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ANNUAL REPORT 2012 - Saft

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ANNUAL REPORT 2012 - Saft Powered By Docstoc
					ANNUAl REpORT 2012
     R E G I S T R AT I O N D O C U M E N T
           including Annual Financial Report
               CONTENTS

1     GROuP PRESENTATION                                                           2
      PORTFOLIO: OuR GREATEST SuCCESSES
      ARE ThOSE OF OuR CuSTOMERS                                                    3


1.1   OVERVIEW 2012                                                               12


1.2   ACTIVITIES                                                                  28


1.3   INNOVATION AND COMMITMENTS                                                  42


      FINANCIAL REPORT                                                            52

2     RISK FACTORS                                                                55
2.1   Risks related to the market environment and the Group’s activities          56
2.2   Operational risks                                                           58
2.3   Credit and counterparty risks                                               60
2.4   Liquidity risk                                                              61
2.5   Market risks                                                                61
2.6   Contractual and legal risks                                                 62
2.7   Risks related to the impact of the Group’s business on the environment,
      human health and safety                                                     63
2.8   Insurance                                                                   65

3     Sustainable Development                                                     67
3.1   Environmental responsibility                                                69
3.2   Social responsibility                                                       74
3.3   Corporate social responsibility                                             78
3.4   Auditor’s report on certain environmental and social information            80

4     Corporate Governance                                                        83
4.1   Management and Supervisory Boards                                            84
4.2   Remuneration and shareholding of the Management
      and Supervisory Board members                                                90
4.3   Report of the Chairman of the Supervisory Board                             100
4.4   Statutory Auditors’ Report, prepared in compliance with article L.225-235
      of the French Commercial Code on the report prepared
      by the Chairman of the Supervisory Board of Saft Groupe SA                  108
4.5   Main provisions of the Supervisory Board bylaws                             109
5      Comments on the 2012 financial year                                                113
5.1    Activity and consolidated results                                                  114
5.2    Earnings by division                                                               116
5.3    Other items of consolidated income                                                 118
5.4    Research and development                                                           120
5.5    Investments and fixed assets                                                       120
5.6    Cash flow and financing                                                            121
5.7    Group’s statement of financial position                                            122
5.8    Other key events in FY 2012                                                        122
5.9    Related-party transactions                                                         123
5.10   Changes in the scope of consolidation in 2012                                      123
5.11   Basis of preparation of the consolidated financial statements                      123
5.12   Events after the reporting period and 2013 outlook                                 124
5.13   Saft Groupe SA activity and results                                                124
5.14   Activity of Saft Groupe SA subsidiaries and controlled entities                    125

6      2012 consolidated financial statements                                             127
6.1    Consolidated statement of financial position                                       128
6.2    Consolidated income statement and consolidated statement
       of comprehensive income                                                            130
6.3    Consolidated statement of cash flows                                               132
6.4    Statement of changes in equity                                                     133
6.5    Notes to the consolidated financial statements                                     134
6.6    Statutory Auditors’ report on the consolidated financial statements                185

7      Parent company Certified Financial Statements                                      187
7.1    Balance sheet – Assets                                                             188
7.2    Balance sheet – Equity and Liabilities                                             188
7.3    Income statement                                                                   189
7.4    Notes to the parent company Financial Statements                                   190
7.5    Parent company – Financial summary for the last five years                         198
7.6    Statutory Auditors’ report on the financial statements
       for the year ended 31 December 2012                                                199

8      Information about the Company and its share capital                                201
8.1    General information about the Company                                              202
8.2    Group history                                                                      203
8.3    Group organisation chart                                                           204
8.4    Significant contracts and commitments                                              205
8.5    Main statutory provisions                                                          206
8.6    Capital and shareholding of Saft Groupe SA                                         210

9      Annual General Meeting                                                             213
9.1    Overview of key resolutions                                                        214
9.2    Statutory Auditors’ special report on regulated agreements
       and commitments with third parties                                                 215

10     Additional information                                                             219
10.1   Documents accessible to the public                                                 220
10.2   Officers responsible for the annual report                                         221
10.3   The Saft Groupe Auditors and related fees                                          222
10.4   Registration Document Cross-Reference table                                        223
10.5   Annual Financial Report Cross-Reference table                                      225
10.6   Management Report Cross-Reference table                                            226
10.7   Cross-Reference table for environmental, social and corporate social information   227



                                                                              SAFT - AnnuAl reporT 2012 / 1
                                SAfT
                                IN BRIEf
           Saft has long been the world’s leading * designer, developer
      and manufacturer of advanced technology batteries for industry.
              Its multi-technology battery systems meet the needs
             of a wide variety of customers worldwide: nickel-based
            and primary lithium batteries in industrial infrastructure,
      transportation, civil and military electronics; lithium-ion solutions
        in energy storage, telecoms, space and defence. Saft continues
         to develop new generations of batteries for new applications,
          helping customers develop innovative products and services.
              Saft’s greatest successes are those of its customers.

                                        * Management estimation.
                    The Saft Group mainly operates in niche markets whose small size means
                          they are not subject to specific analyses or external studies.




                       18
                    COUNTRIES
                                                                4,066   STAff
                 AROUND ThE WORlD                                     WORlDWIDE



                       15
                  MANUfACTURING
                                                                        9%
                                                               Of SAlES INVESTED
                  SITES WORlDWIDE                               IN RESEARCh AND
                                                              DEVElOpMENT IN 2012



                                             598m
                                              SAlES IN 2012


2 / SAFT - AnnuAl reporT 2012
              pORTfOlIO



  Our greatest
    successes
    are those
of our customers
  SUCCESS STORIES, CUSTOMER STORIES




                              SAFT - AnnuAl reporT 2012 / 3
ENERGY
STORAGE
Major player in renewable
energy storage
         Grid compatible – intensium® max is Saft’s ready-to-install
         containerised energy storage system designed for today’s electricity
         grids and the smart grids of tomorrow. Its efficient, long-life Li-ion technology
         provides megawatt-level energy storage. The system is scalable to suit a wide
         variety of applications, for example to smooth intermittent generation
         or reduce ramp rates.
Integrating renewable energy sources into the grid is advancing rapidly.
Saft is working with power utilities in their quest for effective solutions
     for the generation, transmission and distribution of electricity
              thanks to its li-ion energy storage solutions.




                “Installing Saft’s energy storage system on Gran Canaria
                is an ideal opportunity to evaluate the technical and economic
                viability of this innovative solution by making reserves
                of energy available in isolated locations, distribution
                substations, and even for energy arbitrage.”
                pablo Fontela martinez, Project Manager STORE, Endesa
TRANSpORTATION
Innovative solutions
for a changing world
          Hybrid/reGenerative – Saft has developed
          a new-generation compact, modular li-ion battery
          solution to meet the specific needs of the growing regenerative hybrid
          traction rail market. The modules can be installed on a variety of rolling
          stock and are designed to suit every power need. Operators using this
          solution can save up to 30% of their energy costs and reduce emissions.
Saft continuously designs and produces new generations of batteries responding
  to the rail industry’s challenges in terms of reliability, safety and performance.
         Its catalogue ranges from individual batteries to fully integrated,
            turnkey battery systems, for new and replacement projects.




                     SocHi – Saft nickel-based rail batteries have
                     been selected by Siemens to support emergency
                     backup and starting power applications onboard 38 electric
                     trains that will serve Russia’s Sochi Olympic Winter Games
                     in 2014. They can deliver exceptional performance
                     at temperatures as low as -40°C.
UTIlITY
METERING
high-level performance
for a market on the move
       lonG liFe – For reliable, cost-efficient and long-lasting
       meters, batteries with these same qualities are crucial.
       Saft primary lithium batteries are the ideal choice. They are safe, compact
       and reliable, with an exceptionally long life of over 20 years. Also, Saft’s
       experienced application engineers help customers face the challenges of
       a changing market environment as they adapt or upgrade their equipment.
       Utility metering continues to be a strong market for Saft as it moves in the direction
of the smarter metering to support the needs of the smarter electricity, gas and water grids being
 deployed. The market is expecting high reliability and over 20 years life for the power solutions
               and Saft has the technologies and track record to support these needs.




                        “The key point in our partnership with Saft is the overall technical
                        support. This enables an excellent understanding of our needs,
                        with the aim of finding the most suitable solution. The strength
                        of Saft is the consistency of support on all aspects: technical, logistics
                        and sales, with a constant concern for quality and reliability.”
                        Jean-François pollet, Global Category Manager Battery, Itron
TElE-
COMMUNICATIONS
Experience in support of
telecoms networks’ new needs
       HiGH cyclinG capability – the Saft evolion® li-ion module
       for the telecom industry offers a unique combination of float charging capability
       and high cycling performance. The Evolion® provides deep cycling capability, fast
       charging, and high energy density. It is maintenance-free and reliable over a wide
       range of operating temperatures. It is ideal for off-grid hybrid power systems, but
       can also act as a compact backup system for a wide variety of telecom installations.
    Saft supplies emergency batteries to telecommunications operators
for backup power in the event of a network fault. Its latest ranges of nickel
        and li-ion batteries are designed to operate for long periods
       without maintenance and, above all, in difficult environments.




                    “Our primary requirements were low weight and compact
                    dimensions, combined with fast charging, deep cycling
                    capability, long cycle life and reliability over a wide range
                    of operating temperatures. Saft has developed the Evolion®
                    battery to meet all these criteria, so it was the ideal choice.”
                    Francesco di noto, Ausonia Program Director
12 / S A F T - A n n u A l r e p o r T 2 0 1 2
   OVERVIEW
    2012
       MESSAGE fROM ThE ChAIRMAN p. 14
         INTERNATIONAl pRESENCE p. 16
               KEY EVENTS p. 18
           SERVING CUSTOMERS p. 20
                RESUlTS p. 22
ShAREhOlDER AND STOCK MARKET INfORMATION               p. 24
         CORpORATE GOVERNANCE p. 26




                                   S A F T - A n n u A l r e p o r T 2 0 1 2 / 13
                                                 OVERVIEW MESSAGE fROM ThE ChAIRMAN




                               JOhN SEARlE
                        ChAIRMAN Of ThE MANAGEMENT BOARD

          In 2012, Saft continued to build on its strategy      create a commercial subsidiary in Russia, with
          of lithium-ion business development and               the potential to build an assembly facility there
          deployment. As a result, we are on track with         when the market requires it. At the same time,
          our overall strategy to achieve accelerated           following a strategic review, we took the deci-
          sales growth of Li-ion solutions in multiple          sion in 2012 to sell SNB, the Small Nickel Bat-
          markets and multiple applications. On the             tery activity in Nersac, France. We have since
          other hand, our overall performance was a             received a firm offer from Fin’Active to acquire
          slightly disappointing year, with a small             this business and once the consultation pro-
          increase in sales and profitability. The global       cess is finalised, the activity and its entire
          slowdown and the European recession                   workforce will be transferred to its new owner.
          impacted many of our businesses, putting us
          a little behind our objectives in our traditional     In 2012, we continued to invest substantially in
          businesses.                                           research and development, especially our
                                                                Li-ion offer. Our R&D investment is key to our
          The year was not without its operational              growth and we are investing at a high level in
          challenges, either. The launching of the first        the products of the future.
          production line at our state-of-the-art manu-
          facturing facility in Jacksonville, Florida, led to   In energy storage systems, we have success-
          some non-recurring operating cost issues, but         fully penetrated the market and delivered on
          the first two lines are now commissioned and          a number of significant contracts. We are now
          will contribute to our sales in 2013. The third       a major player in this market. We also made
          production line will be operational at the end        the strategic decision to re-enter the vehicle
          of 2013 and the factory will be fully operational     market, targeting promising application areas
          for 2014.                                             such as hybrid and electric buses and trucks.

          Saft continues to build its strategy for nickel       We are in a process which will mark a step
          activities in emerging markets: we are opening        change in our business, leading to significant
          a new factory to build nickel-based batteries         growth. Such change requires investments
          in India, which will more than double produc-         that have a short-term impact on profitability,
          tion capacity for the fast-growing local stand-       but which will lead to long-term success – and
          by power and rail markets. We have decided to         position Saft as a winner in the years to come.




14 / S A F T - A n n u A l r e p o r T 2 0 1 2
  “WE ARE IN A pROCESS WhICh WIll
MARK A STEp ChANGE IN OUR BUSINESS.”
                                                    OVERVIEW INTERNATIONAl pRESENCE




          MEETING CUSTOMER NEEDS,
            WhEREVER ThEY ARE

Energy – defence – transportation – telecoms.
These are markets Saft serves. They are global.
So is Saft. Its international scope is built on
a long-standing, state-of-the-art manufacturing
base anchored in Europe and North America.
Its high-technology battery solutions make
an important contribution to major programmes,
be they in Europe, America, BRIC or elsewhere,
supported by a wide network of sales offices
guaranteeing responsiveness to local customer needs.




    Head office
    Specialty Battery Group production site
    high-performance primary and rechargeable lithium and silver
    batteries for the electronics, defence and space industries.
    Industrial Battery Group production site
    Rechargeable nickel and lithium-based batteries
    for demanding industrial applications.
    Saft sales network
    ASB (50% Saft, 50% EADS).




auStralia               czecH                       Great              netHerlandS   Sweden
 Sydney                 republic                    britain             Eindhoven      Oskarshamn
                         Prague                      Glasgow                          Växjö
brazil                     Raskovice                 harlow            norway
 São Paulo                                             South Shields    Osteraas     uSa
                        France                                                           Cockeysville
cHina                      Bagnolet                 india              ruSSian         Jacksonville
 hong Kong                Bordeaux                     Bangalore       Federation     North haven
 Shanghai                Bourges                      Delhi             Moscow        Port Washington
   Zhuhai                 Nersac                      Mumbai                           Valdese
                           Poitiers                                     SinGapore      Valdosta
cypruS                                              italy                             West Palm
 Limassol               Germany                       Milan            Spain          Beach
                          Büdingen                                      Madrid
                         Nuremberg




   16 / S A F T - A n n u A l r e p o r T 2 0 1 2
 30            15
SAlES
 OffICES
           MANUfACTURING
                SITES
                           S A F T - A n n u A l r e p o r T 2 0 1 2 / 17
                                                 OVERVIEW KEY EVENTS




                                 AN EVENTfUl
                                     2012
                   Many events took place for Saft in 2012, culminating in the prestigious
                     ferrari Innovation Award. New products with technology evolution
                  and new contracts punctuated the year, paving the way to future growth.




          JANUARY
          MRX BAtteRIeS foR fInlAnd’S
          HIGH-Speed pendolIno tRAInS
          In trial installations, Saft’s nickel-based MRX
          specialised rail batteries delivered high performance,
          outstanding reliability and low maintenance
          requirements on Finland’s prestigious high-speed
          Pendolino trains. As a result, the VR Group, Finland’s
          state-owned rail network operator, decided to purchase
          an increased number of MRX onboard batteries – which
          supply backup power for critical safety and passenger
          comfort services such as emergency lighting,
          communications, door operation and heating and
          ventilation.
                                                                   fEBRUARY
                                                                   JACKSonVIlle fACtoRY delIVeRS
                                                                   fIRSt IntenSIUM® MAX 20 ContAIneR
                                                                   Saft shipped its first Intensium® Max 20 container from
                                                                   its new Jacksonville, Florida, facility – the world’s most
                                                                   advanced automated lithium-ion battery factory. The
                                                                   container is composed of several thousand large Li-ion
                                                                   cells and was fully manufactured at Jacksonville.



                                                                   enHAnCed e6t lI-Ion BAtteRY
                                                                   SYSteM delIVeRed to US MARIne CoRpS
                                                                   And US ARMY
                                                                   Saft delivered its new enhanced e6T lithium-ion battery
                                                                   system to the US Marine Corps and the US Army. The
                                                                   lightweight batteries will demonstrate the performance
                                                                   of Li-ion batteries as compared to lead acid batteries
                                                                   aboard military ground vehicles.




18 / S A F T - A n n u A l r e p o r T 2 0 1 2
                                                         JUNE
                                                         SAft pRoVIdeS SMARt BAtteRY StoRAGe
                                                         foR SCHÜCo’S IntellIGent SolAR
                                                         eneRGY MAnAGeMent SolUtIon
                                                         Saft is providing Li-ion smart storage solutions
                                                         for Schüco's innovative Energy Manager in-building PV
                                                         energy storage system. They offer extremely efficient
                                                         and flexible energy storage all year round to support
                                                         the highly dynamic charge and discharge cycling
                                                         profiles found in renewable applications, with a 20-year
                                                         service life.



SAft eVolIon® lItHIUM-Ion BAtteRIeS                      NOVEMBER
SeleCted BY AUSonIA foR off-GRId                         5-YeAR ContRACt foR tHe defenSe
BtS poWeR SUpplY                                         loGIStICS AGenCY
Saft Evolion® maintenance-free telecom batteries         Saft is awarded a major five year contract
have been selected to provide effective energy storage   by the US Defense Logistics Agency (DLA) to supply
for Ausonia’s innovative Hybrid Integrated Module        the US Army, Navy, Air Force and Marine Corps
(HIM), designed to provide reliable and cost-effective   with BA 5590 lithium sulfur dioxide (Li-SO2) batteries.
power for off-grid telecom Base Transceiver Station      The BA 5590 batteries provide a long lasting,
(BTS) applications.                                      lightweight and reliable power source for the Army’s
                                                         critical missions and are to be used in different
                                                         portable applications such as military radios
ApRIl                                                    and surveillance equipment.
SAft delIVeRS AIRCRAft BAtteRIeS
foR BoeInG’S neW 747-8 VeRY
lARGe AIRCRAft                                           DECEMBER
Saft’s ULM® rechargeable nickel batteries provide        BAtteRY BACKUp SYSteM foR VIetnAM’S
the 747-8 with emergency backup power, as well           VInH tAn 2 CoAl-fIRed poWeR plAnt
as starting power for the auxiliary power unit           Saft is to supply 14 nickel-cadmium battery
and electrical bus support. Two Saft batteries           backup systems comprising hundreds of SBM blocks
are fitted onto each 747-8.                              for Vietnam’s Vinh Tan 2 coal-fired power plant.
                                                         The battery systems will provide up to 3 hours of
                                                         autonomous operation for critical safety and control
                                                         functions in the event of a power supply interruption.




MAY
SAft to SUpplY lI-Ion BAtteRIeS
foR tHe fRenCH ARMY’S felIn SYSteMS
Saft has been selected to equip the French
modernisation systems. Over 40,000 Li-ion battery
systems will power the FELIN infrared night vision
equipment, the infrared binoculars, the radio systems,
man-machine interface equipment, the GPS and
                                                                                    Scuderia Ferrari
the osteophonic systems.
                                                                                  RECOGNISES SAFT WITh
                                                                                 2012 INNOVATION AWARD,
                                                                                     ENhANCING SAFT’S
                                                                                  OVERALL CONTRIBuTION
                                                                                  TO FERRARI’S F1 TEAM.




                                                                                      S A F T - A n n u A l r e p o r T 2 0 1 2 / 19
                                                    OVERVIEW OUR TEAMS




SERVING CUSTOMERS
Saft’s 4,066 employees across 18 countries are committed to serving
and marketing customers worldwide.

The company’s sales and marketing departments are deployed
in 30 sales offices located on five continents. Each Saft division
has its own sales team, though if the customer situation demands,
one division can work with the other in certain markets.
The Industrial Battery Group sales and marketing teams comprise 129 people.
They are organised by geographic zone, whereas the Specialty Battery
Group’s sales teams of 75 people are structured by brand. In certain
markets or regions, the sales teams are complemented by agents or
distributors with whom the company has been working for several years.

Thirty sales offices on five continents
Most of the sales and marketing teams are based in Europe
and the USA. However, their numbers in emerging countries,
particularly throughout Asia and Brazil, are constantly on the rise.
On most of the advanced-technology battery markets targeted
by Saft, the Saft® brand is a key criterion in the customers’ purchase
decisions. However, Saft also markets products under other well-known
brands: Alcad®, Tadiran®, Nife® and Ferak®. This strategy enables
the company to leverage its position on certain specialised markets
throughout the world and meet the diverse needs of its customers.




   20 / S A F T - A n n u A l r e p o r T 2 0 1 2
S A F T - A n n u A l r e p o r T 2 0 1 2 / 21
                                                 OVERVIEW RESUlTS




                                                 RESUlTS
                                                  2012
                           SALES*                     2012 CONSOLIDATED SALES BY MARKET SEGMENT
                        (in e million)                                              (in e million)

                                                              83.8                                                  187.4
                      0
                    8.


                                 4




                                                             Military
                               7.




                                                                                                                Stationary
                  59




                                          9
                            57


                                        9.




                                                            activities                                         backup power
                                     52




                                                                                                                and energy
                                                                                                                  storage
                                                                                                                 systems




                   2012      2011 2010


                       * Excluding SNBs                 193.7
                    (Small Nickel Batteries)             Civil                                                  133.1
                      sold by the Group.               activities                                            Transportation



                                                             CONSOLIDATED SALES BY ACTIVITY
                                                                                    (in e million)
                                                                                                         5
                                                                                                       0.


                                                                                                               .9
                                                                                                     32
                                                               5




                                                                                                                8
                                                                         1




                                                                                                                      9
                                                             7.




                                                                                                             29
                                                                               0
                                                                      1.




                                                                                                                     9.
                                                           27




                                                                               0.
                                                                    27




                                                                                                                    26
                                                                             26




                                                           2012     2011     2010                2012        2011   2010




                                                                Specialty                               Industrial
                                                              Battery Group                           Battery Group




22 / S A F T - A n n u A l r e p o r T 2 0 1 2
        EBITDA                     EBIT
      (in e million)         (in e million)




              7
             8.


                       9
        1



                       3.
            10
      2.



                    10




                                     .7
    10




                                              .7
                                    80

                                           75
                              .4
                            69
    2012 2011       2010    2012    2011   2010




  NET INCOME FROM                NET
CONTINuING ACTIVITIES          INCOME
      (in e million)         (in e million)



                                     .0
                                    75
             .4
            51


                       .7
                    46
      .6
    41




                                              .6
                              .3



                                           36
                            34




    2012 2011       2010    2012    2011   2010




   ShAREhOLDER’S                   NET
      EQuITY                       DEBT
      (in e million)         (in e million)
                                               4
                                             5.
                6




                                           13
        7

             6.
      5.
            40
    39




                                8
                       2
                      1.




                              0.
                    34




                            10


                                     .6
                                    69




    2012    2011    2010    2012    2011   2010




                                     S A F T - A n n u A l r e p o r T 2 0 1 2 / 23
                                                 OVERVIEW fINANCIAl INfORMATION




                       ShAREhOlDER
                          AND STOCK MARKET
                            INfORMATION
                                Saft's share price decreased by almost 19% in 2012,
                                underperforming the main paris stock market indices.
                              however, it rebounded by a strong 12.6% in January 2013.


                     IDENTIFICATION                                       DIVIDEND FOR ThE YEAR
                                                                                          (in euros)
                     listing: Euronext Paris
                                                                 2011                                               1.72
                Market: Eurolist Compartiment B
                Indexes: SBF 120, CAC Mid 60,                    2010                                               0.70
                   CAC IT, CAC Industrial Index                  2009                                               0.68
                  ISIn code: FR 0010208165
               Eligible security to French equity                           Saft will propose an ordinary dividend
              saving plan (PEA) and to deferred                              of e0.75 per share to shareholders
         settlement service (SRD) for long positions.                   at their annual General Meeting in May 2013.



         FINANCIAL CALENDAR 2013                                   DISTRIBuTION OF ThE CAPITAL*

                        Q1 turnover                                             Institutional shareholders
                       April 26, 2013                                 Institutional shareholders represent 80.60%
                                                                    of Saft’s capital. The split by region is as follows:
            Shareholders general annual meeting
                        May 7, 2013
             Q2 turnover and half year earnings                   28.01%                                             21.43%
                                                                  France                                               North
                       July 25, 2013
                                                                                                                      America
                        Q3 turnover
                     October 25, 2013




               MAIN ShAREhOLDERS                                                                                         0.75%
                                                                                                                         Rest of
                                                                                                                        the world
                Ameriprise Financial Inc.: 6.19%
                      Allianz SE: 5.22%
               Schroders Investment Mgt: 5.02%
                Governance for Owners: 5.02%                       16.93%                                        13.48%
                  Carmignac Gestion: 4.46%
                                                                    united                                         Other
                                                                   Kingdom                                        Europe

                                                                                 Individual shareholders
                                                                              18.98% including management
                                                                               and employees of the Group.

                                                                                  treasury stock: 0.42%


                                                                          * At January 31, 2013, based on an analysis
                                                                         of shareholdings in December 2012, adjusted
                                                                      where relevant to take into account major holding
                                                                     notifications received after the study was conducted.
24 / S A F T - A n n u A l r e p o r T 2 0 1 2
                                                STOCK MARKET INFORMATION

Share price (in euros)                                                                         2012                 2011                2010
highest                                                                                      24.900               31.600              34.900
Lowest                                                                                       16.335               18.995              23.005
Closing price for the year                                                                   17.700               21.850              27.550
Change in the year                                                                         (18.99)%             (20.69)%           (18.39)%
Change in the CAC 40 index during the year                                                   15.23%             (16.95)%             (3.32)%
Change in the SBF 120 index during the year                                                  16.50%             (16.21)%               0.06%
Change in the CAC Mid 60 index during the year                                               23.00%             (21.58)%             18.70%
Stock market capitalisation at December 31 (in million euros)                                      446                550                   692
Annual transaction volume (millions of shares)                                                 12.34                21.31               19.70
Number of shares comprising the share capital at December 31                           25,174,845            25,174,845          25,125,840
Annual share capital turnover                                                                 x 0.49               x 0.85              x 0.78




                                                             ShARE PRICE
                                                 from January 1, 2012 to January 31, 2013
                                                                                                                   Share volume
        (in euros)                                                                                       (in thousands of shares)
   35                                                                                                                                        300



                                                                                                                                             250
   30

                                                                                                                                             200



   25                                                                                                                                        150



                                                                                                                                             100

   20
                                                                                                                                              50



   15                                                                                                                                          0

        January    February   March     April      May       June      July   August   September   October   November December    January
         2012                                                                                                           2012       2013



  Saft            SBF 120      CAC 40           CAC Mid 60          Volume




                                            This label recognizes the most transparent Registration Documents
                                            according to the criteria of the Annual Transparency Ranking.




                                                                                                              S A F T - A n n u A l r e p o r T 2 0 1 2 / 25
                       OVERVIEW CORpORATE GOVERNANCE




MANAGEMENT BOARD
    tHoMAS              JoHn           JIll             BRUno           XAVIeR
     AlCIde            SeARle        ledGeR             dAtHIS         delACRoIX
     Director &        Chairman       Director       Chief Financial      Director
 General Manager                     Corporate           Officer         & General
 of SBG, President                Communications                       Manager of IBG
of Saft America Inc.               & Institutional
                                     Relations
                  CORpORATE GOVERNANCE
         The Saft Group has governance bodies whose operating principles are transparency and dialogue and
       which is guided by the applicable recommendations and stipulations issued in recent years in the context
      of the AFEP-MEDEF consolidated code of corporate governance for listed companies, issued in April 2010.
           The Saft management team is driven by a long-term vision. It is recognised for its stability and its
                                              international experience.




                                      Management Board
       The Management Board is appointed by the Supervisory Board. It has the most extensive powers to act
      under any circumstances in the Company’s name. It decides the strategy and priorities for Saft’s activities.



                                        Supervisory Board
The five members of the Supervisory Board are appointed by the Shareholder’s General Meeting for a three-year term.
          The Supervisory Board exercises permanent control over management of the Board of Directors.

  YAnn                     JeAn-MARC                 CHARlotte                    BRUno                   GHISlAIn
dUCHeSne                   dAIllAnCe                  GARnIeR-                    AnGleS                  leSCUYeR
  Chairman                Vice-Chairman               peUGeot

                                               Audit Committee
                       Jean-Marc daillance Chairman / Bruno Angles / Yann duchesne

                          Remuneration and Appointments Committee
                   Yann duchesne Chairman / Bruno Angles / Charlotte Garnier-peugeot


                                Strategy and Technology Committee
                     Ghislain lescuyer Chairman / Yann duchesne / Jean-Marc daillance



                                Management Committee
                       A Management Committee also exists within the Group, which serves
          as a forum for discussing and for implementing the Group’s strategy. In addition to the members
                        of the Management Board, the Management Committee comprises:

  fRAnçoIS                     IGAl                   fRAnCK                    KAMen                        fRédéRIC
  BoUCHon                     CARMI                   CeCCHI                    neCHeV                        tHIelen
    Director            General Manager                Director                    Chief                     Purchasing
 of the Energy             of Tadiran                   Li-ion                  Technology                    Director
 Storage Unit            Batteries Ltd.               Operations                  Officer




                                                                                        S A F T - A n n u A l r e p o r T 2 0 1 2 / 27
28 / S A F T - A n n u A l r e p o r T 2 0 1 2
ACTIVITIES
    Saft’s business is divided into two divisions:




INDUSTRIAl BATTERY GROUp p. 30
   The Industrial Battery Group (IBG) manufactures
         rechargeable batteries for transport,
    stationary backup power and energy storage.




SpECIAlTY BATTERY GROUp p. 36
          The Specialty Battery Group (SBG)
      builds primary and rechargeable batteries
            for civil and military activities.




                                           S A F T - A n n u A l r e p o r T 2 0 1 2 / 29
                                                 ACTIVITIES INDUSTRIAl BATTERY GROUp




              INDUSTRIAl
                BATTERY
                 GROUp
            Nickel-based batteries represent the traditional expertise
     of Saft’s Industrial Battery Group (IBG). On the foundations of this long
     heritage, the Group has successfully developed lithium-ion technology
       in order to meet the ever diversified requirements of its customers,
                whose applications benefit from the smaller, lighter,
                longer-life and versatile batteries that Li-ion offers.
            IBG is now going that extra mile in satisfying customer needs
                       by offering not only systems integration,
             for example in energy storage systems, but also full turnkey
          solutions that include services such as installation, commissioning
                   and training across all its markets and segments.




         320.5m 53.6% 10.6%
                SAlES IN 2012 *                               Of GROUp SAlES       Of EBITDA MARGIN
 * EXClUDING SAlES Of SMAll NICKEl BATTERIES (SNB)



30 / S A F T - A n n u A l r e p o r T 2 0 1 2
                                                                                           SAFT IS
                                                                                    ThE LEADING SuPPLIER
                                                                                      OF BATTERIES FOR
                                                                                    ThE AVIATION MARKET,
                                                                                       WITh BATTERIES
                                                                                       ONBOARD 2/3 OF
                                                                                  ThE WORLD’S FLEET OF CIVIL
                                                                                   AND MILITARY AIRCRAFT.




                                              MAIN ApplICATIONS
    Aircraft safety and starting systems, high-speed trains, urban transport networks, backup power systems
for oil and gas plants and industrial facilities, power generation and distribution systems, storage for renewable
         energy systems, telecommunications networks, motive power, trucks, buses, scooters and sports cars.
                                                 ACTIVITIES INDUSTRIAl BATTERY GROUp




           Saft’s Industrial Battery Group had an eventful 2012.              teries will also equip the tram-train fleet in Karlsruhe,
           During the year Jacksonville was ramping up production             Germany, and the Pendolino high-speed trains in Finland.
           and shipping new products, while the second manufac-               In addition, Saft will supply backup batteries for the
           turing line was commissioned. In addition, the new,                Ankara (Turkey) metro network.
           state-of-the-art factory in India was completed, doubling
           manufacturing capacity in a market that is growing                 Aviation
           rapidly and offers substantial potential for the coming            Saft is the world’s leading supplier of battery systems for
           years. It was also decided to open a subsidiary in Russia,         the aeronautics industry, with its batteries onboard two
           also a very promising region.                                      thirds of the worldwide fleet of civil and military aircraft.

           On the product side, the new Super-Phosphate™                      In 2012, the sales in this sector have grown for the year,
           battery is now on the market, as is the high-temperature/          with a small drop in the civil aviation replacement market
           low-temperature nickel based SRA cell range for railway            compensated for by growth in military aviation. Especially,
           applications.                                                      Saft continues to supply two advanced Li-ion battery types
                                                                              for Lockheed Martin's JSF strategic warfighter under Low
           These and other excellent successes enabled IBG                    Rate Initial Production contracts. Saft's advanced battery
           to increase the profitability of its traditional activities in a   technology provides the high power, low weight and
           difficult economic climate whilst dealing with the opera-          minimum volume to ensure mission readiness of this US
           tional challenges of the Jacksonville ramp-up.                     air superiority fighter. Deliveries accelerated in 2012
                                                                              significantly over the previous year and are expected to
                                                                              increase further in the coming years.
           TRANSpORTATION
           Rail transport                                                     One of the highlights of the year was also the beginning
           Saft supplies railway and mass transit operators as well           of deliveries to Boeing for onboard backup power to
           as train manufacturers primarily with nickel-based                 support the new 747-8 very large aircraft.
           batteries for backup power for communication, lighting,
           air-conditioning and critical safety applications such
           as emergency braking and for door opening systems.                 ENERGY STORAGE SYSTEMS
                                                                              Energy Storage Systems (ESS) began to have major suc-
           These were an increasing number of rail projects in 2012,          cesses, thanks to a number of orders and deliveries in
           particularly in China and emerging countries. In addition          2012 to some major customers – who need a reliable
           to its launch of the SRA cell range, an enhanced nickel-           supplier with excellent technical know-how. Saft as
           based solution for extreme temperatures, IBG also                  a pioneer of Li-ion technology with its versatility of appli-
           brought out its 250V modular onboard Li-ion battery for            cation is focusing on two principal ESS market segments:
           hybrid/regenerative traction resulting in energy efficiency        the integration of renewable energy sources (RES) into
           and reduced environmental impact. It has already been              the grid, which is the most vibrant ESS segment today
           awarded initial contracts in this area and should contrib-         and small and residential ESS.
           ute to Saft’s growth in the rail segment in the future.
                                                                              RES integration is fast evolving, especially on islands
           IBG received a number of rail transport contracts, includ-         where intermittency of RES electricity generation
           ing the supply of MRX battery systems for the Electrostar          is more and more critical, and it is also the case in the US
           trainsets for Southern Railways in the south of England.           and in Canada. In 2012 Saft has upgraded its solution for
           These will be delivered as turnkey, installation-ready             this market – the 1 MWh Intensium® Max 20 Li-ion battery
           packages, complete with control equipment and inter-               system, built around modules/cabinets, assembled in a
           faces to communicate with the train systems. MRX bat-              20-foot container with built-in safety system and power >




                       133.1m
                    TRANSpORTATION SAlES IN 2012
                                                                                           187.4m
                                                                                        STATIONARY BACKUp pOWER
                                                                                       AND ENERGY STORAGE SYSTEMS
32 / S A F T - A n n u A l r e p o r T 2 0 1 2                                                SAlES IN 2012
                                                 SAFT MSX BATTERIES
                                             hELP KARLSRuhE (GERMANY)
                                             TRAM-TRAIN TO RuN ON-TIME.
                                               ThE ONBOARD BATTERIES
                                                 PROVIDE EMERGENCY
                                                   BACKuP POWER
                                                  FOR ThE VEhICLE'S
                                                  CRITICAL SYSTEMS.




IN 2012, SAfT AlSO lAUNChED ITS fIRST ONBOARD lI-ION BATTERY
     SYSTEM TO CApTURE AND STORE TRAIN BRAKING ENERGY.

                                           S A F T - A n n u A l r e p o r T 2 0 1 2 / 33
                                                 ACTIVITIES INDUSTRIAl BATTERY GROUp




          > electronics – and booked many contracts for such              telecommunications networks
          containerized solutions. For example, it has provided           The role of batteries for telecommunications network
          energy storage for the STORE project on the Canary              backup is to provide power in case of grid failure.
          Islands. The Intensium® Max 20 containerised systems
          for this contract were manufactured at Saft’s assembly          Sales in this segment continue to grow in 2012, both in
          facility in Bordeaux, France.                                   nickel-based and Li-ion technologies.

          The same range, this time manufactured at Saft’s new            In addition to penetrating the wireless telecom market
          plant in Jacksonville, Florida, has been delivered              in North America, Saft has registered a number of sales
          to support the “Hawaii Renewable Energy Storage                 for its Evolion® Li-ion batteries, launched in 2011.
          System” project. Saft is also participating in another, very    Of particular interest is its application in hybrid diesel
          innovative project led by the South-Eastern Pennsylvania        generators for off-grid Base Transceiver Station appli-
          Transportation Authority (SEPTA), whereby the braking           cations. This concept integrates a variable speed diesel
          energy of trains is captured in a fully integrated, contain-    DC generator with the Evolion® battery; the generator
          erised Intensium® Max 20 Li-ion battery storage system          simultaneously charges the battery and powers the site
          and injected into the regional electric grid.                   load. When the battery has been fully charged the
                                                                          generator shuts down and the battery takes over as the
          On the residential side, Saft is focusing initially on          primary source of power. This approach offers major
          the German market, working with a network of installers         savings in fuel consumption and also reduces CO2
          and distributors to deliver Li-ion technology. For exam-        emissions. This type of application is likely to expand in
          ple, Saft is providing Li-ion smart storage solutions           the coming years.
          for Schüco's Energy Manager in-building PV energy stor-
          age systems. Saft is also co-operating with Nedap
          on photovoltaic energy storage. Success in the German           COMpETITIVE ENVIRONMENT
          market will act as a springboard for penetration into           For its nickel battery activity, Saft IBG is the leader on
          other countries.                                                almost all its markets and faces competition mainly
                                                                          coming from Europe and India with smaller production
          IBG aims to continue its efforts in energy storage systems      capacity than Saft. For Li-ion, the range of competitors
          to expand the range and size of its offerings to fit specific   is wider and comes mainly from US and Asia.
          customer needs, develop integration skills and offer            The Saft Group's financial strength gives it the power
          turnkey solutions including consulting and services.            to constantly develop new products and be present
                                                                          worldwide to keep its leadership position.
                                                                          With its deep knowledge of high value-added markets
          STATIONARY BACKUp pOWER                                         for nickel based activities, exciting new Li-ion opportuni-
          Industrial standby                                              ties, two new world class factories and its extensive
          The IBG division develops and manufactures nickel-              sales network, Saft has a unique multi technology offer
          based batteries to guarantee backup power. Markets              of high performance and competitive products.
          include oil and gas, power generation and distribution,
          as well as railway signalling systems.

          2012 saw good growth in this segment in emerging
          countries. The nickel-based maintenance-free Uptimax,
          introduced in 2011, is now shipping to customers, and the
          rack-mounted Li-ion Intensium® Flex battery system is
          being developed for backup power supply for data centres.




34 / S A F T - A n n u A l r e p o r T 2 0 1 2
                                             ThE OIL AND GAS INDuSTRY
                                                REPRESENTS AROuND
                                           A ThIRD OF SAFT’S INDuSTRIAL
                                           STAND-BY SALES. ThIS SECTOR
                                                CONTINuED TO GROW
                                               IN 2012, PARTICuLARLY
                                                 IN ThE MIDDLE-EAST.




IN CERTAIN OIl AND GAS ApplICATIONS, SAfT BATTERIES OpERATE
   UNDER SOME Of ThE EARTh’S MOST EXTREME CONDITIONS.

                                          S A F T - A n n u A l r e p o r T 2 0 1 2 / 35
                                                 ACTIVITIES SpECIAlTY BATTERY GROUp




                      SpECIAlTY
                      BATTERY
                       GROUp
                     Saft’s Specialty Battery Group (SBG)
            is acknowledged as the world’s leader in the design,
        development and manufacture of high-performance primary
               lithium and lithium-ion (Li-ion). Battery systems
   meeting customer needs in the civil and military electronics industry,
defence and space industries. Saft is the leading provider of Li-ion batteries
      for space and defence and also supplies silver-based batteries
     for conventional defence applications such as electric torpedoes.
                  By delivering state-of-the-art technology, reliability,
                 long life and outstanding performance, SBG’s solutions
            have a significant impact on the effective, long-term operation
           of its customers’ products. SBG’s success, therefore, is the result
                     of a strong relationship with customers, based
                              on quality, support and value.




         277.5m 46.4% 25.4%
              SAlES IN 2012                                   Of GROUp SAlES          Of EBITDA MARGIN


36 / S A F T - A n n u A l r e p o r T 2 0 1 2
                                                                                SAFT hAS OVER
                                                                             40 YEARS’ EXPERIENCE
                                                                         IN ThE DESIGN, DEVELOPMENT
                                                                              AND MANuFACTuRE
                                                                        OF ONBOARD BATTERY SYSTEMS
                                                                       FOR SATELLITES AND LAuNChERS.




                                        MAIN ApplICATIONS
Utility meters, electronic toll collection, oil and gas exploration, military communications systems,
     satellites, torpedoes, space launchers, military hybrid vehicles, small submarines, marine,
       missiles, night-vision goggles, GpS systems, medical equipment, asset tracking, sonobuoys.
                                                 ACTIVITIES SpECIAlTY BATTERY GROUp




          The volatile economic situation made 2012 a challenging           In the oil and gas industry, Saft batteries support vital
          year for the Specialty Battery Group. However, the divi-          systems in onshore and offshore production in oil drilling
          sion was successful in managing its profitability in a con-       and well completion applications, as well as oil and gas
          text of marginal sales decline at constant rates. Despite         exploration and pipeline inspection. They are used in a
          the overall economic climate, SBG made a number of                variety of applications where their versatility provides a
          important investments during the year, including the              combination of reliability, resistance to harsh environ-
          launch of the TLM high power, small format, primary               mental conditions, long life span and minimum mainte-
          lithium technology targeting medical, and telematics,             nance needs. In some applications, such as measurement
          naval product development, expanded test facilities for           while drilling (MWD), Saft lithium batteries perform in
          space-related solutions, as well as longer-term work on           some of the most severe environments, where tempera-
          developing the next-generation space cell.                        tures can exceed +100°C, pressures are extreme and
          Among the highlights of 2012 for SBG were a solid                 vibration and shock loadings are severe. Development
          performance in the metering market, a record performance          focus will be on very high temperature products, which
          in the oil and gas exploration sector, with batteries for tools   should contribute to further growth in this sector in the
          needing to withstand high temperature. Also of special note       coming years.
          is the first order in the promising civil marine segment.         2012 was a record year for battery sales to the oil and gas
                                                                            industry, thanks to advanced electro-chemistry efforts and
                                                                            continued improvement of the Saft Li-ion offering, as well
          CIVIl ACTIVITIES                                                  as emphasis on new customers, markets and applications.
          Civil electronics                                                 In 2012, Saft worked on further improving its positioning
          With its two major brands, Saft® and Tadiran®, the Saft           in other existing and emerging markets in the civil elec-
          Group in 2012 continues to be the world’s leading supplier        tronics field. Saft is developing new Li-ion products for
          of primary lithium technologies for the main targeted             the workstation on wheels medical market with a product
          market segments. With their high performance, long life,          launch in March of 2013. Saft is also well positioned for
          reduced weight and high reliability, lithium-based batter-        the e-call automotive systems and working on further
          ies are used to power a wide variety of key applications.         strengthening its position in the emerging M2M and wire-
                                                                            less sensor markets.
          The civil electronics sector was one of the key businesses
          for SBG. Saft maintained its focus on delivering products         Space
          that meet its customers’ needs. For example, Saft has             Saft is the world’s leading company for the design, devel-
          launched its rapid response product range in its Tadiran®         opment and manufacture of Li-ion batteries for satellites
          brand which minimises any voltage drop at the beginning           used in communications, scientific and defence applica-
          of discharge after storage, making it a highly competitive        tions and is continually breaking new ground in this area.
          solution with improved reliability for long life applications.    Satellites represent the major share of Saft’s space activ-
          Saft’s metering activity again grew healthily in 2012. Saft       ity. However, the company also equips satellite launchers,
          is engaged with most major meter manufacturers, who               where it has pioneered solutions based on lithium-ion
          appreciate the high reliability of the Saft Group’s batter-       technology combining lighter weight with improved ther-
          ies. The major growth in smart metering has been in               mal management Saft remains the only manufacturer
          North America, in the last few years, where Saft is clearly       with a complete range of battery technologies for the
          the market leader. The next wave is expected in Europe,           space market.
          where major programmes have been initiated. The smart
          electricity meter market, especially in China, has matured        In 2012, Saft won a large number of satellite orders and
          but saw a decrease in volumes, mainly due to an delay in          reached the milestone of more than 1 MWh of Li-ion batteries
          installing meters in the field in 2012. The gas and subse-        in space and more than 85 satellites launched since 2002.
          quently water meter segments are growing in China and             In 2012 Saft's efforts resulted in increase breadth of sales
          these segments will be a target for future focus for Saft.        in Asia and in South America. These new customers are >




                       193.7m
                     CIVIl ACTIVITIES SAlES IN 2012
                                                                                           83.8m
                                                                                  MIlITARY ACTIVITIES SAlES IN 2012

38 / S A F T - A n n u A l r e p o r T 2 0 1 2
        SAFT BATTERIES
CONSTITuTE A MISSION-CRITICAL
        POWER SOuRCE
  FOR TELECOMS SATELLITES,
PARTICuLARLY IN ThE 2 ECLIPSE
        PERIODS A YEAR
   IN GEOSTATIONARY ORBIT.




           IN 2012, SAfT pASSED ThE MIlESTONE Of 1MWh
                    Of lI-ION BATTERIES IN SpACE.

                                            S A F T - A n n u A l r e p o r T 2 0 1 2 / 39
                                                 ACTIVITIES SpECIAlTY BATTERY GROUp




           > expected to continue to grow and make Saft’s portfolio       The Group also delivered its new enhanced e6T Li-ion
           stronger through diversified customer base. Continued          battery system, for engine starting and silent watch func-
           success in Europe via the major suppliers, such as             tions, to the US Marine Corps and the US Army, the first
           Astrium, Thales Alenia Space and others maintains Saft’s       e6T battery system to be delivered to both branches of
           leadership position in geostationary satellite batteries.      the US military. The order for the Marine Corps was
           Saft's successful efforts in Low Earth Orbit satellite         placed in conjunction with its Improved Battery System
           batteries in the 2011 are continuing in spite of stiffer       (IBS) programme, which aims to demonstrate advanced
           competition from small suppliers in the market.                technologies to improve existing platforms.
           Saft was awarded a contract to provide Li-ion batteries        Saft has also been selected to equip the new French
           for the first two R-series Geostationary Operational Envi-     Soldier of the Future systems with Li-ion battery systems
           ronmental Satellites (GOES-R and GOES-S) for NASA and          to power infrared night vision equipment, infrared binocu-
           NOAA (National Oceanic and Atmospheric Administra-             lars, radio systems, GPS and the osteophonic systems.
           tion). Saft will supply its high-energy Li-ion batteries,      Another Saft success in the military sector is the 5-year
           which meet the unique capacity and temperature require-        contract from the US Defense Logistics Agency (DLA) to
           ments for the GOES-R satellite programme. Qualified to         supply the US Army, Navy, Air Force and Marine Corps with
           endure the rigours of long life operation in space, the        BA5590 lithium sulphur dioxide (Li-SO2) batteries.
           batteries are capable of providing power for the satellite’s
           critical functions throughout its 15-year life span. This is
           Saft’s largest ever satellite contract to date.                COMpETITIVE ENVIRONMENT
           At the end of the year, Saft was awarded a contract from       In primary lithium products Saft offers its customers a wide
           Boeing to build Li-ion battery packs for four new 702SP        portfolio of technologies. The Saft Group has a leading posi-
           communications satellites. Saft will deliver multiple bat-     tion in its key markets and faces competition mainly from
           teries for each satellite from its Cockeysville, MD factory.   Asian companies offering a significantly smaller choice of
           With this new order Saft is the clear market leader for        technologies with more limited performance. Saft is in a
           batteries for the GEO satellite market.                        unique position in the targeted markets with it’s very strong
           To secure Saft’s postion in the space market we have           technology portfolio.
           launched programs targeting both mid- and long-term            In rechargeable Li-ion, Saft SBG mainly addresses techni-
           requirements for space batteries.                              cally-driven niche markets, offering customers complete
                                                                          in-house battery solutions. Competition varies depending
                                                                          on the market and is based in the US, Europe and Asia. In
           MIlITARY ACTIVITIES                                            many cases, the competition cannot offer a complete in-
           Saft is a leading designer, developer and manufacturer         house solution, but integrates cells from different cell man-
           of high-performance lithium solutions for military applica-    ufacturers in their solutions. Saft SBG can provide a
           tions. These batteries power equipment ranging from            complete one-stop solution for the key markets we address,
           communications systems, night-vision goggles to thermal-       creating a strong position for Saft SBG in the marketplace.
           imaging cameras, missile launchers and military vehicles.

           Despite a sharp reduction in defence spending Saft’s           ASB GROUp
           sales were only slightly below 2011 levels and Saft main-      Saft holds a 50% share in this thermal battery specialist
           tained its leadership position thanks to a number of           company in a joint venture with the French defence and
           important orders. For example, its advanced Li-ion             aerospace group, EADS. The ASB Group manufactures
           energy storage system will support the technology devel-       thermal batteries for tactical missiles and smart weap-
           opment phase of the U.S. Army’s Ground Combat Vehicle          ons. It has two subsidiaries: MSB in Scotland and ATB in
           (GCV) programme. Comprised of ultra-high-power Li-ion          the United States.
           cells, the Li-ion energy storage system will support the       2012 was a year of lower sales and profitability for ASB,
           vehicle’s hybrid electric drive system.                        particularly in the United States and United Kingdom.




                                                                                               85
                                                                                SATEllITES lAUNChED WITh lI-ION
                                                                                     BATTERIES SINCE 2002
40 / S A F T - A n n u A l r e p o r T 2 0 1 2
IN 2012, SAFT uNDERPINNED
  ITS LEADERShIP POSITION
      FOR hIGh-QuALITY,
     hIGh-PERFORMANCE
     AND COST-EFFICIENT
     LIThIuM SOLuTIONS
FOR MILITARY APPLICATIONS.




  SAfT WON A fIVE-YEAR CONTRACT fROM ThE US DEfENSE
    lOGISTICS AGENCY fOR lIThIUM pRIMARY BATTERIES.

                                      S A F T - A n n u A l r e p o r T 2 0 1 2 / 41
42 / S A F T - A n n u A l r e p o r T 2 0 1 2
INNOVATION &
COMMITMENTS
     RESEARCh & DEVElOpMENT p. 44
     SUSTAINABlE DEVElOpMENT p. 48
    Innovation is key at Saft and enables the Group to maintain
                      its technological leadership.


The Group sets the highest sustainability standards in the industry,
         continually improving its environmental track record.




                                                     S A F T - A n n u A l r e p o r T 2 0 1 2 / 43
         INNOVATION & COMMITMENTS RESEARCh & DEVElOpMENT




       RESEARCh
    & DEVElOpMENT
           If Saft has succeeded in establishing itself as a world leader
                in cell and battery systems, it is in large part thanks
      to the company’s long-term commitment to research and development.
           Saft’s R&D effort has multiple facets – basic electrochemistry
              research, new materials, improved production processes,
          design, development and enhancement, systems and software,
                    data management, maintainability, and more.
        A major portion of Saft’s R&D work is dedicated to creating new,
     cost-competitive products meeting specific customer application needs
          and offering very near-term benefits. Today’s R&D successes
                 are the springboard to future competitiveness.




                                     53.8mINVESTED
                                                                9%
                                                            Of GROUp SAlES
                                       IN R&D IN 2012   INVESTED IN R&D IN 2012

44 / S A F T - A n n u A l r e p o r T 2 0 1 2
                                        TO MEET ThE DEMANDING
                                       NEEDS OF ITS CuSTOMERS
                                          IN ThE SPACE SECTOR,
                                     SAFT IS CONTINuALLY BREAKING
                                     NEW GROuND WITh INNOVATIVE
                                         TEChNOLOGIES, SuCh AS
                                     ThE LI-ION SuPER-PhOSPhATE™.




 BUIlDING ON ITS MANY YEARS’ EXpERIENCE DEVElOpING
NEW TEChNOlOGIES AND ENhANCING EXISTING SOlUTIONS,
    SAfT’S RESEARCh TEAMS DETERMINE ThE MAJOR
         pRODUCT DEVElOpMENT DIRECTIONS.
         INNOVATION & COMMITMENTS RESEARCh & DEVElOpMENT




          In 2012, Saft again invested more than €50 million in         In the shorter term, the R&D teams have further
          research and development, representing 9% of sales.           intensified its systems development activity to integrate
          R&D headcount further increased to 447. During 2012,          power electronics and software so as to offer customers
          10 patents were filed, adding to Saft’s portfolio of patent   complete, customised solutions. The Systems Development
          families of around 140.                                       Unit (SDU) is the fastest growing team in Saft’s R&D
                                                                        community, and a SDU unit has been created at the
          Li-ion technologies, the major growth area for Saft,          Jacksonville plant, whose engineers have the task of
          represent some 70% of the Company’s R&D investment,           integrating specific US needs into the systems. SDU
          in the quest for new chemistries and new cell formats         continues to work on several programmes to improve the
          for next-generation solutions. Primary lithium                system content of Energy Storage Systems, offering more
          represents another area of significant growth                 energy and more power at a more competitive price in the
          opportunities for Saft in the future. Therefore the R&D       market. In further developing systems, the R&D teams
          team also works on improving traditional primary              enable Saft to deliver more content to more applications,
          lithium products as well as bringing new products to          and therefore expand the product portfolio.
          market. R&D engineers continue to enhance Saft’s
          nickel-based products to bring greater benefits to            Turnkey solutions, which customers increasingly
          customers.                                                    demand, are high on the priority list of Saft R&D. Much of
                                                                        the focus here is on maintainability. With systems that
                                                                        have a service life of 20 years or more, maintenance is
          lI-ION, A pROMISING fUTURE                                    important. Maintainability needs to be integrated in initial
          Thanks to its R&D advances, Saft is now a multi-              design – so that the electronics are easily accessible for
          chemistry lithium-based battery provider. Our lithium-ion     service technicians and safe to handle. This requires new
          chemistries are now in production and shipping from the       and more stringent modular design criteria that the R&D
          Jacksonville and Cockeysville plants in the USA and from      engineers are developing for future products.
          the Bordeaux factory in France. The Nersac facility in
          France will be also shipping these products in 2013. So
          today, Saft is meeting multiple needs with multiple
          technologies.

          Other Li-ion chemistries are in and coming out of
          the pipeline. Considerable development effort has gone
          into the Super-Phosphate™ lithium-ion technology,
          including software to predict and manage performance,
          lifetime and safety. Industrialisation is planned
          to be completed during 2013.



          CEll AND SYSTEM DEVElOpMENT
          Of Saft’s overall R&D investment, around 10%
          is dedicated to long-term research, where the
          Company continues to focus on new materials,
          new chemistries and new processes. This will lead
          to improved performance and lower cost products
          for the future. In addition research is also expanding the
          work on models and algorithms to support system
          development.




                                140
                                 pATENT fAMIlIES
                                                                                            10%
                                                                                   R&D INVESTMENT ARE
                                                                             DEDICATED TO lONG-TERM RESEARCh
46 / S A F T - A n n u A l r e p o r T 2 0 1 2
                                                   SAFT R&D TEAMS
                                              ARE DECIDEDLY CuSTOMER
                                                  BENEFIT-ORIENTED
                                               AS ThEY SEEK TO DESIGN
                                                 hIGh-PERFORMANCE,
                                                 RELIABLE AND SAFE
                                                     PRODuCTS.




     DEVElOpING SOfTWARE, MODElS AND AlGORIThMS
IS A KEY ElEMENT IN BUIlDING COMplETE BATTERY SYSTEMS.

                                        S A F T - A n n u A l r e p o r T 2 0 1 2 / 47
         INNOVATION & COMMITMENTS SUSTAINABlE DEVElOpMENT




          SUSTAINABlE
          DEVElOpMENT
                             In designing and manufacturing products that
                            contain chemicals, Saft strives to make efficient
                             use of resources and reduce the environmental
                          impact to a minimum. This is achieved by improving
                              performance, extending lifetime and reducing
                                the weight and footprint of the products.
                                It can also be enhanced by saving energy
                           and minimising the CO 2 emissions of its factories.
                              Saft supports end-of-life battery recycling and
                             the use of recycled materials. These actions are
                              all included in programmes Saft has introduced
                                        to preserve the environment.




      31COUNTRIES
               COVERED BY ThE SAfT
                                                                  13%
                                                         REDUCTION IN ENERGY USAGE
              “TAKE-BACK” pROGRAMME                    ACROSS All MANUfACTURING SITES
                                                          SINCE 2005 AT GROUp lEVEl
48 / S A F T - A n n u A l r e p o r T 2 0 1 2
                                         SAFT ONBOARD BATTERIES
                                       ENABLE TRANSPORT OPERATORS
                                             TO CAPTuRE, STORE
                                        AND RE-uSE BRAKING ENERGY,
                                           RESuLTING IN REDuCED
                                          ENVIRONMENTAL IMPACT
                                            AND A CONTRIBuTION
                                          TO SuSTAINABLE CITIES.




 SAfT IS fUllY AWARE Of ITS RESpONSIBIlITIES IN TERMS
Of pRODUCT STEWARDShIp AND RESOURCE pRESERVATION;
   CONSEQUENTlY, IT hAS INITIATED A VERY pRO-ACTIVE
          ENVIRONMENTAl pROTECTION pOlICY.
         INNOVATION & COMMITMENTS SUSTAINABlE DEVElOpMENT




          Saft continues to make every effort to protect people and     and progressively extend this process to all other
          the planet, while bringing benefits to the users of its       industrial sites.
          products. The Group uses a set of Key Performance
          Indicators (KPIs) to monitor its environmental                Saft has embarked on a practice of eco-design. Product
          performance. These KPIs assist the Group in monitoring        developers are co-operating with recyclers to understand
          the impact of its activity on the environment and the         the constraints and costs of design to recyclers. Developers
          results of the Group’s efforts. In most cases, these KPIs     are seeking to include recycling-related constraints in
          show the Group is making good progress. In addition, all      initial design without impacting products performance. For
          Saft sites in Europe and China are now ISO 14001 certified.   example, Saft’s Systems Development Unit is investigating
                                                                        mechanical design alternatives to determine the best way
          The Company contributes to protecting the environ-            to dismantle products at end-of-life.
          ment through its end-of-life programmes, where Saft
          is fully compliant with national laws. An important ele-
          ment is the Saft “take-back” programme. For many              hEAlTh AND SAfETY
          years, Saft has encouraged, on a voluntary basis, that        The Group makes every effort to fully comply and exceed
          used Saft nickel-based batteries be returned by end           legal health and safety requirements to reduce risks
          users to bring-back points for recycling. Now that this       and uses a number of indicators which demonstrate risks
          is an EU wide requirement, Saft goes beyond the legal         are controlled. These indicators continue to show
          demands. The programme has been extended geo-                 progress year on year.
          graphically to cover 31 countries, well beyond the
          EU-27 area.



          RE-CYClE AND lIfE CYClE
          Recycling has long been a policy at Saft. All products
          are recycled back into the manufacturing process. With
          nickel-based batteries, for example, recycled cadmium
          is used to produce new batteries, while nickel is
          re-used either in batteries or in other industries.

          The Group also carried out a full Life Cycle Assessment
          (LCA) on primary lithium batteries for metering devices.
          LCA involves measuring impacts at different phases of a
          component or system life to detect where improvements
          are needed to reduce (inter alia) CO2 emissions or energy
          usage. This can lead to changes in design or materials or
          in the manufacturing process. Saft is the first battery
          supplier to conduct such an LCA, and utility companies
          appreciate the initiative.



          plANTS AND pRODUCTS
          In 2012, Saft has completed a greenhouse gas audit, on
          its French sites, in compliance with French law. This
          audit covers direct emissions and indirect emissions
          linked to energy. The Group is considering to voluntary




50 / S A F T - A n n u A l r e p o r T 2 0 1 2
                                             SAFT BATTERIES hELP
                                             SMOOTh ThE FLOW OF
                                          INTERMITTENT WIND POWER
                                              INTO ThE GRID AND
                                           CONTRIBuTE TO REDuCING
                                         GREENhOuSE GAS EMISSIONS.




        ENERGY STORAGE SYSTEMS CAN plAY
AN IMpORTANT ROlE IN pRESERVING ThE ENVIRONMENT.

                                      S A F T - A n n u A l r e p o r T 2 0 1 2 / 51
52 / S A F T - A n n u A l r e p o r T 2 0 1 2
 fINANCIAl
  REpORT            RISK fACTORS   p. 55
              SUSTAINABlE DEVElOpMENT       p. 67
               CORpORATE GOVERNANCE        p. 83
       COMMENTS ON ThE 2012 fINANCIAl YEAR           p. 113
      2012 CONSOlIDATED fINANCIAl STATEMENTS             p. 127
   pARENT COMpANY CERTIfIED fINANCIAl STATEMENTS                 p. 187
INfORMATION ABOUT ThE COMpANY AND ITS ShARE CApITAl                       p. 201
             ANNUAl GENERAl MEETING        p. 213
              ADDITIONAl INfORMATION       p. 219




                                                    S A F T - A n n u A l r e p o r T 2 0 1 2 / 53
54 / S A F T - A n n u A l r e p o r T 2 0 1 2
                                                                         2
Risk Factors
2.1     Risks related to the market
        environment and the Group’s activities                                   56
2.1.1   Risks related to exposure to a high level of competition
        and price pressure                                                         56
2.1.2   Risks related to technologies used                                         56
2.1.3   Risks related to development of new markets in which Saft
        is making a significant investment                                          57
2.1.4   Risks related to the Group’s dependence on certain customers
        or core sectors                                                            58
2.1.5   Risks related to the geopolitical environment                              58

2.2     Operational risks                                                        58
2.2.1   Risks related to defective or poor quality products                        58
2.2.2   Risks related to the ability to recruit and retain qualified staff          59
2.2.3   Risks related to potential disagreements between Saft
        and its partners relating to their joint subsidiaries                      59
2.2.4   Risks related to purchases and suppliers                                   59
2.2.5   Risks of Internal Control failure and risk of fraud                        60

2.3     Credit and counterparty risks                                            60
2.3.1   Credit risk                                                                60
2.3.2   Counterparty risk                                                          60

2.4     Liquidity risk                                                           61

2.5     Market risks                                                             61
2.5.1   Raw material price risks                                                   61
2.5.2   Foreign exchange risk                                                      61
2.5.3   Interest rate risk                                                         61
2.5.4   Share price risk                                                           61

2.6     Contractual and legal risks                                              62
2.6.1   Risks related to products sold                                             62
2.6.2   Risks related to export control                                            62
2.6.3   Litigation risks                                                           62
2.6.4   Risks related to intellectual property                                     62

2.7     Risks related to the impact
        of the Group’s business
        on the environment, human health
        and safety                                                               63
2.7.1   Environmental risks related to operating factories                         63
2.7.2   Risks related to the availability and use of chemical substances           63
2.7.3   Risks related to the end of life of products sold                          64
2.7.4   Risks to human health and safety                                           64

2.8     Insurance                                                                65



                                              S A F T - A N N U A L R E P O R T 2 0 1 2 / 55
      2         RISK FACTORS
                Risks related to the market environment and the Group’s activities




     This section describes the significant risks which the Group            it is exposed. The risk mapping, which is updated regularly,
     considers it is exposed to through its activities and environment,     ranks all risks identified based on their potential impact, on
     as well as the steps taken to lower the probability of such risks      the probability that they will occur and on an assessment
     materialising and to reduce their potential impact.                    of the level of control for each one of them. The process of
                                                                            evaluating risks is described in the report prepared by the
     At the time that this annual report was prepared, the Company
                                                                            Chairman of the Supervisory Board, presented hereafter in
     performed a review of risks that could have a material
                                                                            chapter 4 “Corporate Governance” of this annual report.
     adverse effect on its business, financial position or results
     and its ability to achieve its objectives, and it feels there are no   The most recent risk mapping update, conducted at the
     risks, other than those listed below, that the Company deems           end of the 2012 financial year, showed that the major risks
     relevant and meaningful.                                               to which the Group is exposed are those listed below in
                                                                            paragraphs 2.1.2, 2.1.3 and 2.2.1.
     Since 2004, the Saft Group has established a risk identifying
     system through a risk mapping of the major risks to which




     2.1            RISKS RELATED TO THE MARKET ENVIRONMENT
                    AND THE GROUP’S ACTIVITIES

     2.1.1          RISKS RELATED TO EXPOSURE TO                            2.1.2       RISKS RELATED TO TECHNOLOGIES
                    A HIGH LEVEL OF COMPETITION                                         USED
                    AND PRICE PRESSURE
                                                                            Loss of the Group’s competitive advantage
     Types of risks                                                         in an environment of fast changing
     Certain segments of the Group’s activities are exposed to              technological development
     competition from low-cost battery producers, mainly in Asia.
                                                                            Types of risks
     The pressure that this competition exerts on prices could force
     the Group to reduce its prices, leading to a contraction of its        Saft’s business is focused on specialised markets for advanced
     margins.                                                               technology batteries. Saft holds leading positions(1) in many of
                                                                            these markets because it provides high value-added products
     Moreover, the possible relocation of some of the commercial            based on innovative technologies and its ability to customise
     or manufacturing operations of the Group’s customers to                its products according to changes in the specifications of its
     Asia or other lower labour cost countries could lead to these          customers.
     customers deciding to source their batteries from competitors
     of the Group already located in these territories. This could          However, the batteries market involves rapidly evolving
     have a considerable negative impact on the Group’s business            technology. Therefore, it cannot be ruled out that the
     and its results.                                                       technological advances in the manufacture of batteries will
                                                                            not affect the competitiveness of the products made by Saft
     Risk management                                                        and lead to a loss of the competitive advantages currently held
     In order to minimise this risk, the Group prioritises its              by the Group.
     innovation strategy, with the aim of differentiating itself
                                                                            Risk management
     from its competitors in terms of the products it offers, while
     also seeking to improve its competitiveness. The Group has             To develop and gain access to new technologies, the
     therefore implemented an investment policy in some low                 Group channels significant resources into Research and
     labour cost countries, such as the Czech Republic, China,              Development. Accordingly, over the last three financial years,
     India and Brazil, by setting up commercial units and/or                the Group has invested the equivalent of 8.4% in 2010, 9.5%
     manufacturing facilities there. In 2012, the Group decided             in 2011 and 9.0% in 2012 of its revenue in Research and
     to invest in the creation of a subsidiary in Russia in order to        Development.
     develop sales of its products, then in the future to perform
     assembly of certain of its products.
                                                                            Uncertainties with regard to the success of
                                                                            lithium-ion technology
                                                                            Types of risks
                                                                            The Group currently develops and sells lithium-ion battery
                                                                            components and systems, which it believes will enable it to
                                                                            meet a range of requirements in a number of evolving sectors,

     (1) Management estimate.



56 / S A F T - A N N U A L R E P O R T 2 0 1 2
                                                                                                                                2
                                                                                                     RISK FACTORS
                                                      Risks related to the market environment and the Group’s activities




notably those regarding storage of renewable energy and              these markets could reach vary significantly and the exact
traction batteries. Saft has thus invested in the construction       pace of this development remains uncertain. Accordingly, the
of a manufacturing plant for lithium-ion cells and batteries in      growth of these markets might not reach the expected levels,
Jacksonville, Florida (USA) and acquired the lithium-ion cell-       and the future profitability of Saft’s investments therein could
manufacturing unit located in Nersac, France from Johnson            be affected.
Controls on 1st January 2013.
                                                                     Dependence on national and international
The Group cannot guarantee that this technology will be a
success, and it cannot be ruled out that different technologies
                                                                     energy policies
will meet the same needs. Thus, some companies have                  The markets for energy storage are partly dependent on
recently developed batteries using emerging technologies that        political decisions, both at the national and international level.
are likely to be in competition with the lithium-Ion technology      These decisions may involve the introduction of subsidies
developed by the Group.                                              and/or tax incentive mechanisms, or the adoption of various
                                                                     pieces of legislation.
Risk management
The Group has established a multi-year continuous                    Impact of commodity and fossil energy prices
development plan for this technology to best meet the                The development of certain new markets for which Saft is
expectations of the various markets addressed by the Group.          investing in new Li-ion production facilities in Jacksonville
In addition, it is pursuing Research and Development work            (USA) and Nersac (France) could be affected by fluctuations
in other technologies, while maintaining a forward-looking           in prices, supplies of raw materials and/or fossil energies (oil
approach to its research activities at all times, and constantly     and natural gas, for example). A large decrease in the price of
monitoring the development of technologies that could                fossil energies could thus cause a fall in demand for lithium-
potentially compete with lithium-ion.                                ion batteries to be used for energy storage.

                                                                     Exposure to competition
2.1.3       RISKS RELATED TO DEVELOPMENT                             In certain new markets, and in particular the markets for
                                                                     energy storage and traction batteries, Saft is exposed to
            OF NEW MARKETS IN WHICH
                                                                     strong competition:
            SAFT IS MAKING A SIGNIFICANT
                                                                        some competitors, already present in these markets or
            INVESTMENT
                                                                        seeking to establish themselves therein, may have more
                                                                        significant commercial, financial, technical or human
Types of risks                                                          resources than those of the Group;
The outlook for growth of the Group’s activities involving
                                                                        some customers in these markets may consider insourcing
products to be manufactured at the Jacksonville, Florida
                                                                        the design or production of the type of components and
(USA) and Nersac (France) facilities is, as with all commercial
                                                                        products offered by the Group.
activities, subject to a certain number of risks. These risks are
principally the following:                                           The pressure that this competition may exert on prices could
                                                                     force the Group to limit its prices and reduce its margins, and
  uncertainties related to the development of the energy
                                                                     consequently could affect its ability to generate the expected
  storage and traction battery sector;
                                                                     profitability in the anticipated timeframe. This could have
  dependence on national and international energy policies;          a considerable negative impact on the Group’s business,
  impact of commodity and fossil energy prices;                      financial position and results.

  exposure to competition.                                           Risk management
                                                                     In order to limit these risks, the Group strives:
Uncertainties related to the development of
the energy storage and traction battery sector                          first, to maintain a balance between existing profitable
                                                                        activities and markets and developing activities and
The markets for energy storage, and in particular those relating
                                                                        markets that generally consume cash;
to the storage of renewable energy, as well as the markets
for traction batteries, in which Saft is positioning itself, are        and secondly, to identify other markets or applications that
emerging markets where production volumes are currently                 can benefit from the advantages of lithium-ion products for
low. Moreover, although the prospects for development                   which Saft is making significant investments.
of these markets over the next few years are generally
considered as significant, estimates relating to the level that




                                                                                                    S A F T - A N N U A L R E P O R T 2 0 1 2 / 57
      2         RISK FACTORS
                Operational risks




     2.1.4          RISKS RELATED TO THE GROUP’S                            2.1.5       RISKS RELATED TO
                    DEPENDENCE ON CERTAIN                                               THE GEOPOLITICAL ENVIRONMENT
                    CUSTOMERS OR CORE SECTORS
                                                                            Types of risks
     Types of risks                                                         The Group carries out a significant portion of its commercial and
     Saft’s sales are made to many industrial customers present             manufacturing operations in emerging countries, which have
     in very diverse sectors such as the aeronautics and rail               recently undergone or are likely to undergo periods of political
     industries, road infrastructure, public transport, oil industry,       or economic instability. In 2012, revenue recorded outside of
     telecommunications, gas and electricity production, defence            the “Europe” and “North America” zones represented 35% of
     and space. However, the Group makes a significant portion               consolidated revenue. Moreover, some countries in which the
     of its sales to a few strategic customers. Thus, for the 2012          Group operates have underdeveloped or un-protective legal
     financial year, the Group’s sales to its top 10 customers               frameworks, which can affect the Group’s ability to enforce
     accounted for 23% of the Group’s consolidated revenue. The             contractual rights.
     Group’s top customer in terms of revenue in 2012 accounted             Saft is therefore exposed to risks that could affect its financial
     for less than 3% of consolidated revenue, as compared to less          position, notably:
     than 4% in 2011 and 3% in 2010.
                                                                              a more restrictive control of foreign exchange that could
     Moreover, the Group’s revenue and operating profit are partly             limit or block a currency leaving a customer country and in
     related to the cyclical nature of certain activities. In particular,     turn its ability to honour its debts;
     a significant portion of the Group’s consolidated revenue
                                                                              discriminatory measures taken against Saft that could pose
     is made from the Defence sector. In 2012, this represented
                                                                              a threat to the Group’s business in a particular country
     15.7% of consolidated revenue.
                                                                              (expropriation, nationalisation, etc.);
     Defence spending for each country depends on a complex mix
                                                                              an unexpected breach of contract or commitment;
     of geopolitical considerations and budgetary constraints. It
     may therefore vary significantly from year to year. Accordingly,          difficulties in protecting the Group’s intellectual property.
     a reduction in defence spending or the postponement of
     particular programmes could have a negative effect on the              Risk management
     Group’s sales, operating profit and cash flow, as well as having         Although Saft’s growing internationalisation enables it to
     significant repercussions for certain production facilities.            spread geopolitical risk, the Group makes every effort to
                                                                            identify ways of limiting the financial impact of this risk. Where
     Risk management                                                        necessary, it may turn to insurers to take out appropriate
     To limit this risk, Saft, on the one hand, constantly seeks to         insurance policies or resort to financial payment hedging
     diversify its customer portfolio to avoid depending on a single        instruments for certain countries (bank guarantees, Coface
     client or on too limited a number of clients and, on the other         guarantees, etc.).
     hand, implements a global strategy aimed at striking a balance
     in its portfolio of activities.




     2.2            OPERATIONAL RISKS

     2.2.1          RISKS RELATED TO DEFECTIVE                              applications, Saft cannot guarantee that its customers will not
                    OR POOR QUALITY PRODUCTS                                encounter defects or quality problems with its products. In the
                                                                            event that its products or services fail to meet its customers’
                                                                            standards, Saft’s reputation could be harmed, which could
     Types of risks
                                                                            adversely affect its marketing and sales efforts, and therefore
     The success of Saft’s business depends on the quality of its           have an impact on its competitive position.
     products and its relationships with customers. As the batteries
     manufactured are often complex and are mostly used in critical




58 / S A F T - A N N U A L R E P O R T 2 0 1 2
                                                                                                                               2
                                                                                                    RISK FACTORS
                                                                                                        Operational risks




Risk management                                                            implementation of a skills development and support for
In order to mitigate these risks, Saft operates detailed                   change policy through trainings,
development, manufacturing and testing processes, as well                  implementation of an attractive remuneration system.
as quality control procedures, at all times. Furthermore, Saft       These measures are described in more detail in section  3.2
has brought all of its continuous improvement processes for          “Social Responsibility” of this annual report.
quality and performance under a global umbrella programme
called Saft World Class. Proven quality management
procedures are thus deployed at all group sites:
                                                                     2.2.3       RISKS RELATED TO POTENTIAL
  quality standards: all of the Group’s sites have ISO 9001
                                                                                 DISAGREEMENTS BETWEEN SAFT
  certification and most of them have supplementary
  certifications depending on the requirements of their
                                                                                 AND ITS PARTNERS RELATING
  markets;                                                                       TO THEIR JOINT SUBSIDIARIES
  the 5S and visual management: each Saft production facility
                                                                     Types of risks
  employs this type of management so that any anomaly
  can be rapidly identified and corrected. The methods for            As part of its manufacturing and commercial activities and
  problem resolution such as the 8D are also implemented             in line with its strategic goals, Saft may decide to enter into
  in the Group;                                                      joint venture agreements with specific partners. Should the
                                                                     relationship between Saft and any of its partners deteriorate,
  process management: relies on various tools, such as
                                                                     or the terms of their agreement no longer be respected,
  equipment design standards, error-proofing systems and
                                                                     Saft’s assets and commercial activities could be affected.
  Statistical Process Control (SPC).
                                                                     Furthermore, any dispute between the parties, management
                                                                     disagreement or any decision to terminate the joint venture
                                                                     agreement could have a material adverse impact on the
2.2.2       RISKS RELATED TO THE ABILITY                             Group’s commercial activities.
            TO RECRUIT AND RETAIN QUALIFIED
                                                                     Risk management
            STAFF
                                                                     In order to limit the risk inherent in any partnership and to
                                                                     safeguard its interests as best as it can, Saft endeavours to
Types of risks
                                                                     ensure that any such agreements contain a certain number
Saft’s success is highly dependent on the quality and                of governance rules regarding the joint management of the
experience of its management team, and of key employees              company including, for example, the need for the two parties
responsible for manufacturing processes and Research                 to agree on all important decisions.
and Development. These highly qualified employees have
generally been at the Group for a number of years, and have          At present, the Saft Group’s only joint venture is ASB, in
an excellent knowledge of its business and the sectors in            which it holds a 50% interest, the same as the EADS group.
which it operates. The departure of one or more managers or          This company mainly produces thermal batteries for military
key employees could lead to a loss of expertise and affect the       use. Shareholder relations are governed by a shareholder
Group’s ability to grow some of its businesses or attain certain     agreement, which was renewed in 2006. This agreement
strategic objectives.                                                contains provisions designed to protect the Group’s interests,
                                                                     notably in the event of a change in control, as described in the
The Group’s future success will partly depend on its ability to      “Additional information” section of the annual report.
attract, train, motivate and retain highly qualified employees
and managers. However, given the intense competition to              Note  29 to the consolidated financial statements details the
attract employees with such qualifications, there can be no           key financial data concerning the Saft Group’s joint venture as
assurance that Saft will be able to do so.                           at the end of the 2012 financial year.

Risk management
In order to limit the impact of this risk, Saft has put in place a   2.2.4       RISKS RELATED TO PURCHASES AND
number of human resource management programmes based                             SUPPLIERS
on anticipating needs and retaining staff:
  drafting of a succession plan for key employees;                   Regulatory risk related to purchases
  implementing a process for rewarding performance and               Types of risks
  retaining staff such as:
                                                                     The Group is subject to a large number of regulations at
      development of geographical and functional mobility,           the local, European and international levels in relation to its
                                                                     purchasing activities.




                                                                                                   S A F T - A N N U A L R E P O R T 2 0 1 2 / 59
      2         RISK FACTORS
                Credit and counterparty risks




     Non-compliance with these requirements would entail legal          2.2.5        RISKS OF INTERNAL CONTROL
     and financial risks and in some cases restrictions on access to                  FAILURE AND RISK OF FRAUD
     public sector contracts. Saft therefore takes particular care in
     ensuring it complies with these regulations.
                                                                        Types of risks
     Risk management                                                    Saft’s international profile means that its administrative,
     In order to mitigate these risks, the Group’s buyers are           financial and operational processes are managed in various
     regularly informed of changes in the legal and regulatory          legal and regulatory environments, with varying degrees
     framework in which they operate. Moreover, compliance              of Internal Control and risk management sensitivity from
     with certain legislation is subject to specific monitoring, for     one entity to another. Moreover, they may be managed with
     example, the European regulation on chemical substances,           different information systems.
     “REACH” programme (Registration, Evaluation, Authorisation         In this context, Saft cannot rule out a failure of Internal Control
     and Restriction of Chemicals).                                     or an instance of fraud that could have a significant financial
                                                                        impact and/or harm the Group’s reputation.
     Supplier risks
                                                                        Risk management
     Types of risks
                                                                        In order to mitigate these risks, Saft has set up a review
     As with any manufacturing company, Saft is exposed to a risk       process of its Internal Control, based on a set of rules and
     related to the quality and durability of its raw materials and     procedures that it has circulated to all its subsidiaries. In
     components supplies. Like any company that manufactures            addition, regular audits of different group sites or audits
     high technology products, Saft regularly uses a number of          of processes are carried out according to a programme
     suppliers of specialised products. If one or more of these         established and approved annually by General Management
     suppliers were to fail, it could have a significant impact on the   and the Audit Committee. Lastly, Saft has implemented a
     group’s business and financial performance.                         number of initiatives to raise the awareness of employees of
                                                                        risks relating to fraud, corruption or non-compliance with the
     Risk management
                                                                        Group’s rules of ethics.
     In order to limit these risks, each unit has supplier risk
     evaluation procedures in place, at least annually, as does         The process of evaluating risks is described in greater detail in
     the management of the Group’s Purchasing Department.               the report prepared by the Chairman of the Supervisory Board,
     In addition, progress plans and specific action plans are           presented hereafter in section  4 “Corporate Governance” of
     regularly drawn up and implemented according to the risk           this annual report.
     levels identified.




     2.3            CREDIT AND COUNTERPARTY RISKS

     2.3.1          CREDIT RISK                                         2.3.2        COUNTERPARTY RISK

     Types of risks                                                     Types of risks
     Credit risk is the risk that a debtor does not settle a debt in    Counterparty risk is the inability of a counterparty to fulfil its
     due time. Because of the nature of the Group’s business, trade     obligations. The Group is exposed to counterparty risks in the
     receivables constitute the main source of credit risk to which     transactions on the financial and banking markets that it uses
     the Group is exposed.                                              to manage foreign exchange and interest rate risks and to
                                                                        manage its payment flows.
     Risk management
     Information on exposure to credit risk and its management is       Risk management
     provided in note 3 of the consolidated financial statements.        Information on counterparty risk and its management is
                                                                        provided in note 3 of the consolidated financial statements.




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                                                                                                          Liquidity risk




2.4         LIQUIDITY RISK

Types of risks                                                     Risk management
Liquidity risk relates to the risk of Saft being unable to meet    Information on exposure to liquidity risk and its management
its monetary needs with the financial resources it generates        is provided in note 3 of the consolidated financial statements.
from its business activities or those it mobilises through
                                                                   The Company has conducted a review of its liquidity risk and
third parties. The Group’s main liquidity risk is linked to its
                                                                   considers that it is able to meet its future payment terms.
borrowings.
                                                                   These are presented in note 18 of the consolidated financial
                                                                   statements.




2.5         MARKET RISKS

2.5.1       RAW MATERIAL PRICE RISKS                               Risk management
                                                                   Information on exposure to foreign exchange risk and its
Types of risks                                                     management is provided in note 3 of the consolidated financial
Some of the metals used by Saft in manufacturing batteries         statements.
- nickel, cobalt, cadmium and silver in particular - are traded
on international commodities markets. Other metals, such
as lithium, are covered by international over-the-counter          2.5.3       INTEREST RATE RISK
contracts. Raw material costs fluctuate based on supply and
demand, or according to financial market forecasts, and cannot      Types of risks
therefore be controlled by the Group. These fluctuations may
                                                                   The Group is subject to fluctuations in interest rates, almost
result in considerable variations in production costs and could
                                                                   exclusively as a result of its long-term debt.
therefore have a significant impact on the Group’s profitability.
                                                                   Risk management
Risk management
                                                                   Information on exposure to interest rate risk and its
Quantitative information on exposure to raw material price risk
                                                                   management is provided in note 3 of the consolidated financial
and its management is provided in note 3 of the consolidated
                                                                   statements.
financial statements.


                                                                   2.5.4       SHARE PRICE RISK
2.5.2       FOREIGN EXCHANGE RISK
                                                                   Types of risks
Types of risks
                                                                   The Group has implemented a liquidity contract in order to
Given the Group’s international presence, it is exposed to
                                                                   improve the liquidity of Saft Groupe SA stock on the Paris
fluctuations in exchange rates:
                                                                   stock exchange (Euronext). The Group’s exposure to equity
  in relation to its operational activities, both industrial and   market risks is solely linked to fluctuations in the price of
  commercial;                                                      treasury shares.
  in relation to its financing activities;
                                                                   Risk management
  during the euro conversion process of the accounts of its        The data relating to transactions in the Company’s own shares
  subsidiaries denominated in foreign currencies.                  throughout the financial year, and the measures taken to
The Group’s exposure to foreign exchange risk is mainly            manage this risk, are presented in the section “Information on
related to fluctuations of the US dollar, Swedish krona and         the Company and its Share Capital” in this annual report.
pound sterling against the euro, and of the shekel and the
Swedish krona against the US dollar.




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      2         RISK FACTORS
                Contractual and legal risks




     2.6            CONTRACTUAL AND LEGAL RISKS

     2.6.1          RISKS RELATED TO PRODUCTS SOLD                       This could reduce Saft’s ability to fulfil contracts and could
                                                                         have a negative effect on its revenue, financial position and
     Types of risks                                                      profitability.

     In selling its batteries, Saft guarantees the functioning and/      Risk management
     or the compliance of its products with specifications defined
                                                                         In order to limit these risks, Saft provides legal oversight on
     by its customers, for periods between one and ten years.
                                                                         regulations on export controls and ensures the compliance of
     In the event of the failure of a battery produced by Saft to
                                                                         its operations to its legal obligations.
     function properly, Saft could face liability for bodily injury,
     or for pecuniary or immaterial damage suffered as a result.
     Saft could also face liability resulting from a design error of
     a complex battery or of the failure to function properly due to     2.6.3       LITIGATION RISKS
     the interface with other systems. The failure of a battery to
     function properly could involve costs linked to the return of       Types of risks
     products by customers, require new development investment           To the Company’s knowledge, as of the date of this annual
     and monopolise technical and economic resources. Any                report and for at least the last twelve months, there have
     such costs could have a significant impact on the Group’s            been no exceptional developments, or governmental, judicial
     profitability and cash flow. Saft’s commercial reputation could       or arbitration proceedings (including any suspended or
     also be damaged, leading to a loss of certain customers and a       threatened proceedings known to the Company), which have
     significant reduction of its consolidated revenue.                   had recently, or could have, any significant impact on the
                                                                         financial position or profitability of the Company or the Saft
     Risk management
                                                                         Group.
     In order to prevent such risks, Saft has implemented quality
     procedures in production and subjects its manufactured              Risk management
     products to precise functional tests. In the case of returned       The amounts of provisions set aside for pending litigation is
     products, the nature and the origin of failures are analysed        disclosed in note 21 of the consolidated financial statements.
     and corrective actions are implemented.
     The Group has put in place insurance policies, in particular
     to cover its civil liability and the risk of product returns. The   2.6.4       RISKS RELATED TO INTELLECTUAL
     Group’s insurance policies in place are analysed in section 2.8
                                                                                     PROPERTY
     hereinafter.
     Finally, Saft accounts for provisions for guarantees calculated     Types of risks
     on the basis of historical statistics. These provisions are
                                                                         In consideration of the highly technological nature of its
     detailed in notes  2.22 and 21 to the consolidated financial
                                                                         products and of the importance of innovation in its strategy, the
     statements.
                                                                         Group’s activity relies in particular on the use of intellectual
                                                                         property, patents and know-how. The Group’s patents,
                                                                         know-how and brand names (“intellectual property rights”)
     2.6.2          RISKS RELATED TO EXPORT CONTROL                      represent a major part of its assets.
                                                                         The unauthorised use of the Group’s intellectual property is
     Types of risks                                                      however difficult to control, in particular in foreign countries
     Exports represent a significant portion of Saft’s business, and      in which existing laws do not always effectively guarantee the
     mainly involve batteries produced for sensitive sectors such        protection of its rights. These rights may be infringed or used
     as space or defence.                                                without Saft’s consent, which could have a major negative
     The export of these batteries from the countries in which they      effect on its reputation and on the results of its operations.
     are manufactured may be restricted or subject to the granting
                                                                         Risk management
     of licences. This applies to the Group’s exports from the USA,
     the UK, France, Israel and Germany.                                 In order to limit the risk of counterfeiting, the Group’s Research
                                                                         and Development Department provides technological
     There is no guarantee that the export controls to which Saft is     monitoring and protects the inventions against any disclosure
     subject will not become more restrictive and that geopolitical      and files, when possible and/or desirable, patent applications
     factors will not make it impossible to obtain export licences.      in competent courts.




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                     Risks related to the impact of the Group’s business on the environment, human health and safety




The Group’s Legal Department registers and renews brands           confidentiality clauses in employment contracts or contracts
and performs monitoring work to prevent or put an end to any       with third parties, and non-competition clauses in employment
infringement on its brands.                                        contracts.
The protection of know-how is also organised by the                Lastly, the Saft Group does not depend on any patent or
implementation of policies relating to the retention of            licence the loss of which could have a material impact on its
personnel, the transmission of knowledge, the inclusion of         operations or profitability.




2.7         RISKS RELATED TO THE IMPACT OF THE GROUP’S
            BUSINESS ON THE ENVIRONMENT, HUMAN HEALTH
            AND SAFETY

2.7.1       ENVIRONMENTAL RISKS RELATED TO                         Risk management
            OPERATING FACTORIES                                    The Group invests significant sums to ensure that it minimises
                                                                   the risks of harming the environment in conducting its
Types of risks                                                     activities, and regularly makes the investments necessary to
                                                                   meet regulatory requirements. In particular:
In each country where the Group operates an industrial
facility, it is subject to a large number of local, national and     The Group’s central objectives comply with these legal
international environmental protection laws and regulations.         requirements and the control systems operated at each
In particular, these laws and regulations impose increasingly        manufacturing site in order to ensure such compliance
restrictive rules on atmospheric emissions and waste water           have been documented and certified in accordance with the
discharge; the use, storage and disposal of hazardous                international ISO 14000 standard for most European sites;
substances, soil protection; removal of asbestos; and the            The Group has progressively set up indicators that are
recycling and disposal of waste.                                     used to evaluate the impact of its operations on the natural
These environmental laws and regulations therefore expose            environment, which are subject to consolidation and internal
the Group to the risk of having to bear significant costs             monitoring and are also communicated to local supervisory
and responsibilities, including in relation to assets sold,          authorities. Detailed information on these indicators is
transferred or past activities:                                      provided in section 3.1 “Environmental responsibility” of
                                                                     this annual report.
  the Group could be required to incur significant additional
  operating expenses and significant investment obligations         In addition, when Doughty Hanson acquired the Alcatel Group’s
  in the event that new laws, regulations or government            battery business, Saft Finance Sarl (a direct subsidiary of
  policies are adopted, decided or required, or in the event of    Saft Groupe SA) was granted a certain number of contractual
  additional demands by competent authorities;                     guarantees in respect of environmental matters, including in
                                                                   particular – within certain limits – the costs of remediation
  additional regulations could limit the Group’s ability to
                                                                   of sites and land affected by the Group’s operations prior to
  modify its processes or expand its factories or to continue
                                                                   2004. These guarantees are effective until 2014.
  to operate a facility;
  additional regulations could also oblige the Group to
  implement pollution prevention measures, or to incur new
  costs for the remediation of existing sites;
                                                                   2.7.2       RISKS RELATED TO THE AVAILABILITY
                                                                               AND USE OF CHEMICAL SUBSTANCES
  the Group could be required, in the future, to contribute to
  the remediation of sites or plants owned or operated by
                                                                   Types of risks
  third parties, and on or in which the Group has stored or
  disposed of the waste it has generated;                          On 30 December 2006, a European Union regulation named
                                                                   REACH (Registration, Evaluation, Authorisation and Restriction
  failure to comply with these requirements could result           of Chemicals) was published in the Official Journal of the
  in administrative or criminal sanctions (fines), or civil         European Union. The purpose of REACH is to improve
  compensation claims.                                             the protection of human health and of the environment
                                                                   via systematic evaluation of the properties of chemical
                                                                   substances and the risks they pose. This regulation also
                                                                   provides for replacement of the most dangerous chemical




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      2         RISK FACTORS
                Risks related to the impact of the Group’s business on the environment, human health and safety




     substances, termed “extremely preoccupying substances”,             steps taken by the Group on recycling are described in detail
     whenever adequate alternatives have been identified.                 in section 3.1 “Environmental responsibility” of this annual
                                                                         report.
     Risk management
                                                                         In addition, the Group ensures that it complies with this
     In 2008, Saft completed an evaluation of the impact of REACH        directive through constant monitoring and information
     on its operations and identified the steps necessary for             gathering.
     compliance with this regulation. The Saft Group continues to
     roll out this multi-year programme.
     Certain substances widely used in industrial batteries are          2.7.4       RISKS TO HUMAN HEALTH AND
     classified as hazardous under the currently applicable
     regulations and may be classified as “extremely preoccupying
                                                                                     SAFETY
     substances” under REACH. However, to its current knowledge,
     Saft does not expect that the REACH authorisation process will      Risks related to the use of toxic or hazardous
     lead to the Group having to stop making or selling any of its       substances
     finished products.
                                                                         Types of risks
     The steps taken by Saft to comply with this regulation are          In the manufacture of its products, the Group has used and
     described in section 3.1 “Environmental responsibility” of this     continues to use significant amounts of toxic or hazardous
     annual report.                                                      materials. Some employees or sub-contractors may also have
                                                                         been or are being exposed to these substances which are
                                                                         harmful to health and could develop diseases for which they
     2.7.3          RISKS RELATED TO THE END OF LIFE                     may seek to hold the Group liable.
                    OF PRODUCTS SOLD
                                                                         Risk management
     Types of risks                                                      The corresponding risks are the subject of strict prevention
                                                                         measures and monitoring, such as the use of suitable
     On 26 September 2006, a directive on batteries and
                                                                         protective materials, frequent training programmes as well as
     accumulators was published in the Official Journal of the
                                                                         regular, compulsory health checks for employees.
     European Union under the reference 2006/66/EC. The aim
     of this directive, which has been applicable since September        Industrial risks
     2008, is to:
                                                                         Types of risks
        on the one hand, ensure that used batteries and
        accumulators are collected and recycled at the end of their      Due to the high energy density of certain batteries and
        lifecycle;                                                       accumulators manufactured by the Group, the batteries may
                                                                         lead to a fire risk, either in the Group’s factories or at the
        on the other, limit the use of mercury in batteries and
                                                                         premises of battery users. Accidents of this nature, should
        accumulators for non-military purposes and of cadmium in
                                                                         they occur, could lead to considerable production or shipping
        most batteries for non-industrial, non-professional or non-
                                                                         delays for which the Group could be held liable and could
        military purposes.
                                                                         therefore become subject to customer compensation claims.
     The commercial restrictions on the use of mercury and               Any such occurrence could have an adverse effect on the
     cadmium do not affect Saft’s products. This directive has           Group’s business, income, financial position, or reputation.
     therefore no significant impact on the Group’s operations.
     However, the European Commission is likely at any time to           Risk management
     re-examine the current derogations in respect of the ban on         To limit this risk, Saft has established safety procedures
     certain substances and could issue additional proposals for         in its Research and Development activities and production
     prohibitions to be imposed, and such prohibitions may affect        operations, and has taken steps to raise awareness among
     market segments in which Saft is present.                           and provide regular training for its employees.

     Risk management                                                     In addition, the Group implements an external insurance
                                                                         policy to cover these industrial risks. This policy is described
     Since the mid-1980s, Saft has participated in instituting and
                                                                         in section 2.8 hereinafter.
     developing a network of partners engaged in collection and
     recycling in most of the world’s industrialised countries. This     The provisions set aside by the Group to confront current
     network - see the http://www.saftbatteries.com website              environmental risks are described in section 3.1.9 “Provisions
     for details - enables Saft to comply with the obligation for        for environmental risks” and in note 21 of the consolidated
     recovery of products imposed by this directive on producers         financial statements.
     of batteries and accumulators in the European Union. The




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                                                                                                      RISK FACTORS
                                                                                                                  Insurance




2.8         INSURANCE

The Group has a policy of obtaining external insurance                  damage to assets and resulting business interruption.
coverage for risks relating to the manufacture and sale of              This coverage is designed to prevent any significant loss
its batteries, and insuring such risks at reasonable rates. In          and ensure continuation of operations in the event of an
order to obtain the best possible coverage for all the Group’s          accident;
companies, Saft relies on the services of an international
                                                                        damage caused by transport of its production assets or
insurance broker, which negotiates insurance policies on
                                                                        equipment, finished or semi-finished products or raw
its behalf. In general, most of the Group’s insurance policies
                                                                        materials;
contain a coverage limit that applies either per claim or per
year and per claim. In some cases, coverage is limited by a             the Group’s liability due to its activities as a supplier to the
certain number of customary exclusions for these types of               aeronautics industry;
policies and limits.                                                    the Group’s liability due to its activities as a supplier to the
The principal risks covered are as follows:                             space industry;

  the Group’s civil liability in its activities resulting from bodily   financial losses resulting from fraudulent acts committed
  harm, property or consequential damage caused to third                by third parties or by employees to the detriment of the
  parties;                                                              Group or a customer of the Group;
                                                                        environmental risks related to the Group’s production sites.




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                                                                        3
Sustainable
Development
3.1      Environmental responsibility                                           69
3.1.1    General environmental policy                                             69
3.1.2    Legal and regulatory compliance                                          69
3.1.3    Chemical substances – REACH Regulation                                   70
3.1.4    End of life - Batteries Directive (2006/66/EC)                           70
3.1.5    Environmental performance indicators                                     70
3.1.6    Environmental objectives assigned to our foreign subsidiaries            72
3.1.7    Environmental impact of Group activities                                 73
3.1.8    Cleaning up contaminated sites                                           73
3.1.9    Provisions for environmental risks                                       73
3.1.10   Resource conservation                                                    73
3.1.11   Helping respond to and control global warming                            74
3.1.12   Biodiversity                                                             74

3.2      Social responsibility                                                  74
3.2.1    Changes in resources                                                     74
3.2.2    A vision and values                                                      75
3.2.3    Human resource management                                                76
3.2.4    Saft reward and recognition systems                                      76
3.2.5    Labour relations management and collective agreements                    77
3.2.6    Occupational health and safety                                           77
3.2.7    Other employment data                                                    77

3.3      Corporate social responsibility                                        78
3.3.1    Local, economic and social impact                                        78
3.3.2    Subcontracting and suppliers                                             78
3.3.3    Measure to prevent consumer health and safety                            79
3.3.4    Human rights group’s commitments, international labour
         organisation (ILO) standards and membership UN Global Compact            79

3.4      Auditor’s report on social,
         environmental and societal information                                 80




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      3         SUSTAINABLE DEVELOPMENT




     Saft promotes Sustainable Development principles, based on           The labour-related data are collated via a special reporting
     three pillars: society, the economy and the environment. This        system in English language used by all sites within the
     approach draws in particular on the introduction of reporting        collation scope, accompanied by a methodology note detailing
     of indicators designed to measure the Group’s performance as         how the requested data is defined. This procedure and
     regards its environmental, social and corporate responsibility.      documentation were put together in 2008 and are regularly
     These non-financial indicators are collated globally for              updated. A consistency check is carried out by the Group HR
     publication in this annual report, in line with the provisions of    Department, which also carries out a series of additional
     articles R.225-104 and R.225-105 of the French Commercial            calculations, compares the data with those from the previous
     Code (known as Grenelle no2 law) and of the ministerial              year and reconciles them with certain data reported elsewhere
     decree Act no2010-788 of 12 July 2010. In order to reflect its        by group management controllers. Data comparison is done
     commitment to further enhancing these indicators, the Group          from monthly reporting notably on social data regarding the
     undertook to have some non-financial information audited by           workforce and training.
     an independent third party beginning 2011.
                                                                          Methodological limitations
     Scope and consolidation method                                       There may be limitations to the methodologies underpinning
     of non-financial data                                                certain environmental and labour-related indicators by virtue
     The indicators relating to Sustainable Development are               of the absence of nationally or internationally recognised
     consolidated globally across all subsidiaries and companies          definitions and of required estimates. In particular, the
     whatever their activity, in which Saft holds a majority              collation of data on waste volumes is dependent on definitions
     interest (>50%). Changes in scope (opening or closing of new         as regards the hazardous or non-hazardous nature of waste,
     sites, production increases, hiring, etc.) are included in the       which is something that varies from one country to the next.
     information supplied, thereby explaining certain year-on-year        The lack of agreement as regards definitions for certain
     changes. In fact, it was decided not to freeze the scope but         labour-related indicators led the Group HR Department to
     instead to have the financial information reflect the scope as         establish a common framework. The Group thus established
     financial reporting does. Nevertheless, where these changes           a common definition for statistics on occupational accidents
     in scope give rise to variations that impact the consistency of      (excluding commuting accidents), having resulted in at least
     the data or a proper understanding of how they have changed,         one lost day.
     additional information is provided with respect to changes on
     a like-for-like basis and explanations are given on key events       Glossary of calculated indicators
     during the financial year.                                            and methodological detail
     The above principles are applied subject to the following            Environmental data
     qualifications:                                                       Hazardous and non-hazardous waste: definition of the hazard
        the environmental indicators only cover the manufacturing         is based on local regulation.
        facilities operated by the Group. They do not therefore           Recovered waste: definition of recovery is based on local
        cover the assembly and distribution units, in light of their      regulation.
        marginal impact on the various environmental indicators
        tracked by the Group;                                             Gas usage: gas usage is measured in MWh HHV (Higher
                                                                          Heating Value).
        the environmental indicators published below do not
        include information on the Indian subsidiary AMCO-Saft, as        Social data
        these data are not yet fully usable;
                                                                          Headcount: Any individual who is recognized as an employee
        where the numbers for an environmental indicator for the          of Saft and on payroll under an employment with Saft
        final month of the year were not available when they were          according to national law, collective agreement, employment
        being collated for the purposes of this report, the information   contract or practices.
        collated and published is, in order of descending priority:
                                                                          Staff Turnover 2012: (Flow-in-Flow-out)/2 divided by prior
             the actual data for the December 2011-November 2012          year headcount.
             period,
                                                                          Theoretical worked hours in a year: Registered employees in
             the actual data for the January  2012-November  2012         Full Time Equivalent (FTE) x Average number of hours worked
             period, with an estimated amount being added for             in the day in a full-time job x Average number of days worked
             December 2012.                                               in a year by full-time job (without public holidays and paid
                                                                          leaves).
     Collation and consolidation of non-
     financial data                                                       Yearly absenteeism rate: Measure of actual absenteeism as
                                                                          a percentage of days lost vs total working days for the same
     The data are tracked throughout the year by the reporting
                                                                          period. This rate is calculated as follows: number of days off
     managers designated at each site. The data are centralised
                                                                          for work related unpaid absence, sick absence, occupational
     annually by HQ, which collates, processes and consolidates
                                                                          disease (excluding long term sick absences and maternity
     the information.
                                                                          & paternity leave) x Average no. of hours per day, all divided
     The environmental data are reported via a common framework           by the number of theoretical hours worked per year by the
     for all sites introduced some nine years ago. An information         salaried workforce.
     note is included in order to specify the collation scope and
     define a few indicators.


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                                                                             SUSTAINABLE DEVELOPMENT
                                                                                           Environmental responsibility




Accident Frequency Rate: Number of accidents with day off /            the indicators that have been evaluated with a moderate
Theoretical number of hours worked in the year x 1,000,000             level are identified by the  sign on the following pages;
Accident Severity Rates: Number of Days Lost x 1,000 /                 the indicators that have been evaluated with a reasonable
Theoretical number of hours worked in 2012                             level are identified by the    sign on the following pages;
                                                                       a review of the consolidation of indicators and a review of
External audit
                                                                       consistency of required information of Art. R.225-105-1 of
The auditing of environmental, labour-related and corporate            the French Commercial Code.
information by an independent third party is split into three
separate phases:                                                     The exact nature of the work done and the conclusions of
                                                                     this work are presented in the auditor’s report on certain
  a review of the procedures used to collate information:            environmental and social indicators, which can be found on
  chosen scope, organisation of collation process and                pages 83 and 84 of this annual report.
  systems used;
  the checking, with a moderate or reasonable level of
  assurance, of the accuracy of data reported on a selection
  of labour-related and environmental indicators and on a
  representative sample of sites;




3.1         ENVIRONMENTAL RESPONSIBILITY

For Saft, the environment and sustainable development are            with environmental regulations and coordinates all ongoing
key priorities. The batteries manufactured by the Group supply       improvement measures. It is also tasked with identifying any
electrical energy without producing any direct emissions             planned new environmental regulations in advance so that
during use. Furthermore, the impact of our products in the           they can be incorporated into practical action plans in a timely
other phases of their lifecycles, during manufacturing and           manner.
recycling in particular, are duly analysed in order to reduce it.    The Eco-design Manager implements the Life Cycle
Saft also strives to maximise the use of secondary rather than       Assessment methodology (LCA) in the Group and provides
primary raw materials, such that the Group’s products make a         specialised support to the development teams in each division.
real contribution to sustainable development.                        The goal is to identify and implement efforts to reduce the
                                                                     impact of products manufactured.
                                                                     The Health and Environment Programme Manager also
3.1.1       GENERAL ENVIRONMENTAL POLICY                             contributes her expertise in the development of new
Compliance with regulatory requirements and reducing the             products in order to ensure compliance with environmental
environmental impact of the Group’s activity has been at             obligations. She is also responsible for monitoring the Group’s
the core of the Group’s values for many years. In order to           environmental performance by means of the performance
implement this policy, the Group has created a dedicated team        indicators detailed below.
responsible for monitoring and minimising the environmental
impact of its activities and products throughout their life cycle.
Coordinated by the Environmental Director, this team consists
                                                                     3.1.2       LEGAL AND REGULATORY
of Environmental Managers located at each production                             COMPLIANCE
site, an Eco-design Manager and a Health and Environment
                                                                     In every country in which Saft operates a production facility,
Programme Manager.
                                                                     this facility operates within a technical and legal framework
On-site Environmental Managers are under the direct                  as part of an “operating permit”, which strictly governs
authority of the plant directors who are themselves                  industrial activities with a view to minimising impacts. Such
responsible for implementing group policy at the operational         permits notably cover the handling, storage, and emissions of
level. Each Environmental Manager is trained on the specific          hazardous substances, as well as the management of waste
areas of impact of the site at which he or she works. This           generated at the site.
team of environmental specialists thus monitors compliance




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      3         SUSTAINABLE DEVELOPMENT
                Environmental responsibility




     3.1.3          CHEMICAL SUBSTANCES –                                A few years ago, a European Union directive (2006/66/EC) was
                    REACH REGULATION                                     adopted by the Council and the EU Parliament with a view to
                                                                         regulating the design and end of life of batteries marketed in
     In 2010, Saft registered all of the substances requiring            the European Union. This directive establishes some design
     registration on or before December 1st 2010, as well as several     limitations as well as an extended producer responsibility
     other substances for which the Registration deadline is set at      regarding the end of life and the recycling of spent batteries.
     a later date (1 June 2013 or 1 June 2018).                          Thanks to the deployment of this take back policy over many
     Saft is also monitoring the list of Substances of Very High         years, a simple adaptation was sufficient to ensure compliance
     Concern (SVHC), drawn up by the European Chemicals Agency           with 2006/66/EC directive.
     (ECHA), and actively exchanges information with its supply          Moreover, the design requirements mandated by this directive
     chain to ensure the effective dissemination of all information      have been implemented by the Group: capacity labelling,
     regarding the presence of SVHC substances in a purchased            marking with a crossed-out wheeled bin symbol and indicating
     preparation or item, thereby complying with its disclosure          the presence of certain substances.
     requirements towards the downstream chain.


                                                                         3.1.5       ENVIRONMENTAL PERFORMANCE
     3.1.4          END OF LIFE - BATTERIES                                          INDICATORS
                    DIRECTIVE (2006/66/EC)
                                                                         The Saft Group has progressively developed a range of
     Over the years, the Group has progressively introduced a            indicators to measure the impact of its activity on the
     policy of collecting and recycling its spent batteries, and in      environment. These indicators are consolidated and monitored
     particular its nickel-based range. The policy originated at         for internal purposes but are also communicated to the local
     our Oskarshamn plant in Sweden, which built a recycling             authorities responsible for issuing the operating permits
     unit originally established for the recycling of production         under which our manufacturing sites generally operate.
     scrap. During the 1980s, the recycling of spent batteries from
     Swedish industrial users started to be offered.                     Water usage
     This recycling service was progressively extended to                Total water usage, whether for manufacturing or sanitary use,
     customers located in other Northern European countries.             is monitored at all our sites. The water used by our sites is
     During the 1990s, it became a full-fledged policy which was          either supplied by local authorities, private companies or is
     gradually extended to all customers located in the European         taken directly from the water table. Such uses are conducted
     Union and in North America. To this end, the Group established      in compliance with public regulations governing the protection
     a network of voluntary bring-back points in a position to collect   of water resources.
     spent batteries from industrial end users, to sort them and re-
                                                                         There are no particular constraints as regards the use of water
     dispatch them to our Oskarshamn recycling facility which has
                                                                         from the natural environment surrounding industrial sites.
     gradually extended its recycling capacity.
                                                                         Total water usage is treated before it is used in battery
     More recently, efforts have been devoted to identifying
                                                                         manufacturing, washing and rinsing. Hence, the Group’s
     voluntary bring-back points within the new Member States
                                                                         water usage is directly correlated to production volumes
     of the European Union as well as in more distant countries,
                                                                         and is strongly linked with its product mix. In fact, usage per
     such as Thailand, Singapore, Taiwan, Australia, South Africa,
                                                                         facility varies greatly depending on battery technologies and
     and several other African countries. During the coming years,
                                                                         manufacturing processes. It is therefore difficult to assess
     efforts will concentrate on developing countries with less
                                                                         the evolution of water usage over time. Reduction in usage
     mature waste management infrastructures.
                                                                         can be achieved by implementing more economical industrial
     In parallel, partnerships with a number of recyclers have           processes or closed circuit systems (in particular for cooling
     been established in Europe and North America, with the result       systems).
     that the Group is now able to offer recycling solutions for all
                                                                         It should be noted that only a minor fraction of the water used
     chemical systems used.
                                                                         by the Group is incorporated into our products. The majority
     As a result of this policy and partner network, the vast            is returned, after proper treatment, to the environment (as a
     majority of our customers now have the option of dropping off       liquid or atmospheric release) in compliance with the quality
     their spent batteries at a designated bring-back point, from        specifications which govern releases to the environment.
     which the waste can be dispatched to an authorised recycler,
                                                                         The results of the Group’s efforts can be seen in the table below.
     in compliance with the rules governing cross-border waste
                                                                         Since 2009, water usage has been cut by 4%. Furthermore,
     transportation.
                                                                         since 2003, when consolidated tracking was implemented for
                                                                         this indicator, water usage overall has been reduced by 45%.




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Quality of water releases                                                   Type and amount of waste generated
All chemical substances in our water discharges having an                   by our plants
environmental impact have been identified and are monitored                  All waste flows generated by our sites are duly identified,
in terms of both concentration and absolute quantity released.              weighed and then recorded in the waste register. Our waste
Process water is treated by water treatment stations, either                flows are thus precisely monitored and recorded based on
(most frequently) on site or by public waste treatment plants               their characteristics (hazardous or non-hazardous) and final
with which the Group subsidiaries have agreements specifying                destination (recovery or elimination).
the nature and maximum admissible quantity of pollutants in
                                                                            The quantities of waste generated may be reduced by
order to ensure the water flow remains within the capabilities
                                                                            improving control over manufacturing processes. However,
of these treatment plants.
                                                                            since our products are constantly evolving and new products
Several avenues are available for reducing the quantities                   typically require novel manufacturing processes, we are often
of pollutants present in wastewater: process changes and                    required to discard non-conforming products, treating them
release abatement.                                                          as waste.
With regard to process changes, performance requirements of                 We constantly strive to identify new recovery solutions and
the finished products drive to a large extent the manufacturing              better segregate waste flows in order to decrease the fraction
processes. Some of these processes are responsible for                      of non-recovered waste.
generating process waste water, and it is thus not always
                                                                            The results of the Group’s efforts can be seen in the table
possible to modify those processes without altering battery
                                                                            presented in section 3.1.7 below. Since 2009, the amount
performance.
                                                                            of waste generated by the Group has increased by 8%. This
More direct improvements on water releases are possible via                 increase is due to the fact that our Jacksonville facility
the design and operation of water treatment stations.                       operated over the course of the full 2012 year. The Jacksonville
Since 2009, the level of cadmium in water discharges has                    plant generated 13% of the total Saft waste. Nevertheless, at
fallen by 46% and the level of nickel has increased by 12%.                 constant scope, a general downward trend is observed.
Since 2003, when consolidated tracking was implemented for                  Furthermore, 34% (1) of hazardous waste and 66% (1) of non-
these indicators, the volume of these substances released in                hazardous waste undergoes recovery, thereby allowing the
water decreased by 71% and 50% respectively.                                materials extracted to be reused for industrial purposes.

Quality of air releases                                                     Noise pollution
In a similar way, chemical substances with environmental                    Acoustic measurements are done on some sites within the
impacts present in air releases have been identified and                     framework of their “operating permit”. These measurements
are monitored for both concentration and absolute quantity                  show that noise pollution does not represent a relevant
released. Air emissions from our production sites are subject               indicator in Saft activity.
to appropriate treatment.
Several avenues are available to reduce the quantities of
                                                                            Energy consumption
pollutants present in the air releases: process changes and                 All energy consumption is metered, whether it be electricity
release abatement (e.g. filtration of particulate matters,                   (from all sources), natural gas or steam. Energy consumption
condensation of substances such as solvents, etc.).                         can be reduced by optimising the energy efficiency of industrial
                                                                            processes and buildings (heating, lighting, air conditioning,
With regard to process changes, the performance requirements
                                                                            etc.).
of the finished products drive to a certain extent the
manufacturing processes, some of which generate atmospheric                 The results of the Group’s efforts can be seen in the table
releases, and it is not always possible to modify those processes           presented in section 3.1.7 below. Since 2009, energy
without altering battery performance, which must comply with                consumption has decreased at constant scope, and increased
very precise specifications.                                                 by 4% considering changes in the scope. In particular, the
                                                                            Jacksonville plant accounts for 8% of total energy consumption
More direct improvements of air releases are possible by
                                                                            of the group, when its activity remains limited in current
improving the performance of air capture and filtration
                                                                            ramp-up phase. Since 2005, when consolidated tracking
systems.
                                                                            was implemented for this indicator, energy consumption
The results of the Group’s efforts can be seen in the table                 decreased by 13%.
presented in section 3.1.7 below. Since 2009, air emissions
of cadmium and nickel have fallen 47% and 18%. These
decreases in air emissions are due to improvement actions
such as filtration of particules. Additionally, since 2003, when
consolidated tracking was implemented for this indicator, the
volume of these substances released in air decreased by 67%
and 70% respectively.




(1)   Data has been subject to verification by a Statutory Auditor with moderate assurance.



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     ISO 14001 Certification
     It is the Group policy to certify the environmental management systems that are implemented on our industrial sites. All European
     facilities are now ISO 14001 certified, except for our plant in the UK.


     10 ISO 14001 certified manufacturing operations                   (2)                                                   Date of certification
     Saft Zhuhai – China                                                                                                                    2010
     Saft Bordeaux – France                                                                                                                 2008
     Saft Poitiers Space and Defence – France                                                                                               2007
     Saft Poitiers Lithium Battery Division – France                                                                                        2007
     Saft Nersac – France                                                                                                                   2007
     Friwo – Germany                                                                                                                        2004
     Saft Ferak – Czech Republic                                                                                                            2003
     Tadiran – Israel                                                                                                                       2000
     Saft Oskarshamn – Sweden                                                                                                               1999
     Tadiran – Germany                                                                                                                      1999



     3.1.6          ENVIRONMENTAL OBJECTIVES                                       Conversely, the environmental impact of the Saft Zhuhai facility
                    ASSIGNED TO OUR FOREIGN                                        in China has been fully included in the Group’s consolidated
                                                                                   data since 2010. The increase seen in a number of indicators
                    SUBSIDIARIES
                                                                                   between 2009 and 2010 is the result of its inclusion.
     The Group makes no distinction between its sites and aims                     Finally, the environmental impact of the new facility in
     to apply the same policy as regards regulatory compliance,                    Jacksonville, which began production in September 2011, has
     environmental impact reduction and sharing of best practices                  been included in the performance indicators. This inclusion
     across all its sites.                                                         notably explains the increase in 2012 of energy consumption
     It should nevertheless be noted that although the Group’s                     and waste generation indicators. This site fully applies Saft’s
     environmental policies are being progressively rolled out                     environmental policy.
     within the Indian company Amco-Saft, in which the Group is
     a majority shareholder, the environmental data set out in the
     table below does not include the data for this company, as
     these data are not fully usable.




     (2)       Data has been subject to verification by a Statutory Auditor with reasonable assurance.



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3.1.7           ENVIRONMENTAL IMPACT OF GROUP* ACTIVITIES

                                                                                                                          Variation
                                                                                                           Variations in      since
                                                                                                            comparison   measures
                                    Units                   2012        2011             2010          2009 with 2009 consolidation
Quality of water releases                                                                                                                  2003
Cd amount                               kg                   12.1         15.4             23.3         22.3           (46)%              (71)%
Ni amount                               kg                   57.4         57.6             59.3         51.3             12%              (50)%
Quality of air releases                                                                                                                    2003
Cd amount                                 t            0.0051          0.0109           0.0097       0.0097            (47)%              (67)%
Ni amount                                 t            0.0379          0.0386           0.0456       0.0462            (18)%              (70)%
IPA(t)                                    t             184.6           185.6              167        176.5             (4)%                  n.a
Water usage                                                                                                                                2003
                                                               (2)
Total water consumption              000 t        481.5                 520.0            510.0         501.6            (4)%              (45)%
City water                           000 t                  344.9       362.1            365.4         335.4              3%              (51)%
Well water                           000 t                  136.6       157.9            144.6         166.2           (18)%              (15)%
Waste generated                                                                                                                            2005
                                                               (1)
Total waste generated                     t          7,369              7,038            7,162         6,821               8%               11%
                                                               (1)
Hazardous                                 t          2,367              2,268            2,640         2,547             (7)%               (4)%
                                                               (1)
   recovered fraction                     t            809                777              959           828             (2)%                 n.a
                                                               (1)
Non-hazardous                             t          5,002              4,770            4,522         4,274               5%            (100)%
                                                               (1)
   recovered fraction                     t          3,301              3,078            3,313         2,945             17%                  n.a
Energy usage                                                                                                                               2005
                                                               (2)
Total energy usage                   MWh       224,269               233,887           230,607      215,779                4%             (13)%
■ Electricity
                                                               (2)
                                     MWh       134,235               142,190           131,466      121,379              11%                  0%
■ Gas
                                                               (2)
                                     MWh        73,619                75,058            83,178       79,905              (8)%             (34)%
■ Steam
                                                               (2)
                                     MWh        16,415                16,638            15,963       14 496              13%                48%
n.a : Data not available



3.1.8           CLEANING UP CONTAMINATED SITES                                to €14.1  million and €13.5  million respectively as of
                                                                              31 December 2011 and 31 December 2010). These provisions
In 2009, the Kalmar County Board and the Municipality of                      cover the future cost of collecting and recycling spent
Oskarshamn, in which the Swedish facility of Saft AB is located,              batteries and certain costs which will be incurred to clean up
entered into two agreements with Saft AB under which Saft AB                  contaminated sites, which in principle, would only be expected
agreed to partly fund, up to a maximum of 41 million Swedish                  to be incurred if these sites were to be closed.
crowns, the cost of cleaning up the Oskarshamn harbour,
                                                                              The change over the prior year is mainly due to exchange rate
where sediment was discovered. The costs incurred by Saft
                                                                              fluctuations of the euro against the US dollar.
AB are being called between 2010 and 2014.
Ninety percent of these costs are covered by various provisions
of the agreement governing the sale in 2004 of the Saft Group
                                                                              3.1.10        RESOURCE CONSERVATION
by Alcatel and the Group is thus reimbursed by Alcatel as
these costs are incurred.                                                     Sustainable development also means preserving resources,
                                                                              and Saft recycling programs make a significant contribution
                                                                              towards achieving this goal. As detailed above, Saft
3.1.9           PROVISIONS FOR ENVIRONMENTAL                                  endeavours to minimise its water and energy consumption in
                RISKS                                                         the course of its industrial activities.

The Group has set aside provisions for environmental risks
totalling €13.9  million as of 31 December 2012 (compared




(1)     Data has been subject to verification by a Statutory Auditor with moderate assurance.
(2)       Data has been subject to verification by a Statutory Auditor with reasonable assurance.
*     Excluding the Indian subsidiary, Amco-Saft Limited.



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     Furthermore, the sophisticated technologies used in Saft                      scope 1 (direct emissions) and scope 2 (indirect emissions
     batteries make it possible to save raw materials, as batteries                linked to energy). Total emissions for 2011 are 14,655t of CO2
     have markedly longer life spans than traditional batteries.                   for Bordeaux, Poitiers, Nersac, and Bagnolet. Associated with
                                                                                   those emissions, 18t of CO2 emissions were avoided. Following
     The Group also supports the development of renewable energy.
                                                                                   this inventory, an action plan to reduce CO2 has been set up,
     In fact, some batteries developed by the Group are used to
                                                                                   with a reduction goal over the 3 next years.
     store energy produced by solar and wind farms before being
     reinjected into the electricity grid, helping to reduce losses.               Finally, we already measure emissions of the main Volatile
     Their use also contributes to reduce impacts associated with                  Organic Compound (VOC) released by our plants: isopropyl
     intermittent power generation of wind and solar farms.                        alcohol (IPA). The data is consolidated in the table of
                                                                                   environmental indicators.
     Lastly, we should add that the installation of solar panels on
     the roof of the facility in Jacksonville makes it possible to                 The amount of IPA released globally decreased by 4% since it
     provide up to 10% of the site’s electricity needs.                            is measured on our production sites.



     3.1.11         HELPING RESPOND                                                3.1.12        BIODIVERSITY
                    TO AND CONTROL GLOBAL WARMING
                                                                                   Biodiversity is managed locally, with actions being taken
     In order to measure the impact of our plants on the                           at a number of sites. Some actions can be mentionned:
     environment with an aim of limiting impact on global warming,                 ecotoxicological study of the surrounding water, analysis of
     we have introduced a greenhouse gas inventory on French                       ambient air, plan to prevent pollution.
     territory. This greenhouse gas emission inventory includes




     3.2            SOCIAL RESPONSIBILITY

     3.2.1          CHANGES IN RESOURCES                                           Over the same period, 692 employees left the Group, of which
                                                                                   180  voluntary departures, 158 end of fixed-term contracts,
                                                          (1)
     At 31 December 2012, the Saft Group had 4,066                                 151       (1)
                                                                                                 who were made redundant.
     employees worldwide, a decrease of 1.33% compared with
                                                                                   Over this year, the staff turnover was 16% (vs. 17% in 2011).
     31 December 2011.
                                                                                   This high rate is mainly explained, on one hand, by a turnover
     The average headcount was stable in 2012 at 4,087 employees
                                                                                   rate of 140% in our Chinese production facility and, on the
     compared to an average of 4,099 in 2010.
                                                                                   other hand, by redundancy plans implemented in our Valdese
     Temporary contracts remainded stable in 2012, representing                    (United States) and South Shields (United Kingdom) production
     an average of 10% of total headcount.                                         units.
                                                                                   Excluding these two main factors, the Group turnover rate was
     Staff turnover
                                                                                   10% in 2012.
                                                                (1)
     Over the past year, the Group hired 638  people               ,
     including 214 on permanent contracts (of which 105 engineers
     and managers, 52  technicians and administrative staff,
     57  operatives) and 424 on fixed-term contracts (of which
     25 engineers and managers, 46 technicians and administrative
     staff, 353 operatives).




     (1)    Data has been subject to verification by a Statutory Auditor with moderate assurance.
     (2)       Data has been subject to verification by a Statutory Auditor with reasonable assurance.



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Breakdown of Group employees by category and gender
A breakdown of employees by country, division and category is shown below.



NUMBER OF EMPLOYEES BY COUNTRY



Country                                                                                        31/12/2010              31/12/2011             31/12/2012
                                                                                                                                                             (1)
France                                                                                                  1,731                  1,719          1,750
                                                                                                                                                             (1)
US                                                                                                        726                    802            786
                                                                                                                                                             (1)
Sweden                                                                                                    500                    521            545
                                                                                                                                                             (1)
Israel                                                                                                    332                    351            336
                                                                                                                                                             (1)
Czech Republic                                                                                            230                    216            193
                                                                                                                                                             (1)
Rest of the World                                                                                         500                    512            456
                                                                                                                                                            (1)
TOTAL                                                                                                   4,019                  4,121          4,066


NUMBER OF EMPLOYEES BY DIVISION



Divisions                                                                                      31/12/2010              31/12/2011             31/12/2012
SBG                                                                                                     1,686                  1,741                   1,627
IBG                                                                                                     2,216                  2,261                   2,310
Other Group activities*                                                                                   117                    119                     129
                                                                                                                                                            (1)
TOTAL                                                                                                   4,019                  4,121          4,066
(*) Other activities mainly include corporate support activities such as IT, research, corporate management, and finance and administration.




                                                         (1)
At 31 December 2012, women represented 34%                   of                        favouring professional development through rewarding and
the Group’s total workforce, compared with 35.2% at the                                stimulating careers.
end of 2011. The breakdown of men and women by socio-                               Employees are united around the key values of the Group,
professional category as of the same date was as follows:                           which are:
      “Managers and Engineers”: 216 women/764 men (compared                            leadership, characterised by business performance,
      to 204 women/771 men in 2011);                                                   management style and innovation;
      Technicians and Administrative Staff”: 348 women/668 men                         respect, throughout customer focus and team spirit;
      (compared to 356 women/695 men in 2011);
                                                                                       progress, based on continuous improvement and personal
      “Operatives”: 815  women/1,255  men (compared to                                 development.
      892 women/1,203 men in 2011).
                                                                                    The importance of the human dimension is translated into
The proportion of women in the Managers/Engineers and                               significant staff loyalty: 25% of employees have been with the
Technician/Administrative categories has been relatively                            Group for more than 25 years. This stability is attributable to a
stable from one year to the next. The proportion within the                         strong corporate culture, nurtured by the transfer of skills and
Operative category was reduced.                                                     sharing of experience on a global scale.
                                                                                    The distribution of a Code of Ethics to which the Group
                                                                                    employees can refer contributes to strengthening our vision
3.2.2           A VISION AND VALUES                                                 and values. This code promotes the essential elements to
                                                                                    establishing a working environment in which every employee
The human dimension is one major axis of Saft’s strategic
                                                                                    feels at ease, thanks to clear and regular communications, the
vision, which strives to be a high quality employer by:
                                                                                    respect for diversity and equality of opportunity, together with
      recruiting and managing its employees in an ethical manner;                   the health and safety protection.
      developing employee skills;




(1)      Data has been subject to verification by a Statutory Auditor with moderate assurance.
(2)        Data has been subject to verification by a Statutory Auditor with reasonable assurance.



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     3.2.3          HUMAN RESOURCE MANAGEMENT                                      The major recurring topics of the training of the Group’s
                                                                                   employees are safety, quality and continuous improvement
     The retention of talents is one key component of the Group’s                  processes, along with management, technology and
     Human Resources strategy and of its processes of induction,                   information systems.
     career management, skills development and compensation.
                                                                                   Reinforcing skills and developing leaders across the
                                                                                   organisation is one of the key focus areas at Saft.
     An induction process that facilitates
     information sharing                                                           Over 2012, the Saft group continued to deploy its global
     Newly-recruited engineers and managers (at the world-wide                     training programs (Sales & Marketing, Leadership, Project
     level) are involved in an induction process organised each                    Management skills) at all levels of the organization.
     year around the visit of the three French production sites. In                The plan to improve our practices in project management has
     addition to an introduction to the Group’s products, businesses               continued during 2012, including the recruitment by year-end
     and activities, the contribution of the Saft Management                       of a project management specialist who will be dedicated to
     Committee members is an important part of this process.                       supporting teams, both on methodology and tools.
     In favouring interactions, this induction program also helps
                                                                                   In addition, each site locally manages many training programs
     the participants to gain an extensive understanding of the
                                                                                   to better meet the needs of employees.
     Group’s values. Employee engagement and their ability to be
     autonomous are key to the Group’s business model, which
     moreover draws on the wealth of interaction offered by its
     multi-cultural teams.                                                         3.2.4         SAFT REWARD
     Employees’ engagement and their autonomy are a key to
                                                                                                 AND RECOGNITION SYSTEMS
     success in our business model which also leans on its multi-
     cultural teams’ interactions.                                                 An attractive and fair compensation policy
                                                                                   To strengthen the commitment of teams implies a coherent
     Career management facilitating professional                                   and attractive remuneration policy for all employees. The
     development                                                                   Group’s salary schemes, which take into account local factors,
     The Group encourages the geographical and functional                          are coordinated in a transparent and equitable manner.
     mobility of its employees and provides them with extensive                    In particular, they refer to frequent benchmarking by job
     information on the existing opportunities within the                          categories and geographical areas.
     organisation through “Echo Job”, the system used to advertise                 In the US, our site of Valdosta, Georgia, participated in
     available positions on the Group’s intranet, as well as through               local wage and benefits surveys and proved that Saft is an
     career interviews. These interviews are carried out by local                  “Employer of Choice” in the United States.
     and corporate human resources teams, and are mainly aimed
     at facilitating employees’ career development and promoting                   The remuneration of engineers and managers includes a
     and optimising internal mobility.                                             fixed salary and variable incentives established according
                                                                                   to performance targets set at the beginning of the year. The
     In 2012, 166 employees changed position within the Group.                     targets partly relate to the financial performance of the
     Opportunities for job mobility increased compared to 2011                     Group, the division or the site, and partly to the individual
     (153 moves).                                                                  performance.
     More specific career management tools are also used to                         Since Saft’s listing in 2005, six stock option plans have been
     facilitate career development. “People Reviews” are regularly                 issued by the Group. Each new plan grants stock options to
     undertaken with a view to identifying, monitoring and assist                  more than one hundred managers and experts.
     high potential employees as well as establishing succession
     plans for management teams and other key employees.                           Recognition for Innovation
                                                                                   To enhance and value our teams’ expertise, we reward our
     Constant skills development effort
                                                                                   staff’s successes notably through a Filling of Patents Award
     During the year 2012, the Group continued to invest in                        plan.
     skills development with 84% of employee (vs. 80% in 2011)
     participating in training initiatives, representing a total of
     52,776 (1) training hours (vs. 58,658 hours in 2011).




     (1)    Data has been subject to verification by a Statutory Auditor with moderate assurance.
     (2)       Data has been subject to verification by a Statutory Auditor with reasonable assurance.



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3.2.5        LABOUR RELATIONS MANAGEMENT                                     Collective agreements and working time
             AND COLLECTIVE AGREEMENTS                                       organisation
                                                                             In 2012, 27 (1) collective agreements were signed (vs. 35
Staff representation                                                         collective agreements in 2011) within the Group. These
Saft encourages a permanent and constructive dialogue in                     agreements mainly relate to pay, working conditions, health
areas relevant to the Company and its employees.                             and safety.

Staff representation in each entity of the Group and the
frequency of meetings between Management and Staff
representatives are exercised in compliance with applicable
                                                                             3.2.6       OCCUPATIONAL HEALTH AND SAFETY
local laws.                                                                  The total number of work accidents with days off was 90 (1)
For example, within the European Union, the laws of the                      in 2012 as compared to 73 in 2011. The frequency rate was
countries in which we operate (France, Sweden, United                        12.59 (1), as compared to 9.2 in 2011 and 10.7 in 2010.
Kingdom, Germany, Czech Republic, Italy, Netherlands and                     However, the rate of severity decreased to 0.18 (1) in 2012 as
Spain) organize rules on information and consultation of                     compared to 0.22 in 2011. The number of working days lost
workers, in accordance with the Directive No. 2002/14 of the                 due to accidents at work decreased by 24.9% in 2012, at 1,285
European Parliament and of the Council.                                      days (as compared to 1,712 days in 2011 and 1,509 in 2010).
Our non-discrimination principles set out in the Saft Code of                In 2012, 2,103 were trained on Safety, representing 52% of
Ethics apply faithfully to staff representatives, to ensure that             registered employees (with average number of temporary
the rights and freedom of staff representatives are strictly                 staff), compared to 3,024 in 2011 (67% of the employees) and
respected and that they have the same chances of career                      3,281 in 2010 (77% of the employees).
evolution and training as any other employees.




3.2.7        OTHER EMPLOYMENT DATA


WORKFORCE ANALYSIS BY PROFESSIONAL CATEGORIES



                                                                                           31/12/2010      31/12/2011          31/12/2012
Overall workforce
Engineers and managers                                                                             22%                24%                  24%
Employees and technicians                                                                          26%                25%                  25%
Operatives                                                                                         52%                51%                  51%
                                                  (2)
Women: 34% of workforce in 2012
Engineers and managers                                                                             20%                21%                  22%
Employees and technicians                                                                          34%                34%                  34%
Operatives                                                                                         43%                43%                  39%
                                            (2)
Men: 66% of workforce in 2012
Engineers and managers                                                                             80%                79%                  78%
Employees and technicians                                                                          66%                66%                  66%
Operatives                                                                                         57%                57%                  61%
Age structure
                                                                                                                                               (2)
Under 25                                                                                            8%                 7%           7%
                                                                                                                                               (2)
25 to 39                                                                                           29%                29%          29%
                                                                                                                                               (2)
40 to 49                                                                                           29%                29%          28%
                                                                                                                                               (2)
50 and over                                                                                        35%                35%          36%
Length of service (years)
0 to 4                                                                                             32%                32%                  25%
5 to 14                                                                                            25%                26%                  29%




(1)   Data evaluated by a Statutory Auditor with a moderate level of assurance.
(2)     Data evaluated by a Statutory Auditor with a reasonable level of assurance.



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                Corporate social responsibility




                                                                                                   31/12/2010      31/12/2011       31/12/2012
     15 to 24                                                                                              18%              17%               19%
     25 years and over                                                                                     25%              24%               27%
     Disabled employees (according to legal definitions
     of the countries concwerned)
     Number of disabled employees                                                                          107               121                129
     Professional training
     Number of employees trained                                                                         3,345             3,278            3,434
     % of total employees                                                                                 83%               80%              84%
     Number of training hours                                                                           52,203            58,658       52,776 (1)
     Absenteeism
                                                                                                                                                  (1)
     Total rate for the year                                                                              4.4%              4.1%         4.1%




     3.3            CORPORATE SOCIAL RESPONSIBILITY

     3.3.1          LOCAL, ECONOMIC AND SOCIAL                                     in Spain, Sweden, France and the Czech Republic) and in the
                    IMPACT                                                         United States.
                                                                                   Finally, Saft sites in the US and in Europe regularly sponsor
     Most of Saft’s production facilities are long-standing                        schools and professional associations. In particular, this means
     operations that have been well received by local residents.                   organising meetings between students and professionals,
     Indeed, the Group endeavours to recruit locally and is often                  visits to factories and internships, as well as providing financial
     recognised as being one of the major employers in the regions                 support for university events or associations (seminars,
     in which it operates. In Jacksonville (Florida, US), where the                newspapers, junior enterprise schemes), awarding grants
     new plant allows the direct employment of 131 people from                     to students and entering into partnerships with engineering
     the region.                                                                   schools and universities as part of research programmes
     Through its research and development activities, Saft supports                (French and European).
     many scientific and technical projects, in particularly through
     partnerships with universities and research laboratories in
     Europe but also in the United States.                                         3.3.2         SUBCONTRACTING AND SUPPLIERS
     Furthermore, in most sites, Saft is involved in local industrial
     and economic development, taking part in professional and                     The Saft Group is looking to implement a responsible
     industrial associations, and sitting on Chambers of Commerce                  purchasing policy and to work with suppliers whose
     and Industry and other Local Committees.                                      commercial and industrial practices respect this principle.
                                                                                   Saft’s Code of Ethics details the rules that must be respected
     Community Commitment                                                          by all employees in business dealings, and in particular
     Saft also plays an active role in local communities by                        in dealings with suppliers. The Purchasing Department is
     supporting or participating in a range of social, environmental               responsible in this respect for ensuring that buyers are
     and humanitarian initiatives. In 2012, donations were made to                 regularly informed of the need to respect these rules.
     communities or organisations of public interest (fire services,                Where group suppliers operate in countries in which
     schools, social centres, etc.) in most localities in which Saft               the governance indicators published by the World Bank
     operates.                                                                     (Worldwide Governance Indicators) fall below the median
     The Group also took part in initiatives to support minority                   of the countries evaluated, they must formally undertake to
     groups (the disabled, senior citizens, people suffering from                  comply with commitments built on three principles: corporate
     illnesses) in most countries (the Czech Republic, the United                  responsibility, ethics and environmental responsibility. This,
     Kingdom, Israel, France and Italy), in charity initiatives for                for example, encompasses respect for conventions  29, 111,
     medical research associations in the US, in the UK, Israel and                138 and 182 of the International Labour Organisation (ILO).
     Germany, not to mention support for NGOs and international                    In addition, in the US, the Group complies in all relevant cases
     organisations (Red Cross, Énergies Sans Frontières, etc.).                    with the obligations of the Federal Acquisition Act with regard
     Furthermore, Saft regularly sponsors cultural venues and                      in particular to respect for minorities and principles of non-
     events and sports clubs and events in Europe (particularly                    discrimination.

     (1)    Data has been subject to verification by a Statutory Auditor with moderate assurance.
     (2)       Data has been subject to verification by a Statutory Auditor with reasonable assurance.

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                                                                                                 Corporate social responsibility




In the course of its dealings with sub-contractors, in France               Labour
the Group particularly endeavours to follow the general                     3: We support the freedom of association and the effective
recommendations of the report of 30 August 2010 of the                      recognition of the right to collective bargaining;
Médiateur des relations interindustrielles et de la sous-
traitance, detailing unfair practices. Furthermore, in the US, it           4: We uphold the principle of the elimination of all forms of
complies in all relevant cases with the provisions of the Davis-            forced or compulsory labour;
Bacon Act as regards daily rates paid to sub-contractors.                   5: We uphold the principle of the effective abolition of child
                                                                            labour; and
                                                                            6: We uphold the principle of the elimination of discrimination
3.3.3        MEASURE TO PREVENT CONSUMER                                    in respect of employment and occupation.
             HEALTH AND SAFETY
                                                                            Environment
Saft products are used by companies in the aeronautic,                      7: We support a precautionary approach to environmental
railway, oil and gas, defence and other industrial sectors. They            challenges;
are absolutely not used in the consumer segment. During their
use, our product does not emit any release. Moreover, they are              8: We undertake initiatives to promote greater environmental
designed in order to ensure the highest level of security and               responsibility; and
manufactured in accordance with those principles.                           9: We encourage the development and distribution of
Additionally, take back and recycling network are implemented               environmentally friendly technologies.
in most of the countries in which our products are used, giving
an end of life in compliance with regulation requirement.
                                                                            Anti-Corruption
                                                                            10: We are opposed to corruption in any and all form, including
                                                                            extortion and bribery.
3.3.4        HUMAN RIGHTS GROUP’S                                           All our internal guiding principles are rooted in the Universal
             COMMITMENTS, INTERNATIONAL                                     Declaration of Human Rights, the International Labour
                                                                            Organization’s Declaration on Fundamental Principles and
             LABOUR ORGANISATION (ILO)
                                                                            Rights at Work, The Rio Declaration on Environment and
             STANDARDS AND MEMBERSHIP                                       Development, and The United Nations Convention Against
             UN GLOBAL COMPACT                                              Corruption.

Beyond its willingness to comply with national law and                      The Saft Group Ethics Code, distributed to every employee, is
regulations of countries where the Group operates, Saft joined              consistent with the UN Global Compact’s principles.
the United Nations Global Compact initiative on 30th December
2011, thus making formal commitments to comply with the UN
Global Compact’s ten principles in the areas of human rights,
labour, environment and anticorruption.
These principles which we have made ours are:

Human Rights
1: We support and respect the protection of internationally
proclaimed human rights; and
2: We make sure that they are not complicit in human rights
abuses.




(1)   Data has been subject to verification by a Statutory Auditor with moderate assurance.
(2)     Data has been subject to verification by a Statutory Auditor with reasonable assurance.

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                Auditor’s report on social, environmental and societal information




     3.4            AUDITOR’S REPORT ON SOCIAL, ENVIRONMENTAL
                    AND SOCIETAL INFORMATION

     This is an unofficial translation into English of the statutory auditors’ report that is issued in the French language and is provided solely
     for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with,
     French law and professional auditing standards applicable in France.


     Year ended 31 December 2012
     SAFT Groupe SA
     12, rue Sadi-Carnot
     93170 Bagnolet


     For the attention of the Board of Directors
     At your request and in our capacity as statutory auditor of SAFT Group (the “Group”), we hereby present our report on the consolidated
     social, environmental and societal information presented in the management report (the “Information”) prepared in respect of the
     financial year ended 31 December 2012 pursuant to article L.225-102-1 of the French Commercial Code law.

     Responsibility of management
     It is the responsibility of the Board of Directors to prepare a management report including the social, environmental and societal
     information provided for by article R.225-105-1 of the French Commercial Code law and prepared in accordance with the Group’s
     reporting framework (the “Framework”) available from its Group Human Resources, Health and Safety Department and Group
     Environment & Research Department.

     Independence and quality control
     Our independence is defined by regulatory texts, our professional code of conduct and the provisions of article L.822-11 of the
     French Commercial Code law. We have also implemented a system of quality control including documented policies and procedures
     designed to ensure compliance with those deontological rules and with the applicable professional standards and legal and
     regulatory texts.

     Responsibility of the statutory auditor
     It is our responsibility, based on our work:
     to attest that the requisite Information has been presented in the management report or, if omitted, that an explanation has been
     provided for its omission in accordance with the third paragraph of article R.225-105 of the French Commercial Code law and
     decree n°2012-557 dated 24 April 2012 dealing with the attestation as to presence;
          to express a conclusion providing reasonable and moderate assurance as to whether the Information has, in all material respects,
          been fairly presented in accordance with the applicable Framework.
     We have had recourse, for assistance in performing our work, to our specialists in corporate social responsibility.



     I.             ATTESTATION AS TO PRESENCE
     We performed the following work in accordance with the professional standards applicable in France:
     We compared the Information presented in the management report with the list provided for by article R.225-105-1 of the French
     Commercial Code law;
     We verified that the Information coincided with the applicable scope of consolidation, i.e. the company as well as its subsidiaries (as
     defined by article L. 233-1) and the other companies it controls (as defined by article L.233-3 of the French Commercial Code law);
          For any omission of consolidated information, we verified that explanation therefore had been provided in accordance with
          decree n°2012-557 dated 24 April 2012.
     Based on our work, we attest as to the presence in the management report of the requisite Information.




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                                                          Auditor’s report on social, environmental and societal information




II.            ASSURANCE REPORT

Nature and extent of our work
We performed our work in accordance with ISAE (International Standard on Assurance Engagements) 3000 and professional
standards applicable in France.
We performed the following work designed to provide:
      Reasonable assurance that the Information identified by the symbol         in the chapter 3 “Sustainable development” of the
      Reference Document was prepared, in all material respects with the provisions of the Framework.
      Moderate assurance that the Information, identified by the symbol in the chapter 3 “Sustainable development” of the Reference
      Document and the other Information did not contain any material misstatement liable to impair its compliance in all material
      respects with the provisions of the Framework;
We performed the following procedures:
      We assessed the appropriateness of the Framework in terms of its relevance, completeness, reliability, neutrality and
      understandability with due regard to any relevant best business practices for the industry.
      We verified the implementation within the Group of a process for collecting, compiling, processing and controlling the Information
      of a nature to ensure its completeness and consistency. We obtained an understanding of the internal control and risk management
      procedures applicable to the preparation of the Information. For that purpose, we interviewed the persons responsible for social
      and environmental reporting.
      We selected the consolidated information to be tested and determined the nature and extent of the applicable tests with due
      regard for the importance of that information in terms of the social and environmental consequences of the Group’s activity and
      other characteristics as well as to its societal commitments.
          With regard to the quantitative consolidated data we considered as the most important:
          _ at the level of the consolidating entity and controlled entities, we performed analytical procedures and verified, on a
             sample basis, the applicable calculations and the consolidation of the information;
          _ at the level of the sites we selected on the basis of their activity, their contribution to the consolidated indicators, their
             location and an analysis of the applicable risks, we:
             conducted telephone interviews to verify the correct application of procedures and obtain the information enabling us to
             undertake our verification;
             performed detailed testing, on a sample basis, involving verification of the applicable calculations and vouching of data
             to supporting documentation.
          With regard to the qualitative consolidated data we considered as the most important, we engaged in interviews and reviewed
          the applicable documentary sources to corroborate the information and assess its fairness of presentation.
          _ As regards the other consolidated information published, we assessed its fairness and consistency on the basis of our
             knowledge of the company and, eventually, by engaging in interviews or consultation of documentary sources.
          _ Finally, we assessed the relevancy of the explanations for any information omitted.



III.           CONCLUSION

Reasonable assurance
In our opinion, the Information identified by the symbol        was prepared, in all material aspects, in accordance with the Framework.

Moderate assurance
 Based on our work, we did not identify any material anomalies likely to call into question the fact that the Information identified by
the symbol and the other Information was prepared, in all material aspects, in accordance with the Framework.


                                                      La Défense, 15 February 2013
                                                                     Mazars


                        Emmanuelle Rigaudias                                                    Juliette Decoux
                   Sustainable Development Partner                                                  Partner




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                                                                         4
Corporate
Governance
4.1      Management and Supervisory Boards                                       84
4.1.1    Management Board                                                          84
4.1.2    Supervisory Board                                                         86
4.1.3    Management Committee                                                      89
4.1.4    Corporate governance repository                                           89
4.1.5    Disclosures concerning Management and Supervisory Board
         members                                                                   89

4.2      Remuneration and shareholding
         of the Management and Supervisory
         Board members                                                           90
4.2.1    Principles and rules related to corporate officers remunerations          90
4.2.2    Policy on the granting of stock options                                   91
4.2.3    Remuneration of management board members                                  92
4.2.4    Remuneration paid to Supervisory Board members                            94
4.2.5    Stock options allocated by the issuer during 2012
         to each member of the Management Board                                    95
4.2.6    Stock options exercised during the 2012 financial year
         by Management Board members                                               96
4.2.7    Performance shares granted to management                                  96
4.2.8    History of stock options granted                                          96
4.2.9    Information on employment contracts, pension
         plans and termination compensation for members
         of the Management Board                                                   98
4.2.10   Shares held by management in the Company’s share capital
         as of 31 December 2012                                                    99
4.2.11   Transactions in Company shares by management
         and persons in a similar position                                         99

4.3      Report of the Chairman
         of the Supervisory Board                                             100
4.3.1    Corporate governance                                                    100
4.3.2    Risk management and Internal Control procedures                         105

4.4      Statutory Auditors’ report, prepared
         in compliance with article L.225-
         235 of the French Commercial
         Code on the report prepared by
         the Chairman of the Supervisory Board
         of Saft Groupe SA                     108

4.5      Main provisions of the Supervisory
         Board bylaws                                                         110
4.5.1    Preparation and organisation of Supervisory Board Meetings              110
4.5.2    Duties and responsibilities of Supervisory Board members                111




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                Management and Supervisory Boards




     4.1            MANAGEMENT AND SUPERVISORY BOARDS

     Saft Groupe SA was incorporated on 7 June 2005 in the form               with by the Supervisory Board or by shareholders at the
     of a Société Anonyme (limited company) with Directoire                   Annual General Meetings. Thus, in accordance with the law, the
     (Management Board) and Conseil de Surveillance (Supervisory              Supervisory Board’s prior approval must be obtained for any
     Board). This structure allows for separation between the                 sale of real property, the sale of all or part of equity interests,
     management functions exercised by the Management Board                   the granting of any sureties, endorsements and guarantees, in
     and the oversight functions of the Supervisory Board, with no            accordance with current regulations.
     member of the latter being on the Management Board.
                                                                              The Management Board must also obtain the prior approval
     The articles of association are supplemented by Supervisory              of the Supervisory Board before committing the Company to
     Board bylaws. They establish the rules regarding how the                 any investment or divestment that would change the scope
     Supervisory Board should operate, structure its interaction              of consolidation of the Company and its subsidiaries. The
     with the Management Board as well as how it is to be                     Management Board must also obtain the prior approval of
     controlled.                                                              the Supervisory Board for any investment relating to an
                                                                              acquisition or any commitment representing over thirty (30)
                                                                              million euros that is outside the scope of the Company’s
     4.1.1          MANAGEMENT BOARD                                          budget or is not a routine operating transaction. Finally, the
                                                                              Management Board must obtain the prior approval of the
     The Management Board is appointed by the Supervisory Board               Supervisory Board before using any authorisation granted by
     which sets the number of its members. The Supervisory                    the Annual General Meeting, including the issuance of shares
     Board appoints the Chairman of the Management Board who                  or any other securities carrying immediate or deferred rights
     represents the Company vis-à-vis third parties.                          to conversion into Company equity.
     The Management Board has the broadest powers to act in all               The members of the Management Board must be individuals
     circumstances in the Company’s name, for all matters falling             who can be chosen from outside the shareholders. The
     within the scope of the Company’s corporate purpose, except              Management Board is appointed for a two-year term.
     expressly for those matters which, by law, may only be dealt


     The Management Board had the following members during the 2012 financial year:


                                                               Date of end
                                           Date         Date       of term
             Name                     appointed   of renewal      of office                    Other activities and other main offices held
     John Searle                23 March 2005     5 May 2011 14 May 2013                     Chairman and Managing Director of Saft SAS,
     Chairman                                                                                                 Director of Saft Finance Sarl,
                                                                                                              Director of Saft America Inc.,
                                                                                                                     Chairman of Saft Ltd.,
                                                                                                        Chairman of Tadiran Batteries Ltd.,
                                                                                         Chairman and Managing Director of Aérospatiale
                                                                                                                            Batteries (ASB),
                                                                                                       Director of MSB, an ASB subsidiary,
     Thomas J. Alcide             22 April 2005   5 May 2011 14 May 2013                                 General Manager of SBG Division,
                                                                                Chairman and CEO of Group’s subsidiaries: Saft America
                                                                               Inc., Saft Federal Systems Inc., Florida Substrate Inc., Saft
                                                                                        JV Holding Co., Saft Zhuhai (FTZ) Batteries Co. Ltd.
     Bruno Dathis                   5 May 2008    5 May 2011 14 May 2013                                             Chief Financial Officer
                                                                                                              Director of Saft Finance Sàrl,
     Xavier Delacroix 11 January 2007             5 May 2011 14 May 2013                                  General Manager of IBG Division,
                                                                                            Chairman of Saft Ferak AS Supervisory Board,
                                                                                   Chairman of the Board of Directors of Amco-Saft India
                                                                                                                        Ltd. and of Saft AB,
                                                                                                               Director of Saft Baterias SL.
     Elizabeth Ledger             22 April 2005   5 May 2011 14 May 2013                                      Director of Communications.




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                                                                                Management and Supervisory Boards




A short presentation of each Management Board member is displayed below:



                    JOHN SEARLE
                    Chairman
                                                                                       BRUNO DATHIS
                    of the management board                                            Member
                    Born in 1954                                                       Born in 1958
                    British                                                            French

Date appointed: 23 March 2005                                      Date appointed: 7 May 2008
Date term of office ends: 14 May 2013                              Date term of office ends: 14 May 2013
Number of shares held as of 31 December 2012: 265,931              Number of shares held as of 31 December 2012: 631
Business address:                                                  Business address:
Saft – 12, rue Sadi Carnot – 93170 Bagnolet                        Saft – 12, rue Sadi Carnot – 93170 Bagnolet
John Searle is Chairman of the Company’s Management Board.         Bruno Dathis joined the Saft Group in March 2008 as Chief
He has been in charge of the Saft Group’s operations since         Financial Officer. He is a graduate of the Institut d’études
2002. John Searle is also Chairman and Managing Director of        politiques de Paris and holds a Masters degree in economics
Saft SAS (France). He joined the Saft Group in 1990 and has        from the University of Paris. He is also a Certified Public
held various sales and management posts in the UK and then         Accountant. A former audit partner with Ernst and Young,
in France. In 1999, he was appointed to head the SBG Division.     in 1999, Bruno Dathis was appointed Chief Financial Officer
Before joining the Saft Group, he was Operations Manager at        of Balmain and was a member of the Board of Directors.
Manchester Steel and Sales Manager at Saunders Valve in the        He joined Myers Industries Incorporated in 2004 as Chief
UK. John Searle holds an engineering degree from Cambridge         Financial Officer for its European Allibert Buckhom division.
University. During the past five years, in addition to the above    Bruno Dathis does not perform, nor has he performed over the
listed duties, John Searle has held the office of President of     past five years, any duties other than those mentioned above.
Revolt Technology GmbH.



                    THOMAS ALCIDE                                                      XAVIER DELACROIX
                    Member                                                             Member
                    Born in 1958                                                       Born in 1964
                    US National                                                        French

Date appointed: 22 April 2005                                      Date appointed: 11 January 2007
Date term of office ends: 14 May 2013                              Date term of office ends: 14 May 2013
Number of shares held as of 31 December 2012: 17,482               Number of shares held as of 31 December 2012: 27,770
Business address:                                                  Business address:
Saft America Inc. – 13575 Waterworks Street, Jacksonville,         Saft – 12, rue Sadi Carnot – 93170 Bagnolet
FL.32221 – USA
                                                                   Xavier Delacroix has served as General Manager of IBG since
Thomas Alcide has been the SBG division’s Director since           January 2007. He joined the Space and Defence division of
2004. Before that, he was Director of the Group’s lithium          the Saft Group in 1992, and became Site Manager of the SBG
batteries division from 2002 to 2004 and Director of its Valdese   Division’s Poitiers plant in 2006. Xavier Delacroix started his
plant until 2002. Previously, he held various management           career with the French Defence Procurement Agency (DGA).
positions within the Group in the United States. Before joining    He holds an engineering degree from ESTACA and a Master’s
Saft in 1988, Thomas Alcide performed engineering duties           degree from ENSAM Paris. Xavier Delacroix does not perform,
at Duracell. He holds an engineering degree from California        nor has he performed over the past five years, any duties
Coast University and an electronics technology degree from         other than those mentioned above.
the Arizona Institute of Technology. Thomas Alcide does not
perform, nor has he performed over the past five years, any
duties other than those mentioned above.




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      4         CORPORATE GOVERNANCE
                Management and Supervisory Boards




                              ELIZABETH LEDGER
                                                                                     Elizabeth Ledger is Director of Corporate Communications at Saft
                              Member
                                                                                     after having led the Group’s Communications Department since
                              Born in 1961                                           1999 and its internal communications since 1998. Elizabeth
                              British                                                Ledger previously held various posts at the Department of
                                                                                     Health and Social Security in the United Kingdom from 1983 to
                                                                                     1991. From 1991 to 1998, she was a business communications
                                                                                     consultant at RSCG Consulting. She is Chairman of the Recharge
     Date appointed: 22 April 2005
                                                                                     Association, which represents the world’s rechargeable
     Date term of office ends: 14 May 2013                                           battery manufacturers. A foreign alumnus of France’s École
     Number of shares held as of 31 December 2012: 55,549                            nationale d’administration, she also holds a Bachelor’s degree
                                                                                     in languages from the University of Leeds and a Master’s in
     Business address:
                                                                                     marketing from the University of Manchester. Elizabeth Ledger
     Saft – 12, rue Sadi Carnot – 93170 Bagnolet
                                                                                     does not perform, nor has she performed over the past five
                                                                                     years, any duties other than those mentioned above.



     4.1.2          SUPERVISORY BOARD
     The Supervisory Board currently has five members. Each                           Supervisory Board members are bound by the “Bylaws of
     member of the Supervisory Board must hold a minimum of                          the Supervisory Board”, the main provisions of which are
     one hundred shares in registered form throughout their term                     presented in section 4.5 of this annual report.
     of office.
                                                                                     The Supervisory Board appoints a Chairman and a Vice-
                                                                                     Chairman from among its members.



     The members of the Supervisory Board are as follows:


                                                                      Date of end
                                             Date           Date          of term          Office Other positions and main offices held in 2012
                 Name                   appointed     of renewal         of office          held                        (out of Saft Groupe SA)
     Yann Duchesne                 12 May 2005 4 May 2011                    AGM    Chairman                                      Senior Principal
                                                                        approving       of the                    of Doughty Hanson & Co. (UK),
                                                                     the accounts Supervisory                        Director of IPSOS (France) (1),
                                                                         for 2012      Board        Director of Balta Industries Group (Belgium)
                                                                                                              Member of the Supervisory Board
                                                                                                                    of Laurent Perrier (France) (1),
                                                                                                             Chairman of the Supervisory Board
                                                                                                                                   of KP1 (France)
     Jean-Marc Daillance 12 May 2005 4 May 2011                   AGM        Vice -                  Operational partner at Jolt Capital (France)
                                                             approving   Chairman                               Senior advisor at Roland Berger
                                                          the accounts       of the                                         Strategy Consultants
                                                              for 2013 Supervisory
                                                                            Board
     Bruno Angles                  12 May 2005 4 May 2011         AGM     Member                     Chairman France, Macquarie Infrastructure
                                                             approving       of the                           and Real Assets (Europe) Limited,
                                                          the accounts Supervisory                                 Director of APRR (Autoroutes
                                                              for 2013      Board                          Paris-Rhin-Rhône) of AREA (France),
                                                                                                                         of SAS Eiffarie (France),
                                                                                                            of SAS Financière Eiffarie, (France).
                                                                                                          Director of Brussels Airport Company
                                                                                                                                       (Belgium).
                                                                                                             Chairman of the Board of Directors
                                                                                                                 for Arlanda Express (Sweden),
                                                                                                              Member of the Supervisory Board
                                                                                                                         of Assystem (France) (1).
     Ghislain Lescuyer             12 May 2005 4 May 2011                   AGM     Member                              Chief Information Officer
                                                                       approving      of the                         of Alstom group (France) (1).
                                                                    the accounts Supervisory
                                                                        for 2012      Board
     Charlotte                       4 May 2011                   -         AGM     Member                 Director of Marketing and Corporate
     Garnier-Peugeot                                                   approving      of the                  Communications for the Edmond
                                                                    the accounts Supervisory                      de Rothschild group (France),
                                                                        for 2012      Board            Managing Director of Edmond Rothschild
                                                                                                                               Communication.
     (1) IPSOS, Laurent Perrier, APRR, Assystem and Alstom are listed on Euronext.



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                                                                           CORPORATE GOVERNANCE
                                                                            Management and Supervisory Boards




Supervisory Board members resume:


                                                               semiconductors, mobility and Cloud and Senior Advisor at
                                                               Roland Berger Strategy Consultants. Over the past number
                   YANN DUCHESNE                               of years, Jean-Marc Daillance has also held the following
                   Chairman                                    offices: Chairman of Zodiac European Pools (France), Zodiac
                   of the Supervisory Board                    International SASU (France), Zodiac Pool Care Europe SASU
                   Born in 1956                                (France), P.S.A. (France), Evac International O.y., Chairman of
                                                               Zodiac group Australia Pty Ltd., Zodiac Pool Care Inc., Manager
                   French                                      of Debes & Wunder GmbH, Zodiac Kern GmbH, General
                                                               Manager of Marine Holding US Corp. Previously, he worked as
Date appointed: 12 May 2005
                                                               an engineer at SAT (Paris) and at IBM Corporation in Raleigh
Date term of office ends: Annual General Meeting approving     (USA).Jean-Marc Daillance is a graduate of France’s École
the financial statements for the financial year ending           Polytechnique and holds a Master of Business Administration
31December 2012                                                from the Harvard Business School.
Number of shares held as of 31 December 2012: 140              He is Director of the Harvard Business School of France
Business address:                                              and Director and Vice-President of CNISF – Ingénieurs et
Doughty Hanson & Co. – 45 Pall Mall, London, SW1Y 5JG, UK      Scientifiques de France.

Yann Duchesne has been Chairman of the Company’s
Supervisory Board since 12 May 2005. He is also Chairman
                                                                                   BRUNO ANGLES
of the Remuneration and Appointments Committee. He has
served as Senior Principal of Doughty Hanson in London                             Member
since January 2003. Previously, he held several positions at                       of the Supervisory Board
McKinsey & Company over a period of twenty years and headed                        Born in 1964
the consulting firm’s Corporate Finance and Private Equity
                                                                                   French
Department in France for many years. In 1997, he became the
General Manager of the Paris office of McKinsey & Company.     Date appointed: 12 May 2005
Author of a book on economic policy (France SA), he has
                                                               Date term of office ends: Annual General Meeting approving
been awarded the French Legion of Honour. Yann Duchesne
                                                               the financial statements for the financial year ending 31
is a graduate of France’s École Polytechnique, the École des
                                                               December 2013.
Mines de Paris and the IEP de Paris. He is a member of the
Supervisory Board of Laurent Perrier. He is also Chairman of   Number of shares held as of 31 December 2012: 138
KP1’s Supervisory Board and a Board Member at IPSOS and        Business address:
Balta Industries.                                              Macquarie Infrastructure and Real Assets (Europe) Ltd., –
                                                               41, avenue George V – 75008 Paris, France
                   JEAN-MARC DAILLANCE                         Bruno Angles has been a member of SAFT’s Supervisory
                   Vice-Chairman                               Board since 12 May 2005. He is Chairman France of Macquarie
                   of the Supervisory Board                    Infrastructure and Real Assets (Europe) Limited. In this
                                                               capacity, he is Director of Autoroutes Paris-Rhin-Rhône, AREA,
                   Born in 1957
                                                               SAS Eiffarie, SAS Financière Eiffarie and of the Brussels
                   French                                      Airport Company. He is also Chairman of the Board of Directors
                                                               of Arlanda Express (A-Train) and member of the Supervisory
Date appointed: 12 May 2005
                                                               Board of Assystem.
Date term of office ends: Annual General Meeting approving
                                                               Bruno Angles was formerly Senior Partner of Mercer Delta
the financial statements for the financial year ending 31
                                                               (2006-2007) after having been General Manager of Vinci
December 2013
                                                               Energies (2004-2005).
Number of shares held as of 31 December 2012: 133
                                                               Before that, he held several positions at McKinsey & Company
Business address:                                              from 1996 to 2004 and became a principal in 2000. He also
11 rue Kepler – 75116 Paris                                    served as General Manager of the Mont Blanc Tunnel Company
Jean-Marc Daillance has been on the Company’s Supervisory      (STMB) (1994-1996), Technical Advisor to the office of Bernard
Board since 12 May 2005 and has served as Vice-Chairman of     Bosson (1993-1994), and Head of the Major Infrastructure
the Supervisory Board and Chairman of the Audit Committee      Projects Department at the Direction départementale de
since 14 May 2007. After holding a number of positions         l’équipement (DDE) in Ille-et-Vilaine (1990-1993).
within the Zodiac group since 1984, he was appointed           Bruno Angles, a structural engineer, is a graduate of École
General Manager of Zodiac’s Marine Division and sat on its     Polytechnique and of the Collège des Ingénieurs. He was
Management Committee from 2002 to August 2007, then            the Chairman of the Association des Ingénieurs des Ponts et
serving as Chairman of the Management Board at Zodiac          Chaussées (2003-2005) and was Chairman of the Fondation
Marine Holding until January 2008.                             de l’Ecole Nationale des Ponts et Chaussées (2006-2011).
He is an operational partner at Jolt Capital, an expansion     Bruno Angles is a Knight of the National Order of the Legion of
fund that invests in European companies involved in            Honour and an officer of the National Order of Merit (France) .

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                              GHISLAIN LESCUYER                                            CHARLOTTE
                              Member                                                       GARNIER-PEUGEOT
                              of the Supervisory Board                                     Member
                              Born in 1957                                                 of the Supervisory Board
                              French                                                       Born in 1960
                                                                                           French
     Date appointed: 12 May 2005
     Date term of office ends: Annual General Meeting approving        Date appointed: 4 May 2011
     the financial statements for the financial year ending 31           Date term of office ends: Annual General Meeting approving the
     December 2012                                                     financial statements for the financial year ending 31December
     Number of shares held as of 31 December 2012: 135                 2012

     Business address:                                                 Number of shares held as of 31 December 2012: 140
     ALSTOM – 3, Avenue André Malraux 92300 Levallois-Perret –         Business address:
     France.                                                           Groupe Edmond de Rothschild – 47, rue du Faubourg
     Ghislain Lescuyer has been a member of the Company’s              Saint-Honoré – 75008 Paris, France
     Supervisory Board since 12 May 2005. He is also Chairman of       Charlotte Garnier-Peugeot has been Director of Marketing and
     the Strategy and Technology Committee.                            Communications at the Edmond de Rothschild group since 2007,
     He is Chief Information Officer of Alstom group, where he         encompassing both its banking and non-banking businesses.
     previously occupied the position of Senior Vice President         She is also Managing Director of Rothschild Communication and,
     of Corporate Strategy and Development between 2010 and            since 2002, Director of Marketing and Corporate Communications
     April 2012. Previously, Ghislain Lescuyer held a number of        at Compagnie Financière Edmond de Rothschild, a French
     positions within the Areva group including, from 2007, the        subsidiary of the Edmond de Rothschild group.
     position of Executive Vice-President of Areva-TD. Deputy          Before that, from 1999 to 2002, she held the position of deputy
     Managing Director of Thomson from 2003 to 2007, he held           Director of Communications at CCF (which became HSBC France
     a number of positions including at Europ@web where he             in 2000). From 1994 to 1999, she worked as a manager at the
     was General Manager from 2000 to 2003. He joined Bull in          Fortiter Expansion firm, which she also helped found. She
     1994 and was appointed Co-Chairman of Bull in Services in         previously worked for the Sun Expansion communications agency
     1999. He has also spent time as a Management Consultant           from 1991 to 1994, was a freelance writer from 1987 to 1991 and
     at McKinsey & Company (1989-1993) and Sales Manager at            spent two years in the External Communications Department of
     Hewlett-Packard (1983-1987). Ghislain Lescuyer has a civil        IBM-France.
     engineering degree in telecommunications and holds a Master
                                                                       Charlotte Garnier-Peugeot is a graduate of Celsa where,
     of Business Administration.
                                                                       in parallel with her day job, she also worked as a part-time
                                                                       lecturer in institutional communications from 1997 to 2000.




     Following the recommendations of the Afep-Medef Code                they do not have a close family tie with a corporate officer;
     of Corporate Governance for Listed Companies, the status
                                                                         they have not been a Company auditor during the previous
     of each Supervisory Board member was examined by the
                                                                         five years;
     Remuneration and Appointments Committee. All Supervisory
     Board members are independent as of the 31st of December            they have not been directors of the Company for more than
     2012 as they meet the following criterias:                          twelve years; and

        they are not an employee or corporate officer of the             they do not have legal ties with a shareholder who directly
        Company or its parent company or of a company falling            or indirectly holds over 10% of the share capital or voting
        within its scope of consolidation either at the present time     rights of the Company.
        and have not held such a position within the past five years;   The Supervisory Board is assisted by three permanent
        they are not a corporate officer of a company in which         committees, the remit and mode of operation of which are set
        the Company directly or indirectly holds a directorship or     out in the Supervisory Board’s bylaws:
        in which any employee designated as such or corporate            an Audit Committee;
        officer of the Company (either at the present time or within
                                                                         a Remuneration and Appointments Committee; and
        the past five years) holds a directorship;
                                                                         since 5 May 2011, a Strategy and Technology Committee.
        they are not a major customer, supplier, investment banker
        or commercial banker of the company or of one of its
        consolidated subsidiaries;



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The members of the Committees are:                            4.1.4       CORPORATE GOVERNANCE
                                                                          REPOSITORY
Audit Committee
Jean-Marc Daillance, Chairman                                 The Company complies with the April 2010 Afep-Medef
                                                              Code of Corporate Governance for Listed Companies, with
Bruno Angles
                                                              the exception of the items listed in the Supervisory Board
Yann Duchesne                                                 Chairman’s report included in section 4.3 of this annual report.

Remuneration and Appointments Committee                       The full text of this code may be consulted on Medef’s website
                                                              (www.medef.fr).
Yann Duchesne, Chairman
Bruno Angles
Charlotte Garnier-Peugeot                                     4.1.5       DISCLOSURES CONCERNING
                                                                          MANAGEMENT AND SUPERVISORY
Strategy and Technology Committee
                                                                          BOARD MEMBERS
Ghislain Lescuyer, Chairman
Jean-Marc Daillance                                           On the date on which this annual report was filed and to the
                                                              Company’s knowledge:
Yann Duchesne
                                                                the Company’s corporate officers have no family ties with
                                                                any other corporate officers;
Number of meetings held in 2012 by the Supervisory Board        during the past five years, the members of Supervisory
and its Committees:                                             Board and the members of Management Board have not
  Supervisory Board: 9 meetings (compared to 11 in 2011);       been found guilty of fraud and no charges have been made
                                                                and/or no official public sanction has been ordered against
  Audit Committee: 6 meetings (compared to 5 in 2011);
                                                                them by statutory or regulatory authorities including
  Remuneration and Appointments Committee: 2 meetings           trade associations, and they have not been prevented by
  (compared to 8 in 2011);                                      a court from acting as members of the Board of directors,
  Strategy and Technology Committee: 2 meetings (compared       Management Board or Supervisory Board of an issuer or
  to 1 in 2011).                                                from being involved in the management or conduct the
                                                                business dealings of an issuer; and they have not been
The organisation of the work of the Supervisory Board and       associated with any bankruptcy, receivership or liquidation
of its Committees as well as that of the Company’s Internal     whatsoever for at least the past five years.
Control is described in the Supervisory Board Chairman’s
report in section 4.3 of this annual report.                    they do not have any potential or current conflict of interest
                                                                with Saft Groupe SA;
                                                                no arrangement or agreement has been entered into with
4.1.3      MANAGEMENT COMMITTEE                                 the core shareholders, customers, suppliers or others
                                                                under which these persons have been selected to be
A Saft Management Committee also exists within the Group,       corporate officers;
which serves as a forum for discussing and implementing
                                                                these persons have not agreed to any restriction concerning
the Group’s strategy. In addition to the members of the
                                                                the sale within a certain time span of their equity interests
Management Board, the Management Committee is comprised
                                                                in Saft Groupe SA, other than those provided for by law and
of Igal Carmi, General Manager of Tadiran Batteries Ltd.,
                                                                regulations and articles of association.
François Bouchon, Director of the energy storage business,
Franck Cecchi, Director of lithium-ion operations, Frédéric   There are no service agreements between members of the
Thielen, Group Purchasing Director, and Kamen Nechev, Group   issuer’s Management or Supervisory Boards and the Company
Technology Director.                                          or any of its subsidiaries.

The Management Committee meets once a month.




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                Remuneration and shareholding of the Management and Supervisory Board members




     4.2            REMUNERATION AND SHAREHOLDING
                    OF THE MANAGEMENT AND SUPERVISORY
                    BOARD MEMBERS

     4.2.1          PRINCIPLES AND RULES RELATED                      expenses) and the level of operating working capital at the end
                    TO CORPORATE OFFICERS                             of each quarter, as measured at the level of the consolidated
                                                                      financial statements of Saft Groupe SA. The variable portion of
                    REMUNERATIONS
                                                                      the remuneration of the members of the Management Board
     The determination of the remuneration of the Directors           is solely based on quantitative criteria and the weight of each
     of the company is placed under the responsibility of the         criterion in the determination of the variable remuneration
     Supervirory Board which bases its decisions on opinions and      of the members of the Management Board is identical. The
     recommendations of the Remuneration and Appointments             expected level of achievement of the quantitative targets
     Committee.                                                       set for managers has been defined in a precise manner. The
                                                                      Supervisory Board considers that this information should
     Supervisory Board members                                        remain confidential. The weight of the variable remuneration
     No remuneration other than attendance fees is paid to            compared to that of the fixed remuneration is not identical for
     Supervisory Board members. For 2012, an overall maximum          all members of the Management Board. This information is set
     amount of €240,000 of attendance fees was approved by the        out in section 4.2.3.
     Combined Ordinary and Extraordinary General Meeting on 11        The Chairman and members of the Management Board all
     May 2012.                                                        benefit from a motor vehicle, with the cost of rental and use of
     Upon proposal of the Remunerations and Appointments              such vehicle being borne by the Company.
     Committee, the Supervisory Board, in compliance with article     The Chairman of the Management Board is contractually
     L.225-83 of the French Commercial Code, set the following        eligible for compensation, in the event of termination of his
     individual and flat-fee attendance fee amounts for the 2012       employment contract, the calculation basis of which is the
     financial year:                                                   fixed and variable remuneration and the benefits in kind.
        Yann Duchesne, Chairman: 51,157 euros (50,154 euros in        Payment of the indemnity is subject to performance conditions
        2011);                                                        that must be met by the beneficiary, which are assessed in
                                                                      light of the performance of Saft Groupe SA. This payment will
        Charlotte Garnier-Peugeot, Bruno Angles, Jean-Marc            therefore only be made if the following two criteria are met:
        Daillance and Ghislain Lescuyer: 34,105 euros each (33,437
        euros in 2011).                                                 payment at least once over the past three years of at least
                                                                        20% of the maximum annual performance bonus;
     The total amount of attendance fees paid during the 2012
     financial year thus amounted to €187,934.                           positive EBIT (defined as operating profit before restructuring
                                                                        costs and other operating income and expenses) of Saft
     Management Board members                                           Groupe SA throughout the beneficiary’s terms of office.
     The membership of the Management Board, which includes           This clause provides for the payment of eighteen months’
     five members, was as follows as of 31 December 2012:              average remuneration (calculated over the last 12 months
        John Searle, Chairman;                                        at the Company). Any accumulation of severance indemnity
                                                                      for indemnity for non-competition cannot in any case exceed
        Thomas Alcide;                                                twenty-four months of remuneration.
        Bruno Dathis;                                                 Detailed information on the remuneration and other benefits of
        Xavier Delacroix;                                             any kind granted to Management Board members is provided
                                                                      in tabular form in section 4.2.3.
        Elizabeth Ledger.
                                                                      Management Board members receiving attendance fees
     The remuneration of the Chairman and of members of the
                                                                      for offices held in the Saft Group subsidiaries and/or joint
     Management Board is set by the Supervisory Board, based
                                                                      ventures return these fees to the Company.
     on proposals from the Remuneration and Appointments
     Committee, in accordance with the principles set out in the      With the exception of the Chairman of the Management Board,
     Afep-Medef Code of Corporate Governance.                         the Management Board members employed in France benefit
                                                                      from the incentive and mandatory profit sharing schemes of
     The remuneration comprises a fixed annual portion, set on the
                                                                      Saft SAS.
     basis of the level of responsibilities and experience of each
     member and with reference to market practices.                   The Chairman and three members of the Management Board
                                                                      (Elizabeth Ledger, Bruno Dathis and Xavier Delacroix) benefit
     It also includes a variable portion based on the Group’s
                                                                      from the same defined contribution supplementary pension
     financial performance objectives: For the 2012 financial year,
                                                                      plan as all Group executives in France, in the form of a multi-
     these objectives were based on the following criteria: revenue
                                                                      employer pension plan (“PERI”), the financing of which is
     growth, the EBITDA margin as a percentage of revenue
                                                                      borne by the Group. This pension plan meets the criteria of the
     (EBITDA is defined as operating profit before amortisation
                                                                      Afep-Medef Code of Corporate Governance.
     and depreciation, restructuring costs and other income and


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4.2.2       POLICY ON THE GRANTING OF STOCK                          Conditions for the exercise of stock options
            OPTIONS                                                  Conditions for the exercise of stock options are the
                                                                     following: any prohibited periods of exercise are defined
Nature of options                                                    and communicated to all option beneficiaries. During these
                                                                     periods, no beneficiary may exercise his or her options.
All stock options granted to date are options for the subscription
of new shares approved by the Group’s shareholders at Annual         With regard to Management Board members, the Supervisory
General Meetings.                                                    Board has set the following supplementary rules:
                                                                       on each occasion that a member of the Management Board
Grant conditions
                                                                       exercises some of his or her stock options, he or she must
Stock options are granted, following a proposal by the                 keep at least 15% of the shares thus issued throughout his
Management Board, by a decision of the Supervisory Board.              or her term of office. This rule applies starting from plan no.
The beneficiaries of these stock options are Group executives.          3 authorised by the Shareholders’ General Meeting on 17
For each stock option plan, the number of beneficiaries of              December 2007;
stock options is approximately 100-150 Group employees. As
of 31 December 2012, the total number of outstanding stock             the exercise by Management Board members of their stock
options represented 8% of the number of shares comprising              options is dependent on achievement of the following
the share capital of Saft Group SA.                                    performance conditions:

With regard to Management Board members, the Supervisory                   for stock options granted under the first four plans
Board has set the following rules for stock options to be                  implemented, the Group’s consolidated EBITDA margin
granted:                                                                   must be positive in the year that the stock options are
                                                                           granted (where the stock options are granted by 30 June
  when making a new grant of stock options, the value of the               at the latest) and in the following two financial years (or
  stock options granted to each member of the Management                   the next three financial years if the stock option grant is
  Board, calculated pursuant to IFRS, must not exceed a                    made after 30 June),
  maximum of 35% (thirty-five percent) of all the components
                                                                           for stock options granted starting under the plan
  of the annual remuneration of each beneficiary;
                                                                           adopted on 2 September 2010, the Group’s consolidated
  the maximum percentage of stock options that may                         EBIT margin must be positive in the financial year that
  be granted to all members of the Management Board                        the stock options are granted (if the grant takes place in
  compared to the total overall number voted at the Annual                 the first half of the calendar year) and in the following
  General Meeting may not exceed 25% (twenty-five percent),                 two financial years or the next three financial years if
  and the maximum percentage granted to each Management                    the stock option grant is made in the second half of the
  Board member may not exceed 6% (six percent) of this total               year. This amendment was ratified by the Supervisory
  overall number.                                                          Board at its meeting on 2 November 2010,
These two principles were validated by the Supervisory Board               for the stock options granted under the plan
on 27 April 2009 and 25 January 2010 and are thus applicable               implemented on 4 July 2012, the number of shares that
to the stock-options plans implemented after these dates:                  may be subscribed by the beneficiaries depends on
  finally, the exercise by members of the Management Board                  performance criteria measured at the group level for
  of stock options granted to them since the plan implemented              the financial years 2012, 2013 and 2014. The criteria
  in 2012 is subject to certain performance conditions set by              for measurement of the Group’s performance are the
  the Supervisory Board upon proposal by the Remunerations                 following:
                                                                            _ the EBITDA margin as defined in the Group’s
  and Appointments Committee.
                                                                                published financial statements,
Frequency of stock option plans                                             _ the ROCE (Return On Capital Employed), that defines
The stock option plans are established at a frequency of more                   the ratio between:
than one year. Six main plans have been implemented by the
                                                                                - the consolidated EBIT margin after corporate taxes,
Management Board since the Company was listed: June 2005,
November 2006, January 2008, March 2009, September 2010                         - the capital used measured at the close of each
and July 2012.                                                                  financial period.
                                                                           The right for each beneficiary to exercise options that
Stock option price                                                         are granted to him/her is thus subject:
No discount may be applied at the time stock options are                    _ for 50% of the total of options granted, and each
granted.                                                                        year by one third, to the level of the EBITDA margin
In addition, the current members of the Management Board                        reached by the Group for the financial years 2012,
who have received stock options may not have recourse to                        2013 and 2014,
transactions to hedge the risks to which they are exposed.                  _
                                                                                for 50% of the total of options granted, and each year
                                                                                by one third, to the level of the ROCE reached by the
                                                                                Group for the financial years 2012, 2013 and 2014;




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        the Management Board members must abstain from                                    4.2.3          REMUNERATION OF MANAGEMENT
        exercising their options during the following windows:                                           BOARD MEMBERS
             a period of 60 days prior to publication of the press
             releases with regard to the annual results,                                  The members of the Management Board of Saft Groupe SA
                                                                                          received the following gross remuneration, stock options and
             a period of 30 days prior to publication of the press
                                                                                          other benefits of all kinds whether paid by the Company, by
             release with regard to the half-year results,
                                                                                          companies controlled (within the meaning of article L.133-16
             a period of 15 days prior to publication of press releases                   of the French Commercial Code) by Saft Groupe SA or by
             on quarterly revenue.                                                        companies controlling (within the meaning of the same article)
     Full information on stock-options plans is provided below in                         Saft Groupe SA.
     sections 4.2.5 to 4.2.8.


     TABLE AND SUMMARY OF REMUNERATION AND STOCK OPTIONS GRANTED
     TO EACH MEMBER OF THE MANAGEMENT BOARD



                                                                                                            2010                    2011             2012
                                                                                                     FinancialYear          Financial Year   Financial Year
     John Searle – Chairman of the Management Board
     Remuneration for the period                                                                          €735,354              €740,511          €577,088
     Value of stock options granted during the period                                                     €124,000                    €0           €58,250
     Value of performance shares granted during the period                                                     n.a.                  n.a.              n.a.
     TOTAL                                                                                               €859,354              €740,511          €635,338
     Thomas Alcide – Member of the Management Board (1)
     Remuneration for the period                                                                          €263,253              €272,184          €230,614
     Value of stock options granted during the period                                                      €93,000                    €0           €41,940
     Value of performance shares granted during the period                                                     n.a.                  n.a.              n.a.
     TOTAL                                                                                               €356,253              €272,184          €272,554
     Bruno Dathis – Member of the Management Board
     Remuneration for the period                                                                          €298,842              €320,725          €249,959
     Value of stock options granted during the period                                                      €93,000                    €0           €41,940
     Value of performance shares granted during the period                                                     n.a.                  n.a.              n.a.
     TOTAL                                                                                               €391,842              € 320,725         €291,899
     Xavier Delacroix – Member of the Management Board
     Remuneration for the period                                                                          €266,865              €290,748          €231,406
     Value of stock options granted during the period                                                      €93,000                    €0           €41,940
     Value of performance shares granted during the period                                                     n.a.                  n.a.              n.a.
     TOTAL                                                                                               €359,865              €290,748          €273,346
     Elizabeth Ledger – Member of the Management Board
     Remuneration for the period                                                                          €181,256              €181,525          €144,614
     Value of stock options granted during the period                                                      €62,000                    €0           €25,630
     Value of performance shares granted during the period                                                     n.a.                  n.a.              n.a.
     TOTAL                                                                                               €243,256              €181,525          €170,244
     (1) The remuneration of Thomas Alcide, which is expressed in euros above, is in fact calculated and paid in dollars.




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The table below shows the breakdown by type of the “Remuneration for the period” row in the above table, along with the amounts
actually paid during the financial year in question.



SUMMARY TABLE OF REMUNERATION OF EACH MEMBER OF THE MANAGEMENT BOARD



                                                        2010 Financial Year                 2011 Financial Year                2012 Financial Year
John Searle –                                           Amounts           Amounts          Amounts             Amounts        Amounts             Amounts
Chairman of the Management Board                            due              paid              due                paid            due                paid
Fixed remuneration                                    €514,672           €514,672         €531,368            €531,368         €542,206           €542,206
Variable remuneration (1)                             €213,187           €128,502         €201,411            €203,187          €27,150           €208,461
   As a % of fixed remuneration (2)                        41%                   -             57%                    -               7%                  -
   Maximum % authorised (2))                              60%                   -             65%                    -             65%                   -
Exceptional remuneration                                 None               None             None                None             None               None
Attendance fees                                          None               None             None                None             None               None
Benefits in kind:
■ Company car                                          €7,495             €7,495           €7,732              €7,732           €7,732             €7,732
TOTAL                                                €735,354           €650,669         €740,511            €742,287         €577,088           €758,399


                                                        2010 Financial Year                 2011 Financial Year                2012 Financial Year
Thomas Alcide –                                       Amounts             Amounts          Amounts             Amounts        Amounts             Amounts
Member of the Management Board (3)                        due                paid              due                paid            due                paid
Fixed remuneration                                    €186,114           €186,114         €192,980            €192,980         €228,191           €228 ,191
Variable remuneration                                  €75,376            €41,895          €76,227             €71,789               €0            €82,585
   As a % of fixed remuneration (2)                        40%                   -             39%                    -               0%                   -
   Maximum % authorised (2)                               45%                   -             50%                    -             50%                    -
Exceptional remuneration                                 None               None             None                None             None                None
Attendance fees                                          None               None             None                None             None                None
Benefits in kind:
■ Company car                                          €1,763             €1,763           €2,977              €2,977           €2,424             €2,424
TOTAL                                                €263,253           €229,772         €272,184            €267,746         €230,615           €313,200


                                                        2010 Financial Year                 2011 Financial Year                2012 Financial Year
Bruno Dathis –                                        Amounts             Amounts          Amounts             Amounts        Amounts             Amounts
Member of the Management Board                            due                paid              due                paid            due                paid
Fixed remuneration                                    €213,122           €213,122         €231,607            €231,607         €248,857           €248,857
Variable remuneration                                  €84,618            €44,973          €88,016             €84,618               €0            €88,016
   As a % of fixed remuneration (2)                        40%                   -             39%                    -               0%                  -
   Maximum % authorised (2)                               45%                   -             50%                    -             50%                   -
Exceptional remuneration                                 None               None             None                None             None               None
Attendance fees                                          None               None             None                None             None               None
Benefits in kind:
■ Company car                                          €1,102             €1,102           €1,102              €1,102           €1,102             €1,102
TOTAL                                                €298,842           €259,197         €320,725            €317,327         €249,959           €337,975
(1) Variable remuneration awarded to John Searle in 2012 is a mobility annual compensation.
(2) Variable pay measured as a percentage of its calculation basis, a fraction of fixed remuneration.
(3) The remuneration and benefits in kind allocated to Thomas Alcide, which are expressed in euros, are calculated and paid in dollars.




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                                                             2010 Financial Year                  2011 Financial Year     2012 Financial Year
     Xavier Delacroix –                                     Amounts             Amounts          Amounts        Amounts   Amounts      Amounts
     Member of the Management Board                             due                paid              due           paid       due         paid
     Fixed remuneration                                    €187,095            €187,095         €206,751       €206,751   €226,481     €226,481
     Variable remuneration                                  €74,845             €39,502          €79,072        €74,845         €0      €79,072
        As a % of fixed remuneration (1)                        40%                    -             39%               -         0%            -
        Maximum % authorised (1)                               45%                    -             50%               -       50%             -
     Exceptional remuneration                                 None                None             None           None       None         None
     Attendance fees                                          None                None             None           None       None         None
     Benefits in kind:
     ■ Company car                                          €4,925              €4,925           €4,925          €4,925     €4,925      €4,925
     TOTAL                                                €266,865            €231,522         €290,748        €286,521   €231,406    €310,478


                                                             2010 Financial Year                  2011 Financial Year     2012 Financial Year
     Elizabeth Ledger –                                     Amounts             Amounts          Amounts        Amounts   Amounts      Amounts
     Member of the Management Board                             due                paid              due           paid       due         paid
     Fixed remuneration                                    €132,828            €132,828         €137,126       €137,126   €140,590     €140,590
     Variable remuneration                                  €44,661             €24,003          €40,333        €44,661         €0      €40,340
        As a % of fixed remuneration (1)                         34%                   -              29%              -         0%            -
        Maximum % authorised (1)                              37.5%                   -            37.5%              -      37.5%            -
     Exceptional remuneration                                  None               None              None          None        None        None
     Attendance fees                                           None               None              None          None        None        None
     Benefits in kind:
     ■ Company car                                          €3,767              €3,767           €4,066          €4,066     €4,024      €4,024
     TOTAL                                                €181,256            €160,598         €181,525        €185,853   €144,614    €184,954
     (1) Variable pay measured as a percentage of its calculation basis, a fraction of fixed remuneration.




     4.2.4          REMUNERATION PAID TO SUPERVISORY BOARD MEMBERS
     At the Combined Ordinary and Extraordinary General Meeting held on 11 May 2012, the maximum annual amount of attendance
     fees to be shared amongst members of the Supervisory Board for the 2012 financial year was set at €240,000. The total amount of
     attendance fees paid to members of the Supervisory Board for the 2012 financial year amounted to €187,934.02.




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The attendance fees paid to members of the Supervisory Board during the last three years were as follows:



TABLE OF ATTENDANCE FEES AND OTHER REMUNERATION RECEIVED BY THE MEMBERS OF THE SUPERVISORY
BOARD, NON-EXECUTIVE CORPORATE OFFICERS



Non-executive corporate officers                         Amounts paid in 2010               Amounts paid in 2011             Amounts paid in 2012
Yann Duchesne
Attendance fees                                                        €48,693.00                         €48,693.00                         €51,386.04
Other remuneration                                                          None                               None                               None
Jean-Marc Daillance
Attendance fees                                                        €32,462.00                         €32,462.00                         €34,258.87
Other remuneration                                                          None                               None                               None
Bruno Angles
Attendance fees                                                        €32,462.00                         €32,462.00                         €34,258.87
Other remuneration                                                          None                               None                               None
Ghislain Lescuyer
Attendance fees                                                        €32,462.00                         €32,462.00                         €34,258.87
Other remuneration                                                          None                               None                               None
Charlotte Garnier-Peugeot
Attendance fees                                                               €0.00                         €5,158.34                        €33,771.37
Other remuneration                                                            None                              None                              None
TOTAL                                                               €146,079.00                        €151,237.34                        €187,934.02


Only Supervisory Board members are eligible for attendance fees.



4.2.5         STOCK OPTIONS ALLOCATED BY THE ISSUER DURING 2012 TO EACH MEMBER
              OF THE MANAGEMENT BOARD
In 2012, the following stock-options have been allocated to members of the Management Board:



STOCK-OPTIONS ALLOCATED IN 2012 TO EACH MEMBER OF THE MANAGEMENT BOARD



                                                                                                           Fair value of options
Name of                       Number                            Number of options                         granted as calculated
the Management               and date                Type          granted during          Exercise        for the consolidated                  Exercise
Board member               of the plan          of options      the current year (1)          price                    accounts                    period
                                  No. 6                                                                                                 from 04/07/16
John Searle               July 4, 2012      Subscription                       25,000      €18,625                        €58,250          to 03/07/19
                                  No. 6                                                                                                 from 04/07/16
Thomas Alcide             July 4, 2012      Subscription                       18,000      €18,625                        €41,940          to 03/07/19
                                  No. 6                                                                                                 from 04/07/16
Bruno Dathis              July 4, 2012      Subscription                       18,000      €18,625                        €41,940          to 03/07/19
                                  No. 6                                                                                                 from 04/07/16
Xavier Delacroix          July 4, 2012      Subscription                       18,000      €18,625                        €41,940          to 03/07/19
                                  No. 6                                                                                                 from 04/07/16
Elizabeth Ledger          July 4, 2012      Subscription                      11,000       €18,625                        €25,630          to 03/07/19
TOTAL                                                                         90,000
(1) As of December 31, 2012, the number of stock-options granted to Mr. John Searle represented 0,099% of the number of shares comprising the Company’s
    share capital. Allocation of stock-options to Mr. Thomas Alcide, Bruno Dathis and Xavier Delacroix represented 0,071% and allocation of stock-options
    to Mrs Elizabeth Ledger represented 0,044% of the number of shares comprising the Company’s share capital.


Under performance conditions set for financial year 2012, 23,000 stock-options granted during 2012 financial year to members of
the Saft Management Committee were canceled, of which 15,000 options granted to members of the Management Board.



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     4.2.6          STOCK OPTIONS EXERCISED DURING THE 2012 FINANCIAL YEAR BY MANAGEMENT
                    BOARD MEMBERS
     No stock options were exercised by members of the Management Board during the 2012 financial year.


     4.2.7          PERFORMANCE SHARES GRANTED TO MANAGEMENT
     To date the Group has never set up any performance share plan.


     4.2.8          HISTORY OF STOCK OPTIONS GRANTED
     The History of stock option plans put in place by the Group is as follows:



     HISTORY OF STOCK OPTIONS GRANTED



                                                         Plan     Plan                Plan            Plan          Plan             Plan           Plan           Plan
                                                        No. 1 No. 1 bis              No. 2           No. 3      No. 3 bis           No. 4          No. 5          No. 6
     Plan and date
     of Shareholders’ Meeting                    29/06/05 29/06/05 22/06/06 17/12/07 17/12/07 12/06/08 09/06/10 11/05/12
     Date of Management
     Board Meeting                  29/06/05                     28/09/05        27/11/06       22/01/08       05/11/08        23/03/09       02/09/10       04/07/12
     Total number
     of shares granted               421,900                        34,500        400,000         390,000          10,000       400,000         400,000        393,500
     ■ of which number of shares

        granted to Management Board
        members (1):
     John E. Searle                   15,000                                -       20,000         15,000               -         16,000         20,000          25,000
     Thomas Alcide                    12,500                                -       12,500         12,500               -         13,000         15,000          18,000
     Bruno Dathis                           -                               -            -              -          10,000         13,000         15,000          18,000
     Xavier Delacroix                  6,000                                -       10,000         12,500               -         13,000         15,000          18,000
     Élizabeth Ledger                  8,000                                -        8,000          8,000               -          9,000         10,000          11,000
     Earliest date
     for exercise of the options    30/06/09                     28/09/09       28/11/10        23/01/12       06/11/12        24/03/13       02/09/14       04/07/16
     Date of expiry                 29/06/15                     27/09/15       27/11/16        22/01/18       05/11/18        23/03/16       01/09/17       03/07/19
     Subscription price (2)           €23.33                       €27.36         €23.33          €24.22         €23.33          €17.76         €25.34        €18.625
     Details of exercise                    -                           -              -               -              -               -              -              -
     Number of shares subscribed
     at December 31, 2012:           243,274                          3,360         65,335                 -              -              -               -              -
     ■ by Management Board

        members                       24,964                                -              -               -              -              -               -              -
     ■ by employees other

        than Management Board
        members                      218,310                          3,360         65,335                 -              -              -               -              -
     Number of options cancelled
     or expired (3):                 105,238                          6,600         57,311         42,161                 -       27,203           8,500         23,500
     ■ of which options granted

        to Management Board members   32, 500                               -       12,500                 -              -              -               -       15,000
     ■ of which options granted

        to employees other than
        Management Board members      72,738                          6,600         44,811         42,161                 -       27,203           8,500          8,500
     Adjusted number of options
     available for exercise:          84,281                        27,873        319,778         391,341          11,145       418,674         391,500        370,000
     ■ of which held by

        Management Board members      18,429                                -       56,281         53,511          11,145         71,354         75,000          75,000
     ■ of which held by employees

        other than Management Board
        members                       65,852                        27,873        263,497         337,830                 -     347,320         316,500        295,000
     (1) Following several operations on the Company’s share capital, performed after the attribution of stock-options, the number of options available for exercise may be
         different from the number of options initially granted. The number of options available for exercise is detailed in the bottom of the table.
         In 2012, the stock-options granted by the Company to the Management Board members and to the Executive Committee members are subject to performance criteria.
         These criteria are described in section 4.2.2 in this annual report
     (2) Initial subscription price adjusted following financial operations subsequent to the attribution of the options.
     (3) Initial number of options eventually adjusted following financial operations performed subsequent to the issuance and before the cancellation of these options.

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Current members of the Management Board who have received stock options may not hedge the risks to which the stock options
they have been awarded are exposed.
Stock-options granted to and exercised by the ten employees with the largest numbers of options during the year 2012 are disclosed
in the following table:



STOCK OPTIONS GRANTED TO THE TEN EMPLOYEES (OTHER THAN CORPORATE OFFICERS) IN RECEIPT
OF THE LARGEST NUMBER AND OPTIONS EXERCISED BY THEM



                                                                               Options held
                                                        Options granted           exercised                                                  Adjusted number
                                                         during the year    during the year  Options granted                               of options available
                                                        by the issuer to      2012, by the             to the                             for exercise, held by
                                                      the 10 employees 10 employees other     10 employees                                  the 10 employees
                                                              other than than Management          other than                                        other than
                                                     Management Board      Board members Management Board                                  Management Board
                                                     members, in receipt having subscribed members, cancelled                              members in receipt
                     Year of                              of the largest     to the highest     or expired at                                    of the largest
                 attribution                          number of options number of options December 21, 2012                               number of options (1)
                                 Total number
                                 of options                           70,000                              -                   30,000                        8,919
                                 Adjusted
Plans No. 1                      weighted
and 1 bis                2005    average price                        €23.33                              -                   €23.33                              -
                                 Total number
                                 of options                           63,500                              -                           -                   51,073
                                 Adjusted
                                 weighted
Plan No. 2               2006    average price                        €23.33                              -                           -                           -
                                 Total number
                                 of options                           60,500                              -                           -                   67,449
                                 Adjusted
                                 weighted
Plan No. 3               2008    average price                        €24.22                              -                           -                           -
                                 Total number
                                 of options                                   -                           -                           -                           -
                                 Adjusted
Plan                             weighted
No. 3 bis                2008    average price                                -                           -                           -                           -
                                 Total number
                                 of options                           63,500                              -                           -                   70,798
                                 Adjusted
                                 weighted
Plan No. 4               2009    average price                        €17.76                              -                           -                           -
                                 Total number
                                 of options                           69,000                              -                           -                   69,000
                                 Adjusted
                                 weighted
Plan No. 5               2010    average price                        €25.34                              -                           -                           -
                                 Total number
                                 of options                           75,500                              -                           -                   67,000
                                 Adjusted
                                 weighted
Plan No. 6               2012    average price                      €18.625                               -                           -                           -
(1) Following several operations on the Company’s share capital, performed after the attribution of stock-options, the number of options available for exercise
    may be different from the number of options initially granted. The number of options available for exercise is detailed in the right column of the above table.




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     4.2.9          INFORMATION ON EMPLOYMENT CONTRACTS, PENSION PLANS AND TERMINATION
                    COMPENSATION FOR MEMBERS OF THE MANAGEMENT BOARD
     The status of each Management Board member with regard to employment contract, pension plans and termination compensation
     or other benefits is as follows:


                                                                                                    Compensation
                                                                                       or other benefits payable
                                                                                         (or liable to be payable)     Compensation as
     Name of the Management Board                 Contract of     Supplementary       inthe event of termination      consideration for a
     member                                      employment         pension plan            orchange of function     non-compete clause
     John Searle                                         Yes          Yes (defined                             Yes                    Yes
     Chairman                                                   contribution plan)
     of the Management Board
     Appointment date: 15/05/2011
     Date office ends: 14/05/2013
     Thomas J. Alcide                                    Yes                None                            None                   None
     Member
     of the Management Board
     Appointment date: 15/05/2011
     Date office ends: 14/05/2013
     Bruno Dathis                                        Yes          Yes (defined                           None                   None
     Member                                                     contribution plan)
     of the Management Board
     Appointment date: 15/05/2011
     Date office ends: 14/05/2013
     Xavier Delacroix                                    Yes          Yes (defined                           None                   None
     Member                                                     contribution plan)
     of the Management Board
     Appointment date: 15/05/2011
     Date office ends: 14/05/2013
     Elizabeth Ledger                                    Yes          Yes (defined                           None                   None
     Member                                                     contribution plan)
     of the Management Board
     Appointment date: 15/05/2011
     Date office ends: 14/05/2013


     Pension plan for members of the Management Board
     The Chairman and three members of the Management Board (Elizabeth Ledger, Bruno Dathis and Xavier Delacroix) benefit from the
     same defined contribution supplementary pension plan as all Group executives in France, in the form of a multi-employer pension
     plan (“PERI“), the financing of which is borne by the Group. The amounts accrued or set aside under this plan on behalf of these four
     Management Board members amounted to €61,937 in 2012. This overall sum breaks down as follows:


                                                                                             2010               2011             2012
                                                                                     Financial Year     Financial Year   Financial Year
     John Searle                                                                          €22,018             €22,484           €23,133
     Bruno Dathis                                                                         €11,993             €16,144           €17,459
     Xavier Delacroix                                                                      €9,968             €13,864           €15,423
     Elizabeth Ledger                                                                      €4,401              €6,242            €5,922
     TOTAL                                                                                €48,380            €58,734            €61,937




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4.2.10         SHARES HELD BY MANAGEMENT IN THE COMPANY’S SHARE CAPITAL
               AS OF 31 DECEMBER 2012


SUPERVISORY BOARD MEMBERS



                                                                                   Number          % of share             % of voting
                                                                                  of shares           capital                  rights
Yann Duchesne                                                                          140                 n.m.                    n.m.
Jean-Marc Daillance                                                                    133                 n.m.                    n.m.
Bruno Angles                                                                           138                 n.m.                    n.m.
Ghislain Lescuyer                                                                      135                 n.m.                    n.m.
Charlotte Garnier-Peugeot                                                              140                 n.m.                    n.m.
n.m.: not material.



MANAGEMENT BOARD MEMBERS



                                                                                   Number          % of share             % of voting
                                                                                  of shares           capital                  rights
John Searle                                                                        265,931               1.06%                   1.06%
Thomas J. Alcide                                                                    17,482               0.07%                   0.07%
Bruno Dathis                                                                           631                 n.m.                    n.m.
Xavier Delacroix                                                                    27,770               0.11%                   0.11%
Elizabeth Ledger                                                                    55,549               0.22%                   0.22%
n.m.: not material.




4.2.11         TRANSACTIONS IN COMPANY SHARES BY MANAGEMENT AND PERSONS IN A SIMILAR
               POSITION
The transactions subject to mandatory reporting pursuant to articles 223–22-A et seq. of the general regulation of the Autorité des
marchés financiers (AMF) and carried out in 2012 were as follows:


                                                                Share purchases                           Share sales
                                                                                   Number                                     Number
Corporate officers                                                   Date         of shares                  Date            of shares
Bruno Dathis                                                  04/04/2012                75                   -                       -
Bruno Dathis                                                  05/04/2012               130                   -                       -
Thoma Alcide                                                           -                 -          11/09/2012                  18,938
John Searle                                                   05/10/2012            41,700          05/10/2012                  41,700


These transactions were reported to the Autorité des marchés financiers (AMF) .




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                  Report of the Chairman of the Supervisory Board




       4.3            REPORT OF THE CHAIRMAN OF THE SUPERVISORY BOARD

       This report is presented to you in compliance with article       Based on these criteria, all members of the Supervisory Board
       L.621-18-3 of the French Monetary and Financial Code and         are independent.
       article L.225-68 subparagraph 7 of the French Commercial
                                                                        The Supervisory Board is composed of one woman out of five
       Code.
                                                                        members, which results in having 20% of women in total. This
       It was approved by the members of the Supervisory Board at       is compliant with the law n° 2011-103 dated 27 January 2011
       their meeting of 31 January 2013.                                relating to the balanced representation of men and women in
                                                                        Supervisory Boards and to the professional equality.
       It provides information on:
          the conditions of preparation and organisation of the work    Supervisory Board bylaws
          of the Supervisory Board and its Board Committees during      Supervisory Board bylaws were introduced in 2005 and have
          the financial period ended 31 December 2012;                   been regularly updated. The Supervisory Board’s bylaws are
          the changes in the Group’s Internal Control and risk          available on the Group’s website (www.saftbatteries.com)
          management procedures; and                                    in the section Investor Centre/AMF regulated information/
                                                                        reports on Internal Control and Corporate Governance. The
          the principles and rules set by the Supervisory Board to
                                                                        main provisions of the bylaws are set out in section 4.5 of this
          determine the remuneration and benefits in kind of any
                                                                        annual report.
          nature granted to corporate officers.
       The Chairman of the Supervisory Board based this report on       Role and responsibilities of the Supervisory Board
       the following information items:                                 Within the scope of its role defined in the Supervisory Board
          the Board’s bylaws as well as the work done by its Board      bylaws, the Supervisory Board oversees the work of the
          Committees in 2012;                                           Management Board on an ongoing basis. In this role, it may
                                                                        perform the checks and controls that it deems appropriate at
          the progress report and summaries of the reports of the       any time of the year, and may request that the Management
          Group’s internal audit;                                       Board provide any documents that it considers useful for
          the discussions held with certain members of the Group’s      carrying out its duties. The Management Board presents
          management, and in particular those in charge of the          the Supervisory Board with a report on the Company’s
          Finance Department, the Legal Department and the Internal     management at least once a quarter. In addition, the Company’s
          Control and Audit Department;                                 articles of association and the bylaws of the Supervisory Board
                                                                        stipulate that certain decisions taken by the Management
          the review of the summary of the work of the Statutory
                                                                        Board are subject to the prior approval of a majority vote of
          Auditors notably in relation to the examination of the
                                                                        the Supervisory Board. In the event of a split decision, the
          financial and accounting internal control.
                                                                        Chairman of the Supervisory Board has a casting vote.
       This report was reviewed by the Audit Committee at its
       meeting on 31 January 2013.                                      Method of functioning of the Supervisory Board
       The Company refers to the Afep-Medef Code of Corporate           The Board meets at least once per quarter and, prior to
       Governance of listed companies of April 2010. The text of this   meetings, all the documentation and information required
       code may be consulted on the Medef website (www.medef.fr).       to carry out its duties is sent to the Board, as defined in its
                                                                        bylaws. During the 2012 financial year, the Supervisory
                                                                        Board met nine times (compared to eleven times during the
                                                                        2011 financial year), on the following dates: 25 January, 10
       4.3.1          CORPORATE GOVERNANCE                              February (twice), 21 March, 23 April, 11 May, 17 May, 4 July
                                                                        and 22 October 2012.
       a)             Composition of the Supervisory
                                                                        The average rate of attendance of members of the Supervisory
                      Board and conditions for preparation
                                                                        Board at meetings was 96% in 2012 (compared to 96% in 2011).
                      and organisation of its work
                                                                        During the 2012 financial year, the Supervisory Board
       Members of the Supervisory Board                                 reviewed and addressed the following subjects:
       The Supervisory Board currently has five members:                 Closing of the financial statements:
          Yann Duchesne, Chairman;                                        the Supervisory Board reviewed the Consolidated and
          Jean-Marc Daillance, Vice-Chairman;                             Parent Company Financial Statements for the 2011
                                                                          financial year as well as the 2011 annual financial report,
          Charlotte Garnier-Peugeot, Bruno Angles and Ghislain            the half-year financial statements on 30 June 2012 and the
          Lescuyer, Board members.                                        related financial report;
       The criteria applied by the Supervisory Board to assess the        it approved the reports and resolutions submitted to the
       independence of its members are those provided for in the          Combined Ordinary and Extraordinary General Meeting held
       Afep-Medef Code of Corporate Governance. These criteria are        on 11 May 2012;
       listed in section 4.1 “Management and Supervisory Boards” of
       this annual report.                                                it approved the Statutory Auditors’ fees for the 2011
                                                                          financial year.


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                                                                    Report of the Chairman of the Supervisory Board




Business reviews:                                                    management procedures and the principles and rules for
  following an analysis by the Committee for Strategy and            setting the remuneration of corporate officers;
  Technology, the Supervisory Board reviewed the budget              it carried out an annual review of its operations. The
  forecasts for 2012 and the 2012-2014 Strategic Plan;               conclusions of this review are presented below in the
  it authorised the Management Board to issue a bond loan            section “Assessment and functioning of the Supervisory
  to American institutional investors, in the form of a private      Board”;
  investment, as part of a strategy for diversification of the        it carried out a review of Saft Group’s shareholders based
  Group’s financing sources;                                          on a study conducted during the month of January 2012;
  it reviewed the situation of the SNB business of small nickel      lastly, it reviewed the work of its Board Committees, as
  batteries, approved the decision taken by the Management           presented below.
  Board to put the activity up for sale and tracked the progress
  of this disposal procedure that is still in progress;            Board Committees
  it examined and approved the project for the Group’s             The Supervisory Board now has three permanent Board
  creation of a subsidiary in Russia in order to develop its       Committees, which are tasked with improving the way it
  sales activity and carry out battery assembly activities;        operates and facilitating decision-making through a prior
                                                                   review of specific matters. These are:
  it examined the quarterly business reports of the
  Management Board;                                                  the Audit Committee;
  it presented its annual report for 2011 to the French              the Remuneration and Appointments Committee;
  Government Commissioner, in accordance with the                    the Strategy and Technology Committee.
  agreement of 4 May 2005, signed by Saft and the French
  Government (see section 8.4.5 of this annual report);            The roles and methods of functioning of these committees are
                                                                   as follows.
  it authorised various       sureties,   endorsements      and
  guarantees issued.                                               Audit Committee
                                                                   The Group’s Audit Committee is composed of three members
Financial communication:
                                                                   of the Supervisory Board, all of whom are independent
  the Supervisory Board reviewed all the press releases with
                                                                   members appointed on an individual basis and that may not
  regard to revenue and the Group’s annual and half-year
                                                                   be represented at meetings by another person. The members
  results. It also examined the documents presenting these
                                                                   of the Audit Committee are Jean-Marc Daillance, Chairman,
  results to financial analysts and investors.
                                                                   Bruno Angles and Yann Duchesne. As a result of their current
Remuneration:                                                      and/or past professional responsibilities described in
  the Supervisory Board set and allocated attendance fees          section  4.1 of this annual report, entitled “Management and
  among its members for the year 2012;                             Supervisory Boards”, the three Audit Committee members
                                                                   are, individually or collectively, competent in accounting, audit
  based on the recommendations of the Remuneration and
                                                                   and financial matters, in particular with regard to the Group’s
  Appointments Committee, the Supervisory Board:
                                                                   activities.
       reviewed the performance levels reached by the Group
                                                                   In accordance with legal and regulatory provisions, the Audit
       in financial year 2011 with respect to the objectives
                                                                   Committee is responsible for monitoring:
       that had been set for the determination of the variable
       remuneration of the members of the Management                 the process of preparation of financial information;
       Board and the Saft Management Committee (SMC). It             the effectiveness of internal control and risk management
       also validated the variable remuneration paid to these        systems;
       persons,
                                                                     the statutory audit of the annual financial statements and
       validated the objectives and the procedures for
                                                                     the consolidated financial statements by the Statutory
       calculating the variable remuneration of the members
                                                                     Auditors;
       of the Management Board and the members of the SMC
       for financial year 2012;                                       the independence of the Statutory Auditors.
  authorised the Management Board to issue stock options           The Audit Committee regularly reports to the Supervisory
  for the Group’s employees and the main managers as               Board regarding the work it has carried out.
  part of the plans approved by the Combined Ordinary and          The role of the Audit Committee is described in more detail
  Extraordinary General Meeting of 11 May 2012.                    in the bylaws of the Supervisory Board. In particular, it takes
Internal audit:                                                    into account the conclusions of the report of July 2010 created
The Supervisory Board reviewed the work and assignments            by the working group established by the AMF on the Audit
of the Group’s Internal Control and Audit Department in 2011,      Committee.
and approved the internal audit action plan for the 2012           The Audit Committee met six times over the past financial
financial year.                                                     year (compared to five times in 2011) on the following dates:
Corporate governance:                                              25 January, 10 February, 23 April, 20 July, 22 October and 17
  the Supervisory Board approved the Chairman’s report             December 2012.
  on the preparation and organisation of the Board’s work          The attendance rate of members of the Audit Committee at
  during the 2011 financial year, Internal Control and risk         meetings was 100% in 2012 (it was also 100% in 2011).


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       In the course of its meetings, the Audit Committee examined,         implemented by the Group’s internal control department
       in accordance with the work program that it had set at the           during the 2011 and 2012 financial years;
       beginning of the year, the following subjects and matters
                                                                            it reviewed the amount of fees paid to the Statutory Auditors
       before they were sent to the Supervisory Board:
                                                                            for the 2011 financial year.
       Preparation of the financial information:
                                                                          Internal control, risk management and governance:
          as of the closing of the annual financial statements for 2011
                                                                            it held discussions with the Group’s head of internal audit
          and of the 2012 half-year statements, the Audit Committee
                                                                            and reviewed its annual business report and the various
          verified the organisation of the account closing, reviewed
                                                                            work carried out, and in particular:
          the financial statements and other related financial
          information (and in particular any proposal to change the             the presentation of the findings of the audits carried out
          accounting standards or principles), held discussions with            in 2011,
          the Group Chief Financial officer and the Statutory Auditors,         the follow-up in 2011 of issues identified during site
          and reviewed their reports;                                           and/or thematic audits carried out in 2010,
          it noted the main changes and projects for IFRS accounting            the implementation of various procedures to improve
          standards, the main tax changes and any implication for               internal control,
          the Group, regarding the financial statements as well                  the results of internal control self-assessments
          as the organisation and the internal procedures for the               of several procedures performed during the 2011
          management of the Group;                                              financial year,
          it examined the various press releases on quarterly revenue,          the analysis carried out on the Group’s corporate
          and the annual and half-year results as well as the various           governance practices, comparing them with the various
          documents presenting these results to financial analysts;              recommendations made by the Afep-Medef and the
          it reviewed the annual budget for 2012 as well as the                 AMF in 2011,
          Management Board’s quarterly business reports;                        the audit and Internal Control action plans for the 2012
                                                                                financial year;
          as part of the preparation of the 2012 annual report, it
          reviewed the Group’s situation with respect to the latest AMF     it reviewed the process and the schedule to update the risk
          recommendations on financial communication, corporate              mapping of the Group conducted in 2012;
          governance and remuneration of the senior management              it examined the Chairman’s report on the preparation and
          executives as well as the conclusions of the AMF review of        organisation of the Board’s work in 2011, Internal Control
          the Group’s 2011 annual report;                                   and risk management procedures and the principles and
       it examined the procedures for the Group’s implementation,           rules for setting the remuneration of corporate officers.
       for its second financial year, of the provisions of the “Grenelle   Remuneration and Appointments Committee
       II” law and in particular the actions undertaken by the Group in
                                                                          The Remuneration and Appointments Committee is composed
       order to enlarge the base of indicators audited and to increase
                                                                          of three members from the Supervisory Board, all of whom
       the level of assurance for a certain number of these indicators.
                                                                          are independent. Committee members are appointed on an
       The results of the implementation of the provisions of this law
                                                                          individual basis and may not be represented at meetings
       are presented in chapter 3, “Sustainable Development”, of this
                                                                          by other persons. The members of the Remuneration and
       annual report.
                                                                          Appointments Committee are Charlotte Garnier-Peugeot, Yann
       Business review:                                                   Duchesne, Chairman, and Bruno Angles.
          it examined the proposal to distribute an extraordinary         The main role of the Remuneration and Appointments
          dividend following the sale of the Group’s holding in           Committee is to examine and make recommendations to the
          the Johnson Control-Saft joint venture and issued               Supervisory Board on the issues listed below:
          recommendations to the Supervisory Board on the per
          share amount of the dividend;                                   On remunerations:

          it examined and approved the Group refinancing strategy            the amount of attendance fees awarded to Supervisory
          presented by the Chief Financial Officer prior to its             Board members, and how they are distributed;
          implementation.                                                   remuneration and benefits for members of the Management
       Statutory Auditor Activity:                                          Board and members of the Saft Management Committee
                                                                            (SMC);
          it examined the audit plan of the Statutory Auditors for the
          2012 financial year and reviewed the conclusions of the            stock option plans.
          interim work on internal control. This review allowed the       On appointments:
          Audit Committee to verify the consistency of the results
          of the internal control review performed by the external          the appointment and re-appointment of Management and
          auditors with the results of the self-assessment process          Supervisory Board members;




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  the structure and composition of the Supervisory Board and     November 2012. The attendance rate at meetings was 100%
  its committees;                                                (compared to 100% in 2011).
  the review of forecast changes to management resources         At these meetings, the Strategy and Technology Committee:
  of the Saft Management Committee (SMC), the succession
                                                                   carried out a review of the technologies used by the Group
  and/or re-appointment of its members;
                                                                   as well as the Group’s research and development activities.
  the review of the independence of Supervisory Board              This review was conducted by the Group Technology
  members, in accordance with the criteria set out in the          Director;
  Afep-Medef Code.
                                                                   conducted a specific review of:
In the course of its work, the Remuneration and Appointments
                                                                       the Group’s lithium-ion strategy,
Committee may rely on external studies and reports.
                                                                       the suitability of the Group’s business plan and its
The Remuneration and Appointments Committee met three                  production tool with this strategy;
times over the past financial year (compared to eight times in
                                                                   examined the 2012-2014 strategic plan;
2011) on the following dates: 11 May and 4 and 20 July 2012.
                                                                   reviewed Saft’s strategy for the automobile market.
The attendance rate of the members of the Remuneration
and Appointments Committee at meetings was 100% in 2012          Assessment of the functioning of the Supervisory Board
(compared to 96% in 2011).
                                                                 In January 2012, and as recommended in the Afep-Medef Code,
In the course of its meetings, the Remuneration and              the Supervisory Board conducted a formal assessment of its
Appointments Committee considered, inter alia, the following     operations, assisted by an outside consultant (the previous
matters:                                                         formal evaluation was conducted in 2009). This assessment
  the independence of its members, as defined in the rules        covered the following themes:
  set out in the Afep-Medef Code of Corporate Governance;          Composition and balance of the Supervisory Board;
  the methods for calculating and setting the variable             Missions of the Supervisory Board;
  portion of 2012 remuneration for the members of the Saft
                                                                   Operating rules of the Supervisory Board;
  Management Committee and the Management Board;
                                                                   Functioning of the Committees.
  setting the Group’s quantitative performance objectives to
  be used as a basis for calculating the variable portion of     At the end of the self-assessment, the Board set a number of
  2012 remuneration for members of the Saft Management           objectives for itself, including the following:
  Committee (“SMC”);                                               to continue strengthening its role in framing the Group’s
  the rollout in 2012 of a new stock option plan for               strategic objectives;
  subscription of new shares for employees and managers,           to enhance its knowledge of the Group’s Research and
  and in particular the setting of performance conditions of a     Development policy;
  stock option plan for the Group’s managers;
                                                                   to put in place annual work plans, for the Supervisory Board
  the setting of the amount of attendance fees allocated to        and its Committees;
  members of the Supervisory Board.
                                                                   to strengthen the work of the Supervisory Board on subjects
Strategy and Technology Committee                                  related the Group’s Human Resources;
The Strategy and Technology Committee, created on 5
                                                                   to enhance risk management and internal control tracking,
May 2011, is composed of three members, all of whom are
                                                                   in connection with the Group’s internal audit department
independent. Committee members are appointed on an
                                                                   and the work performed by the Statutory Auditors.
individual basis and may not be represented at meetings by
another person. The members of this committee are: Ghislain
Lescuyer, Chairman, Jean-Marc Daillance and Yann Duchesne.
The main role of the Strategy and Technology Committee is
to assist the Supervisory Board in assessing the Group’s
overall strategic and technological objectives proposed by
the Management Board. To this end, it regularly reviews
the Company’s strategic objectives and those of its main
subsidiaries and assesses the soundness of the key strategic
decisions recommended by the Management Board together
with their consequences.
The role of the Strategy and Technology Committee is
described in detail in the Supervisory Board bylaws.
The Strategy and Technology Committee met two times in
2012 (compared to once in 2011), on 21 May 2012 and 21




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       Compliance by the Company with the recommendations of the April 2010 Afep-Medef Code of Corporate Governance
       for listed companiesThe Company’s compliance with the recommendations of the April 2010 Afep-Medef Code of
       Corporate Governance for listed companies
       The Company complies with the recommendations of the Afep-Medef Code of Corporate Governance except as follows:


                    Recommendation of the Afep-Medef Code                                        SAFT practice
       Ending of employment contracts for corporate office holders
       The Afep-Medef recommends that, when a manager                     This recommendation applies to John Searle, as Chairman
       becomes  a corporate officer, the employment contract              of the Management Board of the Saft Group.
       linking  him/her to the company or to a company                    The Supervisory Board considers that, while the
       of  the  Group  should be  terminated, either by traditional       recommendation of the Afep-Medef Code is understandable
       severance or by resignation.                                       for a manager who has recently joined a company, it cannot
                                                                          be justified for a manager who has had a long and successful
                                                                          career in the Group, and in particular as an  employee
                                                                          not holding any corporate office. The  Supervisory Board
                                                                          consequently decided to authorise the  continuation of the
                                                                          employment contract between Saft Acquisition SAS and
                                                                          John Searle alongside his term of office as Chairman of the
                                                                          Company’s Management Board.
       Stock options policy
       The Afep-Medef recommends making allocations in the same           No specific rule sets the frequency and/or regularity
       calendar periods, which would eliminate the windfall effect.       of implementation of stock option plans. The Group considers
                                                                          that it would be appropriate to maintain a certain degree of
                                                                          flexibility in this area, given that any stock option plan must
                                                                          receive the prior authorisation of shareholders at an Annual
                                                                          General Meeting and of the Supervisory Board.
       Remuneration of the members of the Supervisory Board
       The Afep-Medef recommends that the remuneration                    Considering the current number of members on the
       of the members of the Supervisory Board should take                Supervisory Board and the involvement of each in the various
       into consideration their attendance to the Board and its           activities of the Board and of its Committees, the Board
       Committees. Therefore, their remuneration should include           decided not to alter the procedures for setting the attendance
       a variable portion. The Afep-Medef considers it “natural”          fees for its members, which are paid on a flat-fee basis.
       to encourage the participation of the members in Board
       Committees by an additional amount of attendance fees.
       Termination compensation for members of the Management
       Board
       The Afep-Medef recommends making termination indemnities           This recommendation applies only to John Searle, as
       of corporate officers subject to performance conditions. These     Chairman of the Management Board of the Saft Group.
       conditions, set by the boards, should be demanding and only        The payment of these contractual severance benefits in
       authorise indemnification of a manager in the case of forced        the case of forced termination is subject to the beneficiary
       departure and in the case of a change of control or of strategy.   meeting performance conditions, evaluated with respect to
                                                                          those of Saft Groupe SA. These conditions are described in the
                                                                          section on principles and rules for setting the remuneration
                                                                          of corporate officers.


       b)             Limitations placed on                                In addition, any forecasting and management documents and
                      the Management Board’s powers                        related analytical reports drawn up by the Management Board
                      by the Supervisory board                             must be provided to the Supervisory Board.

       The Management Board has the broadest powers to act in all          c)          Statutory provisions governing
       circumstancesinthenameofSaftGroupeSAregardingallmatters
                                                                                       shareholders’ participation
       falling within the scope of the Company’s corporate purpose,
                                                                                       in the Annual General Meeting
       except for powers reserved by law for other persons or bodies.
                                                                           Shareholders’ participation in the Annual General Meeting is
       The Company’s articles of association and  the Supervisory          governed by articles 13, 14 and 22 of the Company’s articles of
       Board bylaws provide, however, that certain decisions require       association. These articles are presented in chapter 8 of this
       the prior approval of the  Supervisory Board in the  following      annual report. Articles of association can be consulted on the
       matters:                                                            website www.saftbatteries.com under the section “Investor
          disposals of properties and shareholdings, and granting of       Centre/Shareholder information”.
          guarantees;
                                                                           d)          Principles and rules adopted
          investments or divestments changing the Group’s scope of
                                                                                       to determine the remuneration
          consolidation;
                                                                                       and benefits of any kind granted
          investments relating to an acquisition or any commitment                     to the corporate officers
          over and above a certain amount;
                                                                           The determination of the remunerations of the Directors
          issuance of bonds, and the implementation of any                 of the company is placed under the responsibility of the
          authorisation in this area.                                      Supervisory Board which based its decisions upon opinions



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and recommendations of the Remunerations and appointment           or maintenance of control, is more burdensome than the risk
Committee.                                                         which it is supposed to mitigate.
Main principles and rules relating to corporate officers           Persons responsible for internal control procedures and
remunerations are described in section 4.2.1 of this annual        risk management
report.
                                                                   The Internal Control and risk management system was
e)          Policy on the granting                                 designed and implemented by the Management Board, and
                                                                   applied and deployed by all staff under the responsibility of the
            of stock options
                                                                   Group’s managers. It is under the control of the Supervisory
Group policy for granting stock options is described in section    Board, which receives regular reports on the functioning of the
4.2.2 of this Annual Report.                                       internal control system and the work carried out.
                                                                   Since 2010, audit and internal control activities have been
                                                                   managed by a person working full-time in this area, reporting
4.3.2       RISK MANAGEMENT AND INTERNAL                           to the Group’s Chief Financial Officer, but able to refer matters
            CONTROL PROCEDURES                                     directly to the Chairman of the Management Board and/or the
                                                                   Audit Committee, when necessary. To carry out certain tasks,
a)          Internal control and risk management                   the Audit and Internal Control Manager regularly uses specific
            procedures                                             external resources.
The Company has put in place procedures for internal control       The Group’s Internal Control processes
and risk management designed to ensure that the information
                                                                   The Group has based its internal control approach on the
contained in the consolidated financial statements is reliable
                                                                   following five components set out in the COSO report:
and to exercise internal control over the Group’s companies.
The Saft Group includes the parent company Saft Groupe SA            control environment;
and its consolidated subsidiaries, detailed in the notes to the      risk assessment;
consolidated financial statements. The Group does not include
the ASB joint venture, as it is accounted for under the equity       control activities;
method. Internal audit and control procedures implemented            information and communication; and
by Saft Group within the ASB joint-venture are limited to the
                                                                     monitoring internal control.
review of quality standards by Saft world class department.
                                                                   Control environment
Definition and objectives                                           The Group has created a strict control environment
The Group’s definition of internal control is based on that         underpinned by the role of the Saft Management Committee
drawn up by the committee of Sponsoring Organisations              (SMC), which is responsible for discussing and setting the
(COSO) of the Treadway Commission, whose report was                Group’s strategic goals. The SMC is chaired by the Chairman
published in the United States in 1992.                            of the Management Board and meets at least once a month.
Within the Group, internal control is defined as the set            Based on the files presented to it and the information
of processes contributing to the control of activities and         exchanged at these meetings, the Committee spearheads
efficiency of operations, designed to ensure the rigorous and      the actions taken or decisions made by the Group’s corporate
effective management of the Group.                                 governance boards, and supervises all projects and activities
                                                                   at the highest level.
The purpose of the Group’s Internal Control system is therefore
to provide reasonable assurance regarding the achievement          Furthermore, the Group has an Audit Committee, a
of the following objectives:                                       Remuneration and Appointments Committee and a Strategy
                                                                   and Technology Committee, established in 2011.
  compliance with applicable laws and regulations, as well as
  with the Group’s defined strategies and internal procedures;      The control environment is subject to a continuous
                                                                   improvement process which forms part of the Group’s
  protection of the Group’s assets;                                objectives. As a result, over the last few years the Group has
  prevention and control of fraud and error, particularly in the   put in place the following instruments:
  area of accounting and finance;                                     an ethics code defining Saft’s values and a Code of Conduct
  reliability of financial and accounting information.                to be respected collectively and individually;
Its purpose is also to avoid and control the risks arising from      a specific Information Systems Security Committee (ISSC)
the Group’s activities.                                              dedicated to ensuring information system security. The
                                                                     main purposes of this committee are to strengthen the
As in any control system, it cannot provide an absolute
                                                                     environment of control of information systems and to
guarantee related to the implementation of the Group’s
                                                                     monitor the deployment of tools used for the protection of
objectives and the control of all the risks.
                                                                     data, networks and information systems in order to maintain
In this respect, the likelihood of achieving these objectives is     a high level of availability, confidentiality and integrity of
subject to the limits inherent in any internal control system        such systems. Starting in 2012, the responsibility for the
and in particular human error, cases of deliberate collusion         security of information systems is provided by a person
between several people making it possible to elude the               who is entirely dedicated to this purpose;
control system in place, or cases where the implementation,



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          a handbook to raise awareness of issues relating to fraud          sales, etc.) or financial, and also reviews forecasts and
          and corruption, which was distributed to the Group’s               their periodic updates. The sales managers of each division
          managers.                                                          regularly participate in these reviews.
       Risk assessment                                                     A certain number of tools are used in these control activities.
       Risk assessment is the identification and analysis of all the        Firstly, under the supervision of the Saft Management
       internal and external risks that may affect the Group’s ability     Committee, a set of rules and procedures has been established
       to achieve its objectives. Risk evaluation is also used to focus    for each executive management team across the Group’s
       the Company’s control activities and certain tasks carried out      divisions.
       by the Internal Audit Department.                                   Furthermore, the Group has an internal control manual that
       In order to monitor this essential Internal Control component,      covers all the key controls of the Group’s major processes,
       the Group’s management regularly undertakes risk mapping,           i.e. those considered essential for the proper performance of
       which enables:                                                      Saft’s operations. This manual is updated as required.

          to prioritise risks depending on their potential impact          The Internal Control manual serves as the basis for a periodic
          should they materialise; and                                     self-assessment process carried out by each operating entity
                                                                           on the quality of its Internal Control. Each year, a certain
          to assess a control level for each risk.                         number of internal control processes are subject to self-
       The Group’s risk mapping was updated at the end of 2012. This       assessment in the various entities, units or subsidiaries,
       update did not demonstrate any significant change in the main        of the Group. The self-assessment questionnaires cover
       risks compared to those identified in the previous update that was   the five key components of the internal control system. The
       carried out in 2009. It allowed measurement of progress made        results of these self-assessments are periodically checked
       since its last updating at the end of 2009 in the management        by the Group’s Statutory Auditors, on a sample basis, and are
       of major risks identified. Finally, it allowed identification of      communicated to the head of Internal Control and Audit, and
       various areas of improvement in the management of the main          to the Audit Committee.
       risks, in particular those linked to the Group’s technology
                                                                           Information and communication
       choices, project management and the operating performance
                                                                           This component of the Group’s internal control system
       of production units. These will lead the implementation of new
                                                                           includes identifying, collating and communicating relevant
       action plans during the 2013 financial year.
                                                                           information in a form and timeframe that enables each of the
       The risks to which the Group is exposed and the procedures          Group’s employees to fulfil their responsibilities. It consists of
       for managing them (including the programme of external              the information flows essential to effective Internal Control
       insurance coverage) are described in chapter 2, “Risk factors”      procedures, from the dissemination of strategies adopted by
       of this annual report.                                              the Management Board through to their implementation in
       In addition, the Group carried out specific risk mapping of          each of the Group’s companies and units.
       information system availability in 2010. This mapping was           The Group uses intranet and messaging systems that enable
       updated in 2012 and resulted in the creation of a plan for          it to effectively share information between the Management
       improvement in 2013.                                                Board, the Saft Management Committee and the subsidiaries
       Control activities                                                  or business units. Through these systems, each participant
                                                                           can access the qualitative and quantitative information
       Control activities involve monitoring the operations and
                                                                           required for performing their duties.
       performance of the Group’s divisions, ensuring the proper
       application of the standards and procedures that contribute         The information is shared by dedicating a special and efficient
       to the implementation of the policies adopted by Group              communication channel for each category of information and
       management, as well as compliance with the laws and                 enables the transfer of:
       regulations in force.                                                 information on budget control;
       The Group has put in place a rigorous and pro-active system           accounting and financial information provided by the
       for monitoring the performance of each division and the               subsidiaries to the Group’s head office;
       application of Group policies. This system is implemented as
       follows:                                                              operating and business-specific information exchanged
                                                                             between the Saft Management Committee and the
          the department in charge of management control carries out         management team of each manufacturing division.
          in-depth monthly reviews of the operations of subsidiaries
          and business units, based on the budget, actual results, and     For example, the financial control of subsidiaries is carried out
          forecasts which are periodically updated. Each subsidiary        by divisional controllers and the heads of management control
          or business unit performs a monthly reporting process            within the units or subsidiaries, and reports are made to the
          using dedicated Magnitude software, which is carefully           Saft Management Committee in the form of the following
          reviewed by the divisions’ management controllers and the        documents:
          SMC, and specific analyses are conducted at subsidiaries            the three-year business plan (updated once per year);
          where necessary;
                                                                             the budget, prepared yearly and subject to gap analyses and
          the Chairman of the Management Board, the Chief Financial          full reforecasting, at the end of each quarter, at least;
          Officer, and the heads of the Group’s divisions meet each
                                                                             monthly financial reporting packages using the Magnitude
          month to examine the monthly performance of each division
                                                                             software application.
          and the units within them, whether commercial (e.g. orders,


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The Group also has a specific information and control system           Internal Control procedures related to preparing financial
for decision-making and tracking of investments. Investment           and accounting information
spending information is thus reported to Group management             The Group’s financial and accounting information is produced
on a monthly basis, as part of a strict and formally documented       by the Finance Department, which coordinates the accounts-
authorisation procedure overseen by a specifically appointed           closing procedures for Saft Groupe SA and its subsidiaries.
officer.                                                              In addition to the points relating to accounting and financial
Finally, Saft is endeavouring to strengthen management                information described above in each of the components of the
and information dissemination tools such as the intranet              Internal Control system, the following specific points should
and the shared databases that offer effective sharing of              be highlighted:
quality information within the Group. For example, in 2011              Group-wide consolidation software based on a standard
Saft implemented a new system designed to improve                       reporting package ensures that the Group management
the management of risk and foreign exchange positions,                  consistently receives the accounting and financial
thereby enabling the various Group entities to communicate              information it needs to carry out its duties and for public
standardised forecasts to the Central Treasury.                         disclosure. This information is regularly expanded in order
Monitoring Internal Control                                             to improve the quality of the financial information available
                                                                        at the Group level;
The internal control systems need to be supervised in order to
assess their usefulness over time.                                      statutory accounting and financial information is produced
                                                                        on a defined schedule, and is based on formally documented
This is accomplished through ongoing monitoring activities,
                                                                        procedures and control processes. Each entity creates a
notably via internal audits.
                                                                        closing file in order to ensure the traceability of accounts-
Internal audits are to be performed on all entities, activities and     closing operations;
processes of the Saft Group by the Internal Audit Department.
                                                                        the Saft Group’s Finance Department draws on the work
The audit programme is approved by the Audit Committee
                                                                        conducted by the Finance Department of each subsidiary,
before being presented to the Saft Management Committee.
                                                                        as well as on the management and budgetary control
Group entities which have been subject to internal audits
                                                                        procedures set up within the Group. This structure
draw up action plans whose implementation is systematically
                                                                        enables objectives to be set and accounting and financial
monitored. The main role of the internal audit function is to
                                                                        information to be collected and analysed at different levels
independently make sure that internal control procedures are
                                                                        of the organisation. It also permits swift application of any
in place and that they are effective, that professional internal
                                                                        corrective measures;
audit standards are applied, as specified by international
professional bodies (notably, the Institute of Internal Auditors).      the Saft Group has drawn up a “Manual of Accounting
                                                                        and Consolidation Principles” which is used by all
As part of its 2012 plan, the Internal Audit Department:
                                                                        Group companies. This manual defines the accounting
  completed three site audit missions:                                  measurement methods used by the Group. It specifies the
      at the Jacksonville facility, in the United States, for           consolidation principles that must be respected. It also
      which four processes were audited,                                includes a detailed analysis of International Financial
                                                                        Reporting Standards (IFRS) and their application within
      at the Valdese facility, in the United States, for which
                                                                        the Saft Group. The manual is available on the Group’s
      four processes were audited,
                                                                        intranet; every quarter, consolidation instructions issued
      at the commercial subsidiary in Cyprus, for which all             by the Group are sent to each entity. These instructions
      processes were audited.                                           are amended regularly in order to integrate any changes in
      These audits were followed by reports containing                  disclosure requirements or control procedures;
      recommendations that will be subject to a follow-up in            a basic set of accounting and financial procedures that are
      2013;                                                             regularly reviewed and updated is made available on the
  tracked the implementation of specific points for                      Group’s intranet.
  improvement identified during the audit of business
  units conducted in 2011, at the sites in Bordeaux, France,          b)          Information that may have an
  Oskarshamn (Sweden), Madrid (Spain), Cockeysville, United                       impact in the event of a public offer
  States, and Bangalore (India);                                                  (article L.225-100-3 of the French
  implemented a self-assessment of the “Cash” process on                          Commercial Code)
  all of the Group’s units;                                           With the exception of clauses pertaining to a change in control
  organised the update of the mapping of the Group’s major            included in loan agreements and disclosed in the notes to
  risks. This process is based on individual interviews with          the consolidated financial statements, the Company has not
  approximately 30 of the Group’s managers, followed by a             entered into any major agreement that would be amended or
  workshop to discuss and rank the risks and to identify any          automatically terminated in the event of a change in control at
  areas of improvement in the management of these major               the Company.
  risks;                                                              The commitments made by the Company with regard to the
  lastly, updated various procedures.                                 French and Israeli governments are described in section 8.4
                                                                      “Significant contracts and commitments” of this annual report.
The results of the work carried out by the Internal Audit
Department were presented to the Audit Committee in
January 2013.

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       4          CORPORATE GOVERNANCE
                  Statutory Auditors’ report, prepared in compliance with article L.225-235 of the French Commercial Code
                  on the report prepared by the Chairman of the Supervisory Board of Saft Groupe SA




       4.4            STATUTORY AUDITORS’ REPORT, PREPARED IN
                      COMPLIANCE WITH ARTICLE L.225-235 OF THE FRENCH
                      COMMERCIAL CODE ON THE REPORT PREPARED
                      BY THE CHAIRMAN OF THE SUPERVISORY BOARD
                      OF SAFT GROUPE SA
       This is a free translation into English of the Statutory Auditors’ report prepared in accordance with article L.225-235 of the French
       Commercial Code, on the report prepared by the Chairman of the Supervisory Board of Saft Groupe SA, issued in the French language
       and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in
       accordance with, French law and professional auditing standards applicable in France.
       Year ended 31 December 2012
       SAFT GROUPE SA
       12 rue Sadi Carnot
       93170 Bagnolet

       To the Shareholders,
       In our capacity as Statutory Auditors of Saft Groupe SA, and in accordance with article L.225-235 of the French Commercial Code,
       we hereby report to you on the report prepared by the Chairman of your Company in accordance with article L.225-68 of the French
       Commercial Code for the year ended December 31, 2012.
       It is the Chairman’s responsibility to prepare, and submit to the Supervisory Board for approval, a report describing the internal
       control and risk management procedures implemented by the Company and providing the other information required by article
       L.225-68 of the French Commercial Code (Code de commerce) in particular relating to corporate governance.
       It is our responsibility:
          to report to you on the information set out in the Chairman’s report on Internal Control and risk management procedures relating
          to the preparation and processing on financial and accounting information;
          to attest that the report includes the other information required by article L.225-68 of the French Commercial Code (Code de
          commerce), it should be noted that it is not our responsibility to assess the fairness of this other information.
       We conducted our work in accordance with professional standards applicable in France.
       Information concerning the Internal Control and risk management procedures relating to the preparation and processing of
       financial and accounting information
       The professional standards require that we perform procedures to assess the fairness of the information on internal control and
       risk management procedures relating to the preparation and processing of financial and accounting information set out in the
       Chairman’s report.
       These procedures mainly consisted of:
          obtaining an understanding of the internal control and risk management procedures relating to the preparation and processing
          of financial and accounting information on which the information presented in the Chairman’s report is based, and of the existing
          documentation;
          obtaining an understanding of the work performed to support the information given in the report and of the existing documentation;
          determining if any material weaknesses in the internal control procedures relating to the preparation and processing of financial
          and accounting information that we may have identified in the course of our work are properly described in the Chairman’s report.
       On the basis of our work, we have nothing to report on the information in respect of the Company’s internal control and risk
       management procedures relating to the preparation and processing of the accounting and financial information contained in the
       report prepared by the Chairman of the Supervisory Board in accordance with article L.225-68 of the French Commercial Code
       (Code de commerce).
       Other information
       We attest that the Chairman of the Supervisory Board’s report includes the other information required by article L.225-68 of the
       French Commercial Code.
                                            Neuilly-Sur-Seine and Courbevoie, 15 February 2013
                                                               The Statutory Auditors

                            PricewaterhouseCoopers Audit                                                 Mazars
                                    Françoise Carnier                                               Juliette Decoux

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                                                                                                                            4
                                                                                CORPORATE GOVERNANCE
                                                                   Main provisions of the Supervisory Board bylaws




4.5         MAIN PROVISIONS OF THE SUPERVISORY BOARD BYLAWS

Supervisory Board bylaws, in line with the recommendations        c)            Controls carried out
of the Apef/Medef code were approved and implemented by                         by the Supervisory Board
the Supervisory Board at its meeting of 22 April 2005 and were
                                                                  The Chairman of the Supervisory Board or the Chairman of the
subsequently modified in 2006, 2010 and 2011. These bylaws
                                                                  Audit Committee may refer matters to the Supervisory Board
are available on the Company’s website (www.saftbatteries.
                                                                  for checks or controls.
com).
                                                                  Where the Supervisory Board decides that such checks or
The main provisions of the bylaws are as follows:
                                                                  controls are required, the Board will precisely define the
                                                                  purpose, terms and conditions thereof in the minutes of the
                                                                  related meeting. The Supervisory Board may carry out such
4.5.1       PREPARATION AND ORGANISATION                          checks or controls itself or entrust them to one of the Board
            OF SUPERVISORY BOARD MEETINGS                         Committees, a Supervisory Board member or an external
                                                                  party.
a)          Strategic objectives                                  If the Supervisory Board decides to entrust the checks and
The Supervisory Board makes decisions regarding the               controls concerned to one of its members or an external party,
Company’s overall strategic, economic, social, financial           that person’s assignment shall be defined as set out below.
and technological objectives and ensures that they are            The Chairman of the Supervisory Board defines the terms
implemented by management.                                        and conditions of the checks or controls to be performed. In
Saft’s medium-term business strategy is defined in an annual       particular, measures shall be taken in order to ensure that
business plan that is drawn up in draft form and presented by     these checks and controls cause minimum disruption to the
the Management Board to the Supervisory Board for approval.       Group’s business.
This draft business plan includes forecasts for Saft’s key        Meetings may be held with Group employees where required.
operating and financial indicators as well as a provisional
                                                                  The Chairman of the Supervisory Board is responsible for
annual budget.
                                                                  ensuring that any information that may be useful in performing
The Management Board is responsible for implementing the          the checks or controls is provided to the person carrying out
strategies set out in the business plan.                          the assignment.
The Management Board must obtain prior authorisation from         Any party performing such checks or controls may not
the Supervisory Board before carrying out any acquisitions        interfere in the management of the Group’s business.
or divestments that would change the Group’s scope of
                                                                  When the controls or checks are completed a report shall be
consolidation.
                                                                  presented to the Supervisory Board. The Board then specifies
Prior approval from the Supervisory Board is also required for    the measures to be subsequently adopted.
any investment made in connection with an external growth
transaction, or any commitment representing over €30 million      d)            Specific assignments carried out
that is not included in the Company’s budget and does not                       by Supervisory Board members
correspond to a routine operating transaction.
                                                                  When the Supervisory Board decides to entrust a specific
The Chairman or any other member of the Management                assignment to one or more of its members or one or more
Board must inform the Supervisory Board of any problem or         third parties, the Board shall draw up the principle terms and
any other factor that could affect the implementation of the      conditions of the assignment concerned.
strategies contained in the Group’s Business Plan.
                                                                  If such an assignment is to be carried out by one or more
                                                                  members of the Supervisory Board, the members concerned
b)          Information provided to members
                                                                  shall not take part in the vote concerning their appointment.
            of the Supervisory Board
                                                                  Following the meeting held to appoint the persons responsible
All Supervisory Board members shall be provided with the
                                                                  for a specific assignment, the Chairman of the Supervisory
agenda of Board Meetings as well as any documents that will
                                                                  Board shall draw up a draft engagement letter which:
enable them to make fully informed decisions.
                                                                       defines the precise aims of the assignment;
At each Board Meeting, the Chairman informs the members
of the main significant events relating to the Group that have          specifies the type of report required on conclusion of the
occurred since the previous meeting.                                   assignment;
Any Supervisory Board member wishing to visit a Group site             sets the duration of the assignment;
in order to obtain information required to carry out his or her        fixes the amount of compensation payable to the person(s)
duties should make a written request to the Chairman of the            responsible for the assignment, as well as payment terms
Management Board through the secretary of the Supervisory              and conditions, after consultation with the Remuneration
Board, stating the aim of the visit.                                   Committee where required;




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       4          CORPORATE GOVERNANCE
                  Main provisions of the Supervisory Board bylaws




            where appropriate, sets a ceiling for the reimbursement of      4.5.2       DUTIES AND RESPONSIBILITIES
            travel and other expenses incurred during the performance                   OF SUPERVISORY BOARD MEMBERS
            of the assignment.
       Where relevant, the Chairman of the Supervisory Board shall          The duties and responsibilities of the members of the
       submit this draft engagement letter to the Relevant Board            Supervisory Board are set out in the code of ethics below
       Committees for their opinion, and shall provide a copy of the        which forms an integral part of these bylaws.
       signed letter to the Chairmen of said committees.
                                                                            Code of ethics for the members of the
       In addition, a copy of the assignment report shall be given to       Supervisory Board
       Supervisory Board members by the Chairman of the Board.
                                                                            Presentation
       The Supervisory Board subsequently decides what action to
       take based on the assignment report.                                 The Supervisory Board has approved this code of ethics which
                                                                            sets out the rights and duties of the Board’s members.
       e)             Board Committees                                      The purpose of the code is to enhance the quality of work
       In order to help with the preparation of its work, the Supervisory   performed by the Supervisory Board, in line with the
       Board has set up an Audit Committee, a Remuneration and              Company’s overriding corporate governance principles of
       Appointments Committee and a Strategy and Technology                 independence, integrity, loyalty and professionalism.
       Committee.
                                                                            The members of the Supervisory Board undertake to comply
       The modus operandi and terms of reference of these committees        with and apply the guidelines contained in this code of ethics.
       are determined by the Supervisory Board’s bylaws.
                                                                            Acting in the best interests of the Company
       f)             Supervisory Board meetings                            Each Supervisory Board member must act in all circumstances
       On the recommendation of its Chairman, each year the                 in the best interests of the Company and consider himself
       Supervisory Board draws up a list of meeting dates for the           as representing all of the shareholders, irrespective of the
       coming twelve months. This list includes the dates of the            reason for his appointment.
       Board’s routine meetings – for reviewing the first- and
       third-quarter sales figures, first-half results and the annual         Compliance with the law and the Company’s articles of
                                                                            association
       financial statements and for preparing General Shareholders’
       Meetings – as well as, where appropriate, any dates that             Before accepting their position, Supervisory Board members
       the members of the Supervisory Board should keep free for            must be fully aware of their rights and obligations. In
       possible additional Supervisory Board meetings.                      particular, they must familiarise themselves with and comply
                                                                            with all the legal and regulatory provisions concerning their
       The Chairman of the Board is responsible for approving the
                                                                            office, as well as the applicable corporate governance codes
       agenda of each Board meeting and circulating the agenda to
                                                                            and best practices, and the Company’s own rules as set out in
       the Board members within a reasonable timeframe and by any
                                                                            its articles of association and the Supervisory Board’s bylaws.
       appropriate method.
       The Chairman shall provide the Board members with the                Independence
       documents required to enable them to make informed                   Supervisory Board members must in all circumstances ensure
       decisions concerning the items on the agenda at least forty-         that they retain their independence as regards their analysis,
       eight hours before the meeting concerned, except in urgent           judgment, decisions and actions. Similarly, during their term
       cases or where such communication is impossible for                  of office each Board member must act independently at all
       confidentiality reasons.                                              times and in the sole interest of the Company.
       In urgent cases, the Chairman of the Board may propose
                                                                            Conflicts of interest
       additional matters for discussion that were not included in the
       original meeting agenda.                                             Supervisory Board members must do everything in their
                                                                            power to avoid any conflict between their personal/material
       Part of one Board meeting per year shall be devoted to               interests and those of the Company or any other Group
       reviewing the Board’s performance.                                   company. They must inform the Board of any potential conflict
                                                                            of interest in which they could be involved. If an actual conflict
       g)             Participation in Supervisory Board
                                                                            of interest does arise which a Supervisory Board member
                      meetings by video conferencing link                   is unable to avoid, he must refrain from taking part in the
       Subject to compliance with the applicable laws and regulations,      debates and votes on the matters concerned.
       Supervisory Board members may participate in meetings by
       video conferencing link.                                             Duty of confidentiality
       The Chairman of the Supervisory Board shall ensure that a            Supervisory Board members personally undertake to treat
       video conferencing link or other means of telecommunication          as strictly confidential all of the information they receive,
       that continuously broadcasts the meeting is provided to Board        as well as the debates in which they participate and the
       members wishing to take part in a meeting.                           votes taken. In general, they are not authorized to issue any
                                                                            external communications in their capacity as Board members,
                                                                            especially to the press.




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                                                                                                                            4
                                                                               CORPORATE GOVERNANCE
                                                                    Main provisions of the Supervisory Board bylaws




The Chairman of the Supervisory Board informs Board                Duty of due care, professionalism and involvement
members of any information to be released to the markets and       The members of the Supervisory Board undertake to devote
provides them with the wording of any press releases issued        the necessary time and attention to their duties. In particular,
for that purpose in the name of Saft Groupe SA.                    they have to:
If a Board member breaches his duty of confidentiality, the           ensure that the overall number of Supervisory Board
Chairmen of the Board Committees shall meet to discuss               positions and/or directorships that they hold and the
the matter and give their opinion to the Chairman of the             ensuing responsibilities enable them to have the requisite
Supervisory Board. The Chairman of the Supervisory Board             time and availability to perform their duties for the Company,
subsequently reports to the Board on the action to be taken in       particularly if they hold an executive position as well;
relation to said breach (which may include legal proceedings
where appropriate).                                                  ensure that they are appropriately informed about the
                                                                     Company’s businesses and specific characteristics as
Inside information and trading in the Company’s shares               well as its goals and corporate values, including by putting
The members of the Supervisory Board must not use any                questions to Management;
inside information to which they are privy for their own             devote the necessary time to examining issues dealt with
personal benefit or the benefit of any third party. In particular,     by the Supervisory Board and by any committee(s) of which
Supervisory Board members must not use any information               they are a member;
concerning the Company that is not in the public domain, for
                                                                     request any additional information that they deem
the purposes of carrying out trades in the Company’s shares,
                                                                     necessary for them to make fully informed decisions
either directly or through a third party.
                                                                     concerning matters that fall within the Supervisory Board’s
Supervisory Board members shall also comply with the                 remit and use their best efforts to obtain such information
following:                                                           on a timely basis;
  Shares owned by members of the Supervisory Board must              take all necessary measures to keep abreast of all issues
  be held in registered form. This requirement applies both to       and information that may be useful to them in their role as
  shares already held at the start of a Board member’s term          a Supervisory Board member. To that end, they may receive
  of office and any shares subsequently acquired during said         training– particularly when they are first elected to the
  term.                                                              Board and where they deem it necessary– in order to better
  Supervisory Board members must provide to the Chairman             understand the specific characteristics of the Saft Group,
  of the Board, in a timely manner, the information to be            including its businesses, industry and financial affairs;
  disclosed to the French securities regulator (Autorité des         actively participate in all meetings of the Supervisory Board
  marchés financiers) concerning any trades they may have             and the committees of which they are members, unless
  carried out in the Company’s shares.                               they have a valid reason for being absent;
Supervisory Board members shall not:                                 attend all General Shareholders’ Meetings.
  trade in the shares of any Group company that is listed on a
                                                                   Duty of effectiveness
  regulated market if they hold any inside information;
                                                                   Supervisory Board members are expected to (i) contribute
  directly or indirectly carry out short sales of said shares;     to the cohesion and effectiveness of the Board and its
The first above-mentioned trading prohibition particularly          committees and (ii) help continually enhance the quality of the
applies during the following “blackout” periods:                   information provided to shareholders. They must also ensure
                                                                   that the Board’s bylaws are complied with and make any and
      (i) the periods during which Saft’s annual and interim
                                                                   all proposals aimed at improving the working conditions of
      results are prepared and published,
                                                                   the Board and its committees, notably during the Board’s self-
      (ii) the quarterly reporting process, and                    assessment procedure.
      (iii) the preparation period for projects or transactions
                                                                   In addition, Supervisory Board members must agree to any
      that require the application of said prohibition.
                                                                   assessment of their own work within the Board.
The Chairman of the Supervisory Board sets or confirms the
                                                                   Each member of the Board undertakes to tender their
start and end dates of the above blackout periods and informs
                                                                   resignation if they consider in good faith that they are no
the Supervisory Board thereof in a timely manner.
                                                                   longer in a position to effectively perform their duties.
The Chairman of the Supervisory Board reports to the Board
on the measures taken to ensure that the above-mentioned
rules are also respected by any Saft employees holding
inside information as a result of their position or duties or
participating in a project or transaction as mentioned in point
(iii) above.




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       4          CORPORATE GOVERNANCE




112 / S A F T - A N N U A L R E P O R T 2 0 1 2
Comments                                                                 5
on the 2012
financial year
5.1      Activity and consolidated results                                    114

5.2      Earnings by division                                                 116
5.2.1    Industrial Battery Group (IBG)                                         116
5.2.2    Specialty Battery Group (SBG)                                          117
5.2.3    Other activities                                                       118

5.3      Other items of consolidated income                                   118
5.3.1    Other items of operating profit                                         118
5.3.2    Operating profit                                                        118
5.3.3    Net financial expense                                                   119
5.3.4    Profit (loss) before tax from continuing operations                     119
5.3.5    Income tax on continuing operations                                    119
5.3.6    Net profit (loss) from continuing operations                            119
5.3.7    Net profit (loss) from discontinued operations                          119
5.3.8    Net profit (loss) for the period, earnings per share and dividend       119

5.4      Research and development                                             120

5.5      investments and fixed assets                                          120
5.5.1    Investments                                                            120
5.5.2    Property, plant and equipment                                          121

5.6      Cash flow and financing                                                121
5.6.1    Cash generated from activities                                         121
5.6.2    Cash and debt                                                          122

5.7      Group’s statement of financial position 122

5.8      Other key events in FY 2012                                          122
5.8.1    Annual General Meeting and dividend                                    122
5.8.2    Investment projects                                                    122

5.9      Related-party transactions                                           123

5.10     Changes in the scope
         of consolidation in 2012                                             123

5.11     Basis of preparation of the consolidated
         financial statements                      123

5.12     Events after the reporting period
         and 2013 outlook                                                     124
5.12.1   Events after the reporting period                                      124
5.12.2   2013 outlook                                                           124

5.13     Saft Groupe SA activity and results                                  124

5.14     Activity of Saft Groupe SA
         subsidiaries and controlled entities                                 125


                                              S A F T - A N N U A L R E P O R T 2 0 1 2 / 113
       5          COMMENTS ON THE 2012 FINANCIAL YEAR
                  Activity and consolidated results




       Preliminary note: In 2012, the Group decided to sell its small                         the total profit or loss, net of income tax; of discontinued
       nickel batteries business (“SNB activity”). As the sale was                            operations, is reported as a single amount on a specific
       highly probable by the end of 2012 financial year, the SNB                              line “Net profit/(loss) from discontinued operations” in the
       activity has been classified, presented and related assets and                          consolidated income statement;
       liabilities measured in accordance with IFRS 5 “Non-current
                                                                                              cash-flows from discontinued operations are reported on
       assets held for sale and discontinued operations” in the Group
                                                                                              a specific line of the consolidated statement of cash-flows,
       consolidated financial statements.
                                                                                              except for cash flows related to financing if they cannot be
       Main classification, presentation and measurement                                       identified separately for sales of assets.
       requirements for discontinued operations are as follows:
          assets held for sale and related liabilities are presented on
          two specific lines of the balance sheet, without offsetting;




       5.1              ACTIVITY AND CONSOLIDATED RESULTS

       The 2012 financial year was marked by stable overall activity                        Finally, on the basis of 2011 revenue excluding the non-
       with revenue of €640.5 million, reflecting a reduction of 0.5%                       recurring €7.4  million upfront royalty fee recorded in the
       at constant exchange rates compared to revenue for the year                         financial year as part of the agreements that ended the joint
       2011.                                                                               venture with Johnson Controls, the Group’s 2012 revenue
                                                                                           grew by 4.9% at current rates and by 0.9% at constant
       As reported, excluding the revenue of the small nickel
                                                                                           exchange rates.
       batteries (“SNB”) line of activity put up for sale, 2012 revenue
       reached €598.0 million, up by 3.6% at current exchange rates
       and down by 0.4% at constant exchange rates.


       The key figures for 2012 are as follows:


                                                                                                    Year ended 31 December
                                                                                    Restated                                          Reported (3)
       (in € million)                                                   2012            2011 (1) % Growth(2)               2012               2011 % Growth (2)
       Revenue                                                          598.0            570.0              0.9%           598.0             577.4             (0.4)%
       Gross profit                                                      175.6            173.3              1.3%           175.6             180.7             (2.8)%
       Gross margin (%)                                                 29.4%            30.4%                             29.4%             31.3%
       EBITDA (4)                                                       102.1            101.3              0.8%           102.1             108.7             (6.1)%
       EBITDA (%)                                                       17.1%            17.8%                             17.1%             18.8%
       EBIT (5)                                                          69.4             73.3            (5.3)%            69.4              80.7           (14,0)%
       EBIT (%)                                                         11.6%            12.9%                             11.6%             14.0%
       Operating income                                                  68.9             72.9            (5.5)%            68.9              80.3           (14,2)%
       Net profit for the period from continuing
       operations                                                         41.6             46.1           (9.8)%             41.6              51.4          (19.1)%
       Net profit for the period from discontinued
       operations                                                         (7.3)            23.6                              (7.3)             23.6
       Net profit for the period                                           34.3             69.7         (50.8)%              34.3              75.0          (54.3)%
       EPS total (€ per share)                                            1.36             2.78         (51.1)%              1.36              2.98          (54.4)%
       EPS from continuing operations (€ per share)                       1.65             1.84         (10.3)%              1.65              2.03          (18.7)%
       (1) Only data from the 2011 financial period have been restated by eliminating the impact of the non-recurring €7.4 million upfront royalty fee recorded
           in revenue following the agreements that ended the joint venture with Johnson Controls.
       (2) Changes are measured at current exchange rates except for the change in revenue, which is measured at constant exchange rates.
       (3) Reported data for 2012 and 2011 has been restated to separate the income from continuing operations from discontinued operations. The discontinued
           operations concern the following:
           ■ in 2012 the small nickel batteries (SNB) activity put up for sale, the disposal of which is highly probable;

           ■ in 2011 Saft Group’s 49% interest in the Johnson Controls-Saft joint venture, an interest that the Group disposed of on 30 September 2011. Up to the date
             of its disposal, this joint venture was accounted for under the equity method in the Group’s financial statements.
       (4) EBITDA is defined as operating profit, before depreciation (net of the depreciation of deferred grants relating to assets), amortisation, restructuring costs
           and other income and expenses.
       (5) EBIT is defined as operating profit before restructuring costs and other income and expenses.



114 / S A F T - A N N U A L R E P O R T 2 0 1 2
                                                                                                                                         5
                                                                  COMMENTS ON THE 2012 FINANCIAL YEAR
                                                                                                  Activity and consolidated results




Unless otherwise stated, the management comments                               The net profit from continuing operations totalled €41.6 million
presented below have been prepared using restated data,                        in 2012, compared to 2011 net profit of €46.1 million. Earnings
meaning on the basis of 2011 revenue restated for the non-                     per share from continuing operations thus is €1.65 in 2012
recurring €7.4 million upfront royalty fee recorded in revenue                 compared to €1.84 in 2011 as restated and €2.03 as reported.
as part of the agreements that ended the joint venture with                    2012 net profit from discontinued operations, which combines
Johnson Controls.                                                              both the 2012 operating loss from the small nickel batteries
The Group’s 2012 gross margin, at €175.6  million, reaches                     (SNB) business unit put up for sale but also the impairment
29.4% of revenue, for a reduction of 100 basis points compared                 losses for write-down of assets held for sale to fair value less
to its 2011 level. This decline in the margin is attributable to               costs to sell, is a loss, net of tax and disposal related expenses,
start-up losses of the Jacksonville manufacturing facility,                    of €7.3 million.
analysed hereinafter.                                                          The net profit of €23.6 million recorded in 2011 for discontinued
The Group’s EBITDA for the financial year 2012 reaches                          activities corresponds to the total impact of the Johnson
€102.1 million, a slight increase by 0.8% as compared to the                   Controls-Saft joint venture on the Group’s consolidated
year 2011. The 2012 rate of the EBITDA margin is thus 17.1%                    income, including the profit from the Group’s disposal of this
of revenue compared to a margin of 17.8% of 2011 sales.                        holding on 30 September 2011.
This change covers, on the one hand, an increase in the                        The Group’s net profit for the financial year 2012 thus totals
profitability of sales of the traditional activities and, on the                €34.3 million compared to a net reported profit of €75.0 million
other hand, a negative contribution of sales of products linked                for the financial year 2011. 2012 earnings per share thus
to the Jacksonville cells and lithium-ion battery manufacturing                reached €1.36, compared to 2011 reported earnings per share
facility, whose start-up losses were greater than anticipated                  of €2.98.
at the beginning of the year 2012.                                             Net cash flows generated in 2012 by operations totalling
The improvement in performance of product sales on                             €55.5 million are down by €11.2 million compared to the 2011
traditional markets results mainly from a strong increase in                   financial year.
the performance of the SBG division but also from a slight                     Although down for the year by €13.6 million, 2012 investments
improvement in the profitability of historical activities of the                reached €53.5  million, including €22.5  million for the
IBG division.                                                                  Jacksonville production facility.
Depreciation, amortisation and impairment of non-current                       Net cash flows from financing activities correspond to a use
assets (1) amounted to €32.7 million, an increase of €4.7 million              of €152.3 million of cash in 2012 compared to a generation of
over 2011. This increase comes mainly from the Jacksonville                    €3.9 million of cash in 2011.
unit.
                                                                               Excluding the impact of the refinancing, the 2012 free cash
The 2012 financial year EBIT margin totalled €69.4  million,                    flow(2) is a positive €11.9  million compared to a comparable
or 11.6% of revenue, compared to a 2011 EBIT margin of
                                                                               positive amount of 21.1  million in 2011. It was negative by
€73.3 million, or 12.9% of revenue.
                                                                               €107.2 million after refinancing and Group’s financial debt
At €68.9  million or 11.5% of revenue, the Group’s 2012                        reduction by €119.1 million.
operating margin showed a year-on-year decline of 5.5%.
                                                                               The Group’s cash position at the close of the 2012 financial
The financial result for the 2012 financial year is a net                        year remains significant at €114.5  million. It allows, in
expense of €12.8 million, up by €1.8 million compared to the                   accordance with the Group’s distribution policy, to propose to
net expense recorded in 2011. This change covers, on the one                   the Ordinary General Meeting of 7 May 2013 the distribution of
hand, a €4.1 million reduction in the cost of net debt and, on                 an ordinary dividend of €0.75, up by 4.2%, representing 45.4%
the other hand, a net foreign exchange loss of €2.4 million in                 of 2012 net profit from continuing operations.
2012 whereas the year 2011 recorded a foreign exchange gain
of €3.7 million.
The tax expense related to continuing operations totalled
€15.3 million for the financial year 2012. This represents an
overall tax rate of 26.9%, compared to a rate of 27.7% in 2011.




(1) Net of the amortisation of deferred investment subsidies linked to the Jacksonville unit
(2) Defined as cash generated from operations and not allocated to investing and financing activities, but before equity investments and dividend
    payments, and excluding flows relating to discontinued operations.



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       5           COMMENTS ON THE 2012 FINANCIAL YEAR
                   Earnings by division




       5.2            EARNINGS BY DIVISION

       The following table shows changes in revenue and EBITDA margin by division:


                                                  2012 Financial Year                                                       2011 Financial Year
                                                                                              EBITDA            Restated               Restated               EBITDA
                           Revenue                 Change               EBITDA                margin           Revenue (1)             EBITDA (1)              margin
                                  (€ M)                  (%)                 (€ M)                  (%)                 (€ M)                  (€ M)                 (%)
       IBG                      320.5                  3.7%                 33.9               10.6%                 298.9                  42.4               14.2%
       SBG                      277.5                (2.1)%                 70.4               25.4%                 271.1                  64.4               23.8%
       Other (2)                    -                      -                (2.2)                 n.s.                   -                  (5,5)                 n.s.
       TOTAL                    598.0                 0.9%                 102.1               17,1%                 570.0                 101.3               17.8%
       All data contained in the table above are expressed at current exchange rates, except for changes in revenue that are expressed at constant exchange rates.
       (1) Revenue and EBITDA for the 2011 financial period excludes the €7.4 million of royalty fee recorded as revenue in the “Other” cost centre as part of the
            agreements for the Group’s disposal of its 49% interests in the Johnson Controls-Saft joint venture.
       (2) The “Other” cost centre includes the cost of corporate support services, i.e. primarily IT, research, corporate management, finance and administration. In 2011,
            this cost centre furthermore includes a non-recurring upfront royalty payment of €7.4 million recorded as a result of the agreement to end the joint venture
            with Johnson Controls. This revenue is excluded from the data in the above table.



       Changes in consolidated revenue by market segment are shown below:


                                                                                                                                     2011       Change at constant
                                                                                                           2012                 Restated (1)       exchange rates
       Stationary backup and energy storage applications                                                   189.2                     172.0                       5.8%
       Transportation (Aviation, Rail and Vehicles)                                                        131.3                     126.9                      2.6%(2)
       TOTAL IBG                                                                                           320.5                     298.9                       3.7%
       Civil activities                                                                                    193.7                     188.6                      (1.6)%
       Defence activities                                                                                   83.8                      82.5                      (3.1)%
       TOTAL SBG                                                                                           277.5                     271.1                     (2.1)%
       TOTAL CONSOLIDATED REVENUE                                                                          598.0                     570.0                      0.9%
       Small nickel battery (“SNB”) discontinued activity                                                   42.5                      51.3                    (17.1)%
       (1) Revenue for the 2011 financial period excludes the €7.4 million royalties fee recorded as revenue in the “Other” cost centre as part of the agreements for the
           Group’s disposal of its 49% interest in the Johnson Controls-Saft joint venture.
       (2) Change calculated excluding revenue from services to ICI.




       5.2.1          INDUSTRIAL BATTERY GROUP (IBG)                                        applications. Nickel batteries for industrial stationary backup
                                                                                            power applications recorded very low growth at constant
       At €320.5  million, Industrial Battery Group division sales                          exchange rates.
       increased by 7.2% at current exchange rates over the financial
                                                                                            The business grew in all regions except Europe, with the
       year. At constant exchange rates, 2012 sales increased by 3.7%
                                                                                            strongest growth being seen in Asia and North America. Sales
       over those of the 2011 financial year. This good performance
                                                                                            of lithium-ion batteries in the energy storage sector were
       covers a growth in all markets. In particular, sales of lithium-
                                                                                            made up to 56% in Europe and 44% in North America.
       ion products linked to the new Jacksonville unit exceeded
       the objectives that the Group had set at the beginning of                            The transportation markets (aviation, rail and vehicles)
       the financial period. They contributed to 2.8% growth of the                          recorded 2012 revenue growth of 2.6% at constant exchange
       Group’s reported sales(1).                                                           rates compared to growth of 3.0% in 2011. Within this activity,
                                                                                            the aviation sector was marked by growth at a level near that
       After very strong growth of nearly 23% in 2011, in 2012 the
                                                                                            of 2011 and in-line with the world-wide evolution of passenger
       markets for batteries for stationary backup power and energy
                                                                                            traffic.
       storage applications reached €187.4  million, a growth of
       5.8% at constant exchange rates. The growth of this segment                          After very slight growth in 2011, in 2012 the rail market
       results, on the one hand, from the growth of sales of lithium-                       recorded a small decline in sales. The decrease in revenue
       ion batteries in new energy storage market and, on the other                         weighed on European and Asian markets whereas the US
       hand, from strong growth of sales in telecommunications                              markets experienced strong growth.
       markets, the division’s second market for stationary


       (1) i.e. 2.6% growth of Group’s total revenue, including the sales of the small nickel battery business.



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                                                            COMMENTS ON THE 2012 FINANCIAL YEAR
                                                                                                   Earnings by division




Finally, 2012 sales in the vehicle segment recorded very            On the other hand, at the end of the first half of 2012 and
strong growth and 70% of sales were made with lithium-ion           following the strategic analysis of the automobile market,
products.                                                           the Group decided to develop its activities in this market by
                                                                    targeting the three following applications:
The small nickel batteries (SNB) activity within the IBG division
that was put up for sale by the Group in 2012 is analysed             batteries for hybrid electric buses and trucks;
below in paragraph 5.3.7 “Net profit/(loss) from discontinued
                                                                      batteries for limited series vehicles and vehicles for
operations”.
                                                                      competition;
In terms of profitability, the year 2012 was marked by a
                                                                      batteries for an emerging application, low-cost hybrid
390  basis point contraction in the division’s EBITDA margin
                                                                      micro-systems for passenger vehicles.
to 10.6% of revenue. This decline results from the negative
contribution of €17.5  million of the Jacksonville lithium-ion      The Saft IBG division has already made sales in the competition
unit (compared to a negative contribution of €9.6  million in       vehicles segment and has allocated resources to meet new
2011). Indeed, the operational efficiency of the first production    opportunities, with further sales expected from 2014.
line was below the expected level due to high level of scrap        Finally, the division’s industrial investments and capitalised
and productivity issues. Technical difficulties have been           Research & Development expenditures reached €40.3 million
identified and corrective measures implemented. Operational          in 2012 compared to €56.2  million in 2011. The largest
losses have been significantly reduced in the second half of         single investment concerns the new lithium-ion facility in
the year despite the costs of commissioning of the second           Jacksonville, for which gross investments made in 2012,
production line. Excluding the negative contribution of the         although smaller compared to those in 2011 and 2010,
Jacksonville unit, the division’s 2012 EBITDA margin grew           reached €22.5 million (US 28.9 million dollars). The investment
by 40 basis points to 17.5% of revenue compared to a 17.1%          made in 2012 in the new production facility of nickel batteries
margin in 2011.                                                     in Bangalore, India, opened in late January 2013, amounted to
This improvement results mainly from a decline in the               more than €2.3 million.
purchase price of certain metals, in particular nickel. The
average LME spot market price of nickel per tonne went from
US 22,894 dollars in 2011 to US 17,536 dollars in 2012, down        5.2.2       SPECIALTY BATTERY GROUP (SBG)
23%. Taking into consideration the hedging policy implemented
by the Group to protect the profitability of a large portion of      At €277.5  million, revenue of the Specialty Battery Group
the order book of the IBG division, the division’s estimated        division recorded year-on-year growth of 2.4% at current
needs for the first half year 2013 were already more than 60%        exchange rates, but a decline of 2.1% at constant exchange
hedged at the close of the 2012 financial period. To the extent      rates.
possible, Saft will continue to apply the strategy of forward       The slight 1.6% contraction of sales in civil markets results
purchasing a portion of the division’s needs at a price in line     solely from the decline in sales in the space market, a
with that invoiced to customers on orders made with the IBG         decline resulting mainly from the timing of deliveries. Sales
division.                                                           on the civil electronics market were in fact stable compared
From a commercial and development of traditional and new            to the previous financial period. This overall stability covers
markets point of view, the 2012 financial year was marked by         an increase in the markets for meters, oil exploration and
a large number of successes, and in particular:                     production, asset tracking and security, as well as a decline in
                                                                    the medical, emergency and distribution markets.
  the launch of new lithium-ion battery systems for the rail
  market that allows operators to recover, store and reuse the      Geographically, sales grew in Asia and in the United States but
  energy from rolling stock braking for traction;                   declined in Europe.
  the supply of lithium-ion energy storage solutions for            In 2012, civil markets represented, as in 2011, 70% of the
  residential solar energy networks to three leading OEM’s on       revenue of the SBG division.
  the European market;                                              Military markets saw their sales decline in 2012 by 3.1% at
  the delivery of 16 Intensium Max 20® energy storage               constant exchange rates. This overall performance includes
  containers in the financial period, with deliveries spread out     a decline in sales of replacement batteries used in portable
  between Europe and the American continent;                        equipment such as radios, night vision goggles and positioning
                                                                    systems, as well as very strong growth in project-based
  the sale of the Evolion® line of lithium-ion high-energy
                                                                    activities.
  batteries for telecommunications applications launched in
  2011, for integrated off-network hybrid power systems for
  telecommunications base stations;
  in the mobility market, the first deliveries of lithium-ion
  batteries for the new “e-Vivacity” zero emissions scooter
  launched by Peugeot Scooter in 2012.




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       5          COMMENTS ON THE 2012 FINANCIAL YEAR
                  Other items of consolidated income




       Whilst the United States saw a decrease in sales of small          margin in 2011. This increase in the profitability of operations
       batteries for portable devices, US contracts have contributed      resulted mainly from a favourable products mix and a positive
       greatly to the growth of project-base sales activities.            foreign exchange effect resulting from the strengthening of
                                                                          the dollar against the euro. It also results from the division’s
       Defence activities overall represented 30% of the revenue of
                                                                          cost control efforts. During the second half of 2012, the division
       the SBG division in 2012.
                                                                          significantly reduced the number of its production employees
       The SBG division also recorded some significant commercial          in its facility in Valdese in the United States, a facility whose
       successes in 2012, including:                                      production serves mainly defence markets.
          a new multi-year contract with the US Defense Logistics         Total investments and capitalised Research & Development
          Agency (DLA) for the supply of BA 5590 lithium-sulphur          expenditures at the SBG division in 2012 amounted to
          dioxide (Li-SO2) batteries to the US Army, Navy and Air         €12.8  million compared to €11.2  million in 2011 and
          Force, and the Marines, a contract covering 100% of the         €9.3 million in 2010.
          needs of the US army for this type of batteries;
          a contract with BAE Systems for the development of a
          lithium-ion battery system for its new Ground Combat            5.2.3       OTHER ACTIVITIES
          Vehicle (GCV) programme;
                                                                          Expenses that are not allocated to the operational divisions,
          a major contract with Lockheed Martin Space Systems
                                                                          and which mainly comprise the costs of corporate support
          Company for the supply of lithium-ion batteries for two first
                                                                          services such as IT, research, finance and administration and
          geostationary meteorological satellites of NASA and NOAA
                                                                          corporate management resulted in a negative 2012 EBITDA
          (National Oceanic and Atmospheric Administration); and
                                                                          margin of €2.2 million compared to a positive EBITA margin of
          a multi-year contract with the Sagem company for the supply     €1.9 million in 2011, following the non-recurring €7.4 million
          of lithium-ion batteries to the new FELIN (infantryman          upfront royalty fee recorded in the financial year. Restated for
          system with integrated equipment and links) system for the      this non-recurring income, the 2011 EBITDA for the Group’s
          French Army.                                                    support activities generated a net expense of €5.5 million.
       In spite of a slight contraction of its activity in 2012, the
       profitability of the SBG division grew to a record level, with
       an EBITDA margin of 25.4% of revenue compared to a 23.8%




       5.3            OTHER ITEMS OF CONSOLIDATED INCOME

       5.3.1          OTHER ITEMS OF OPERATING PROFIT                     resources within the Jacksonville facility. The Group’s overall
                                                                          research effort represented 9.0% of revenue in 2012. This is
       Sales and marketing expenses for the 2012 financial year            analysed in section 5.4 below.
       increased by 7.9% over 2011. Excluding currency effects
                                                                          The Group’s restructuring costs for the year 2012 were equal
       related to the strengthening of the US dollar against the
                                                                          to €0.8 million and were mainly incurred by the SBG division
       euro, the year-on-year increase in costs was 4.7% and
                                                                          in the context of the reorganisation of the Valdese unit in the
       results from the Group’s strategy to address new markets
                                                                          United States.
       such as renewable energy storage or vehicle market and to
       geographically strengthen its commercial and assistance
       network. Thus, sales and marketing costs increase mainly
       results from an increase of IBG division sales and marketing       5.3.2       OPERATING PROFIT
       personnel costs.
                                                                          Adjusting for a non-material amount (€0.3  million) of other
       Administrative expenses were up 1.2% to €42.4 million in the       operating income and expenses, the Group’s 2012 operating
       2012 financial year, versus €41.9  million in 2011. Excluding       profit totalled €68.9 million, a decrease of €4.0 million, down
       the foreign exchange effect, they are down 1.6% year-on-year.      5.5% compared to the 2011 financial year.
       Finally, the Group’s Research and Development costs expensed       The Group’s operating profit represented 11.5% of 2012
       was up €2.8 million in the financial year to €24.4 million, with,   revenue, compared to an operating profit of 12.8% in 2011.
       in particular, the progressive establishment of development




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                                                            COMMENTS ON THE 2012 FINANCIAL YEAR
                                                                                   Other items of consolidated income




5.3.3       NET FINANCIAL EXPENSE                                   5.3.6       NET PROFIT (LOSS) FROM
                                                                                CONTINUING OPERATIONS
The Group’s net financial expense amounted to €12.8 million
in 2012, compared to a net expense of €11.0 million in 2011.        The net profit from continuing operations for the 2012 financial
Net borrowing costs, after factoring in income from cash            year thus amounted to €41.6 million, compared to a 2011 net
investments, amounted to €8.0 million in 2012, compared to a        profit on a comparable basis of €46.1 million.
net expense of €12.2 million in 2011.                               The earnings per share from continuing operations thus stood
The composite interest rate on the Group’s bank debt, net of        at €1.65 in 2012, versus €1.84 in 2011.
hedging, amounted to 3.42% in 2012, compared to 3.32% in
2011. This overall stability encompasses a decrease in the
net borrowing costs in euro at 2.33% in 2012 versus 3.44% in        5.3.7       NET PROFIT (LOSS) FROM
2011, but an increase of 112 basis points in the US dollar bond                 DISCONTINUED OPERATIONS
debt to 4.34% in 2012. This increase of the cost of the US dollar
debt is the consequence of the extension from three to eight        The 2012 net loss from discontinued operations concerns SNB’s
and a half years of its maturity upon refinancing.                   small nickel battery business conducted within the IBG division,
During the 2012 financial year, the Group posted a net               as in July 2012 Saft decided to sell this non-strategic business
foreign exchange loss of €2.4 million compared to net foreign       for the Group. In late 2012, the Group received a takeover bid
exchange gain of €3.7 million in 2011. The foreign exchange         for this business from French investment company Fin’Active
loss recorded in 2012 is the consequence of the strengthening       and therefore agreed to exclusivity with Fin’Active. Upon
of the Swedish crown against the euro and the US dollar.            completion of the consultation process currently underway
However, over a third of this loss is unrealised, as it is the      with the bodies representing staff, Fin’Active should take over
result of appreciation of trade receivables and cash in foreign     SNB’s business, including its staff, i.e. approximately 340
currencies of the Group’s Swedish subsidiary.                       people. Fin’Active supports the strategy established by SNB’s
                                                                    management, which includes, amongst others, the provision of
                                                                    electrodes by Saft for the following years.

5.3.4       PROFIT (LOSS) BEFORE TAX                                The sales of this business contracted for the second year in a
                                                                    row, with a decrease of revenue of 17.1% at constant exchange
            FROM CONTINUING OPERATIONS
                                                                    rates. In 2012 the fall in this business affected the professional
Profit before tax from continuing operations totalled                electronics market more than the safety lighting market. In
€56.9  million in 2012, compared to a profit before tax of           compliance with accounting standard IFRS 5, as the disposal
€63.7 million in 2011, representing a decrease of 10.7%.            of SNB is highly probable, this business sales are no longer
                                                                    consolidated in the Group’s revenue. The business net profit
In addition to the financial result, the income (loss) from
                                                                    (loss) is posted to a specific line of the income statement, “Net
ordinary activities takes into consideration the Group’s 50%
                                                                    Profit (loss) from discontinued operations.”
share in the profit of joint venture ASB with the EADS group.
This 50% share of Saft in ASB’s net profit totalled €0.8 million     The 2012 net profit (loss) from discontinued operations
in 2012, compared to €1.8 million for the 2011 financial year.       includes, on the one hand, the 2012 operating profit after tax
The reduction in the profit of this joint venture specialising in    of the SNB business, but also the impairment of this business
the manufacture of thermal batteries for defence markets is         assets as recorded upon fair value assessment. Said result
due, on the one hand, to a slight decline of 3.7% of the activity   is a loss, after tax and disposal costs, of €7.3  million. The
at constant exchange rates, at €27.7 million and, on the other      detailed analysis of this result can be found in note 30 of the
hand, to restructuring costs relating to the Scottish subsidiary    Group’s consolidated financial statements.
of the Group, Missiles & Space Batteries Limited (MSB).

                                                                    5.3.8       NET PROFIT (LOSS) FOR THE PERIOD,
5.3.5       INCOME TAX ON CONTINUING                                            EARNINGS PER SHARE AND DIVIDEND
            OPERATIONS
                                                                    The Group’s net profit for the 2012 financial year totalled
2012 tax expense for continuing operations totalled                 €34.3 million, compared to a reported net profit of €75.0 million
€15.3 million, compared to an expense of €19.7 million in 2011.     in 2011.

This expense represents an overall tax rate of 26.9%,               Accounting for the non-controlling interests at the Amco-Saft
compared to a rate of 27.7% in 2011.                                Indian subsidiary, the net profit for the period attributable to
                                                                    owners of the parent company totalled €34.1 million in 2012
                                                                    compared to a reported profit of €74.6 million in 2011.




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       5          COMMENTS ON THE 2012 FINANCIAL YEAR
                  Research and development




       Earnings per share, calculated on the basis of the weighted          The Ordinary General Meeting of 07 May 2013 will be asked to
       average number of shares outstanding over the financial               approve an ordinary dividend of €0.75 per share, an increase
       year, that is to say 25,073,058 shares in 2012 (compared with        of 4.2%.
       an average 25,086,737 shares in 2011), thus stood at €1.36,
       compared to €2.98 for the 2011 financial year.




       5.4            RESEARCH AND DEVELOPMENT

       Research and Development costs and investments totalled              9% increase over the previous year. The strengthening of
       €53.8  million, representing 9.0% of Group consolidated              the teams mainly concerns activities aimed at developing
       revenue in 2012, compared to 9.5% of consolidated revenue            integrated battery systems based in Bordeaux, in France, but
       in 2011. This slight fall is due to a decrease in development        also in Jacksonville (United States).
       expenses within the SBG division, particularly in the United         Investment in specific research and development equipment
       States for the defence and space markets. Excluding the share        totalled €2.6 million in 2012, versus €2.7 million in 2011.
       of development costs charged to customers, subsidies and
       research tax credit, 66% of Research and Development costs           In 2012, the share of research efforts devoted to lithium-ion
       were paid for by the Group in 2012, versus 58% in 2011.              technology represented more than 70% of the Group’s total
                                                                            effort in Research and Development. It was only 50% in 2008.
       At year-end 2012, the Company employed 447 engineers
       and technicians in its Research and Development teams, a




       5.5            INVESTMENTS AND FIXED ASSETS

       5.5.1          INVESTMENTS                                           €10.5 million in 2012, is included in cash flows generated by
                                                                            financing activities. This subsidy is recognised in income on
       The Group’s investments in the 2012 financial year totalled           the same basis as the amortisation of equipment it helped
       €54.3 million, compared to €68.7 million in 2011.                    finance and accordingly reduces the impact of the Group’s
       Direct industrial investments totalled €44.6  million in 2012,       overall amortisation expense. The amortisation of this subsidy
       versus €58.6  million in 2011. The Group’s investments in            for the 2012 financial year totalled €3.3  million, versus
       intangible assets amounted to €9.7 million in 2012, compared         €0.8 million in 2011.
       to €9.1 million in 2011.                                             Other significant investments made by the Group in 2012
       As in 2011 and 2010, the new Jacksonville lithium-ion                concern the production of nickel rechargeable batteries,
       production unit is the most significant investment, with              with one hand, the investment in a new production facility
       €22.5 million invested in 2012 (versus €40.3 and €49.2 million       in Bangalore, India, and on the other hand, automation
       in 2011 and 2010 respectively).                                      investments in the production unit of Oskarshamn in Sweden,
                                                                            in order to reduce production costs.
       In accordance with the contract signed with the US Department
       of Energy, Saft is receiving a 50% public subsidy on this project,   The Group’s investments in intangible assets mainly comprise
       up to a maximum of US$95.5 million. The subsidy effectively          capitalised Research and Development expenditure, primarily
       received in the 2012 financial year totalled €11.1  million           as part of the 2010-2015 5-year plan to develop next
       (US$14.2 million). Within the consolidated statement of cash         generation lithium-ion products.
       flow, the share of the subsidy pertaining to investments, i.e.




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                                                                   COMMENTS ON THE 2012 FINANCIAL YEAR
                                                                                                               Cash flow and financing




Future investment commitments made by the Group amount                          5.5.2         PROPERTY, PLANT AND EQUIPMENT
to €29.8 million as of 31 December 2012. They mainly relate
to ongoing capital expenditure at the production facility in                    The Group’s main manufacturing locations are fully-owned by
Jacksonville and the repurchase by the Group to Johnson                         the Group. They are not subject to any major individual charge.
Controls Inc. of the lithium-ion production unit of Nersac, in
France. These investments will be funded by Group current
treasury.




5.6           CASH FLOW AND FINANCING

5.6.1         CASH GENERATED FROM ACTIVITIES                                    allow the mass production of elements using SLFP® (lithium
                                                                                iron phosphate) technology. On the other hand, one assembly
                                                                                line was installed in Jacksonville in 2012 to produce battery
Cash flow from operations
                                                                                modules. This line is currently used to produce Evolion®
At €55.5  million, cash generated from operations decreased                     lithium-ion batteries for telecommunications networks and
by €11.2 million as compared to that in the 2011 financial year.                 Intensium Max 20 (“IM20”) containers for energy storage.
This reduction is due to:
  a decrease of €8.4 million in the cash flow before change                      Cash flow from financing activities
  in working capital to €99.2 million, mainly due to the losses                 Over the 2012 financial year the Group’s financing activities
  suffered by the Jacksonville unit;                                            consumed cash for €152.3 million versus a cash generation of
  an increase of €27.4  million in overall working capital;                     €3.9 million in 2011.
  this change is explained by, on the one hand, for up to                       The main flows in 2012 were generated by refinancing of the
  €13.6 million, the increase in trade receivables at the end                   Group’s financial debt, implemented in the first quarter of
  of the 2012 financial year, taking into consideration the                      2012. This refinancing allowed the Group to reduce its overall
  record sales made by the Group in the fourth quarter of                       debt by €119.1 million without weighing on its cash position.
  2012 and, on the other hand, for up to €11.5 million, non-
                                                                                Furthermore, since 2009 the Group has received a subsidy
  operating items, in particular the increase in grants and tax
                                                                                up to a maximum of US$95.5 million from the US Department
  receivables;
                                                                                of Energy for its 50% share in financing investments in
  but also a fall of €7.4 million of interest and taxes effectively             Jacksonville. In 2012 the Group received for this subsidy
  paid in 2012 compared to the previous financial year.                          €11.1  million (US$14.2  million), of which €10.5  million were
                                                                                related to investments (1).
Cash flow from investing activities
                                                                                Lastly, Saft paid its shareholders dividends of €43.1 million, of
Net cash flow from investing activities amounted to                              which €25.1 million as a special dividend.
€53.5  million overall, compared to €67.1  million in the 2011
financial year. This reduction in investments is mainly linked                   Free cash flow (2)
to the change in investments in the Jacksonville unit. These
                                                                                Excluding debt refinancing, the free cash flow generated by
investments totalled €22.5 million (US$28.9 million) in 2012,
                                                                                the Group over the 2012 financial year totalled €11.9 million
versus €40.3 million (US$56.1 million) in 2011.
                                                                                versus €21.1 million in 2011. Taking into account the reduction
In 2012 the second lithium-ion elements production line was                     in the Group’s financial liabilities, the consolidated free cash
installed and started to operate. More in particular, it will                   flow was negative for €107.2 million in 2012.




(1) Only the portion of the grant relating to investments is presented as part of cash flows from financing activities. Part of the grant relating to costs
    expensed is recognised directly in the financial year profit and loss account, as a reduction of expenses it is intended to finance.
(2) Defined as cash generated from operations and not allocated to investing and financing activities, but before equity investments and dividend
    payments, and excluding flows relating to discontinued activities.



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       5          COMMENTS ON THE 2012 FINANCIAL YEAR
                  Group’s statement of financial position




       5.6.2          CASH AND DEBT                                                  financial year compared to €69.6  million the previous year.
                                                                                     The net debt to EBITDA ratio stood at 0.98 (1) on 31 December
       At the end of the 2012 financial year, the Group’s cash position               2012, compared to a ratio of 0.54 on 31 December 2011 and a
       stood at €114.5  million, compared to €267.2  million on                      contractual maximum of 3.0.
       31 December 2011.
                                                                                     The interest coverage ratio was 14.2 for the 2012 financial year,
       Taking into account financial debt for €217.5 million at the end               compared to 12.1 in 2011. The contractual minimum is 4.5.
       of the 2012 financial year (versus €339.0 million in 2011), the
       Group’s net debt stands at €100.8 million at the end of the 2012




       5.7            GROUP’S STATEMENT OF FINANCIAL POSITION

       The Group’s statement of financial position stood at                             lastly, shareholder’s equity of €395.7  million, versus
       €969.1  million as of 31 December 2012 and shows the                            €406.6 million as of 31 December 2011. The slight reduction
       following main changes in relation to 2011:                                     in shareholders’ equity, after taking into account the net
                                                                                       profit of €34.3 million in the 2012 financial year, is due to the
          an increase, limited to €5.0 million, in non-current assets,
                                                                                       payment of dividends for a total of €43.1 million, of which
          after the reclassification of non-current assets of SNB’s
                                                                                       €25.1 million as a special dividend.
          small nickel battery business on a specific line in the
          statement of financial position titled “Assets held for sale”               After recognising the depreciation and impairment of certain
          for a net amount of €3.7 million;                                          non-current assets for €6.5  million (depreciations and
                                                                                     impairments posted to profit and loss on the line “Net profit
          a healthy cash position of €114.5 million;
                                                                                     (loss) from discontinued operations”, the net value of assets
          a reduction in the Group’s financial debt by €121.5 million                 of the SNB business classified as held for sale stood at
          to €217.5 million;                                                         €18.8 million. Total liabilities associated with that discontinued
                                                                                     business amounted to €15.1 million.




       5.8            OTHER KEY EVENTS IN FY 2012

       5.8.1          ANNUAL GENERAL MEETING                                         5.8.2        INVESTMENT PROJECTS
                      AND DIVIDEND
                                                                                     Jacksonville project: a new Saft plant for the
       At the Annual General Meeting on 11 May 2012, Saft Groupe
                                                                                     production of lithium-ion batteries in Florida
       SA’s shareholders voted for a payment of €0.72 per ordinary
       share for the 2011 financial year, that is an increase of 2.9%.                This project, which is close to completion, involves the
       They also approved the payment of a special dividend of one                   construction of a facility to manufacture lithium-ion batteries
       euro per share. These dividends were paid on 21 May for a                     in Jacksonville, Florida. The first of three planned production
       total of €43.1 million, of which 25.1 million as special dividend.            lines was brought on line in Q4 2011. The second line was
                                                                                     installed and started to operate in the second half of 2012. The
       Furthermore, the shareholders renewed the Management                          third and last line will be installed and start to operate during
       Board to deliberate, within certain limits, on the issue of shares            2013.
       and/or securities giving immediate or long-term access to the
       Company’s share capital. The prevailing authorisations are
       detailed in chapter 8 of this Annual Report.




       (1) As per contractual terms of calculating, as presented in note 3 to the consolidated financial statements presented in this document.



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                                                                                                                              5
                                                             COMMENTS ON THE 2012 FINANCIAL YEAR
                                                                                             Related-party transactions




This project, costing approximately US$200 million, of which         As of 31 December 2012, the investment made  (1) reached
US$95.5  million financed by the US Department of Energy              US$177.9  million. Subsidies paid by the US Department of
under the provisions of the Federal American Recovery and            Energy (DoE) totalled US$91.5 million as of today’s date over a
Reinvestment Act (ARRA), will be completed at the end of 2013.       maximum possible amount of US$95.5 million.
It will allow the Group to have a unit for the production of high-
                                                                     Gross investments in the Jacksonville unit in 2013, aimed at
capacity elements and thus to develop new products for new
                                                                     completing this project, in particular with the installation and
applications in the Group’s current markets, such as aviation,
                                                                     commissioning of the third and last production line for lithium-
railways and certain applications in the military sector, and
                                                                     ion elements, are estimated at approximately €23  million
for new markets such as the stocking of renewable energy,
                                                                     (US$27 million).
vehicles, as well as the marine industry. Once the project is
complete, total production capacity at Jacksonville should be
around US$300 million in revenue.




5.9          RELATED-PARTY TRANSACTIONS

The nature of the transactions made by the Group with related        for a number of services rendered, including a certain number
parties in 2012 did not change significantly during the 2012          of research and development services.
financial year. However, it must be remembered that on
                                                                     The information related to the Group’s holdings in associated
30 September 2011, the Saft Group sold its holding in joint
                                                                     companies and transactions with related parties is presented
venture Johnson Controls-Saft, which was regularly charged
                                                                     in note 29 of the consolidated financial statements.




5.10 CHANGES IN THE SCOPE OF CONSOLIDATION IN 2012

No change was recorded during the 2012 financial year in the scope of consolidation.




5.11 BASIS OF PREPARATION OF THE CONSOLIDATED
     FINANCIAL STATEMENTS

In accordance with EC regulation 1606/2002 of 19 July 2002           applied by the Company and have not led to any significant
on international accounting standards, Saft Groupe SA’s              changes in methods of valuation and financial statement
consolidated financial statements for the financial year ended         presentation.
31 December 2012 were prepared in accordance with the IFRS           The Company has not opted for the early application
accounting basis, as adopted in the European Union and in            of standards and interpretations that do not have to be
compliance with the IFRS as issued by the IASB.                      mandatorily used in 2012.
The new accounting standards and interpretations applicable
for periods beginning from 1 January 2012 onwards have been




(1) Capex and projects costs.



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       5          COMMENTS ON THE 2012 FINANCIAL YEAR
                  Events after the reporting period and 2013 outlook




       5.12 EVENTS AFTER THE REPORTING PERIOD
            AND 2013 OUTLOOK

       5.12.1         EVENTS AFTER THE REPORTING                           5.12.2      2013 OUTLOOK
                      PERIOD
                                                                           Considering the uncertainties surrounding the near-term
       No event has occurred since 31 December 2012 that is liable         economic performance of the major developed countries,
       to have a material impact on the Group’s financial position at       the Group anticipates 2013 revenue between €630 and €650
       that date.                                                          million at constant exchange rate  (1). This growth is mainly
                                                                           expected from the development of the sale of products using
       However, it must be noted that, in compliance with the
                                                                           lithium-ion technology. Total sales of lithium-ion products in
       agreements signed on 30 September 2011 between Saft and
                                                                           2013 are estimated at €120 million.
       Johnson Controls, the Saft Group repurchased on 1 January
       2013 from Johnson Controls the lithium-ion cells and batteries      As regards the Group’s profitability, Saft expects an EBITDA
       production unit located in Nersac, France.                          margin of between €102 and €106 million at constant
                                                                           exchange rates (1).
                                                                           2013 capital expenditures and free cash flow should be in line
                                                                           with 2012 actuals.




       5.13 SAFT GROUPE SA ACTIVITY AND RESULTS

       Saft Groupe SA is a financial holding company. It owns 100%          refinanced in the first quarter of 2012, they were no longer
       of the shares of Saft Finance Sarl which owns, directly or          reported by its subsidiary Saft Acquisition subsidiary but by
       indirectly, the different subsidiaries of the Saft Group.           Saft Groupe SA itself for an amount of €215.5 million. These
                                                                           financial debts are entirely lent to certain Group operating
       Revenue for the 2012 financial year totalled €6.9  million,
                                                                           subsidiaries.
       compared to revenue of €6.5  million in 2011. This was
       mainly generated from the different services provided by the        In addition to loans to the subsidiary mentioned above, non-
       Company to the various Saft Group subsidiaries.                     current assets primarily comprised Saft Finance Sarl shares
                                                                           valued at €309.0 million, unchanged on the previous financial
       Operating expenses amounted to €6.2  million, compared to
                                                                           year.
       €5.4 million in 2011. They primarily consisted of fees and the
       cost of services provided by Saft Sas. At €0.7 million, operating   Current assets were mainly composed of various receivables
       profit was unchanged on the previous financial year.                  plus cash of €67.9 million at the end of the 2012 financial year,
                                                                           compared to cash of €43.4 million as of 31 December 2011.
       Net financial revenue was €41.8  million and was mainly
       comprised of dividends received from Group subsidiaries.            The Company’s share capital has not changed from the end of
       The dividends received in the 2011 financial year amounted           the previous financial year. It stands at €25.2  million, whilst
       to €29.8 million.                                                   equity amounts to €361.5 million after taking into account the
                                                                           financial year’s profit and the payment of dividends for a total
       Extraordinary items constituted a net expense of €0.3 million,
                                                                           of €43.1  million, of which €25.1  million as an extraordinary
       unchanged from the net amount for the 2011 financial year.
                                                                           dividend of one euro per share.
       These expenses represented the cost of trading in Saft shares
       under the liquidity contract.                                       The Company’s financial debts amounted to €215.5 and
                                                                           consist, on the one hand, of a medium-term credit facility
       During the financial year, Saft Groupe SA recorded a tax
                                                                           for €100.0  million and, on the other hand, of bonds for
       revenue of €1.3 million versus €0.4 million in 2011.
                                                                           US$150  million held by a group of qualified institutional
       Saft Groupe SA’s 2012 net profit totalled €43.5  million,            investors in the US private market.
       compared to a net profit of €31.0 million in 2011.
                                                                           Lastly, the Company’s current liabilities amounted to
       Total assets amounted to €596.5 versus €372.1  million at           €15.3 million, versus €11.0 million at the end of the previous
       the end of the previous financial period. This change is due         financial year. These liabilities only relate to unmatured debts.
       to the fact that after the Group’s main financial debts were




       (1) And in particular a EUR/USD exchange rate of 1.28.



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                                                                                                                                      5
                                                                  COMMENTS ON THE 2012 FINANCIAL YEAR
                                                                 Activity of Saft Groupe SA subsidiaries and controlled entities




5.14 ACTIVITY OF SAFT GROUPE SA
     SUBSIDIARIES AND CONTROLLED ENTITIES

Revenue posted in 2012 by consolidated subsidiaries of Saft Groupe SA is as follows:



CONSOLIDATED SUBSIDIARIES OF SAFT GROUPE SA.

(Saft Groupe SA’s percentage control of and interest in the Group’s subsidiaries can be found in note 4 of the consolidated financial
statements).

(Revenue in € thousand, excluding inter-company transactions)

                                                             Country of
Company name                                              incorporation                         Activity      2012          2011          2010
Saft Groupe SA                                                    France      Group Holding company                 -             -             -
                                                                                        Manufacturing
Friemann & Wolf Batterietechnik GmbH (Friwo®)                   Germany                and commercial         4,090         4,139         3,158
Saft Batterien GmbH                                             Germany                    Commercial         3,153         1,542         1,798
SGH GmbH                                                        Germany        Group Holding company              -             -             -
                                                                                        Manufacturing
Tadiran Batteries GmbH                                          Germany               and commercial         22,002        25,164       21,100
                                                                                        Manufacturing
Saft UK Ltd                                                       England             and commercial         10,800         7,971       11,246
Saft Australia Pty Ltd.                                          Australia     Group Holding company              -             -            -
Saft Batteries Pty Ltd.                                          Australia   Assembly and commercial          3,991         8,944        6,927
Saft Do Brasil                                                      Brazil                 Commercial           456             -            -
                                                                                        Manufacturing
Saft Zhuhai (Ftz) Batteries Co, Ltd.                             China                and commercial          6,139        7,952         5,788
Saft Nife® ME Ltd.                                             Cyprus                      Commercial         5,842        6,018         5,546
Saft Baterias SL                                                Spain                      Commercial        13,781       10,543        10,387
Saft JV Holding Co                                       United States         Group Holding company              -            -             -
Florida Substrate Inc. (Saft PPF)                        United States       Production of plated strips        483        1,139         1,046
                                                                                        Manufacturing
Saft America Inc.                                        United States                and commercial       178,620       155,096       155,936
Saft Federal Systems Inc. (Tadiran US)                   United States                     Commercial       44,709        39,732        42,596
                                                                                        Manufacturing
Saft SAS (previously Saft SA)                                      France             and commercial       163,465       159,240       147,250
Saft Acquisition SAS                                               France      Group Holding company             -             -             -
                                                                               Group Holding company
Saft Hong Kong Ltd.                                         Hong Kong                 and commercial          5,753         8,399         9,675
                                                                                        Manufacturing
Amco-Saft India Ltd. (51%)                                           India            and commercial          8,716         8,727         7,468
                                                                                        Manufacturing
Tadiran Batteries Ltd.                                          Israel                and commercial         12,985        12,921       11,948
Saft Batterie Italia Srl                                          Italy                    Commercial         1,037         1,131          672
Saft Finance Sarl                                         Luxembourg           Group Holding company              -         7,406          480
Saft AS Norway                                                Norway                       Commercial         1,314           840        1,038
Saft Batterijen BV                                        Netherlands                      Commercial            69           304          286
                                                                                        Manufacturing
Saft Ferak® AS                                         Czech Republic                 and commercial         14,988        16,020       12,016
                                                                               Group Holding company
Saft Batteries Pte Ltd.                                         Singapore             and commercial          3,648         4,276         4,676




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       5          COMMENTS ON THE 2012 FINANCIAL YEAR
                  Activity of Saft Groupe SA subsidiaries and controlled entities




       (Revenue in € thousand, excluding inter-company transactions)

                                                                    Country of
       Company name                                              incorporation                     Activity      2012      2011       2010
       Alcad® AB                                                       Sweden                  Commercial       32,396    40,579     23,392
                                                                                       Property investment
       Fast Jung KB                                                    Sweden                     company             -          -        -
                                                                                            Manufacturing
       Saft AB                                                         Sweden              and commercial       59,509    49,302     45,507
       Saft Sweden AB                                                  Sweden       Group Holding company            -         -          -
       TOTAL                                                                                                   598,000 577,385 529,936


       JOINT VENTURE CONSOLIDATED UNDER THE EQUITY METHOD BY SAFT GROUPE SA



       (Revenue in € million)

                                                                                         Percentage
                                              Country                                 of shares held
       Company name                   of incorporation                   Activity     by Saft Group           2012        2011        2010
                                                                   Manufacturing
                                                           and commercialisation
       ASB group                                  France     of thermal batteries              50%             27.7       28.0         25.8




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                                            2012 consolidated
                                            financial
                                            statements
                                            6.1       Consolidated statement
                                                      of financial position                                              128

                                            6.2       Consolidated income statement
                                                      and consolidated statement
                                                      of comprehensive income                                           130

                                            6.3       Consolidated statement of cash flows                               132

                                            6.4       Statement of changes in equity                                    133

                                            6.5       Notes to the consolidated
                                                      financial statements                                               134

                                            6.6       Statutory Auditors’ report
                                                      on the consolidated
                                                      financial statements                                               185




IMPORTANT LEGAL INFORMATION AND CAUTIONARY STATEMENTS:
The consolidated financial statements for the year ended 31 December 2012 presented in this document have been
approved by the Management Board, reviewed by the Audit Committee and approved by the Supervisory Board of Saft.
Certain statements contained herein are forward-looking statements including, but not limited to, statements that are
predictions of or indicate future events, trends, plans, objectives or results of operation. Undue reliance should not be
placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and
can be affected by other factors that could cause actual results and Saft’s plans and objectives to differ materially from
those expressed or implied in the forward looking statements.


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       6          2012 CONSOLIDATED FINANCIAL STATEMENTS
                  Consolidated statement of financial position




       Preliminary note: In 2012, the Group decided to sell its small nickel batteries business (“SNB activity”). As the sale was highly
       probable by the end of 2012 financial year, the SNB activity has been classified, presented and related assets and liabilities
       measured in accordance with IFRS 5 “Non-current assets held for sale and discontinued operations” in the Group consolidated
       financial statements.
       Main classification, presentation and measurement requirements for discontinued operations are as follows:
          assets held for sale and related liabilities are presented on two specific lines of the balance sheet, without offsetting;
          the total profit or loss, net of income tax; of discontinued operations, is reported as a single amount on a specific line “Net profit/
          (loss) from discontinued operations” in the consolidated income statement;
          cash-flows from discontinued operations are reported on a specific line of the consolidated statement of cash-flows, except for
          cash flows related to financing if they cannot be identified separately for sales of assets.




       6.1              CONSOLIDATED STATEMENT OF FINANCIAL POSITION

       ASSETS



       (in € million)                                                      Note       31/12/2012           31/12/2011          31/12/2010
       Non-current assets
       Intangible assets, net                                                  7              213.3               218.1               222.2
       Goodwill                                                                8              111.1               112.7               110.3
       Property, plant and equipment, net                                      9              226.7               214.4               166.8
       Investment properties                                                   9                0.1                 0.1                 0.1
       Investments in joint undertakings                                      29               13.3                13.3                49.6
       Deferred income tax assets                                             27                5.1                 5.9                 6.6
       Other non-current financial assets                                      11                0.3                 0.4                 0.8
                                                                                              569.9               564.9               556.4
       Current assets
       Inventories                                                            12               80.2                85.5                76.5
       Tax credits                                                                             14.7                10.0                 5.3
       Trade and other receivables                                            13              170.0               159.5               148.4
       Derivative financial instruments                                        14                1.0                 3.9                 2.1
       Cash and cash equivalents                                              15              114.5               267.2               194.6
                                                                                              380.4               526.1               426.9

       Assets held for sale                                                   30                18.8                 0,0                 0,0

       TOTAL ASSETS                                                                           969.1             1,091.0               983.3




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                                                   2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                 Consolidated statement of financial position




LIABILITIES



(in € million)                                            Note    31/12/2012          31/12/2011             31/12/2010
Shareholders’ equity                                        16
Ordinary shares                                                            25.2                25.2                    25.1
Share premium                                                              78.1               103.2                   102.1
Treasury shares                                                            (2.0)               (1.8)                   (0.7)
Cumulative translation adjustments                                         26.0                34.8                    24.9
Fair value and other reserves                                                2.3               (3.7)                     3.1
Group consolidated reserves                                               263.4               246.2                   185.3
Minority interest in equity                                                  2.7                 2.7                     1.4
Total shareholders’ equity                                                395.7               406.6                   341.2
Liabilities
Non-current liabilities
Financial debt                                              18            212.8               101.2                   327.7
Other non-current financial liabilities                      19              4.9                 5.3                     6.1
Deferred grants related to assets                           17             53.4                47.3                    25.5
Deferred income tax liabilities                             27             75.1                71.0                    60.0
Pensions and other long-term employee benefits               20              8.9                10.3                     9.9
Provisions                                                  21             31.5                33.1                    35.0
                                                                          386.6               268.2                   464.2
Current liabilities
Trade and other payables                                    22            152.9               162.3                   156.2
Income tax payable                                          27              5.7                 6.6                     8.1
Financial debt                                              18              4.7               237.8                     2.3
Derivative instruments                                      14              1.0                 1.2                     1.8
Pensions and other long-term employee benefits               20              1.1                 1.1                     1.0
Provisions                                                  21              6.3                 7.2                     8.5
                                                                          171.7               416.2                   177.9

Liabilities associated with assets held for sale            30              15.1                 0.0                     0.0

TOTAL LIABILITIES AND EQUITY                                              969.1            1,091.0                   983.3




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       6          2012 CONSOLIDATED FINANCIAL STATEMENTS
                  Consolidated income statement and consolidated statement of comprehensive income




       6.2              CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED
                        STATEMENT OF COMPREHENSIVE INCOME

       CONSOLIDATED INCOME STATEMENT



       (in € million)                                                             Note                2012                   2011                  2010
       Revenues                                                                      6                 598.0                 577.4                 529.9
       Cost of sales                                                                23               (422.4)               (396.7)               (358.1)
       Gross profit                                                                                    175.6                 180.7                 171.8
       Distribution and sales costs                                                 23                (39.4)                (36.5)                (35.0)
       Administrative expenses                                                      23                (42.4)                (41.9)                (40.2)
       Research and Development expenses                                            23                (24.4)                (21.6)                (20.8)
       Restructuring costs                                                          24                  (0.8)                   0.0                 (0.7)
       Other operating income and expenses                                          25                    0.3                 (0.4)                   1.1
       Operating profit                                                                                  68.9                  80.3                  76.1
       Finance costs, net                                                           26                (12.8)                (11.0)                (18.8)
       Share of profit/(loss) of associates                                          29                    0.8                   1.8                   1.6
       Profit before income tax from continuing operations                                               56.9                  71.1                  58.9
       Income tax on continuing operations                                          27                (15.3)                (19.7)                (12.2)
       Net profit/(Loss) from continuing operations                                                      41.6                  51.4                  46.7
       Net profit/(Loss) from discontinued operations(1)                             30                  (7.3)                 23.6                (10.1)
       Net profit for the period                                                                         34.3                  75.0                  36.6
       Attributable to owners of the parent company                                                     34.1                  74.6                  36.4
       Attributable to non-controlling interests                                                          0.2                   0.4                   0.2
       Earnings per share (in € per share)                                          28
       ■ basic                                                                                          1.36                  2.98                  1.46
       ■ diluted                                                                                        1.36                  2.96                  1.45
       Earnings per share of continued operations (in € per share)
       ■ basic                                                                                          1.65                  2.03                  1.87
       ■ diluted                                                                                        1.65                  2.02                  1.85




       (1) 2012 Net profit/(loss) from discontinued operations relates to Small Nickel Batteries activity for sale. 2011 and 2010 net results also includes
           Johnson Controls-Saft joint-venture operations.



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                                                                                                                      6
                                                  2012 CONSOLIDATED FINANCIAL STATEMENTS
                               Consolidated income statement and consolidated statement of comprehensive income




CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME



(in € million)                                                  Note           2012               2011                    2010
Net profit for the period                                                        34.3               75.0                    36.6
Other comprehensive income
Actuarial gains and losses recognised against Statement
of Comprehensive Income                                          20             (4.5)                0.4                   (1.6)
Tax effect on actuarial gains and losses recognised against
Statement of Comprehensive Income                                                  1.5              (0.1)                    0.5
Items that will not be reclassified to profit or loss                             (3.0)                0.3                   (1.1)
Fair value gains/(losses) on cash flow hedge                                        1.5              (1.5)                    0.5
Fair value gains/(losses), net on investment hedge               18              12.1               (5.9)                 (13.0)
Currency translation adjustments                                                 (9.2)                9.8                   13.2
Tax effect on income/(expenses) recognised directly in equity    27              (4.6)                2.5                    3.9
Items that may be reclassified subsequently to profit
or loss                                                                         (0.2)                4.9                     4.6
Total other comprehensive income for the period,
net of tax                                                                     (3.2)                5.2                     3.5
Total comprehensive income for the period                                      31.1                80.2                    40.1
Attributable to:
Owners of the parent company                                                    31.1                80.0                   39.7
Non-controlling interests                                                        0.0                 0.2                    0.4




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       6          2012 CONSOLIDATED FINANCIAL STATEMENTS
                  Consolidated statement of cash flows




       6.3              CONSOLIDATED STATEMENT OF CASH FLOWS

       (in € million)                                                        Note     2012      2011       2010
       Net profit for the period from continuing operations                             41.6      51.4       46.7
       Adjustments
       Share of net profit/(loss) of associates (net of dividends received)              0.1       (0.8)      (0.7)
       Income tax expense from continued activities                           20       15.3       19.7       12.2
       Property, plant and equipment and intangible assets amortisation
       and depreciation                                                                 36.0       28.8      28.1
       Amortisation of deferred grants related to assets                                (3.3)      (0.8)       0.0
       Finance costs, net                                                               12.8       11.0      18.8
       Stock option plans                                                                1.4        1.6        1.4
       Net movements in provisions                                            21       (4.3)      (3.5)      (4.3)
       Other                                                                           (0.4)        0.2      (1.3)
                                                                                       99.2      107.6     100.9
       Change in inventories                                                           (3.3)      (8.7)      (7.1)
       Change in trade and other receivables                                          (13.6)        2.8    (13.2)
       Change in trade and other payables                                                 1.0     (1.2)        5.2
       Change in other receivables and payables                                       (11.5)     (10.1)        7.3
       Changes in working capital                                                    (27.4)     (17.2)      (7.8)
       Cash flows from operations before interest and tax                               71.8       90.4      93.1
       Interest paid                                                                   (6.6)     (12.6)    (14.1)
       Income tax paid                                                                 (9.7)     (11.1)      (5.0)
       Net cash generated by operating activities                                      55.5       66.7      74.0
       Cash flows from investing activities
       Purchase of property, plant and equipment                                      (44.6)     (58.6)     (67.7)
       Purchase of intangible assets                                                   (9.7)      (9.1)      (6.7)
       Proceeds from sale of property, plant and equipment                               0.7        0.3        1.7
       Variation of other non-current financial assets and liabilities                    0.1        0.3        0.1
       Net cash used in investing activities                                         (53.5)     (67.1)     (72.6)
       Cash flows from financing activities
       Capital increase                                                                   0.0      2.2         0.7
       Purchase/Sale of treasury shares - liquidity contract                            (0.2)    (1.1)       (0.4)
       New financial debt                                                               209.4       0.0         0.0
       Financial debt repayments                                                     (328.5)       0.0         0.0
       Grants related to assets                                                         10.5      20.4        24.5
       Increase/(decrease) in other long-term liabilities                               (0.4)      0.0       (0.8)
       Dividends paid to Company shareholders                                         (43.1)    (17.6)       (7.4)
       Net cash generated by/(used in) financing activities                          (152.3)        3.9       16.6
       Net cash generated by/(used in) continuing operations                         (150.3)       3.5        18.1
       Net cash generated by/(used in) discontinued operations                            0.0     62.1      (37.1)
       Net increase/(decrease) in cash                                              (150.3)      65.6      (19.0)
       Cash and cash equivalents at beginning of period                                267.2    194.6       207.4
       Impact of changes in exchange rates                                              (2.4)      7.0         6.2
       CASH AND CASH EQUIVALENTS AT END OF PERIOD                                    114.5      267.2      194.6




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                                               2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                              Statement of changes in equity




6.4              STATEMENT OF CHANGES IN EQUITY

                                                      Owners of the parent company
                                    Number                                Profit for
                                   of shares                            the period                    Non-
                                  making up Share        Share         attributable             controlling Shareholders’
(in € million)                    the capital capital premium Reserves    to equity       Total   interests       equity
Balance at 31/12/2009            24,684,093    24.7     92.5     152.3        36.3       305.8            1.0            306.8
Appropriation of 2009 earnings                    -        -      36.3       (36.3)          -              -              0.0
Employee stock option plans
(value of employee services)                      -         -       1.4              -     1.4               -               1.4
Payment of dividend in shares        410,647    0.4       8.9     (9.3)              -     0.0               -               0.0
Capital increase by exercise
of stock options                      31,100      -      0.7          -           -         0.7             -               0.7
Dividend paid                                     -        -      (7.4)           -       (7.4)             -             (7.4)
Purchase/Sale of treasury shares                  -        -      (0.4)           -       (0.4)             -             (0.4)
Total comprehensive income                        -        -          -        39.7       39.7            0.4             40.1
Balance at 31/12/2010            25,125,840    25.1    102.1     172.9        39.7       339.8            1.4            341.2
Appropriation of 2010 earnings                    -        -      39.7       (39.7)           -             -               0.0
Employee stock option plans
(value of employee services)                      -         -       1.6              -      1.6              -               1.6
Capital increase at Amco-Saft
India Ltd.                                        -         -         -              -        -           1.1                1.1
Capital increase by exercise
of stock options                      49,005    0.1      1.1          -           -         1.2             -               1.2
Dividend paid                                     -        -     (17.6)           -      (17.6)             -            (17.6)
Purchase/Sale of treasury shares                  -        -      (1.1)           -       (1.1)             -             (1.1)
Total comprehensive income                        -        -          -        80.0        80.0           0.2              80.2
Balance at 31/12/2011            25,174,845    25.2    103.2     195.5        80.0       403.9            2.7            406.6
Appropriation of 2011 earnings                    -        -       80.0      (80.0)           -             -               0.0
Employee stock option plans
(value of employee services)                      -         -       1.3           -         1.3              -               1.3
Dividend paid                                     -    (25.1)    (18.0)           -      (43.1)              -            (43.1)
Purchase/Sale of treasury shares                  -         -     (0.2)           -       (0.2)              -             (0.2)
Total comprehensive income                        -         -         -        31.1        31.1              -              31.1
BALANCE AT 31/12/2012            25,174,845    25.2     78.1     258.6        31.1       393.0            2.7             395.7




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                  Notes to the consolidated financial statements




       6.5            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


       DETAILED SUMMARY OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS




            NOTE 1      Information relative to the Company       135   NOTE 19 Other non-current financial liabilities   168

            NOTE 2      Accounting policies                       135   NOTE 20 Pensions, retirement indemnities
                                                                                and other employee benefits               168
            NOTE 3      Market risks and financial risks
                        management policies                       145   NOTE 21 Provisions for other liabilities
                                                                                and charges                              172
            NOTE 4      Scope of consolidation                    152
                                                                        NOTE 22 Trade and other payables                 174
            NOTE 5      Changes in the scope of consolidation     152
                                                                        NOTE 23 Expenses by type                         174
            NOTE 6      Information by business segment
                        and geographical segment                  153   NOTE 24 Restructuring costs                      174

            NOTE 7      Intangible assets                         158   NOTE 25 Other operating income and expenses      175

            NOTE 8      Goodwill                                  159   NOTE 26 Financial costs, net                     175

            NOTE 9      Property, plant and equipment             160   NOTE 27 Income taxes                             176

            NOTE 10 Asset impairment tests                        161   NOTE 28 Earnings per share                       178

            NOTE 11 Other non-current financial assets             162   NOTE 29 Related-party transactions
                                                                                and investments in associates            179
            NOTE 12 Inventories                                   163
                                                                        NOTE 30 Discontinued operations                  180
            NOTE 13 Trade and other receivables                   163
                                                                        NOTE 31 Contractual obligations and
            NOTE 14 Financial derivatives                         164           other off balance sheet commitments      181

            NOTE 15 Cash and cash equivalents                     164   NOTE 32 Remuneration of members
                                                                                of the Management Board                  182
            NOTE 16 Equity                                        165
                                                                        NOTE 33 Share-based payments                     183
            NOTE 17 Public subsidies                              165
                                                                        NOTE 34 Post balance sheet events                184
            NOTE 18 Financial debts                               166




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                                                     2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                     Notes to the consolidated financial statements




NOTE 1           INFORMATION RELATIVE TO THE COMPANY

Saft Groupe  SA (the “Company”, and collectively with its         Unless otherwise indicated, the consolidated financial
consolidated subsidiaries the “Group” or “Saft”) was formed       statements are presented in millions of euro.
on 23 March 2005. Saft Groupe  SA, a French Public Limited
Company (société anonyme) whose registered office is at
12, rue Sadi Carnot, 93170 Bagnolet, France, has been listed
on Euronext Paris (compartment B) since 29 June 2005.




NOTE 2           ACCOUNTING POLICIES

2.1       BASIS OF PREPARATION                                    2.2       STANDARDS, INTERPRETATIONS
          OF THE CONSOLIDATED FINANCIAL                                     AND AMENDMENTS TO STANDARDS
          STATEMENTS                                                        ALREADY PUBLISHED AND WHICH
                                                                            HAVE NOT BEEN APPLIED EARLY
Pursuant to European Regulation 1606/2002 of 19 July 2002
on international accounting standards, the consolidated           The new standards, interpretations and amendments to
financial statements of Saft Groupe  SA for the year ending        existing standards applicable to accounting periods opened
31 December 2012 have been prepared in accordance with            prior to 1st January 2012 but which can be applied early in the
the International Financial Reporting Standards as approved       consolidated financial statements are the following:
by the European Union. These standards are available on the
                                                                    IAS 1 – Presentation of financial statements:
following website:
                                                                    this amendment of the standard relates to the presentation
http://ec.europa.eu/internal_market/accounting/ias_                 of other comprehensive income;
fr.htm#adopted-commission.
                                                                    IAS 16 – Property, Plant and Equipment: this amendment
The consolidated financial statements have been prepared             clarifies the classification of spare parts and service
in accordance with the historical cost convention, except           equipment.
for the revaluation of financial assets (including derivative
                                                                    IAS 19 – Employee Benefits: this amendment improves the
financial instruments) and financial liabilities (derivative
                                                                    accounting requirements for defined benefit plans.
financial instruments) which are measured at fair value. For
comparative purposes, they include figures for the years           The Group does not expect these new standards to have a
ended 31 December  2011 and 31 December 2010 prepared             significant impact on its consolidated financial statements.
under the same reporting standards.
The Group consolidated financial statements have been
prepared using the accounting principles and policies             2.3       USE OF ASSUMPTIONS AND ESTIMATES
described below. These are consistent with those applied by
the Company in its consolidated financial statements for the       The preparation of consolidated financial statements, in
years ended 31 December 2011 and 31 December 2010.                accordance with the IFRS conceptual framework, requires the
                                                                  use of estimates and assumptions that affect amounts shown
The main assumptions and estimates made in preparing the          in the financial statements, such as depreciation, amortisation
consolidated financial statements are set out in note 2.3 below.   and provisions.
New IFRS standards, revisions, amendments or interpretations      These estimates are prepared on a going concern basis
of existing standards, as adopted by the EU for periods           using information available at the time of preparation. They
beginning from 1st January  2012, have been applied by the        may be revised if new information leads to a change in the
Company. They have not led to any significant changes in the       circumstances on which they were based. Actual results may
measurement and presentation of assets, liabilities, income       differ from these estimates.
and expenses.
                                                                  Revision of an estimate does not constitute correction of an
The Company has not opted for the early application               accounting error.
of standards and interpretations that do not have to be
mandatorily used in 2012. These standards are presented in
note 2.2 below.




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       6          2012 CONSOLIDATED FINANCIAL STATEMENTS
                  Notes to the consolidated financial statements




       The use of assumptions and estimates in the preparation of          Accounting for discontinued operations
       the consolidated financial statements mainly relates to:             and assets held for sale
          assessment of the recoverable value of goodwill and other        A discontinued operation is defined, according to IFRS 5,
          assets;                                                          as a component of the Group’s activity that either has been
          the calculation of pension and retirement benefit obligations     disposed of, or is classified as held for sale and which
          and other provisions;                                            represent a separate major line of business or geographical
                                                                           area of operations that forms part of a single coordinated
          the determination of certain provisions;                         disposal plan.
          the recognition of revenue and results relating to               In accordance with IFRS 5, “Non-current assets held for sale
          construction contracts;                                          and discontinued operations”:
          the recognition of deferred tax assets.                            assets held for sale and related liabilities are presented on
       Main assumptions and estimates used by the Group when                 two specific lines of the balance sheet, without offsetting.
       performing asset impairment tests are disclosed in note  10           Previous years balance sheet data not being restated.
       below.                                                                the net profit or loss from discontinued operations is
                                                                             reported as a single amount on a specific line “Net profit/
                                                                             (loss) from discontinued operations” in the consolidated
       2.4          CONSOLIDATION METHODS                                    income statement;
                                                                             cash-flows from discontinued operations are reported on
       The consolidated financial statements at 31 December 2012
                                                                             a specific line of the consolidated statement of cash-flows,
       include the Financial Statements of Saft Groupe  SA and
                                                                             except for cash flows related to financing if they cannot be
       its subsidiaries. The Financial Statements of consolidated
                                                                             identified separately for sales of assets;
       subsidiaries and associates have been restated in accordance
       with Group accounting policies.                                       no further depreciation or amortisation is recorded on
                                                                             depreciable/amortisable assets once they are classified as
       Subsidiaries are consolidated from the date on which the
                                                                             held for sale.
       Group takes control of the entity until the date on which control
       of the subsidiary is transferred outside the Group. Control is      The following conditions must be met for an asset to be
       defined as the direct or indirect power to govern the financial       classified as held for sale:
       and operational policies of a Company in order to benefit from         The asset must be available for immediate sale in its
       its activities.                                                       present condition subject only to terms that are usual and
       Companies under sole control are fully consolidated. When a           customary for sales of such assets;
       company under sole control is consolidated for the first time,         the sale is highly probable;
       its identifiable assets and liabilities are re-measured at fair
       value. The residual difference is recognized as goodwill (see         the carrying amount is recovered principally through a sale
       note 2.9).                                                            rather that continuing usage.

       Jointly-controlled undertakings are consolidated using the          Assets held for sale, net of the associated liabilities are
       equity method.                                                      measured and recognized at the lower of net book value and
                                                                           market value less costs necessary to complete the sale. Any
       The equity method is also used to account for all other             losses are charged to income from discontinued operations.
       companies over which the Group exercises significant
       influence, which is presumed to exist when the percentage of         If the fair value of a group of assets held for sale is lower than
       voting rights held by the Group exceeds 20%.                        the carrying value of non-current assets valued in accordance
                                                                           with IFRS 5, current assets have to be impaired for the
       Investments in associates and the related goodwill are initially    difference, according to accounting standards applicable to
       recognized in the balance sheet at cost and are subsequently        them.
       adjusted upward or downward for post-acquisition changes in
       the Group’s share in the net assets of the associate, less any      Note 30 to the consolidated financial statements presents
       impairment in value.                                                income statement, cash-flow and balance sheet items relating
                                                                           to discontinued activities.
       Group’s share in net income of associates for the period is
       recorded in the consolidated income statement under the
       heading “Share of profit/(loss) of associates”.
       Material inter-company transactions are eliminated on
       consolidation. Inter-company losses are not eliminated unless
       the value of the assets transferred exceeds their recoverable
       amount.




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                                                              2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                               Notes to the consolidated financial statements




2.5         BUSINESS SEGMENT INFORMATION                                    At the balance sheet date, monetary assets and liabilities
                                                                            of individual entities denominated in foreign currencies are
A business segment is a component of an entity:                             translated into the functional currency at the exchange rate
  that engages in business activities from which it may                     prevailing on that date. All exchange gains and losses arising
  earn revenue and incur expenses (including revenue and                    on translation are recognized in the income statement as
  expenses relating to transactions with other components of                financial income or expense.
  the same entity);
  whose operating results are reviewed regularly by the
  entity’s chief operating decision-maker to make decisions                 2.7        TRANSLATION OF FINANCIAL
  about resources to be allocated to the segment and assess                            STATEMENTS DENOMINATED
  its performance; and                                                                 IN FOREIGN CURRENCY
  for which discrete financial information is available.
                                                                            The consolidated financial statements of Saft are presented in
The business segment is the primary reporting format used by                euros, which is the Group’s functional and reporting currency.
the Group and the geographical segment is the second format.
                                                                            The balance sheets of companies whose functional currency
Financial information on business segments as per the Group                 is not the euro are translated into euros using the exchange
reporting and as hereafter disclosed is prepared in accordance              rate at the balance sheet date, and their income statements
with the same accounting standards as those used for the                    and statements of cash flow are translated into euros using
preparation of the consolidated financial statements, as                     an average exchange rate for the period.
disclosed in current note 2.
                                                                            Translation differences resulting from the use of different
Each business segment’s performance is measured by                          exchange rates for the opening balance sheet position, the
reference to EBITDA, EBIT and Operating Profit. EBITDA and                   net profit (loss) for the period and the closing balance sheet
EBIT aggregates are defined as follows:                                      position are recorded directly in equity. These translation
  EBITDA is defined as operating profit, before depreciation (1),             differences are only recorded in the income statement when
  amortisation, restructuring costs and other operating                     the entity in question is sold.
  income and expenses;                                                      Translation differences arising on the Group’s net investments
  EBIT is defined as operating profit, before restructuring                   in entities whose functional currency is not the euro, and on
  costs and other operating income and expenses.                            debt and other currency instruments designated as hedges
                                                                            of such investments, are taken to shareholders’ equity under
                                                                            “Translation reserves”.

2.6         TRANSLATION OF FOREIGN CURRENCY                                 Goodwill and other fair value adjustments arising on
                                                                            acquisitions of foreign entities whose functional currency is
            TRANSACTIONS AND BALANCES
                                                                            not the euro are treated as assets or liabilities of such entities
Items recognized in the Financial Statements of each                        and are translated in euro at the closing exchange rate.
individual Group entity are measured using the currency of the              The table below shows the main exchange rates used in the
principal economic environment in which the entity operates                 preparation of the consolidated financial statements. The
(the functional currency).                                                  closing rate is used in the preparation of the statement of
Accordingly, transactions denominated in foreign currencies                 financial position, and the average rate for the year is used
are initially recorded in the functional currency of the entity             in the preparation of the income statement and statement of
using the exchange rate at the date of the transaction.                     cash flow.



                                                      2012                             2011                                 2010
                                        Average rate Closing rate at        Average rate Closing rate at      Average rate Closing rate at
                                         for the year 31 December            for the year 31 December          for the year 31 December
Swedish krona                                      8.70              8.58           9.03             8.91                9.54               8.97
US dollar                                          1.28              1.32           1.39             1.29                1.33               1.34
Pound sterling                                     0.81              0.82           0.87             0.84                0.86               0.86




(1) Net of the depreciation of deferred grants relating to assets.



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       6          2012 CONSOLIDATED FINANCIAL STATEMENTS
                  Notes to the consolidated financial statements




       2.8          INTANGIBLE ASSETS EXCLUDING                                 Research and Development costs
                    GOODWILL                                                    Research and Development expenditure is recognised as an
                                                                                expense in the year in which it is incurred, except for some
       In accordance with IAS 38 “Intangible assets”, assets are only           development costs that are capitalised as an intangible asset
       capitalised if the cost of the asset can be measured reliably and        in accordance with IAS 38 when all of the following six criteria
       it is probable that the future economic benefits attributable to          are strictly met:
       the asset will flow to the Group.
                                                                                  the technical feasibility of completing the intangible asset
       Intangible assets are derecognised when the risks and                      so that it will be available for use or sale;
       rewards incidental to ownership of the asset are transferred
       or when there is no future economic benefit expected from the               the intention to complete the intangible asset and use or
       asset’s use or sale.                                                       sell it;

       The Group’s main intangible assets are:                                    the ability to use or sell the intangible asset;

          brand names and customer relationships from the                         the existence of a market for the output of the intangible
          acquisition of the battery operations of the Alcatel Group in           asset;
          January 2004;                                                           the availability of adequate technical, financial and human
          purchased technologies from the above-mentioned                         resources to complete the development; and
          business combination, most of them being protected;                     the ability to measure the expenditure attributable to the
          Research and Development                projects   capitalised   in     intangible asset during its development reliably.
          accordance with IAS 38.                                               The cost of a capitalised development project is the sum of
       Brand names were valued using the same royalty-based                     expenditure incurred from the date when the project first
       method as was applied in the valuation of existing technologies.         meets the six criteria listed above. Development expenditure
       Regular investments are made with regard to brand names                  initially recognised as an expense is not capitalised in
       that have an indefinite useful life and are not amortised.                subsequent periods.

       The value attributed to customer relationships was the                   Capitalised development costs are amortised over:
       present value of future surplus profits to be generated from                the useful life (of a process) or the commercial life (of a
       such customers over the remaining life of the commercial                   product), if this can be determined; or
       relationship. The resulting asset is amortised using the
                                                                                  the useful life of the underlying technology.
       straight-line method applied over the estimated period of
       expected benefits, which are as follows:                                  Amortisation of capitalised development costs does not start
                                                                                until the related product begins to be sold.
          Specialty Battery Group division: 20 years;
                                                                                Capitalised development costs are generally amortised over a
          Industrial Battery Group division: 14 years.
                                                                                period of between 3 and 21 years. These periods are reviewed
       Saft owns an extensive portfolio of technologies thanks                  annually, and any adjustments required as a result of these
       to its substantial R&D capacity, the majority of which is                reviews are recognised prospectively.
       devoted to product development and standardisation. Most
                                                                                Billable Research and Development expenditure incurred
       Saft technologies are protected because of their strategic
                                                                                under a contract with a customer is included in long-term
       importance.
                                                                                contract work in process.
       On the acquisition of the Alcatel group’s battery operations,
       Saft’s technologies were valued using the royalty method,
       which involves estimating the value of the royalties Saft would
                                                                                2.9       GOODWILL
       have to pay a third party to use the technologies.
       Each technology is amortised by the straight-line method                 In accordance with IFRS  3 “Business combinations”, at the
       on the basis of their estimated useful lives and commercial              acquisition date, the difference between the acquisition cost of
       prospects. The periods used are:                                         the subsidiary and the Group’s interest in its net assets stated
                                                                                at fair value, is accounted for as goodwill.

          Lithium-ion                                             21 years      Goodwill is not amortised but is tested for impairment as soon
                                                                                as an indication of potential impairment appears and at least
          Primary Lithium                                         11 years
                                                                                on an annual basis.
          Nickel-Cadmium                                          11 years
          Nickel-Metal Hydride                                     7 years      Goodwill is allocated to the Cash Generating Units (CGUs) or
                                                                                groups of CGUs to which it relates to carry out impairment
          Other Technologies                                       4 years
                                                                                tests. In accordance with IAS  36 “Impairment of assets”,




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                                                      2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                        Notes to the consolidated financial statements




the methodology used by the Group to identify potential            ■   Buildings used for administrative
impairments primarily involves comparing the recoverable               and selling activities                        10 to 40 years
amount of each CGU or group of CGUs with the carrying              ■   Industrial buildings and plants:
amount of their respective assets.                                     ■ Industrial buildings                        20 to 30 years
The recoverable amount is the higher of the fair value less exit       ■ Industrial buildings held under

costs or the value in use determined as the present value of             finance lease                                      15 years
                                                                       ■ Infrastructure works                        10 to 20 years
future cash flows associated with the CGU.
                                                                       ■ Technical installations,
Recoverable amounts of CGUs are determined on the basis of:              plant equipment and tooling                  5 to 10 years
  projections of cash flows generated by operations for the             ■ Small tools                                        3 years
  relevant CGU over its three-year business plan, plus a
                                                                   The Group applies the straight-line method of depreciation.
  terminal value;
                                                                   Depreciation is calculated on the basis of acquisition cost or
  discounting such projected cash flows at the Group’s              production cost net of any residual value, when it is deemed
  Weighted Average Cost of capital (WACC).                         significant.
Any impairment losses identified are charged to the income          The initial and remaining useful service lives of assets are
statement in the operating profit. Impairment losses                reviewed at each balance sheet date, and adjusted if necessary.
recognised against goodwill may not be reversed.
                                                                   Investment properties
The main assumptions and estimates used for these
calculations by the end of 2012 are described in note 10.          Investment properties are properties held to generate rentals
                                                                   or for capital appreciation or both, rather than for use in the
                                                                   production or supply of goods or services, for administrative
                                                                   purposes, or for sale in the ordinary course of business.
2.10      PROPERTY, PLANT AND EQUIPMENT
                                                                   Investment properties are recognised as an asset when it is
In accordance with IAS  16 “Property, Plant and Equipment”         probable that the future economic benefits attributable to the
assets are only capitalised if the cost of the asset can be        property will flow to the Group and the cost of the property can
measured reliably and it is probable that the future economic      be measured reliably.
benefits attributable to the asset will flow to the Group.
                                                                   Investment properties are accounted for at historical cost, less
Items of property, plant and equipment are derecognised            accumulated depreciation.
when the risks and rewards incidental to ownership of the
asset are transferred or when there is no future economic          Finance leases
benefit expected from the asset’s use of sale.                      Fixed assets acquired under finance leases (as defined in
Any gain or loss arising from the derecognition of an asset        IAS  17) are capitalised in the balance sheet as described in
(calculated as the difference between the net disposal             note 2.30.
proceeds and the carrying amount of the asset) is recognised
in the income statement in the period in which the asset is
derecognised.                                                      2.11       IMPAIRMENT OF INTANGIBLE
Items of property, plant and equipment are initially recognised               AND TANGIBLE ASSETS
at historical cost of acquisition or production.
                                                                   Intangible assets which have an indefinite useful life and
Property, plant and equipment costs may include, if applicable,    are not amortised, are tested for impairment annually, or
borrowing costs when the asset is eligible under IAS 23 R          whenever events or changes in market conditions indicate that
(asset requiring a long preparation period before it can be        they might be impaired. Amortisable intangible assets and
used or sold).                                                     depreciable items of property, plant and equipment are also
The historical cost of property, plant and equipment is reduced    tested for impairment whenever events or changes in market
by accumulated depreciation and by recognised impairment           conditions indicate that they might be impaired. Impairment
losses.                                                            tests involve comparing the carrying amount of an asset with
                                                                   the discounted future operating cash flows expected from that
Depreciation is usually charged over the estimated service life
                                                                   asset.
for the relevant asset.




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       6          2012 CONSOLIDATED FINANCIAL STATEMENTS
                  Notes to the consolidated financial statements




       If the test shows that these estimated future cash flows are         2.14      TRADE AND OTHER CURRENT
       less than the carrying amount, the Group takes account of the                 RECEIVABLES
       effect on future cash flows of alternative strategies.
       If there is still a shortfall, an impairment loss is recognised     Trade receivables are measured at fair value net of any
       in the form of a provision, reducing the carrying amount of         required provisions for impairment.
       the asset to its value as measured by reference to discounted       A provision for impairment of trade and other current
       future operating cash flows (or, if it can be determined, to its     receivables is recorded when it becomes probable that a
       fair value).                                                        receivable will not be collected in full. Impairment losses are
       The main assumptions and estimates used for these                   recognised through the income statement, in the operating
       calculations by the end of 2012 are described in note 10.           profit.



       2.12         OTHER NON-CURRENT FINANCIAL                            2.15      CASH AND CASH EQUIVALENTS
                    ASSETS                                                 Cash and cash equivalents as shown in the consolidated cash
                                                                           flow statement comprise cash at bank and in hand plus short-
       Other non-current financial assets are measured and
                                                                           term investments that are liquid and easily convertible into a
       recognised in accordance with IAS 39 “Financial instruments”.
                                                                           measurable amount of cash.
       Available-for-sale securities                                       The same definition also applies to cash and cash equivalents
       Investments in non-consolidated undertakings are “available-        as shown in the balance sheet.
       for-sale” financial assets, and are therefore measured at fair       In accordance with IAS 39 “Financial Instruments”, short-term
       value. In the case of listed securities, fair value is the listed   investment securities are measured at fair value.
       market price. If fair value cannot be measured reliably, the
                                                                           Changes in the fair value of securities classified as held-for-
       investment is measured at cost. Changes in fair value are
                                                                           trading are taken to financial profit or loss without exception.
       taken directly to shareholders’ equity. If there is objective
       evidence that a financial asset is severely and permanently
       impaired, that impairment must be recorded through the
       income statement.                                                   2.16      EQUITY
       Loans and other financial receivables
                                                                           Share capital
       Loans are initially recognised at fair value, and subsequently
                                                                           Ordinary shares are classified in “Share capital”. Costs
       measured at amortised cost. If there is objective evidence that
                                                                           incurred on new share issues are offset against the issue
       a loan is impaired, a provision for impairment is recorded. The
                                                                           proceeds, net of taxes.
       impairment loss, equal to the excess of the carrying amount
       of the loan over its recoverable amount, is recognised through
                                                                           Other equity components
       the income statement; it is reversible if the carrying amount
       increases in the future.                                            In addition to share capital, consolidated equity includes the
                                                                           following:
       Other financial receivables mainly comprise security deposits
       paid.                                                                 “Share premium”, which corresponds to the excess paid
                                                                             by shareholders of the parent company over the par-value
       The Group reviews its investments in non-consolidated                 price of a stock issue;
       undertakings and other financial assets at each balance
       sheet date in order to assess if there is objective evidence of       “Treasury shares”, deducted from equity at their acquisition
       impairment.                                                           cost. Any gains or losses from the sale of these shares are
                                                                             recognised directly in equity and not taken to the income
                                                                             statement;

       2.13         INVENTORIES                                              “Cumulative translation adjustment”, which records currency
                                                                             translation adjustments deriving from the translation of
       Inventories and industrial work in process are measured at            the financial statements of foreign subsidiaries having a
       the lower of cost (including indirect production costs) and net       functional currency different from the euro;
       realisable value. Cost is usually calculated using the weighted       “Fair value and other reserves”, which primarily records
       average cost method.                                                  changes in market values of derivatives designated as cash
       Net realisable value is the estimated selling price in the            flow hedges and investment hedges;
       ordinary course of business, less the estimated costs of              “Consolidated reserves”, which comprises the non-
       completion and the estimated costs necessary to make the              distributed net income of the parent company as well as the
       sale.




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                                                    2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                    Notes to the consolidated financial statements




  Group’s share in the retained earnings of fully-consolidated   2.20       DEFERRED TAXES
  companies and companies accounted for by the equity
  method since their first consolidation date;                    In accordance with IAS 12, deferred taxes are recognised on
                                                                 all temporary differences between the taxable amount of
  “Minority interest in equity”, which comprises the non-
                                                                 assets and liabilities and their value for the purposes of the
  distributed net income share of non Group shareholders in
                                                                 “consolidated financial statements”.
  consolidated subsidiaries.
                                                                 Main temporary differences are resulting from:
                                                                   the elimination of entries made in the individual company
2.17      SHARE-BASED PAYMENTS                                     financial statements of subsidiaries to reflect elective tax
                                                                   treatments that differ from accounting rules;
The Group has put in place long-term remuneration plans
                                                                   adjustments made to restate financial statements of
which will be settled in equity instruments (stock options).
                                                                   consolidated subsidiaries in accordance with Group
The fair value of services rendered by employees in exchange
                                                                   accounting policies.
for the grant of the options is recognised in expenses, with
a double entry to shareholders’ equity. The total amount         However, in accordance with IAS  12, deferred tax assets
recognised in expenses over the vesting period is determined     or liabilities are not recognised on temporary differences
on the basis of the fair value of the options granted, without   resulting from goodwill for which amortisation is not
taking into account conditions for vesting which are not         deductible for tax purposes.
market conditions. Conditions for vesting which are not          Deferred tax assets and liabilities are stated using the liability
market conditions are taken into account in the assumptions      method, based on tax rates adopted or virtually adopted at the
concerning the number of options that are likely to become       balance sheet date.
exercisable.
                                                                 The effects of changes in tax rates are recognised in net
At each balance sheet date, the entity reviews the number of     income for the year in which the change in rate is enacted.
options that are likely to become exercisable. If necessary,
it recognises the impact of changes in its estimates through     A deferred tax liability is recognised for temporary differences
profit and loss with a corresponding double entry adjusting       arising from dividends which may be distributed from reserves
shareholders’ equity.                                            by subsidiaries unless the Group controls the dividend policy
                                                                 and it is probable that the temporary difference will not
Amounts received when the options are exercised are credited     reverse in the foreseeable future.
to the “Share capital” and “Share premium” captions, net of
directly attributable transaction costs.                         Deferred tax assets and liabilities are not discounted. Deferred
                                                                 tax assets and liabilities are presented at their net amount
                                                                 when taxes are levied by the same taxation authority and the
                                                                 latter authorises such netting.
2.18      DEBT
                                                                 Deferred tax assets are recognised in the balance sheet when
In accordance with IAS  39 “Financial Instruments”, debt is      it is likely that they will be recovered in future years. Factors
initially recognised at cost, which is the fair value of the     taken into account in assessing the Group’s ability to recover
consideration received net of transaction costs. Subsequent      deferred tax assets include the following:
to initial recognition, interest-bearing debt is measured          estimates of future taxable profits and losses;
at amortised cost using the effective interest method. The
effective interest rate is the rate which makes it possible        any taxable timing difference;
to equalise the net cash of the loan with all the cash flows        the extent to which exceptional expenses that are unlikely
produced by servicing the loan. Amortised cost is calculated       to recur in the future were included in past tax losses; and
taking into account all issuance costs and any redemption
                                                                   finally, actual taxable profits and losses for previous years.
discounts or premiums.


                                                                 2.21       PENSIONS, RETIREMENT INDEMNITIES
2.19      OTHER NON-CURRENT LIABILITIES
                                                                            AND OTHER EMPLOYEE BENEFITS
Other non-current financial liabilities are measured and
recognised in accordance with IAS 39 “Financial instruments”.    The Group offers its employees pension, retirement benefits
They mainly include contingent advances, which consist of        and healthcare plans in accordance with the law and custom
reimbursable Government advances to subsidise research.          in the countries in which it operates.
                                                                 In France, each Group employee is entitled to a lump sum
                                                                 retirement benefit. In other countries, the type of plan




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       6          2012 CONSOLIDATED FINANCIAL STATEMENTS
                  Notes to the consolidated financial statements




       depends on local legislation, and on the business activities        Actuarial gains and losses are generated when differences
       and historical practice of the subsidiary.                          arise between actual figures and the assumptions previously
                                                                           used, or following a change in actuarial assumptions.
       In addition to basic State schemes, pension plans are of two
       types: defined-contribution and defined-benefit. Defined-               In the case of post-employment benefits, such actuarial gains
       benefit plans are partially or wholly funded by earmarked            and losses are recognised directly in shareholders’ equity in
       investments in plan assets such as equities, bonds, insurance       the year in which their amount is determined.
       policies or other types of investment.
                                                                           In the case of long-term benefits payable during the period
                                                                           of employment, actuarial gains and losses are recognised
       Basic State schemes
                                                                           directly in operating profit (loss) in the year in which they arise
       In some countries, including France, Saft contributes to basic      (long-service awards or equivalent).
       State social security schemes. The cost recognised in respect
       of these schemes is the amount of contributions payable to the
       social security authorities.
                                                                           2.22       PROVISIONS
       Defined-contribution plans
                                                                           In accordance with IAS  37 “Provisions, contingent liabilities
       The benefits paid depend entirely upon the cumulative                and contingent assets”, provisions are recorded when the
       contributions paid and the return on the investments in which       Group has a present obligation (legal or constructive) resulting
       these contributions are invested. The Group has no obligation       from a past event, it is probable that an outflow of resources
       beyond the contributions paid, which are recognised as an           will be necessary to settle the obligation, and the amount of
       expense.                                                            the obligation can be reliably measured.

       Defined-benefit plans                                               The amount recognised as a provision is the best estimate of
                                                                           the expenditure required to settle the present obligation at
       The Group’s obligation under defined-benefit plans is
                                                                           the balance sheet date. Where the effect of the time value of
       calculated annually by independent actuaries using the
                                                                           money is material, the amount of the provision is the present
       “Projected Unit Credit” method, in accordance with the
                                                                           value of the expenditure expected to be required to settle the
       provisions of IAS 19 “Employee benefits”.
                                                                           obligation; this applies in particular to provisions for end of life
       Under this method, each period of service gives rise to             battery recycling costs.
       an additional unit of benefit entitlement and each unit is
                                                                           The costs actually incurred by the Group may differ from these
       measured separately to build up the final obligation. These
                                                                           estimates, which may have a material impact on its financial
       actuarial calculations build in assumptions regarding:
                                                                           position.
          retirement dates;
                                                                           Where the Group expects the amount provided for to be
          employee turnover;                                               reimbursed to it in full or in part, for example under an
          mortality tables;                                                insurance policy or a vendor’s guarantee of liabilities, the
                                                                           reimbursement is recognised only if recovery is certain.
          future salary increases and inflation rates;
          expected returns on the plan’s assets;                           Provisions for restructuring
          discount rates.                                                  Restructuring costs are provided for immediately and in full
                                                                           in the year when the Group has an obligation towards third
       The estimated future benefits are discounted using rates             parties, arising from a decision by an appropriate corporate
       appropriate to each country. Discount rates are determined by       body, which is evidenced before the balance sheet date by the
       reference to the yield on government bonds and high-quality         announcement of the decision to the third parties involved.
       corporate bonds.                                                    The amount of this provision mainly corresponds to severance
       The amount recognised in the balance sheet is the net amount        payments, termination notice periods paid but not worked by
       of the obligation less the fair value of dedicated plan assets at   employees, costs for retraining of employees made redundant,
       the balance sheet date.                                             and site closure costs.
       Two types of defined-benefit plan are operated by Saft:               Retirements of fixed assets and impairment of inventories
                                                                           and other assets directly attributable to restructuring plans
          annuity: retirees are paid a pension throughout their
                                                                           are also included in these provisions.
          retirement (the pension plan in Germany and an additional
          retirement scheme for “cadres” in France);
                                                                           Provisions for other liabilities and charges
          lump sum on retirement or cessation of employment (the           Provisions for contractual claims relate mainly to product
          pension plan in France and Israel).                              warranties and other specific risks. Provisions for product
       In addition, the Group participates in a multi-employer             warranties primarily cover the risk of valid product returns
       defined benefit plan in Sweden but does not have sufficient           during the warranty period. Except in exceptional cases, the
       information to account for it as a defined-benefit plan. This         warranty period ranges from twelve months for standard
       plan is accounted for as a defined-contribution plan.                batteries up to ten years. Saft also recognises provisions to
                                                                           cover claims from customers in respect of products shipped
                                                                           by the Group.




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                                                         2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                         Notes to the consolidated financial statements




Provisions for contractual claims are determined on the basis         Group sales from constructions contracts are primarily for the
of information indicating that a technical problem has arisen         construction or design of specific batteries, mainly in military
on a product, whether sold or in inventory. Information may be        applications and satellites.
obtained from internal sources (Quality Control Department),
                                                                      In accordance with IAS 11, in recognising revenue and profits
or from external sources (customer claims referred to the
                                                                      on construction contracts the Group applies the percentage of
Sales Department). The information is then processed by
                                                                      completion method based on contractually-agreed milestones.
the Technical and Quality Departments, which analyse and
calculate on a statistical basis the quantities affected.             Probable losses on completion are recognised immediately.

The Group recognises warranty provisions by reference to              In the event of uncertainty regarding customer acceptance, or
contractual terms and statistics based on past experience,            in the case of relatively short-term contracts, revenue is only
and on the basis of estimates and assumptions made by Group           recognised up to the amount of recoverable costs.
management in the light of information about the underlying           Work in process on long-term contracts is recorded at
risks.                                                                production cost and does not include any administrative or
These estimates and assumptions are determined on the                 selling expenses.
basis of formal claims made by the Group’s customers. The             Movements in contract penalties (late delivery or non-
information contained in these claims is compared with                compliance) are recognised as a deduction from revenue.
internal technical data in order to quantify the extent of the
                                                                      Partial payments received under construction contracts
risk.
                                                                      are recognised as a liability in the balance sheet under
                                                                      “Prepayments on long-term contracts” for the portion of
                                                                      such payments corresponding to work not yet carried out.
2.23       REVENUE AND CONSTRUCTION                                   The amount of costs incurred, plus recognised gains and
           CONTRACTS                                                  less recognised losses (in particular provisions for losses to
                                                                      completion), is calculated individually for each contract. If this
Revenue comprises income derived from sales of bought-in              amount is positive, it is recorded as an asset under “Long-term
goods, manufactured goods and services in connection with             contract receivables”. If negative, it is recorded as a liability
the Group’s principal activities, net of VAT, customer discounts      under “Prepayments on long-term contracts”.
and contract penalties.
In accordance with IAS  18 “Revenue recognition”, revenue
from the sale of goods and equipment are recognised when              2.24       COST OF SALES
there is a formal agreement with the customer, the amount
of revenue can be reliably measured, it is probable that the          Cost of sales mainly includes:
economic benefits associated with the transaction will flow               the cost of production, which includes the acquisition cost
to the Group, and the Group has transferred substantially all           of raw materials and other components used in production,
the risks and rewards of ownership to the purchaser. If the             direct production costs (mainly salaries), and indirect
contract requires formal acceptance of the goods, equipment             production costs that are attributable to the production of
or services by the customer, revenue recognition is in principle        the goods sold;
deferred until the date of such acceptance.
                                                                        depreciation of property, plant and equipment and
Revenue is measured at the fair value of the consideration              amortisation of intangible assets;
received or receivable. Where payment is deferred and the
effect on fair value is material, this effect is taken into account     depreciation of deferred grants related to assets;
by discounting the future payments.                                     provisions for product returns; and
For products sold through distributors, revenue is recognised           direct selling costs (freight, packaging and sales
on delivery to the distribution network. Product returns,               commissions).
estimated in accordance with contractual commitments and
statistics on past sales, are recognised at the same date.

Construction contracts                                                2.25       GROSS PROFIT
IAS  11 defines a “Construction contract” as a contract                Gross profit is calculated as net revenue less cost of sales.
specifically negotiated for the construction of an asset or
a combination of assets that are closely interrelated or
interdependent in term of their design, technology and
function or their ultimate purpose of use.




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       6          2012 CONSOLIDATED FINANCIAL STATEMENTS
                  Notes to the consolidated financial statements




       2.26         OPERATING PROFIT (LOSS)                               than twelve months, the financial derivative is classified as a
                                                                          current asset or liability.
       Operating profit is made up of gross profit, administrative and
                                                                          Financial derivatives held for trading are classified as current
       selling expenses, Research and Development expenses, other
                                                                          assets or liabilities.
       operating income/expenses and restructuring costs.
       Other operating income and expenses consists primarily of:
          gains or losses on forward contracts for purchases and          2.29       HEDGE ACCOUNTING
          sales of commodities, where the hedging contracts do not
          satisfy the IAS 39 criteria for hedge accounting;               Cash flow hedges
          gains or losses on available-for-sale securities;               A cash flow hedge makes it possible for the Group to protect
          gains or losses on disposals of investments, of property,       itself against the risk of future changes in one or more cash
          plant and equipment, and of intangible assets;                  flows affecting consolidated income. The hedged cash flows
                                                                          may derive from contracts on financial or non-financial assets
          income and expenses that are non-recurring during the
                                                                          already translated in the statement of financial position,
          Group’s day-to-day operations. They are characterised by
                                                                          or future transactions not yet translated in the statement
          their unusual nature and/or amount.
                                                                          of financial position, when these transactions are highly
       Operating profit excludes net financial expense and income           probable.
       tax expense.
                                                                          When a derivative financial instrument is designated as a
                                                                          hedge of the variability in cash flows of a recognised asset or
                                                                          liability, or a highly probable forecasted transaction, changes
       2.27         FINANCIAL INCOME AND EXPENSES                         in the fair value of the derivative financial derivatives are
                                                                          taken to other comprehensive income for the effective part
       Financial income and expenses include interest income and          and profit or loss for the ineffective part. Gains or losses
       expense, changes in the fair value of held-for-trading and         accumulated in equity must be reclassified in income, in the
       available-for-sale financial assets, impairment losses on           same section as the element hedged - namely operating profit
       other non-current financial assets, foreign exchange gains          for hedges of operating flows and financial income for other
       and losses, changes in the fair value of financial instruments      hedges - during the same periods in which the hedged cash
       (excluding hedges of non-financial assets and liabilities) and      flow affects income.
       other financial income and expenses.
                                                                          When a hedging instrument expires or is sold, terminated
       Financial expenses also include the financial component             or exercised, or the Group revokes the designation of the
       of pension costs and the effect of unwinding of discount on        hedge relationship but the hedged forecast transaction is
       assets and liabilities.                                            still expected to occur, the cumulative gain or loss at that
       Interest income and expense is accounted for on a time-            point is retained in equity and is recognised in accordance
       proportion basis in accordance with the effective interest rate    with the above policy when the transaction occurs. If the
       method.                                                            hedged transaction is no longer expected to take place, then
                                                                          the cumulative unrealised gain or loss recognised in equity is
                                                                          recognised immediately in profit or loss.
       2.28         DERIVATIVE FINANCIAL INSTRUMENTS                      Fair value hedge
       The Group may, from time to time, use financial derivatives         A fair value hedge makes it possible for the Group to protect
       to manage and reduce exposure to risks of movements in             itself against the risk deriving from changes in the fair value of
       interest rates, exchange rates and the prices of certain metals.   assets, liabilities, such as fixed-rate loans and borrowings or
                                                                          assets, liabilities or firm commitments in foreign currencies.
       Financial derivatives that qualify for hedge accounting
       according to IAS  39 are classified as hedges. The financial         Fair value hedge accounting is used when a financial derivative
       derivatives that do not qualify for hedge accounting, although     is designated as a hedge of the variability of the fair value of a
       set up for the purpose of managing risk, are designated as and     recognised asset or liability (or firm commitment).
       accounted for as trading instruments.                              The hedging instrument is measured at fair value with
       Financial derivatives are measured at fair value.                  changes in fair value recognised in net profit (loss) for the
                                                                          period. The hedged item is re-measured symmetrically to its
       The fair value of a financial derivative is classified as a non-
                                                                          fair value. These two re-measurements offset each other in
       current asset or liability when the outstanding maturity of
                                                                          the consolidated income statement, with the exception of the
       the related hedged item is greater than twelve months. When
                                                                          ineffective part of the hedge.
       the outstanding maturity of the related hedged item is less




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                                                       2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                       Notes to the consolidated financial statements




Hedge of net investments                                            Lease payments are apportioned between the finance charge
A hedge of a net investment makes it possible for the Group         and the reduction of the outstanding liability so as to produce
to protect itself against the currency risk of a net investment     a constant periodic rate of interest on the remaining balance
(investments, long-term loans, provisions to branches,              of the liability for each period.
unrepatriated income) in an entity consolidated abroad.             Assets held under finance leases are depreciated over the
Hedges of net investments in foreign entities are recognised in     shorter of the useful life of the asset or the lease term.
the same manner as cash flow hedges. The portion of the gain         Leases under which the lessor retains substantially all the
or loss on the hedging instrument that is determined to be an       risks and rewards incident to ownership of the leased asset
effective hedge is recognised directly in equity; the ineffective   are classified as operating leases.
portion of the gain or loss on the hedging instrument is
                                                                    Payments made as lessee under an operating lease are
recognised in profit or loss, as financial income or expense.
                                                                    recognised as an expense in the income statement on a
Cumulative gains and losses recognised in equity are                straight-line basis over the lease term.
recognised to profit and loss when the foreign entity is sold.


                                                                    2.31       DISTRIBUTION OF DIVIDENDS
2.30      FINANCE LEASES
                                                                    When a dividend is declared, a liability is recognised in the
Under IAS 17, leases, which transfer to the Group substantially     financial statements in the year in which the dividend was
all the risks and rewards incident to ownership of the leased       approved by the shareholders.
asset, are classified as finance leases. They are recognised as
assets on inception of the lease at the lower of the fair value
of the leased asset or the present value of the minimum lease
payments.




NOTE 3           MARKET RISKS AND FINANCIAL RISKS MANAGEMENT POLICIES


3.1       CAPITAL RISK MANAGEMENT                                   3.2        LIQUIDITY RISK
In managing its capital structure, the Group’s objectives
                                                                    Risk identification and measurement
are to ensure its ability to continue as a going concern
whilst providing returns to shareholders, benefits to other          Liquidity risk is the risk of not having the necessary funds to
stakeholders and maintaining an optimal capital structure.          honour commitments when they fall due. It involves, firstly,
                                                                    the risk that assets cannot be sold quickly under satisfactory
In order to maintain or adjust the capital structure, the Group     conditions if need be and, secondly, the risk that liabilities will
may adjust the amount of dividends paid to shareholders,            be called in advance or that the Group would not have access
return capital to shareholders, issue new shares, or sell           to credit on satisfactory terms.
assets to reduce debt.
                                                                    With respect to financial assets, with the exception of financial
It should also be noted that the Group has put in place a           assets allocated to finance its pension obligations, severance
liquidity contract in order to improve the liquidity of Saft        packages and other long-term commitments to employees
Groupe SA shares on the stock market.                               (see note  20 below) and trade receivables (see credit risk
Exposure to share market risks only relates to variations in        in section 3.5 below), the Group has mainly cash and cash
the price of own shares held.                                       equivalents (see note 15 below). Hence, the Group does not
                                                                    have a significant amount of financial securities that could
The data relating to transactions in the Company’s own shares
                                                                    pose a liquidity risk.
during 2012, and the measures taken to manage this risk, is
presented in the “Information on the Company and its Capital”       With respect to the liquidity risk stemming from its
section of this Annual Report.                                      indebtedness, the Group’s bank debt and its amortisation
                                                                    terms and conditions are disclosed in note 18.




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       6          2012 CONSOLIDATED FINANCIAL STATEMENTS
                  Notes to the consolidated financial statements




       The significant level of Saft’s debt is liable to:                                    The Group’s loan agreements contain financial commitments,
                                                                                            including the requirement for the Group to comply with the
          render the Group more vulnerable to any unfavourable
                                                                                            following financial ratios (measured on a six-month basis):
          change in the economic and industrial environment and
          in particular, to any increase in interest rates since a large                       contractual maximum gearing ratio (net financial debt to
          portion of the Group’s debt has been contracted at floating                           EBITDA) of 3.00 for each 12-month period ending 30 June
          rates;                                                                               and 31 December of each year;
          oblige the Group to devote a significant portion of its                               minimum interest coverage ratio (contractually defined
          operating cash flow to the payment of interest, thus reducing                         EBITDA to total net interest) of 4.50 for each 12-month
          its ability to finance its working capital, capital expenditure,                      period ending on 30 June and 31 December.
          cost reduction programmes or acquisitions;
                                                                                            The definition of EBITDA is included in the contractual
          limit the Group’s ability to pay dividends;                                       commitments with the banks. This definition is in line with
                                                                                            that used by the Group in its financial reporting. EBITDA is
          limit the Group’s ability to engage in forward planning or
                                                                                            defined as operating profit or loss before depreciation and
          react to changes in its activities or in the markets in which
                                                                                            amortization  (1), restructuring costs and other operating
          it operates;
                                                                                            income and expenses.
          limit the Group’s ability to launch new products, develop
                                                                                            Net financial indebtedness is defined as being borrowings
          new technologies or derive benefit from new opportunities;
                                                                                            minus cash and cash equivalents. In relation to the financing
          impede the Group’s competitiveness when confronted with                           agreement, it is calculated in euro using the average €/$
          proportionately less indebted competitors; and                                    exchange rate for the period.
          limit the Group’s ability to incur additional borrowings in                       Non compliance with any of these two ratios could allow the
          the future given the covenants contained in its current loan                      lenders to require early repayment of the loans. The Group
          agreements.                                                                       has fully complied with these ratios in 2012.


       Below are the changes in these ratios as at financial year-end.



       NET DEBT TO EBITDA RATIO



                                                                                                      31/12/2012               31/12/2011           31/12/2010
       Cash and cash equivalents                                                                               (114.5)                 (267.2)          (194.6)
       Borrowings                                                                                                211.7                   335.5            325.9
       Accrued interest                                                                                            1.9                     0.1              1.7
       Finance leases and other financial liabilities                                                               1.7                     1.2              2.4
       Net debt                                                                                                 100.8                     69.6           135.4
       EBITDA (last 12 months)                                                                                   102.1                   110.0            108.4
       RATIO OF TOTAL NET DEBT TO EBITDA(1)                                                                      0.98                     0.54            1.24
       (1) This ratio is calculated from the amount of the net debt expressed in euros using the average €/$ exchange rate for the financial year.



       NET INTEREST COVERAGE RATIO



                                                                                                                2012                    2011             2010
       Net interest expense                                                                                       7.2                     9.1             11.7
       EBITDA (last 12 months)                                                                                  102.1                   110.0            108.4
       EBITDA TO NET INTEREST EXPENSE RATIO                                                                      14.2                     12.1             9.3




       (1) Net of the amortisation of deferred grants related to assets.



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                                                     2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                       Notes to the consolidated financial statements




Hence, at 31 December 2012, the Group’s liquidity position was as follows:


                                                                                    2012                 2011                    2010
Undrawn confirmed revolving credit facilities                                        100.0                    -                    33.5
Undrawn unconfirmed credit facilities                                                    -                    -                       -
Cash and cash equivalents                                                           114.5                267.2                   194.6
TOTAL                                                                               214,5                267.2                  228.1


The analysis of financial liabilities by contractual maturity is    Nevertheless, the Group regularly invests its cash in the form
shown in note 18 below.                                            of overnight money market funds, commercial paper and
                                                                   short term deposits. Almost all of the instruments used in
Risk management                                                    2012 comply with the risk and liquidity criteria corresponding
The Group has centralised cash pooling systems that allow for      to cash equivalents as defined by IAS 7.
pooling cash denominated in the main currencies at the Group       The Group is exposed to interest rate risk nearly exclusively
level among its various subsidiaries. This system enables the      due to its long-term debt and investments. Its long-term
Group to reduce its bank financing requirements, with the           financial debt, which is described in note 18 to the consolidated
surplus cash of some subsidiaries being used to finance the         financial statements, is contracted at variable rates for its
cash requirements of other entities.                               fraction in euros and at fixed rates for its fraction in US dollars.
The Group’s treasury office monitors the cash position of each     The Group therefore seeks to limit its exposure to fluctuations
of its units and subsidiaries on a weekly basis. This weekly       in the interest rate by partially hedging the variable part of its
cash position is reported to the senior management.                debt and limiting its investments to a maximum maturity of
The Group also has a comprehensive liquidity forecasting           three months.
program that operates on quarterly cash flow predictions but        The Group’s interest rate risk is measured and managed in a
also in the longer term based on the budgetary data and/or         centralised fashion by the Group’s Treasury Department.
the three-year plan drawn up at the end of each financial year.
On 31  December 2012, the Company believes it is able to           Risk management
meet its future payments. It is also confident of its ability to    The strategies and policies for managing interest rate risk are
complete refinancing before its current bank debt falls due for     reviewed and approved by the Group’s senior management.
repayment.
                                                                   No change in Group’s interest rate risk management policy
                                                                   occurred in 2012. The objective of this policy is to protect the
                                                                   Group against a significant increase in interest rates.
3.3       INTEREST RATE RISK                                       Practically, interest rate risk hedging instruments currently in
                                                                   place only relate to Group banking debt in euro, as the Group
Risk identification and measurement                                bond debt in US dollar being at fixed interest rates.
Excluding those financial assets allocated to finance its            The instruments used to hedge the interest rate risk are
pensions, retirement indemnities and other long-term               rate swaps, options or option combinations (Collars). The
commitments to employees (see note  20 below), the Group           financial counterparties of these hedges are leading financial
does not incur significant interest rate risk on its financial       institutions that are part of the Group’s financing bank pool.
assets, which consist mainly of cash and cash equivalents. At
31 December 2012, the Group’s cash position consists almost        As at 31 December 2012, interest rate risk hedging transaction
entirely of cash and cash equivalents.                             in place is an interest rate swap (exchange of fixed rate against
                                                                   3 months Euribor to guard against the risk of rising Euribor)
                                                                   of €25 million nominal amount and ending on June 6, 2015.




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                  Notes to the consolidated financial statements




       As at 31 December 2012, the fair values of the Group’s interest rate risk management derivative instruments are broken down as
       follows:


                                                                    Notional amount                                  Market value
                                                                  (in million local currency)                         (in € million)

       Type of instrument                          Currency < to 5 years            > 5 years       31/12/2012 31/12/2011 31/12/2010
       COLLAR
       Pay fixed rate/receive 3M dollar Libor           USD             170.0                    -               -               (0.5)            (1.5)
       Pay fixed rate/receive 6M dollar Libor           USD             210.0                    -               -                   -                -
       Pay fixed rate/receive Euribor 3M                EUR             100.0                    -               -                 0.0            (0.5)
       CAP
       Pay fixed rate/receive Euribor 3M                EUR              25.0                    -            (0.4)                     -             -


       The short-term management of interest rate risk consists                   optimise the return on surplus cash. Decisions taken in this
       mainly of meeting the objectives set by senior management to:              area are subject to prior approval from senior management.
          optimise the cost of long-term debt by fixing interest                Interest rate risk on the Group’s bank debt after management
          periods from three to six months depending on yield curve            can be broken down as follows:
          expectations over the next six months;



                                                                                         31/12/2012            31/12/2011                  31/12/2010
       USD bond debt
       Fixed interest rate debt                                                                     112.9                  0.0                    0.0
       Variable interest rate debt                                                                    0.0                185.2                  177.8
       EUR bank debt
       Fixed interest rate debt                                                                        0,0                  0.0                    0.0
       Variable interest rate debt                                                                  100.0                 149.7                  148.1
       Total financial liabilities at variable rate                                                  100.0                334.9                  325.9
       Financial assets at variable rate                                                               0.0                  0.0                 (22.5)
       Net position before management                                                               100.0                334.9                  303.4
       Euro debt hedging collar                                                                        0.0              (100.0)                (100.0)
       Euro debt hedging cap                                                                        (25.0)                 0.0                    0.0
       Dollar debt hedging collar                                                                      0.0              (131.4)                (127.2)
       NET POSITION AFTER MANAGEMENT                                                                 75.0                103.5                   76.2


       A 1% increase in the interest rate on the net debt at                   Their fluctuation could have a significant impact on the costs
       31 December 2012 would result in an increase in the interest            of production, and consequently, on the Group’s profitability.
       expense of €0.8  million per annum (before tax), net of the
                                                                               The main raw material, excluding energy, used by the Group
       impact of hedging instruments.
                                                                               is nickel, the prices of which are negotiated on the London
       Inversely, on the same net position after management, a                 Metal Exchange (LME), an international commodities market.
       1% reduction in the interest rate would reduce the interest             Its other purchases of non-ferrous metals, which are less
       expense by €0.1 million.                                                significant, concern cobalt, cadmium and lithium. Cobalt
                                                                               prices are negotiated over the counter based on the LME’s
                                                                               quotations. The price of cadmium is indexed to that published
       3.4          RISK OF FLUCTUATIONS                                       in the London Metal Bulletin. Lithium prices are negotiated
                                                                               directly with the suppliers.
                    IN COMMODITY PRICES
                                                                               The Group’s exposure to fluctuations in the price of nickel
                                                                               affects the Industrial Battery Group division, whose annual
       Risk identification and measurement
                                                                               consumption (net of recycling) is about 1,500 to 2,000 metric
       The Group is mainly exposed to price changes in the raw                 tons.
       materials used in its production processes, either through
       its purchases of manufactured products or more directly                 The average price of nickel on the LME dropped by 23%
       its purchases of primary or transformed raw materials. The              between 2011 and 2012, from an average price of US$22,894
       prices of these materials fluctuate with changes in supply and           per tonne in 2011 to an average price of US$17,536 per tonne
       demand, and thus are beyond the Group’s control.                        in 2012.




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                                                         2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                            Notes to the consolidated financial statements




Risk management                                                          The hedging policy, and its implementation, must be approved
In order to protect itself against fluctuations in the price of           by a special committee comprising the Group General
nickel, the Group‘s hedging policy consists mainly of a hedging          Manager, Group Purchasing Director, IBG General Manager,
pool covering all or part of estimated needs within the IBG              and the Group Chief Financial Officer.
division (excluding small nickel batteries activities). As of            The general principles for the accounting treatment of
31 December 2012, more than 60% of IBG’s forecasted total                derivatives used to hedge the risks of fluctuations in
needs for the first six months of 2013 were hedged (excluding             commodities prices are explained above in note  2.29 to the
small nickel batteries activity). This is done by purchasing             consolidated financial statements in the paragraph relating to
forward contracts or other derivatives such as swaps and/or              cash flow hedges.
options denominated in US dollars, the currency used to buy
                                                                         Gains and losses resulting from hedging contracts are
nickel.
                                                                         recognised in cost of sales of the division whose future needs
According to the so called surcharge policy used on the                  are hedged when these contracts satisfy the criteria for hedge
markets for small nickel batteries consisting in indexing                accounting under IAS 39.
the selling prices of its products to the price of nickel on the
                                                                         If these contracts are not eligible for hedge accounting under
London Metal Exchange, no specific and automatic hedging
                                                                         IAS 39, then the realised gains and losses are recorded in
of nickel purchases beyond the floor price of the indexation
                                                                         “Other operating income and expenses”.
mechanism is required. However, the Group may enter into
certain hedging transactions on a selective basis by means of
the aforementioned derivative instruments.


As at 31 December 2012, the Group purchased the following financial derivatives to hedge the risk of changing commodities prices:


                                                                               Contract market value at 31 December 2012
                                                       Nominal value     Future cash           Fair value Non allocated
(in € million)                                           of contracts    flow hedge                 hedge      (trading)                     Total
Silver swaps                                                       1.5             0.0                  -                    -                0.0
Nickel swaps                                                       8.7             0.5                  -                    -                0.5
TOTAL                                                            10.2              0.5                  -                    -                0.5


The impact from existing hedges on the Group’s consolidated financial statements at financial year end is shown below:


                                                                                         Sensitivity of impact          Sensitivity of impact
                                                  Amount                                      on shareholders’               on shareholders’
                                          in shareholders’                               equity to an increase          equity to a decrease
                                              equity as at Impact on 2012                 of 10% in the nickel           of 10% in the nickel
                                       31 December 2012 income statement                      and silver prices              and silver prices
Silver swaps                                               0                   -                            (0.1)                             0.1
Nickel swaps                                             0.3                   -                              1.4                           (0.4)
TOTAL                                                    0.3                   -                             1.3                            (0.3)



As indicated in the above table, the impact from existing nickel         Swedish krona parities and in the US dollar-Israeli shekel
and silver hedging instruments on Group consolidated equity              parity. Changing parities can thus have a significant impact
resulting from a 10% increase of nickel and silver market                on the Group’s financial position and on the comparability of
prices would be €1.3 million. A decrease by 10% of the nickel            certain data from one year to the next. The impact may arise
and silver prices would result in a symmetrical negative                 in two ways:
impact of €0.3 million.
                                                                           translation risk: the risk associated with movements in a
                                                                           currency other than the euro in which a Group company
                                                                           maintains its financial accounts; and
CURRENCY RISK                                                              transaction risk (operational and financial): the risk
                                                                           associated with movements in a currency other than that
Risk identification and measurement                                        in which a Group company maintains its financial accounts.
Given the geographic diversity of its facilities and its activities,     The Group‘s exposure to currency risk stemming from its
the Group is exposed to exchange rate fluctuations, particularly          companies’ purchases and sales in currencies other than
in the euro-US dollar parity, but also in the euro- and US dollar-       their functional one (transaction risk) mainly affects those




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       6          2012 CONSOLIDATED FINANCIAL STATEMENTS
                  Notes to the consolidated financial statements




       units engaged in both manufacturing and marketing, while the         currency’s parity with the euro and the US dollar, a currency
       purely sales units mainly make their purchases and bill their        in which the Group earns an average of between 35% and 45%
       clients in their functional currency.                                of its revenue.
       The principal currency risk affecting manufacturing units
       with an extensive international activity concerns their local


       The following table shows the respective weightings of the principal currencies in the Group’s revenue:


                                                                           Euro               USD                 GBP Other currencies
       2012 financial year                                                45.88%            44.31%              2.71%               7.10%
       2011 financial year                                                49.92%            38.53%              2.81%               8.70%
       2010 financial year                                                49.11%            40.29%              3.05%               7.60%


       The identification and measurement of transactional                   It should be noted that the Group pays for its purchases of raw
       currency risks is carried out locally by each entity, and sent       materials in US dollars, particularly those of nickel and other
       to the Group’s treasury office on a quarterly basis. The             metals. A significant part of the Group’s investments in 2013,
       treasury office then consolidates the existing and forecast          especially within the framework of the Jacksonville facility
       positions by currency pairs. The Finance Department uses             project, will be made in US dollars.
       these consolidated positions to make decisions relating to
                                                                            Although Group revenue is less sensitive to change in parity
       management of these risks and their potential hedging. These
                                                                            of currencies other than dollar against euro, this is not the
       decisions, and in particular hedging transactions, may be
                                                                            case of Group EBITDA margin, due to the number and size of
       implemented either centrally or locally under the supervision
                                                                            Group plants located in countries outside the dollar and euro
       of the Group’s treasury office.
                                                                            zones. In particular, the Group has two large production plants
                                                                            in Sweden and Israel. These plants have sizeable cost bases
       Transaction risk management
                                                                            in their local currencies but make most of their sales in euros
       The Group’s overall sensitivity to the US dollar/euro parity is      or dollars. The Group’s EBITDA margin is therefore sensitive to
       limited by a hedging policy consisting mainly of:                    changes in the euro- and dollar- parities to the Swedish krona
          buying or manufacturing in the same currency as used for          and the dollar parity to the Israeli shekel.
          billing;                                                          As of 31  December 2012, transaction implemented in order
          using the net cash flows in US dollars to service the Group’s      to partially hedge transaction risk was a forward sale of
          US dollar debt.                                                   US$11.3  million against Israeli shekel., representing as of
                                                                            31 December 2012, a €8.6 million hedge position of forward
                                                                            2013 transactions.


       Outstanding cash flow hedges at 31 December 2012 are as follows:


                                                                     < 1 year                 Between 1 and 5 years
       Hedging instruments                                     Currency              €M         Currency              €M     Market value
       Forward exchange contracts
       ILS/USD                                                      11.3             8.6              0.0              0.0             0.6


       A 10% change in foreign exchange parity of hedged                    The following table shows the current assets and liabilities for
       transactions at 31  December 2012 would impact Group                 the Group’s main currencies of exposure as at 31 December
       shareholders’ equity by €0.9 million. Impact on profit and loss       2012 along with a sensitivity measurement of the residual
       account of the same change in foreign exchange parity would          positions, after taking into consideration foreign exchange
       not be material.                                                     hedging transactions.




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                                                   2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                       Notes to the consolidated financial statements




(countervalue in € million)                                        GBP                 SEK                     USD                     ILS
Current assets                                                    13.7                  18.8                  428.2                     6.1
Current liabilities                                               (3.0)               (22.1)                (369.9)                   (8.3)
Net balance sheet position before management                      10.7                 (3.3)                   58.3                  (2.2)
Current hedging as at 31 December 2012                              0.0                  0.0                 (28.0)                     0.0
Net balance sheet position after management                       10.7                 (3.3)                   30.3                  (2.2)
Foreign exchange rates against euro
as at 31 December 2012                                             0.82                8.58                    1.32                  4.92
Impact in euro of a 5% decrease in the euro                          0.6               (0.2)                     1.6                 (0,1)
Impact in euro of a 5% increase in the euro                        (0.6)                 0,2                   (1.6)                  0.1


Fair value hedges consist of foreign exchange swaps and are broken down as follows:


                                                            < 1 year                Between 1 and 5 years
                                                                                        Curren                                    Market
Hedging instruments                                   Currency              €M         Currency                    €M              value
Foreign exchange swaps
USD/EUR                                                    37.0            28.0                0.0                 0.0               (0.5)


The Group considers that with all other parameters remaining      in 2012 (as against 4% in 2011 and less than 3% in 2010), and
the same, a 10% change in the dollar-euro parity has              the Group’s ten largest customers together represented 23%
approximately a 4% impact in the same direction on revenue        of consolidated revenue in 2012, compared with 24% in 2011
and a 6% impact in the same direction on EBITDA as it is          and 2010 respectively.
defined in the consolidated financial statements.
                                                                  Each unit manages its own credit risk locally. An assessment
                                                                  of the risk of non-recovery is made quarterly or when an event
Translation risk management
                                                                  makes collection of a receivable uncertain.
The Group holds certain investments in activities located
abroad whose net assets are exposed to foreign currency           The Group’s financial officers also conduct periodic reviews of
translation risk. The currency risk associated with holding       its main customers.
the net assets of the Group’s foreign units is mainly managed
                                                                  Bank and financial counterparty risk
through borrowings denominated in the local currency.
                                                                  The counterparty risk stemming from cash and cash
The Group has not entered into any specific hedging contracts
                                                                  equivalents and from the financial instruments and derivative
on its net assets abroad other than through borrowings
                                                                  products entered into with banks or financial institutions is
denominated in those units’ local currencies.
                                                                  managed at Group level by the Group’s Treasury Department.
The Group had US$150 million of debt at 31 December 2012.         Derivatives transactions and cash investments made by
This debt is matched by the Group’s US dollar assets. In this     the Group takes into account the need to diversify Group’s
respect, it is considered as a hedge of Group net foreign         counterparty risks over financial partners.
investments in US$ and the impact from currency fluctuations
                                                                  As of 31 December 2012, the majority of the Group’s cash was
on this debt is recorded under shareholders’ equity.
                                                                  deposited with various banks which provide the Group’s long-
                                                                  term financing, all of them having at least a Standard & Poor’s
                                                                  A+ long-term rating.
3.5         CREDIT AND COUNTERPARTY RISKS                         Raw material price, foreign exchange and interest rate risks
The credit risk to which the Group is exposed stems mainly        hedging derivatives are also concluded with the Group’s
from its trade receivables and commitments vis-à-vis its          lending banks.
customers and from its cash and cash equivalents on deposit
with banks and other financial institutions, and from over-
the-counter financial instruments and derivative products          3.6        ESTIMATING THE FAIR VALUE
contracted with financial institutions.                                       OF FINANCIAL INSTRUMENTS
Credit risk from receivables                                      The market values of the interest rate or commodities
Due to the nature of Saft’s business, trade receivables           derivatives used as a basis of preparation of the consolidated
constitute the main source of credit risk. Owing to the very      financial statements were calculated on the basis of the
broad diversity of its markets and customers, the biggest         fair market values reported by the counterparties to these
customer accounted for less than 3% of consolidated revenue       transactions.




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       6          2012 CONSOLIDATED FINANCIAL STATEMENTS
                  Notes to the consolidated financial statements




       NOTE 4              SCOPE OF CONSOLIDATION

       The scope of consolidation at 31 December 2012 comprises the following companies:


                                                                                                             Percentage
                                                                                                               of control Consolidation
       Company name                                                              Activity        Country    and interest       method
       Saft Groupe SA                                       Group Holding Company                France            100             Full
       Saft Australia Pty Ltd.                                      Holding company             Australia          100             Full
       Saft Batteries Pty Ltd.                            Assembly and commercial               Australia          100             Full
       Saft Do Brazil                                                    Commercial                Brazil          100             Full
       Saft Zhuhai (Ftz) Batteries Co, Ltd.            Manufacturing and commercial                China           100             Full
       Saft Nife® ME Ltd.                                                Commercial              Cyprus            100             Full
                                                                                                   Czech
       Saft Ferak® AS                                  Manufacturing and commercial             Republic            100            Full
       Saft SAS (previously Saft SA)                   Manufacturing and commercial               France            100            Full
       Saft Acquisition SAS                                        Holding company                France            100            Full
                                                           Manufacturing and sale of
       ASB (and its subsidiaries)                                  thermal batteries              France             50             EA
       Friemann & Wolf Batterietechnik GmbH
       (Friwo®)                                       Manufacturing and commercial             Germany             100             Full
       Saft Batterien GmbH                                               Commercial            Germany             100             Full
       SGH GmbH                                                     Holding company            Germany             100             Full
       Tadiran Batteries GmbH                         Manufacturing and commercial             Germany             100             Full
       Saft Hong Kong Ltd.                          Holding company and commercial           Hong Kong             100             Full
       Amco-Saft India Ltd.                           Manufacturing and commercial                 India          51.04            Full
       Tadiran Batteries Ltd.                         Manufacturing and commercial                Israel           100             Full
       Saft Batterie Italia Srl                                          Commercial                 Italy          100             Full
       Saft Finance Sarl                                            Holding company         Luxembourg             100             Full
       Saft Batterijen BV                                                Commercial         Netherlands            100             Full
       Saft AS Norway                                                    Commercial             Norway             100             Full
       Saft Batteries Pte Ltd.                      Holding company and commercial            Singapore            100             Full
       Saft Baterias SL                                                  Commercial               Spain            100             Full
       Alcad® AB                                                         Commercial             Sweden             100             Full
       Fast Jung KB                                      Property investmet company             Sweden             100             Full
       Saft AB                                        Manufacturing and commercial              Sweden             100             Full
       Saft Sweden AB                                               Holding company             Sweden             100             Full
                                                                                                 United
       Saft UK Ltd.                                    Manufacturing and commercial            Kingdom              100            Full
                                                         Manufacture of nickel-plated
       Florida Substrate Inc. (PPF)                                            strips       United States           100            Full
       Saft America Inc.                               Manufacturing and commercial         United States           100            Full
       Saft Federal Systems Inc. (Tadiran US)                            Commercial         United States           100            Full
       Saft JV Holding Co                                          Holding company          United States           100            Full


       In the table above, “Full” signifies that a company is consolidated using the full consolidation method and “Equity Accounting”
       (or “EA”) signifies that a company is consolidated using the equity accounting consolidation method.




       NOTE 5              CHANGES IN THE SCOPE OF CONSOLIDATION

       There has been no change in the scope of consolidation during the year.




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                                                    2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                          Notes to the consolidated financial statements




NOTE 6           INFORMATION BY BUSINESS SEGMENT AND GEOGRAPHICAL SEGMENT


6.1          INFORMATION BY BUSINESS SEGMENT                          the Industrial Battery Group (IBG) division, which
                                                                      manufactures batteries used for standby power supplies
The Group’s Management Board defined the business                      for industrial applications, telecommunications networks
segments based on the reporting which it regularly examines           and the aviation and rail industries, as well as the storage
in order to make decisions regarding allocation of resources          of renewable energies. It also manufactures a specialised
to segments and evaluation of their performance.                      range of rechargeable batteries used in emergency lighting
Group reporting has been structured based on the following            and professional electronics. The sale of the Small Nickel
business segments:                                                    Batteries business (SNB) being highly probable by the end
                                                                      of 2012 financial year, this activity has been classified,
   the Specialty Battery Group (SBG) division, which                  presented and related assets and liabilities measured in
   manufactures batteries for applications including water,           accordance with IFRS 5 «Non-current assets held for sale
   gas and electricity utility meters, automated meter readers        and discontinued operations» in the Group Consolidated
   and road tolling systems, computer memory back-up                  financial Statements.
   systems, satellites, radios and other portable systems for
   military use, missiles, and torpedoes;                             the Other segment comprises the Group’s holding
                                                                      companies. It also includes central functions such as
                                                                      IT, research and central management, finance and
                                                                      administration.


Operating profit by division


FINANCIAL YEAR 2012



(in € million)                                                     IBG                 SBG               Other                    Total
Total segment revenues                                           413.5               358.5                   0.0                 772.0
Minus intra-segment revenues                                     (93.0)              (81.0)                  0.0               (174.0)
Consolidated revenues                                            320.5               277.5                  0.0                 598.0
EBITDA                                                            33.9                70.4                (2.2)                 102.1
Depreciation of intangible assets                                 (6.0)               (6.5)                (0.2)                (12.7)
Amortisation of property, plant & equipment                      (13.2)               (8.4)                (0.6)                (22.2)
Impairment of intangible assets                                   (0.3)               (0.8)                  0.0                  (1.1)
Amortisation of deferred grants related to assets                   3.3                 0.0                  0.0                    3.3
EBIT                                                              17.7                54.7                (3.0)                   69.4
Provisions for restructuring                                        0.0               (0.8)                  0.0                  (0.8)
Other operating income/(expenses)                                   0.0                 0.3                  0.0                    0.3
Operating profit                                                   17.7                 54.2               (3.0)                   68.9




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       6          2012 CONSOLIDATED FINANCIAL STATEMENTS
                  Notes to the consolidated financial statements




       FINANCIAL YEAR 2011



       (in € million)                                               IBG     SBG     Other      Total
       Total segment revenues                                     385.4    351.9       7.4     744.7
       Minus intra-segment revenues                               (86.6)   (80.8)      0.0   (167.4)
       Consolidated revenues                                      298.9    271.1      7.4     577.4
       EBITDA                                                      42.4     64.4      1.9     108.7
       Depreciation of intangible assets                           (5.4)    (7.4)    (0.3)    (13.1)
       Amortisation of property, plant & equipment                 (7.2)    (7.5)    (0.6)    (15.3)
       Impairment of intangible assets                               0.0    (0.4)      0.0      (0.4)
       Amortisation of deferred grants related to assets             0.8      0.0      0.0        0.8
       EBIT                                                        30.6     49.1      1.0       80.7
       Provisions for restructuring                                  0.0      0.0      0.0        0.0
       Other operating income/(expenses)                             0.0    (0.4)      0.0      (0.4)
       Operating profit                                             30.6     48.7      1.0      80.3


       FINANCIAL YEAR 2010



       (in € million)                                               IBG     SBG     Other      Total
       Total segment revenues                                     358.9    340.1       0.0     699.0
       Minus intra-segment revenues                               (89.0)   (80.1)      0.0   (169.1)
       Consolidated revenues                                      269.9    260.0      0.0     529.9
       EBITDA                                                      48.2     59.2    (3.5)     103.9
       Depreciation of intangible assets                           (6.0)    (7.8)      0.0    (13.8)
       Amortisation of property, plant & equipment                 (6.4)    (7.4)    (0.5)    (14.3)
       Impairment of intangible assets                               0.0      0.0      0.0        0.0
       Amortisation of deferred grants related to assets             0.0      0.0      0.0        0.0
       EBIT                                                        35.7     44.0    (4.0)       75.7
       Provisions for restructuring                                (0.7)      0.0      0.0      (0.7)
       Other operating income/(expenses)                             1.5    (0.4)      0.0        1.1
       Operating profit                                             36.5     43.6    (4.0)      76.1




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                                           2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                Notes to the consolidated financial statements




Balance sheet by business segment


AS AT 31/12/2012



(in € million)                                           IBG                 SBG                     Other                    Total
Total segment assets                                   337.5                255.7                    236.3                   829.5
Total non-allocated assets                                                                                                   139.6
TOTAL ASSETS                                                                                                                969.1
Total segment liabilities                              (64.0)               (65.0)                   (61.7)                (190.7)
Total non-allocated liabilities                                                                                            (382.7)
TOTAL LIABILITIES
(EXCLUDING SHAREHOLDERS’ EQUITY)                                                                                          (573.4)


AS AT 31/12/2011



(in € million)                                           IBG                 SBG                     Other                    Total
Total segment assets                                   327.6                265.2                    341.7                   934.5
Total non-allocated assets                                                                                                   156.5
TOTAL ASSETS                                                                                                              1,091.0
Total segment liabilities                              (76.5)               (67.8)                   (58.3)                (202.6)
Total non-allocated liabilities                                                                                            (481.8)
TOTAL LIABILITIES
(EXCLUDING SHAREHOLDERS’ EQUITY)                                                                                          (684.4)


AS AT 31/12/2010




                                                  Continued operations
                                                                                                Discontinued
(in € million)                                  IBG                 SBG              Other      operations (1)                Total
Total segment assets                          274.7                262.4             287.7                 37.1              861.9
Total non-allocated assets                                                                                                   121.4
TOTAL ASSETS                                                                                                                983.3
Total segment liabilities                     (90.1)               (65.4)            (44.2)                   0.0          (199.7)
Total non-allocated liabilities                                                                                            (442.4)
TOTAL LIABILITIES
(EXCLUDING SHAREHOLDERS’ EQUITY)                                                                                          (642.1)
(1) Johnson Controls-Saft joint venture.




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       Investments by business segment


       FINANCIAL YEAR 2012



       (in € million)                                              IBG   SBG    Other   Total
       Acquisitions of non-current assets                         33.4   10.6     1.2   45.2
       Capitalisation of development costs                         6.9    2.2     0.0    9.1
       TOTAL                                                      40.3   12.8     1.2   54.3


       FINANCIAL YEAR 2011



       (in € million)                                              IBG   SBG    Other   Total
       Acquisitions of non-current assets                         49.9    8.5     1.3   59.7
       Capitalisation of development costs                         5.3    2.7     0.0    8.0
       TOTAL                                                      55.2   11.2     1.3   67.7


       FINANCIAL YEAR 2010



       (in € million)                                              IBG   SBG    Other   Total
       Acquisitions of non-current assets                         59.7    8.0     0.8   68.5
       Capitalisation of development costs                         4.6    1.3     0.0    5.9
       TOTAL                                                      64.3    9.3     0.8   74.4




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6.2          INFORMATION BY GEOGRAPHICAL SEGMENT


CONSOLIDATED REVENUES BY GEOGRAPHICAL SEGMENT



(in € million)                                                                      2012               2011                    2010
Europe                                                                              256.9              268.3                   247.2
North America                                                                       209.6              192.5                   183.2
Asia/Oceania                                                                         73.3               70.2                    61.4
Middle East and Africa                                                               49.7               41.2                    32.5
South America                                                                         8.5                5.2                     5.6
TOTAL                                                                              598.0               577.4                  529.9


Revenues are allocated according to the geographical location of the customer.


TOTAL ASSETS BY GEOGRAPHICAL SEGMENT



(in € million)                                                               31/12/2012         31/12/2011             31/12/2010
Europe                                                                              663.5              794.5                   684.8
North America                                                                       229.9              226.5                   235.3
Asia/Oceania                                                                         28.8               27.1                    25.9
Middle East and Africa                                                               46.7               42.9                    37.3
South America                                                                         0.2                0.0                     0.0
TOTAL                                                                              969.1            1,091.0                   983.3


Assets are allocated according to the geographical location of the asset.


ACQUISITIONS OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
INCLUDING CAPITALISATION OF DEVELOPMENT COSTS



(in € million)                                                                      2012               2011                    2010
Europe                                                                               22.0                19.4                   16.4
North America                                                                        28.7                45.3                   54.0
Asia/Oceania                                                                          1.8                 1.2                    1.6
Middle East and Africa                                                                1.8                 1.8                    2.4
South America                                                                         0.0                 0.0                    0.0
TOTAL                                                                                54.3               67.7                    74.4


Acquisitions of property, plant and equipment and intangible assets are allocated according to the geographical location of the
asset.




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       NOTE 7              INTANGIBLE ASSETS

       The table below shows movements in the carrying amount of intangible assets:


                                                                                                             Other
                                                                                      Development       intangible
       (in € million)                                   Software     Brand names             costs          assets            Total
       Carrying amount at 01/01/2010                         0.2          125.8              22.3            79.9           228.2
       Acquisitions                                           0.3           0.0                5.8             0.6             6.7
       Disposals                                              0.0           0.0                0.0             0.0             0.0
       Amortisation                                         (0.3)           0.0              (4.7)           (8.8)          (13.8)
       Translation adjustment                                 0.0           0.0                1.0             0.0             1.0
       Transfers                                              0.3           0.0                0.0           (0.2)             0.1
       Impairment                                             0.0           0.0                0.0             0.0             0.0
       Carrying amount at 31/12/2010                         0.5          125.8              24.4            71.5           222.2
       At 31/12/2010
       Gross value                                            4.3         125.8              33.1           135.4           298.6
       Accumulated amortisation                             (3.8)           0.0              (8.7)          (63.9)          (76.4)
       Carrying amount                                       0.5          125.8              24.4            71.5           222.2
       Carrying amount at 01/01/2011                         0.5          125.8              24.4            71.5           222.2
       Acquisitions                                           0.9           0.0                8.0             0.2             9.1
       Disposals                                              0.0           0.0                0.0             0.0             0.0
       Amortisation                                         (0.7)           0.0              (3.4)           (9.0)          (13.1)
       Translation adjustment                                 0.0           0.0                0.2             0.1             0.3
       Transfers                                              0.1           0.0                0.0           (0.1)             0.0
       Impairment                                             0.0           0.0              (0.4)             0.0           (0.4)
       Carrying amount at 31/12/2011                         0.8          125.8              28.8            62.7           218.1
       At 31/12/2011
       Gross value                                             5.4        125.8              38.7           135.2           305.1
       Accumulated amortisation                              (4.6)          0.0              (9.9)          (72.5)          (87.0)
       Carrying amount                                        0.8         125.8              28.8            62.7           218.1
       Carrying amount at 01/01/2012                          0.8         125.8              28.8            62.7           218.1
       Acquisitions                                            0.5          0.0                9.2             0.0              9.7
       Disposals                                               0.0          0.0.               0.0             0.0             0.0
       Amortisation                                          (0.8)          0.0              (3.0)           (8.9)          (12.7)
       Translation adjustment                                  0.0          0.0              (0.1)             0.0           (0.1)
       Transfers                                               0.1          0.0                0.0             0.0              0.1
       Impairment                                              0.0          0.0              (1.1)             0.0           (1.1)
       Assets held for sale                                    0.0          0.0              (0.7)             0.0            (0.7)
       Carrying amount at 31/12/2012                        (0.6)         125.8              33.1            53.8           213.3
       At 31/12/2012
       Gross value                                            5.8          125.8              42.6          135.2            309.4
       Accumulated amortisation                             (5.2)            0.0              (9.5)         (81.4)           (96.1)
       CARRYING AMOUNT                                       0.6          125.8              33.1            53.8           213.3


       Other intangible assets mainly include technologies and customer relationships recorded in 2004 when the Doughty Hanson Funds
       acquired the Alcatel Group’s battery activities.




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                                                                            Notes to the consolidated financial statements




NOTE 8           GOODWILL

Main goodwill dates from January  2004, when the Alcatel                   intangible assets for €201  million. Intangible assets,
Group sold its battery activities to the Doughty Hanson Funds.             primarily consisting of brand names, Research and
                                                                           Development projects and customer relationships by
The acquisition price paid by the Doughty Hanson Funds
                                                                           product line;
for the operating entities of the Group was allocated in part
to the assets and liabilities transferred, measured at 14                  property, plant and equipment for €24 million. The estimated
January 2004 at fair value based on an independent expert’s                useful lives of these assets were also reviewed.
valuation. This re-measurement compared with the carrying
                                                                         The residual unallocated acquisition value, amounting to
amounts in the consolidated balance sheet of the year ended
                                                                         €117.1 million, was recognised as goodwill in 2004.
31 December 2004 related to:

The table below shows movements in goodwill:


(in € million)                                                                          2012                 2011                    2010
                       st
Carrying amount at 1 January                                                            112.6                110.3                  104.8
Newly consolidated/deconsolidated entities                                                 0.0                 0.0                    0.0
Impairment                                                                                 0.0                 0.0                    0.0
Translation adjustment                                                                   (1.5)                 2.4                    5.5
Carrying amount at 31 December                                                          111.1                112.7                  110.3

Goodwill is allocated to the Cash Generating Unit to which it relates.
Goodwill per CGU and geographic segment breaks down as follows:



AT 31/12/2012



(in € million)                                                                             IBG                 SBG                    Total
Europe                                                                                    20.2                 14.7                   34.9
North America                                                                             43.7                 31.8                   75.5
Asia/Oceania                                                                               0.7                  0.0                    0.7
TOTAL                                                                                     64.6                46.5                  111.1


AT 31/12/2011



(in € million)                                                                             IBG                 SBG                    Total
Europe                                                                                    20.2                 14.7                   34.9
North America                                                                             44.6                 32.5                   77.1
Asia/Oceania                                                                               0.7                  0.0                    0.7
TOTAL                                                                                     65.5                47.2                  112.7


AT 31/12/2010



(in € million)                                                                             IBG                 SBG                    Total
Europe                                                                                    20.2                 14.7                   34.9
North America                                                                             43.2                 31.4                   74.6
Asia/Oceania                                                                               0.8                  0.0                    0.8
TOTAL                                                                                     64.2                46.1                  110.3




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       NOTE 9              PROPERTY, PLANT AND EQUIPMENT

       The table below shows movements in the carrying amount of property, plant and equipment:


                                                                           Technical                              Other
                                                                       installations,          Assets         property,
                                                                           plant and            under         plant and
       (in € million)                              Land      Buildings       tooling      construction       equipment            Total
       Carrying amount at 01/01/10                  9.4           23.8          62.8              8.2               5.9         110.1
       Acquisitions                                 1.1             0.5           7.2            60.0                0.8          69.6
       Disposals                                    0.0             0.0         (0.5)              0.0               0.0         (0.5)
       Depreciation                                 0.0           (2.1)        (13.1)             0.0              (1.1)        (16.3)
       Translation adjustment                       0.3             0.7           2.9             0.2                0.1           4.2
       Transfers                                    0.0             1.9           5.7            (8.1)               0.3          (0.2)
       Carrying amount at 31/12/10                 10.8           24.8          65.0             60.3               6.0         166.9
       At 31/12/2010
       Gross value                                 10.8             45.7        200.1              60.3            13.6          330.5
       Accumulated depreciation                      0.0          (20.9)      (135.1)               0.0            (7.6)       (163.6)
       Carrying amount                             10.8            24.8          65.0             60.3              6.0         166.9
       Carrying amount at 01/01/11                 10.8            24.8          65.0             60.3              6.0         166.9
       Acquisitions                                  0.0            12.3         20.2              26.3              0.8          59.6
       Disposals                                     0.0           (0.5)          0.0               0.0            (0.1)          (0.6)
       Depreciation                                  0.0           (2.9)       (13.1)               0.0            (1.0)        (17.0)
       Translation adjustment                      (0.1)             3.4          3.2             (0.8)              0.0            5.7
       Transfers                                     0.0            32.7         22.4            (55.7)              0.5          (0.1)
       Carrying amount at 31/12/11                 10.7            69.8          97.7             30.1              6.2         214.5
       At 31/12/2011
       Gross value                                 10.7             94.2        246,0              30.1            13.5           394.5
       Accumulated depreciation                     0.0           (24.4)      (148.3)               0.0            (7.3)        (180.0)
       Carrying amount                             10.7            69.8          97.7             30.1              6.2          214.5
       Carrying amount at 01/01/12                 10.7            69.8          97.7             30.1              6.2          214.5
       Acquisitions                                 0.0              1.1         25.0              17.3              1.2           44.6
       Disposals                                    0.0            (0.2)         (0.2)              0.0              0.0           (0.4)
       Depreciation                                 0.0            (3.2)       (17.8)               0.0            (1.2)         (22.2)
       Assets held for sales                        0.0              0.0         (7.6)              0.0              0.0           (7.6)
       Translation adjustment                       0.0            (0.6)         (1.2)            (0.3)              0.0           (2.1)
       Transfers                                    0.0            (8.5)         24.4            (15.9)              0.0           (0.0)
       Carrying amount at 31/12/12                 10.7            58.4        120.3              31.2              6.2        (226.8)
       At 31/12/2012
       Gross value                                 10.7             86.0        277.3             31.2             14.2          419.4
       Accumulated depreciation                     0.0           (27.6)      (157.0)              0.0             (8.0)       (192.6)
       CARRYING AMOUNT                             10.7            58.4        120.3              31.2              6.2         226.8


       Assets under construction amounted to €31.2  million by             €2.8 million as at 31 December 2012, against €2.9 million by
       the end of 2012, almost 65% of which relates to the new             the end of 2011 and €3.2 million by the end of 2010. They are
       Jacksonville production unit in Florida.                            accounted for under the caption “Other property, plant and
                                                                           equipment” in the above table.
       Property, plant and equipment under finance leases or
       long-term lease contracts represented a carrying value of




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NOTE 10          ASSET IMPAIRMENT TESTS

In the second half of each year, the Group conducts asset            significant improvement or deterioration of the profitability of
impairment tests on its property, plant and equipment and            the Group’s brands.
intangible assets, as well as on its goodwill, in accordance
                                                                     Similarly, the long-term growth rates used are unchanged
with the principles set forth in note 2.11.
                                                                     from those used in the previous tests performed in 2011
These tests are conducted every year on unamortised                  (between 1.5% and 2.5% depending on the brands).
intangible assets and goodwill. They are only carried out
                                                                     Following these tests, the Group did not recognise any
for depreciable fixed assets when events or changes to the
                                                                     impairment of brand value at the close of 2012 as compared
market environment point to an impairment risk.
                                                                     with their book value at this date, even after taking the
At the close of the 2012 financial year, there was no impairment      following sensitivity factors into account:
identified concerning the Group’s depreciable property, plant
                                                                       a 50% decline in sales growth over the plan’s term: this
and equipment.
                                                                       change would result in a 16.8% decline in brand value,
                                                                       which nevertheless would not fall below their book value;
                                                                       that would require a decline of 18.8% in sales over the
MAIN ASSUMPTIONS USED                                                  plan’s term;

The future cash flows used to determine the going concern               a 100 basis point decline in long-term growth over the
value of the assets result from discounted forecasts of the            plan’s term: this decline would result in a 11.6% decline in
second half of the current year and of the three-year strategic        brand value, which nevertheless would not fall below their
plan, i.e. next year’s budget data plus the data for the following     book value; that would require a decline of 1,450 basis
two years.                                                             points in the long-term growth rate (negative long-term
                                                                       growth between 12.0% and 13.0%, depending on brands);
The strategic plan covering the 2013-2015 period was drawn
up with economic assumptions of sales revenue, commodity               finally, a 100 basis point increase in the Weighted Average
prices and energy prices which Group management deemed                 Cost of Capital: this increase would result in a 13.2% decline
to be realistic.                                                       in brand value, which nevertheless would not fall below
                                                                       their book value; that would require an increase of 1,020
The discount rate used was the Weighted Average Cost of                basis points in the Weighted Average Cost of Capital (i.e. a
Capital calculated on the basis of industry parameters where           discount rate of 19.2%).
applicable plus a spread reflecting the specific degree of risk
for the asset tested. The data used to determine these rates         Goodwill
mainly come from an independent outside source.                      The Group’s biggest goodwill item is the “Saft” goodwill
Taking into account the above-mentioned parameters,                  resulting from the acquisition and takeover by the Doughty
the Weighted Average Cost of Capital used to perform the             Hanson Funds of Alcatel’s battery operations in January 2004.
impairment tests (excluding any spread) is 8.0% in 2012 as           The goodwill impairment test consists of comparing the
compared to 8.8% in 2011.                                            net book value of each Cash Generating Unit (CGU) with its
                                                                     recoverable value, which is defined as the greater of its going
                                                                     concern value or its fair value minus the disposal costs. The
VALUATION TEST FOR UNAMORTISED                                       Group selected as Cash Generating Units those business
INTANGIBLE ASSETS                                                    segments existing at the time the Alcatel Group’s battery
                                                                     operations were acquired and transferred to the Doughty
                                                                     Hanson Funds in January 2004. No goodwill was recognised
Brands
                                                                     for the Cash Generating Unit comprising the Rechargeable
The brand valuation tests rely on the present value of the           Battery Systems division, now the SNB activity of small
future royalties that would be paid by a third party wishing         nickel batteries, the sale of which is highly probable and is
to use them on the basis of sales revenue forecasts for each         thus accounted for as discontinued operations in the 2012
brand in the strategic plan. The discount rate used was the          consolidated financial statements.
Weighted Average Cost of Capital indicated above, plus a
spread of 1%, i.e. a rate of 9.0%. The going concern value also      The going concern value is calculated based on the discounted
includes a terminal value based on a long-term growth rate           future cash flows resulting from the strategic plan and a
which differs according to the extent to which the brands            terminal value composed of a single growth rate for all Cash
valued are strategic or not.                                         Generating Units. It is identical to the growth rate used to value
                                                                     the Saft brand (2.5%), and is the same as that for the previous
The trademark royalty rates used in 2012 were not modified            year.
from the previous financial year in the absence of any




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                  Notes to the consolidated financial statements




       The discount rate used is the same for all Cash Generating        which nevertheless would not fall below their book value;
       Units. It is based on the Weighted Average Cost of Capital with   that would require a decline in their operating profit of 24%
       no mark-up spread (i.e. rate of 8.0% in 2012). It is therefore    for IBG and of 63% for SBG;
       independent of the Group’s financial structure and of the
                                                                         a decline of 100 basis point in the long-term growth over
       manner in which the Group funded the acquisition of assets
                                                                         the term of the strategic plan would lead to a decline in their
       belonging to the Cash Generating Unit or group of CGUs tested.
                                                                         going concern value of 15.4% for IBG and 13.6% for SBG,
       Management did not recognise any loss of value in goodwill        which nevertheless would not fall below their book value;
       after comparing the going concern value as calculated with        that would require a long-term decline of 0.7% for IBG and
       the net book value of the Cash Generating Units.                  of 13.4% for SBG;
       The sensitivity tests described below confirm the absence of       an increase of 100 basis points in the Weighted Average
       any impairment in the Group’s goodwill:                           Cost of Capital would lead to a decline in their going
                                                                         concern value of 17.0% for IBG and 15.1% for SBG, which
          a decline of 10% in the operating profit of the CGUs over the
                                                                         nevertheless would not fall below their book value; that
          term of the strategic plan would lead to a decline in their
                                                                         would require an increase of 277 basis points for IBG and
          going concern value of 15.1% for IBG and 10.4% for SBG,
                                                                         1,17 basis points for SBG.




       NOTE 11             OTHER NON-CURRENT FINANCIAL ASSETS

       Other non-current financial assets break down as follows:


       (in € million)                                                       At 31/12/2012        At 31/12/2011       At 31/12/2010
       Financial assets available for sale                                                0.1                 0.1                  0.2
       Security deposits                                                                  0.2                 0.3                  0.6
       TOTAL                                                                              0.3                 0.4                  0.8




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NOTE 12          INVENTORIES

Inventories break down as follows:


(in € million)                                                    At 31/12/2012      At 31/12/2011        At 31/12/2010
Raw materials and bought-in goods
■ Gross value                                                                44.7                40.5                   36.9
■ Impairment                                                                 (2.6)               (3.6)                  (3.8)
Carrying amount                                                              42.1                36.9                   33.1
Industrial work in process
■ Gross value                                                                27.3                33.9                   30.0
■ Impairment                                                                 (0.9)               (1.2)                  (1.2)
Carrying amount                                                              26.4                32.7                   28.8
Finished goods
■ Gross value                                                                12.6                17.1                   15.7
■ Impairment                                                                 (0.9)               (1.2)                  (1.1)
Carrying amount                                                              11.7                15.9                   14.6
TOTAL INVENTORIES NET                                                        80.2               85.5                    76.5


All inventories are classified as current assets.




NOTE 13          TRADE AND OTHER RECEIVABLES

Trade and other receivables comprise the following:


(in € million)                                                    At 31/12/2012      At 31/12/2011        At 31/12/2010
Trade receivables - gross value                                             136.7              128.7                   130.7
Trade receivables - impairment                                               (1.4)              (1.8)                   (2.3)
Trade receivables - carrying amount                                         135.3              126.9                   128.4
Long-term contract receivables                                                 5.5                9.6                     6.5
Taxes (other than income tax) and duties                                       8.7                3.7                     4.4
Prepaid expenses                                                               7.9                6.9                     3.8
Amounts due from employees                                                     0.1                0.1                     0.1
Advance payments to suppliers                                                  0.6                0.6                     0.8
Others                                                                       11.9               11.7                      4.4
TOTAL TRADE AND OTHER RECEIVABLES                                          170.0               159.5                  148.4


Trade receivables are all due within a year.




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       NOTE 14             FINANCIAL DERIVATIVES

       Financial derivatives break down as follows:


                                                                  At 31/12/2012              At 31/12/2011               At 31/12/2010
       (in € million)                                             Assets Liabilities         Assets    Liabilities       Assets    Liabilities
       Interest rate risk hedging derivatives                         0.0          1.0          0.0           0.3            0.0          1.7
       Currency risk hedging instruments                              0.6          0.0          3.7           0.7            0.5          0.0
       Commodity price risk hedging derivatives                       0.4          0.0          0.2           0.2            1.6          0.1
       TOTAL                                                          1.0          1.0          3.9           1.2            2.1          1.8


       Saft Groupe is exposed to the risk of interest rate rises on its      Foreign exchange hedging instruments concern forward
       senior debt, which was contracted at variable rates. To protect       purchasing contracts matched by future financial cash flows
       itself against this exposure, Saft has contracted a succession        and currency swaps. These are described in note  3 to the
       of interest rate swaps, caps and collars to coincide with each        consolidated financial statements.
       refinancing of the debt.
                                                                             Derivatives contracted by Saft to protect itself against the risk
       The balance sheet amounts set out above correspond to the             of fluctuation in raw material prices are mainly nickel price
       interest rate risk hedging instruments described in note  3           risk hedging derivatives. These instruments are described in
       “Market risks and financial risks management policies” to the          note 3 to the consolidated financial statements.
       consolidated financial statements.




       NOTE 15             CASH AND CASH EQUIVALENTS

       Cash and cash equivalents comprise the following:


       (in € million)                                                             At 31/12/2012        At 31/12/2011         At 31/12/2010
       Cash                                                                                   110.9                  264.2             119.4
       Cash equivalents                                                                         3.6                    3.0              75.2
       TOTAL                                                                                 114.5                   267.2             194.6


       Cash includes funds deposited in interest-bearing current accounts.
       Cash equivalents held at year-end are highly liquid overnight money market funds and term deposits.




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                                                         2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                                         Notes to the consolidated financial statements




NOTE 16           EQUITY

16.1       ORDINARY SHARES                                            financial year at €1.72 per ordinary share, including a special
           AND SHARE PREMIUMS                                         dividend of €1.0. The total amount of dividends paid out in 2012
                                                                      was €43.1 million, as compared with €17.6 million in 2011.
At 31 December  2012, share capital of Saft Groupe  SA
consists of 25,174,845 ordinary shares with a par value               Treasury shares
of 1 euro, unchanged as compared to the situation as at 31            At 31 December 2012, the Company held 104,950 treasury
December 2011.                                                        shares under the liquidity contract set up with an independent
Share premiums amounted to €78.1  million at December                 financial institution to stabilise the secondary market or
2012, compared with €103.2  million at 31 December 2011,              ensure the liquidity of the Company’s shares. The total value
as a portion of dividends paid in 2012 was charged to share           of these shares amounted to €1,825,686 on the basis of the
premiums.                                                             purchase price and €1,857,615 in terms of market value.

                                                                      Stock options
                                                                      A new stock-options plan to subscribe for shares was
16.2       CHANGES IN CONSOLIDATED                                    implemented on July 4, 2012. The total number of options
           SHAREHOLDERS’ EQUITY                                       allocated in this plan is 393,500, including 141,000
                                                                      performance-based stock-options.
The changes in consolidated shareholders’ equity between 1st
January and 31 December 2012 break down as follows:                   This stock-option plan is presented in note 33 «Stock-based
                                                                      payements» to the Consolidated financial Statements.
Distribution
At the Annual General Meeting on 11 May 2012, Saft
Groupe  SA’s shareholders set the dividend for the 2011




NOTE 17           PUBLIC SUBSIDIES

The Group is currently carrying out the construction of a new         17.1       PUBLIC GRANTS RELATED TO ASSETS
Li-ion battery production facility in Jacksonville, Florida, in the
USA.                                                                  Public grants received that relate to assets are presented
                                                                      under balance sheet liabilities as deferred income on a
This project, costing a total amount of approximately
                                                                      specific line called “Deferred grants related to assets”. These
US$200  million over the period 2010-2013 (including both
                                                                      grants are recorded as income over the depreciation period of
capital expenditure and operating expenses relating to
                                                                      the assets that they are used to fund. This income is recorded
project management), has been selected to receive, within the
                                                                      in cost of sales like the depreciation expense for the related
framework of the provisions of the Federal American Recovery
                                                                      assets.
and Reinvestment Act (ARRA), a federal public grant awarded
by the US Department of Energy in the form of a cost-sharing          At 31 December 2012, the amount of the public grants received
programme for 50% that may amount to up to $95.5 million.             with regard to assets totals €53.4  million (US$70.5  million).
Receipt of this grant will be spread over time according to the       Following the start of the Jacksonville production facility in the
progress of the project. It covers capital expenditure and some       second half of 2011, amortisation in the income statement of
of the project management costs.                                      these deferred grants relating to assets totalled €3.3 million
                                                                      in 2012, compared with €0.8 million during the 2011 financial
This project is also receiving additional funding from the State
                                                                      year.
of Florida and the City of Jacksonville for an amount of up to
US$20.8 million.
Furthermore, the Saft Group receives, primarily in France, tax
credits related to research. Such tax credits are being treated
as grants from an accounting standpoint.




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                  Notes to the consolidated financial statements




       17.2         PUBLIC GRANTS RELATED TO RESULTS                       production facilities in future years. In consideration of these
                                                                           grants, the Company has to comply with a certain number of
       Public grants related to results, i.e.  grants other than those     commitments primarily related to job creation and a minimum
       related to assets, are recorded in income as a deduction from       level of average salaries.
       the expenses to which they relate.
                                                                           Public grants related to results recorded in 2012 in respect
       Most of the grants from the State of Florida and the City of        of the Jacksonville project amounted to €1.8  million
       Jacksonville are grants related to results. Spread over several     (US$2.3 million) compared to €6.2 million (US$8.5 million) in
       financial periods (of up to ten years), this aid will mainly lead    2011.
       to a reduction in operating expenses for the Jacksonville




       NOTE 18             FINANCIAL DEBTS

       18.1         DESCRIPTION AND CHANGE IN GROUP                        The banking financing agreement comprises, as the previous
                    INDEBTEDNESS                                           one, a certain number of the usual provisions contained in this
                                                                           type of agreement.
       During the first half year of 2012, the Group refinanced its          Sales and acquisitions made by the Group are thus subject
       entire bank debt. The new refinancing consists of:                   to a certain number of usual conditions. Similarly, any
          a syndicated loan including a €100 million five years term        additional loan contracted by the Group for an amount of over
          loan and a €100 million revolving credit facility, signed with   €120 million and/or over 10% of the Group total balance sheet
          a group of leading banks. The initial margin was set at 140      amount, is subject to contractual limitations.
          basis points over Euribor for the euro loan and 90 basis         The agreement contains change of control clauses concerning
          points over Euribor for the revolving credit facility. These     the Company, enabling each lender to request early repayment
          margins are calculated on a half-yearly basis depending on       of the share of the credit facilities that it granted.
          the ratio of the Group’s net debt to the Group’s consolidated
          EBITDA over the 12-month period prior to the date when           Finally, pursuant to the agreement, the granting and
          this margin is set. This margin could therefore vary from        continuation of the loans is conditional upon meeting certain
          1.4% to 2.15% for the euro loan and from 0.90% to 1.65% for      financial ratios:
          the revolving credit facility;                                     a maximum leverage ratio (net financial debt to EBITDA)
          an issue of senior unsecured bonds on the U.S. private             of 3.00 for each 12-month period ending 30 June  and
          market for US$150 million. The bond issue is divided into          31 December of each year; and
          two tranches:                                                      a minimum interest coverage ratio (contractually defined
               a first tranche of US$75  million with a seven year            EBITDA to total net interest) of 4.50 for each 12-month
               maturity (due February 28, 2019) with a fixed coupon           period ending on 30 June and 31 December.
               of 4.26%,                                                   At 31 December  2012, the Group’s gearing ratio, calculated
               a second tranche of US$75  million with a 10 year           according to the contractual terms and conditions, amounted to
               maturity (due February 28, 2022) with a fixed coupon         0.98 (compared to 0.54 at 31 December 2011) and the interest
               of 4.73%.                                                   coverage ratio to  14.2 (compared to  12.1 at 31  December
                                                                           2011).
       Both financing are pari passu.
                                                                           The contract signed between the group and the holders of
                                                                           the bonds issued on the private market in the United States
                                                                           contains identical provisions.




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18.2         BREAKDOWN OF DEBT AT YEAR-END

Breakdown of debt by nature

(in € million)                                                          At 31/12/2012       At 31/12/2011        At 31/12/2010
Non-current
Bank borrowings (in Euro)                                                          100.0              100.0                   329.6
Bonds (in US dollar)                                                               113.7                0,0                      0.0
Deferred bank fees                                                                  (2.0)               0,0                    (3.7)
Other debts                                                                           0.6               0.5                      0.7
Finance leases                                                                        0.5               0.7                      1.1
                                                                                  212.8               101.2                  327.7
Current
Bank borrowings                                                                      0.0              235.5                      0.0
Bonds                                                                                0.0                0.0                      0.0
Accrued interest                                                                     1.9                0.1                      1.7
Finance leases                                                                       0.2                0.2                      0.2
Other debts                                                                          2.2                1.6                      0,0
Research & development grants                                                        0.4                0.4                      0.4
                                                                                     4.7              237.8                      2.3


Breakdown of non-current debt by maturity

(in € million)                                                          At 31/12/2012       At 31/12/2011        At 31/12/2010
Between 1 and 2 years                                                                0.8                0.7                   330.4
Between 2 and 5 years                                                             100.3               100.5                      1.0
More than 5 years                                                                 113.7                 0.0                      0.0
                                                                                  214.8               101.2                   331.4
Bank fees                                                                          (2.0)                0.0                    (3.7)
                                                                                  212.8               101.2                  327.7


Breakdown of debt by currency

(in € million)                                                         At 31/12/2012        At 31/12/2011        At 31/12/2010
Euro                                                                              103.5               153.7                   151.9
USD                                                                               116.0               185.9                   181.8
                                                                                  219.5               339.6                   333.7
Bank fees                                                                          (2.0)               (0.6)                   (3.7)
                                                                                  217.5               339.0                  330.0


At 31 December 2010 and 2011, as the entire financial debt          rate while US dollars bonds are at fixed rates. The carrying
was at floating rate, its fair value was the same as its carrying   value as of the date of the US dollar debt was $152.2 million
value. At 31 December 2012, the bank debt in euro is at floating    (€115.3 million).




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                  Notes to the consolidated financial statements




       18.3         HEDGE OF NET INVESTMENTS                               adjustment of €-5.9  million as of 31 December 2011 and of
                    IN FOREIGN OPERATIONS                                  €-13.0 million at 31 December 2010) arising on the translation
                                                                           of this debt into euro at the balance sheet date has been
       Group’s dollar-denominated debt has been designated as a            recognised in fair value reserves in shareholders’ equity for
       hedge of the net investments in the Group’s American and            an amount of €8.1 million (as compared to €-3.9 million at 31
       Israeli subsidiaries. The negative translation adjustment           December 2011 and €-8.7 million at 31 December 2010) net
       of €12.1million as of 31 December 2012 (versus a negative           of tax.




       NOTE 19             OTHER NON-CURRENT FINANCIAL LIABILITIES

       Other financial liabilities comprise repayable subsidies. These totaled €4.9  million as of 31 December 2012, as compared to
       €5.3 million as of 31 December 2011 and €6.1 million as of 31 December 2010.




       NOTE 20             PENSIONS, RETIREMENT INDEMNITIES AND OTHER
                           EMPLOYEE BENEFITS

       Provisions for pensions and other long-term employee benefits comprise:
          pensions and retirement benefits;
          other long-term employee benefits (long-service benefits, early retirement plans, etc.).


       (in € million)                                                            At 31/12/2012      At 31/12/2011      At 31/12/2010
       Obligations recognised in the balance sheet:
       ■ pensions and retirement benefits                                                    14.1                11.4               10.9
       ■ other long-term employee benefits                                                    3.2                 3.2                3.3
       TOTAL                                                                                17.3               14.6                14.2




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20.1         PENSIONS AND RETIREMENT BENEFITS

Balance sheet provision
Changes in defined benefit plan obligations and in the fair value of plan assets are as follows:


                                                                                                  Retirement obligations
(in € million)                                                                     31/12/2012             31/12/2011             31/12/2010
Changes in the obligations
Total present value of obligation at start of year                                            35.4                  36.0                   29.9
Cost of services rendered in the year                                                           1.4                   1.4                    1.3
Interest expense                                                                                1.6                   1.5                    1.5
Change in plan(1)                                                                               0.0                   0.0                    2.2
Restructuring of discontinued activities                                                      (2.2)                   0.0                    0.0
Foreign exchange differences                                                                    0.1                 (0.5)                    1.7
Actuarial losses/(gains)                                                                        4.5                 (0.6)                    1.5
Benefits paid                                                                                  (2.0)                 (2.4)                  (2.1)
Total present value of obligations at end of year                                             38.8                  35.4                   36.0
■ Of which: partly or fully funded plans                                                      34.6                  31.8                   31.4
■ Of which: unfunded plans                                                                      4.2                   3.6                    4.6
Changes in plan assets
Market value of plan assets at start of year                                                  21.6                 22.5                    19.9
Actual return on plan assets                                                                    0.8                  0.9                     1.0
Actuarial gains                                                                                 0.0                (0.2)                   (0.1)
Foreign exchange differences                                                                    0.0                (0.7)                     1.8
Contributions                                                                                   0.8                  0.5                     0.3
Benefits paid                                                                                  (0.5)                (1.4)                   (0.4)
Fair value of plan assets at end of year                                                      22.7                 21.6                    22.5
Net obligations                                                                               16.1                 13.8                    13.5
Costs of non-recognised services                                                              (2.0)                (2.4)                   (2.6)
PROVISION RECOGNISED IN THE BALANCE SHEET                                                     14.1                 11.4                    10.9
■ Of which liabilities associated with assets held for sale                                    4.1                  0.0                     0.0




(1) Change in plan recorded in 2010 for €2.2 millions result from the consideration of amendments to French regulation pertaining to retirement
    indemnities and conventional compensation for dismissal.



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                  Notes to the consolidated financial statements




       Pension and retirement indemnity costs
       The table below sets out a breakdown of pension and retirement indemnity expenses for the year:


       (in € million)                                                              31/12/2012          31/12/2011         31/12/2010
       Cost of services rendered in the year                                                  1.4                 1.4                1.3
       Interest expense                                                                       1.6                 1.5                1.5
       Expected return on plan assets                                                       (0.9)               (0.9)              (1.0)
       Past services costs amortisation                                                       0.4                 0.2                0.0
       Other                                                                                (2.2)                 0.2                0.1
       NET EXPENSE FOR THE YEAR                                                              0.3                 2.4                1.9


       Changes in the provision recognised in the balance sheet are as follows:


       (in € million)                                                              31/12/2012          31/12/2011         31/12/2010
       Total provision at beginning of year                                                (11.4)             (10.9)               (9.5)
       Net expense for the year                                                             (0.3)              (2.4)               (1.9)
       Contributions/benefits paid                                                             2.1                1.5                 2.1
       Actuarial recognised in the consolidated statement of income
       and expenses                                                                         (4.5)                0.4               (1.6)
       TOTAL PROVISION AT END OF YEAR                                                     (14.1)              (11.4)             (10.9)


       Differences between actual and expected figures were as follows:


       (in € million)                                                                      2012               2011                2010
       Difference between actual and expected returns on assets                               0.1                0.3               (0.1)
       Differences between actual and expected changes in obligations                         4.4                0.1               (0.2)


       Actuarial assumptions                                               In France, at 31 December 2012, retirement benefits are
       The basic assumptions used in actuarial calculations under          measured on the main assumption of retirement taking
       defined-benefit pension and retirement benefit plans                   place at the employee’s initiative, with payment of retirement
       take account of conditions in each country, while specific           benefits subject to social security expenses.
       assumptions (staff turnover and salary inflation) are
       calculated separately for each company.


       The table below shows the rates used in each geographical area in 2012:

       Discount rates

                                                                           2012                       2011                        2010
       France                                                             2.75%                     4.50%                        4.20%
       Germany                                                     3.25 – 3.50%              4.50 – 4.75%
                                                         (depending on duration)   (depending on duration)                       3.90%
       Norway                                                              2.2%                     3.30%                        4.00%
       Israel                                                      2.30 – 4.77%              3.23 – 5.03%
                                                         (depending on duration)   (depending on duration)                       4.50%


       The discount rates used are obtained by reference to the yield on high-security bonds with a term equivalent to that of the plan
       being measured (Bloomberg and Iboxx references).




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Sensitivity of current commitment value                               an increase of 0.50% in the discount rate would reduce
to the discount rate                                                  the commitments for pensions and other retirement
                                                                      indemnities by 4.89%;
The sensitivity of commitments for pensions and other
retirement indemnities to changes in the discount rate is as          a reduction of 0.50% would lead to an increase of 5.55% in
follows:                                                              the same commitments.


Long-term salary breakdown
The following assumptions were used to determine commitments:


                                                                    2012                       2011                            2010
France                                                               3.0%                     3.00%                           3.00%
Germany                                                                                2.50 – 3.00%
                                                                   2.5%      (depending on duration)                     2.50%
Norway                                                            3.25%                       4.00%                      4.00%
Israel                                                     2.94 – 5.65%                2.11 – 5.37%               2.80 – 5.70%
                                                 (depending on duration)     (depending on duration)    (depending on duration)


Long-term return on assets
Expected return on assets has varied over the last three financial years as set out below:


                                                                                    2012               2011                    2010
France                                                                              2.75%              3.50%                  3.90%
Germany                                                                             4.00%              4.00%                  4.00%
Norway                                                                              2.20%              4.80%                  5.40%
Israel                                                                              4.50%              4.40%                  5.40%


The return on plan assets depends on the composition of             The Group’s hedging assets in Israel are invested in a multi-
the portfolio, the term of the assets, and the expected future      employer asset management fund. Approximately 62% of the
performance. As funds are mainly invested in bonds, the             assets comprise Israeli state or private sector bonds, 24%
expected rate of return are based on rates of bonds in the          are invested in insurance contracts and the remaining assets
currency of the geographical area.                                  (around 14%) in equity.
The Group’s hedging assets in France are invested in insurance      Yields from hedging assets in 2012 were:
contracts. The Group does not expect to make any contribution
in 2013.



                                                                                                                              2012
France                                                                                                                        3.06%
Germany                                                                                                                       3.57%
Norway                                                                                                                      (0.59)%
Israel                                                                                                                        4.62%




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                  Notes to the consolidated financial statements




       Expected retirement benefits for 2013                                 These employee benefit plans mainly comprise bonus
       Benefits to be paid by the Group in 2013 for those entities for        payments and long-service leave entitlement schemes in
       which this information is available at the date on which the          various Group countries.
       consolidated financial statements are drawn up represent
       approximately 89.6% of the Group’s total commitments and
       are estimated to be €1.7 million.                                     20.3        DEFINED-CONTRIBUTION PLANS
                                                                             The Group has no obligation beyond the contributions
                                                                             paid, which are recognised as an expense. The amount of
       20.2         OTHER LONG-TERM EMPLOYEE                                 contributions recognised in expenses in respect of the Group’s
                    BENEFITS                                                 own plans (excluding legal plans such as those linked to social
                                                                             security) was €4.8  million in 2012 (€5.1  million in 2011 and
       Provisions for other long-term employee benefit plans
                                                                             €4.3 million in 2010).
       amounted to €3.2 million at 31 December 2012 (€3.2 million at
       31 December 2011 and €3.3 at 31 December 2010).




       NOTE 21             PROVISIONS FOR OTHER LIABILITIES AND CHARGES

       As at 31 December 2012, provisions for other liabilities and charges as shown in the balance sheet are as follows:


                                                                        Provisions for
                                                          Product warranties                                    Other
       (in € million)                                             and claims         Restructuring          provisions               Total
       At 01/01/2010                                                       29.3                 3.6               11.9               44.8
       Charges in year                                                       6.2                0.3                 0.7                7.2
       Releases of provisions on use                                       (5.7)               (1.0)                0.2              (6.5)
       Releases of unused provisions                                       (4.1)                 0.0              (0.4)              (4.5)
       Transfers                                                             0.2                 0.0              (0.1)                0.1
       Translation adjustments                                               1.5                 0.0                0.7                2.2
       Adjustment to discount rate                                           0.1                 0.0                0.1                0.2
       At 31/12/2010                                                       27.5                 2.9               13.1               43.5
       At 01/01/2011                                                       27.5                 2.9               13.1               43.5
       Charges in year                                                       4.6                0.1                 1.8                6.5
       Releases of provisions on use                                       (4.7)               (1.0)              (0.2)              (5.9)
       Releases of unused provisions                                       (3.6)                 0.0              (0.7)              (4.3)
       Transfers                                                             0.0                 0.0              (0.2)              (0.2)
       Translation adjustments                                               0.4                 0.0                0.2                0.6
       Adjustment to discount rate                                           0.1                 0.0                0.0                0.1
       At 31/12/2011                                                       24.3                 2.0               14.0               40.3
       At 01/01/2012                                                       24.3                 2.0               14.0               40.3
       Charges in year                                                       3.9                0.0                 0.4                4.3
       Releases of provisions on use                                       (2.2)               (0.1)              (0.1)              (2.4)
       Releases of unused provisions                                       (3.3)                 0.0              (0.4)              (3.7)
       Transfers                                                             0.0                 0.0              (0.5)              (0.5)
       Translation adjustments                                             (0.2)                 0.0              (0.1)              (0.3)
       Adjustment to discount rate                                           0.1                 0.0                0.0                0.1
       AT 31/12/2012                                                       22.6                 1.9               13.3               37.8




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These provisions break down by maturity as follows:


(in € million)                                                            At 31/12/2012        At 31/12/2011         At 31/12/2010
Non-current liabilities                                                                31.5                 33.1                   35.0
Current liabilities                                                                     6.3                  7.2                    8.5
                                                                                       37.8                40.3                    43.5



21.1         PROVISIONS FOR PRODUCT WARRANTIES AND CLAIMS
Provisions for contractual claims include primarily provisions for product warranties, litigation and the cost of recycling batteries
sold.
At 31 December 2012, provisions for contractual claims break down as follows:


(in € million)                                                            At 31/12/2012        At 31/12/2011         At 31/12/2010
Provisions for product warranties                                                      14.2                 15.4                   18.0
Provisions for litigation                                                               0.6                  1.1                    1.8
Provisions for losses on long-term contracts                                            0.0                  0.1                    0.1
Provisions for battery recycling                                                        5.1                  5.1                    4.8
Other provisions                                                                        2.7                  2.6                    2.8
                                                                                       22.6                24.3                    27.5


The reduction in provisions for warranties is mainly due:            amount of the outlays of funds that could result therefrom. No
                                                                     individual litigation is significant.
   in 2012, to the adjustment of certain statistical warranty
   provisions based on the most recent rate of return feed-
   back on certain military products;
   in 2011, to the release for €2.1 million of most of the
                                                                     21.2       PROVISIONS FOR RESTRUCTURING
   provision set up in 2009 relating to the BESS contract (in        The provision for restructuring is relative to battery recycling
   Alaska).                                                          costs of an activity discontinued in 2001.
Provisions have been recognised for all litigation identified in
2012 insofar as the Company considered it necessary for the


21.3         OTHER PROVISIONS

(in € million)                                                            At 31/12/2012        At 31/12/2011         At 31/12/2010
Provision for environmental risks (site decontamination costs)                           7.0                 7.1                     6.9
Provisions for long-service awards                                                       2.8                 2.7                     3.2
Other provisions                                                                         3.5                 4.2                     2.9
                                                                                       13.3                14.0                    13.0


The provision for environmental risk relates to the decontamination costs at the Valdosta site in the United States.




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       NOTE 22              TRADE AND OTHER PAYABLES

       This item breaks down as follows:


       (in € million)                                                                              At 31/12/2012       At 31/12/2011       At 31/12/2010
       Trade payables                                                                                           71.1               75.7                71.4
       Prepayments on long-term contracts                                                                        2.5                5.0                 4.1
       Accrued expenses and other liabilities                                                                   14.6               16.6                16.3
       Tax liabilities (1)                                                                                      47.9               48.0                45.9
       Other prepayments received from customers                                                                16.7               16.7                17.8
       Other liabilities                                                                                         0.1                0.3                 0.7
                                                                                                              152.9              162.3               156.2
       (1) Other than income taxes presented on a separate line in the balance sheet.


       All trade and other payables fall due within less than one year.




       NOTE 23              EXPENSES BY TYPE

       The table below gives a breakdown of depreciation, amortisation, impairment, personnel expenses and other items charged in
       arriving at operating profit (including those related to the small nickel battery business):


       (in € million)                                                                                         2012                2011               2010
       Consumption of raw materials and components                                                            217.0               208.3              185.5
       Salaries and social security charges                                                                   170.6               199.0              185.1
       Depreciation, amortisation and provisions on non-current assets (1)                                     34.5                29.8               30.1
       (1) These amounts are net of the amortisation of deferred grants relating to assets.


       In 2012, raw materials and components represented 51.0%                                assets have an impact on the “Cost of sales” item in the income
       of cost of sales, as compared to 47.0% in 2011 and 45.1% in                            statement. Amortisation of deferred grants relating to assets
       2010.                                                                                  was treated in the same way.
       Almost all the depreciation, amortisation and impairment
       expenses of property, plant and equipment and intangible




       NOTE 24              RESTRUCTURING COSTS

       Restructuring expenses recognised in 2012 relate to the                                Those recognized in financial year 2010 were mainly related
       restructuring of the production unit of Valdese, United States.                        to restructuring of Group facilities in France.




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NOTE 25              OTHER OPERATING INCOME AND EXPENSES

Other operating income and expenses comprise:


(in € million)                                                                        2012                 2011                    2010
Losses on disposals of non-current assets                                                0.3                 (0.4)                    0.0
Other operating income                                                                   0.0                   0.0                    1.1
                                                                                         0.3                (0.4)                     1.1


In 2010, other operating income mainly corresponds to an insurance payment received in respect of a past insurance claim.




NOTE 26              FINANCIAL COSTS, NET

Net financial expense breaks down as follows:


(in € million)                                                                        2012                 2011                    2010
Financial income from cash and cash equivalents                                           1.2                 1.9                    0.7
Finance costs on gross debt                                                             (9.2)              (14.1)                 (14.6)
Interest cost on net debt                                                               (8.0)              (12.2)                 (13.9)
Other financial income and expenses:
■ Unwinding of discounts on provisions for pensions

   and other financial liabilities                                                       (2.4)                (2.7)                  (2.1)
■ Fair value remeasurement of financial instruments
                                                    (1)
                                                                                          0.0                  0.2                  (0.3)
■ Foreign exchange gains/(losses)                                                       (2.4)                  3.7                  (2.5)
                                                                                      (12.8)              (11.0)                  (18.8)
(1) Ineffective portion of hedging instruments.



The net foreign exchange gain includes the fair value of              value of €3.7 million in 2011 and negative by €-0.3 million for
financial instruments hedging foreign exchange risk, which             financial year 2010.
was negative by €4.2  million in 2012 against a positive fair


26.1         FINANCE COSTS ON GROUP DEBT
The composite interest rate on the Group’s bank debt, after taking into account hedging instruments, amounted to 3.42% in 2012 as
compared to 3.32% in 2011 and 3.68% in 2010.


                                                                                      2012                 2011                    2010
Senior debt in EUR                                                                    2.33%                3.44%                  3.05%
Senior debt in USD                                                                    4.34%                3.22%                  4.20%
COMPOSITE INTEREST RATE                                                               3.42%               3.32%                  3.68%


The increase in the interest rate on the US dollar senior debt is explained by the lengthening from three to eight and a half years of
the duration of this financing.




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       NOTE 27             INCOME TAXES

       27.1         BREAKDOWN OF INCOME TAX EXPENSE

       (in € million)                                                                     2012               2011               2010
       Income tax expense on profit from continuing operations
       ■ Current tax expense                                                                (5.3)            (14.0)              (9.6)
       ■ Net deferred tax revenue/(expense)                                               (10.0)               (5.7)             (2.6)
       Total income tax expense on profit from continuing operations                       (15.3)             (19.7)            (12.2)
       Income tax revenue/(expense) from discontinued operations                              3.3              (6.3)               5.1
       INCOME TAX EXPENSE                                                                 (12.0)            (26.0)               (7.1)


       It should be noted that since 2010 and following the reform         is determined by applying the applicable tax rate to income
       of the Business Tax (Taxe professionnelle) in France, income        less some operating expenses, is a measure of income and,
       tax expenses due include an amount known as the Local               considering the industrial activity of the Group and IAS  12
       Business Tax (Contribution économique territoriale or CET). It is   accounting standard, has to be recorded as a component of
       Saft Group’s opinion that the “CVAE” component of CET, which        the income tax provision.


       27.2         RATIONALISATION OF INCOME TAX EXPENSE ON CONTINUING OPERATIONS
       The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate
       applicable to profits of the consolidated companies as follows:


       (in € million)                                                                     2012               2011               2010
       Profit before tax from continuing operations                                         56.9               71.1               58.9
       Notional tax charge (based on the French tax rate)                                 (19.4)             (24.2)             (20.1)
       Impact of differences in tax rates between France and other countries                 1.4                1.2                2.1
       Effect of change in tax rate                                                          0.2                0.4                1.4
       Permanent differences (including Research Tax Credit)                                 1.4                1.1                2.1
       Use of prior year losses for which no deferred tax asset
       was recognised                                                                        1.1                1.8               2.3
       Tax losses of the current period on which no deferred tax
       was recognised                                                                        0.0                0.0               0.0
       INCOME TAX EXPENSE FROM CONTINUING OPERATIONS                                      (15.3)            (19.7)             (12.2)
       Effective tax rate on continuing operations                                        26.9%             27.7%              20.7%


       27.3         DEFERRED TAXES RECOGNISED IN THE BALANCE SHEET

       (in € million)                                                          At 31/12/2012        At 31/12/2011      At 31/12/2010
       Deferred tax assets to be recovered after more than 12 months                         4.1                3.3               4.7
       Deferred tax assets to be recovered within 12 months                                  1.0                2.6               1.9
       Total deferred tax assets                                                             5.1                5.9               6.6
       Deferred tax liabilities to be paid after more than 12 months                      (48.1)             (44.6)            (44.5)
       Deferred tax liabilities to be paid within 12 months                               (27.0)             (26.4)            (15.5)
       Total deferred tax liabilities                                                     (75.1)             (71.0)            (60.0)


       The increase of more than €10 million in deferred tax liabilities in 2011 comes mainly from tax bonus depreciation relating to
       industrial equipment from the new Jacksonville facility in Florida.




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The sources of deferred tax assets are as follows:


                                                                                               Elimination of
                                                                          Fair value         internal margin             Temporary           Total deferred
(in € million)                                                        adjustments(1)            on inventory             differences            tax assets
At 01/01/2010                                                                      2.5                     0.8                     6.8                   10.1
Deferred tax income/(expense) recognised
in income statement                                                               (0.3)                    0.3                   (2.9)                   (2.9)
Deferred tax income/(expense) recognised
in equity                                                                          0.0                     0.0                   (0.8)                   (0.8)
Translation adjustment                                                             0.0                     0.0                     0.2                     0.2
At 31/12/2010                                                                      2.1                     1.1                    3.4                     6.6
Deferred tax income/(expense) recognised
in income statement                                                               (0.4)                   (0.1)                    1.0                     0.5
Deferred tax income/(expense) recognised
in equity                                                                          0.0                     0.0                   (1.2)                   (1.2)
Translation adjustment                                                             0.0                     0.0                     0.0                     0.0
At 31/12/2011                                                                      1.7                     1.0                    3.2                     5.9
Deferred tax income/(expense) recognised
in income statement                                                               (0.4)                    0.0                     3.3                     2.9
Deferred tax income/(expense) recognised
in equity                                                                          0.0                     0.0                   (3.7)                   (3.7)
Translation adjustment                                                             0.0                     0.0                     0.0                     0.0
AT 31/12/2012                                                                      1.3                     1.0                     2.8                     5.1
(1) These adjustments relate to the acquisition by the Doughty Hanson Funds, in January 2004, of the Alcatel Group battery operations. See note 8 “Goodwill”
    to the consolidated financial statements.



The sources of deferred tax liabilities are as follows:


                                                                         Fair value              Impairment Other temporary                  Total deferred
(in € million)                                                       adjustments (1)               of assets     differences                  tax liabilities
At 01/01/2010                                                                   (45.6)                 (14.8)                    (8.6)                 (69.0)
Deferred tax income/(expense) recognised
in income statement                                                                5.4                    (4.1)                    4.1                     5.4
Deferred tax income/(expense) recognised
in equity                                                                           0.0                    0.0                     6.5                     6.5
Translation adjustment                                                            (2.9)                    0.0                     0.0                   (2.9)
At 31/12/2010                                                                   (43.1)                  (18.9)                     2.0                 (60.0)
Deferred tax income/(expense) recognised
in income statement                                                                2.7                    (8.8)                  (6.4)                  (12.5)
Deferred tax income/(expense) recognised
in equity                                                                           0.0                    0.0                     3.5                     3.5
Translation adjustment                                                            (2.0)                    0.0                     0.0                   (2.0)
At 31/12/2011                                                                   (42.4)                  (27.7)                   (0.9)                 (71.0)
Deferred tax income/(expense) recognised
in income statement                                                               (4.2)                   (5.5)                    0.1                   (9.6)
Deferred tax income/(expense) recognised
in equity                                                                          0.0                     0.0                     4.0                     4.0
Translation adjustment                                                             1.5                     0.0                     0.0                     1.5
AT 31/12/2012                                                                   (45.1)                 (33.2)                      3.2                 (75.1)
(1) These adjustments relate to the acquisition by the Doughty Hanson Funds, in January 2004, of the Alcatel Group battery operations. See note 8 “Goodwill”
    to the consolidated financial statements.




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       Movements in net deferred tax are shown in the table below:


       (in € million)

       At 01/01/2010                                                                                                                (58.9)
       Deferred tax income recognised in income statement                                                                               2.5
       Deferred tax income recognised in equity                                                                                         5.7
       Translation adjustment                                                                                                         (2.7)
       At 31/12/2010                                                                                                                (53.4)
       Deferred tax expense recognised in income statement                                                                           (12.0)
       Deferred tax expense recognised in equity                                                                                        2.3
       Translation adjustment                                                                                                         (2.0)
       At 31/12/2011                                                                                                                (65.1)
       Deferred tax expense recognised in income statement                                                                            (6.7)
       Deferred tax expense recognised in equity                                                                                        0.3
       Translation adjustment                                                                                                           1.5
       AT 31/12/2012                                                                                                               (70.0)


       At 31 December  2012, unrecognised deferred tax assets             27.4       INCOME TAX RISKS
       (taxable basis amounts) amount to €9.2  million in 2012 as
       compared to €13.6  million at 31 Decembre 2011 and €20.5           Regular tax audits are carried out on the Group by the tax
       million in 2010. These losses relate mainly to Friemann und        authorities of the countries in which it is established. As of the
       Wolf Batterietechnik GmbH in Germany.                              date hereof, Saft does not have any information to the effect
                                                                          that the tax audits in process, which have not yet led to any tax
                                                                          reassessments, could have a material impact on the Group’s
                                                                          financial position.


       NOTE 28             EARNINGS PER SHARE

       Earnings per share are calculated on the basis of the average number of Saft Groupe SA shares in issue during the year, treasury
       shares held on average over the same period being deducted.


                                                                                           2012                 2011                2010
       Weighted average outstanding number of Saft Groupe SA
       ordinary shares                                                              25,174,845           25,153,229          24,920,115
       Less average number of treasury shares held                                    (101,787)             (66,493)            (54,259)
       Number of shares used to compute basic earnings per share                    25,073,058           25,086,737          24,865,856
       Potential dilutive effect of stock options                                        38,741             123,682             225,837
       Number of shares used to compute diluted earnings per share                  25,111,799           25,210,419          25,091,693


       Earnings per share are presented with the Group’s consolidated income statement.




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NOTE 29          RELATED-PARTY TRANSACTIONS AND INVESTMENTS IN ASSOCIATES

Following the sale by the Group of its 49% stake in the joint       As mentioned in note 2.4 regarding the consolidation methods,
venture Johnson Controls-Saft on 30 September 2011,                 ASB is consolidated under the equity method, being a jointly
investments in associates are limited to a 50% interest in ASB,     controlled venture.
the joint venture with EADS.
Transactions regarding Johnson Controls-Saft and its sale
are detailed in note 30 “Net profit/(loss) from discontinued         29.2      RELATED-PARTY TRANSACTIONS
operations” of the consolidated financial statements.
                                                                    The Group does not realise any product sales with ASB,
                                                                    a company in which it holds a 50% interest and which is
                                                                    consolidated under the equity method. Support services
29.1         INVESTMENTS IN ASSOCIATES                              provided and invoiced by the Saft Groupe to the ASB Group
                                                                    amounted to €0.3 million in 2012 as compared to €0.3 million
The Saft Groupe holds a 50% interest in the share capital
                                                                    both in 2011 and 2010.
of ASB and its subsidiaries, jointly with the EADS Group.
ASB manufactures and sells thermal batteries for military
applications.


The Group’s share of the balance sheets of ASB and Johnson Controls-Saft (up to 2010 year-end) (none of which is listed on a stock
market) is as follows:


(in € million)                                                                      2012                2011                    2010
Non-current assets                                                                    8.5                  8.7                    8.4
Current assets                                                                       11.2                 11.7                   11.5
Total assets                                                                         19.7                 20.4                   19.9
Non-current liabilities                                                               0.0                  0.0                    0.0
Current liabilities                                                                   6.4                  7.1                    7.4
Total liabilities                                                                     6.4                  7.1                    7.4
Group’s share in net assets of ASB Group                                             13.3                 13.3                   12.5
Group’s share in net assets of JCS                                                    0.0                  0.0                   37.1
TOTAL INVESTMENTS IN ASSOCIATES                                                      13.3                13.3                    49.6


The Group’s share of the income statement of ASB is as follows:


(in € million)                                                                      2012                2011                    2010
Sales                                                                                 13.8                14.0                   12.9
Cost of sales                                                                       (10.4)              (10.4)                   (9.0)
R&D costs (Engineering)                                                              (0.4)               (0.3)                   (0.4)
Other operating expenses                                                             (1.4)               (1.5)                   (1.3)
Operating income                                                                       1.6                 1.8                    2.2
GROUP’S SHARE IN NET ASSETS NET INCOME (LOSS)
FOR THE YEAR OF ASB GROUP                                                             0.8                  1.8                     1.6




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                  Notes to the consolidated financial statements




       NOTE 30             DISCONTINUED OPERATIONS

       Small Nickel batteries Business (SNB) put for sale by the              the sale of the business is highly probable as of the end of
       Group in July 2012 has been accounted for as discontinued              2012 financial year as the Group has received before year-
       operations in accordance with IFRS 5 as:                               end by the company Fin’Active a firm offer which has been
                                                                              accepted by the group.
          this activity is one of the three autonomous lines of business
          of IBG division and is management by a dedicated team;


       30.1         PROFIT & LOSS OF DISCONTINUED OPERATIONS
       Small nickel batteries activity profit & loss account is as follows:


       (in € million)                                                                       2012               2011                2010
       Sales                                                                                  42.5               51.3                61.2
       Cost of Goods Sold                                                                   (39.0)             (46.5)              (53.3)
       Sales, marketing, general and administrative expenses                                  (5.3)              (5.2)               (5.3)
       Operating profit/(loss)                                                                (1.8)              (0.4)                 2.6
       Income tax                                                                              0.6                0.1               (0.9)
       NET PROFIT/(LOSS) OF SNB ACTIVITY                                                     (1.2)              (0.3)                1.7


       Net profit/(loss) from discontinued operations is as follows:


       (in € million)                                                                       2012               2011                2010
       Net income of SNB line of business held for sale                                       (1.2)             (0.3)                 1,7
       Impairment of assets held for sale and disposal costs                                  (9.4)               0.0                 0.0
       Share of profit/(loss) in Johnson Controls-Saft joint venture                             0.0            (19.7)              (16.9)
       Capital gain on disposal of Saft Group’s stake in Johnson
       Controls-Saft                                                                           0.0              49.9                  0.0
       Income tax revenue/(expense) from discontinued operations                               3.3              (6.3)                 5.1
       NET PROFIT/(LOSS) FROM DISCONTINUED OPERATIONS                                        (7.3)              23.6              (10,1)


       30.2         ASSETS AND LIABILITIES HELD FOR SALE
       Assets and liabilities classified as held for sale as at December 31, 2012 are as follows:


       (in € million)                                                                                                    At 31/12/2012
       Non-current assets:
       ■ Intangible assets, net                                                                                                      0,0
       ■ Property, plant & equipment, net                                                                                            0,0
       ■ Deferred income tax assets                                                                                                  3.7
       Current assets                                                                                                               15.1
       Assets held for sale                                                                                                         18.8
       Non-current liabilities                                                                                                       4.8
       Current liabilities                                                                                                           9.3
       Liabilities associated with assets held for sale                                                                             15.1


       As of December 31, 2012, assets held for sale, net of the associated liabilities have been measured and recognized at the lower
       of net book value and market value less costs necessary to complete the sale. Market value have been determined based on the
       purchase price received from Fin’Active for the business.




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30.3         CASH FLOWS FROM DISCONTINUED OPERATIONS
Cash flows from the Small Nickel Batteries business up for sale are as follows:


(in € million)                                                              2012                       2011                       2010
Net cash generated by operation activities                                         1.2                     3.1                       0.8
Net cash used in investing activities                                            (1.2)                   (1.0)                     (2.0)
Net cash generated by/(used in financing activities                                 0.0                     0.0                       0.0
NET INCREASE/(DECREASE) IN CASH OF SNB ACTIVITY                               (0.0)                       2.1                      (1.2)




NOTE 31          CONTRACTUAL OBLIGATIONS AND OTHER OFF BALANCE
                 SHEET COMMITMENTS

Off balance sheet commitments are summarised in the table below:


(in € million)                                                          At 31/12/2012           At 31/12/2011        At 31/12/2010
Tender guarantees                                                                         0.6                0.2                     1.2
Customer prepayment guarantees                                                            8.9                5.9                     4.5
Performance bonds                                                                         5.4                6.6                     7.1
Unmatured discounted bills & similar items                                                0.0                0.0                     0.0
Other commitments                                                                         5.0                4.8                     4.3
                                                                                         19.9              17.5                    17.1


31.1         GUARANTEES                                            31.2      DEBT WARRANTIES AND ADVANCES
                                                                             SECURED BY COLLATERAL
Saft has given various guarantees to customers concerning
the execution of contracts awarded to the Group (performance       Following the 2012 financial debt refinancing, no warranties
bonds, customer prepayment guarantees, refunds, etc.). The         were granted nor assets pledged to the lending banks and
total amount of such commitments at 31 December 2012 was           bond holders.
€14.9 million. This represents the maximum potential amount
                                                                   Saft has pledged no other assets as collateral, and does not
(undiscounted) that the Group could be required to pay under
                                                                   use discounting of bills or receivables as a source of financing.
these guarantees, and has not been reduced to reflect any
sums that the Group might be able to recover through legal
proceedings or via counter-guarantees received.
The other guarantees given, for an amount of €5.0  million,
principally consist of guarantees given to financial institutions
in the United States in relation with the implementation of
Standby Letters of Credit.




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       31.3         OTHER COMMITMENTS

       (in € million)                                                         At 31/12/2012      At 31/12/2011     At 31/12/2010
       Unconditional purchase obligations                                                  0.0               0.0               0.0
       Obligations to purchase property, plant and equipment                              29.8              27.2              38.6
       Sub-total - Purchase commitments                                                   29.8              27.2              38.6
       Commitments with regard to receivables – Dailly assignments                         0.0               0.0               0.0
       Unused first demand financial guarantees                                             10.9              19.0              18.4
       TOTAL - OTHER COMMITMENTS                                                          40.7              46.2              57.0


       Property, plant and equipment purchasing commitments               Pursuant to IAS  32 “Financial Instruments”, purchase and/
       include the buyback of the Li-ion production facility at Nersac,   or sale commitments in respect of commodities or forward
       France for the amount of €7.6 million (US$10 million).             foreign currency contracts are recognised in the Group’s
                                                                          consolidated statement of financial position at fair value.
       The above-mentioned first demand financial guarantees
       concern guarantees given with regard to surety lines used by
       the Group’s US subsidiary to US credit institutions.




       NOTE 32             REMUNERATION OF MEMBERS OF THE MANAGEMENT BOARD

       Remuneration paid to members of the Group Management Board in the past three financial years is broken down as follows:


       (in €)                                                                            2012              2011              2010
       Salaries and other short-term benefits                                         1,905,006         1,799,734         1,531,758
       Post-employment benefits (Peri)                                                   61,937            58,734            48,380
       Other long-term employee benefits                                                      -                 -                 -


       Stock options granted to members of the Management Board           At 31 December 2012, provisions recognised in the Group’s
       in 2012 are described in Chapter 4 «Corporate Governance»          balance sheet in respect of pension obligations for senior
       of this annual report.                                             management amounted to €0.2  million (€0.1  million at 31
                                                                          December 2011 and 2010).




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NOTE 33               SHARE-BASED PAYMENTS

33.1         EXISTING STOCK OPTION PLANS
A new stock option plan to subscribe new shares was established on July 4, 2012. 393,500 stock options have been granted to 145
employees or directors of the group. Of this total, 141,000 options granted to members of the steering committee of the group (Saft
Management Committee) contains performance conditions.
The main initial features of the stock option plans in force at 31 December 2012 are as follows:


                                                  Plan           Plan              Plan             Plan           Plan              Plan            Plan            Plan
                                                 No. 1       No. 1 bis            No. 2            No. 3       No. 3 bis            No. 4           No. 5           No. 6
Date of plan                             29/06/2005 28/09/2005 27/11/2006 22/01/2008 05/11/2008 23/03/2009 02/09/2010 04/07/2012
Number of options granted                   421,900     34,500    400,000    390,000     10,000    400,000    400,000    393,500
Adjusted exercise price (1)                  €23.33     €27.36     €23.33     €24.22     €23.33     €17.76     €25.34    €18.625
Vesting period                              4 years    4 years    4 years    4 years    4 years    4 years    4 years     4 years
Term of plan                               10 years   10 years   10 years   10 years   10 years    7 years    7 years     7 years
(1) Above-listed exercise prices for stock option plans 1 to 4 have been adjusted to reflect the impact of the share capital increase on 2 December 2009.



33.2         CHANGE IN THE NUMBER OF STOCK OPTIONS
The change in the number of stock options over the last three financial years is as follows


                                                                                                                                                                 Number
                                                                                                        Number                    Average                  of exercisable
                                                                                                      of options             exercise price                      options
Options outstanding at 31/12/09                                                                       1,427,160                       €21.95                    136,712
Options granted                                                                                         400,000
Options cancelled                                                                                       (27,874)
Options exercised                                                                                       (29,550)
Options outstanding at 31/12/10                                                                       1,769,736                       €22.70                    516,799
Options granted                                                                                                0
Options cancelled                                                                                       (50,235)
Options exercised                                                                                       (49,005)
Options outstanding at 31/12/11                                                                       1,670,496                       €22.67                    446,916
Options granted                                                                                         393,500
Options cancelled                                                                                       (49,404)
Options exercised                                                                                              0
Options outstanding at 31/12/12                                                                       2,014,592                       €21.93                    834,418


Stock options outstanding at 31 December 2012 are broken down as follows:


                                                                                               Outstanding                       Adjusted            Remaining
Date of grant                                                                              number of options              exercise price (€) period until expiry
Plan No. 1 dated 29 June 2005                                                                             84,281                       23.33                   2.5 years
Plan No. 1 bis dated 28 September 2005                                                                    27,873                       27.36                   2.7 years
Plan No. 2 dated 27 November 2006                                                                        319,778                       23.33                   3.9 years
Plan No. 3 dated 22 January 2008                                                                         391,341                       24.22                   5.1 years
Plan No. 3 bis dated November 5, 2008                                                                     11,145                       23.33                   5.9 years
Plan No. 4 dated March 23, 2009                                                                          418,674                       17.76                   3.2 years
Plan No. 5 dated September 2, 2010                                                                       391,500                       25.34                   4.7 years
Plan No. 6 dated July 4, 2012                                                                            370,000                      18.625                   6.5 years




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                  Notes to the consolidated financial statements




       33.3         FAIR VALUE OF INSTRUMENTS GRANTED
       The fair values of stock options are determined by an independent valuer using a binomial model. The assumptions used to
       determine the fair value of the options are as follows:


                                                   Plan       Plan     Plan       Plan        Plan         Plan            Plan    Plan
                                                  No. 1   No. 1 bis   No. 2      No. 3    No. 3 bis       No. 4           No. 5   No. 6
                                                  dated     dated     dated      dated      dated         dated           dated   dated
       Date of grant             29/06/2005 28/09/2005 27/11/2006 22/01/2008 05/11/2008 23/03/2009 02/09/2010 04/07/2012
       Price at date of grant         €26.00     €31.00     €23.26     €23.10     €23.35     €19.06     €25.60     €18.80
       Initial exercise price        €26.00     €30.50     €26.00     €27.00     €26.00     €19.80     €25.34    €18.625
       Expected term               10 years 10 years      7 years    7 years    7 years    7 years    7 years       7 ans
       Expected volatility              40%        40%       40%        40%     42.25%        40%        30%     39.75%
       Risk-free rate                 3.20%      3.20%     3.73%      3.84%      3.51%      2.75%      2.00%       1.89%
       Rate of dividend
       distribution                   3.00%      3.00%     2.90%      2.90%      3.24%      3.57%      2.80%       3,88%
       Fair value:
       ■ stock options with

          performance conditions           -          -          -          -          -          -          -     €2.33
       ■ stock options without

          performance conditions     €10.40     €12.53      €6.08      €5.91      €7.35      €5.48      €6.20     €5.365


       The expected volatility of the share price was determined on the basis of historical volatility for comparable groups.



       33.4         IMPACT ON PROFIT AND LOSS OF SHARE-BASED PAYMENTS
       The share-based payment expense recognised in accordance with IFRS 2 is broken down as follows:


       (in € thousand)                                                                       2012                 2011            2010
       Plan No. 1 dated June 29, 2005                                                            -                   -                -
       Plan No. 1bis dated September 28, 2005                                                    -                   -                -
       Plan No. 2 dated November 27, 2006                                                        -                   -              301
       Plan No. 3 dated January 22, 2008                                                        37                 610              442
       Plan No. 3bis dated November 5, 2008                                                     16                  18               18
       Plan No. 4 dated March 23, 2009                                                         558                 495              433
       Plan No. 5 dated September 2, 2010                                                      558                 515              162
       Plan No. 6 dated July 4, 2012                                                           183                   -                -
       TOTAL                                                                                 1352                 1,638           1,356




       NOTE 34             POST BALANCE SHEET EVENTS

       No event has occurred since the balance sheet date which is            Johnson Controls, Saft Groupe bought from Johnson Controls,
       likely to have a material effect on the financial position of the       on January 1, 2013, the lithium-ion production unit located
       Group.                                                                 Nersac, France
       However, it should be noted that, in accordance with
       agreements signed September 30, 2011 between Saft and




184 / S A F T - A N N U A L R E P O R T 2 0 1 2
                                                                                                                           6
                                                    2012 CONSOLIDATED FINANCIAL STATEMENTS
                                                   Statutory Auditors’ report on the consolidated financial statements




6.6           STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED
              FINANCIAL STATEMENTS

This is an unofficial translation into English of the Statutory Auditors’ report issued in French and is provided solely for the
convenience of English speaking users. The Statutory Auditors’ report includes information specifically required by French law in
such reports, whether modified or not. This information is presented below the opinion on the consolidated financial statements and
includes an explanatory paragraph discussing the auditors’ assessments of certain significant accounting and auditing matters.
These assessments were considered for the purpose of issuing an audit opinion on the consolidated financial statements taken as
a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated
financial statements.
This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards
applicable in France.


Year ended 31 December 2012


SAFT GROUPE SA
12, rue Sadi Carnot
93170 Bagnolet


To the Shareholders,
In compliance with the assignment entrusted to us by your Shareholders’ General Meeting, we hereby report to you, for the year
ended 31 December 2012, on:
     the audit of the accompanying consolidated financial statements of SAFT GROUPE SA;
     the justification of our assessments;
     the specific verification required by law.
These consolidated financial statements have been approved by the Management Board. Our role is to express an opinion on these
consolidated financial statements based on our audit.



I.            OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS
We conducted our audit in accordance with professional standards applicable in France; those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain
audit evidence about the amounts and disclosures in the consolidated financial statements. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall
presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial
position of the Group as at 31 December 2011 and of the results of its operations for the year then ended in accordance with
International Financial Reporting Standards as adopted by the European Union.




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       6           2012 CONSOLIDATED FINANCIAL STATEMENTS
                   Statutory Auditors’ report on the consolidated financial statements




       II.            JUSTIFICATION OF OUR ASSESSMENTS
       In accordance with the requirements of article L.823-9 of the French Commercial Code (Code de Commerce) relating to the
       justification of our assessments, we bring to your attention the following matter(s):
             The accounting treatment of the non-current assets held for sale and discontinued operations is described in Note 2.4. As part
             of our work, we verified that the disclosures in said note are appropriate and we obtained assurance on the correct accounting
             treatment of such operations on the consolidated financial statements. We ensure the correct disclosure of information in Note 30.
             The Company tests goodwill and indefinite-lived intangible assets for impairment at each balance sheet date, and also assesses
             whether there is any indication that non-current assets may be impaired, in accordance with the methods described in notes
             2.9 and 10. We reviewed the methods used to perform this impairment test as well as the underlying cash flow forecasts and
             assumptions, and verified that the disclosures contained in said note are appropriate.
             The Company records provisions for other liabilities and borrowings, mainly to cover restructuring costs and risks related to
             warranties given on goods sold (provisions for contractual claims), in accordance with the methods set out in note 2.22. As part
             of our work, we assessed the data and assumptions on which these estimates were based, reviewed the calculations made by
             the Company, compared the accounting estimates from prior periods with the corresponding actual figures, and examined the
             management approval procedures applicable to these estimates. As part of our assessments, we obtained assurance that the
             estimates used were reasonable. We ensure the correct disclosure of information in Note 21.
       These assessments were made as part of our audit of the consolidated financial statements taken as a whole, and therefore
       contributed to the opinion we formed which is expressed in the first part of this report.



       III.           SPECIFIC VERIFICATION
       As required by law, we have also verified in accordance with professional standards applicable in France the information presented
       in the Group’s management report.
       We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.


                                                        Neuilly-sur-Seine and Paris, 15 February 2013
                                                                   The Statutory Auditors



                            PricewaterhouseCoopers Audit                                                   Mazars
                                    Françoise Garnier                                                   Juliette Decoux




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                                                                                                                   7
                                            Parent company
                                            Certified Financial
                                            Statements
                                            7.1       Balance sheet – Assets                                            188

                                            7.2       Balance sheet – Equity and Liabilities                            188

                                            7.3       Income statement                                                  189

                                            7.4       Notes to the parent company
                                                      Financial Statements                                              190

                                            7.5       Parent company – Financial summary
                                                      for the last five years                                            198

                                            7.6       Statutory auditors’ report
                                                      on the financial statements
                                                      For the year ended 31 December 2012 199




IMPORTANT LEGAL INFORMATION AND CAUTIONARY STATEMENTS:
The parent company Financial Statements for the year ended 31 December 2011 presented in this document have been
approved by the Management Board, reviewed by the Audit Committee and approved by the Supervisory Board of Saft.
Certain statements contained herein are forward-looking statements including, but not limited to, statements that are
predictions of or indicate future events, trends, plans, objectives or results of operation. Undue reliance should not be
placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties and
can be affected by other factors that could cause actual results and Saft’s plans and objectives to differ materially from
those expressed or implied in the forward looking statements.
Unless otherwise indicated, the parent company Financial Statements are presented in thousand euros.


                                                                                        S A F T - A N N U A L R E P O R T 2 0 1 2 / 187
       7          PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                  Balance sheet – Assets




       7.1            BALANCE SHEET – ASSETS

                                                   Note   31/12/2012   31/12/2011   31/12/2010
       Non-current assets
       Shares in subsidiaries and associates         3       308,955      308,955      308,955
       Loans to subsidiaries                         3       215,636            -            -
       Other non-current financial assets             8             1            1            1
                                                             524,592      308,956      308,956
       Current assets
       Advance payments to third parties                           1            2            -
       Trade receivables                             8             -            -            1
       Other receivables                             8        23,373       17,417        5,018
       Marketable securities                                   2,506        2,313        2,099
       Cash and cash equivalents                              42,011       43,426       35,664
                                                              67,891       63,158       42,782
       Prepaid expenses                                        1,892            -            -
       Unrealised foreign exchange gains                       2,106            -            -
       TOTAL                                                 596,481      372,114      351,738




       7.2            BALANCE SHEET – EQUITY AND LIABILITIES

                                                   Note   31/12/2012   31/12/2011   31/12/2010
       Equity
       Share capital                                 4        25,175       25,175       25,126
       Additional paid-in capital                            270,240      295,313      294,215
       Legal reserve                                           2,517        2,513        2,468
       Retained income                                        20,084        7,119       13,340
       Net income/(loss) for the year                         43,451       31,022       11,410
                                                    15       361,467      361,142      346,559
       Provisions                                    5         2,106            -            -
       Liabilities
       Bank borrowings and other financial debts      6       215,523            -            -
       Trade payable                                 7         1,107          958        1,158
       Taxes and social benefits owed                 7            12           11           12
       Other liabilities                             7        14,160       10,003        4,009
                                                     9       230,802       10,972        5,179
       Unrealised foreign exchange losses                      2,106
       TOTAL                                                 596,481      372,114      351,738




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                                                                                                     7
                                       PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                                                                             Income statement




7.3        INCOME STATEMENT

                                                     Note       2012             2011                    2010
Total revenues                                                  6,876            6,543                  6,444
Operating expenses
Purchases of raw materials and other supplies                         -               -                       -
Other purchases and external expenses                          (5,648)          (5,229)                  5,157
Taxes (other than on income)                                       (45)            (24)                    (23)
Depreciation and amortisation                                    (321)
Other expenses                                                   (187)           (172)                   (146)
                                                               (6,201)         (5,425)                 (5,326)
Operating profit/(loss)                                            675           1,118                   1,118
Financial income
Income from investment in subsidiaries (dividends)             43,182           29,500                   7,500
Income from other securities and loans                          6,673
Other interest and related income                                 429             295                      273
Foreign exchange gains                                          6,567              58                       26
                                                               56,851          29,853                    7,799
Financial expenses
Currency risk provision                                         (2,106)                                      -
Interest and similar expenses                                   (6,238)             (2)                      -
Foreign exchange losses                                         (6,700)             (6)                   (10)
                                                              (15,044)              (8)                   (10)
Net financial income/(loss)                                     41,807          29,845                   7,789
Income from ordinary activity before tax                       42,482          30,963                   8,907
Non-recurring income from capital transactions                      151            241                     221
Non-recurring expenses on capital transactions                    (460)          (533)                   (473)
Net non-recurring profit/(loss)                                   (309)          (292)                   (252)
Income tax                                            14          1,278            351                  2,755
NET INCOME/(LOSS) FOR THE YEAR                                 43,451          31,022                  11,410




                                                                          S A F T - A N N U A L R E P O R T 2 0 1 2 / 189
       7          PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                  Notes to the parent company Financial Statements




       7.4            NOTES TO THE PARENT COMPANY
                      FINANCIAL STATEMENTS

       DETAILED SUMMARY OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS




            NOTE 1      Information relative to the Company   191    NOTE 10 Impact from ad valorem tax appraisals     195

            NOTE 2      Summary of accounting policies        191    NOTE 11 Increases and relief in future tax debt   195

            NOTE 3      Long-term financial assets             191    NOTE 12 Management compensation
                                                                             as of 31 December 2012                    195
            NOTE 4      Share capital                         192
                                                                     NOTE 13 Average number of employees               195
            NOTE 5      Provisions                            192
                                                                     NOTE 14 Breakdown of income tax                   196
            NOTE 6      Bank borrowings
                        and other financial debts              193    NOTE 15 Changes in shareholders’ equity           196

            NOTE 7      Accrued expenses                      194    NOTE 16 Financial position with affiliates
                                                                             as of 31 December 2012                    196
            NOTE 8      Accounts receivables                  194
                                                                     NOTE 17 Stock option plans                        197
            NOTE 9      Accounts payables                     195




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                                                                                                                               7
                                          PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                                                                      Notes to the parent company Financial Statements




NOTE 1            INFORMATION RELATIVE TO THE COMPANY

Saft  Groupe  SA was created in March  2005 by a group of             The financial year ran from January 1 to December 31.
investment funds managed by Doughty Hanson & Co Limited
(the “Doughty Hanson Funds”). Its purpose was to group,               Consolidating entity:
under the control of a French company, the various operating          Saft Groupe SA, whose registered office is 12, rue Sadi Carnot,
subsidiaries of the Saft Group directly or indirectly acquired        93170 Bagnolet, France is the Group’s parent company
by Saft France Sarl, a Luxembourg company created as part of          consolidating the Saft Group’s entities.
the purchase by the Doughty Hanson Funds in January 2004 of
Alcatel Group’s battery activities.




NOTE 2            SUMMARY OF ACCOUNTING POLICIES

The annual accounts are drawn up in accordance with the               b)        Marketable securities
rules laid out in the 1999 chart of accounts and the French           Marketable securities constitute short-term investments of
Commercial Code, as well as with French generally accepted            cash in the form of money market funds with a daily liquidity.
accounting principles. The fundamental accounting policies
were applied in accordance with the prudence principle, and           c)        Accounts receivables
the following basic assumptions:                                      Receivables are valued at their nominal value. An impairment
     on-going business;                                               provision is entered when the inventory value is lower then
                                                                      the book value.
     consistent accounting methods from one year to another;
     independence of financial years;                                  d)        Debts
     and, in accordance with the general rules for drawing up         Debts are reported as liabilities at their nominal value.
     and presenting annual financial statements.
                                                                      e)        Basis of conversion for items expressed in
The basic method adopted for evaluating the items recorded in                   foreign currencies
the books is the historical cost method.                              Where applicable, items expressed in foreign currencies
The principal methods used are as follows:                            are recorded for their exchange-value on the date of the
                                                                      transaction.
a)          Shareholdings, other investments
                                                                      Receivables, cash, cash equivalents and liabilities in
Shareholdings and other investments are entered at their cost         foreign currencies are shown in the balance sheet at the
of purchase plus miscellaneous expenses. When the inventory           year-end exchange rates. The difference resulting from
value is lower than the book value, a depreciation provision is       updating receivables and liabilities in foreign currencies at
entered to account for the difference.                                their year-end value is disclosed on the balance sheet as
The inventory value of the shares corresponds to their market         unrealised translation gains or losses. Unrealised losses on
value for the Company. It is determined according to the net          foreign currency translation are subject to a provision for
asset value of the Company under consideration, its return on         contingencies.
investment and its future prospects.




NOTE 3            LONG-TERM FINANCIAL ASSETS

                                                           01/01/2012           Acquisitions                Sales        31/12/2012
Shares in subsidiaries and associates                             308,955                 -                      -              308,955
Loans and other financial fixed assets                                    1           215,636                      -              215,637
TOTAL                                                             308,956          215,636                       0             524,592


Saft  Groupe  SA only holds a 100% shareholding in Saft               and its net income for the 2012 financial year was a profit of
Finance Sarl for an amount of €308.9  million. Saft Finance           €24.2 million.
Sarl net equity as of 31  December 2012 was €160.3  million



                                                                                                    S A F T - A N N U A L R E P O R T 2 0 1 2 / 191
       7          PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                  Notes to the parent company Financial Statements




       The Saft Group subsidiaries indirectly held by Saft Groupe SA       At 31 December 2012, loans to subsidiaries consist of:
       are listed in section 5.14 of this Annual Report.
                                                                             A medium-term loan in euro for a total amount of
       Since the refinancing of the Group during the first quarter of          €100.0 million;
       2012, the Group’s financial debt is carried by Saft Groupe SA,
                                                                             A medium-term loan in US dollars for a total amount of
       which then allocates funding to a number of subsidiaries.
                                                                             US$150.0 million.
                                                                           Borrowings of Saft Groupe SA are presented in below note 6.




       NOTE 4              SHARE CAPITAL

       At 31 December 2012, the Company’s subscribed share capital was fully paid up and comprised 25,174,845 fully paid ordinary
       shares with a par value of €1.


       At 31/12/2012                                                                                        Number       Nominal value
       Shares or share rights in the share capital at the start of the financial year                     25,174,845                   1€
       Shares or share rights issued during the financial year                                                     -                    -
       Shares or share rights redeemed during the financial year                                                   -                    -
       SHARES OR SHARE RIGHTS COMPOSING THE SHARE CAPITAL
       AT THE END OF THE FINANCIAL YEAR                                                                 25,174,845                    1€


       Saft Groupe SA has not carried out any capital increase during      Company’s shares on the stock market in order to stabilise
       fiscal year 2012.                                                    the secondary market or ensure the liquidity of the Company’s
                                                                           shares, the liquidity contract with Exane BNP Paribas has been
                                                                           renewed.
       TREASURY SHARES                                                     At 31 December 2012, the total value of the 104,950 treasury
                                                                           shares held amounted to €1,825,686 on the basis of the
       As the Annual General Meeting of 11 May 2012 renewed the            purchase price and €1,857,615 in terms of market value.
       authorisation granted to the Management Board to trade in the




       NOTE 5              PROVISIONS

       At 31 December 2012, provisions relate to unrealised foreign exchange loss on financial debt in US dollars.


                                                                 01/01/2012            Allowance           Reversal      31/12/2012
       Provision for unrealised foreign exchange loss                        -             2,106                    -               2,106




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                                                                                                                            7
                                           PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                                                                    Notes to the parent company Financial Statements




NOTE 6            BANK BORROWINGS AND OTHER FINANCIAL DEBTS

During the first quarter of 2012, the Group refinanced its            Both financing are pari passu.
entire bank debt. Since that date, the Group’s financial debt
                                                                    The banking financing agreement includes, like the previous
is carried by Saft Groupe SA, which then allocates funding to
                                                                    one, a certain number of the usual provisions contained in this
certain of its subsidiaries.
                                                                    type of agreement.
                                                                    Sales and acquisitions made by the Group are thus subject
                                                                    to a certain number of usual conditions. Similarly, any
DESCRIPTION AND CHANGE IN GROUP                                     additional loan contracted by the Group for an amount of over
INDEBTEDNESS                                                        €120  million and/or over 10% of the Group’s total balance
                                                                    sheet amount, is subject to contractual limitations.
The new medium and long term financing consist of:
                                                                    The agreement contains change of control clauses concerning
   a syndicated loan including a €100  million five year term
                                                                    the Company, enabling each lender to request early repayment
   loan and a €100 million revolving credit facility, signed with
                                                                    of the share of the credit facilities that it granted.
   a group of leading banks. The initial margin was set at 140
   basis points over Euribor for the euro loan and 90 basis         Finally, pursuant to the agreement, the granting and
   point over Euribor for the revolving credit facility. These      continuation of the loans is conditional upon meeting certain
   margins are calculated on a half-yearly basis depending on       financial ratios:
   the ratio of the Group’s net debt to the Group’s consolidated      maximum leverage ratio (net financial debt to EBITDA)
   EBITDA over the 12-month period prior to the date when             of 3.00 for each 12-month period ending 30 June  and
   this margin is set. This margin could therefore vary from          31 December of each year; and
   1.4% to 2.15% for the euro loan and from 0.90% to 1.65% for
                                                                      minimum interest coverage ratio (contractually defined
   the revolving credit facility.
                                                                      EBITDA to total net interest) of 4.50 for each 12-month
   an issue of senior unsecured bonds on the US private               period ending on 30 June and 31 December.
   market for US$150 million.
                                                                    At 31 December  2012, the Group’s gearing ratio, calculated
The bond issue is divided into two tranches:                        according to the contractual terms and conditions, amounted to
   a first tranche of US$75 million with a seven year maturity       0.98 (compared to 0.54 at 31 December 2011) and the interest
   (due February 28, 2019) with a fixed coupon of 4.26%;             coverage ratio to  14.2 (compared to  12.1 at 31  December
                                                                    2011).
   and a second tranche of US$75  million with a 10 year
   maturity (due February 28, 2022) with a fixed coupon of           The contract signed between the group and the holders of
   4.73%.                                                           the bonds issued on the private market in the United States
                                                                    contains identical provisions.


DEBT ANALYSIS AS OF 31 DECEMBER 2012

Breakdown of debt by nature

(in € million)                                                           At 31/12/2012       At 31/12/2011         At 31/12/2010
Non-current
Bank borrowings (in EUR)                                                            100.0                     -                       -
Bonds (in USD)                                                                      113.7                     -                       -
Accrued interest                                                                      1.8                     -                       -
TOTAL DEBT                                                                          215.5                     -                       -


Breakdown of non-current debt by maturity

(in € million)                                                           At 31/12/2012       At 31/12/2011         At 31/12/2010
Less that 1 year                                                                      1.8                     -                       -
Between 2 and 5 years                                                               100.0                     -                       -
More than 5 years                                                                   113.7                     -                       -
TOTAL DEBT                                                                          215.5                     -                       -




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       7          PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                  Notes to the parent company Financial Statements




       Breakdown of debt by currency

       (in € million)                                                                At 31/12/2012         At 31/12/2011       At 31/12/2010
       EUR                                                                                       100.1                     -                   -
       USD                                                                                       115.4                     -                   -
       TOTAL DEBT                                                                                215.5                     -                   -


       INTEREST RATE RISK MANAGEMENT                                           As the US dollar bond debt is at a fixed rate, interest risk
                                                                               hedging strategy is solely set to manage interest rate risk on
       No changes were made in the methods of management and                   the euro bank debt.
       hedging of interest rate risk with regard to the Group’s debt
                                                                               As at 31 December 2012, interest rate risk hedging transaction
       during the 2012 financial year. The aim remains to provide the
                                                                               in place is an interest rate swap (exchange of fixed rate against
       Group with hedging against significant increases in interest
                                                                               3 months Euribor to guard against the risk of rising Euribor)
       rates.
                                                                               of €25 million nominal amount and ending on June 6, 2015.




       NOTE 7              ACCRUED EXPENSES

       At 31/12/2012                                                                                                                    Amount
       Trade payables                                                                                                                     1,107
       Taxes and social benefits owed                                                                                                         12
       Other liabilities                                                                                                                 14,160
       TOTAL ACCRUED EXPENSES                                                                                                           15,279


       Other liabilities represent the tax liability of Saft Groupe SA, the head of the French tax consolidation group, to its French subsidiaries
       part of the tax consolidation group.




       NOTE 8              ACCOUNTS RECEIVABLES

       At 31/12/2012                                                                      Gross value         Up to 1 year          Over 1 year
       Non-current assets
       Intercompany loans                                                                     215,636                      -           215,636
       Other financial assets                                                                        1                      -                 1
       Current assets
       Trade receivables                                                                             -                    -                   -
       Tax credits                                                                              13,789                    -              13,789
       Taxes (VAT)                                                                                 264                  264                   -
       Shareholder advances to subsidiaries                                                      9,319                9,319                   -
       TOTAL ACCOUNTS RECEIVABLE                                                              239,009                9,583             229,426


       Tax credits relate mainly to research tax credits for the years 2011 and 2012




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                                                                                                                              7
                                          PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                                                                     Notes to the parent company Financial Statements




NOTE 9           ACCOUNTS PAYABLES

At 31/12/2012                                               Gross value        Up to 1 year        1 to 5 years          Over 5 years
Bank borrowings and other financial debts                       215,523               1,835             100,000                 113,688
Trade payables                                                   1,107               1,107                   -                       -
Accrued taxes                                                       12                  12                   -                       -
Group current accounts                                          14,147              14,147                   -                       -
Other current debts                                                 13                  13                   -                       -
TOTAL DEBTS                                                    230,802              17,114            100,000                 113,688
Loans taken out during the financial year                       215,523                   -                  -                       -
Loans repaid during the financial year                                -                   -                  -                       -




NOTE 10          IMPACT FROM AD VALOREM TAX APPRAISALS

2012 net income has not been impacted by any ad valorem tax appraisal.




NOTE 11          INCREASES AND RELIEF IN FUTURE TAX DEBT

As shown below, Saft Groupe SA will benefit from tax relief in future years, mainly as a result of tax losses to be carried forward.


                                                                                                                         Deferred tax
                                                                                                                            expense/
At 31/12/2012                                                                                         Tax base             (revenue)
Increases in future tax debt                                                                                    -                     -
Relief in future tax debt                                                                                                             -
■ Organic (sales tax)                                                                                        11                       4
■ Unrealised foreign exchange gains                                                                       2,106                     720
■ Tax losses carried forward                                                                                  2                       -
INCREASE/(RELIEF) IN THE FUTURE TAX DEBT                                                                  2,119                     724




NOTE 12          MANAGEMENT COMPENSATION AS OF 31 DECEMBER 2012

Compensation paid to members of the Management Board in              Compensation paid to members of the Supervisory Board in
2012 totalled €1,905,006. This amount includes benefits in            2012 totalled €187,934.
kind.




NOTE 13          AVERAGE NUMBER OF EMPLOYEES

The company has no employee.




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       7            PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                    Notes to the parent company Financial Statements




       NOTE 14             BREAKDOWN OF INCOME TAX

       Corporate income tax can be broken down as follows:


                                                                                                                                Tax revenue/
                                                                                               Tax base              Rate          (expense)
       Income/(loss) from ordinary activities                                                   42,482            33.33%             (1,250)
       Income/(loss) from non-current activities                                                 (309)                  -              2,528
       NET INCOME FOR THE FINANCIAL YEAR                                                        42,173                                1,278




       NOTE 15             CHANGES IN SHAREHOLDERS’ EQUITY

       Change in shareholder’s equity during financial year 2011 was as follows (in euros):


                                                                Appropriation
                                                                     of 2011       Dividend            Capital          Result
       (in euros)                                 01/01/2012        earnings            paid        increases    of the period 31/12/2012
       Share capital                               25,174,845              -               -                 -              -    25,174,845
       Additional paid-in capital                 295,312,939              -    (25,072,808)                 -              -   270,240,131
       Statutory reserve                            2,512,584          4,900               -                 -              -     2,517,484
       Special reserve on long-term
       capital gains                                        -              -               -                 -              -             -
       Other reserves                                       -              -               -                 -              -             -
       Retained earnings                            7,119,146     31,017,293    (18,052,422)                 -              -    20,084,017
       Net income/(loss)
       for the year                                31,022,193    (31,022,193)              -                 -    43,450,629     43,450,629
       Tax-regulated provisions                             -               -              -                 -             -              -
       TOTAL                                      361,141,707              0 (43,125,230)                   0    43,450,629 361,467,106




       NOTE 16             FINANCIAL POSITION WITH AFFILIATES AS OF 31 DECEMBER 2012

       Balance sheet and income statement items relating to transactions with affiliates can be analysed as follows at 2012 year-end:


       At 31/12/2012                                                                                                                Amount
       Balance sheet
       Loans to subsidiaries                                                                                                        215,636
       Cash and cash equivalents                                                                                                     37,611
       Other current receivables                                                                                                      1,740
       Income statement
       Income from investments in subsidiaries                                                                                       43,182
       Interest revenue                                                                                                               7,100
       Interest expenses                                                                                                                (19)




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                                                   PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                                                                                    Notes to the parent company Financial Statements




NOTE 17             STOCK OPTION PLANS

The main initial features of stock option plans in force at 31 December 2012 are as follows:


                                          Plan           Plan             Plan            Plan           Plan             Plan            Plan              Plan
                                         No. 1       No. 1 bis           No. 2           No. 3       No. 3 bis           No. 4           No. 5             No. 6
Date of plan                29/06/2005 28/09/2005 27/11/2006 22/01/2008 05/11/2008 23/03/2009 02/09/2010 04/07/2012
Number of options
granted                        421,900     34,500    400,000    390,000     10,000    400,000    400,000    393,500
Price at date of granting       €26.00     €31.00     €23.26     €23.10     €23.25     €19.06     €25.60    €18.625
Initial exercise price          €26.00     €30.50      €26.00     €27.00    €26.00      €19.80    €25.34    €18.625
Adjusted exercise price (1)     €23.33     €27.36     €23.33     €24.22     €23.33     €17.76     €25.34    €18.625
Vesting period                  4 years   4 years     4 years    4 years   4 years     4 years    4 years    4 years
Term of plan                  10 years   10 years   10 years   10 years   10 years     7 years    7 years    7 years
Remaining period
until expiry                  2.5 years 2.7 years 3.9 years 5.1 years 5.9 years 3.2 years 4.7 years 6.5 years
Number of options
cancelled                    (105,238)     (6,600)   (57,311)   (42,161)         -    (27,203)    (8,500)   (23,500)
Number of options
exercised                    (243,274)     (3,360)   (65,335)          -         -           -          -          -
Options outstanding
at 31 December 2012             84,281     27,873    319,778    391,341     11,145    418,674    391,500    370,000
Of which options
exercisable after
adjustment                      84,281     27,873    319,778    391,341     11,145           -          -          -
(1) Above-listed exercise prices for stock option plans 1 to 4 have been adjusted to reflect the impact of the share capital increase on 2 December 2009.




CHANGE IN THE NUMBER OF STOCK OPTIONS
The change in the number of stock options over the last three financial years is as follows:


                                                                                                                                                    Number
                                                                                                     Number                Average            of exercisable
                                                                                                   of options         exercise price                options
Options outstanding at 31 December 2009                                                           1,427,160                   €21.95                 136,712
Options granted                                                                                     400,000
Options cancelled                                                                                   (27,874)
Options exercised                                                                                   (29,550)
Options outstanding at 31 December 2010                                                           1,769,736                   €22.70                 516,799
Options granted                                                                                            0
Options cancelled                                                                                   (50,235)
Options exercised                                                                                   (49,005)
Options outstanding at 31 December 2011                                                           1,670,496                   €22.67                 446,916
Options granted                                                                                     390,500
Options cancelled                                                                                   (49,404)
Options exercised                                                                                          0
Options outstanding at 31 December 2012                                                           2,014,592                   €21.93                 834,418




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       7          PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                  Parent company – Financial summary for the last five years




       7.5            PARENT COMPANY – FINANCIAL SUMMARY
                      FOR THE LAST FIVE YEARS

       The results of Saft Groupe SA over the past five years are as follows:


       Description
       (amounts in euros)                                  31/12/2008      31/12/2009       31/12/2010    31/12/2011 31/12/2012
       Share capital at year-end
       a) Share capital                                     18,514,086         24,684,093    25,125,840    25,174,845   25,174,845
       b) Number of ordinary shares in issue                18,514,086         24,684,093    25,125,840    25,174,845   25,174,845
       c) Number of bonds convertible into shares                    -                  -             -             -            -
       Operations and results of the period
       a) Sales (excluding VAT)                               6,576,701         5,996,869     6,443,590     6,542,509    6,876,173
       b) Income before tax, employee profit sharing,
          depreciation, amortisation and provisions         34,508,681          8,648,852     8,655,078    30,670,728   44,278,543
       c) Income tax revenue/(expense)                         (62,956)         (106,371)     2,755,000       351,467    1,277,890
       d) Income after tax, employee profit sharing,
          depreciation, amortisation and provisions         34,445,725          8,542,481    11,410,078    31,022,194   43,450,629
       e) Earnings distributed                              12,553,998         16,750,647    17,586,357    43,125,230          n.d.
       Earnings per share
       a) Income after tax, employee profit sharing
          but before depreciation, amortisation and
          provisions                                               1.86              0.35          0.45          1.23         1.81
       b) Income after tax, employee profit sharing,
          depreciation, amortisation and provisions                1.86              0.35          0.45          1.23         1.73
       c) Dividend per share                                       0.68              0.68          0.70          1.72          n.d.
       Employees                                                                                                                  -
       a) Average employee headcount                                   -                -             -             -             -
       b) Salary expenses in the period                                -                -             -             -             -
       c) Amounts paid for employee social security
          benefits during the period                                    -                -             -             -             -
       n.d.: not yet determined.




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                                             PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                            Statutory auditors’ report on the financial statements For the year ended 31 December 2012




7.6            STATUTORY AUDITORS’ REPORT ON THE FINANCIAL
               STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012

This is a free translation into English of the statutory auditors’ report on the financial statements issued in French and it is provided
solely for the convenience of English speaking users.
The statutory auditors’ report includes information specifically required by French law in such reports, whether modified or not. This
information is presented below the audit opinion on the financial statements and includes an explanatory paragraph discussing the
auditors’ assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose
of issuing an audit opinion on the financial statements taken as a whole and not to provide separate assurance on individual account
balances, transactions, or disclosures.
This report also includes information relating to the specific verification of information given in the management report and in the
documents addressed to shareholders.
This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards
applicable in France.


Year ended 31 December 2012


SAFT GROUPE SA
12, rue Sadi Carnot
93170 Bagnolet


To the Shareholders
In compliance with the assignment entrusted to us by your annual general meeting, we hereby report to you, for the year ended 31
December 2012, on:
      the audit of the accompanying financial statements of Saft Groupe SA;
      the justification of our assessments;
      the specific verification and information required by law.
These financial statements have been approved by the Board of Directors. Our role is to express an opinion on these financial
statements based on our audit.



I.             OPINION ON THE FINANCIAL STATEMENTS
We conducted our audit in accordance with professional standards applicable in France; those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An
audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the
amounts and disclosures in the financial statements. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made, as well as the overall presentation of the financial statements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the
Company as at 31 December 2012 and of the results of its operations for the year then ended in accordance with French accounting
principles.



II.            JUSTIFICATION OF OUR ASSESSMENTS
In accordance with the requirements of article L.823-9 of the French Commercial Code (Code de commerce) relating to the
justification of our assessments, we bring to your attention the following matters:
      Note 2.a) to the financial statements describes the accounting policies and methods applied for recognizing and measuring
      investments in subsidiaries and affiliates and other long-term equity investments. As part of our assessment of the accounting
      policies and principles applied by Saft Groupe SA, we obtained assurance that these accounting policies and methods and the
      related disclosures were appropriate, and that they had been correctly applied.
These assessments were made as part of our audit of the financial statements taken as a whole, and therefore contributed to the
opinion we formed which is expressed in the first part of this report.


                                                                                                      S A F T - A N N U A L R E P O R T 2 0 1 2 / 199
       7          PARENT COMPANY CERTIFIED FINANCIAL STATEMENTS
                  Statutory auditors’ report on the financial statements For the year ended 31 December 2012




       III.           SPECIFIC VERIFICATIONS AND INFORMATION
       We have also performed, in accordance with professional standards applicable in France, the specific verifications required by
       French law.
       We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given
       in the management report of the Board of Directors and in the documents addressed to shareholders with respect to the financial
       position and the financial statements.
       Concerning the information given in accordance with the requirements of article L.225-102-1 of the French Commercial Code (Code
       de commerce) relating to remunerations and benefits received by the directors and any other commitments made in their favour,
       we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial
       statements and, where applicable, with the information obtained by your company from companies controlling your company or
       controlled by it. Based on this work, we attest the accuracy and fair presentation of this information.
       In accordance with French law, we have verified that the required information concerning the identity of the shareholders and
       holders of the voting rights has been properly disclosed in the management report.


                                                  Courbevoie and Neuilly-sur-Seine, on 15 February 2013
                                                                 The statutory auditors



                            PricewaterhouseCoopers Audit                                                  Mazars
                                    Françoise Garnier                                               Juliette Decoux




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                                                                         8
Information about
the Company
and its share capital
8.1     General information about
        the Company                                                           202

8.2     Group history                                                         203

8.3     Group organisation chart                                              204

8.4     Significant contracts and commitments 205
8.4.1   Credit facilities                                                       205
8.4.2   A multi-year contract with the US Defence Logistics Agency              205
8.4.3   Contract with the US Department of Energy                               205
8.4.4   Joint ventures                                                          205
8.4.5   Undertakings made to France and Israel                                  205

8.5     Main statutory provisions                                             206

8.6     Capital and shareholding
        of Saft Groupe SA                                                     210
8.6.1   Share capital of Saft Groupe SA                                         210
8.6.2   Voting rights                                                           210
8.6.3   Share buyback programme                                                 210
8.6.4   Shareholding of Saft Groupe SA                                          211
8.6.5   Securities other than shares                                            211
8.6.6   Stock option plans                                                      211
8.6.7   Dividends                                                               211
8.6.8   Authorisations in force in relation to capital increases                212
8.6.9   Saft Group credit rating                                                212




                                              S A F T - A N N U A L R E P O R T 2 0 1 2 / 201
       8          INFORMATION ABOUT THE COMPANY AND ITS SHARE CAPITAL
                  General information about the Company




       8.1            GENERAL INFORMATION ABOUT THE COMPANY

       Company name:                                                      components, and of all derivative applications, and more
                                                                          generally of all mechanical, electric or electronic appliances
       Saft Groupe SA
                                                                          contributing to their proper functioning and incidentally, of all
       Registered office:                                                 other products susceptible of being manufactured with the
       12, rue Sadi Carnot, 93170 Bagnolet (Seine-Saint-Denis,            Company’s tooling, as well as the manufacture and sale of all
       France)                                                            other electric or electronic equipment; the acquisition, use and
                                                                          sale of all forms of patents, licences, manufacturing processes
       Tel: +33 (0)1 49 93 19 18                                          and trade secrets, ideas, models or trademarks, relating to
       Legal form:                                                        the abovementioned appliances and equipment; and more
                                                                          generally, the performance of any industrial, commercial,
       French Limited Company with Management and Supervisory
                                                                          financial, investment or property transactions related, directly
       Boards (Société Anonyme à Directoire et Conseil de Surveillance)
                                                                          or indirectly and in total or in part, to any of the purposes
       formed on 23 March 2005.
                                                                          specified in the Company’s articles of association or to any
       Duration:                                                          similar or subsidiary purpose.
       99 years, i.e. until 24 March 2104                                 Companies registry:
       Purpose:                                                           The company is registered in the Bobigny companies register
       (Summary of section 2 of the Company’s articles of association):   under the number B481 480 465; its APE code is 6420 Z.

       In all countries, the design, manufacture, sale and rental of      Accounting period:
       all forms of electric accumulators and batteries and their         From 1st January to 31 December.




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                                                                                                                              8
                                INFORMATION ABOUT THE COMPANY AND ITS SHARE CAPITAL
                                                                                                            Group history




8.2         GROUP HISTORY

  1918                                                                 2004
Société des Accumulateurs Fixes et de Traction (Saft SA)             Acquisition from Alcatel of all of the Group’s businesses by the
is founded in France by two Swiss electrochemists to                 Doughty Hanson Funds.
manufacture and distribute nickel-based batteries for
                                                                       2005
industrial applications and forklift trucks.
                                                                     Reorganisation of the Group into Saft Groupe SA, to which are
  1928
                                                                     directly or indirectly linked all the subsidiaries in the Group,
Acquisition of Saft by Compagnie Générale d’Electricité (which       and admission of Saft Groupe  SA shares to trading on the
later became Alcatel).                                               Eurolist market of Euronext Paris on 29 June 2005. Set-up of a
                                                                     production plant at Zhuhai in southern China, via the creation
  1940-1980
                                                                     of a wholly-owned subsidiary.
Saft develops its operations in the United Kingdom (1940s)
                                                                     Acquisition of a 51% stake in the capital of AMCO Power
and in the United States (1970s).
                                                                     Systems, an Indian manufacturer of nickel-based batteries
In the early 1980s, Saft commences operations in Asia                located in Bangalore.
(Singapore).
                                                                       2006
  1980-1995
                                                                     Creation of the Johnson Controls-Saft joint venture to address
The shares of Saft SA are listed on the Paris Bourse. At the         the hybrid and electric vehicle market. Saft holds 49% and
start of the 1990s, Alcatel repurchases all the shares of Saft       Johnson Controls holds 51% of the joint venture.
SA, which was de-listed in 1995.
                                                                       2008
In the late 1980s and early 1990s, the Group acquires two of
                                                                     Start-up of the new Johnson Controls-Saft production line in
its major competitors, Nife and Alcad, as well as the Czech
                                                                     Nersac, France, dedicated to lithium-ion batteries for hybrid
company Ferak, to strengthen its position in the industrial
                                                                     and electric vehicles.
battery market.
                                                                       2009
  2000
                                                                     Launch of two major industrial projects to build two lithium-
Acquisition of Tadiran, an Israeli manufacturer of lithium
                                                                     ion production plants, one in Florida (Saft plant) and the other
batteries, with operations in Israel, the United States and
                                                                     in Michigan (project led by the Johnson Controls-Saft joint
Germany including a 50% stake in Sonnenschein Lithium in
                                                                     venture).
Germany.
                                                                     To finance these two projects and achieve greater financial
  2001
                                                                     flexibility, the Group carried out a capital increase of
Saft significantly downsizes its rechargeable battery division        €120 million.
(now the RBS division), through the closure of a manufacturing
                                                                       2011
facility in Tijuana, Mexico and the sale of its battery assembly
facility in Korea and its Uniross distribution facility, resulting   Start of production and first deliveries of lithium-ion cells
in a workforce reduction of approximately 1,300 employees.           from the new lithium-ion manufacturing plant at Jacksonville.
Acquisition of Hawker Eternacell, a leading provider of lithium      Disposal by the Group of its 49% stake in the joint venture
batteries to the US and UK armed forces. Saft also increases         Johnson Controls-Saft on 30 September 2011.
its stake in ASB from 22% to 50%, and increases its stake
in Sonnenschein Lithium from 50% to 100%. All of these
companies are now part of its SBG division.
  2003
Acquisition of the German company Friemann und Wolf
Batterietechnik GmbH (Friwo) and the assets of Emisa and
Centra from Exide. These companies produce industrial nickel-
based batteries, lithium batteries for the defence industry and
batteries for torpedoes.




                                                                                                   S A F T - A N N U A L R E P O R T 2 0 1 2 / 203
       8           INFORMATION ABOUT THE COMPANY AND ITS SHARE CAPITAL
                   Group organisation chart




       8.3             GROUP ORGANISATION CHART


                                                                                       Saft Groupe SA
                                                                                          (France)

                                                                                   Saft Finance Sarl
                                                                                     (Luxemburg)




        Saft Acquisition       Saft Ferak® AS                         Saft Australia                                                                             Saft Nife®
                                                     Friwo® GmbH                               Saft AS             Saft Baterias SL          Saft Ltd.
              SAS                  (Czech                               Pty Ltd.                                                                                   ME Ltd.
                                                      (Germany)                               (Norway)                  (Spain)         (United Kingdom)
            (France)             Repuplic)                             (Australia)                                                                                (Cyprus)


                    Saft Batterie                    Saft Batterien   Saft Batteries                     Saft Batteries       Saft Sweden AB                           Saft Batterijen BV
                      Italia Srl                         GmbH            Pty Ltd.                           Pte Ltd.             (Sweden)                                (Netherlands)
                        (Italy)                       (Germany)        (Australia)                        (Singapore)


                                          Saft do Brasil                                                                          Saft AB          Saft America Inc.
                                               Ltda                                                                              (Sweden)           (United States)
                                             (Brazil)                            98%

                    50%                                                                      2%       51.04%

                    Aérospatiale                                                Saft Hong Kong           AMCO-Saft             Saft Federal             Florida               Saft JV
                                            Saft SAS                                                      India Ltd.
                  Batteries (« ASB »)                                                 Ltd.                                     Systems Inc.          Substrate Inc.         Holding Co
                                            (France)                                                        (India)
                       (France)                                                  (Hong Kong)                                  (United States)       (United States)       (United States)



                  Missiles & Space                                             Saft (Zhuhai FTZ)
                    Batteries Ltd.                                             Batteries Co Ltd.
                  (United Kingdom)                                                   (China)

                     Advanced
                      Thermal
                    Batteries Inc.                                                                                Tadiran Batteries
                                                                                            Fast Jung KB                                    Alcad® AB
                   (United States)                                                                                       Ltd.
                                                                                              (Sweden)                                      (Sweden)
                                                                                                                       (Israel)


                                                                                                                 Spezialgeratebau
                                                                                                                 Hamburg GmbH
                                                                                                                     « SGH »
                                                                                                                    (Germany)


                                                                                                                  Tadiran Batteries
                                                                                                                       GmbH
                                                                                                                     (Germany)




       When no specific percentage is mentioned, the controlling                                    with the terms of the agreement signed on 30 September 2011
       interest amounts to 100%.                                                                   relating to the disposal of the Group’s holding in the Johnson
                                                                                                   Controls-Saft joint venture, is a Li-ion battery facility with a
       Since 1st January 2013, Saft SAS holds 100% of the shares of
                                                                                                   capacity of 60MWh and employs 90 people.
       Saft Line SAS whose registered office is located in Nersac. This
       company, acquired from Johnson Controls Inc. in accordance




204 / S A F T - A N N U A L R E P O R T 2 0 1 2
                                                                                                                            8
                               INFORMATION ABOUT THE COMPANY AND ITS SHARE CAPITAL
                                                                              Significant contracts and commitments




8.4         SIGNIFICANT CONTRACTS AND COMMITMENTS

8.4.1       CREDIT FACILITIES                                      8.4.4       JOINT VENTURES
During the first quarter of 2012, the Group refinanced its
                                                                   ASB group
bank debt, on the one hand by a syndicated loan including
a five-year €100 million loan and a revolving credit line of        One of Saft’s subsidiaries is a party, with EADS France, to a
€100 million from a group of leading banks and, secondly, by       shareholder agreement renewed in 2006 and governing an
US$150 million of senior unsecured notes on the US Private         equal shareholding in ASB, a company mainly engaged in
Placement market.                                                  the manufacture of thermal batteries for military uses. The
                                                                   agreement provides that in the event of a change of control
The terms of these financings are described in note 18 to the       of either of the two ASB shareholders, the other will have a
consolidated financial statements for the year 2012 in this         purchase option for all the shares in the joint venture held
document.                                                          by the shareholder subject to the change of control. In this
                                                                   event, and in the absence of any other agreement between
                                                                   the parties, the price would be determined by an expert
8.4.2       A MULTI-YEAR CONTRACT WITH                             designated in accordance with section 1843-4 of the French
            THE US DEFENCE LOGISTICS AGENCY                        code of civil law.

On September 28, 2012, Saft America Inc. signed a new multi-
year contract with the US Defence Logistics Agency (DLA)
                                                                   8.4.5       UNDERTAKINGS MADE
to supply the US Army, Navy, Air Force and Marine Corps
with BA 5590 lithium sulfur dioxide (Li-SO2) batteries. The
                                                                               TO FRANCE AND ISRAEL
contract provides Li-SO2 batteries for many portable military      By letter dated 11  December 2003 and in the context of
applications, including communications and electronics             Alcatel’s sale of the Saft Groupe to the Doughty Hanson
systems, sensors and optical sights for missile launchers.         Funds, Tadiran, the Company’s Israeli subsidiary, provided
This contract, just as the previous one, was awarded to Saft       an assurance to the Israeli Minister of Defence (MOD) that it
for 100% of the US military needs for this type of battery. The    would preserve the confidentiality of any information relating
contract with DLA is an indefinite quantity contract for a five      to MOD orders for batteries classified under the provisions of
year period with a maximum amount of up to $98 million.            the Israeli Security Directorate. Tadiran also undertook that
                                                                   its General Manager would remain an Israeli citizen subject
Orders under the contract are demand-based, with the first
                                                                   to strict security clearance. Any change in the control of
order placed in late 2012. Orders under the contract are placed
                                                                   Tadiran must be notified to the MOD and requires the prior
whenever DLA receives an order from the users. This contract
                                                                   authorisation of the Chief Scientist’s Office and the Investment
maintains Saft’s position as the leading supplier of lithium
                                                                   Centre of the Israeli Ministry of Industry and Commerce.
batteries to the US Army. The contract will be supplied from
Saft’s Valdese NC facility that has been the leading supplier of   Given the products that are the subject of these commitments,
these types of military batteries since the 1980s.                 Saft does not expect the effect of the commitments to have
                                                                   a significant negative impact on the financial situation of the
                                                                   Group.
8.4.3       CONTRACT WITH                                          On 4 May 2005 the French government signed an agreement
            THE US DEPARTMENT OF ENERGY                            with the Company, applicable for ninety years, under which the
                                                                   Company undertook to retain its Group general management
On 1st December 2009, Saft America Inc. signed a contract with     and associated functions in France. The Company provided
the US Department of Energy, by which it will receive a cost-      certain other assurances and guaranteed the performance
sharing subsidy representing 50% of the cost for a maximum         by its French subsidiaries of its direct or indirect obligations
amount of $95.5  million under the provisions of the Federal       towards the French Ministry of Defence relating in particular
American Recovery and Reinvestment Act (ARRA).                     to the future supply by its French subsidiaries themselves,
The grant supported the construction, in Jacksonville, Florida,    at fair and reasonable terms for all the parties, of products
of a manufacturing plant to produce advanced lithium-ion           for use in the framework of French space and national
cells and integrate lithium-ion batteries for renewable energy     defence applications. The Company also undertook, subject
storage, telecommunication networks markets, as well as            to certain conditions relating in particular to the competitive
aviation, railway and military markets.                            environment, to maintain and develop in France certain assets
                                                                   and technologies judged critical for the purposes of France’s
As of 31 December 2012, total grants received from the US          national defence. Those assets and technologies represent an
Department of Energy amounted to US$91.5 million.                  insignificant portion of the Group’s assets as a whole.




                                                                                                 S A F T - A N N U A L R E P O R T 2 0 1 2 / 205
       8          INFORMATION ABOUT THE COMPANY AND ITS SHARE CAPITAL
                  Main statutory provisions




       Finally, since 2004 an official representative to Saft            Board. The provision of such information shall not be deemed
       Groupe  SA has been appointed by the French government.           to affect any confidentiality provisions to which the Company
       The representative is regularly provided with economic,           or its subsidiaries may be subject. Any change of control of
       financial and legal information, relating to the Group and its     the Company would not have any impact on the Company’s
       French subsidiaries and he receives all the information also      undertakings towards the French State.
       provided to the members of the Company’s Supervisory




       8.5            MAIN STATUTORY PROVISIONS

       SOCIAL PURPOSE (ARTICLE 2 OF THE ARTICLES                         5. the management of an equities and securities portfolio
       OF ASSOCIATION)                                                      and associated transactions;
                                                                         6. the ownership and management of real estate;
       Directly or indirectly, the purpose of the Company both in
       France and in foreign countries, is as follows:                   7. the study, manufacture, sale and rental of all accumulators,
                                                                            batteries and electrical storage batteries and their
       1. the study, creation, operation, supervision and                   components, of all other derived applications, generally
          management of all commercial, industrial, real property           of all mechanical, electrical or electronic devices as may
          or financial matters, businesses and entities;                     contribute to the proper functioning of the foregoing,
       2. the acquisition, leasing, rental with or without the              and any derivative products that can be manufactured
          agreement to sell, construction and operation of all              therefrom; and the manufacture and sale of any electrical
          factories, workshops, offices, and premises;                      or electronic equipment;
       3. the acquisition, management and operation, rental (with        8. the acquisition, use and sale of all patents, licences,
          or without option to purchase) and, as the case may be,           manufacturing and trade secrets, know-how, models or
          sale of all capital goods, fixed or moveable equipment or          trademarks with regard to the devices and equipment
          rolling stock, machinery and tools, as well as any land, sea      referred to in the preceding paragraph; and more
          or air vehicles;                                                  generally;
       4. the direct or indirect participation in all transactions       9. the performance of any industrial, commercial, financial,
          or undertakings through the creation of companies,                personal property and real property transactions directly
          establishments, or groups of a real property, commercial,         or indirectly relating to any of the purposes set forth
          industrial, or financial nature, the participation in the          above, in whole or in part and to any similar or related
          formation of the foregoing or in capital increases of             purpose.
          existing companies;




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                               INFORMATION ABOUT THE COMPANY AND ITS SHARE CAPITAL
                                                                                           Main statutory provisions




ANNUAL GENERAL MEETINGS                                               having received his or her attendance card by zero hours
(ARTICLE 22 OF THE ARTICLES                                           Paris time on the third working day prior to the meeting.
OF ASSOCIATION)                                                   11. Any shareholder may be represented by his or her spouse
                                                                      or by another shareholder subject to production of a duly
1. Decisions are taken by shareholders during their General           completed form of proxy.
   Meetings, whether of an ordinary, extraordinary or special
                                                                  12. Any shareholder may equally send the Company a blank
   nature according to the nature of the business to be
                                                                      proxy, in which case the chairman of the Annual General
   transacted.
                                                                      Meeting will vote in favour of draft resolutions presented
2. Shareholders’ decisions are binding on all shareholders            or approved by the Management Board and against any
   even when absent, in disagreement or legally a minor.              other draft resolutions; to vote differently, a shareholder
                                                                      must choose another proxy agreeing to vote as directed.
Convocation of Annual General Meetings
                                                                  13. Each shareholder may vote by correspondence using a
3. Annual General Meetings are convened as provided by law            bulletin prepared and sent to the Company in accordance
   by the Supervisory Board or, failing that, by the Statutory        with applicable law and regulations. The bulletin must be
   Auditors or any other legally authorised person.                   received by the Company three days prior to the date of
4. Annual General Meetings are held at the Company’s                  the General Meeting; otherwise, it will not be taken into
   registered office or any other location indicated in the           account.
   notice.                                                        14. Shareholders may, if so decided by the Supervisory Board,
                                                                      participate in General Meetings using video conferencing
Agenda
                                                                      or other means enabling them to be identified in
5. The agenda for Annual General Meetings is determined by            accordance with the applicable regulations.
   the author of their convocation.
6. However one or several shareholders, or the Works              Voting rights
   Committee, may also, subject to the conditions posed by        15. Every shareholder has as many voting rights as the
   the applicable legal and regulatory provisions, request            number of shares that he or she holds or represents.
   that draft resolutions be added to the agenda.
                                                                  Register of attendance – officials – minutes
7. Shareholders may not discuss matters not included in
   the agenda but they do have the power to revoke one or         16. A register of attendance must be prepared in accordance
   more members of the Supervisory Board and name their               with the applicable law and regulations.
   replacement.                                                   17. Annual General Meetings are chaired by the President of
8. The agenda for a General Meeting may not be modified in             the Management Board or the Chairman of the Supervisory
   the event of the meeting requiring a second convocation.           Board or, in their absence, by the oldest member of the
                                                                      Management or Supervisory Boards present at the
Participation in General Meetings                                     meeting. In the event of convocation by the Statutory
                                                                      Auditors or any other person so authorised by law, the
9. All shareholders have the right to attend Annual General
                                                                      meeting is chaired by the author of the convocation.
   Meetings and to participate in the deliberations, personally
                                                                      Otherwise, the meeting elects its own chairman.
   or via a representative, irrespective of the number of
   shares owned and subject to simple proof of his or her         18. The role of returning officer is performed by the present
   identity.                                                          and willing shareholders disposing, in their own name or
                                                                      by proxy, of the largest number of votes.
10. To have the right to participate in Annual General
    Meetings, to vote by correspondence or to be personally       19. The abovementioned officials in turn designate a secretary
    represented, shareholders must have been registered as            who need not be a shareholder.
    such either on a nominative basis, or via a bearer share      20. The abovementioned officials are responsible for verifying,
    account administered by an authorised intermediary, by            certifying and signing the register of attendance, ensuring
    zero hours Paris time on the third working day prior to the       proper debate, dealing with any incidents, registering and
    meeting.                                                          validating votes expressed and preparing minutes for the
    The holders of bearer shares must prove their quality             meeting.
    by virtue of an attestation delivered by the authorised       21. The minutes must be signed by the abovementioned
    intermediary administering their investment, eventually           officials and incorporated in a special register kept at the
    by electronic means, and appended to the postal vote              Company’s registered office. Copies or extracts thereof
    bulletin, the proxy form or the request for an attendance         must be signed by the Chairman or Vice-Chairman of the
    card prepared in the name or on behalf of the shareholder.        Supervisory Board or by a member of the Management
    A similar attestation must be delivered to any shareholder        Board.
    wishing to attend a General Meeting in person but not




                                                                                                S A F T - A N N U A L R E P O R T 2 0 1 2 / 207
       8          INFORMATION ABOUT THE COMPANY AND ITS SHARE CAPITAL
                  Main statutory provisions




       Ordinary General Meetings                                               maintained by, or on behalf of, the Company (in the case
       22. Ordinary General Meetings are held to take all decisions            of registered shares) or in registers maintained by an
           not involving any change to the Company’s articles of               authorised financial intermediary (in the case of bearer
           association. At least one such meeting must be held each            shares).
           year, within the applicable legal and regulatory time limits,   3. In order to identify holders of bearer shares, the Company
           to approve the financial statements of the previous year.           may request the central custodian maintaining its issued
       23. Following its first convocation, the shareholders present,          share account to provide the information specified in
           represented or voting by postal ballot must possess                section L.228-2 of the French Commercial Code (Code de
           at least one fifth of the Company’s voting rights for the           Commerce). Accordingly, the Company may request at any
           meeting to be valid; if a second convocation is required, no       time, for a fee payable by the Company, the name and year
           quorum is imposed.                                                 of birth or, in the case of legal entities, the name and year
                                                                              of incorporation, nationality and address of holders of
       24. Decisions are taken at Ordinary General Meetings by                securities with existing or future voting rights at its Annual
           simple majority of the votes held by the shareholders              General Meetings, as well as the number of securities
           present, represented or voting by postal ballot.                   held by each such person or entity and, if applicable, any
                                                                              restrictions that may exist with respect to the securities.
       Extraordinary General Meetings
                                                                           4. Based on the list provided by the central custodian and
       25. Only an Extraordinary General Meeting can modify the
                                                                              under the same conditions, the Company is entitled to
           Company’s articles of association subject to the proviso
                                                                              request, either from the custodian or directly from persons
           that it has no right to increase the shareholders’ liability
                                                                              or entities appearing on the list provided by the custodian
           except in the event of those changes resulting from a duly
                                                                              (and which the Company has reason to believe may hold
           completed merger.
                                                                              their shares on behalf of others), the same information
       26. Following its first convocation, the shareholders present,          with respect to the owners of the shares. If such persons
           represented or voting by postal ballot must possess at             are intermediaries, they are required to provide the identity
           least one quarter of the Company’s voting rights for the           of the underlying owners of the shares. The information is
           meeting to be valid; this also applies in the event of a           furnished directly to the authorised financial intermediary
           second convocation being required.                                 account holder, which is responsible for reporting such
       27. Decisions are taken at Extraordinary General Meetings by           information to the Company or to the central custodian, as
           a two thirds majority of the votes held by the shareholders        the case may be.
           present, represented or voting by postal ballot.                5. In the case of registered equity or equity-linked securities,
                                                                              the intermediary recorded in the register on behalf of
       Special General Meetings                                               an owner who does not reside in France is required to
       28. Special General Meetings assemble the holders of shares            provide the identity of the owners of the securities, as well
           of a particular category in order to determine any changes         as the number of securities held by each such owner, upon
           in the rights attaching to such shares.                            request by the Company or its representative, which may
                                                                              be made at any time.
       29. Following its first convocation, the shareholders present,
           represented or voting by postal ballot must possess             6. Whenever the Company believes that certain shareholders
           at least one half of the Company’s voting rights for the           whose identity has been provided to the Company hold
           meeting to be valid and at least one quarter in the event of       their shares on behalf of third parties, the Company
           a second convocation being required.                               may request that these holders provide the identity of
                                                                              the owners of the securities. Following such request,
       30. Decisions are taken at Special General Meetings by a
                                                                              the Company may request of any legal entity that owns
           two-thirds majority of the votes held by the shareholders
                                                                              its shares and whose holdings exceed 2.5% of the share
           present, represented or voting by postal ballot.
                                                                              capital or voting rights, to provide the identity of the
                                                                              person or entities who directly or indirectly hold more
                                                                              than one third of the share capital or voting rights of such
       FORM OF SHARES (ARTICLE 11                                             legal entity.
       OF THE ARTICLES OF ASSOCIATION)                                     7. If any of the aforementioned obligations are not complied
       1. Fully paid-up shares can be held as registered or bearer            with, the equity or equity-linked securities in respect of
          shares, at the option of the shareholder.                           which such obligations have not been satisfied, shall be
                                                                              deprived of voting rights at any Annual General Meeting
       2. Other than when registered in an account on behalf of               held up until such time as the identification procedures
          an intermediary in accordance with applicable law and               have been complied with, and payment of the corresponding
          regulations, ownership of shares results from their being           dividend will be deferred until such date.
          recorded in the name of their holder(s) either in registers




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                                                                                                                             8
                                INFORMATION ABOUT THE COMPANY AND ITS SHARE CAPITAL
                                                                                             Main statutory provisions




8. Moreover, if the individual or entity recorded in the register       amount representing 1% of the share capital or voting
   knowingly fails to meet these obligations, the court with            rights, must inform the Company of the total number of
   jurisdiction where the Company’s registered office is                shares and securities giving access to the Company’s
   located, upon the request of the Company or one or more              share capital or voting rights held by such person,
   shareholders holding at least 5% of the share capital, may           by certified letter with acknowledgement of receipt,
   pronounce, for a period not to exceed 5 years, the total or          addressed to the Company’s registered office, within five
   partial forfeiture of voting rights attached to the shares in        trading days of exceeding such investment threshold(s).
   respect of which the Company has requested information           4. At the request of one or more shareholders holding at least
   and may also pronounce, for the same period, forfeiture of          1% of the Company’s share capital or voting rights, the
   the right to payment of the corresponding dividend.                 failure to comply with this disclosure requirement may be
                                                                       sanctioned by the forfeiture of voting rights of the shares
                                                                       exceeding the fraction that should have been disclosed at
SALE OF SHARES (ARTICLE 12                                             any Annual General Meeting held for a period of two years
OF THE ARTICLES OF ASSOCIATION)                                        following the date on which the non-disclosure is cured.
                                                                    5. This same disclosure requirement applies, under the
1. Shares may be freely traded except as otherwise provided
                                                                       same conditions and within the same time period, each
   by applicable law or regulations.
                                                                       time the portion of share capital or voting rights owned by
2. Sales or transfers of shares, whether registered or                 a shareholder falls below one of the above thresholds.
   bearer shares, are effected on behalf of the Company and
   third parties by means of account-to-account transfers
   under conditions established under applicable law and            RESULTS OF OPERATIONS – ALLOCATION
   regulations.
                                                                    OF NET INCOME (ARTICLE 24 OF THE ARTICLES
3. Shares that are not fully paid-up may not be transferred         OF ASSOCIATION)
   from one account to another.
                                                                    1. At least 5% of net income for the year, less any losses
                                                                       brought forward from prior years, shall be transferred
THRESHOLD DISCLOSURE (ARTICLE 13                                       to the legal reserve until such time as the legal reserve
                                                                       represents one tenth of the Company’s share capital.
OF THE ARTICLES OF ASSOCIATION)
                                                                       Further transfers shall be made on the same basis if the
1. Pursuant to the provisions of the French Commercial Code            legal reserve falls to below one tenth of the share capital.
   (Code de Commerce), any person or legal entity, acting           2. Income available for distribution corresponds to net
   alone or in concert, holding shares in bearer form entered          income for the year, less any losses brought forward
   in an account with an authorised intermediary and                   from prior years and any amounts allocated to reserves
   which comes to own a number of shares in the Company                in compliance with the law and the Company’s articles of
   representing more than one twentieth, one tenth, one                association, plus any retained earnings.
   fifth, one third, one half, or two thirds of the Company’s
                                                                    3. Shareholders may decide to allocate all or part of income
   share capital or voting rights, must inform the Company
                                                                       available for distribution to any discretionary, ordinary
   and the AMF, within five trading days of exceeding the
                                                                       or extraordinary reserves or to retained earnings. Any
   relevant threshold, of the total number of shares or voting
                                                                       balance is allocated to the shareholders in proportion to
   rights held by such person or legal entity. This information
                                                                       the number of shares held.
   is made public according to the terms of the General
   Regulations of the AMF. This information must also be            4. Shareholders may decide to pay dividends to shareholders
   provided, under the same conditions and within the same             out of distributable reserves, in which case the related
   time period, when the ownership of share capital falls              resolution must stipulate the reserve accounts from
   below one of these thresholds.                                      which the dividend is to be deducted. However, insofar as
                                                                       possible, dividends must be paid from income available
2. In the case of failure to declare share ownership as
                                                                       for distribution.
   provided above, the shares exceeding the threshold in
   relation to which disclosure was required are deprived of        5. The terms and conditions for the payment of dividends
   voting rights at any Annual General Meeting for a period of         voted by an Annual General Meeting are set by the said
   two years following the date on which the non-disclosure            meeting or failing this by the Management Board in
   is cured.                                                           accordance with sections L.232-12 to L.232-20 of the
                                                                       French Commercial Code (Code de Commerce).
3. Moreover, the Company’s articles of association provide
   that any person or legal entity which, acting alone or in        6. The Annual General Meeting may offer shareholders the
   concert, comes to hold, directly or indirectly, a number of         option of receiving all or part of the annual dividend or any
   shares representing a proportion of the share capital or            interim dividend in the form of newly-issued shares of the
   voting rights equal to or greater than 1%, or any additional        Company as provided for by law.




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       8          INFORMATION ABOUT THE COMPANY AND ITS SHARE CAPITAL
                  Capital and shareholding of Saft Groupe SA




       8.6            CAPITAL AND SHAREHOLDING OF SAFT GROUPE SA

       8.6.1          SHARE CAPITAL OF SAFT GROUPE SA                           8.6.2       VOTING RIGHTS
       The share capital of the Company at 31 December 2012 was                 At 31 December 2012 the number of voting rights amounted
       €25,174,845, divided into 25,174,845 shares with a par value             to 25,069,895 i.e. the total number of 25,174,845  shares
       of €1, all fully paid-up and all of the same class.                      comprising the Company’s share capital less the
                                                                                104,950 treasury shares held at that date that are stripped of
                                                                                their voting rights. No double voting rights exist.


       Changes in the share capital of the Company over the last years were as follows:


       Date                                                      Type of operation      Shares issued        Total shares    Capital in euros
       31 December 2008                                                           -                 -         18,555,901          18,555,901
       31 December 2009                                            Capital increase         6,128,192         24,684,093          24,684,093
                                           Capital increase following the exercise
       12 April 2010                                  of share subscription options             4,450         24,688,543          24,688,543
                                      Capital increase following options exercised
       9 July 2010                              for the payment of a scrip dividend           410,647         25,099,190          25,099,190
                                           Capital increase following the exercise
       13 July 2010                                   of share subscription options             3,344         25,102,534          25,102,534
                                           Capital increase following the exercise
       15 December 2010                               of share subscription options            12,374         25,114,908          25,114,908
                                           Capital increase following the exercise
       31 December 2010                               of share subscription options            10,932         25,125,840          25,125,840
                                           Capital increase following the exercise
       10 June 2011                                   of share subscription options            49,005         25,174,845          25,174,845


       During recent past years, the changes in the Company’s                   market regulator. The investment service provider retained
       shareholding structure have essentially related to the sale by           was Exane BNP Paribas (16, avenue Matignon – 75008 Paris).
       the Doughty Hanson & Co Funds, in April 2007, of their residual
                                                                                During the 2012 financial year, the following purchases and
       36.6% shareholding in Saft that Doughty Hanson & Co had held
                                                                                sales of the Company’s shares took place:
       since the Group’s flotation in June 2005.
                                                                                  purchases: 277,371 shares at an average purchase price of
                                                                                  €19,95 per share;

       8.6.3          SHARE BUYBACK PROGRAMME                                     sales: 264,026 shares at an average sales price of €19,96
                                                                                  per share.
       A share buyback plan was authorized by shareholders at their
                                                                                The total number of shares traded during 2012 in the
       Annual General Meeting held on 11 May 2012 for an 18-month
                                                                                framework of the liquidity contract thus amounted to
       period and for a maximum number ot 200,000 shares
                                                                                541,397 shares. The Company did not pay any trading fees for
       representing 0.80% of the total capital shares.
                                                                                these transactions.
       The purpose of the share buyback plan was to facilitate
                                                                                At 31  December 2012, the Company held 104,950 treasury
       transactions in the Company’s shares via an independent
                                                                                shares (representing 0.42% of its share capital). Their overall
       investment service provider and in the framework of a
                                                                                acquisition cost amounted to €1,825,686. Their market value
       liquidity contract complying with an ethical charter recognised
                                                                                at 31 December 2012 is €1,857,615.
       by the Autorité des marchés financiers (AMF), the French capital




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                                       INFORMATION ABOUT THE COMPANY AND ITS SHARE CAPITAL
                                                                                          Capital and shareholding of Saft Groupe SA




8.6.4         SHAREHOLDING OF SAFT GROUPE SA
The breakdown of the capital at 31 December 2012 hereinafter was established on the basis of information made known to the
Company in application of article L.233-7 of the French Commercial Code and, if any, on the basis of information voluntarily provided
by the Company’s shareholders:
  Free Float                               97.18%;
  Management Board members                 1.43%;
  Staff and employees                      0.97% (including 0.14% via the FCPE Saft Energy);
  Treasury shares                          0.42%.



To the knowledge of the Company and based on the most recent                     shareholders at 31st January 2013 are listed below. The main
study of the identification of the shareholding conducted in the                  shareholders as of 31 December 2010 and 31 December
month of December 2012, possibly adjusted by notifications                        2009 were identified on the basis of statements of threshold
of threshold crossing received thereafter, the Group’s main                      crossings only.


                 31/12/2013                                       31/01/2012                                           31/12/2010
                                 (1)
 Ameriprise Financial Inc.                6.19%      Ameriprise Financial Inc.            6.35%      Pictet Assets Management                        5.37%
 Allianz SE                               5.22%      Carmignac Gestion                    4.50%      Commerzbank                                     5.31%
 Schroeders Investment Mgt                5.02%                                                      Ameriprise Financial Inc. (1)                   5.03%
 Governance for owners                    5.02%                                                      Taube, Hobson, Stonex Partners                  4.98%
 Carmignac Gestion                        4.46%                                                      FMR LLC (Fidelity Investments)                  4.96%
                                                                                                     Fortis Investment Management                    4.94%
                                                                                                     Schroders Investment Mgt Ltd                    4.91%
(1) Ameriprise Financial Inc is acting through the following entities which it controls: Columbia Wanger Asset Management LLC, Columbia Management
    Investment Advisers LLC and Threadneedle Asset Management Holdings Ltd.



As of 10 February 2013, we are not aware of any change in the                    8.6.7          DIVIDENDS
above mentioned shareholdings.
                                                                                 The Company’s policy is to distribute dividends to its
To the Company’s knowledge:
                                                                                 shareholders. The amount of the dividend is determined
  no shareholder other than those listed above owns more                         after taking into consideration the Company’s capital needs,
  than 5% of the capital or voting rights;                                       return on capital, current and future profitability and market
  no shareholder was in a position to exercise significant                        practices in terms of dividend distribution, especially in the
  influence over the Group at the date of registration of this                    Group’s industry. Saft’s target is to pay dividends in the range
  document;                                                                      of 30% to 40% of net income.

  no shareholder agreements or actions in concert exist.                         At the Annual General Meeting on 11th  May 2012, Saft
                                                                                 Groupe SA’s shareholders voted an ordinary dividend of €0.72
                                                                                 and an extraordinary dividend of €1.00 per share for the 2011
                                                                                 financial year, that is a total dividend of €1.72 per ordinary
8.6.5         SECURITIES OTHER THAN SHARES                                       share.
At the date of registration of this document, the Company had                    At the Annual General Meeting of 7th May  2013, Saft will
not issued any other securities than shares.                                     propose an ordinary dividend of €0.75 per share with an
                                                                                 option for payment of dividends in the form of shares.


8.6.6         STOCK OPTION PLANS
Stock-options plan set up as of 31 December 2012 and related
figures are described in note 33 of the consolidated financial
statements and note  17 to the parent company’s financial
statements presented in this annual report.




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       8          INFORMATION ABOUT THE COMPANY AND ITS SHARE CAPITAL
                  Capital and shareholding of Saft Groupe SA




       The dividends paid by the Company for the last three years are:


       Financial Year                                                             Date paid                Dividend Number of shares                   Distribution
                                                                                                                                            (1)
       2009                                                                   July 9, 2010                     €0.68         10,955,270                €7,449,584
       2010                                                                   May 4, 2011                      €0.70          25,123,367              €17,586,357
       2011                                                                  May 21, 2012                      €1.72          25,073, 889             €43,127,089
       (1) Out of a total number of 24,688,543 shares making up the share capital (excluding treasury shares) on the date of payment of the dividend, shareholders
           representing a total of 13,733,273 shares chose the payment of a stock dividend, as decided by the shareholders at the Annual General Meeting
           on 9 June 2010.



       Unclaimed dividends become State property five years after their initial date of payment.


       8.6.8          AUTHORISATIONS IN FORCE IN RELATION TO CAPITAL INCREASES
       Outstanding authorisations granted to the Management Board by the Annual General Meeting and allowing for share capital
       increases (article L.225-100 of the French Commercial Code):


                                                                                                      Authorised limits
                                                                                                             Ordinary shares
                                                                                                                and securities
                                                                                                                 giving access
                                                                                                              to share capital
                                                                   Authorisation           Expiration          (nominal value            Exercise          Amount
       Authorisation description                                           Date                  date        of the issuance)               date             used
       Capital increase by issue of ordinary
       shares reserved to participants
       in a company savings plan (PEE) open
       to employees of the Company and related                        Combined
       companies, in accordance with articles                    Shareholders’
       L.3332-18 and subsequent of the                                  Meeting
       French Labor Code, without pre-emptive                    of 4 May 2011                                €250,000
       subscription rights                                     (22nd Resolution)        3 July 2013 (nominal amount)                    Not used               None
                                                                                                              Maximum
                                                                                                      nominal amount
                                                                                                       of share capital
       Capital increase by issue of shares                             Combined                         increases that
       and/or securities giving access,                           Shareholders’                        may be carried
       immediately or in the future, to the share                        Meeting                      out immediately
       capital of the Company, with maintenance                  of 11 May 2012                        or in the future:
       of preferential subscription rights                      (12th Resolution)     10th July 2014          €9 million                Not used               None
                                                                                                              Maximum
                                                                                                      nominal amount
       Capital increase by issue of shares                                                             of share capital
       and/or securities giving access,                                Combined                         increases that
       immediately or in the future, to the share                 Shareholders’                        may be carried
       capital of the Company, without                                   Meeting                      out immediately
       preferential subscription rights,                         of 11 May 2012                        or in the future:
       but with a priority term.                                (13th Resolution)     10th July 2014          €5 million                Not used               None



       Maximum nominal amount of share capital increases which                             Stock-option plans are described in note 33 “Share-based
       may be carried out in accordance with above authorisations                          payments” to the consolidated financial statements presented
       is €12.5 million.                                                                   in this Annual Report.
       Capital increases in relation with stock-options plans decided
       by the Annual General Meeting and implemented by the                                8.6.9         SAFT GROUP CREDIT RATING
       Company are not mentioned in the above table.
                                                                                           The Saft Group is not subject to any external credit rating
                                                                                           (or rating) by any financial rating agencies.




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                                                        9
Annual
General Meeting
9.1   Overview of key resolutions                            214

9.2   Statutory Auditors’ special report
      on regulated agreements and
      commitments with third parties                         215




                             S A F T - A N N U A L R E P O R T 2 0 1 2 / 213
       9          ANNUAL GENERAL MEETING
                  Overview of key resolutions




       9.1            OVERVIEW OF KEY RESOLUTIONS

       The Annual General Meeting is scheduled for 7 May 2013.             Technology Committee, and Mrs. Charlotte Garnier Peugeot
                                                                           member of the Supervisory Board;
       During this meeting, in addition to resolutions on the approval
       of the parent company and consolidated financial statements          the distribution of an ordinary dividend of €0.75 per share
       and related reports, the following main resolutions will be         with the option of payment of a stock dividend.
       proposed to shareholders:
                                                                         In terms of financial authorities, given the current authorisations
          the renewal of the mandates of the following members           in force presented in section 8.6.8 “Authorisations in force”
          of the Supervisory Board: Mr. Yann Duchesne, President         of this document, it will mainly be proposed to shareholders
          of the Supervisory Board and of the Remuneration and           to renew the authorisation for the Company to trade its own
          Appointments Committee, Mr. Ghislain Lescuyer member           shares.
          of the Supervisory Board and Chairman of the Strategy and




214 / S A F T - A N N U A L R E P O R T 2 0 1 2
                                                                                                                                9
                                                                                  ANNUAL GENERAL MEETING
                        Statutory Auditors’ special report on regulated agreements and commitments with third parties




9.2         STATUTORY AUDITORS’ SPECIAL REPORT ON REGULATED
            AGREEMENTS AND COMMITMENTS WITH THIRD PARTIES

This is a free translation into English of the Statutory Auditors’ special report on regulated agreements and commitments with third
parties that is issued in the French language and is provided solely for the convenience of English speaking readers. This report
on regulated agreements and commitments should be read in conjunction with, and construed in accordance with, French law
and professional auditing standards applicable in France. It should be understood that the agreements reported on are only those
provided by the French Commercial Code and that the report does not apply to those related party transactions described in IAS–24
or other equivalent accounting standards.


SAFT GROUPE SA
12, rue Sadi Carnot
93170 Bagnolet
To the Shareholders,
In our capacity as Statutory Auditors of your Company, we hereby report on regulated agreements and commitments with third
parties. It is our responsibility to communicate to you, based on information provided to us, the principal terms and conditions
of these agreements and commitments brought to our attention which we or may have identified as part of our engagement,
without expressing an opinion on their usefulness or their merit or searching for other agreements or commitments. It is your
responsibility, pursuant to article R.225-58 of the French Commercial Code (Code de commerce), to assess the interest of entering
into these agreements with a view to approving them.
Where applicable, it is our responsibility to communicate to you the information pursuant to article R.225-58 of the French
Commercial Code (Code de commerce) relating to carrying out the agreements and commitments already approved by the
Shareholder’s Meeting during the year.
We conducted the procedures we deemed necessary in accordance with professional standards applicable in France; those
standards require that we check that the information provided to us agree with the relevant source documents.



AGREEMENTS AND COMMITMENTS TO BE APPROVED BY THE SHAREHOLDERS’ MEETING

Agreements and commitments authorized in 2012
Pursuant to article L.225-88 of the French Commercial Code (Code de commerce), the following agreements and commitments,
which were previously authorized by your Supervisory board, have been brought to our attention.

1.        Services Agreement

Executive concerned:
John Searle, Chairman of the Management Board of Saft Groupe SA and also Chairman of the Board of Directors of Saft SAS
(previously Saft SA), which is wholly-owned by Saft Acquisition SAS, which in turn is indirectly controlled by Saft Groupe SA;

Type of agreement and purpose:
At its meeting of June 29, 2005 the Supervisory Board authorized the Company to sign a Services Agreement with Saft SA (which
became Saft SAS on December 8, 2010).
This Services Agreement was entered into on October 1, 2005 for a period expiring on December 31, 2008. It is subsequently
automatically renewable on an annual basis unless terminated with three months’ notice. The Company pays Saft SAS for the
services provided on an actual cost basis.
The authorization of this agreement has been renewed by your Supervisory Board at its meeting of October, 22nd, 2012.

2.        Management Services Agreement (MSA)

Executive concerned:
John Searle, Chairman of the Management Board of Saft Groupe SA and also Chairman of the Board of Directors of Saft SAS
(previously Saft SA), which is wholly-owned by Saft Acquisition SAS, which in turn is indirectly controlled by Saft Groupe SA;
Any offices held by members of the Supervisory and Management Board in non-French Subsidiaries must also be taken into
accounts. In addition the Management services Agreement has been conclude by the following foreign subsidiaries: Saft Batterie
Italia srl, Saft Ferak® AS, Friwo® GmbH, Saft AS, Saft Bateria SL, Saft Batteries Pty Ltd, Saft Hong Kong Ltd, Saft Batterien GmbH,
Saft Batteries Pty Ltd, Saft Nife® Me Ltd, Saft AB, Tadiran Batteries Ltd, Saft America Inc, Saft Federal Systems Inc, Florida Substrate


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       9          ANNUAL GENERAL MEETING
                  Statutory Auditors’ special report on regulated agreements and commitments with third parties




       Inc, Saft Zhuhai Batteries Co Ltd, Saft Sweden AB, AMCO Saft India Ltd, Tadiran Batteries GmbH, SGH GmbH, Saft Australia Pty Ltd,
       Saft Batterijen BV.

       Type of agreement and purpose:
       At its meeting of June 29, 2005, the Supervisory Board decided that as the holding company of the Saft Group, Saft Groupe SA
       should assist certain of the operating companies that it controls either directly or indirectly by providing them with management
       services.
       As a result, on October 1, 2005 the Company signed a Management Services Agreement for an initial period of 39 months expiring
       on December 31, 2008. The agreement is subsequently automatically renewable on an annual basis unless terminated with six
       months’ notice.
       As consideration for the services provided by the Company, the operating subsidiaries concerned pay a quarterly fee representing
       1.1% of their external revenue.
       The authorization of this agreement has been renewed by your Supervisory Board at its meeting of October, 22nd, 2012.



       AGREEMENTS AND COMMITMENTS ALREADY APPROVED IN PRIOR YEARS BY
       THE SHAREHOLDERS’ MEETING

       a)          Applicable during the period
       In addition, pursuant to article R.225-57 of the French Commercial Code (Code de commerce), we have been informed that the
       following agreements and commitments, approved by the Shareholders’ Meeting in prior years, have had continuing effect during
       the year.

       1.          Term and Revolving Facilities Agreement

       Executives concerned:
       John Searle, Chairman of the Management Board of Saft Groupe SA and also:
            Chairman of the Board of Directors of Saft SAS (previously Saft SA), which is wholly-owned by Saft Acquisition SAS, which in turn
            is indirectly controlled by Saft Groupe SA;
            Managing Director of Saft Finance Sarl, wholly-owned by Saft Groupe SA;
            Member of the Board of Saft America Inc.;
            Chairman of Saft Ltd;
            Chairman of the Board of Tadiran Batteries Ltd.
       Thomas Alcide, member of the Management Board of Saft Groupe SA and Chairman and CEO of Saft America Inc. and Saft Federal
       Systems Inc.
       Bruno Dathis, member of the Management Board of Saft Groupe SA and Managing Director of Saft Finance Sarl, wholly-owned by
       Saft Groupe SA

       Type of agreement and purpose:
       The “ Term and Revolving Facilities Agreement” dated June 13, 2005 to finance the Group’s working capital and investments has
       been repaid and refinanced on July 3, 2009.
       The Supervisory Board authorized the signature of the “Term and Revolving Facilities Agreement” at its meeting of June 30, 2009.

       Terms and conditions:
       The credit facilities covered by the agreement include (i) non-renewable loans representing a maximum of €150 million (“Facility A”)
       and US$240 million (“Facility B”) respectively; and (ii) a Revolving Multicurrency Facility representing a maximum of €33,5 million.
       Under the credit agreement, each borrowing company listed as “Revolving Facility Borrowers” undertook to honor, at the lender’s
       request, the commitments of any other borrowing company party to the agreement in the event of default. The credit agreement
       also states that each underwriting company’s commitment (“Original Obligor”) is subject to limit described in the credit agreement.
       This agreement expired the 29th of February 2012, with the reimbursement of the two Facilities, in connection with the debt
       refinancing.




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                                                                                ANNUAL GENERAL MEETING
                           Statutory Auditors’ special report on regulated agreements and commitments with third parties




2.           Supplementary retirement plan for four of the members of the Management Board

Executives concerned:
John Searle, Chairman of the Management Board of Saft Groupe SA and Chairman of the Board of Directors of Saft SAS, which is
wholly-owned by Saft Acquisition SAS, which in turn is indirectly controlled by Saft Groupe SA.
Elizabeth Ledger, member of the Management Board of Saft Groupe SA and an employee of Saft SAS which is indirectly controlled
by Saft Groupe SA.
Xavier Delacroix, member of the Management Board of Saft Groupe SA and an employee and Director of Saft SAS which is indirectly
controlled by Saft Groupe SA.
Bruno Dathis, who is a member of the Management Board of Saft Groupe SA, is an employee of Saft SAS, which is indirectly
controlled by Saft Groupe SA.

Type of agreement and purpose:
A defined benefits supplementary retirement scheme was set up for the top executives and managers of Saft SAS and of Saft
Acquisition SAS as part of an intercompany retirement savings plan (PERI in French). The contributions paid into this plan by Saft
Acquisition SAS are based on the following rates:
     0 to 3 x ASSC(1): 0.2%;
     over 3 x ASSC to 4 x ASSC: 7%;
     over 4 x ASSC to 11 x ASSC: 8%.

Terms and conditions:
The Company retirement savings plan call undertaken by Saft SAS and by Saft Acquisition SAS for the financial year from January
1st to December  31st, 2012 on behalf of John Searle, Elizabeth Ledger, Xavier Delacroix and Bruno Dathis came to €23  132.64,
€5 921.57, €15 422.55 and €17 459.36 respectively.

3.           Services Agreement
We have been informed of the continuance of the commitments, described in details above, regarding the Service Agreement.

Terms and conditions:
At December 31, 2012, Saft SAS billed the Company a total of T€ 4 600 (excl. VAT) for services provided under this agreement. The
full amount of these fees had been paid by December 31, 2012.

4.           Management Services Agreement (MSA)
We have been informed of the continuance of the commitments, described in details above, regarding the Management Service
Agreement.

Terms and conditions:
In 2012, the Company billed T€ 6 876 (excl. VAT) to the operating subsidiaries for services provided under the Management Services
Agreement.
The full amount of these fees had been paid by December 31, 2012.

b)           not applicable during the period:
In addition, we have been informed that the following agreements and commitments, approved by the Shareholders’ Meeting in
prior years, were not applicable during the year.

1.           Severance benefits payable to John Searle on the termination of his employment contract –
             renewal of the approbation:

Executive concerned:
John Searle, Chairman of the Management Board of Saft Groupe SA and Chairman of the Board of Directors of Saft SAS, which is
wholly-owned by Saft Acquisition SAS which in turn is indirectly controlled by Saft Groupe SA.

Type of agreement and purpose:
Article 10 of the employment contract entered into on January 14, 2004 between John Searle and Saft Acquisition SAS provides for
the payment of severance benefits in the event that the contract is terminated for any reason other than gross or willful misconduct.
This article states that the benefits payable correspond to 18 months of John Searle’s average compensation and also sets out the
applicable terms and conditions for their payment.



(1) Social Security annual cap.


                                                                                                   S A F T - A N N U A L R E P O R T 2 0 1 2 / 217
       9          ANNUAL GENERAL MEETING




       According to the French Act 20071223 of August 21, 2007, the Supervisory Board decided to add the following wording to the
       severance benefits clause included in John Searle’s employment contract:
       “These contractual severance benefits shall only be payable if the following two performance criteria, based on individual and
       company related objectives, are met:
          the beneficiary has received at least 20% (twenty percent) of the maximum amount of his annual performance related bonus at
          least once in the previous three years;
          Saft Groupe SA has posted positive EBIT figures for the entire duration of the beneficiary’s terms of office.”
       This agreement has been renewed by your Supervisory Board at its meeting of May, 5th, 2011 at the same time of the reappointment
       of John Searle as Chairman of the Board.

       Terms and conditions:
       This commitment had no impact in 2012.


                                                  Courbevoie and Neuilly sur Seine, on 15 February 2013
                                                                 The statutory auditors



                            PricewaterhouseCoopers Audit                                                  Mazars
                                    Françoise Garnier                                               Juliette Decoux




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Additional
information
10.1   Documents accessible to the public                      220

10.2   Officers responsible
       for the annual report                                   221

10.3   The Saft Groupe Auditors
       and related fees                                        222

10.4   Registration document
       Cross-Reference Table                                   223

10.5   Annual financial report
       Cross-Reference table                                   225

10.6   Management report
       Cross-Reference table                                   226

10.7   Cross-reference table
       for environmental, social
       and corporate social information                        227




                               S A F T - A N N U A L R E P O R T 2 0 1 2 / 219
 10               ADDITIONAL INFORMATION
                  Documents accessible to the public




       10.1 DOCUMENTS ACCESSIBLE TO THE PUBLIC

       The annual registration documents, including historical            The Company’s articles of association, the minutes of Annual
       financial information relating to the Company, filed with            General Meetings, the Statutory Auditors’ reports and all other
       the AMF, are available on the Company’s website: www.              corporate documents may be consulted at the Company’s
       saftbatteries.com. Copies of the documents may also be             registered office.
       obtained at the Company’s registered office at 12, rue Sadi
                                                                          Pursuant to article 227-7 of the AMF’s General Regulations, the
       Carnot, 93170 Bagnolet.
                                                                          list below displays the information disclosed to the public by
       All the regulated information published by the Company,            the Company during the 2012 financial year in order to comply
       pursuant to article  221-1 et seq of the AMF’s General             with its obligations relating to the stock exchange regulations.
       Regulations, is available on the Company’s website in the          This list is also available on the Company’s website and on the
       “Investor centre/Regulated information” section.                   AMF’s website: www.amf-france.org.



       Press Release
       04-12       Saft’s Jacksonville factory delivers first Intensium® MAX 20 container
       08-12       Saft Groupe SA reports 2011 fourth quarter sales, and full year sales and earnings
       09-12       Saft lithium-ion batteries selected by Green Charge Networks to support NYC smart grid demonstration program
       10-12       Saft: 2011 Registration Document / annual report available
       13-12       Saft announces debt refinancing and the success of its first issue on the U.S. private placement market
       16-12       Preparatory Documents for the Annual Shareholders’ Meeting of May 11th, 2012
       20-12       Saft Groupe SA reports Sales for the first quarter of 2012
       21-12       Saft announces cooperation with Nedap to deliver effective energy storage for residential solar power systems
       23-12       Report of the Combined General Meeting of May 11th, 2012
       26-12       Saft Li-ion batteries to power GOES-R series weather satellites for NASA and NOAA
       27-12       Saft signs a multi-year contract with Sagem to supply Li-ion batteries for the French army’s FELIN systems
       29-12       Saft provides smart battery storage for Schüco’s intelligent solar energy management solution
       30-12       Saft and Nedap cooperation brings effective storage and self-consumption to domestic solar energy systems
       31-12       Saft presents smart Li-ion energy storage solutions for centralized and distributed PV systems
       34-12       Saft Groupe SA announces Q2 2012 sales and H1 sales and results
       35-12       Information on availability of mid-year financial report on June 30th, 2012
       36-12       SAFT GROUPE S.A - Increase Resources allocated to the liquidity contract
                   Saft Intensium® Max Li-ion system to provide megawatt level energy storage for Endesa-led STORE project
       37-12       in the Canary Islands
       38-12       Saft launches first onboard Li-ion battery system for regenerative traction applications
       40-12       Saft presents its new Li-ion batteries for electric and hybrid vehicles at the Paris Motor Show
       41-12       Saft Groupe recognized for the transparency of its financial information
       42-12       Saft Groupe SA reports sales for the 3rd quarter of 2012
       44-12       New Saft Lithium-Ion Battery Energy Storage System Helps Harness Wind Power in Saskatchewan, Canada
       47-12       Saft Wins Five-Year Multi-Million Dollar Contract to Provide Li-SO2 Batteries to Defense Logistics Agency
       48-12       Saft Contracted by Boeing to Provide Li-ion Batteries for New Small Platform GEO Satellites
       51-12       Scuderia Ferrari recognizes Saft with 2012 Innovation Award




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                                                                               ADDITIONAL INFORMATION
                                                                            Officers responsible for the annual report




10.2 OFFICERS RESPONSIBLE FOR THE ANNUAL REPORT

Responsible for the annual report                                  We obtained an end-of-assignment letter from the Statutory
Mr John Searle, Chairman of the Management Board                   Auditors, stating that they have completed their verification of
                                                                   the information related to the financial position and financial
Mr Bruno Dathis, Member of the Management Board and Chief          statements provided in the annual report, and their reading of
Financial Officer                                                  this entire report.
Responsible for financial information                               Information included by reference
Mr Bruno Dathis, Member of the Management Board and Chief          In accordance with article  28 of the European Commission
Financial Officer                                                  regulation No. 809/2004 dated 29  April 2004, the following
                                                                   information is included by reference in this annual report:
Statement by the Officers
We certify that, having taken all reasonable care to ensure that     the 2010 consolidated financial statements and related
such is the case, the information contained in this document is,     Statutory Auditors’ report, on pages 115 to 168 of the
to the best of our knowledge, in accordance with the facts and       annual report No. D11-0062 were filed with the Autorité
contains no omission likely to affect its import.                    des marchés financiers on 16  February 2011. The 2010
                                                                     consolidated financial statements have been audited by
We certify that, to the best of our knowledge, these financial        PricewaterhouseCoopers Audit and SYC SA-More Stephens
statements have been prepared in accordance with the                 SYC.
relevant accounting standards and give a true and fair value
of the assets and liabilities, financial position and the results     the 2011 consolidated financial statements and related
of operations of the Company and of all the entities included        Statutory Auditors’ report, on pages 123 to 182 of the
in the consolidation, and that the management report whose           annual report No. D.12-0085 were registered by the
content is specified in section  10.6 “Management report              Autorité des marchés financiers on 16 February 2012. 2011
cross-reference table” of this annual report, presents a             consolidated financial statements have been audited by
faithful picture of the business trends, earnings and financial       PricewaterhouseCoopers Audit and Mazars.
position of the Company and of all the entities included in the
consolidation, as well as a description of the principal risks
and uncertainties they are facing.




                                                                                                S A F T - A N N U A L R E P O R T 2 0 1 2 / 221
 10               ADDITIONAL INFORMATION
                  The Saft Groupe Auditors and related fees




       10.3 THE SAFT GROUPE AUDITORS AND RELATED FEES

       Statutory Auditors                                                     Substitute Auditors

       PricewaterhouseCoopers Audit                                           Mr Yves Nicolas
       63, rue de Villiers                                                    63, rue de Villiers
       92208 Neuilly-sur-Seine Cedex                                          92208 Neuilly-sur-Seine Cedex
       Represented by Françoise Garnier-Bel                                   Appointed on: 4 May 2011
       Appointed on: 4 May 2011                                               End of mandate: AGM 2017
       End of mandate: AGM 2017

       Mazars                                                                 Mr David Chaudat
       61, rue Henri Regnault                                                 61, rue Henri Regnault
       92075 Paris-La-Défense Cedex                                           92075 Paris-La-Défense Cedex
       Represented by Juliette Decoux                                         Appointed on: 4 May 2011
                                                                              End of mandate: AGM 2017



       AUDIT FEES PAID BY THE SAFT GROUPE TO STATUTORY AUDITORS AND COMPANIES IN THEIR NETWORK IN 2012,
       2011 AND 2010



                                                                                             Mazars (2012 and 2011)// SYC SA-Moore
                                                  PricewaterhouseCoopers Audit                        Stephens SYC (2010)
                                                Amounts                   %                    Amounts                      %
       (in € thousand)               2012 2011 2010             2012     2011     2010 2012 2011 2010             2012     2011     2010
       Audit
       Statutory audit
       and contractual audits:          628       573     920   77.6%    75.3%    70.4%    360      360   135     80.9%    96.8%    90.6%
          Parent company                 89        35      45   11.0%     4.6%     3.4%     89       35    45     20.0%     9.4%    30.2%
          Consolidated
          subsidiaries                  539       538     875   66.6%    70.7%    67.0%    271      325    90     60.9%    87.4%    60.4%
       Other audit
       related services:                    -       -     167        -        -   12.7%      31       -       -        -        -        -
          Parent company                    -       -       -        -        -        -     26       -       -        -        -        -
          Consolidated
          subsidiaries                    -         -   167          -        -   12.7%      5        -     -          -        -        -
       Sub-total                        628       573 1,087     77.6%    75.3%    83.2%    391      360   135     87.9%    96.8%    90.6%
       Other services
       Legal and tax                    181       188   220     22.4% 24.7% 16.8%           54       12    14 12.1%    3.2%   9.4%
       Sub-total                        181       188   220     22.4% 24.7% 16.8%           54       12    14 12.1%    3.2%   9.4%
       TOTAL                            809       761 1,307     100% 100.0% 100.0%         445      372   149 100.0% 100.0% 100.0%




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                                                                            ADDITIONAL INFORMATION
                                                                      Registration document Cross-Reference Table




10.4 REGISTRATION DOCUMENT CROSS-REFERENCE TABLE

The cross-reference table below highlights the main information required by European Union regulation No. 809/2004 dated
29 April 2004.


Information                                                                                                                Pages
1       Persons assuming responsibility for the document                                                                     221
2       Auditors                                                                                                             222
3       Selected financial data                                                                                          2, 22, 23
4       Risk factors                                                                                                    55 to 65
5       Information about Saft
5.1     History and development of the Company                                                                   2, 202, 203
5.2     Investments                                                              115, 117, 118, 120, 121, 156, 158, 159, 160
5.2.1   Main completed investments                                                      115, 117, 118, 120, 156, 158 to 160
5.2.2   Main ongoing investments                                                                                 120 to 123
5.2.3   Main future investments                                                                                     122, 123
6       Business overview
6.1     Principal activities                                                                                           28 to 42
6.2     Principal markets                                                                                3 to 10, 28 to 42, 157
6.3     Exceptional events                                                                                       114, 119, 180
6.4     Dependences                                                                                               57, 58, 62, 63
6.5     Elements on which all issuer representations regarding its competitive
        position are based                                                                                                       2
7       Group chart
7.1     Summary description of the Group                                                                               202, 204
7.2     List of subsidiaries                                                                                      125, 126, 152
8       Property, plant and equipment
8.1     Significant existing or planned tangible fixed assets                                               16, 17, 117, 121,160
8.2     Environmental issues that could influence the use of tangible
        fixed assets                                                                                 48 to 51, 67 to 74, 80, 81
9       Operating and financial review
9.1     Financial condition                                                      115, 121, 122, 128, 129, 132, 133,164 to 168
9.2     Operating results                                                                                        114 and seq.
10      Liquidity and capital resources                                                                             121, 122
11      Research and Development, patents and licenses                                                          44 to 47, 120
12      Trend information                                                                             14, 116, 117, 118, 124
13      Profit forecasts or estimates                                                                                      124
14      Administrative and management bodies
14.1    Members of management and supervisory bodies                                               26, 84 to 89, 100 to 103
14.2    Conflicts of interest                                                                                             89
15      Remunerations and benefits                                                          90 to 100, 182 to 184, 195, 197
16      Management and Supervisory Board practices                                                    84 to 89, 100 to 103
17      Employees
17.1    Workforce                                                                                                  2, 74 to 78
17.2    Shareholdings, stock options                                                                 76, 96, 97, 183, 184, 197
17.3    Issue of share capital reserved for employees                                                                 211, 212
18      Main shareholders                                                                                              24, 211
19      Related-party transactions                                                                                         179




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 10               ADDITIONAL INFORMATION
                  Registration document Cross-Reference Table




       Information                                                                                         Pages
       20        Financial information containing Saft’s assets and liabilities,
                 financial position and profits and losses
       20.1      Historical financial information                                                              197
       20.2      Proforma financial information                                                                n.a.
       20.3      consolidated financial statements                                                     128 to 184
       20.4      Auditing of historic annual financial information                            185, 186, 199, 200
       20.5      Age of latest financial information                                         31st december 2012
       20.6      Interim and other financial information                                                       n.a.
       20.7      Dividend policy                                                                              211
       20.8      Legal and arbitration proceedings                                               62, 63, 172, 173
       20.9      Significant change in Saft financial or trading position                        14, 114, 119, 180
       21        Additional information
       21.1      Share capital                                                               165, 192, 198, 210
       21.2      Incorporation and articles of association                                     202, 206 to 209
       22        Material contracts                                                                         205
       23        Third party information, statements by experts and declaration
                 of any interest                                                                            n.a.
       24        Documents available to the public                                                          220
       25        Information on shareholdings                                      125, 126, 152, 179, 191, 192
       n.a.: not applicable




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                                                                               ADDITIONAL INFORMATION
                                                                        Annual financial report Cross-Reference table




10.5 ANNUAL FINANCIAL REPORT CROSS-REFERENCE TABLE


The cross-reference table below highlights the financial information required in the Annual Financial Report.


Information                                                                                                                   Pages
Declaration by the person responsible                                                                                     221
                                                                            See the cross-reference table of the Management
Management Board report                                                      Board report in section10.6 of this annual report
Parent Company Financial Statements                                                                                188 to 198
consolidated financial statements                                                                                   128 to 184
Statutory Auditors’ report on the Parent Company Financial Statements                                                199, 200
Statutory Auditors’ report on the consolidated financial statements                                                   185, 186




                                                                                                S A F T - A N N U A L R E P O R T 2 0 1 2 / 225
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                  Management report Cross-Reference table




       10.6 MANAGEMENT REPORT CROSS-REFERENCE TABLE

       The cross-reference table below highlights the financial information required in the management report (rapport de gestion) as per
       articles L.225-100 to L.225-100-3 and L.225-211, paragraph 2 of the French Commercial Code (Code de Commerce).


       Information                                                                                                               Pages
       Activity and results
       Summary of activities of the Group during the past year, uncertainties
       and future prospects                                                                                             14, 114 to 124
       Presentation of activities of the Group by business segment, the results
       of these activities, progress made and difficulties encountered                                                       116 to 118
       Activity of Group subsidiaries and controlled companies                                                           119, 125, 126
       Analysis of business trends, results and the financial situation of the Group                             114 to 124, 164 to 168
       Financial and non-financial key performance indicators                                                 2, 16, 17, 22, 23, 67 to 79
       Information on the use of financial instruments                                                 145 to 151, 166 to 168, 193, 194
       Research and development activities                                                                                44 to 47, 120
       Significant events that occurred between the closing date and the time
       of writing the management report                                                                                            124
       Changes made to the presentation of annual and/or
       Consolidated Financial Statements                                                                                 114, 128, 180
       Information on social and environmental impact
       Social information                                                                                              68, 69, 74 to 80
       Environmental information                                                                                       68, 69 to 74, 80
       Information on risks
       Risk factors                                                                                                            55 to 66
       Equity investments
       Significant equity investments during the past year in companies
       registered in France                                                                                                        n.a.
       Subsidiaries and affiliates                                                                                       125, 126, 152
       Information on share capital and shareholding
       Information on shareholding                                                                                               24, 211
       Transactions on Company’s shares and share buyback programs                                91, 92, 95, 96, 97, 183, 184, 197, 210
       Dividends and other revenue distribution over the last three years                                              24, 165, 198, 211
       Evolution of share price                                                                                                   24, 25
       Stock options granting and exercising conditions set by the Supervisory Board
       to the Management Board members                                                                                           91, 92
       Corporate officers
       List of corporate office mandates                                                                                       84 to 88
       Remunerations and benefits in kind granted to corporate officers                                                         90 to 98
       Transactions on Company’s shares by Board members and their relatives                                                         99
       Other information
       Information that may have an impact in the event of a public offer
       (article L.225-100-3 of French Commercial Code)                                                                             107
       Appendices
       Five-year financial summary                                                                                                  198
       Special report of Statutory Auditors on stock option plans granted
       to corporate officers and employees                                                                                          n.a.
       Report of the Chairman of the Supervisory Board about governance
       and internal control                                                                                                        108
       Authorisations and powers granted by the Annual General Meeting
       to the Management Board with respect of share capital increase                                                              212
       n.a.: not applicable




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                                                                               ADDITIONAL INFORMATION
                                      Cross-reference table for environmental, social and corporate social information




10.7 CROSS-REFERENCE TABLE FOR ENVIRONMENTAL, SOCIAL
     AND CORPORATE SOCIAL INFORMATION

Articles R.225-102-1 and R.225-105 of the French Commercial Code (Code de Commerce).


Cross-reference table for social and environmental information                                                                Pages
Environmental information
General environmental policy
Company organization in order to take into account environmental subject and,
if necessary, process of assessment or certification on environmental subject                                                  69, 72
Training and information for employees about environmental protection                                                             69
Resources allocated to environmental risk and pollution prevention                                                          69 to 73
Reserves and guarantees for environmental risks, subject to this information
could not be seriously prejudicial to company in a ongoing litigation                                                        73, 173
Pollution and waste management
Prevention, reduction and correction of waste released into the air, water
and ground with severe environmental consequences                                                                         70, 71, 73
Prevention of waste production, recycling and waste disposal                                                                      70
Recognition of noise pollution and any pollution specific to an activity                                                           71
Sustainable use of resources
Water consumption and supply depending on local constraints                                                                       70
Raw material consumption and measures to improve efficiency in use                                                            68, 69
Energy consumption, measures taken to improve energy efficiency and the use
of renewable energy                                                                                                               70
Land use                                                                                                                          n.a
Global warming
Greenhouse gas emissions                                                                                                           74
Recognition of the impact of climate change                                                                                        74
Biodiversity protection
Measures taken to protect and develop biodiversity                                                                                 74
Social responsibility
Employment
Total and breakdown of employees by sex, age and geographical area                                                   74, 75, 77, 78
Hiring and firing                                                                                                                 74
Remuneration and their evolution                                                                                                 76
Training
Policies implemented training                                                                                                      76
Total number of training hours                                                                                                     76
Work organisation
Work time organisation                                                                                                            77
Absenteeism                                                                                                                   77, 78
Occupational health and safety
Conditions of health and safety at work                                                                                            77
Review of agreements with trade unions or employee representatives
on health and safety at work                                                                                                       77
Accidents, including their frequency and severity, and occupational diseases                                                       77




                                                                                                S A F T - A N N U A L R E P O R T 2 0 1 2 / 227
 10               ADDITIONAL INFORMATION
                  Cross-reference table for environmental, social and corporate social information




       Cross-reference table for social and environmental information                                Pages
       Equal treatment
       Measures for gender equality                                                                      75
       Measures to promote employment of disabled people                                             75, 76
       Policy against discrimination                                                                 75, 76
       Industrial Relations
       Organization of industrial relations, including information procedures
       and negotiation with staff                                                                       77
       Collective bargaining agreements                                                                 77
       Promotion and respect of provisions of the ILO core conventions relating to:
       ■ Freedom of association and the effective recognition of the right

          to collective bargaining                                                                      79
       ■ Elimination of discrimination in respect of employment and occupation                          79
       ■ Elimination of all forms of forced or compulsory labour                                        79
       ■ Effective abolition of child labour                                                            79
       Territorial impact, economic and company’s social activities
       Employment and regional development                                                              78
       On local populations                                                                             78
       Relationships with persons or organizations interested in the business
       of the Company, including associations, educational institutions,
       consumer associations and locals.
       Conditions of dialogue with these people or organizations                                        77
       Share of partnership or sponsorship                                                              77
       Information about social commitments in favor of sustainable
       development
       Subcontractors and suppliers
       Taken into account in the procurement policy of social and environmental issues               77, 78
       Importance of outsourcing and taking into account relations with suppliers
       and subcontractors for their social and environmental responsibility                          77, 78
       Fairness of practices
       Measures to prevent corruption                                                                    79
       Measure to prevent consumer health and safety                                                     79
       Other actions to promote Human Rights                                                         78, 79




228 / S A F T - A N N U A L R E P O R T 2 0 1 2
The information contained in the management report relating to the financial year ended December 31, 2012, presented in this document has been
prepared by the Management Board and approved by the Supervisory Board of Saft.

Certain statements contained herein are forward-looking statements relating, in particular, to future events, trends, plans or objectives. By their nature,
these forecasts are subject to known or unknown risks and uncertainties could cause Saft’s actual results and objectives to differ materially from those
expressed or implied in these forward-looking statements.




     The French version of the 2012 Registration Document has been registered with the AMF. It is therefore the only version that is binding in law.
     This Registration Document was registered with the Autorité des marchés financiers (AMF) on February 22, 2013, in accordance with
     the article 212–13 of the AMF’s General Regulations. It may be used in support of a financial transaction if accompanied by a transaction
     circular approved by the AMF.


The annual Registration Documents are available on the Company’s website: www.saftbatteries.com.
Copies of the Registration Documents may also be obtained at the Company’s registered office at 12 rue Sadi Carnot, 93170 Bagnolet – France.




                         This document is printed in France on FSC-certified paper from sustainable sources.

Gettyimages®/P. Castellano (cover, p. 3, 4, 5), Gettyimages®/E. Innocenti (cover, p. 3, 6, 7), Gettyimages®/M. Rakusen (cover, p. 3, 8, 9),
S. Ogle (cover, p. 3, 10, 11), Saft (p. 4, 6, 8, 10, 18, 45), Fotolia (p. 5), Siemens AB (p. 7), Itron (p. 9), Ausonia (p. 11, 19), Franck Juery (p. 15, 26),
VR Group (p. 18), Boeing (p. 19), Publicorp/J. Desportes (p. 20, 21, 47), DVA (p. 21), Gettyimages®/J. hunter (p. 31), Bombardier (p. 33),
Gettyimages®/Digital Vision (p. 35), Gettyimages®/Science Images/uIG (p. 37, 41), Gettyimages®/M. Dannenbaum (p. 39),
Gettyimages®/T. Tolstrup (p. 49), Gettyimages®/M. Keijser (p. 51).

Document no. 50038-2-0213 – Published by the Communication Department
Saft Groupe SA – Société Anonyme à Directoire et Conseil de surveillance
S.A. au capital de 25,174,845 euros – RCS Bobigny B 481 480 465




C R E AT I O N A N D D E S I G N :                          / +33 (0)1 55 76 11 11



                                                                / +33 (0)1 53 06 30 80
Saft Groupe SA
12, rue Sadi Carnot
93170 Bagnolet France
Tel.: + 33 (0)1 49 93 19 18
Fax: + 33 (0)1 49 93 19 55
www.saftbatteries.com

				
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