2018 COMBINED SHAREHOLDERS MEETING

Transcription

1 2018 COMBINED SHAREHOLDERS MEETING May 25, 2018 Friday, May 25, 2018

2 2018, THE FIRST YEAR OF RECOVERY Philippe Crouzet Chairman of the Management Board Friday, May 25, 2018

3 : A STABILIZED OIL MARKET DEMAND / SUPPLY BALANCE (mb/d) 90 Q1 Q Q1 Q Q1 Q Q1 16 Q1 17 Q1 18 Stock Change (right) (R) World Oil Supply World Oil Demand 4.5 4, , , , , , , , CAPITAL EXPENDITURE IN EXPLORATION AND PRODUCTION ( bn) Source: International Energy Agency. Oil Market Report - January 2018 Source: IHS Markit November 2017 Amérique Latin America Latine Russie Russia Russia & Caspian & Mer Caspian Caspienne Sea Amérique North America du Nord Moyen-Orient Middle East Europe Asie-Pacifique Asia-Pacific Afrique Africa Investissements Global investments Capex mondiaux NUMBER OF RIGS & WTI OIL PRICE ($) OCTG PRICES ($/t) ,5002 2,0002 1,5001 1, J-14 M-14 S-14 J-15 M-15 S-15 J-16 M-16 S-16 J-17 M-17 S-17 J-18 Total International US United States WTI (right) Sources: Baker Hughes and Thomson Reuters 0 J-14 M-14 S-14 J-15 M-15 S-15 J-16 M-16 S-16 J-17 M-17 S-17 J Middle East (1) Western European (1) US United (2) States 2 Sources: 1 MBR (OCTG casing L80 premium connection) January PipeLogix (seamless tube average) January 2018 Friday, May 25,

4 2017: A YEAR OF RECOVERY QUARTERLY SALES (in thousands of metric tons) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4* Q1* 1 Q2 1 * Q3* 1 Q4 1 * ,159kt ,323kt ,411kt ,281kt ,256kt A REGULAR RISE IN VOLUME 1 Includes the integration of Tianda and VSB full consolidation Friday, May 25,

5 CHANGING TO RETURN TO THE PATH OF PROFITABLE GROWTH Tianda integration New production routes Internal collaboration Competitiveness initiatives Cost savings An innovative and agile partner of choice for smart and sustainable tubular solutions Shared services Logistics Commercial performance Industrial performance Financial performance Global S&OP Organization and processes optimization Customer solutions Industry 4.0 Kill complexity Put customers first Innovation & digital Cultural change Friday, May 25,

6 BALANCED GLOBAL INDUSTRIAL INFRASTRUCTURE, COMPETITIVE PRODUCTION ROUTES 25% of production capacity 25% of production capacity North America Europe A center of technological excellence An offer for the local oil and gas market Pipe mill Steel mill R&D center Finishing unit Sales and services office Plantation and mine 30% of production capacity Brazil China 20% of production capacity A new ultracompetitive production center A unique and very competitive production center 19,500 employees, 50 production facilities, over 20 countries Friday, May 25,

7 HIGH BUSINESS STAKES IN EACH REGION NA Incredible dynamic of shale Step up our production capacity to meet demand Strengthen our service offering EA Transformation continues to prepare the future Provide a relevant response to struggling business sectors Optimize production facilities Pursue the performance improvement plan SA Brazil: a driving force behind Vallourec s recovery Remain the leader in the Brazilian market Strengthen the competitiveness of our production facilities Develop an Innovative services strategy MEA The Group's highly-competitive route Respond to growing regional demand by generating more sales momentum Continue to integrate and move upmarket the offer supported by Tianda Friday, May 25,

8 INNOVATION THROUGHOUT THE VALUE CHAIN... PRODUCT INNOVATION SERVICE INNOVATION Cleanwell solution VAM Bolt 47m invested in 2017 Services on the rig Saturnax 01 Valguard PROCESS INNOVATION 28 patents filed NEW BUSINESS Quality control using Phased-Array ultrasound Renewable energy sources Carbon capture, storage and use research projects Friday, May 25,

9 DIGITAL: A STRATEGY AND NEW WAYS OF WORKING A 3-FOLD STRATEGY Connect customers to Vallourec plants and products Use the power of data to optimize our production facilities Spread digital culture throughout the company THE 4.0 ERA HAS BEGUN DIGITAL APPLICATIONS Hackathon Open innovation challenge A A DEDICATED ORGANIZATION TO TO DEVELOP DEVELOP AND AND IMPLEMENT OUR OUR DIGITAL DIGITAL STRATEGY Start-up partnerships Additive manufacturing Friday, May 25,

10 VERY POSITIVE FEEDBACK FROM OUR CUSTOMERS When is your solution fully ready? We need you for the next job The basic data of the app are very interesting for us Order ongoing 15 saved per delivered truck and it eases certificate management Data is part of the tender Request for pipe data The Vallourec RFID saved me 5 hours a day (Stockyard supervisor) This will change the way we make our operations Friday, May 25,

11 SAFETY & QUALITY: OPERATE WITHOUT COMPROMISE SAFETY QUALITY 0 fatal accidents in 2015, 2016 and CUSTOMER COMPLAINTS PER MONTH Lost-time accidents: LTIR vs in 2013 All accidents: TRIR vs in 2013 Targets for LTIR 1.2 TRIR YTD 2018 Target 1 LTIR: Lost Time Injury Rate (accident frequency rate with time off) 2 TRIR: Total Recordable Injury Rate (accident frequency rate with or without time off) 3 Includes the integration of Tianda Friday, May 25,

12 ALWAYS OPERATE AS A RESPONSIBLE INDUSTRIAL PLAYER AND IN ACCORDANCE WITH OUR VALUES More stringent commitments to environmental challenges Strong local presence 42% 61% 94% 29% 86% of energy consumed comes from renewable sources of steel used comes from recycled scrap metal of waste recycled of our production comes from ISO sites of our production comes from ISO sites 2.7m dedicated to actions that benefit local communities Priority given to maintaining and developing expertise Social barometer 300 business experts receive individual support 282,530 vocational training hours (Source: LMS) 93% of employees who took part in the Group's social climate survey said that they were proud of working at Vallourec Friday, May 25,

13 OUR AMBITION FOR 2018 Roll out digital Support sustained demand for oil & gas Accelerate innovation CUSTOMER Optimize our industrial footprint Find new growth drivers Strengthen our competitiveness Friday, May 25,

14 2017 FINANCIAL YEAR HIGHLIGHTS Olivier MALLET Chief Financial Officer

15 2017 AT A GLANCE EBITDA AT BREAKEVEN Transformation Plan benefits Significantly higher activity level TRANSFORMATION PLAN Execution moving forward at a very good pace High level of savings ongoing CONTINUOUS MANAGEMENT OF CASH AND LIQUIDITY Additional reduction in working capital Monetization of non-core assets Strengthened liquidity 15

16 2017 KEY FIGURES SALES VOLUMES (in thousands of tons) REVENUE (in millions of euros) 1, % 2,256 2, ,5% 3, EBITDA (in millions of euros) FREE CASH-FLOW 1 (in millions of euros) Free cash-flow (FCF) is defined as cash-flow from operating activities minus gross capital expenditure and plus/minus change in operating working capital requirement. 16

17 FY 2017 REVENUE BY MARKET Revenue up 26.5% in 2017 vs % at constant scope and exchange rate Oil & Gas +28.4% 1 (+14.7% 2 ) FY 2017 revenue (in millions of euros) Industry & Other +38.6% 1 (+30.4% 2 ) USA: strong recovery Rebound in volumes and prices EAMEA: stable Positive scope impact (VSB & Tianda) Brazil: revenue up Higher deliveries, notably in Q1 2, % 3, % Europe Higher volumes Brazil Market recovery and higher iron ore prices Petrochemicals % 1 (+76.0% 2 ) % Power Generation -16.0% 1 (-16.3% 2 ) Strong increase Recovery in the USA 1 FY 2017 vs.fy At constant scope and exchange rate % Conventional and Nuclear revenue down 17

18 TRANSFORMATION PLAN TRANSFORMATION PLAN EXECUTION AHEAD OF PLAN STRICT CAPEX DISCIPLINE AND WORKING CAPITAL MONITORING Savings generated: 315m gross savings in 2 years Compared to a target of 400m over 5 years Efficient CAPEX management: in millions of 268 New routes deployment well underway: Rationalization of European footprint Tianda acquisition and VBR-VSB merger in Brazil done in 2016 Successful integration of Tianda in 2017 and first commercial successes Large synergies already achieved in Brazil, a highly competitive export base ~50% of the targeted contribution of 750m to the Group s 2020 EBITDA achieved in 2 years Reduction of working capital In 2017, reduction of 61m, in spite of the revenue increase of 26.5% Better efficiencies notably thanks to the ReInvent program Vallourec confirms that it will achieve the targeted 750m ADDITIONAL EBITDA CONTRIBUTION FROM ITS TRANSFORMATION PLAN IN

19 2017 FINANCIAL RESULTS Olivier MALLET Chief Financial Officer 19

20 FY 2017: SIMPLIFIED P&L In millions of % change Revenue 3,750 2, % Industrial margin % SG&A 1 (440) (448) -1.8% EBITDA 2 (219) + 221m As a% of revenue 0.1% -7.4% +7.5pts Amortization and depreciation (341) (332) +2.7% Impairment of assets, asset disposals, restructuring and other (144) (198) na Operating income (loss) (483) (749) + 266m Financial income (loss) (174) (131) +32.8% Income tax na Other na Net income (loss), Group share (537) (758) + 221m EBITDA: + 221m to reach 2m Industrial margin: + 215m Higher level of activity Savings from the Transformation Plan Net provision reversal Lower SG&A costs: 11.7% of revenue compared to 15.1% in 2016 Net loss reduced by 221m Less Impairment of assets, asset disposals, restructuring and other Higher income tax gain 1 Before depreciation and amortization 20

21 2017 FREE CASH-FLOW in millions of Cash-flow from operating activities (FFO) (A) (332) (399) Cash-flow from operating activities improved 67m Improvement of EBITDA partly offset by net provision reversals and higher financial charges Change in operating WCR (B) [+ decrease, (increase)] Gross capital expenditure (C) (152) (175) Better efficiencies in operational working capital management notwithstanding the strong activity recovery in the USA Efficient CAPEX management Free cash-flow 1 (A)+(B)+(C) (423) (395) 1 Free cash-flow (FCF) is defined as cash-flow from operating activities minus gross capital expenditure and plus/minus change in operating working capital requirement 21

22 FY 2017 NET DEBT (in millions of euros) Net Debt as at 31 Dec Net Debt as at 31 Dec Net debt = 34.1% of equity (1,287) Cash-flow from operating activities Change in WCR 1 (332) 61 Gross capital expenditure Asset disposals & other items (152) 168 Net debt = 53.4% of equity (1,542) 1 Change in Working Capital Requirement, + decrease/(increase) Free cash-flow = - 423m NSSMC shares disposal, Forex (translation effect) NET DEBT REDUCED BY 103m DURING Q INCREASED BY 255m OVER FY

23 LIQUIDITY AS AT 31 DECEMBER 2017 AVAILABLE LIQUIDITY (in millions of euros) 2,040 3,061 1,021 Cash Undrawn Undrawn committed Long Term long-term Facilities facilities Total Liquidity Strong liquidity as at 31 December bn cash 2bn undrawn LT committed bank facilities Successful comeback on the bond market in October 250m convertible bonds 550m bonds MATURITY OF BONDS (in millions of euros) & After OCEANE Bonds A good debt maturity profile Bank facilities available until bond redemption refinanced in April 2018 by a new bond maturing in

24 Q Olivier MALLET Chief Financial Officer

25 Q KEY FIGURES REVENUE (in millions of euros) EBITDA 1 (in millions of euros) FREE CASH-FLOW 2 (in millions of euros) Q Q Q Q Q Q Strong revenue increase YoY: mainly driven by Oil & Gas operations in the US despite negative forex YoY EBITDA improved 16m FCF: stable cash-flow from operating activities and increased working capital as a result of higher activity level 1 Earnings Before Interest, Taxes, Depreciation and Amortization 2 Free cash-flow (FCF) is defined as cash-flow from operating activities minus gross capital expenditure and plus/minus change in operating working capital requirement 25

26 OUTLOOK FOR 2018 Olivier MALLET Chief Financial Officer

27 OUTLOOK FOR 2018 NORTH AMERICA Average rig count expected to remain robust: this should allow further price increases in H Benefit from the full year impact of volume and price increases achieved in H Ready to benefit and to adapt to the final outcome of Section 232 which aims at favoring domestic steel manufacturers EAMEA O&G: Vallourec anticipates higher bookings with positive impacts on deliveries to materialize mostly starting late H Industry: better momentum should be confirmed Power Generation: declining conventional power plant projects BRAZIL O&G: drilling activity expected to remain stable. New long-term contracts signed with Petrobras will enter into force in H Industry: better momentum should be confirmed Transformation Plan will continue to generate significant savings Unfavorable forex and raw material prices vs VALLOUREC TARGETS 2018 EBITDA TO IMPROVE VERSUS 2017, WITH H SIGNIFICANTLY HIGHER THAN H

28 STOCK PERFORMANCE CHANGE IN SHARE PRICE SINCE 2016 (rebased on Vallourec last update on May 24th, 2018) Source : Nasdaq IR Insight Vallourec (VK-PAR) France SBF 120 (PX4-ENX) 28

29 GOVERNANCE Vivienne COX Chairman of the Supervisory Board

30 VALLOUREC, A COMPANY WITH A SUPERVISORY BOARD AND A MANAGEMENT BOARD Chairman Vivienne Cox Vice-Chairman Lead Member Pierre Pringuet Maria Pilar Albiac-Murillo Philippe Altuzarra Cédric de Bailliencourt Bpifrance Participations, represented by Alexandre Ossola Laurence Broseta Pascale Chargrasse Mickaël Dolou José Carlos Grubisich Yuki Iriyama Jean-Jacques Morin Alexandra Schaapveld 30

31 COMPOSITION OF THE SUPERVISORY BOARD Policy on the composition of the Supervisory Board Expertise and diversity: Internationalization: 38% of foreign nationality Feminization: 42% of female members Regard for the corporate interest: A Lead Member responsible for the management of the conflicts of interests Restricted workforce Fluid exchange of information and individual expression Effectiveness confirmed by the results of the Supervisory Board s self-assessment 31

32 GOVERNANCE BODIES ACTIVITY IN meetings for the Supervisory Board 5 meetings for the Finance and Audit Committee 9 meetings for the Appointements, Compensation and Governance Committee 3 meetings for the Strategy Committee Effective attendance rate of 89% for the Supervisory Board and of 100% for the Committees MANAGEMENT BOARD 1 meeting per week 32

33 ACTIVITY OF THE SUPERVISORY BOARD IN 2017 Authorization of strategic projects, in particular those related to the Transformation Plan and monitoring their implementation Examination of the financial statements Monitoring the Group's policy on financing and bond issues Compensation of members of the Management Board Policy on enabling the personnel to share in the Group s net profits Risk mapping Group s internal control, audit and Corporate Social Responsibility policy Composition of the Supervisory Board and Committees Compliance of Group governance with recommendations of the AFEP-MEDEF Code 33

34 COMPENSATION AND GOVERNANCE COMMITTEE Pierre PRINGUET Chairman of the Appointments, Compensation and Governance Committee

35 THE APPOINTMENTS, COMPENSATION AND GOVERNANCE COMMITTEE Pierre Pringuet Pascale Chargrasse Alexandra Schaapveld Laurence Broseta Mickaël Dolou Chairman of the CNRG, and Vice-President of the Supervisory Board Shareholder Employee representative Independent member Independent member Employee representative 35

36 ACTIVITY OF THE CNRG IN 2017 (1/2) 1. Governance The Supervisory Board Evaluation of the members independence 82% of the members are independent Selection process for new members and mandate renewal of existing members Proposal for the nomination of Jean Jacques Morin Proposal for a renewal of the mandate of Vivienne Cox, Cédric de Bailliencourt, Laurence Broseta, Alexandra Schaapveld Human resources strategy on: Gender and compensation equity policy Cultural change in progress 2. Management Talent review and succession planning Configuration of the management board after Jean-Pierre Michel s retirement 36

37 ACTIVITY OF THE CNRG IN 2017 (2/2) 3. Management Board compensation Management Board compensation policy Compensation Benchmarks AFEP-MEDEF Code Total cash compensation policy Fixed compensation Selection of annual variable compensation performance objectives Performance objectives achievement 4. Long Term Incentives policy Of the Management Board Of the Top Executives 37

38 2017 COMPENSATION A compensation policy in line with previous years (page 300 and next in the registration document): Same base salary as 2017 and with no changes since 2014 Same target variable pay opportunity for the Chairman of the Management Board (100% of base salary at target) and the member of the management board (75% of base salary at target) For the board, a long term incentive grant that represents 22% of the global compensation structure at target (base salary / annual variable pay / long term incentives). An increase of the percentage in 2017 compared to 2016 in order to reach gradually a grant value equal to 33% of global compensation at target Identical policy for severance agreements for the Chairman and the member of the Management Board This year in conformity with the loi sapin II, the compensation granted to Management Board in 2017 will be subject to a binding vote (10 th,11 th and 12 th resolutions) 38

39 PERFORMANCE TO BE CONSIDERED IN THE CONTEXT OF THE GROUP TRANSFORMATION PLAN 2017 annual variable compensation was set with regards to strategic and essential objectives for the Group 2017 variable portion P. Crouzet JP. Michel O. Mallet Target Actual Target Actual Target Actual Financial Performance EBITDA 20% 27% 15% 20% 15% 20% Competitiveness plan - Cost reduction 20% 21.5% 15% 16.1% 15% 16.1% PRI Performance Plan 20% 27% 15% 20% 15% 20% Operational Performance Roll-out of the new structure subject to re-organization in 2017 CSR performance 25% 20% 18.75% 15% 18.75% 15% Safety (TRIR / LTIR) 10% 0% 7.5% 0% 7.5% 0% Group share of industrial waste reclaimed 5% 3% 3.75% 2.25% 3.75% 2.25% Variable portion as a percentage of the fixed portion of compensation 100% 98.5% 75% 73.3% 75% 73.3% 39

40 LONG TERM INCENTIVES: PERFORMANCE SHARES AND STOCK OPTIONS GRANTED IN 2017 Performance shares and stock options are fully allocated under performance conditions, upon requirements of resolutions voted during the 2017 Shareholders Meeting 50% of criteria are performance criteria linked to internal Vallourec performance Performance shares: reduction of costs in 2017, 2018 and 2019 Stock options: aggregate net cash flow for the Group in 2017, 2018, 2019 and % of criteria are linked to Vallourec performance compared to the performance of a peer group of comparable companies Performance shares: growth of the EBITDA margin between 2017 and 2019 Stock options: total shareholder return (TSR) for 2017, 2018, 2019 and 2020 Hedging is prohibited 40

41 LONG TERM INCENTIVES: PERFORMANCE SHARES PAST GRANTS Performance shares Allocation years Vesting Years Number of shares allocated to the Management Board 17,000 17,068 17,068 17,068 47, , , ,000 Fair value 1,058k 1,209k 706k 533k 920k 275k 1 117k 474k Number of shares vested out of total number of shares allocated 15,640 3,208 2,787 3,432 6,038 ND ND ND Percentage of shares vested out of total number of shares allocated 92% 18.8% 16.2% 20.1% 12.7% ND ND ND % of shares definitively allocated demonstrate how demanding the performance criteria are 1 Philippe Crouzet has made the decision to voluntarily waive his 13,770 performance shares allocated in The grants take into account the adjustments related to the share capital increase with preferential subscription rights 41

42 LONG TERM INCENTIVES: STOCK OPTIONS PAST GRANTS Stock Options Year Maximum number of options allocated to Management Board 99, , , , , , ,500 Fair value 1,470k 1,110k - 625k 276k 92k 31k 158k Exercise price Number of options vested out of total number of options allocated 49,362 39,986 - ND ND ND ND ND Percentage of options vested out of total number of options allocated 49.3% 40% - ND ND ND ND ND % of options definitively allocated demonstrate how demanding the performance criteria are 1 Philippe Crouzet has made the decision to voluntarily waive his 18,100 stock options allocated in The grants take into account the adjustments related to the share capital increase with preferential subscription rights 42

43 2017 COMPENSATION PHILIPPE CROUZET Fixed compensation 798, ,000 Actual annual variable compensation 679, ,084 Article 82 Payment in cash 125, ,000 Car 4,386 4,373 Compensation due for the fiscal year 1,609,143 1,715,957 Performance shares granted in , ,860 Stock options granted in , ,350 Total 1,685,497 2,145,167 43

44 2017 COMPENSATION JEAN-PIERRE MICHEL Fixed compensation 450, ,500 Actual annual variable compensation 285,615 8,492 Article 82 Payment in cash 4,000 1,000 Car 5,225 1,314 Compensation due for the fiscal year 744, ,306 Performance shares granted in ,413 - Stock options granted in ,504 - Total 780, ,306 1 On the management board until 31/03/

45 2017 COMPENSATION OLIVIER MALLET Fixed compensation 420, ,000 Actual annual variable compensation 266, ,970 Article 82 Payment in cash 73,500 73,500 Car 5,400 5,400 Compensation due for the fiscal year 765, ,870 Performance shares granted in , ,460 Stock options granted in ,504 50,285 Total 801,391 1,009,615 45

46 2017 COMPENSATION VIVIENNE COX Fixed compensation 320, ,000 Actual annual variable compensation NA NA Compensation due for the fiscal year 320, ,000 Performance shares granted in 2017 NA NA Stock options granted in 2017 NA NA Total 320, ,000 46

47 2018 COMPENSATION POLICY OF THE CHAIRMAN AND MANAGEMENT BOARD MEMBERS (1/3) This policy will be subject to your approval (6 th,7 th,8 th and 9 th resolutions). Extracts of the registration document (pages 278 and next) The fixed compensation of the Management Board Members remains unchanged in 2018 compared to 2017 The 2018 annual variable compensation is based on the following objectives: Targets M. Crouzet (Target variable portion: 100%) M. Mallet (Target variable portion: 75%) 1. Financial Performance EBITDA, Cost reduction, PRI 2. Operational Performance Roll-out of the transformation plan and quality 3. CSR performance Safety, environment Weight: 60% Weight: 45% Weight: 25% Weight: 18.75% Weight: 15% Weight: 11.25% 47

48 2018 COMPENSATION POLICY OF THE CHAIRMAN AND MANAGEMENT BOARD MEMBERS (2/3) Extracts of the registration document (pages 278 and next) The portion of Long Term Incentives: Increased (25% of target global compensation vs 22% in 2017): To face considerable group challenges and to align the interest of beneficiaries to those of shareholders To reach progressively the target global compensation structure (33% base salary / 33% target variable pay / 33% long term incentive) Still fully allocated to presence at the end of vesting period and internal and external performance conditions: Performance shares Cost reductions in the years 2018, 2019 and 2020 compared to projected performance as per the Group s mid-term plan over the same period (Weight: 50%) increase of gross operating margin rate between 2018 and 2020 compared to a peer group of comparable companies (Weight: 50%) Stock-options accumulated net free cash flow for the financial years 2018, 2019, 2020 and 2021 compared to the projected performance as per the Group s mid-term plan over the same period (Weight: 50%) the Total Shareholder Return (TSR) for the financial years 2018, 2019, 2020 and 2021 compared to a peer group of comparable companies (Weight: 50%) 48

49 2018 COMPENSATION POLICY OF THE CHAIRMAN AND MANAGEMENT BOARD MEMBERS (3/3) Extracts of the registration document (pages 278 and next) The members of the supervisory board are exclusively granted fees for the fiscal year based on their actual attendance. The fixed portion amounts to one-third of attendance fees and the variable portion based on actual attendance represents two-thirds The Chairman of the Supervisory Board receives a fixed annual compensation. It remains unchanged in 2018 compared to

50 STATUTORY AUDITOR S REPORTS Fiscal year ended 31 Dec. 2017

51 STATUTORY AUDITOR S REPORTS (ORDINARY SHAREHOLDERS MEETING) Reports on the resolutions submitted to your approval Ordinary shareholders meeting Report on the statutory financial statements (1 st resolution) Report on the consolidated financial statements (2 nd resolution) Report on regulated agreements and commitments Extraordinary shareholders meeting Report on the delegation of power with regard to transactions on share capital (19 th to 25 th resolutions) 51

52 REPORTS ON THE STATUTORY AND CONSOLIDATED FINANCIAL STATEMENTS (ORDINARY SHAREHOLDERS MEETING) Opinions on the financial statements: unqualified opinions Report on the statutory financial statements (1 st resolution) The key audit matter mentioned in the justification of our assessments relates to the measurement of equity interests Report on the consolidated financial statements (2 nd resolution) The financial statements of your Group are prepared in accordance with IFRS; no significant changes in 2017 The key audit matter mentioned in the justification of our assessments relates to the valuation of goodwill, intangible assets and property, plant and equipment We have verified the appropriateness of the information disclosed in the management report and the notes to the financial statements. We have verified in particular the accuracy and the fairness of the information related to the remunerations received by the directors and commitments in their favor 52

53 REPORT ON REGULATED AGREEMENTS AND COMMITMENTS (ORDINARY SHAREHOLDERS MEETING) Agreements and commitments authorized during the past year We have not been advised of any agreement or commitment authorized during the year Agreements and commitments approved during previous years which continuing effect during the year Execution of the defined contribution pension scheme benefiting Mr. Jean-Pierre Michel Additional pension scheme for Messrs. Philippe Crouzet, Jean-Pierre Michel and Olivier Mallet Agreements and commitments approved during previous years which were not performed during the year Crystallisation of the defined contribution pension scheme benefiting Messrs. Philippe Crouzet and Olivier Mallet Monetary termination benefit for the end of the term of office of Messrs. Philippe Crouzet and Olivier Mallet and non-compete obligation applicable to Mr. Philippe Crouzet 53

54 REPORT ON THE DELEGATION OF POWER WITH REGARD TO TRANSACTIONS ON SHARE CAPITAL (EXTRAORDINARY SHAREHOLDERS MEETING) Your Management Board recommends that you confer on it the authority to decide: The issue of shares and/or marketable securities conferring entitlement to the share capital with retention and/or cancelation of preferential subscription rights (19 th to 21 st resolutions) The issue of shares and/or marketable securities conferring entitlement to the share capital with cancelation of preferential subscription rights for the requirements of an employee share ownership offering (22 nd to 25 th resolutions) We have performed the procedures that we considered necessary in accordance with the professional guidelines applicable in France. We have no comment on the information given in the Management Board s report in connectionwith the delegation of power with regard to transactions on share capital. We shall issue a supplementary report, if necessary, in case these delegations are used by your Management Board. 54

55 QUESTIONS / ANSWERS

56 VOTE ON THE RESOLUTIONS

57 HOW TO USE HOUSINGS When prompted, press the number(s) for your response(s): Key 1 to vote For Key 2 to vote Against Key 3 to vote Abstention A confirmation that your vote has been received appears on the screen To change your vote, simply press your new choice (1, 2 or 3) to replace the previous one If you want to cancel your vote, press key X 57

58 RESOLUTIONS SUBMITTED TO THE ORDINARY SHAREHOLDERS MEETING 58

59 1 st RESOLUTION Ordinary Approval of the parent company financial statements for the 2017 fiscal year Net income/(loss) for the fiscal year: (39,056,082.19) 59

60 2 nd RESOLUTION Ordinary Approval of the consolidated financial statements for the 2017 fiscal year Net income/(loss) for the fiscal year: (559,729,000) 60

61 3 rd RESOLUTION Ordinary Allocation of the net income/(loss) for the 2017 fiscal year It is proposed that no dividend be distributed for that fiscal year 61

62 4 th RESOLUTION Ordinary Renewal of the term of KPMG S.A. s engagement as principal Statutory Auditor For a period of six (6) years, i.e. until the end of the Ordinary Shareholders Meeting called to approve the financial statements for the fiscal year ended 31 December

63 5 th RESOLUTION Ordinary Renewal of the term of Deloitte & Associés s engagement as principal Statutory Auditor For a period of six (6) years, i.e. until the end of the Ordinary Shareholders Meeting called to approve the financial statements for the fiscal year ended 31 December

64 6 th RESOLUTION Ordinary Compensation policy for the Chairman of the Management Board for 2018 Approval of the principles and criteria for determining, distributing and allocating the fixed, variable and exceptional items comprising the total compensation and benefits of all kinds that may be allocated to the Chairman of the Management Board for fiscal year

65 7 th RESOLUTION Ordinary Compensation policy for the members of the Management Board (other than the Chairman) for 2018 Approval of the principles and criteria for determining, distributing and allocating the fixed, variable and exceptional items comprising the total compensation and benefits of all kinds that may be allocated to members of the Management Board (other than the Chairman) for fiscal year

66 8 th RESOLUTION Ordinary Compensation policy for the Chairman of the Supervisory Board for 2018 Approval of the principles and criteria for determining, distributing and allocating the fixed, variable and exceptional items comprising the total compensation and benefits of any kind that may be allocated to the Chairman of the Supervisory Board for fiscal year

67 9 th RESOLUTION Ordinary Compensation policy for the members of the Supervisory Board (other than the Chairman) for 2018 Approval of the principles and criteria for determining, distributing and allocating the fixed, variable and exceptional items comprising the total compensation and benefits of any kind that may be allocated to members of the Supervisory Board (other than the Chairman) for fiscal year

68 10 th RESOLUTION Ordinary Compensation paid or allotted to Mr. Philippe Crouzet for 2017 Approval of the fixed, variable and exceptional components of the total compensation and benefits paid or allotted for the fiscal year ended 31 December 2017 to Mr. Philippe Crouzet, Chairman of the Management Board 68

69 11 th RESOLUTION Ordinary Compensation paid or allotted to Messrs. Olivier Mallet and Jean-Pierre Michel for 2017 Approval of the fixed, variable and exceptional components of the total compensation and benefits paid or allotted for the fiscal year ended 31 December 2017 to Mr. Olivier Mallet, member of the Management Board, and Mr. Jean-Pierre Michel, a former member of the Management Board 69

70 12 th RESOLUTION Ordinary Compensation paid or allotted to Ms. Vivienne Cox for 2017 Approval of the fixed, variable and exceptional components of the total compensation and benefits paid or allotted for the fiscal year ended 31 December 2017 to Ms. Vivienne Cox, Chairman of the Supervisory Board 70

71 13 th RESOLUTION Ordinary Renewal of Ms. Vivienne Cox s term of office as member of the Supervisory Board for a four (4)-year term, i.e. until the end of the Ordinary Shareholders Meeting called to approve the financial statements for the fiscal year ended 31 December

72 14 th RESOLUTION Ordinary Renewal of Mr. Cédric de Bailliencourt s term of office as member of the Supervisory Board for a four (4)-year term, i.e. until the end of the Ordinary Shareholders Meeting called to approve the financial statements for the fiscal year ended 31 December

73 15 th RESOLUTION Ordinary Renewal of Ms. Laurence Broseta s term of office as member of the Supervisory Board for a four (4)-year term, i.e. until the end of the Ordinary Shareholders Meeting called to approve the financial statements for the fiscal year ended 31 December

74 16 th RESOLUTION Ordinary Renewal of Ms. Alexandra Schaapveld s term of office as member of the Supervisory Board for a four (4)-year term, i.e. until the end of the Ordinary Shareholders Meeting called to approve the financial statements for the fiscal year ended 31 December

75 17 th RESOLUTION Ordinary Appointment of Mr. Jean-Jacques Morin as member of the Supervisory Board for a four (4)-year term, i.e. until the end of the Ordinary Shareholders Meeting called to approve the financial statements for the fiscal year ended 31 December

76 18 th RESOLUTION Ordinary Authorization to be given to the Management Board to trade in the Company s shares Maximum limit: 10% of the shares comprising the Company s capital (legal limit) Maximum purchase price: 15 per share Duration of the authorization: 18 months 76

77 RESOLUTIONS SUBMITTED TO THE EXTRAORDINARY SHAREHOLDERS MEETING 77

78 19 th RESOLUTION Extraordinary FINANCIALS DELEGATIONS Delegation of power to be given to the Management Board to increase the capital through the issuance, with preferential subscription rights, of shares and/or marketable securities providing access to the capital immediately or in the future Maximum nominal amount: million Duration of the authorization: 14 months 78

79 20 th RESOLUTION Extraordinary FINANCIALS DELEGATIONS Delegation of power to be given to the Management Board to increase the capital by an issue of shares and/or marketable securities providing access to the capital immediately or in the future, without preferential subscription rights, through a public offering Maximum nominal amount: million Duration of the authorization: 14 months 79

80 21 th RESOLUTION Extraordinary FINANCIALS DELEGATIONS Delegation of power to be given to the Management Board to issue shares and/or securities providing access to the capital immediately or in the future, without preferential subscription right, by private placement Maximum nominal amount: million Duration of the authorization: 14 months 80

81 22 th RESOLUTION Extraordinary EMPLOYEE SHAREHOLDING OFFER Delegation of power to be given to the Management Board to issue shares and/or securities providing access to the capital immediately or in the future, without preferential subscription rights, reserved to members of employee savings plans Maximum limit: 2% of the Company's share capital Duration of the authorization: 26 months 81

82 23 th RESOLUTION Extraordinary EMPLOYEE SHAREHOLDING OFFER Delegation of power to be given to the Management Board to issue shares and/or securities providing access to the capital immediately or in the future reserved to employees (and equivalent beneficiaries) of companies in the Vallourec Group whose registered office is located outside of France and to company mutual funds, outside of a company savings plan) Maximum limit: 2% of the Company s share capital Duration of the authorization: 18 months 82

83 24 th RESOLUTION Extraordinary EMPLOYEE SHAREHOLDING OFFER Delegation of power to be given to the Management Board to to issue shares and/or securities providing access to the capital immediately or in the future, reserved to credit institutions or any entities with the exclusive purpose of subscribing to, holding and disposing of shares of the Company within the context of an operation reserved for employees Maximum limit: 2% of the Company s share capital Duration of the authorization: 18 months 83

84 25 th RESOLUTION Extraordinary EMPLOYEE SHAREHOLDING OFFER Authorization to be given to the Management Board to proceed with free allocations of shares to the benefit of subscribers to an employee share ownership plan implemented within companies of the Vallourec Group whose registered office is located outside of France Maximum limit: 0.3% of the Company s share capital Duration of the authorization: 18 months 84

85 26 th RESOLUTION Extraordinary POWERS FOR FORMALITIES 85

86 2018 COMBINED SHAREHOLDERS MEETING May 25, 2018 Friday, May 25, 2018