ANNUAL REPORT 2015 - | HEURTEY · PDF file... HEURTEY PETROCHEM 2015 ANNUAL REPORT 2015 HEURTEY PETROCHEM 2015 | ANNUAL REPORT 2015 03. CONTENTS 04 ... FMC Technologies, the global

A N N U A L R E P O R T 2 0 1 5

WITH A STRONG FINANCIAL SITUATION, RECOGNISED EXPERIENCE, A BROAD INTERNATIONAL NETWORK, AN OFFENSIVE SALES STRATEGY AND A LEANER COST STRUCTURE, WE ARE POISED TO OVERCOME THE CRISIS.

The year 2015 was marked by an intensification of the crisis affecting the oil and gas sector.

In this context, the Heurtey Petrochem group has shown considerable resilience with the publication of firm results in 2015. Our revenue, which came out at €420 million, was in line with our objectives. It recorded a slight fall (-4%) compared to 2014 (-9% at constant exchange rates).

Our current operating income, which reached €16.3 million, was also in line with our objectives. However, the situation differed between our two businesses. Indeed, in the furnaces branch, the current operating margin rate improved significantly (5.0%, compared with 4.4% in 2014). Conversely, the gas branch was affected in particular by the suspension of contracts in Venezuela, which prompted us to cancel the margins previously accounted for and to recognise provisions totalling some €3 million.

Despite the solid results in 2015, the intensification of the crisis in the sector has led to a significant reduction in our markets, particularly in the upstream sector where our gas branch operates. Our order book has therefore contracted and we are expecting our revenues to fall in 2016.

In this difficult environment, we implemented an

action plan in 2014 to strengthen our competitiveness and optimise our commercial positioning. We have therefore extended our geographical coverage through local commercial partnerships and we have closed non-strategic offices. In parallel, we have implemented technological and business partnerships, to be better positioned in projects with high added value. We have also focused on improving our competitiveness by diversifying our supplies and rationalising project management.

In view of the scale of the crisis, we deemed it necessary to intensify our efforts to reduce costs by launching a restructuring plan in 2016 which will result in around one hundred job losses across the world, thereby reducing our fixed costs by some €10 million per year from 2017.

This plan will allow us to strengthen our competitiveness and thereby be better positioned to seize market opportunities. With a strong financial situation, recognised experience, a broad international network, an offensive sales strategy and a leaner cost structure, we are poised to overcome the crisis.

Dominique HenriChairman and Chief Executive Officer

CHAIRMAN’S STATEMENT

02 | HEURTEY PETROCHEM 2015 | ANNUAL REPORT 2015 HEURTEY PETROCHEM 2015 | ANNUAL REPORT 2015 | 03

CONTENTS

04THE FIGURES | 36

04.1 | 2015 in figures | 38

04.2 | Stock market information | 40

04.1 | Consolidated financial statements at 31 december 2015 | 42

02

01BUSINESS ACTIVITIES AND ORGANISATION | 06

01.1 | Group Profile | 08

01.2 | Governance | 10

01.3 | Business lines and expertise | 12

01.4 | Facilities and resources | 16

03SUSTAINABLE DEVELOPMENT | 28

03.1 | Human resources | 30

03.2 | Health and safety | 32

03.3 | Environment | 34

ACHIEVEMENTS & STRATEGY | 18

02.1 | Key events | 20

02.2 | Projects | 22

02.2 | Market, strategy and outlook | 26


OUR INTERNATIONAL NETWORK, WHICH IS CONSIDERABLE GIVEN OUR SIZE, PROVIDES US WITH THE RESOURCES TO CARRY OUT PROJECTS IN MOST GEOGRAPHIC REGIONS.

01BUSINESS ACTIVITIES AND ORGANISATION

06 | HEURTEY PETROCHEM 2015 | ANNUAL REPORT 2015

w

GROUP PROFILE01.1

€ 420REVENUES OF

IN 2015

10SUBSIDIARIES IN

COUNTRIES

INTERNATIONAL OIL AND GAS ENGINEERING GROUP

Two market segments:

Process furnaces for refining, petrochemicals and hydrogen production

Natural gas processing

MILLION

BUSINESS ACTIVITIES AND ORGANISATION


GOVERNANCE01.2 From left to right:

Dominique HenriChairman and CEO

Jacques MoulinChief Operating Officer

Françoise PeugnetCorporate Secretary

Grégory MatouskoffGroup Chief Financial Officer

GOVERNANCE COMMITTEES

BOARD OF DIRECTORSHeurtey Petrochem’s Board of Directors determines the Group’s strategic direction and ensures its implementation. It currently has eight members, including three independent members (*):

n Mr. Dominique HENRI Chairman and Chief Executive Officer of Heurtey Petrochem

n Mr. Pascal BARTHELEMY Executive Vice President of IFP Energies Nouvelles

n Mr. Jean DESEILLIGNY *

n Ms. Isabelle MULLER * General Delegate to the French oil industry association (Union Française des Industries Pétrolières – UFIP)

n Ms. Sophie PATURLE Member of the Management Board of DEMETER PARTNERS

n Mr. Georges PICARD Executive Vice President of IFP Energies Nouvelles

n Mr. Jean SENTENAC Chairman and Chief Executive Officer and Director of AXENS

n Ms. Claire TUTENUIT* General Delegate to the French environmental association EpE (Association Française des Entreprises pour l’Environnement)

BOARD OF DIRECTORS COMMITTEES

The Board of Directors bases its decisions on the recommendations of three specialised Committees, each of which includes at least one independent director. The members of the Committees are designated personally and they may not be represented by others.

APPOINTMENTS AND REMUNERATION COMMITTEE

This Committee’s members are Mr. Jean DESEILLIGNY (Committee Chairman), Ms. Sophie PATURLE and Mr. Georges PICARD. Its role is to make recommendations to the Board of Directors concerning the composition of the Board, the selection of candidates to the Board, the assessment of their skills and their independence, the remuneration of the key management personnel and members of the Board, the policy regarding stock options or the allocation of shares to managers and employees, monitoring of key persons within the Group and, more generally, to make any proposals about policy and tools for staff remuneration and motivation.

AUDIT COMMITTEE

This Committee’s members are Mr. Georges PICARD (Committee Chairman) and Ms. Claire TUTENUIT. Its role is to verify internal procedures for collecting and controlling information, examine the accounts and annual budgets before they are presented to the Board of Directors and assess financial and internal control procedures with a view to reducing the risks inherent in the Group’s activity.

STRATEGY COMMITTEE

This Committee’s members are Mr. Pascal BARTHELEMY (Committee Chairman), Mr. Jean DESEILLIGNY, Ms. Isabelle MULLER and Mr. Jean SENTENAC. The Committee examines the Group’s main strategic directions and gives an opinion on decisions to acquire strategic assets, strategic agreements for technological and industrial alliances and cooperation as well as on draft development plans before they are submitted to the Board of Directors.

EXECUTIVE COMMITTEE

n Dominique HENRI Chairman and CEO

n Jacques MOULIN Chief Operating Officer

n Françoise PEUGNET Corporate Secretary

n Grégory MATOUSKOFF Group Chief Financial Officer

STATUTORY AUDITORS

n PriceWaterhouseCoopers Audit 63 rue de Villiers 92208 Neuilly sur Seine CEDEX

n Ernst & Young et Autres 1-2 place des Saisons 92400 Courbevoie Paris La Défense 1



BUSINESS LINE: PROCESS FURNACES

01.3DESIGN AND MANUFACTURE OF PROCESS FURNACES

Heurtey Petrochem designs and manufactures process furnaces for the refining, petrochemicals and hydrogen production industries. These furnaces can heat, vaporise or crack oil products to transform them either into directly usable products, such as fuel, or into products which are then used to produce petrochemical derivatives, such as plastics. Heurtey Petrochem is also present on the market for hydrogen production furnaces, used in refining procedures.

Each furnace is unique and custom-designed by Heurtey’s teams in accordance with the client’s specific needs. Thanks to its integrated teams, Heurtey Petrochem is able to manage all types of contract for its clients ranging from feasibility studies, process and mechanical design, project management, purchasing and manufacturing, to the turnkey construction on the production sites

PETROCHEMICALS HYDROGEN PRODUCTION

60 YEARS OF EXPERIENCE MORE THAN 2,000 REFERENCES

THREE AREAS OF EXPERTISE

REFINING



BUSINESS LINE: GAS PROCESSING01.3

CUTTING-EDGE SOLUTIONS FOR GAS PROCESSING

Through its subsidiary Prosernat, Heurtey Petrochem offers cutting-edge solutions for the entire natural gas processing chain.

When it is extracted from the well, the gas must be processed, in particular to remove certain liquids or impurities, so that it can be transported then used. Heurtey Petrochem provides both technology licences and modular units to process the gas on the field.

Prosernat has a comprehensive technological portfolio, with four main areas of expertise: dehydration, deacidification, MEG reclaiming and sulphur recovery.

Prosernat also works in the field of refining, particularly for sulphur recovery units which are used both in the refinery and in the gas processing units.

DEHYDRATION DEACIDIFICATION MEG RECLAIMING SULPHUR RECOVERY

FOUR AREAS OF EXPERTISE



FACILITIES AND RESOURCES

01.4HEURTEY PETROCHEM IN THE WORLD

Established in 10 countries, Heurtey Petrochem has a large network of subsidiaries around the world: in the United States, India, Romania, South Korea, Malaysia, Russia, China and Brazil. This international network, which is considerable given the Group’s size, provides us with the resources to carry out projects in most geographic regions.

Furthermore, to control manufacturing and optimise costs, the Group has two proprietary manufacturing units in Romania and India, with a combined production capacity of 7,000 tonnes per annum.

Beijing, China

Seoul, South Korea

PARIS , FRANCE

Mumbai, India

Saint Petersburg, Russia

Bucharest, Romania

Buzau, Roumanie

Rio de Janeiro, Brazil

Kuala Lumpur, Malaysia

Dubai, United Arab EmiratesBaroda, India

n Head office

n Engineering and project management centres

n Manufacturing workshops

Los Angeles, USAHouston, USA

Tulsa, USA75 % OF STAFF BASED ABROAD

10 COUNTRIES

2 MANUFACTURING UNITS



WE REMAIN VIGILANT CONCERNING THE CONTRACTS THAT WE TAKE ON AND ENSURE THAT WE EXECUTE THEM WITH THE UTMOST RIGOUR.

02ACHIEVEMENTS & STRATEGY


02.1

July

Acquisition of a plot of land in India on which a new manufacturing unit has been built

In 2015, the Group acquired land on which was built its Indian manufacturing unit, for a total of €3.5 million. Situated in the state of Gujarat, this 40,000m2 facility, which has an annual production capacity of 3,000 tonnes, complements the production facility in Buzau, Romania. This new plant, which represents a major competitive strength for reaching the Indian and Middle Eastern markets, is already operating at full capacity.

August

Extension of Heurtey Petrochem’s offering to the manufacture of air preheaters

Heurtey Petrochem has extended its offering, providing a fully-integrated solution for the design and manufacture of air preheaters. With these air preheaters, which are manufactured in Buzau in the Group’s Romanian plant, Heurtey Petrochem is able to provide its clients with an additional guarantee in terms of quality and efficiency. Orders have already been placed for projects in Taiwan, Kuwait and Russia.

September

Signature of a partnership between Prosernat and FMC Technologies

Prosernat has signed a partnership with FMC Technologies, the global market leader in subsea systems and a leading provider of technologies and services to the oil and gas industry. This partnership aims to offer an integrated solution in the processing and separation of oil, water, gas and solids.

Signature of a partnership with Ecoslops

Backed by its refining expertise, Heurtey Petrochem has developed an innovative procedure called P2R to recycle oil residues produced by ships and to produce marketable marine fuels. This procedure, which is the result of many years’ research and development within Heurtey Petrochem, is applied by an industrial partner, Ecoslops, and the first unit is now operational. In September 2015, Heurtey Petrochem signed a partnership agreement with Ecoslops. This agreement, regarding the supply of P2R units, was concluded for a 10-year period and provides for the pooling of sales initiatives and resources for prospecting to accelerate the development of new projects.

November

OHSAS 18001 certification delivered

Heurtey Petrochem France was granted OHSAS 18001 (“Occupational Health and Safety Assessment Series”) certification, the international benchmark for Health and Safety in the Workplace management systems.

December

Handover of the project for Total in Antwerp

In 2012, Heurtey Petrochem signed a €59 million contract with Total for the modularised delivery of two ethylene furnaces at their petrochemical platform in Antwerp, Belgium. The two furnaces were delivered shortly before Christmas.

Closing the Group’s subsidiary in South Africa

In a very reduced domestic market and in the absence of medium-took prospects in this country, the Group decided to close its subsidiary in South Africa.

Suspension of contracts in Venezuela

Heurtey Petrochem has several gas processing projects underway in Venezuela, with some €100 million remaining. Given the financing difficulties encountered by the client, these contracts have been suspended. From a prudential perspective, the Group has decided to cancel the margins previously accounted for as technical work progresses and to recognise provisions for research not paid to date. These measures had a one-off impact on 2015 current operating income of some €3 million and on consolidated net income of around €2 million.

Launch of a restructuring plan

Given the scale of the crisis in the sector, in the 1st quarter of 2016 Heurtey Petrochem announced the launch of a restructuring plan, which will result in around 100 job losses around the world, i.e. approximately 15% of employees in the engineering centres. In parallel, additional steps will be taken to cut general expenses. In 2016, the various measures in the plan should generate a non-recurring charge evaluated at €4.7 million and, from 2017, should allow the Group to reduce its fixed costs by some €10 million per year. With a leaner cost structure, Heurtey Petrochem will be better positioned to overcome the crisis and seize any market opportunities that may arise.

KEY EVENTS

2015

2016

ACHIEVEMENTS & STRATEGY


02.2PROJECTS

DELIVERY OF TWO ETHYLENE FURNACES FOR TOTAL IN ANTWERP

Client: TOTAL OLEFINS ANTWERP (TOA)Site: Antwerp refinery, BelgiumContract amount: €59 million Project: Delivery of two modularised ethylene furnacesTechnology: Technip Stone & Webster

In 2012, Heurtey Petrochem signed a contract with Total for the modularised delivery of two ethylene furnaces at their petrochemical platform in Antwerp, Belgium.

THREE QUESTIONS FOR PHILIPPE BERGAULT, PROJECT DIRECTOR

What did the project consist of?Our client Total placed an order for the delivery of two ethylene furnaces for their petrochemical platform, within the refinery in Antwerp.

Did the fact that the refinery was already in operation result in any particular constraints?Yes, we had to work in a very restricted assembly area, between different units which remained in operation. To meet these constraints, we prefabricated our furnaces in our Romanian plant in around 60 modules, each weighing between 20 and 150 tonnes, and we then transported them to a yard close to the refinery. Each evening a convoy transported one module to the site where it was then

installed by crane. To give you an idea of the complexity of the assembly, the person operating the crane, which was 50 metres from the assembly area, could not see the assembly site and was guided by a colleague via walkie-talkie.

The furnaces have now been delivered; what is your assessment of the project?We are delighted at the execution of the project and the quick, smooth start-up of our furnaces, with zero accident during the project. For us, this project is an excellent example of the modularised design and construction of large-scale furnaces in units in operation.



02.2PROJECTS

EIGHT ETHYLENE FURNACES IN THE US

2,100

2016

16,000 8

SULPHUR RECOVERY UNIT FOR AXION IN ARGENTINA

HYDROGEN REFORMER AND 24 REFINING FURNACES FOR KNPC IN KUWAIT

Site: Petrochemical complex in Baytown, Texas, USAScope: Delivery of a train of eight modularised ethylene furnaces

Project in consortium with Mitsui Engineering & Shipbuilding

Client: AxionSite: Campana refinery, ArgentinaProject: Delivery of modules for a sulphur recovery unit

Contract amount: €65 million Project financing secured by a buyer’s credit

Client: Kuwait National Petroleum Company (KNPC)Sites: Mina Abdullah and Mina Al Ahmadi refineries, Kuwait

Project: Delivery of a hydrogen reformer and 24 refining furnacesContract amount: €54 million

In 2013, Heurtey Petrochem signed a contract in consortium with Mitsui Engineering & Shipbuilding, covering the semi-modularised fabrication and delivery of eight ethylene furnaces for the petrochemical complex in Baytown, Texas.

The furnaces were manufactured in semi-modularised form from a yard in Thailand before being delivered by sea to the port of Houston.

This contract covers the delivery of equipment and modules for a sulphur recovery unit for the Campana refinery in the province of Buenos Aires, Argentina. The project is managed by Prosernat, the Group’s gas business, as its sulphur recovery technologies are put to use both in the refinery and in the gas processing units

Kuwait’s national petroleum company KNPC launched a project called the “Clean Fuel Project” aimed to extend and modernise two refineries in Mina Abdulla and Mina Al-Ahmadi. KNPC’s aim is to reach a refining capacity of 800,000 barrels per day with a reduced environmental impact, particularly reduced sulphur content.In this project, Heurtey Petrochem is responsible for delivering one hydrogen furnace (“SMR”) and 24 refining furnaces. The engineering of these furnaces is predominantly carried out by the Group’s French, South Korean and Indian entities. Manufacturing is carried out, for the most part, within the Group’s facilities in Romania and India. Handover is scheduled for the end of 2016.

n Fabrication of the modules in France

n Assembly of the modules in China

n Expected delivery date: Second half 2016

Key stages of the project

Key stages of the project

Shipment of furnaces from Thailand to Houston

n Semi-modularised fabrication of eight furnaces in Thailand

n Shipment of the furnaces to the port of Houston

n Construction underway on the Baytown site



02.3MARKET, STRATEGY AND OUTLOOK INTERVIEW WITH JACQUES MOULIN,

CHIEF OPERATING OFFICER OF HEURTEY PETROCHEM

The price of oil has been plummeting for several months. How does this affect you? When oil prices fall sharply, this affects the revenues of oil companies, who are our clients. In this context we observe a significant delay in their investments. Consequently, this reduces our opportunities and contracts our market.

What actions have you implemented to limit the impact of the market slowdown?First of all we remain vigilant concerning the contracts that we take on and ensure that we execute them with the utmost rigour. In 2015, we succeeded in maintaining our gross margin rate at around 14%, which shows our capacity to manage our contracts well.At the same time, we are making significant efforts to improve our competitiveness by optimising our processes, diversifying our supplies and manufacturing in low-cost countries. We are also working on positioning ourselves better on projects with high added value, by implementing technological and business partnerships.However, in view of the scale and expected duration of the crisis, we deemed it necessary to intensify our efforts to reduce costs by launching a restructuring plan in 2016 which will result in around 100 job losses across the Group, thereby reducing our fixed costs by some €10 million per year from 2017.

Are all your markets affected in the same proportions?The oil companies have reduced their investments in exploration and production as a priority. Consequently, the upstream sector where our Gas branch is active is more affected than the downstream sector where our Furnaces branch operates. The refining sector, for example, is holding up quite well.In terms of geographical regions, the Middle East is a dynamic area with large-scale projects announced

in Kuwait and the United Arab Emirates, and significant market potential with the reopening of the Iranian market. India is also a market in which substantial investments are announced to increase the country’s refining capacities and to adapt them to the new environmental standards. Lastly, the US remains an active region.

When do you expect the market to improve?The fall in oil prices was provoked by the surplus supply of oil on the market. With the decline in investments, this excess supply should fall in the medium term, but it is difficult to give a precise time scale. According to the International Energy Agency, the oil market could improve in 2017. We are prepared for two years of market slowdown, 2016 and 2017.

n OBJECTIVES 2016Revenues: €320 to €340 millionCurrent operating margin rate: more than 2.5% for the Furnaces branch, negative for the Gas branchEBIT: Break even (after €4.7m in restructuring fees)

n 2017 OBJECTIVES Positive current operating income for the two branches



DIVERSITY IS AT THE HEART OF THE GROUP’S CULTURE AND OUR EMPLOYEES MANAGE INTERNATIONAL PROJECTS WITHIN MULTICULTURAL TEAMS.

03SUSTAINABLE DEVELOPMENT


ETHICS TRAINING FOR ALL EMPLOYEES

03.1HUMAN RESOURCES

In 2015, Heurtey Petrochem launched an e-learning programme on ethical issues. This programme, which was carried out by all Group employees, dealt with the main areas of ethics such as conflicts of interest, money laundering, corruption, data protection, health and safety in the workplace, intellectual property, discrimination and harassment.

Heurtey Petrochem had 981 employees, working in 10 countries, at 31 December 2015.Human resources form the heart of the Group, and Heurtey Petrochem is fully committed to offer its teams a safe, stimulating environment in which each employee is treated fairly and can develop his/her skills as well as benefit from development opportunities.

Diversity is at the centre of the Group’s culture and employees are responsible for international projects that require, alongside technical skills, strong project management capacities in multicultural team settings. The Group encourages talent-sharing between the different entities, particularly by favouring secondments and expatriations.

HR VALUES

Heurtey Petrochem is eager to ensure equal opportunities and condemns any form of

discrimination based on criteria relative to geographic or social origins, ethnic origin, disability, religion, political convictions, trade union activities, sex, sexual orientation and family situation.

The Group encourages skills development with its employees and training initiatives aim principally to develop technical expertise.

The HR policy pursued by the Group aims to develop the Heurtey Group’s culture by promoting its values: n professionalism and client satisfactionn respect for the culture and environment

of the countries we work inn team development and motivation.

GENDER DISTRIBUTION

74 % 26 %

MEN WOMEN

GEOGRAPHIC DISTRIBUTION

292 324 145 90 130

FRANCE ROMANIA INDIA USA OTHER

24TEMPORARY EMPLOYEES

957 PERMANENT EMPLOYEES

CHANGE IN GROUP STAFF

DISTRIBUTION OF GROUP STAFF

DISTRIBUTION OF STAFF BETWEEN PERMANENT AND TEMPORARY EMPLOYEES

GROUP WORKFORCE

9811059

20

15

20

13

20

14

1021

SUSTAINABLE DEVELOPMENT


THE GROUP’S EIGHT COMMITMENTS IN TERMS

OF HEALTH AND SAFETY IN THE WORKPLACE :

Heurtey Petrochem considers Health and Safety in the workplace to be a top priority in all the Group’s activities. Our goal is to provide our employees and our teams of subcontractors with a safe work environment, wherever it is in the world, by promoting the development of a zero accident culture.

The Health and Safety in the workplace policy concerns our employees as well as subcontractors working under our responsibility in our premises, in the manufacturing workshops or on the construction sites. This policy aims to continuously improve the Health and Safety in the workplace management system (SST system) to prevent risks and reduce any negative impacts.To create a safe environment for all employees, the Group’s policy aims to:n Assess the risks at all stages of our activities,n Determine the SST objectives and indicators,n Ensure permanent monitoring

of regulatory changes,n Control the application of Group

procedures and standards,n Provide our employees with training

relating to safety issues,n Regularly re-evaluate the Health and Safety

in the workplace management system.

One of the main aims for the year 2015 was to proactively implement the methods used for analysing the risks of our activities. The workstations were analysed and prevention measures decided on and implemented to avoid accidents. In addition, the level of noise and lighting was measured in the Vincennes (France) offices and in the manufacturing workshops in Pali (India) and Buzau (Romania).

At the same time, the Group initiated a monthly reporting process measuring the frequency and severity rate of accidents in all the Group’s subsidiaries, workshops and sites.In parallel, Heurtey Petrochem has set up safety integration programmes, as well as training courses and awareness initiatives on the risks present in the offices, workshops and on the sites. In addition, several training sessions including “Fire evacuation alert”, “ATEX (explosive atmosphere)” and “Work at a height” have been organised for the relevant staff members.

To ensure the coherence and uniformity of the health and safety standards within the Group, it has embarked upon a wide-ranging certification processes. Several subsidiaries are now certified OHSAS 18001 (in France, Russia, India and South Korea).

03.2HEALTH AND SAFETY IN THE WORKPLACE

n Ensure that Health and Safety in the workplace requirements are considered as the top priority in all the Group’s activities: engineering, manufacturing, construction and start-up,

n Implement a Health and Safety management system that responds to our clients’ requirements and international standards,

n Check the understanding and the implementation of the Health and Safety policy at every level within the Group, collect Health and Safety indicators for the whole Group, analyse the data and set concrete improvement actions,

n Ensure that all accidents and dangerous situations are fully reported and investigated and implement prevention measures for the future,

n Define precise objectives for promoting Health and Safety and review them on a regular basis, as part of a continuous improvement process,

n Consider Health and Safety requirements as a key criterion when selecting subcontractors,

n Provide our teams with training to improve their understanding and commitment to the Health and Safety policy.



03.3ENVIRONMENT

HEURTEY PETROCHEM IS FULLY MOBILISED TO COMBINE THE DEVELOPMENT OF ITS BUSINESS ACTIVITIES WITH THE PROTECTION OF THE ENVIRONMENT.

With this in mind, the Group has set itself the objective of reducing the negative impact of its activities on the environment, controlling energy and raw materials consumption and efficiently managing its waste emissions.

Within its business designing, manufacturing and installing industrial units, Heurtey Petrochem strives to promote the design and diffusion of environmentally-friendly technologies. Through the continuous improvement of the return on its equipment, which also minimises the atmospheric emissions, Heurtey Petrochem makes an active contribution to reducing the environmental impact of its clients, oil and gas companies.

Furthermore, after several years of research and development, Heurtey Petrochem has developed an innovative procedure called P2R which enables oil residues from marine transport to be recycled and transformed into marketable marine fuels. This procedure, which falls within the MARPOL Convention (International Convention for the Prevention of Pollution from Ships), offers an economically viable solution for ships to manage their waste and thereby take an active role in combating marine pollution. This procedure has been in operation since September 2015 by an industrial partner and the first unit is now operational.

The Group also implements actions to control and manage its energy consumption. To this end, Heurtey Petrochem conducted various energy audits both at the Group’s head office and at Prosernat’s head office, to measure energy consumption and identify solutions for improving the energy performance of the building.

Heurtey Petrochem’s commitment to the environment has been recognised through ISO 14001(*) certification which was granted to its plants in Romania and India. Prosernat was also granted ISO 14001 certification in 2015.

(*) ISO 14001 is a key international standard which recognises a company’s commitment to environmental management.



IN 2015, HEURTEY PETROCHEM SHOWED CONSIDERABLE RESILIENCE WITH THE PUBLICATION OF SOUND RESULTS.

04THE FIGURES


2015 IN FIGURES

04.1

ORDER BOOK AT 31/12/15

CURRENT OPERATING INCOME (€M)

BREAKDOWN BY REGIONBREAKDOWN BY BUSINESS

6 %HYDROGEN

38 %REFINING

10 %PETROCHEMICALS

46 % GAS

11 %EUROPE,RUSSIA

20 %ASIA, OCEANIA

17 %MIDDLE EAST, AFRICA

52 %AMERICAS

BREAKDOWN BY BUSINESS BREAKDOWN BY REGION

34 %REFINING

4 %HYDROGEN

26 %GAS

36 %PETROCHEMICALS

15 %MIDDLE EAST, AFRICA

15 %EUROPE,RUSSIA

51 %AMERICAS

19 %ASIA, OCEANIA

REVENUES (€M)

420

REVENUES

€M

401

20

15

20

13

20

14

437

20

15

16.3

CURRENT OPERATING INCOME

€M20

13

16.6

20

14

20.7

This figure includes €107 million in contracts in Venezuela, on which the Group does not expect to achieve a significant level of completion in 2016 as the client is facing financing difficulties.

NET INCOME, GROUP SHARE (€M)* SHAREHOLDERS’ EQUITY AT 31 DECEMBER (€M)

9.2

8.3

20

15

NET INCOME, GROUP SHARE

*

€M2

01

3

5.9

20

14

SHAREHOLDERS’ EQUITY AT 31 DECEMBER

€M2

01

3

51.2

20

14

20

15

78.293.8

* 100% acquisition of Prosernat from 1 June 2014

n Furnaces branch: rise in the current operating margin rate to 5.0%n Gas branch: Current operating income impacted by an unfavourable mix of licences/EPC contracts and by the suspen-

sion of contracts in Venezuela (margins previously accounted for cancelled and provisions recognised for some €3m)

Audited figures, in € million (IFRS)

2015 2014

Furnaces Gas Total Furnaces Gas Total

Revenues 309.2 111.1 420.3 349.8 87.7 437.5

Current operating income 15.3 0.9 16.3 15.3 5.4 20.7

% of revenues 5.0% 0.8% 3.9% 4.4% 6.2% 4.7%

A contrasting situation for our two businesses

ORDER BOOK: 400 €M

THE STRENGTH OF HEURTEY PETROCHEM’S RESULTS IN 2015, AGAINST A SEVERE CRISIS IN THE SECTOR, DEMONSTRATES THE GROUP’S RESILIENCE.

THE FIGURES

n Revenues: €420 million

n Current operating income: €16.3 million

n Net income, Group share: €8.3 million


STOCK MARKET INFORMATION04.2

CONTACTS

n Anaïs de Scitivaux, Investor Relations / Tel.: +33 (0)1 41 93 46 42 / +33 (0)6 73 21 35 84 / [email protected] of the Group’s financial publications are also available from the Group’s website: www.heurtey.com

BREAKDOWN OF CAPITAL AT 31 DECEMBER 2015

1.7 %MANAGEMENT &

EMPLOYEES

62.3 %PUBLIC & INSTITUTIONALS

36.0 %IFP INVESTISSEMENTS

The Board of Directors of Heurtey Petrochem has decided not to pay a dividend for 2015 in the light of the weak market environment and the launch of the restructuring plan.

SHARE OVERVIEW

n Trading market: Alternext d’Euronext Paris

n ISIN: FR0010343186n Ticker symbol: ALHPCn Number of share: 4,914,725

n Price at 9 may 2016 : 13.80 €

n Market capitalisation : 68 M€

n Share price over one year : -51%

n Average daily volume over one year : 3,482

n Capital turnover rate over one year : 18%

CHANGE IN MARKET PRICE IN € OVER 1 YEAR AT MAY, 2016

THE CALENDAR OF FINANCIAL COMMUNICATION FOR 2016 IS AS FOLLOWS

n 2015 revenues: 16 February 2016

n 2015 full year results: 16 March 2016

n 2016 1st quarter revenues: 17 May 2016

n 2016 2nd quarter revenues: 8 August 2016

n 2016 1st half revenues: 14 September 2016

n 2016 3rd quarter revenues: 14 November 2016

MARKET DATA AT 9 MAY 2016 AND CHANGE OVER ONE YEAR PERIOD

0

5

10

15

20

25

30

35

may

2015

june

2015

july 2

015

aug

2015

sept

. 2015

oct.

2015

nov.

2015

dec.

2015

jan. 2

016

feb.

2016

mar

. 2016

apr.

2016

THE FIGURES


04.3CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2015

I – CONSOLIDATED STATEMENT OF FINANCIAL POSITION

in Euro thousands 31 DECEMBER 2015 31 DECEMBER 2014

ASSETS

NON-CURRENT ASSETS

Goodwill 67,100 65,282

Intangible assets 10,977 8,010

Tangible assets 11,039 8,816

Financial assets 1,837 1,377

Other non-current assets 806 88

Interests in equity-accounted joint ventures 342 186

Derivative financial instruments 101

Deferred tax assets 4,135 3,779

96,235 87,640

CURRENT ASSETS

Inventories 2,846 3,083

On-going construction contracts (assets) 77,873 88,441

Trade receivables and related accounts 148,674 156,932

Current taxes (assets) 6,301 3,470

Other current assets 37,692 36,875

Derivative financial instruments 297 187

Cash and cash equivalents 54,983 56,210

328,665 345,198

TOTAL ASSETS 424,900 432,838

in Euro thousands 31 DECEMBER 2015 31 DECEMBER 2014

SHAREHOLDERS’ EQUITY AND LIABILITIES

Share capital 16,415 16,354

Issue premiums 35,538 35,538

Consolidated reserves – Group share 29,268 22,985

Profit for the year – Group share 8,254 9,165

Translation reserves 4,141 (5,995)

SHAREHOLDERS' EQUITY (GROUP SHARE) 93,617 78,047

Non-controlling interests (minority interests) 221 186

TOTAL SHAREHOLDERS' EQUITY 93,838 78,233

NON-CURRENT LIABILITIES

Financial debt 7,177 7,305

Provisions 782 118

Provisions for pension liabilities and similar 1,657 1,985

Derivative financial instruments 25 72

Deferred tax liabilities 4,375 2,333

Other non-current liabilities 2,018 2,384

16,035 14,197

CURRENT LIABILITIES

Financial debt 28,537 26,832

Provisions 6,089 4,383

On-going construction contracts (liabilities) 76,412 99,915

Trade payables and related accounts 175,165 184,262

Current tax liabilities 2,162 2,548

Derivative financial instruments 2,154 1,147

Other current liabilities 24,507 21,322

315,027 340,408

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 424,900 432,838

THE FIGURES


04.3CONSOLIDATED FINANCIALSTATEMENTS AT 31 DECEMBER 2015

II – COMPREHENSIVE INCOME

III – STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

CONSOLIDATED PROFIT AND LOSS STATEMENTin € thousands 2015 2014

REVENUES 420,271 437,481

Cost of sales (360,508) (376,897)

GROSS MARGIN 59,763 60,584

Administrative and commercial expenses (43,497) (39,860)

CURRENT OPERATING INCOME 16,266 20,724

Other operating income and expenses (575) (566)

OPERATING INCOME 15,691 20,158

Share of net income from equity-accounted joint ventures 136 (155)

OPERATING INCOME INCLUDING THE SHARE OF NET INCOME FROM EQUITY-ACCOUNTED JOINT VENTURES 15,828 20,003

Income from cash and cash equivalents 495 448

Cost of gross financial debt (1,199) (1,371)

COST OF NET FINANCIAL DEBT (704) (923)

Other financial income and expenses 913 (4,488)

OTHER FINANCIAL INCOME AND EXPENSES 913 (4,488)

INCOME BEFORE TAX 16,036 14,592

Tax on income (7,729) (4,966)

CONSOLIDATED NET INCOME 8,308 9,626

Net income attributable to non-controlling interests (minority interests) 54 462

Net income, Group share 8,254 9,165

EARNINGS PER SHARE (IN €)

Basic 1.68 2.12

Diluted 1.68 2.11

OTHER ITEMS OF COMPREHENSIVE INCOME in € thousands 2015 2014


Translation adjustments 10,142 (1,987)

Cash flow hedges (809) 2,375

Deferred tax on items that will be reclassified to profit or loss 208 (773)

TOTAL OTHER ITEMS OF COMPREHENSIVE INCOME THAT WILL BE RECLASSIFIED TO PROFIT OR LOSS 9,541 (385)

Actuarial gains and losses 594 (135)

Deferred tax on items that will not be reclassified to profit or loss (192) 53

TOTAL OTHER ITEMS OF COMPREHENSIVE INCOME THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS 402 (82)

CONSOLIDATED COMPREHENSIVE INCOME 18,251 9,159

Of which: Group share 18,216 8,648

Net income attributable to non-controlling interests (minority interests) 35 511

in € thousands NUMBER

OF SHARES CAPITAL ISSUE

PREMIUMS TREASURY

SHARES

CONSO-LIDATED INCOME

AND RESERVES

TRANS-LATION

RESERVES

RESERVES FOR

ACTUARIAL GAINS AND

LOSSES FAIR VALUE

RESERVES

TOTAL SHAREHOL-

DERS' EQUITY

(Group share)

NON-CONTROL-

LING INTERESTS

(minority interests)

TOTAL SHAREHOL-

DERS' EQUITY

BALANCE AT 1 JANUARY 2014 3,539,568 11,822 5,617 (64) 24,015 (3,997) 10 (2,282) 35,120 16,044 51,163

Consolidated net income 9,164 9,164 462 9,626

Actuarial gains and losses (85) (85) 3 (82)

Gains and losses on hedging instruments 1,597 1,597 5 1,602

Translation adjustments (2,028) (2,028) 41 (1,987)

Total other items of comprehensive income (2,028) (85) 1,597 (516) 49 (467)

COMPREHENSIVE INCOME 9,164 (2,028) (85) 1,597 8,648 511 9,159

Trading in own shares (133) (133) (133)

Share-based payments 88 88 88

Capital increase 1,356,834 4,532 29,921 34,453 34,453

Dividends paid (1,947) (1,947) (480) (2,427)

Change in scope 1,617 30 3 167 1,818 (15,889) (14,071)

BALANCE AT 31 DECEMBER 2014 4,896 402 16 354 35 538 (197) 32 938 (5 995) (73) (518) 78 047 186 78 233

Consolidated net income 8,254 8,254 54 8,308

Actuarial gains and losses 400 400 3 402

Gains and losses on hedging instruments (574) (574) (27) (601)

Translation adjustments 10,136 10,136 6 10,142

Total other items of comprehensive income 10,136 400 (574) 9,962 (19) 9,943

COMPREHENSIVE INCOME 8,254 10,136 400 (574) 18,216 35 18,251

Trading in own shares (30) (30) (30)

Share-based payments 18,323 61 34 95 95

Dividends paid (2,703) (2,703) (2,703)

Change in scope (9) (9) (9)

BALANCE AT 31 DECEMBER 2015 4,914,725 16,415 35,538 (226) 38,514 4,141 326 (1,092) 93,617 221 93,838

THE FIGURES


04.3

in Euro thousands 2015 2014


Elimination of net income from equity-accounted joint ventures (136) 155

Elimination of amortisation, depreciation and provisions 8,393 4,049

Elimination of revaluation gains/losses (fair value) 176 356

Elimination of the discounting effect 25 5

Elimination of other items without cash impact (319)

Elimination of income from transfers and dilution losses and profits (7) 71

Income and expenses in connection with share-based payments 95 88

SELF-FINANCING CAPACITY AFTER THE COST OF NET FINANCIAL DEBT AND TAX

16,854 14,031

Elimination of tax expenses (income) 7,729 4,966

Elimination of the cost of net financial debt 704 923

SELF-FINANCING CAPACITY BEFORE THE COST OF NET FINANCIAL DEBT AND TAX

25,287 19,920

Impact of changes in WCR (10,697) (14,794)

Taxes paid (7,976) (5,485)

CASH FLOW FROM OPERATING ACTIVITIES 6,615 (358)

Impact of changes in scope (279) (1,527)

Acquisition of tangible and intangible fixed assets (6,999) (2,646)

Changes in loans and advances granted (639) 724

Disposal of tangible and intangible fixed assets 737 (400)

CASH FLOW FROM INVESTING ACTIVITIES (7,180) (3,849)

Capital increase - other 34,447

Loan issues 7,997 3,394

Loan repayments (6,857) (8,762)

Shareholder transactions: partial disposals / acquisitions (8) (14,092)

Net financial interests paid (629) (721)

Dividends paid to Group shareholders (2,703) (1,947)

Dividends paid to minority interests (480)

CASH FLOW FROM FINANCING ACTIVITIES (2,174) 11,840

Impact of changes in foreign exchange rates 1,137 (2,658)

CHANGE IN CASH POSITION (1,601) 4,975

Opening cash position 35,574 30,599

Closing cash position 33,973 35,574

CHANGE IN CASH POSITION (1,601) 4,975

IV – CONSOLIDATED CASH FLOW STATEMENT

THE FIGURES

CONSOLIDATED FINANCIALSTATEMENTS AT 31 DECEMBER 2015


Heurtey Petrochem S.A.8, cours Louis Lumière - 94306 Vincennes CEDEX - France - www.heurtey.com

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