognized a share-based payment expense of 14.3 million during the year for continuing 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 historical volatility of the Group shareholders’ return over different averaging periods and different terms. For the calculation of the option value based on the lattice model, weekly steps were introduced, therefore focusing on a weekly term of volatility. The retained volatility assumption was set at 27.5% to reflect the increase of observed volatility. No other market condition has been included in 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 2021, shares have been granted mainly to top management resulting in an extra charge of 4.8 million for continuing operations.

The defined contribution plans of the Group in some countries like the USA, Canada, South Africa and Germany are directly recognized in the Consolidated income statement under the line “Contribution to defined contribution plans”.

The cash discounts that the authorities give back to Umicore Belgium on the social security contributions, relating to incentives regarding a.o. shift premiums, overtime and R&D are disclosed under the item “Employer’s social security”.

Thousands of Euros

2020

2021

Interest income

3,749

12,962

Interest expenses

(61,659)

(64,460)

Discounting of non-current provisions

(3,146)

(3,046)

Foreign exchange gains and losses

(30,445)

(23,480)

Other financial income

295

942

Other financial expenses

(12,996)

(13,210)

Total of continuing operations

(104,202)

(90,292)

All interest income and expenses are recognized using the effective interest rate method.

The 2021 interest income reached 13.0 million benefiting from the 9.3 million impact related to the interests on the tax credit in Brazil , resulting from a landmark ruling by the Brazilian Supreme Court in May 2021 and covering multiple years. Those related interests have been taken in adjustments (see note F9). The interest expenses amounted to 64.5 million. Those expenses included 10.0 million of interest expenses (theoretical phantom interests) on the debt component of the convertible debt (5.2 million in 2020) and 1.0 million of interests related to leases as per IFRS 16.

The discounting of non-current provisions relates mainly to employee benefits provisions and to a lesser extent to 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 the recognition of new non-current liabilities. Most of the discounting results in 2021 were booked in Germany and to a lesser extent in Belgium.

Foreign exchange results, mainly explained by the cost of forward points in hedging instruments, include realized exchange results and the unrealized translation adjustments on monetary items using the closing rate of the period. 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 other financial fees incurred.

Thousands of Euros

2020

2021

Capital gains and losses on disposal of financial investments

517

946

Dividend income

230

210

Interest income from financial assets

14

-

Total for continuing operations

761

1,156

Thousands of Euros

2020

2021

Income tax expense

Recognized in the income statement

Current income tax

(115,672)

(201,870)

Deferred income tax

56,542

22,826

Total tax expense for continuing operations

(59,131)

(179,044)

Relationship between tax expense (income) and accounting profit

Result from operating activities

304,592

878,938

Financial result

(104,202)

(90,292)

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

200,390

788,646

Weighted average theoretical tax rate (%)

25.48

24.77

Income tax calculated at the weighted average theoretical tax rate for continuing operations

(51,055)

(195,312)

Tax effect of :

Expenses not deductible for tax purposes

(4,383)

(7,395)

Tax-exempted revenues

3,457

303

Dividends from consolidates companies & Associates

(267)

(66)

Gains & Losses taxed at a reduced rate

37

36

Tax incentives and tax holidays

14,563

26,903

Tax computed on other basis

(1,657)

563

Utilisation of previously unrecognized tax losses

4,349

4,130

Write down (or reverse of previous write down) of DTA

6,050

(6,475)

Change in applicable tax rate

(31)

(300)

Other tax credits (excluding R&D tax credits)

958

1,058

Non recoverable foreign withholding taxes

(12,003)

(7,943)

Previous years adjustments

988

(3,299)

Other (including IFRIC 23)

(20,135)

8,753

Tax expense at the effective tax rate for the year

(59,129)

(179,044)

The weighted average theoretical tax rate evolved from 25.5% in 2020 to 24.8% in 2021 for the continuing operations. Excluding the impact of adjustments, the adjusted effective tax rate for 2021 was 23.1%. This compares to the 24.2% in 2020.

Thousands of Euros

Development expenses capitalized

Concessions, patents, licences, etc.

Software

CO2 emission rights

Other intangible assets

Total

At the beginning of previous year

Gross value

151,880

101,229

149,792

19,213

85,216

507,329

Accumulated amortisation

(98,113)

(46,499)

(122,842)

-

(25,721)

(293,176)

Net book value at the beginning of previous year

53,768

54,730

26,949

19,213

59,494

214,154

. acquisition through business combinations

-

82

40

-

(23)

98

. additions

13,784

50

5,404

-

24,821

44,060

. disposals

-

(2,336)

(3)

(4,009)

(217)

(6,564)

. amortisation charged (included in "Depreciation and impairments")

(12,708)

(9,334)

(8,267)

-

(4,901)

(35,209)

. impairment losses recognized (included in "Depreciation and impairments")

(17,299)

(8,529)

(1,485)

-

-

(27,313)

. emission rights allowances

-

-

-

697

-

697

. translation differences

(450)

(6)

(346)

(3)

(908)

(1,712)

. other movements

1,422

50

4,401

(0)

(3,186)

2,687

At the end of previous year

38,517

34,707

26,694

15,898

75,081

190,897

Gross value

157,704

98,840

150,989

15,898

103,637

527,068

Accumulated amortisation

(119,187)

(64,134)

(124,295)

-

(28,556)

(336,172)

Net book value at the end of previous year

38,517

34,707

26,694

15,898

75,081

190,897

. additions

8,867

842

1,435

8

25,702

36,854

. disposals

(553)

-

(26)

0

(45)

(623)

. amortisation charged (included in "Depreciation and impairments")

(9,424)

(8,890)

(8,119)

-

(4,691)

(31,123)

. impairment losses recognized (included in "Depreciation and impairments")

(5,099)

(17,381)

(274)

-

(214)

(22,968)

. emission rights allowances

-

-

-

1,979

-

1,979

. translation differences

(145)

5

329

(1)

533

722

. other movements

3,843

3,507

8,463

0

(10,287)

5,526

At the end of the year

36,006

12,790

28,503

17,884

86,079

181,263

Gross value

156,213

104,755

158,921

17,884

116,012

553,785

Accumulated amortisation

(120,207)

(91,965)

(130,418)

-

(29,932)

(372,522)

Net book value for continuing operations

36,006

12,790

28,503

17,884

86,079

181,263

In 2021, additions amounted to 36.9 million and mainly contain capitalized expenses in internally generated developments for 27.8 million (see note F9), of which 19.0 million included in “Other intangible assets” as “Intangible assets under construction”. Additions also contain capitalized expenses (studies, project costs, IT) related to the new cathode materials plant in Poland for around 4.0 million. Impairment losses are mainly linked to impairment of IP's following the closure of Automotive Catalysts' heavy-duty diesel operations in Frederikssund, Denmark. Net increase of emission right allowances amounts to 1.9 million in 2021 (new grants 7.8 million and settlement €-5.9 million). Other movements mainly include the transfer between intangible assets in progress (included under “other intangible assets”) and the other categories of intangible assets and transfers from tangible assets. The other intangible assets category contains intangible assets in progress for 69.2 million (mainly capitalized development costs) but also some business portfolio and customers’ list acquired for 16.3 million. There are no pledges on, or restrictions to, the title on intangible assets, other than disclosed in note F35.

Thousands of Euros

31/12/2020

31/12/2021

At the end of the previous year

Gross value

169,915

165,627

Accumulated impairment losses

(13,210)

(9,637)

Net book value at the end of previous year

156,705

155,990

. acquisition through business combinations

1,499

-

. translation differences

(2,214)

2,595

At the end of the year

155,990

158,585

Gross value

165,627

168,915

Accumulated impairment losses

(9,637)

(10,330)

Net book value for continuing operations

155,990

158,585

This table includes goodwill related to fully consolidated companies only. Goodwill relating to companies accounted for using the equity method is detailed in note F17.

The change of the period relates only to translation differences.

The goodwill accounted in each of the CGU groups, but summarized by segment, is as follows:

Thousands of Euros

Catalysis

Energy & Surface Technologies

Recycling

Total

31/12/2020

49,999

87,737

18,254

155,990

31/12/2021

49,988

90,264

18,333

158,585

Management tests annually whether goodwill has suffered any impairment in accordance with the accounting policy stated in note F2. Such impairment tests are performed at a cash generating unit level, which may vary in scope from a total business unit to an individual plant but never a full segment scope. The recoverable amounts of cash-generating units to which goodwill is allocated have been determined based on value-in-use calculations by means of discounted cash flow modelling on the basis of the Group’s operational plans which typically look forward 5 years, followed by a long term projection. On macroeconomic and external indicators such as currency and metal prices, the testing uses typically prevailing market conditions at the time the plans are drafted. The rates used are typically the ones observed on international exchanges in the last quarter of the year. The 2021 goodwill impairment testing indicated sufficient headroom in the respective cash generating units and hence no goodwill impairments were recognized. The 2021 impairment testing used an average tax rate of 25.0% (unchanged versus 2020) and a weighted average cost of capital post-tax of 7% (unchanged versus 2020) . A uniform WACC rate was applied across cash generating units with unit-specific risk factors considered to be reflected in the underlying cash flow projections. Terminal values were determined on the basis of a perpetual growth rate of on average 2% (same as in 2020). Inflation rates were based on guidance from national and international institutes such as the NBB or ECB.

Thousands of Euros

Land and buildings

Plant, machinery and equipment

Furniture and vehicles

Other tangible assets

Construction in progress and advance payments

Total

At the beginning of previous year without leasing

Gross value

1,189,490

2,402,378

242,362

15,070

461,369

4,310,669

Accumulated depreciation

(530,148)

(1,553,922)

(166,862)

(13,950)

-

(2,264,881)

Net book value at the beginning of previous year without leasing

659,343

848,457

75,500

1,120

461,369

2,045,788

. acquisition through business combinations

3,510

(798)

548

-

876

4,136

. additions

20,663

32,588

7,852

364

330,009

391,475

. disposals

(10)

(938)

(176)

(20)

(134)

(1,278)

. depreciations (included in "Depreciation and impairments")

(43,501)

(148,434)

(19,154)

(194)

-

(211,282)

. net impairment losses recognized (included in "Depreciation and impairments")

(15,053)

(44,416)

(654)

(312)

-

(60,435)

. translation differences

(18,017)

(20,505)

(2,321)

(54)

(16,266)

(57,164)

. other movements

88,832

154,714

20,807

-

(267,820)

(3,466)

At the end of previous year without leasing

695,767

820,668

82,403

903

508,033

2,107,775

At the beginning of the year without leasing

Gross value

1,242,294

2,478,662

260,590

23,522

508,033

4,513,101

Accumulated depreciation

(546,526)

(1,657,994)

(178,187)

(22,619)

-

(2,405,326)

Net book value at the beginning of the year without leasing

695,767

820,668

82,403

903

508,033

2,107,775

. additions

76,361

42,349

14,979

16,148

229,435

379,272

. disposals

(446)

(207)

(111)

(312)

(113)

(1,189)

. depreciations (included in "Depreciation and impairments")

(47,462)

(159,613)

(20,906)

(331)

-

(228,312)

. net impairment losses recognized (included in "Depreciation and impairments")

(462)

(24,543)

(743)

312

-

(25,436)

. translation differences

16,705

19,803

600

39

24,674

61,822

. other movements

50,119

183,342

10,746

40

(249,089)

(4,842)

At the end of the financial year without leasing

790,583

881,799

86,969

16,799

512,941

2,289,090

Gross value

1,382,096

2,703,328

276,986

39,340

512,940

4,914,690

Accumulated depreciation

(591,513)

(1,821,529)

(190,017)

(22,540)

-

(2,625,599)

Net book value for continuing operations without leasing

790,583

881,799

86,970

16,799

512,940

2,289,091

Gross value

47,341

135

18,175

500

-

66,152

Accumulated depreciation

(11,496)

(58)

(5,713)

-

-

(17,268)

Net book value at the beginning of previous year for leasing

35,845

77

12,462

500

-

48,884

. additions

17,901

1,034

8,578

144

-

27,657

. depreciations (included in "Depreciation and impairments")

(12,726)

(724)

(6,765)

(142)

-

(20,357)

. translation differences

(1,133)

(10)

(99)

(0)

-

(1,242)

. transfer

979

(35)

-

-

-

944

At the end of previous year for leasing

40,866

342

14,176

502

-

55,886

Leasing at begining of the year

Gross value

67,193

1,055

24,865

637

-

93,750

Accumulated amortisation

(26,327)

(713)

(10,689)

(135)

-

(37,864)

Net book value at the beginning of the year for leasing

40,865

342

14,176

502

-

55,886

. additions

16,638

1,274

7,662

-

-

25,573

. depreciations (included in "Depreciation and impairments")

(11,907)

(771)

(7,330)

(105)

-

(20,113)

. translation differences

1,336

2

40

0

-

1,378

. transfer

(681)

-

1

-

-

(680)

At the end of the financial year for leasing

46,251

847

14,549

397

-

62,043

Gross value

68,958

2,310

28,436

625

-

100,329

Accumulated amortisation

(22,707)

(1,463)

(13,888)

(228)

-

(38,286)

Net book value for leasing

46,251

847

14,549

397

-

62,044

Tangible asset including leasing

Gross value

1,451,054

2,705,637

305,423

39,965

512,940

5,015,019

Accumulated amortisation

(614,220)

(1,822,992)

(203,904)

(22,769)

-

(2,663,885)

Net book value for continuing operations including leasing

836,834

882,646

101,519

17,196

512,940

2,351,134

Capital expenditures totaled 389 million (including additions on intangible assets but without the capitalized R&D costs as per Umicore's capital expenditures definition), compared with 403 million the previous year. Energy & Surface Technologies accounted for close to 60 % of the Group's capital expenditures, driven by Rechargeable Battery Materials’ European expansion investments. This implies a temporary slow-down in Energy & Surface Technologies’ capital expenditures compared to 2020. In Catalysis and Recycling, capital expenditures only slightly increased compared to the low spending levels of 2020. In Catalysis, Automotive Catalysts continued to focus on production footprint optimization investments and targeted capacity expansions. In Recycling, the capital expenditures increase was earmarked for environmental and safety-related investments in Precious Metals Refining.

Impairments on property, plant and equipment are mainly related to a decision to stop a development program in Precious Metals Chemistry linked to the semiconductor industry.

The line ‘other movements’ mainly includes the transfer between tangible assets in progress and the other categories and to a lesser extent transfer to intangible assets.
There are no pledges on, or restrictions to, the title on property, plant and equipment, other than disclosed in note F35.

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

Country

Measurement currency

Percentage

Percentage

2020

2021

For continuing operations

Associates

IEQSA

Peru

PEN

40.00

40.00

Ganzhou Yi Hao Umicore Industries

China

CNY

40.00

40.00

Element Six Abrasives

United Kingdom

USD

40.22

40.22

Jiangmen Chancsun Umicore Industry Co.,LTD

China

CNY

40.00

40.00

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.

Investments in associates are accounted for in accordance with the equity method and represent approximately 1.7% 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 most significant associate is Element Six Abrasives, in which Umicore holds 40.22%. Element Six Abrasives is a synthetic diamond materials group, part of De Beers Group, its majority shareholder. The group operates worldwide with primary manufacturing facilities in Ireland, Germany, the UK, the US and South Africa. Element Six Abrasives is on an adjusted results basis a profitable group, generating positive cash flow. The group’s functional currency is USD. Umicore is represented in the Board of Directors and the audit committee of Element Six Abrasives. Besides its equity share in this company, Umicore has no other commitments, guarantees or obligations arising from its involvement in this associate. Adjustments 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 pending file qualified as contingent liability at Element Six Abrasives and note F9 for adjustments).

Thousands of Euros

Net book value

Goodwill

Total

At the end of previous year

94,683

45,156

139,839

. profit for the year

17,347

-

17,347

. dividends

(4,808)

-

(4,808)

. change in other reserves

(3,114)

-

(3,114)

. translation differences

5,449

427

5,877

At the end of the year for continuing operations

109,557

45,583

155,140

Umicore’s share in the aggregated balance sheet and profit and loss items of the associates and joint ventures would have been as follows:

Thousands of Euros

31/12/2020

31/12/2021

Assets

214,719

270,781

Liabilities

101,894

143,037

Turnover

195,889

261,159

Net result

(5,332)

17,347

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

Thousands of Euros

Financial assets at FV through OCI

Loans granted

Non-current financial assets

At the beginning of previous year

10,897

2,192

. increase

1,633

753

. reversals of impairment losses (included in "Income from other financial instruments")

2

-

. translation differences

(45)

(79)

. fair value recognized in equity

(4,193)

-

. other movements

59

386

At the end of previous year

8,352

3,252

. increase

5,014

39

. translation differences

78

36

. fair value recognized in equity

(43)

-

. other movements

719

(719)

At the end of the financial year for continuing operations

14,120

2,608

Current financial assets

At the end of the preceding financial year

-

80

. increase

-

132

. translation differences

-

1

. other

-

(44)

At the end of the financial year for continuing operations

-

169

In 2021, the movements in non-consolidated entities include, amongst other, the equity investment in a developer of next-generation solid state batteries.

Thousands of Euros

31/12/2020

31/12/2021

Analysis of inventories

Base products - gross value

2,706,918

2,874,788

.Permanently tied up metal inventories (not hedged)

775,213

834,372

.Commercially available metal inventories (hedged) (*)

1,477,096

1,364,202

.Other base products inventories (not hedged)

454,609

676,214

Consumables - gross value

102,163

111,128

Write-downs

(105,715)

(118,279)

Advances paid

7,222

12,059

Contracts in progress

7,503

(10,626)

Total inventories for continuing operations

2,718,092

2,869,071

* applying Umicore's transactional metal hedging - see note F2.21.1 and F3.2.2

Inventories have increased by 151.0 million compared with December 2020. This increase is mainly due to higher metal prices impacting the value of the commercially available metal inventories. The increase of permanently tied up inventories is mainly linked to the battery materials activities, where ramp-up of production capacity and commissioning of new production lines requires higher quantities of permanent metal inventory.

The total gross book value of Umicore’s permanently tied-up metal inventories at 31 December 2021 compares to a value of 3,298 million when applying the 31 December market prices (3,008 million at end December 2020).

As per the accounting policy with regards to permanently tied-up metal inventories (see Chapter 2.9), 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 CGU’s carrying these inventories. Applying the LOCOM principle on permanently tied-up metal inventories on 31 December 2021 would have given rise to a non-cash impairment charge of 0.9 million for the Group.

The change in inventory recognized in Raw Materials and Consumables in the consolidated income statement is a positive amount of 76 million (representing the cash movements on inventory balances). The net write-down of inventory recorded in the consolidated income statement in 2021 amounts to 10 million.

There are no pledges on, or restrictions to, the title on inventories.

Thousands of Euros

Notes

31/12/2020

31/12/2021

Non current

Cash guarantees and deposits

8,370

9,737

Other receivables maturing > 1 year

2,574

10,217

Assets employee benefits

820

718

Total for continuing operations

11,764

20,672

Current

Trade receivables (at cost)

1,366,686

1,394,540

Trade receivables (write down)

(22,319)

(18,771)

Other receivables (at cost)

177,008

243,746

Other receivables (write down)

(207)

(207)

Interest receivable

495

1,439

Fair value receivable financial instruments held for cash-flow hedging

F33

45,091

80,452

Fair value receivable - financial instruments related to FV hedging (IFRS 9 hedge accounting)

F33

21,511

9,868

Fair value receivable - financial instruments related to FV hedging (economic hedging)

1,931

3,977

Deferred charges and accrued income

86,973

116,989

Total for continuing operations

1,677,167

1,832,033

Compared to 31 December 2020, trade receivables substantially increased driven mainly by higher sales volumes and higher metal prices.

Total

Not due

Overdue between

Thousands of Euros

0-30 days

30-60 days

60-90 days

> 90 days

Ageing balance analysis at the beginning of the year

Trade receivables (w/o doubtful and securitized receivables) - at cost

1,328,476

1,161,303

137,088

21,569

4,384

4,131

Other receivables - at cost

177,007

176,020

-

-

223

765

Loss allowance

14,888

9,412

1,291

334

240

3,611

Expected loss rate

0.99%

0.70%

0.94%

1.55%

5.20%

73.75%

Ageing balance analysis at the end of year

Trade receivables (w/o doubtful and securitized receivables) - at cost

1,357,690

1,222,865

111,435

12,724

6,021

4,645

Other receivables - at cost

243,746

236,195

2,940

1,186

252

3,173

Loss allowance

16,595

10,006

1,465

270

692

4,162

Expected loss rate

1.04%

0.69%

1.28%

1.94%

11.03%

53.24%

CREDIT RISK – TRADE RECEIVABLES

Thousands of Euros

Trade receivables (write-down)

Other receivables (write-down)

Total

At the beginning of previous year

(22,983)

(207)

(23,190)

. Impairment losses recognized in P&L

(3,943)

342

(3,602)

. Reversal of impairment losses

4,328

-

4,328

. Impairment written off against asset carrying amount

48

-

48

. Other movements

(408)

(346)

(755)

. Translation differences

639

5

644

At the end of previous year

(22,320)

(207)

(22,526)

At the beginning of the financial year

(22,320)

(207)

(22,526)

. Impairment losses recognized in P&L

(1,761)

-

(1,761)

. Reversal of impairment losses

1,535

-

1,535

. Impairment written off against asset carrying amount

4,564

-

4,564

. Other movements

129

-

129

. Translation differences

(918)

0

(917)

At the end of the financial year for continuing operations

(18,771)

(207)

(18,978)

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 the days past due. The expected loss rates are based on historical payment profiles of sales and the corresponding credit losses experienced. The historical loss rates are adjusted to reflect current and forward-looking information on macro-economic factors affecting the ability of 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, and accordingly 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 trade receivables. In 2021, two main credit insurance policies with two different insurers were in place. At closing, 462 million of the Group's outstanding invoices were covered by a policy where indemnification in case of non-payment amounts to 95% with an indemnification cap set at regional or country level. The other policy covered 262 million of trade invoices with a global annual deductible of 5 million, a maximum indemnity per year of 100 million and an indemnification in case of non-payment of 90%. The Group also managed credit exposure by selling invoices to financial institutions without recourse (410 million end of 2021 compared to 301 million end of 2020), partly covered by the above credit insurance policies. Under one of these facilities, the carrying amount of receivables sold before the transfer amounts to 220 million while total carrying amount of the assets that the entity continues to recognize and the related continuing involvement liability equal to 17.6 million as of 31 December 2021. The latter consist mainly of non-transferred credit risk as well as late payment risk over the relevant portfolio. Other facilities amounted to 190 million are derecognized in their entirety.

Specifically in China, Umicore reduces credit risk by discounting bank acceptance drafts it receives from its customers without recourse (and hence derecognized) (290 million end of year 2021 compared to 245 million end of 2020).

Finally, some of our businesses function without credit insurance and instead internal credit limits are set based on available financial information and business knowledge. Theses limits are duly reviewed and approved by management.

Thousands of Euros

31/12/2020

31/12/2021

Tax assets and liabilities

Income tax receivables

39,553

46,762

Deferred tax assets

221,938

219,248

Income tax payable

(160,734)

(197,488)

Deferred tax liabilities

(22,846)

(24,294)

Assets

Liabilities

Net

Thousands of Euros

2020

2021

2020

2021

2020

2021

At the end of preceding financial year

168,927

221,938

(11,461)

(22,846)

157,466

199,092

Deferred tax recognized in the P&L

59,688

18,119

(3,146)

4,707

56,542

22,826

Deferred tax recognized in equity

(12,208)

(23,322)

3,632

(8,156)

(8,576)

(31,478)

Acquisitions through business combination

-

-

(359)

-

(359)

-

Translation adjustments

(6,199)

5,359

218

(84)

(5,981)

5,275

Transfer

11,722

(2,085)

(11,722)

2,085

-

-

Other movements

8

(761)

(8)

-

-

(761)

At the end of financial year for continuing operations

221,938

219,248

(22,846)

(24,294)

199,092

194,954

Assets

Liabilities

Net

Thousands of Euros

2020

2021

2020

2021

2020

2021

Deferred tax in respect of each type of temporary difference

Intangible assets

22,144

25,797

(11,043)

(6,392)

11,101

19,405

Goodwill on fully consolidated companies

-

-

(514)

(556)

(514)

(556)

Property, plant and equipment

11,506

11,848

(29,644)

(29,662)

(18,138)

(17,814)

Long term receivables

1,371

141

(181)

(470)

1,190

(329)

Inventories

41,534

77,332

(33,159)

(27,804)

8,375

49,528

Trade and other receivables

8,212

15,529

(25,600)

(58,640)

(17,388)

(43,111)

Group Shareholder's equity

-

105

(6,148)

(3,959)

(6,148)

(3,854)

Long Term Financial Debt and other payable

11,688

15,743

(18,023)

(24,307)

(6,335)

(8,564)

Provisions Employee Benefits

89,764

77,506

(8,267)

(7,299)

81,497

70,207

Provisions for Environment

26,150

29,969

(378)

(205)

25,772

29,764

Provisions for other liabilities and charges

12,968

22,889

(583)

(658)

12,385

22,231

Current Financial Debt

40

1,224

(1,080)

(4,858)

(1,040)

(3,634)

Current Provisions for Environment

1,969

1,969

-

-

1,969

1,969

Current Provisions for Other Liabilities & Charges

9,952

4,281

(8)

(8)

9,944

4,273

Trade and other payables

67,076

60,570

(1,309)

(877)

65,767

59,693

Total deferred tax due to temporary differences

304,374

344,903

(135,937)

(165,695)

168,437

179,208

Tax losses to carry forward

70,257

80,051

-

-

70,257

80,051

Investments deductions

867

650

-

-

867

650

Other

3,389

2,236

-

-

3,389

2,236

Deferred tax assets not recognized

(43,858)

(67,191)

-

-

(43,858)

(67,191)

Total tax assets/liabilities

335,029

360,649

(135,937)

(165,695)

199,092

194,954

Compensation of assets and liabilities within same entity

(113,091)

(141,401)

113,091

141,401

Net amount

221,938

219,248

(22,846)

(24,294)

199,092

194,954

2020

2021

2020

2021

Thousands of Euros

Base

Base

Tax

Tax

Amount of deductible temporary differences, unused tax losses or tax credits for which no deferred tax asset is recognized in the balance sheet

Expiration date with no time limit

158,635

249,850

43,858

67,191

The changes of the period in temporary differences are charged to the consolidated income statement except those arising from events that were recognized directly in the consolidated statement of comprehensive income.

The main movements in deferred tax recognized directly in the consolidated statement of comprehensive income are deferred taxes generated by temporary differences included within the lines "Trade and other receivables" (negative by 8.3 million), “Provisions for employee benefits” (negative by 12.7 million) and “Trade and other payables” (negative by 10.7 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 time the deferred taxes are recognized.

Unrecognized deferred tax assets of 67.2 million mainly arise from tax losses (61.6 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 anticipates that this liability will not be incurred in a foreseeable future.

Group current income tax payable at 31 December 2021 amounting 197.5 million (2020 : 160.7 million) include uncertain tax positions of 101.1 million (114.9 million in 2020).

Thousands of Euros

31/12/2020

31/12/2021

Cash and cash equivalents

Short-term investments : bank term deposits

373,904

272,965

Short-term investments : term deposits (other)

5

43

Cash-in-hands and bank current accounts

636,397

921,428

Total cash and cash equivalents

1,010,307

1,194,437

Bank overdrafts

8,678

28,122

Net cash as in Cash Flow Statement for continuing operations

1,001,629

1,166,315

All cash and cash equivalents are fully available for the Group.

Liquidity risk management implies maintaining sufficient cash and marketable securities, the availability 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.

The detail of the Group’s share in currency translation differences and other reserves is as follows:

Thousands of Euros

Conversion rights recognized in equity

Financial assets at FV through OCI reserves

Cash flow hedge reserves - Commodities

Cash flow hedge reserves - Currencies

Cash flow hedge reserves - IRS

Deferred taxes directly recognized in OCI

Changes in post employment benefits, arising from changes in actuarial assumptions

Share-based payment reserves

Currency translation differences

Total

Balance at the beginning of previous year

-

1,141

(33,865)

5,493

(687)

87,094

(298,028)

37,271

(82,873)

(284,454)

Remeasurements recognized in other comprehensive income

-

(4,198)

(20,951)

7,972

(84)

(513)

(27,632)

-

-

(45,406)

Remeasurements recognized in equity

50,324

-

-

-

-

-

-

10,108

-

60,432

Remeasurements derecognized out of other comprehensive income

-

-

27,054

2,707

-

(8,057)

-

-

-

21,704

Transfer from/to retained earnings

-

-

-

-

-

-

-

(2,737)

-

(2,737)

Other movements

-

-

-

-

-

868

(1,775)

-

-

(908)

Exchange differences

-

5

74

549

-

(204)

2,403

-

(119,284)

(116,457)

Balance at the end of previous year

50,324

(3,052)

(27,688)

16,721

(771)

79,187

(325,033)

44,642

(202,157)

(367,826)

Balance at the beginning of the year

50,324

(3,052)

(27,688)

16,721

(771)

79,187

(325,033)

44,642

(202,157)

(367,826)

Remeasurements recognized in other comprehensive income

-

2

69,150

(16,354)

(1,971)

(25,487)

48,082

-

-

73,423

Remeasurements recognized in equity

-

-

-

-

-

-

-

14,255

-

14,255

Remeasurements derecognized out of other comprehensive income

-

-

28,949

(14,165)

-

(6,044)

(0)

-

-

8,740

Transfer from/to retained earnings

-

-

-

-

-

-

-

(5,904)

-

(5,904)

Change in scope

-

-

-

-

-

912

(3,026)

-

-

(2,114)

Exchange differences

-

40

393

150

(143)

(176)

(2,107)

-

84,898

83,055

Balance at the end of the year

50,324

(3,009)

70,804

(13,649)

(2,885)

48,392

(282,084)

52,994

(117,259)

(196,370)

The net gains recognized in the OCI regarding cash flow hedges (50.8 million) are the changes 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 losses derecognized from OCI (14.8 million) are the fair values of the cash-flow hedging instruments existing at the opening which expired during the year. The total impact incurred at expiration of the cash-flow hedges during the year represents a loss of 3.6 million, recognized in the income statement. This amount includes the mentioned net losses derecognized from OCI (14.8 million) and the fair value changes incurred in the course of the year on expired existing cash-flow hedges and on new instruments contracted during the year (11.2 million).

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 48.1 million (refer to Note 27 on Provisions for employee benefits). The 2021 shares and stock option plans have led to a share-based payment reserve increase of 14.3 million (refer to note F10 on employee benefits). 5.9 million, linked to exercised options and free shares plans, have been transferred to retained earnings.

The movements on exchange differences are mainly related to the strengthen of the USD, CNY, HKD and BRL compared to EUR. The total exchange differences are mainly impacted by the following currencies : BRL, KRW, PLN, CNY, ZAR, CAD, ARS and USD.

Thousands of Euros

Bank loans

Lease liability

Other loans

Total

Non-current

At the beginning of previous year

1,101,266

46,262

3,555

1,151,083

. Increase

125,000

27,657

494,360

647,017

. Decrease

-

(19,801)

(304)

(20,105)

. Translation differences

(146)

(1,251)

5

(1,392)

. Transfers

(21,120)

(4)

(21,124)

. Conversion rights recognized in equity

-

(50,324)

(50,324)

At the end of previous year

1,205,000

52,865

447,289

1,705,154

. Increase

-

25,573

32,109

57,682

. Decrease

-

(19,534)

(824)

(20,358)

. Translation differences

-

1,400

(0)

1,400

. Transfers

-

2,588

(22,430)

(19,842)

At the end of the financial year for continuing operations

1,205,000

62,892

456,145

1,724,037

Current portion of long-term financial debts

At the end of the preceding financial year

21,790

-

158

21,948

. Increase / decrease

(22,144)

-

1,785

(20,359)

. Translation differences

354

-

(40)

314

. Transfers

-

-

18,097

18,097

At the end of the financial year for continuing operations

-

-

20,000

20,000

Thousands of Euros

Short term bank loans

Bank overdrafts

Short term loan : commercial paper

Other loans

Total

Current

At the end of the preceding financial year

554,266

8,678

134,282

4

697,230

. Increase / decrease

(204,601)

19,093

(126,277)

(1,786)

(313,571)

. Transfers

-

-

-

1,745

1,745

. Translation differences

25,055

351

-

38

25,444

At the end of the financial year for continuing operations

374,720

28,122

8,005

1

410,847

Net financial debt at 31 December 2021 stood at 960.4 million, down compared with 1,414.0 million at the start of the year.

The financial debt includes the US private debt placements issued in 2019 (390 million; fair value of 396.4 million) and in 2017 (360 million; fair value 377.9 million), the Schuldschein issued in 2017 (330 million; fair value 336.6 million), the European Investment Bank (EIB) loan issued in 2020 (125 million; fair value 122.0 million) and the convertible bond issued in 2020 (500 million ; fair value 456.1 million).

On December 31, 2021, an amount of 5 million was outstanding on the French NEU CP program and an amount of 20 million was outstanding on the French NEU MTN program (out of 600 million available under each program).

An amount of 3 million was outstanding on the Belgian Commercial Paper program (out of 600 million available under the program).

On December 31, 2021, there were no outstanding advances neither under the 500 million Syndicated Bank Credit Facility renewed in 2021 and maturing in October 2026, nor under the 495 million Syndicated Bank Credit Facility maturing in April 2025.

The aforementioned Syndicated Bank Credit Facilities and the long term debt instruments require the Company to comply with certain financial covenants. Umicore has not faced any breach of those covenants in 2021 or in previous years.

The long-term debts mainly consist in debt instruments in EUR.

The average interest rate on the average gross debt amounted to 2.23% for full year 2021 (1.91% for full year 2020).

The line "new loans and repayment of loans" in the consolidated statement of cash flow do not include the movements on bank overdrafts and the currency translation differences, nor the theoretical phantom interests on the debt component part of the convertible debt (€10.0 million in 2021) which is non cash.

The net gearing ratio (see definition in Glossary) end of 2021 of 23.3% (35.0% in 2020) and the net financial debt over adjusted EBITDA ratio of 0.77x (compared to 1.76x end of 2020) position the Group well within its targeted capital structure limits.

Thousands of Euros

Type of Interest

Due within 1 year

Due between 1 and 5 years

Due beyond 5 years

Total

Gross Financial debt of previous year

Lease Liabilities

-

40,478

12,387

52,865

Credit Institutions

Fixed/Floating

584,895

3,190

-

588,085

Commercial Papers

Floating

134,282

-

-

134,282

Schuldschein

Fixed/Floating

-

287,000

43,000

330,000

US Private Placement

Fixed

-

-

750,000

750,000

EIB Loan

Fixed

-

-

125,000

125,000

Convertible Bond

Fixed

-

444,100

-

444,100

Total

779,177

774,768

930,387

2,424,332

Thousands of Euros

Type of Interest

Due within 1 year

Due between 1 and 5 years

Due beyond 5 years

Total

Gross Financial debt of the year

Lease Liabilities

-

45,209

17,683

62,892

Credit Institutions

Fixed/Floating

402,847

-

-

402,847

Commercial Papers

Floating

28,000

-

-

28,000

Schuldschein

Fixed/Floating

-

287,000

43,000

330,000

US Private Placement

Fixed

-

50,000

700,000

750,000

EIB Loan

Fixed

-

125,000

-

125,000

Convertible Bond

Fixed

-

456,145

-

456,145

Total

430,847

963,354

760,683

2,154,884

Thousands of Euros

EUR

Total

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

Bank loans

1,205,000

1,205,000

Other loans

476,145

476,145

Non-current financial debts (including current portion)

1,681,145

1,681,145

Thousands of Euros

2020

2021

Non current financial debt

1,705,154

1,724,037

Current portion of non current financial debt

21,948

20,000

Current financial debt

697,230

410,847

Cash and cash equivalents

(1,010,307)

(1,194,437)

Net financial debt

1,414,024

960,447

Gross outstanding debt

Short term bank loans

17.4%

Long term bank loans

55.9%

Commercial paper

0.4%

Bank overdrafts

1.3%

Lease liability

2.9%

Convertible Bond

21.2%

Other bank facilities

0.9%

Millions of Euros

2020

2021

Net financial debt

1,414.0

960.4

Equity

2,621.9

3,167.3

Total

4,035.9

4,127.7

Gearing ratio (%)

35.0

23.3

Thousands of Euros

Notes

31/12/2020

31/12/2021

Non-current

Other long-term debts

5,682

6,540

Investment grants and deferred income from grants

17,823

40,821

Total for continuing operations

23,505

47,361

Current

Trade payables

1,896,099

2,196,225

Advances received on contracts in progress

32,180

29,851

Tax payable (other than income tax)

38,317

32,885

Payroll and related charges

135,835

168,014

Other amounts payable

39,733

67,708

Dividends payable

11,618

11,612

Accrued interest payable

9,109

10,326

Fair value payable financial instrument held for cash flow hedging

F33

57,957

24,504

Fair value payable - financial instruments related to FV hedging (IFRS 9 hedge accounting)

F33

18,708

31,874

Fair value payable - financial instruments related to FV hedging (economical hedging)

19,589

433

Accrued charges and deferred income

159,784

234,534

Total for continuing operations

2,418,928

2,807,966

Compared to 31 December 2020, trade payables increased, driven mainly by more purchase volumes at higher metal prices with longer payment terms. Trade payables include bank acceptance drafts issued by Umicore in China. Bank acceptance drafts are a commonly used form of payment in China, often preferred by suppliers in view of their transferrability, their use as financing collateral or their ability to be discounted. End of 2021, Umicore issued 260 million of bank acceptance drafts in China (compared to 280 million end of 2020). Trade payables end of 2021 include contracted metals to be repurchased for an amount of 136 million (compared to 230 million end of 2020). The tax payables (other than income tax) mainly include VAT payables.

Umicore has no global supply chain programme. However, some suppliers have agreements in place with banks through which Umicore is expected to provide confirmation that suppliers invoices are correct and will be settled on the due date. At the end of 2021, such confirmations were provided for a total outstanding payable amount of 242 million.

PREVIOUS FINANCIAL YEAR

Earliest contractual maturity

Thousands of Euros

< 1 Month

1 to 3 Months

3 Months to 1 Year

1 to 5 Years

> 5 years

Total

Financial debt

274,765

90,870

353,542

774,766

930,387

2,424,330

Current

274,765

90,870

353,542

-

-

719,177

Short term bank loans

231,384

55,590

267,293

-

-

554,266

Bank overdrafts

8,678

-

-

-

-

8,678

Short-term loan: commercial paper

25,000

35,250

74,032

-

-

134,282

Other loans

-

4

-

-

-

4

Current portion of long-term bank loans

9,691

-

12,099

-

-

21,790

Current portion of other long-term loans

13

26

119

-

-

158

Non-current

-

-

-

774,766

930,387

1,705,153

Bank loans

-

-

-

287,000

918,000

1,205,000

Lease liability

-

-

-

40,478

12,387

52,865

Other loans

-

-

-

447,288

0

447,288

Trade and other payables

1,377,057

362,626

659,330

32,008

11,409

2,442,430

Current

1,377,057

362,626

659,330

19,912

-

2,418,925

Trade payables

1,105,279

246,622

544,198

-

-

1,896,099

Advances received on contracts in progress

13,586

18,199

395

-

-

32,180

Tax payable (other than income tax )

35,188

2,591

539

-

-

38,317

Payroll and related charges

38,663

41,765

55,407

-

-

135,835

Other amounts payable

28,760

4,627

6,346

-

-

39,733

Dividends payable

11,618

-

-

-

-

11,618

Accrued interest payable, third parties

6,960

1,653

496

-

-

9,109

Fair value payable financial instrument held for cash flow hedging

471

9,324

28,631

19,527

-

57,953

Fair value payable - financial instruments related to FV hedging (IFRS 9 hedge accounting)

9,405

6,075

2,844

385

-

18,708

Fair value payable - financial instruments related to FV hedging (economical hedging)

6,715

11,827

1,047

-

-

19,589

Accrued charges and deferred income

120,413

19,943

19,428

-

-

159,784

Non-current

-

-

-

12,096

11,409

23,505

Other long-term debts

-

-

-

1,182

4,500

5,682

Investment grants and deferred income from grants

-

-

-

10,914

6,909

17,823

FINANCIAL YEAR

Earliest contractual maturity

(EUR thousand)

< 1 Month

1 to 3 Months

3 Months to 1 Year

1 to 5 Years

> 5 years

Total

Financial debt

252,209

69,764

108,874

963,354

760,683

2,154,884

Current

252,209

69,764

108,874

-

-

430,847

Short term bank loans

216,083

69,764

88,873

-

-

374,720

Bank overdrafts

28,122

-

-

-

-

28,122

Short-term loan: commercial paper

8,005

-

-

-

-

8,005

Other loans

-

-

1

-

-

1

Current portion of other long-term loans

-

-

20,000

-

-

20,000

Non-current

-

-

-

963,354

760,683

1,724,037

Bank loans

-

-

-

462,000

743,000

1,205,000

Lease liability

-

-

-

45,209

17,683

62,892

Other loans

-

-

-

456,145

0

456,145

Trade and other payables

1,868,161

583,445

342,920

48,278

12,522

2,855,327

Current

1,868,161

583,445

342,920

13,439

-

2,807,966

Trade payables

1,539,519

463,937

192,769

-

-

2,196,225

Advances received on contracts in progress

16,545

9,155

4,151

-

-

29,851

Tax payable (other than income tax )

26,481

6,186

218

-

-

32,885

Payroll and related charges

50,943

42,202

74,869

-

-

168,014

Other amounts payable

26,120

27,639

13,949

-

-

67,708

Dividends payable

11,612

-

-

-

-

11,612

Accrued interest payable, third parties

6,777

139

3,410

-

-

10,326

Fair value payable financial instrument held for cash flow hedging

1,949

1,831

10,942

9,782

-

24,504

Fair value payable - financial instruments related to FV hedging (IFRS 9 hedge accounting)

8,974

12,550

6,693

3,657

-

31,874

Fair value payable - financial instruments related to FV hedging (economical hedging)

-

-

433

-

-

433

Accrued charges and deferred income

179,242

19,806

35,487

-

-

234,534

Non-current

-

-

-

34,839

12,522

47,361

Other long-term debts

-

-

-

1,178

5,362

6,540

Investment grants and deferred income from grants

-

-

-

33,661

7,161

40,821

The Group has various legal and constructive defined benefit obligations, the vast majority of them being “final pay” plans linked to the Belgian and German operations.

Thousands of Euros

Post-employment benefits, pensions and similar

Post-employment benefits - other

Termination benefits early retirement & similar

Other long-term employee benefits

Total

At the end of the previous year

380,834

2,633

27,087

15,802

426,356

. Increase (included in "Payroll and related benefits")

38,091

252

6,635

2,887

47,864

. Reversal (included in "Payroll and related benefits")

659

-

-

(48)

611

. Use (included in "Payroll and related benefits")

(35,968)

(130)

(5,322)

(1,010)

(42,430)

. Interest and discount rate impacts (included in "Finance cost - Net")

3,092

7

6

93

3,198

. Translation differences

3

(4)

(129)

(10)

(141)

. Transfers

927

-

(689)

(295)

(57)

. Recognized in other comprehensive income

(48,255)

60

(0)

(0)

(48,196)

At the end of the financial year for continuing operations

339,383

2,817

27,588

17,418

387,206

Thousands of Euros

31/12/2020

Movements 2021

31/12/2021

Belgium

95,573

(18,512)

77,061

Germany

300,743

(20,316)

280,427

Subtotal

396,316

(38,828)

357,488

Other entities

30,040

(322)

29,718

Total for continuing operations

426,356

(39,150)

387,206

The first table shows the balances and the movements in provisions for employee benefits of the fully consolidated subsidiaries only.

The termination benefits mainly concern some severance pay schemes in Korea and Belgian pre-retirement plans. Other long-term benefits mainly concern jubilee premium in Belgium and Germany.

The lines “Increase”, “Reversal” and “Use” of employee benefits provisions can be linked with the line “Provisions for employee benefits” of the note F10. The amount recognized in other comprehensive income originates mainly from an increase in discount rates on the pension plans. A reconciliation with the note F23 and the consolidated statement of comprehensive income is provided in the tables below.

The defined contribution plans of the Group in some countries like in the USA, Canada, South Africa and Germany are not part of this note as the amounts are directly recognized in the income statement under the line “Contribution to defined contribution plans” (see note F10).

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

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

BELGIUM

Characteristics of the Defined Benefit plans Umicore companies in Belgium operate defined benefit plans that provide retirement or long-term employee benefits which are related to salary and age or length of service. These retirement and long term benefit plans represent a defined benefit obligation of 309.2 million and assets for 232.1 million. They foresee in lump sum or monthly payments upon retirement or pre-retirement and benefits in case of reaching a number of years of service or in case of death or disability prior to retirement.

The net provisions for pension of 77.1 million can be broken down in post-employment defined benefit plans (54.0 million of which 167.3 million is the obligation and 113.3 million relates to plan assets), termination benefits plan (4.8 million of obligation not funded), jubilee premium (3.5 million, not funded) and post-employment defined contributions plans and bonus saving plans with guaranteed return and therefore treated as Defined Benefit plans (14.8 million of which 133.6 million is the obligation and 118.8 million relates to plan assets).

Funding The post-employment plans are externally funded through either insurance companies or a self-administrated 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 the consequences of strategic investment policies are analyzed in terms of risk- and-return profiles and solvency measures. A statement of investment principles and funding 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 no direct positions in Umicore shares or bonds, nor do they own any property used by an 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 benefit type providing retirement, disability and death benefits. All benefit plans are based on final or final average pay excluding the deferred compensation plans. The benefits of the deferred compensation plan are based on annual converted salary and provide a guaranteed interest of 3.0% p.a. (6.0% p.a. for salary conversions before 2014). All post-employment plans represent a defined benefit obligation of 288.2 million and assets for 7.8 million.

The net provisions for pension of 280.4 million mainly includes the Degussa pension defined benefit plans, including the contribution plan where the inflation and interest rate adjustments of the benefits are guaranteed (207.4 million), the closed and open compensation plans (57.4 million), a jubilee premium plan (8.5 million) and other termination benefits (7.1 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.

The most significant risks related to the defined benefit plans are:

  • 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.

  • 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 2014 provide life annuities which involve the risk of longevity i.e. the risk that the payment period of 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 a risk of cash outflow before retirement.

  • Legislation risks: If the law which define the benefit changes, it can result in a change of the obligations.

Some additional risks are related to Germany only:

  • In Germany two defined contribution pension plans exist which are externally financed via the “Pensionskasse Degussa” (PKD) or the support fund “Unterstützungskasse Degussa” (RUK). With respect to the required pension adjustments of pensions paid by these plans, there is a risk that these adjustments cannot be fully borne by the PKD or RUK and therefore can result in additional unfunded pension obligations. This part of the PKD and RUK plans is therefore considered as a Defined Benefit Plan and the risk of the additional obligation expected until end of 2023 has been included in the defined benefit obligation and is yearly reviewed (additional obligation of 4.8 million for PKD and 0.7 million for RUK at the end of 2021).

  • The closed 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 was closed at 31 December 2013 and replaced by a plan with no significant risk in this respect.

And some risks are related to Belgium only:

  • 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 return from 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 the years after 2015 on future contributions and also on the accumulated past contributions as 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, the rates 3.25/3.75% still apply on the accumulated past contributions as at 31 December 2015. 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 the minimum 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 133.6 million as at the end of December 2021 and related plan assets to 118.8 million.

Thousands of Euros

2020

2021

Change in benefit obligation

Benefit obligation at beginning of the year

651,685

697,222

Current service cost

34,591

43,641

Interest cost

6,246

5,904

Plan Participants' Contributions

905

843

Remeasurements - changes in demographic assumptions

1,556

(831)

Remeasurements - changes in financial assumptions

29,185

(37,337)

Remeasurements - experience adjustments

2,942

723

Benefits paid from plan/company

(26,873)

(30,537)

Expenses paid

(1,819)

(2,479)

Plan combinations

157

-

Exchange rate changes

(1,353)

818

Benefit obligation at end of the year

697,222

677,967

Thousands of Euros

2020

2021

Change in plan assets

Fair value of plan assets at the beginning of the year

259,952

271,690

Expected return on plan assets

2,349

2,069

Remeasurements on plan assets

5,398

11,671

Employer contributions

32,473

37,350

Member contributions

905

843

Benefits paid from plan/company

(26,873)

(30,537)

Expenses paid

(1,870)

(2,534)

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

(76)

-

Exchange rate changes

(568)

927

Fair value of plan assets at the end of the year

271,690

291,479

Pension plans mainly in Belgium, Korean, Liechtenstein and Japan are wholly or partly funded with assets covering a substantial part of the obligations. All other plans have no material funding or are unfunded.

Thousands of Euros

2020

2021

Amount recognized in the balance sheet

Defined benefit obligations

697,222

677,967

Fair value of plan assets

271,690

291,479

Funded Status

425,532

386,488

Net liability (asset)

425,532

386,488

Components of pension costs

Amounts recognized in profit and loss statement

Current service cost

34,591

43,641

Interest cost

6,246

5,904

Interest income on plan assets

(2,349)

(2,069)

Remeasurement of Other Long Term Benefits

277

(920)

Administrative expenses and taxes

51

55

Total pension cost recognized in P&L account

38,816

46,611

Amounts recognized in other comprehensive income

Cumulative remeasurements at opening

270,082

299,829

Remeasurements of the year

28,004

(48,196)

Minorities

37

27

Other movements

1,775

-

Exchange differences

(69)

4

Change in scope

-

3,026

Total recognized in the OCI at subsidiaries

299,829

254,689

Remeasurements at associates and joint ventures

25,202

27,396

Total recognized in the OCI

325,030

282,084

Remeasurements recognised in Other comprehensive income as per Note F23 (w/o Minorities)

(27,632)

48,082

Currency translation differences as per Note F23 (w/o Minorities)

2,403

(2,107)

Reameasurements related to Minorities (including ctd's on Minorities )

32

32

Total Remeasurement shown in OCI

(25,198)

46,007

.Currency translation differences as per Note F23 (w/o Minorities)

(2,403)

2,107

.Currency translation differences related to Minorities

5

(5)

.Remeasurements related to equity companies

(409)

87

Total remeasurements shown in note F27

(28,004)

48,196

Remeasurements (recognized in other comprehensive income)

Effect of changes in demographic assumptions

1,433

(805)

Effect of changes in financial assumptions

29,124

(37,103)

Effect of experience adjustments

2,677

1,404

(Return) on plan assets (excluding interest income)

(5,230)

(11,692)

Total remeasurements included in Other Comprehensive Income

28,004

(48,196)

The interest cost and return on plan assets as well as the remeasurement impact on the non post- 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”.

Remeasurements of the year recognized in other comprehensive income originate mainly from a change in discount rates on the pension plans and differences between the expected and actual return on plan assets.

2020

2021

PRINCIPAL ACTUARIAL ASSUMPTIONS

Weighted average assumptions to determine benefit obligations at year end

Discount rate (%)

0.78

1.17

Rate of compensation increase (%)

2.55

2.62

Rate of price inflation (%)

1.75

1.80

Rate of pension increase (%)

1.30

1.27

Weighted average assumptions used to determine net cost

Discount rate (%)

0.95

0.78

Rate of compensation increase (%)

2.60

2.55

Rate of price inflation (%)

1.78

1.75

Rate of pension increase (%)

1.30

1.30

2021

Fair value of all plan assets

Fair Value of plan assets with quoted market price

Plan assets

Cash and cash equivalents

22,062

22,062

Equity instruments

66,269

66,269

Debt instruments

93,787

93,787

Real estate

6,738

6,738

Assets held by insurance company

94,290

80,983

Other

8,333

7,322

Total plan assets

291,479

277,161

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 other regions. 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.

2021

Valuation trend +0,25%

Valuation trend -0,25%

Sensitivity to trend rate assumptions on discount rate

Present value of defined benefit obligation

640,901

687,587

Weighted average duration of benefit obligation (in years)

13.33

14.92

Sensitivity to trend rate assumptions on inflation rate

Present value of defined benefit obligation

648,639

622,105

Sensitivity to trend rate assumptions on salary increase rate

Present value of defined benefit obligation

670,622

652,617

Thousands of Euros

2020

2021

BALANCE SHEET RECONCILIATION

Balance sheet liability (asset) as of previous year

391,734

425,529

Pension expense recognized in P&L in the financial year

38,816

46,611

Amounts recognized in SoCI

28,004

(48,196)

Employer contributions via funds in the financial year

(20,633)

(25,572)

Employer contributions paid directly in the financial year

(11,840)

(11,771)

Amounts recognized due to plan combinations

233

-

Other

-

(3)

Exchange rate adjustment - (gain)/loss

(785)

(109)

Balance sheet liability (asset) as of end of the year

425,529

386,489

Provisions for employee benefits in non current liabilites as per Balance Sheet

426,356

387,206

Asset employee benefit in non current asset (note F20)

(820)

(718)

Other

(7)

-

Net obligation on BalanceSheet

425,529

386,488

At 31 December

Thousands of Euros

2017

2018

2019

2020

2021

Present value of defined benefit obligation

552,021

549,052

651,685

697,222

677,967

Fair value of plan assets

209,774

216,101

259,952

271,690

291,479

Deficit (surplus) in the plan

342,247

332,951

391,733

425,532

386,488

Experience adjustments on plan assets

(5,286)

4,410

(17,138)

(5,398)

(11,671)

Experience adjustments on plan liabilities

4,611

5,967

3,032

2,942

723

Thousands of Euros

2021

EXPECTED CASH FLOWS FOR FOLLOWING YEAR

Expected employer contributions

36,912

Expected total benefit payments

Year 1

30,310

Year 2

48,062

Year 3

20,078

Year 4

31,508

Year 5

28,122

Next 5 years

119,823

Plan

Expiry date

Exercise

Exercise price EUR (the exercise price may be higher in certain countries)

Number of options still to be exercised

ISOP 2015

09/02/2022

all working days of Euronext Brussels

17.29

39,000

18.90

2,500

19.50

3,000

44,500

ISOP 2016

04/02/2023

all working days of Euronext Brussels

16.63

248,750

248,750

ISOP 2017

13/02/2024

all working days of Euronext Brussels

25.50

413,500

27.04

23,750

437,250

ISOP 2018

08/02/2025

all working days of Euronext Brussels

40.90

973,125

973,125

ISOP 2019

10/02/2026

all working days of Euronext Brussels

34.08

1,216,000

36.78

5,000

1,221,000

ISOP 2020

09/02/2027

all working days of Euronext Brussels

42.05

1,168,375

1,168,375

ISOP 2021

10/02/2028

all working days of Euronext Brussels

47.08

1,108,500

1,108,500

Total

5,201,500

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

The stock options, which are typically vested at the time of the grant, are foreseen to be settled with treasury shares. Options which have not been exercised before the expiry date elapse automatically.

2020

2021

Number of share options

Weighted average exercise price

Number of share options

Weighted average exercise price

DETAILS OF THE SHARE OPTIONS OUTSTANDING DURING THE YEAR

Outstanding at the beginning of the year

5,641,250

27.42

5,785,190

32.00

Granted during the year

1,168,375

42.05

1,108,500

47.08

Exercised during the year

1,024,435

18.25

1,692,190

22.72

Outstanding at the end of the year

5,785,190

32.00

5,201,500

38.23

Exercisable at the end of the year

5,785,190

32.00

5,201,500

38.23

The options outstanding at the end of the year have a weighted average contractual life until January 2026.

The details concerning the calculation of the fair value of the options granted are detailed under note F10 on Payroll and related Benefits.

Thousands of Euros

Provisions for soil clean-up & site rehabilitation

Other environmental provisions

Total

At the end of previous year

108,238

13,136

121,374

. Increase (included in "Other operating expenses")

58,989

14,377

73,367

. Reversal (included in "Other operating expenses")

(471)

(159)

(630)

. Use (included in "Other operating expenses")

(57,081)

(6,519)

(63,600)

. Discounting (included in "Finance cost -Net")

(152)

-

(152)

. Translation differences

256

-

256

At the end of the financial year for continuing operations

109,780

20,836

130,615

Of which - Non Current

106,247

11,146

117,393

Of which - Current

3,533

9,689

13,222

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 9.2 million, with additional provisions which are higher than the uses and reversals of existing provisions.

The new provisions for soil and groundwater remediation are mainly related to new provisions taken in Belgium at the Hoboken and Olen sites. In Hoboken, additional provisions for the creation of a green zone neighboring the Hoboken plant have been taken for 45.6 million. This reflects the success of the voluntary offer to purchase neighboring houses. The creation of the green zone is a key building block of the site’s plan to further reduce the impact on its neighbors. Taking into account the use of the provision over the period (51.2 million), the total provision for the creation of the green zone at December 31 amounted to 44.4 million.

Early 2020, the Federal Agency for Nuclear Control issued guiding principles for the permanent remediation and storage of the legacy radioactive material related to Umicore’s Olen site in Belgium. Joint working groups have been established, including governmental agencies such as NIRAS/ONDRAF, OVAM, FANC and Umicore to elaborate a roadmap describing the different steps that need to be taken to reach a permanent storage solution. Going forward, the joint working groups will provide updates of the estimated future remediation and storage costs and the dedicated existing environmental provisions. Developing and implementing this detailed roadmap is currently expected to take several years. Umicore will in the meantime continue the monitoring works to guarantee that no risks are emanating from those remnants, neither for the workers on site, nor for the surrounding population.

The movements of the other environmental provisions are mainly related to the need for and adjustment of CO2 emission rights in Belgium.

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

Thousands of Euros

Provisions for reorganisation & restructuring

Provisions for litigation

Provisions for onerous contracts IFRS 9

Provisions for other liabilities and charges

Total

At the end of the previous year

40,856

2,686

19,963

57,454

120,958

. Increase (included in "Other operating expenses")

8,147

84

-

47,396

55,626

. Reversal (included in "Other operating expenses")

(1,530)

-

(20,267)

(247)

(22,045)

. Use (included in "Other operating expenses")

(10,451)

(228)

-

(18,506)

(29,185)

. Translation differences

912

3

305

765

1,984

. Transfers

(2)

(18)

-

6

(14)

. Other movements

823

-

-

-

823

At the end of the financial year for continuing operations

38,754

2,527

-

86,869

128,148

Of which - Non Current

27,226

801

-

70,081

98,108

Of which - Current

11,529

1,725

-

16,790

30,044

Provisions for reorganization and restructuring and other liabilities and charges are recognized and measured by reference to an estimate of the probability of future outflow of cash 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 7.2 million.

Additional provisions for reorganization and restructuring have been mainly taken for the restructuring initiatives linked to the closure of Automotive catalysts's heavy duty diesel operation in Frederikssund (Denmark) and in Cobalt & Specialty Materials in Belgium. The uses of provision for reorganization and restructuring mainly relate to the execution of the previously announced restructurings in Cobalt & Specialty Materials in Belgium and in the USA and in Catalysis in Denmark and in the USA.

The provisions for litigation are not including the tax provisions related to IFRIC 23 as those are booked under the line Income tax payable.

The provisions for onerous contracts related to IFRS 9 were linked to the introduction of IFRS 9 for fair value hedging. Those provisions were taken when IFRS 9 hedge accounting could not be applied or obtained, Umicore previously offset under IAS 37 principles any material positive mark-to-markets with provisions for onerous contracts and reclassified the negative mark-to-markets under the provisions for onerous contracts. In 2021, Umicore has decided to directly reverse the material positive mark-to-markets and to abandon the provisions for onerous contracts logic for IFRS 9, resulting in a reversal of last year taken provision. From the provision of 20.0 million for 2020, 10.0 million could be reversed in 2021 as hedge accounting was obtained, as explained in note 2.21.1.

Additional other provisions for liabilities and charges include other onerous contracts provisions of 22.0 million and provisions for warranty and quality recall risks of 22.7 million that are mainly linked to risks related to automotive end market applications in both Catalysis and Energy & Surface Technologies (the latter referring to the dedicated provisioning model for battery materials introduced in 2018). The use of provisions related to other onerous contract provisions amounts to 15.4 million in 2021.

No reliable estimation could be made regarding the expected timing of cash outflows related to the non-current part of the provisions for other liabilities and charges.

Thousands of Euros

Notes

31/12/2020

30/06/2021

31/12/2021

Intangible assets

F14,F15

346,888

344,025

339,849

Property, plant and equipment

F16

2,163,661

2,236,527

2,351,134

Investments accounted for under the equity method

F17

139,839

150,052

155,140

Financial assets at FV through OCI

F18

8,352

15,125

14,120

Inventories

F19

2,718,092

3,081,161

2,869,071

Non current receivable (excluding assets employee benefits)

F20

10,945

12,378

19,954

Adjusted current accounts receivable

1,611,461

2,013,295

1,750,174

Income tax receivable

39,553

44,147

46,762

Assets included in capital employed

7,038,790

7,896,710

7,546,203

Non-current trade and other payables

F25

23,505

32,774

47,360

Adjusted current accounts payable

2,360,975

3,149,457

2,783,459

Translation reserves

F23

(202,148)

(149,920)

(117,250)

Non-current provisions

F29,F30

182,040

221,178

215,502

Current provisions

F29,F30

60,296

57,857

43,266

Income tax payable

160,734

236,935

197,488

Liabilities included in capital employed

2,585,401

3,548,280

3,169,825

Capital employed

4,453,389

4,348,430

4,376,378

Eliminations

3,191

3,012

517

Capital employed as published

4,456,580

4,351,443

4,376,895

Average Capital Employed in half year preceding closing date

4,454,596

4,364,169

Average Capital Employed in year preceding closing date

4,450,948

4,384,090

Adjusted EBIT in year preceding closing date

F9

536,361

971,377

ROCE in year preceding closing date

12.05%

22.16%

The adjusted current account receivables included in the “Capital Employed” do not take into account the margin calls (1.4 million at the end of 2021) and the gains booked on the mark-to-market value of strategic hedging instruments (80.5 million in 2021). The adjusted current account payables included in the “Capital Employed” do not take into account the losses booked on the mark-to-market value of strategic hedging instruments (24.5 million at the end of 2021).

Average capital employed for the half years is calculated as the average of the capital employed at the end of the period and at the end of the preceding period. Average capital employed for the year is calculated as the average of the capital employed of both half years.

AS AT THE END OF PREVIOUS YEAR

Carrying amount

Thousands of Euros

Level

Fair value

Held for trading - economic hedging

Fair value hedge accounting

Cash Flow hedge accounting

Loans, receivables and payables

Financial assets at FV through OCI

ASSETS

Financial assets at fair value through Other Comprehensive Income

8,352

-

-

-

-

8,352

Financial assets at fair value through Other Comprehensive Income - Shares

1

8,352

-

-

-

-

8,352

Loans granted

3,332

-

-

-

3,332

-

Loans to associates and non consolidated affiliates

3,332

-

-

-

3,332

-

Trade and other receivables

1,688,931

1,931

21,511

45,091

1,620,398

-

Non-current

Cash guarantees and deposits

8,370

-

-

-

8,370

-

Other receivables maturing in more than 1 year

2,574

-

-

-

2,574

-

Assets employee benefits

820

-

-

-

820

-

Current

Trade receivables (at cost)

1,366,686

-

-

-

1,366,686

-

Trade receivables (write-down)

(22,319)

-

-

-

(22,319)

-

Other receivables (at cost)

177,008

-

-

-

177,008

-

Other receivables (write-down)

(207)

-

-

-

(207)

-

Interest receivable

495

-

-

-

495

-

Fair value of financial instruments held for cash-flow hedging

2

45,091

-

-

45,091

-

-

Fair value receivable - financial instruments related to FV hedging

2

23,442

1,931

21,511

-

-

-

Deferred charges and accrued income

86,973

-

-

-

86,973

-

Cash and cash equivalents

1,010,306

-

-

-

1,010,306

-

Short-term investments: bank term deposits

373,904

-

-

-

373,904

-

Short-term investments: term deposits (other)

5

-

-

-

5

-

Cash-in-hand and bank current accounts

636,397

-

-

-

636,397

-

Total of financial instruments (Assets)

2,710,921

1,931

21,511

45,091

2,634,036

8,352

LIABILITIES

Financial debt

2,495,431

-

-

-

2,424,331

-

Non-current

Bank loans

1,276,100

-

-

-

1,205,000

-

Lease liability

52,865

-

-

-

52,865

-

Other loans

447,289

-

-

-

447,289

-

Current

Short term bank loans

576,056

-

-

-

576,056

-

Bank overdrafts

8,678

-

-

-

8,678

-

Short term loan: commercial paper

134,282

-

-

-

134,282

-

Other loans

162

-

-

-

162

-

Trade and other payables

2,442,433

19,589

18,708

57,957

2,346,180

-

Non-current

Other long term debts

5,682

-

-

-

5,682

-

Investments grants and deferred income from grants

17,823

-

-

-

17,823

-

Current

Trade payables

1,896,099

-

-

-

1,896,099

-

Advances received on contracts in progress

32,180

-

-

-

32,180

-

Tax - other than income tax - payable

38,317

-

-

-

38,317

-

Payroll and related charges

135,835

-

-

-

135,835

-

Other amounts payable

39,733

-

-

-

39,733

-

Dividends payable

11,618

-

-

-

11,618

-

Accrued interest payable

9,109

-

-

-

9,109

-

Fair value financial instrument held for cash flow hedging

2

57,957

-

-

57,957

-

-

Fair value payable - financial instruments related to FV hedging

2

38,296

19,589

18,708

-

-

-

Accrued charges and deferred income

159,784

-

-

-

159,784

-

Total of financial instruments (Liabilities)

4,937,864

19,589

18,708

57,957

4,770,511

-

AS AT THE END OF THE FINANCIAL YEAR

Carrying amount

Thousands of Euros

Level

Fair value

Held for trading - economic hedging

Fair value hedge accounting

Cash Flow hedge accounting

Loans, receivables and payables

Financial assets at FV through OCI

ASSETS

Financial assets at fair value through Other Comprehensive Income

14,120

-

-

-

-

14,120

Financial assets at fair value through Other Comprehensive Income - Shares

1

14,120

-

-

-

-

14,120

Loans granted

2,777

-

-

-

2,777

-

Loans to associates and non consolidated affiliates

2,777

-

-

-

2,777

-

Trade and other receivables

1,852,705

3,977

9,868

80,452

1,758,408

-

Non-current

Cash guarantees and deposits

9,737

-

-

-

9,737

-

Other receivables maturing in more than 1 year

10,217

-

-

-

10,217

-

Assets employee benefits

718

-

-

-

718

-

Current

Trade receivables (at cost)

1,394,540

-

-

-

1,394,540

-

Trade receivables (write-down)

(18,771)

-

-

-

(18,771)

-

Other receivables (at cost)

243,746

-

-

-

243,746

-

Other receivables (write-down)

(207)

-

-

-

(207)

-

Interest receivable

1,439

-

-

-

1,439

-

Fair value of financial instruments held for cash-flow hedging

2

80,452

-

-

80,452

-

-

Fair value receivable - financial instruments related to FV hedging

2

13,845

3,977

9,868

-

-

-

Deferred charges and accrued income

116,989

-

-

-

116,989

-

Cash and cash equivalents

1,194,436

-

-

-

1,194,436

-

Short-term investments: bank term deposits

272,965

-

-

-

272,965

-

Short-term investments: term deposits (other)

43

-

-

-

43

-

Cash-in-hand and bank current accounts

921,428

-

-

-

921,428

-

Total of financial instruments (Assets)

3,064,038

3,977

9,868

80,452

2,955,621

14,120

LIABILITIES

Financial debt

2,182,852

-

-

-

2,154,884

-

Non-current

Bank loans

1,232,968

-

-

-

1,205,000

-

Lease liability

62,892

-

-

-

62,892

-

Other loans

456,145

-

-

-

456,145

-

Current

Short term bank loans

374,720

-

-

-

374,720

-

Bank overdrafts

28,122

-

-

-

28,122

-

Short term loan: commercial paper

8,005

-

-

-

8,005

-

Other loans

20,001

-

-

-

20,001

-

Trade and other payables

2,855,327

433

31,874

24,504

2,798,516

-

Non-current

Other long term debts

6,540

-

-

-

6,540

-

Investments grants and deferred income from grants

40,821

-

-

-

40,821

-

Current

Trade payables

2,196,225

-

-

-

2,196,225

-

Advances received on contracts in progress

29,851

-

-

-

29,851

-

Tax - other than income tax - payable

32,885

-

-

-

32,885

-

Payroll and related charges

168,014

-

-

-

168,014

-

Other amounts payable

67,708

-

-

-

67,708

-

Dividends payable

11,612

-

-

-

11,612

-

Accrued interest payable

10,326

-

-

-

10,326

-

Fair value financial instrument held for cash flow hedging

2

24,504

-

-

24,504

-

-

Fair value payable - financial instruments related to FV hedging

2

32,307

433

31,874

-

-

-

Accrued charges and deferred income

234,534

-

-

-

234,534

-

Total of financial instruments (Liabilities)

5,038,179

433

31,874

24,504

4,953,400

-

Loans and debt have been issued at market rates which would not create any major differences with effective interest expenses. All categories of financial instruments of Umicore are at fair value except the non-current bank loans for which the carrying amounts differ from the 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 determined using valuation techniques, mainly discounted cash-flow, using market assumptions prevailing at the end of the reporting period. In particular, the fair value of interest rate swaps is calculated as the present value of the estimated 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 the end of the reporting period. The fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values.

F32.1 Fair value hierarchy

The Group adopted the amendment to IFRS 7 for financial instruments which are measured in the balance sheet at fair value, with effect from January 2009. This amendment requires disclosures of 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 the asset 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.

During the year, there were no transfer between levels in the fair value hierarchy.

F32.2 Sensitivity analysis on financial instruments

Umicore is sensitive to commodity prices, foreign currency and interest rate risk on its financial instruments. The fair values of the financial instruments reflect the difference between the contract rates and the closing rates. The sensitivity calculations are performed by stressing the closing rates (being commodity prices, currency exchange rates, electricity and gas prices and interest rates) with 10% up and down. The market values in the stressed scenario’s are then compared to the original market values.

F32.2.1 Commodity prices

The fair value on financial instruments related to cash flow hedging sales would have been 14.4 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 6.5 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 4.7 million higher/lower if the metal prices would strengthen/weaken by 10%.

The fair value on other commodity sales hedge compliant financial instruments would have been 26.1 million lower/higher and the fair value on other commodity purchases hedge compliant financial instruments would have been 8.7 million higher/lower if the metal prices would strengthen/weaken by 10%.

The fair value on other commodity sales financial instruments according to economic logic would have been 5.7 million lower/higher and the fair value on other commodity purchases financial instruments according to economic logic would have been 5.9 million higher/lower if the metal prices would strengthen/weaken by 10%.

F32.2.2 Foreign currency

The fair value of forward currency contracts related to cash flow hedging would have been 28.7 million higher if the EUR would strengthen against USD by 10% and would have been 35.1 million lower if the EUR would weaken against USD by 10%.

The fair value of forward currency contracts related to cash flow hedging would have been 10.6 million lower if the USD would strengthen against KRW by 10% and would have been 10.6 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 5.7 million higher if the EUR would strengthen against CNY by 10% and would have been 6.9 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 9.8 million lower if the USD would strengthen against CNY by 10% and would have been 5.7 million higher if USD would weaken against CNY by 10%.

The fair value of forward currency contracts related to cash flow hedging would have been 6.4 million lower if the USD would strengthen against BRL by 10% and would have been 6.4 million higher if USD