2010 registration document (PDF) - Valeo

2010 

Registration document 

containing the annual financial report 

Automotive technology, naturally

Contents 

Interview with Jacques Aschenbroich, 

Chief Executive Offi cer of Valeo. 2 

1 Presentation of Valeo 

and its businesses 5 

1.A. Overview of Valeo 6 

1.B. Key fi gures 9 

1.C. Presentation of Valeo 14 

1.D. Core businesses 29 

1.E. Main markets 40 

2 Risk Factors AFR 43 

2.A. Main risks 44 

2.B. Insurance and risk coverage 51 

3 Corporate Social 

Responsibility 53 

3.A. Environmental policy and sustainable 

development 54 

3.B. Social and societal policy 77 

3.C. Valeo’s voluntary commitment 

to sustainable development 91 

4 Corporate governance AFR 93 

4.A. Corporate governance structure 94 

4.B. Compensation of corporate offi cers 105 

4.C. Organization and operation 

of the Board of Directors 116 

4.D. Report of the Chairman of the Board 

of Directors on the composition of the 

Board, the application of the principle 

of gender equality, the conditions in 

which the Board’s work is prepared 

and organized, and the internal control 

and risk management procedures put in 

place by the Valeo Group 119 

4.E. Statutory Auditors’ report prepared in 

accordance with article L. 225-235 of the 

French Commercial Code and dealing with 

the report of the Chairman of the Board 

of Directors of Valeo 136 

4.F. Statutory Auditors’ special report on 

related-party agreements and commitments 138 

The elements of the annual fi nancial report can be clearly 

identifi ed in the table of contents using the AFR pictogram 

5 Financial and accounting 

information AFR 141 

5.A. Analysis of 2010 consolidated results 142 

5.B. 2010 Consolidated fi nancial statements 146 

5.C. Subsequent events and outlook 210 

5.D. Analysis of Valeo’s results 212 

6 Valeo 

and its shareholders AFR 213 

6.A. Stock market data 214 

6.B. Investor relations 217 

6.C. Dividend 218 

6.D. Capital ownership 218 

6.E. Share buyback program 222 

6.F. Additional disclosures 225 

7 Additional information AFR 235 

7.A. Principal legal and statutory provisions 236 

7.B. Information on subsidiaries and affi liates 239 

7.C. Major contracts 242 

7.D. Consultation of documents 242 

7.E. Information related to the Statutory Auditors 247 

7.F. Person responsible for 

the Registration Document 249 

8 Cross-reference tables 251 

8.A. Cross-reference table for the Registration 

Document 252 

8.B. Cross-reference table with employment 

and environmental disclosures required 

by the New Economic Regulations Act , 

introduced by Decree no. 2002-221 256 

8.C. Cross-reference table for the Annual 

Financial Report 257 

8.D. Cross-reference table of the Management 

Report as provided for by Articles L. 225- 

100 et seq. of the French Commercial Code 258


Registration document 


Group profile 

Valeo is an independent Group fully focused on 

the design, manufacture and sale of components, 

integrated systems and modules for the automotive 

industry, mainly for CO 2 emissions reduction. Valeo 

ranks among the world’s top automotive suppliers. 

The Group has 109 plants, 20 Research centers, 

38 Development centers, 10 distribution platforms 

and employs 58,000 people in 27 countries 

worldwide. 

Valeo’s strategy is based on a philosophy 

of sustainable and responsible development. 

valeo added TM 

This “Document de référence” was filed with 

the Autorité des Marchés Financiers (AMF) on 

March 29, 2011, pursuant to Article 212-13 of the 

AMF’s General Regulation. It may only be used in 

connection with a corporate finance transaction 

if it is accompanied by a memorandum approved 

by the AMF. This document was prepared by the 

issuer, and the signatories hereto are liable for 

its contents. 

In accordance with Article 28 of European 

Regulation No. 809/2004 dated April 29, 2004, the 

reader is asked to refer to previous “Documents 

de référence” containing the following specific 

information: 

1. the management report, consolidated 

financial statements, parent company financial 

statements, Statutory Auditors’ reports on 

the consolidated financial statements and 

parent company financial statements for 

the year ended December 31, 2009, and 

the Statutory Auditors’ special report on 

regulated agreements relating to 2009 

included in the “Document de référence” filed 

with the Autorité des Marchés Financiers on 

March 23, 2010 under No. D.10-149; 

2. the management report, consolidated 

financial statements, parent company financial 

statements, Statutory Auditors’ reports on 

the consolidated financial statements and 

parent company financial statements for 

the year ended December 31, 2008, and the 

Statutory Auditors’ special report on regulated 

agreements relating to 2008 , included in the 

“Document de référence” filed with the Autorité 

des Marchés Financiers on March 17, 2009 under 

No. D.09-128. 

Registration document 2010 - VALEO 

PAGE 1

PAGE 2 

Interview with Chief Executive Offi cer 

Interview with Jacques Aschenbroich, Chief Executive 

Officer of Valeo. 

What do you see as the key developments for Valeo in 2010? 

J.A.: In 2010 Valeo’s operational performance surpassed the targets set in the plan presented at the start of 2010. With sales of 

9.6 billion euros, the Group achieved an operating margin of 6.4%, 2.8 points higher than it was before the economic downturn 

in 2009 on comparable sales and net income of 365 million euros, representing 3.8% of sales. 

Valeo also generated net cash of 440 million euros with a 30% return on capital employed. 

But the best news for 2010 is certainly the record order level of 12.5 billion euros: this shows our customers’ confidence in our 

products - in particular our innovations in CO emission reduction - and our organic growth potential. 

2 

What do you attribute these results to? 

J.A.: The relevance of the two main growth areas upon which we have built our strategy was confirmed in 2010: CO emission 

2 

reduction products and expansion in Asia and emerging countries. Worldwide car production of 74 million passenger vehicles 

exceeded our expectations and we outperformed the market in our main production regions. 

Amid this strong recovery, our strict cost management policy also enabled us to lower our breakeven point to below what it 

was before the 2009 economic downturn. 

The Group set new targets for 2015 in March 2011. Are you confident Valeo can attain them? 

J.A.: The Group set new targets for 2015 during our investor day on 9, March: 

Sales of around 14 billion euros, equating to average annual organic growth of 8%; 

An operating margin rate above 7%, and; 

Return on capital employed of more than 30%. 

We are convinced that the Group can outperform worldwide car production by 3% a year between 2011-2015, due to the 

growing importance of the innovative products developed by Valeo, the market’s ready acceptance of the technical solutions 

that Valeo brings to CO emission reduction, and the Group’s growth in Asia and emerging countries. 

2 

Valeo will also continue to implement its new organization and strict cost control. 

We are confident we can achieve these targets and attain one of the highest sustained returns on capital employed in the sector. 

All of the Group’s employees, who have done a remarkable job of turning the Company around during a difficult year, are fully 

committed to achieving these new Group goals over the coming years. 

Registration document 2010 - VALEO

Interview with Chief Executive Offi cer 

Japan has gone through an unprecedented catastrophe. What message do you want to give 

to Valeo’s Japanese employees and partners? 

J.A.: My thoughts go out particularly to all those who are suffering during this terrible time, those who have lost loved ones or 

seen their homes damaged or destroyed. 

I would first like to thank all Valeo employees, who have shown exemplary courage and determination when faced with multiple 

professional challenges while at the same time dealing with their own personal problems. I would then like to thank our suppliers, 

who have marshaled their efforts to bring production back on line, often amid difficult material circumstances. Lastly, I would 

like to thank our Japanese clients for their continued confidence in our products. 

I have worked with Japan for over 30 years: I am sure that the country will emerge from this extraordinary challenge stronger 

than before. Valeo will continue to grow and reinforce its presence in Japan in the years to come, and will continue to support 

its Japanese clients around the world. 

March 28, 2011 

Jacques Aschenbroich 

Chief Executive Officer 


PAGE 3

PAGE 4 


1.A. Overview of Valeo 6 

1.A.1. History and development of the Group 6 

1.A.2. Legal structure 9 

1.B. Key figures 9 

1.B.1. Net sales by Business Group 9 

1.B.2. Net sales by region 10 

1.B.3. Net sales by market 10 

1.B.4. Gross margin 11 

1.B.5. Research and development costs 11 

(1) 1.B.6. Operating margin 12 

(3) 1.B.7. EBITDA 12 

1.B.8. Net attribuable income 

1.B.9. Earnings per share from continuing 

13 

operations (euro/share) 13 

1.B.10. Earnings per share (euro/share) 13 

1.B.11. Net debt (2) 13 

1.B.12. ROCE (Return on capital employed) (1) 14 

PRESENTATION OF VALEO 

AND ITS BUSINESSES 

1.C. Presentation of Valeo 14 

The elements of the annual fi nancial report can be clearly identifi ed in the table of contents using the AFR pictogram 


1 

1.C.1. Description and organization 

1.C.2. Valeo’s functional networks: tasks 

14 

and achievements 15 

1.C.3. Research and Development 25 

1.C.4. Industrial footprint and real estate portfolio 27 

1.C.5. Investments over the past three years 28 

1.D. Core businesses 29 

1.D.1. Powertrain Systems 29 

1.D.2. Thermal Systems 31 

1.D.3 Comfort and Driving Assistance Systems 32 

1.D.4. Visibility Systems 33 

1.D.5. Aftermarket products and services 34 

1.D.6. Highlights of the year 35 

1.E. Main markets 40 

1.E.1. Introduction to the Group’s markets 40 

1.E.2. Valeo’s competitive positioning 42 

PAGE 5

1 Overview 

PAGE 6 

Presentation of Valeo and its businesses 

of Valeo 

1.A. Overview of Valeo 

1.A.1. History and development of the Group 

The Group’s origins date back to the creation, in 1923, 

of Société Anonyme Française du Ferodo (SAFF), which 

operated out of a workshop in Saint-Ouen near Paris. SAFF 

started by distributing, then manufacturing, brake linings 

and clutch facings under the Ferodo license. In 1932, the 

Company was listed on the Paris Stock Exchange. 

The 1960s and 1970s 

For SAFF, this was a time of development through 

diversification into new sectors (brake systems in 1961, 

thermal systems in 1962, lighting systems in 1970 and 

electrical systems in 1978) and through international growth 

(Spain in 1963, Italy in 1964, Brazil in 1974). On May 28, 

1980, at its Annual General Shareholders’ Meeting, SAFF 

adopted the name Valeo, a Latin word meaning: “I am well”. 

By the 1980s, Valeo had become a global group, developing 

through acquisitions around the world: 

1987 

Acquisition of Neiman (security systems) and its Paul 

Journée subsidiary (wiper systems). 

Acquisition of Chausson’s heat exchanger business. 

1988 

Acquisition of Clausor and Tibbe (security systems in Spain 

and Germany). 

Creation of Valeo Pyeong Hwa (clutches and ring gears 

in Korea), Valeo Transtürk (clutches and distribution in 

Turkey), and Valeo Eaton (clutches for heavy-duty trucks 

in the United States). 

Creation of the Valeo Acustar Thermal Systems Inc. joint 

venture (climate control in the United States). 

1989 

Acquisition of Delanair (climate control in Great Britain). 

Acquisition of Blackstone (engine cooling in the United 

States with businesses in Mexico, Canada, Sweden, Spain 

and Italy). 

This drive for growth was accompanied by the refocusing of 

the Group’s activities around a number of core businesses, 

and the sale of non-strategic businesses (brake linings, 

ignition, horns) in 1990. 


The 1990s 

The Group implemented a powerful strategy based on: 

a new industrial culture: the Group adopted its “5 Priorities” 

method in 1991 (see “5 Priorities” in “Operational 

excellence”, section 1.C.2.2.); 

a sustained Research and Development drive: in 1992, 

the Group set up an electronics research centre in Créteil 

(France) and an electronic module production site at 

Meung-sur-Loire (France). In 1993, Valeo opened Research 

and Development centers for lighting systems in Bobigny 

and for clutches in Saint-Ouen (France); 

increasingly international growth: the first production sites 

in Mexico and Wales (climate control) and Italy (lighting 

systems) opened in 1993, and in 1994 the first joint 

ventures in China were created for wiper systems, climate 

control, lighting systems and electrical systems. 

The Group’s external growth continued throughout the 

decade: 

1995 

Acquisition of Siemens’ thermal business in Germany. 

1996 

Acquisition of a stake in Mirgor (thermal systems in 

Argentina). 

Acquisition of Fist S.p.A. and a division of Ymos AG 

(security systems in Italy and Germany). 

Acquisition of Klimatizacni Systemy Automobilu (thermal 

systems in the Czech Republic). 

1997 

Creation of joint venture clutch production companies in 

India and China and a friction materials joint venture in 

India. 

Acquisition of Univel (security systems in Brazil). 

Acquisition of Osram Sylvania’s automobile business to 

create Valeo Sylvania (lighting systems) in the United States. 

1998 

Acquisition of the Electrical Systems activity of ITT 

Industries.

1999 

Acquisition of a division of Mando (electrical systems in 

South Korea). 

Sale of its 50% stake in the German company LuK. 

2000 

Creation of a joint venture with Unisia Jecs (transmissions 

in Japan). 

Acquisition of a stake in Zexel (thermal systems). 

Strategic alliance with Ichikoh (lighting systems in Japan). 

Acquisition of Labinal’s automotive business (Argentina, 

Eastern Europe, Italy, Spain, France, India, North Africa 

and Portugal). 

The 2000s 

The Group implemented a program of industrial streamlining 

with production reorganized across fewer sites, a greater 

protion of sites in low-cost regions, and the sale of selective 

non-strategic activities. 

As from 2004, the Group focused on technology through 

targeted acquisitions, while accelerating its expansion in Asia, 

particularly China. 

2001 

Sale of the Filtrauto business and of Valeo Transmissions Ltd, 

UK. 

2003 

Valeo increased its stake in the joint venture ZVCC (Zexel 

Valeo Climate Control) to 50%. 

Valeo increased its stakes in two Chinese joint ventures, 

to 50% in electrical systems and 55% in wiper systems. 

2005 

Valeo acquired the Engine Electronics division of Johnson 

Controls (JCEED), which designs and produces complete 

engine management systems, electronic control units and 

electronic motor drives as well as engine components. 

Acquisition of shares held by Bosch in the Group’s Climate 

Control businesses in Asia (Zexel Valeo Climate Control 

plant and Valeo Zexel China Climate Control). This gave 

Valeo control of all the share capital of its climate control 

and compressor production businesses, 

Valeo increased its stakes in two Thai companies, Siam 

Zexel Co., Ltd. and Zexel Sales Thailand Co., Ltd. – 

specializing in climate control systems, to 74.9% 

Valeo formed a new joint venture with FAWER, the 

automotive supply branch of FAW, in China. The new 

entity, 60% owned by Valeo, develops and manufactures 

compressors for climate control systems aimed at the 

Chinese market and at export. Its plant is located in 

Changchun in the northeast of China, 

1 


Overview of Valeo 

Valeo formed a joint venture with Hangsheng Electronics, a 

Chinese tier one automotive supplier, for the production of 

ultrasonic parking assistance systems. Valeo owns a 75% 

share in this joint venture, 

Valeo increased its stake in Ichikoh, the Japanese 

manufacturer of automotive lighting systems and mirrors 

to 28.2%. 

2006 

Valeo sold its Electric Motors & Actuators business to the 

Japanese group Nidec, of its stake in Bluetooth specialist 

Parrot, and of Logitec, a logistics business in Japan. 

Valeo also acquired a 50% stake in Threestar, a leading 

South Korean radiator manufacturer. This new entity, of 

which the other 50% is held by Samsung Climate Control 

Group, is called Valeo Samsung Thermal Systems. 

Valeo created a new joint venture in China, with Ichikoh, 

and increased its shareholding in Hubei Valeo to 100%. 

2007 

Sale of the Wiring harness business to Leoni. 

Acquisition of Connaught Electronics Ltd. (CEL), an Irish 

manufacturer of automotive electronics. 

Two joint ventures were launched in India: Valeo Minda 

Security Systems and Valeo Minda Electrical Systems India 

Private Limited. 

2008 

Valeo sold its truck engine cooling division to EQT, a 

Northern European investment fund. 

Valeo set a joint venture with the Russian company Itelma, 

which supplies automotive parts to Russian manufacturers, 

in which Valeo holds a 95% stake. 

A joint venture with the Anand group to produce lighting 

systems was set up in India. The new company, called 

Valeo Lighting Systems India Private Limited, is majority 

owned by Valeo. 

The strategic links with Ichikoh, one of the leaders in 

automotive lighting in Japan, were strengthened with the 

signing of a new agreement on operational management 

and corporate governance. 

2009 

On March 20, 2009, Pascal Colombani became Chairman 

of the Board of Directors, while Jacques Aschenbroich was 

appointed Chief Executive Officer. 

An extensive reorganization took place to make the Group 

more profitable and efficient in the face of the increasing 

globalization of its markets and its customers. The new, 

simpler structure is based on four Business Groups and a 

more important role for the National Directorates. 


PAGE 7

1 Overview 

PAGE 8 



The four new Business Groups are: Comfort and Driving 

Assistance Systems; Powertrain Systems; Thermal 

Systems; Visibility Systems. 

Valeo’s stake in the compressors joint venture in China was 

increased from 60% to 100%. The new company, which 

produces compressors for the Chinese market and Asia, 

is called Valeo Compressor (Changchun) Co. Ltd. 



Sale of the headlamp leveling devices business to a group 

of investors supported by the European investment fund 

Syntegra Capital and the regional development fund 

Picardie Investissements. 

Sale of the Telma speed controller business, which 

manufactures electromagnetic retarders, to the current 

management team. 

Increase of Valeo’s stake in the Indian electrical systems 

production company, now known as Valeo Engine and 

Electrical Systems India Private Ltd., to 100%. 

Presentation of the Group’s new strategy on March 10, 2010, 

at an investors’ day, based on two priorities for growth: 

reduction of CO 2 emissions and development in Asia and 

in emerging countries.

1.A.2. Legal structure 

The Group’s legal structure is based on three holding 

companies, which are interposed between the parent 

company, Valeo, and its operating subsidiaries: Valeo 

Finance, which holds shares in French companies and 

manages research projects, Valeo Bayen, whose purpose 

is to hold shares in foreign companies and, in doing so, 

succeeds VIHBV, registered in the Netherlands, which 

previously played the role of investor in foreign companies. 

One other holding company exists for historical reasons: 

Société de Participations Valeo. 

At an intermediate level, in some countries (Germany, Spain, 

United States, Italy, Czech Republic, United Kingdom, Japan), 

1.B. Key figures 

1.B.1. Net sales by Business Group 

In millions of euros and as a % of net sales 

8,677 7,499 9,632 

1% 0.3% 

0.6% 

24% 26% 

24% 

31% 30% 

30% 

26% 27% 

28% 

18% 17% 

17% 

08 (1) 09 10 

1 


Key fi gures 

holdings are organized around one or several companies 

established in the country itself, which also play the role of 

holding company and hold shares, directly or indirectly in 

other operational companies, forming a local sub-group. This 

structure allows the centralization and optimization of the 

financial management of the members of the sub-group and, 

where legally possible, the creation of a fiscally consolidated 

grouping. 

To break into new markets or consolidate its systems offer 

for customers, or to develop new product offers, Valeo 

has formed jointly owned companies with industrial or 

technological partners in various countries. 

Other 

Visibility Systems 

Thermal Systems 

Powertrain Systems 

Comfort and Driving Assistance Systems 

(1) As from January 1, 2009, the Group has changed the presentation of its income statement, notably net sales. Other operating revenue is 

now classified mainly as a reduction from R&D expenditures. The figures for 2008 have been restated accordingly. 


PAGE 9

1 Key 

PAGE 10 


fi gures 

1.B.2. Net sales by region 



8,677 7,499 9,632 

8% 8% 

8% 

14% 17% 

19% 

12% 

1.B.3. Net sales by market 

As a % of net sales 

10% 

13% 

66% 65% 

60% 

08 (1) 09 10 

17% 83% 

Aftermarket (2) OEM 

South America 

Asia and others 

North America 

Europe + Africa 



(2) Including miscellaneous sales and tooling.

1.B.4. Gross margin 


15.3% 

15.2% 

18.0% 

08 (1) 09 10 

16.4% 

1.B.5. Research and development costs 


5.8% 

13.8% 13.0% 

1 


Key fi gures 

17.0% 

17.9% 18.1% 

H1-08 H1-09 

(1) H2-08 (1) H2-09 H1-10 H2-10 

6.3% 

5.6% 

08 (1) 09 10 




PAGE 11

1 Key 

PAGE 12 


fi gures 

1.B.6. Operating margin (1) 


2.7% 

1.B.7. EBITDA (3) 


1.8% 


6.4% 

08 (2) 09 10 

9.1% 8.9% 

11.9% 

08 (2) 09 10 

4.2% 

0.7% 

-1.5% 

4.6% 

6.1% 

6.7% 

H1-08 H1-09 

(2) H2-08 (2) H2-09 H1-10 H2-10 

10.4% 

7.5% 

6.6% 

11.0% 

11.8% 

12.1% 

H1-08 H1-09 

(2) H2-08 (2) H2-09 H1-10 H2-10 

(1) The Group’s operating margin corresponds to operating income before other income and expenses (see Note 4.5 to the consolidated 

financial statements, Chapter 5, section 5.B.6). 


now classified mainly as a reduction from R&D experditures. The figures for 2008 have been restated accordingly. 

(3) EBITDA corresponds to operating income before amortization, depreciation, impairment losses, and other income and expenses (see 

Note 3.2 to the consolidated financial statements, Chapter 5, section 5.B.6).

1.B.8. Net attribuable income 


(207) 

-2.4% 

(153) 

-2.0% 

365 

09 

08 (1) 10 

1.B.10. Earnings per share 

(euro/share) 

(2.73) 

(2.04) 

4.86 

08 09 

(1) 10 

3.8% 

1 


Key fi gures 

1.B.9. Earnings per share from 

continuing operations 

(euro/share) 

(2.73) 

(2.04) 

4.89 

08 09 

(1) 10 

1.B.11. Net debt (2) 

In millions of euros and % of equity 


now classified mainly as a reduction from R&D experditures. The figures for 2008 have been restated accordingly. 

(2) Net debt comprises all long-term debt (including the current portion) and short-term debt, less loans, other non-current financial assets and 

cash and cash equivalents (see Note 5.10.5 to the consolidated financial statements, Chapter 5, section 5.B.6). 

821 

60% 

722 

278 

56% 16% 

08 09 10 


PAGE 13

1 Presentation 

PAGE 14 



1.B.12. ROCE (Return on capital employed) (1) 


11% 

7% 

32% 

08 09 

(2) 10 

(1) The ROCE is the ratio of operating margin to capital employed excluding goodwill. 



1.C. Presentation of Valeo 

1.C.1. Description and organization 

1.C.1.1. Group profile and structure 

Valeo is an independent industrial Group fully focused on 

the design, manufacture and sale of components, integrated 

systems and modules for automobiles and heavy goods 

vehicles, in both the original equipment and aftermarket 

segments. It ranks among the world’s leading automotive 

suppliers. 

At December 31, 2010, the Group had 109 plants, 20 

Research centers, 38 Development centers and 10 

distribution platforms and employed 57,930 people in 

27 countries worldwide. 

1.C.1.2. The Group’s operational structure 

The Group’s operational structure is based on four Business 

Groups, the aftermarket business, Valeo Service, and National 

Directorates, whose role has been reinforced. 

1.C.1.2.1. The operational structure 

The Group’s operational organization is broken down as 

follows: Group, Business Groups, Product Groups, Product 

Lines and Regional Operations. 

The Group defines strategic orientation and decides on 

the allocation of resources among the Business Groups. It 

oversees the deployment of the Group standards and policies, 

with the support of the functional networks. It analyzes and 

directs the Business Groups, and assures consistent sales 

and industrial policies. 

The Business Groups are responsible for business growth 

and operating performance of the Product Groups and 

Product Lines that they manage, across the globe. They 

provide technological road maps to the Group. With support 

from National Directorates, they coordinate between Product 

Groups and Product Lines, in particular the pooling of 

resources, the allocation of R&D efforts and the optimization 

of production resources on the industrial sites. Each of the 

4 Business Groups is structured to reinforce co-operation 

and stimulate growth for all the Product Groups worldwide.

The Product Groups and Product Lines manage their 

activities and can draw on all the development, production 

and marketing resources needed to fulfill their objectives. 

The Regional operations manage operations of a Business 

Group for a given region. 

Operational principles and rules, with an appropriate 

delegation of authority, have been established at all levels, 

with a precise definition of areas and decision thresholds. 

1.C.1.2.2. National Directorates 

The National Directorates are tasked with ensuring the 

Group’s growth in their respective countries, and are the 

interface with local customers. They also manage all the 

services which support operational activities in the country. 

1.C.1.2.3. Aftermarket activity 

Valeo Service is under the responsibility of the Group’s Chief 

Operating Officer. In cooperation with the Business Groups/ 

Product Groups, it supplies original equipment spares to 

automakers and replacement parts to the independent 

aftermarket. 

See section 1.D of this Chapter for more information on the 

Business Groups and the aftermarket business. 

1 


Presentation of Valeo 

1.C.1.3. The Group’s functional structure 

The Group’s functional structure is as follows: 

The Finance Department oversees management control, 

accounting, financial reporting, financing activities and cash 

management, taxation, financial communications, strategic 

operations, IT systems, procurement and the area of risk, 

insurance and the environment; 

The Human Resources Department is centered on 

workplace relations, career development, training and skills 

managment and employee involvement; 

The Chief Operating Officer’s office is responsible for the 

four operations Business Groups and Valeo Service and 

oversees the Industrial, Logistic and Quality functions; 

Research & Development and Product Marketing directs 

the Group’s innovation program as well as methods and 

product development tools; 

The Sales and Business Development Department is 

organized around four main areas: a Sales Department for 

each Business Group, Customer Directors dedicated to each 

major automaker, National Directorates for each geographical 

aera, and an International Development Department for 

Business Group; 

The Legal Department ensures compliance with Group 

procedures and with legal regulations; 

The Corporate Strategy and Planning Department 

coordinates the Group’s strategic planning, in liaison with all 

the functional departments and Business Groups; in particular 

for preparing the medium-term plan and determining the 

Group’s profitability and the main areas of organic and 

external growth. 

The Heads of these functions, of the Business Groups and 

of Valeo Service are members of an Operations Committee 

(see Chapter 4, section 4.A.1.1). 

1.C.2. Valeo’s functional networks: tasks and achievements 

1.C.2.1. Human Resources 

Human Resources is responsible for skills management 

(recruitment, compensation, internal mobility and team 

motivation), training and adherence to the Group’s Code of 

Ethics. 

It pursues a strategy to support the Group’s international 

development by devising a global policy that is deployed 

in accordance with the characteristics of local employment 

markets. 

Valeo encourages employee commitment and is particularly 

attentive to factors that help motivate employees at every 

level and in every region. The Group formed a working 

group to consider how to maintain team motivation and 

strengthen the sense of belonging among employees. On 

the recommendations of this group, Valeo has reinforced 

local management action by cascading information on its 

financial position while stepping up internal communications 

and efforts to strengthen links between teams, at every level 

of the organization. 


PAGE 15


PAGE 16 



These various actions help to improve the sense of belonging 

to the Valeo Group and to develop pride in “being Valeo” at 

every hierarchical level. 

1.C.2.1.1. Management development 

The Group’s new organization, rolled out in October 2010, 

improves the HR network’s ability to develop the Company’s 

most talented staff, which is one of the function’s essential 

activities, particularly in the Business Groups and at the 

country level. To this end, the role of the HR teams at the 

country level has been extended so that they can work 

to best support the Group’s development locally. The HR 

teams have been strengthened in high-growth markets that 

are growing strongly (Germany, Brazil, China, India, Mexico, 

Poland). The skills management system is a comprehensive 

range of procedures and tools available to managers to drive 

the effective development of Valeo employees. This system is 

used to recruit, develop and motivate the necessary human 

resources, not just in their day-to-day work but also to 

achieve the Group’s strategic objectives. 

The three major constituents of the management development 

strategy are external recruitment, which also includes relations 

with higher education establishments, internal mobility and 

personal development, and compensation and benefits. 

Recruitment and relations with schools and universities 

Recruiting the best talent in the field of technologies related 

to reducing CO emissions and in fast growing emerging 

2 

markets, in particular the emerging countries, in order to 

support its international development and innovation strategy 

is a key factor for Valeo’s success. Qualified teams ensure 

Valeo can offer its customers around the world, value-added 

services in terms of innovation, total quality and competitive 

solutions and services. 

To ensure that recruitment, both internal and external, is 

managed coherently and professionally, all managers are 

trained using a recruitment kit. This kit brings together in 

a single document all existing tools such as the Employer 

Brand, fully revised in 2008 with a new visual identity, the 

Internal Mobility Charter and the Valeo Competences 

System, launched in 2004. A Recruitment Guide, explaining 

the Group’s operating culture and the key messages to 

communicate to applicants, is the core element of the 

recruitment kit. By offering a standard recruitment policy 

based on objective selection criteria, the Recruitment Guide 

helps to promote diversity at Valeo and to eliminate all forms 

of discrimination. 


In order to ensure the efficient management of external 

applicants, the Group has also improved the functionalities 

of its recruitment website valeocareers.com and has 

completely reviewed its graphic charter for press and web 

communication in order to improve the visibility of its brand 

on the employment markets. In 2010, Valeo recruited 

10,676 employees throughout the world (of whom 5,063 are 

on fixed-term contracts) including 1,592 engineers and 

managers, bringing to the Group new skills that will support 

its international development. 

Valeo has maintained its policy of relations with higher 

education institutes, in particular by developing partnerships 

with universities and schools of international renown, and 

fostering diversity within its workforce. In 2010, the Group 

took part in many events targeting future graduates school 

forums at: Arts et Métiers ParisTech, Audencia, Centrale 

Paris-Supélec, EDHEC, ESEO, Supméca, Sup’Optique and 

UTC (France); the international corporate volunteers forum 

organized by UbiFrance; a training forum with CEFIPA and 

ESIEE (France); events held at 11 universities in China (in, 

among others, Shanghai, Wuhan, Chengdu), Japan and 

India; and the Franco-German forum held in Strasbourg. 

Valeo also sponsors the Ingénieur d’Audencia Nantes 

network, which allows graduate engineers to qualify at this 

renowned business school through a specific studies course. 

The Group was also represented at the “Top Women, Top 

Careers” forum in Brussels, with the objective of attracting 

applications from female engineers or those seeking a career 

in industry. Valeo also sponsors the Elles bougent association 

which promotes careers in the transport sector among female 

high school graduates; and Valeo helped to organize the Elles 

Bougent au Mondial de l’automobile day, which allowed some 

100 female high school and university students to attend 

events where businesses were presented with the aid of the 

Valeo sponsors. 

Valeo took an active part in the campaign to promote 

aftermarket businesses conducted by the FIEV (Fédération 

des Industries des Équipements pour Véhicules), which 

produced a brochure on this topic, including testimonials 

from Valeo. 

Valeo also signed a collaboration agreement with the IFP 

School (École du Pétrole et des Moteurs), which foresees 

the development of joint teaching courses in the field of 

automotive automobile technologies. 

Finally, Valeo sponsors the student association ShARE, for 

students from the most prestigious Asian universities, and 

played an active role in organizing the association’s international 

seminar held in Shanghai (China) in December 2010.

Internal mobility and personal development 

To offer attractive career prospects to the 11,375 engineers 

and managers employed by Valeo, the Group’s policy 

requires that at least three out of four positions are filled 

internally. Internal promotions were strongly encouraged in 

2010, in particular as part of the implementation of the new 

organization. 

A succession and development plan is drawn up each year, 

in order to identify the next stages in the career path of 

each engineer and manager. This plan is implemented by 

each Group entity via a committee responsible for making 

decisions regarding internal job applications. In order to 

prepare employees for success in the next stage of their 

career, Valeo has a standard “individual development plan” 

form comparing skills acquired with skills required for the next 

stage, allowing very detailed individual development plans 

to be drawn up. The plan is based on the “3 E” approach 

(Education, Exposure, Experience), which favors structured 

experience and first-hand knowledge in addition to more 

traditional training and education. The Group has also 

developed a career appraisal form to help identify potential 

career developments for each engineer and manager, based 

on an analysis of their personal and professional interests. 

Using these tools, 2,099 engineers and managers benefited 

from career development actions in 2010. 

To encourage the transfer of working cultures, technologies 

and methods, and to offer international career opportunities, 

the Group must be able to send some 50 experienced 

managers abroad every year. In order to be effective, Valeo’s 

international mobility policy must be both competitive on the 

employment market and contribute to cutting costs. With 

this in mind, the Group has set up a shared services center 

devoted to managing international mobility, in order to provide 

high level support to these moves. 

The system for recognizing Experts (products or processes) 

introduced in 1997 led to the appointment in 2010 of 63 new 

Experts, the promotion of 8 Experts to a higher status, and 

the renewal of 134 Expert positions. Being an Expert at Valeo 

means following a parallel career path with the same status as 

a manager, but without the wider managerial responsibilities. 

Compensation and benefits 

The Group constantly monitors the employment market 

in order to remain competitive so that it can motivate and 

retain its talent. It must also adapt its practices by offering 

appropriate compensation to its employees throughout the 

world. The Group maintains competitive salaries in particularly 

volatile employment markets such as Brazil, China, Egypt, 

India, Romania, Russia and Slovakia, while also adapting its 

employee benefits in countries like Romania. Valeo’s human 

resources rules are constantly reviewed and updated to adapt 

to countries in which the Group is newly established. 

1 



1.C.2.1.2. Personnel training and involvement 

In a highly competitive environment, training is an essential 

means of improving employee skills. The training policy and 

system are designed to reflect the needs of operational 

activities, functional networks and the career development 

aspirations expressed during employees’ annual appraisals. 

Training is essential for improving employability. It is seen 

as a shared investment: it is up to individual employees to 

be proactive and to commit to their own training programs 

by discussing them with their managers and the Human 

Resources team. 

Training is also a key means of mobilizing everyone through 

the dissemination of values, methods and a common 

language in all sites through Valeo’s Five Priorities schools 

based in Europe and Asia. 

Valeo Experts transfer their product and process expertise 

through technical institutes to all employees as well as 

external customers. 

The Group’s functional networks train their members at 

internal Academies led by the business managers. 

The sites design and organize all training related to their 

operational needs for a flexible, multi-skilled workforce, by 

offering the support of local management while constantly 

working to improve employee professionalism. 

To achieve the greatest flexibility and efficiency, educational 

tools are designed in the form of training programs. The Group 

aims to alternate theory and practice so that employees learn 

to implement the skills acquired in their day-to-day work. 

Extending and improving skills, particularly through a dynamic 

training policy based on innovative resources and e-learning, 

means that Valeo is better placed to succeed in a highly 

competitive environment, and that its employees can benefit 

from career development opportunities. 

E-learning covers all areas: languages, office skills, 

management, technical knowledge, personal development 

and communications. It is regularly enhanced with new 

modules, mainly designed in-house. For example, for its 

“well-being and efficiency at the workstation” project, in 

support of safety training, the Group deployed an e-learning 

program on ergonomics in 11 languages to help prevent 

muscular-skeletal disorders and work-related illnesses. 

Valeo has also developed special training courses to develop 

managerial skills in change management and has produced 

its executive training program, carried out with the CEDEP 

(Centre Européen d’Education Permanente, a permanent 

education center that works with INSEAD). 


PAGE 17


PAGE 18 



1.C.2.1.3. The Code of Ethics 

Valeo has long been aware of its social and environmental 

responsibilities, and is committed to upholding them while 

respecting national legislation and international treaties and 

agreements. 

To this end, the Group has made a number of commitments, 

both internally and externally, including adhering to the UN 

Global Compact. Valeo has also undertaken to promote the 

fundamental rights expressed in the Universal Declaration of 

Human Rights, human dignity and value, respect for private 

lives of employees and equality of rights between men and 

women. 

As part of its commitment, each year Valeo informs the 

Global Compact (Communication of Progress – COP) about 

advances made by the Group in these areas. 

In 2005, these commitments led to the drawing up and 

international distribution of a Code of Ethics aimed at all 

Group employees, which sets out the rules applicable in all 

Group legal entities and in every country without exception. 

The new Code of Ethics covers issues such as child labor, 

disabled workers, discrimination, harassment and health and 

safety in the workplace. It also demonstrates the Group’s 

commitment to sustainable development: the environment, 

human resources, social dialogue and freedom of expression, 

as well as each employee’s individual development. It covers 

the Group’s commitments to society (professional training, 

new employment assistance, reindustrialization), business 

conduct and professional conduct. Finally, the Code states 

that Valeo service providers, consultants and subcontractors 

are obliged to act in accordance with the ethical rules outlined 

by the Group. 

The Group has set up an alert procedure to inform it of any 

unethical situations. For each alert, an enquiry is opened, 

driven and coordinated by the Group and the HR network. 

The Code of Ethics is an essential element of Valeo’s values 

and a manager who does not respect it automatically receives 

the lowest evaluation rating. In such cases, an improvement 

plan must be implemented in order to demonstrate significant 

progress within a given timescale. This “manager assessment 

procedure” was chosen as a best practice by La Halde, 

France’s anti-discrimination and equal opportunities body. 


1.C.2.1.4. Well-being at work 

In October 2009, the French Minister of Employment launched 

an urgent plan to prevent stress and psychosocial risks. 

On March 9, 2010, Valeo signed a method agreement with 

French unions that has continued with the negotiation and 

signing of a Group agreement on “Wellbeing at work” on 

October 13, 2010. This agreement aims to: 

Reaffirm the Valeo Group’s commitment to the physical and 

mental wellbeing of its employees; 

Define an approach for assessing psychosocial risks in the 

Company; 

Define a list of measures aimed at improving wellbeing at 

work. 

Accordingly, a social climate survey covering all French 

employees was carried out in the last quarter of 2010. 

Following this quantitative analysis, a series of qualitative 

interviews took place in the first quarter of 2011 in order to 

draw up a psychosocial risks roadmap. The “Well-being at 

work” committees set up in 2010 in each establishment will 

be responsible for defining and implementing local action 

plans during 2011, with a view to addressing their own issues. 

A course for all members of the “Well-being at work” 

committees began in 2010 and will be continued in 2011. A 

video to raise awareness amongst employees and managers 

of psychosocial risks will also be circulated during the first 

half of 2011. 

1.C.2.1.5. Labor relations 

Valeo strives to reconcile economic, social and environmental 

development in each of the Group’s legal entities, and to 

achieve an optimal social climate. Valeo is firmly committed 

to a forward-looking policy of employment and skills 

management. 

Within the framework of optimizing its industrial base, the 

Group actively seeks solutions that will provide alternative jobs 

for employees affected: transfers within the Group, training 

courses leading to qualifications, individual and collective 

external redeployment, the search for new employers to take 

over sites in question, the reindustrialization of employment 

regions and local economic development initiatives. 

Employee representatives are regularly informed and 

consulted on these operations. 

In 2010, Valeo started to implement its new organization, 

based on four major Business Groups. The Group’s 

Management investigated all possible measures in order to 

minimize job losses. 

The Group’s social indicators are set out in Chapter 3, 

section 3.B.

1.C.2.2. Operational excellence 

Operational excellence is of critical importance to Valeo. The 

controlled expansion of the Group’s business takes place 

through the daily implementation of a guiding principle: 

obtaining cost-effective total quality first time, whether this 

involves process engineering, manufacturing, projects or 

purchasing. 

The 5 Priorities methodology is applied around the world, 

by all Group employees, in order to deliver “zero defects” 

to the customer. The 5 Priorities are: 

Personnel Involvement: this implies recognizing skills, 

enhancing them through training and giving people the 

means to carry out their responsibilities. Employees 

are particularly encouraged to make suggestions for 

improvement and participate actively in the work of 

autonomous teams; 

The Valeo Production System (VPS): the VPS is designed 

to improve the productivity and quality of products and 

systems. It involves the following approaches: pull flow 

organization, flexible production resources, the elimination 

of all non-productive operations and stopping production 

at the first non-quality incident; 

Constant Innovation: to design innovative, easy-tomanufacture, 

high-quality and cost-effective products 

while reducing development time, Valeo has set up an 

organization based on project teams and the simultaneous 

engineering of products and processes; 

Supplier Integration: this allows Valeo to benefit from 

suppliers’ ability to innovate, to develop productivity plans 

with suppliers and improve quality. Valeo sets up close and 

mutually beneficial relationships with a limited number of 

world-class suppliers and sustains these relationships in 

the long term; 

Total Quality: in order to meet customer expectations 

in terms of product and service quality, Total Quality is 

required throughout the Group and from its suppliers. 

5 PRIORITIES 

Constant 

Innovation 

Total Quality 

Production System 

Involvement of Personnel 

Supplier 

Integration 

FOR CUSTOMER SATISFACTION 

1 



In 2010, Group Quality function focused on 10 key points 

to deploy across all Group sites in terms of operational 

excellence. 

Three of these ten points are based on the QRQC approach 

(Quick Response Quality Control): QRQC for safety, 

plants and suppliers. Any problem that arises is immediately 

identified and analyzed on the spot by the parties involved. A 

corrective action is defined and implemented within 24 hours. 

This approach is applied to all areas: Production, Quality, 

Projects, Purchasing, Warranty, Logistics and Safety. 

The seven other essential points are: 

the standard certification of operators: this ensures 

that each workstation has clear instructions and that all 

operators are trained and capable of producing the right 

parts with the right quality at the right speed; 

“Level 3 QRQC” certification of the teams: this allows 

qualitative measurement of individual capacity to ensure 

the implementation of the Group’s Quality approach. 

Valeo teams therefore have access to a growing number 

of instructors/certifying officers to accelerate Group culture 

and establish it in the long term; 

compliant project management: Project Management 

Committees hold regular meetings, in line with Valeo’s 

project management processes, in order to ensure “zero 

defect” launches take place on the scheduled date and 

with the projected gross margin; 

the identification of project risks: all analyses of fault 

modes, their effect and their critical nature are carried 

out and the critical characteristics are incorporated into 

control plans to ensure perfect quality. In 2009, as part of 

a plan to improve product development and in order to 

obtain built-in quality, a standard process of identifying and 

determining critical product and process characteristics 

was developed and put in place in all project teams 

(Built In Quality Program). In addition, the testing of said 

characteristics, known as SPPC (Special Product and 

Process Characteristics), was implemented internally by 

Valeo, but also by its suppliers, by making communication, 

assessment and measurement standards available to 

teams. In 2010, this process was applied to all projects; 

an appropriate supply base: suppliers are selected 

according to several criteria which were updated in 2009, 

including their ability to supply Valeo with the highest quality 

components, as well as their financial stability and capacity 

for ongoing improvement; 

the development of these suppliers: a plan has been 

implemented to improve the quality systems of suppliers 

(Supplier Quality Step Up, part of the aforementioned “Builtin 

Quality” strategy). A new Supplier Quality Assurance 

Manual has been developed and distributed to reinforce 

the definition of the Group’s quality requirements in 

development processes among our Supplier Quality teams. 

In addition, all specifications and the associated checks, 

and more particularly in relation to “critical” characteristics, 

are included in the VRF (Valeo Requirement File). Valeo also 

continued to deploy tools to help its suppliers improve their 

own quality processes. Valeo’s QRQC (Quick Response 


PAGE 19


PAGE 20 



Quality Control) approach continues to be implemented to 

assist suppliers in achieving “zero defects”; 

the San Gen Shugi approach: all sites and functional 

networks adhere to the principle of the three “reals” (real 

place, real part, real data) in order to conduct flawless 

analyses of all problems encountered and to eliminate them 

once and for all. Feedback, gathered via “Lessons Learned 

Cards”, is then made available to all parties in a database 

accessed via an intranet search tool. 

The results of the 5 Priorities approach are measure by an 

internal audit. For the past 10 years, Valeo has developed 

its own standards to analyze and improve the application of 

each of the 5 Priorities. 

1.C.2.2.1. Purchasing 

In order to give Valeo’s strategy a truly competitive 

edge, the role of the Purchasing Department is to 

reduce costs by sourcing from only the most globally 

competitive suppliers, implementing extremely rigorous 

selection processes for new suppliers, applying the 

total quality and innovation approach to suppliers and 

sub-contractors, and establishing close partnerships 

with the most innovative and best performing suppliers. 

In the fourth quarter of 2010, the new Purchasing Department 

was rolled out across the Group. 

Six Commodity Purchasing Directors (Purchasing Family) 

were appointed to lead the cross-departmental purchasing 

teams spread out in each key area of the world. Each is 

responsible for defining the strategy for one of the six main 

commodities and for managing all the Group’s activities 

related to integrating its suppliers. 

The six commodities relate to: 

Steel and conversion; 

Plastics and conversion; 

Non-ferrous metals and conversion; 

Electromechanics; 

Electronics; 

Indirect purchases. 

This in-depth organizational change is aimed at improving 

the globalization of the Purchasing function at Group level, 

in order to accelerate the convergence of new business on 

strategic suppliers and justify greater competitive efforts on 

their part at the planning phase, where they will be integrated 

sooner. 

Valeo has continued to deploy resources to help its suppliers 

improve their own quality processes. The Group’s QRQC 


approach continues to be implemented to assist suppliers 

in achieving zero defects. 

In 2010, Valeo instituted a new strategy referred to as Supplier 

Quality Step Up in order to improve the quality of its suppliers. 

Valeo thus brought its expertise, covering key commodities, 

to 60 of its suppliers, who accounted for 35% of the Group’s 

supplier incidents. A technical analysis of the gap existing 

between the supplier’s technology and best practices in the 

automotive industry was carried out when this program was 

launched. A quality improvement plan was written as a result 

and is reviewed periodically to ensure continuous progress. 

In particular, implementing this new strategy allowed supplier 

incidents to be reduced by 25% compared with 2009. 

Supplier Relationship Management (SRM) is an essential tool 

in the relationship between Valeo and its suppliers. Modules 

such as the Incident Management System, Product Quality 

Assurance (qualification of new components in projects) 

and the Supplier Scorecard (quality performance, cost and 

delivery timeframe) can be accessed on a secure extranet. 

These enable Valeo and its suppliers to work closely together 

and share standardized processes, for example to share 

project schedules and to exchange and approve component 

qualification documents. 

By working with fewer suppliers and retaining only the best 

in terms of quality, technology and productivity, Valeo is 

better able to support them in their quality strategies and to 

include them in its projects. In 2010, the Group, with its new 

organization, set a new objective to streamline the supply 

base, which aims at reducing by 30% the number of suppliers 

accounting for 95% of its purchases, over the next 3 years. 

In line with its Code of Ethics, Valeo further tightened the 

requirements imposed on its suppliers in terms of labor 

rights and environmental protection. All production suppliers, 

accounting for 95% of Valeo’s net revenue, signed the 

SCSD (Supply Chain Sustainable Development) Code on 

December 31, 2010, or have forwarded their own codes 

compatible with the UN charter. 

Innovating and designing products using different materials 

and new technologies can also help improve quality and 

further reduce costs. Conventions are held regularly to 

showcase supplier innovations and jointly consider how to 

incorporate them into new projects. 

Valeo has increased its sourcing from competitive-cost 

regions. These purchases are up by 30% compared with 

2009. This result has been obtained through the presence of 

the Purchasing network at Valeo’s sites in the various regions 

of the world where its customers are based.

1.C.2.2.2. Industrial and Logistics 

The role of the Industrial and Logistics Department is to 

improve the quality of Valeo’s products and customer 

service, while reducing production costs and fixed 

assets. At the heart of this strategy lie the optimization 

of industrial operations and the deployment of a Total 

Quality culture. 

In 2010, Valeo continued to implement its plan to standardize 

processes and equipment, the Kosu approach (to measure 

the resources required to manufacture a part), and also its 

investment optimization strategy: TPM (Total Productive 

Maintenance). These operational standards make it possible 

to capitalize on experience, cut product development lead 

times, stabilize new production lines quickly while avoiding 

start-up problems, and cut costs at every stage of the 

process. All activities are now carried out using standards that 

supervisors must ensure are respected and improved. On the 

shop floor, performance is monitored in real time through a 

concrete analysis of what really happens on the production 

line. Problems are identified, immediately processed and 

turned into opportunities for improvement. Each operation 

is assessed for its contribution to products’ value-added, and 

operations lacking in this respect are eliminated. 

The ergonomic design of workstations continues to be 

improved. Each workstation is organized around the needs 

of operators, who have made significant contributions to 

improving their comfort and safety at work. This approach is 

also part of Valeo’s Occupational Health and Safety policy. It 

helps reduce the number of accidents at the Group’s plants. 

The specific features of the aftermarket are also taken into 

account at Valeo. This market imposes certain limitations on 

industrial operations. Products are mainly manufactured using 

the same production machines as for original equipment 

parts. If necessary, simplified lines designed for small volumes 

with low levels of automation can meet the requirements of 

this market. Servicing and maintenance of these specific 

machines are already in place. 

In terms of the supply chain, 2010 saw the continued 

introduction of pull flow lines in order to reduce inventories, 

achieved through the use of tools and processes such as 

Visual ReOrder (VRO) for components, Kanban for managing 

parts in production and truck image for managing stocks of 

finished products. The goal of extending the use of VRO to 

70% of volumes purchased was achieved. 

The ongoing introduction of assembly to order and the 

widespread roll out of the truck image helped maintain the 

plant service rate above 99%. 

The implementation of sequential flows has also started on 

some sites. This organization will be implemented wherever 

possible in 2011. 

1.C.2.2.3. Quality 

1 



Quality is a key demand from consumers and automakers. 

It is a prime concern for all Group employees on a 

daily basis: it is the cornerstone of Valeo’s 5 Priorities 

methodology and an integral part of the Group’s culture. 

Total Quality is not just a question of methodology; above 

all, it is a state of mind. It therefore requires the involvement 

of everyone at all times and in all circumstances. At Valeo, 

this approach is the responsibility of each of the Group’s 

employees. 

The role of the Quality network is to ensure that everyone 

is aware of and understands their individual responsibilities. 

It also consists of evaluating problems and requirements in 

terms of training support, and of training, supporting and 

validating lessons to be retained and shared to avoid any 

recurrence. 

In addition to this systemic approach, the Quality network 

ensures that the organization responds quickly to problems 

affecting the Group’s customers. It also promotes and 

provides the necessary support for implementing the tools 

whithin the Quality anticipation strategy, in order to pre-empt 

customers issues. 

The Valeo Quality network operates as a decentralized 

network and involves each of the 5 Priorities: 

the Quality System Manager validates Internal Procedures, 

checks that they are applied properly, and updates them to 

ensure that they are in line with both internal and external 

quality standards; 

the Project Quality Manager ensures that the Quality 

methodology is duly applied to projects and checks that 

it covers projects for their entire duration, in accordance 

with Valeo standards; 

the Supplier Quality Manager manages the quality of 

components delivered, from the project phase right through 

the product’s lifecycle, and assists supplier progress 

through the implementation of improvement plans; 

the Production Quality Manager ensures that qualityspecific 

tools are properly implemented within the 

manufacturing process and coordinates the deployment 

of control plans as well as work instructions. They also act 

as the “voice of the customer” for all quality incidents to 

ensure the customer’s total satisfaction; 

the Quality Managers build the Quality network, and 

develop its skills and abilities by instilling the QRQC spirit 

into the teams making up all the networks. With this in 

mind, Level 3 QRQC, which is a method of coaching in 

problem-solving tools, was implemented in 2010. 

Valeo has also implemented a program of resident engineers, 

to provide optimal customer support. Engineers are no longer 


PAGE 21


PAGE 22 



simply assigned to a given customer; they actually go and 

work at the customer’s premises. As soon as a problem is 

detected, the engineer communicates it to the appropriate 

people at Valeo, so that actions can be defined immediately 

to protect the customer. At the end of 2010, the Group 

had 80 resident engineers: 51 in Europe, 12 in North America, 

13 in Asia and 4 in South America. Among these 80, a team 

of 12 project and warranty resident engineers, as part of a 

resident engineers program, have also joined customer teams 

either at the headquarters or in their warranty management 

centers. 

Reinforcing the Valeo culture involves the mobilization of all 

employees at all levels, and is based on: 

the San Gen Shugi approach, inspired by Japanese best 

practices and based on a concrete analysis of what actually 

happens on the shop floor. San Gen Shugi is an approach 

based on reality: Gen-ba (where and when a problem arises) 

Gen-butsu (with actual parts involved, whether above or 

below the standard) and Gen-jitsu (with measurable facts). 

This attitude is founded on both individual responsibility 

and teamwork; 

it also relies on the QRQC (Quick Response Quality Control) 

approach, whereby each problem is immediately identified 

and analyzed by the parties involved. Corrective action is 

defined immediately and implemented within 24 hours. In 

the event of a quality incident, meetings are held on the 

spot to identify the root cause of the incident and eliminate 

it once and for all. These meetings involve employees from 

the various functions, as required: production, logistics, 

maintenance, etc. 

At the end of 2010, the Group’s Quality level reached a 

historic record of 7,300 PPB (defective parts per billion), an 

improvement of almost 50% compared with 2008, and stable 

compared with 2009. 

1.C.2.3. Sales and Business Development 

Valeo develops, produces and sells original equipment 

and aftermarket products and systems for all automotive 

and truck manufacturers. The Group’s commercial policy 

extends well beyond everyday commercial relations and 

involves forging very close partnerships and accompanying 

their customers in developing their markets, throughout the 

world. 

1.C.2.3.1. Automaker customers 

In 2010, the Group’s German customers were its leading 

customers, representing 28% of revenue. French customers 

(excluding Nissan) represented 23% of Group revenue. Asian 

and American customers represented 22% and 18% of Group 

sales respectively. 


The Group’s biggest customer represents 20% of Valeo’s 

revenue. 

Valeo’s main original equipment customers are (in alphabetical 

order): 

BMW; 

Chery; 

Daimler; 

Fiat/Chrysler; 

Ford Motor Company; 

Geely/Volvo Cars; 

General Motors; 

Honda; 

Hyundai; 

MAN; 

Mazda; 

Mitsubishi; 

PSA Peugeot Citroen; 

Renault-Nissan; 

Subaru; 

Suzuki; 

Tata Motors/Jaguar/Land Rover; 

Toyota; 

Volkswagen Group/Porsche 

Volvo Trucks. 

1.C.2.3.2. Strategy and Organization 

In 2010, the Sales and Business Development strategy 

focused on: 

generating new orders: 2010 was a record year for 

orders, reflecting the success of the Group’s strategy 

for its two growth priorities, which are: selling innovative 

products which reduce CO 2 emissions, and expanding in 

emerging countries. Orders taken increased substantially 

in all areas: Europe, North America, South America and 

Asia, mainly China. 

concentrating efforts on growth in emerging countries: 

in 2010, the Sales and Business Development network 

stepped up its efforts among customers in emerging 

countries, mainly in India, China, ASEAN, Russia and Turkey, 

with a number of achievments in all these areas, both with 

its traditional customers, by following their international 

growth, and with local automakers, in particular in China 

and India. 

selling of products aimed at reducing CO emissions 

2 

have been very successful, in particular in the Group’s 

traditional markets. There were also significant orders in 

2010 for innovative driving assistance products.

In line with this strategy, Sales and Business Development 

was reorganized in 2010 around its four networks: 

the Sales and Business Development network, 

consisting of four Sales Directors attached to each of 

the four Business Group’s Managment teams, as well 

as the Sales Directors for each Product Group. This 

network is responsible for defining the sales strategy to 

be implemented, as well as day to day customer relations, 

with a global customer-focused organization, both for the 

Business Groups and for each Product Group; 

the Group’s Customer Directors, who are the Commercial 

Directors responsible for the key automaker customers; 

there are ten of these. Each represents Valeo in its dealing 

with a given automaker and coordinates relations with this 

customer across all departments in the Group’s Business 

Groups; 

National Directorates, whose aim is to promote the 

Valeo brand and establish close relationships with the key 

customers in their geographical aera and, if necessary, 

resolve locally any legal or labor issues. There are thirteen 

National Directorates, based in Germany, North America, 

South America, China, South Korea, Spain, India, Italy, 

Japan, Poland, Turkey, Thailand for ASEAN (Association 

of South-East Asian Nations) and Russia. 

The role of the National Directorates was reinforced in 2010, 

with the aim of optimizing the Group’s presence among 

national automakers. 

the International Business Development network, which 

consists of four International Development Directors for 

the Group’s four Business Groups. It identifies market 

opportunities in emerging countries, defines and 

implements the external growth strategy for the Business 

Groups and manages relations with external partners. 

1.C.2.4. The Risk, Insurance, Environment, 

Health and Safety function 

1.C.2.4.1. Risks Management and Insurance 

Valeo’s risk management policy is founded on a network of 

representatives, rigorous procedures, management systems 

for improving performance, as well as regular internal and 

external audits. 

The Risk Insurance Environment Department has instituted 

a dedicated structure which relies on Health, Safety and 

Environment (HSE) managers assigned to each Valeo 

Business Group and their sites. Each Business Group 

HSE Manager provides technical support to the site HSE 

managers. The Risk Management Committee, whose 

members are the Business Group HSE managers and the 

1 



Director, is the central steering body of the Group’s Risk 

Insurance Environment Department. 

Valeo’s risk management policy, applied systematically at 

all sites, can be summarized as follows: first, by respecting 

obligations imposed by national legislation as well as those 

defined by Group policy (which exceeds the requirements 

of national regulations in many fields); second, by identifying 

risks, evaluating their impact, setting objectives and 

implementing action plans to reduce – or where possible to 

eliminate – risks; and finally, by regularly checking progress 

achieved through internal and external audits. 

All procedures regarding health and safety, building security, 

the environment and the protection of knowledge and 

expertise are detailed in the Risk Management Manual, 

which is updated on a regular basis. The Group also 

produces an Insurance Manual, updated yearly, providing 

comprehensive information on risk coverage and managing 

insurance programs. 

To achieve its objectives and bring risk levels down to 

zero, continuous visibility is necessary. Each site therefore 

undergoes regular external audits covering the environment, 

health and safety at work, and the protection and safety 

of the facilities. These audits are carried out by external 

consultants in accordance with local obligations, Group 

policy and good practice. They provide useful and detailed 

information, especially related to environmental issues, site 

activity, the surrounding area and its natural environment: 

geology, seismic risks, flood risk areas, etc. Actions to be 

undertaken and associated action plans are established on 

the basis of these audits. 

In 2010, a computerized risk management system was 

tested, in order to track more accurately changes to site 

action plans resulting from external audit recommendations. 

A self-assessment system in the form of a roadmap has 

also been instituted, so that each site can assess its own 

performance. 

The Risks Insurance Environment Department thus has a 

precise and complete reporting procedure for measuring site 

performances. This performance is measured by means of 

a rating based on objective and factual criteria. Risks that 

might impact Valeo’s business are set out in Chapter 2, 

section 2.A.2 “Industrial and environmental risks”. 

1.C.2.4.2. Environment 

Environmental protection demands a number of initiatives 

which are, by definition, long term. Valeo has been committed 

to this effort for nearly 20 years in terms of both product 

innovation and the management of its industrial sites. 

The objective is of course to prevent environmental pollution, 

but also to protect the environment and biodiversity through 


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a consistent sustainable development policy, notably by 

reducing consumption of energy and natural resources 

(water and raw materials), reducing greenhouse gas 

emissions, particularly CO 2 , reducing or even eliminating the 

consumption of dangerous products, reducing waste and 

achieving maximum recyclability of all products, and offering 

an industrial environment that is both safe and pleasant to 

work in. 

Valeo always incorporates an environmental approach to 

all the stages in the life of its products and processes: 

design, production, use and end of life management. 

Since 1998, a group of experts in Environmental matters 

and Research and Development from different Valeo 

Business Groups have been working together to reduce 

the environmental impact of processes and products over 

their entire lifecycle. This research group meets regularly to 

discuss specific topics, such as the elimination of banned 

and regulated substances, the use of recycled plastics, 

or compliance with the REACH regulations (Registration, 

Evaluation, Authorization and Restriction of Chemicals): this 

requires listing the chemicals purchased or produced by 

the Company, assessing the toxicological risk associated 

with their use and, where relevant, requesting a license to 

put it on the market. 

Valeo has also created a reference database of substances 

that are banned or restricted in the automotive industry. 

Updated again in 2010 and scheduled for further reviews 

in 2011, this database details the regulations applicable 

in the different countries where Valeo operates and the 

requirements of its automaker customers concerning 

those substances used in the composition of parts and in 

manufacturing and repair processes. 


To fulfill its progress objectives, Valeo bases its environmental 

policy on performance and also on the establishment of a 

management system leading to regularly renewed external 

certification. This is the case with ISO 14001 certification, 

the international standard in terms of environmental 

management systems. 98% of sites were ISO 14001 

certified at the end of 2010 compared with 89% at the 

end of 2009. The principle is to oblige Valeo’s industrial sites 

to be certified, so that a newly acquired site is immediately 

included in the certification system. 

For a complete list of the Group’s environmental indicators, 

see Chapter 3, section 3.A. – “Environmental Policy and 

Sustainable Development”. 

1.C.2.4.3. Health & Safety 

Health and safety at work is a priority for Valeo, which is 

constantly striving for “zero accidents”. This policy is based 

on rigorous procedures using indicators to measure the 

effectiveness of actions taken, feedback through the QRQC 

approach applied to health and safety at work, and finally, 

an OHSAS 18001 certification process for all industrial sites. 

At the end of 2010, 89% of sites were certified, compared 

with 81% at the end of 2009. Like the ISO system, this health 

and safety management system is based on continuous 

improvement.

1.C.3. Research and Development 

Designing the automobile of tomorrow, creating 

technologies and products in line with the market while 

anticipating its expectations and driving the market 

through innovation: these are the fundamental principles 

of Valeo’s Research & Development strategy. 

Innovation is at the heart of the Group’s development strategy. 

Valeo engineers seek to anticipate automakers’ demand for 

solutions that offer real value-added for drivers: improved 

comfort, safety, performance and respect for the environment. 

With this in mind, the search for solutions that will reduce 

fuel consumption is the fundamental priority for Valeo’s R&D 

teams. This is materialized both by continuous improvement 

of all existing products (volume gains and energy efficiency 

improvement), but above all by new ground-breaking 

approaches from which innovations bringing very significant 

fuel consumption benefits emerge. This approach covers 

the technologies and components, as well as complete subsystems 

and systems, extending to the vehicle in its entirety, 

connected to and communicating with its environment. 

Valeo’s Business Groups are thus working in harmony with 

new system approaches, in particular in the research phases. 

This is also the case with an increasing number of partners, 

manufacturers and research institutes. 

Valeo’s R&D centers are located throughout the world. 

At the end of 2010, the Group had 20 Research centers 

and 38 Development centers, with a total headcount of over 

6,200. 

In 2010, Research and Development expenses, net of 

customer contribution and net of subsidies and tax credits, 

represented 5.6% of revenue, and 612 new patents were 

filed. Less than 4% of the Group’s revenue rely on external 

patents or licenses. 

1.C.3.1. Research and Development policy 

In line with market expectations, Valeo’s Research and 

Development is focused on 3 main topics: 

Reduction of CO 2 emissions, which is broken down into 

several priorities : 

• in the internal combustion engine field, Valeo contributes to 

the design of new low-consumption motorizations (direct 

injection, supercharged engines with few cylinders), the 

objective being to meet future European requirements 

(maximum emission level of 95g of CO 2 /km in 2020), in 

particular through new gasoline engine management 

systems, depollution systems (EGR - Exhaust Gas 

Recycling), engine combustion management and 

1 



transmissions (acyclism filtering solutions, especially with 

3-cylinder engines), 

• a second research priority is to power accessories (pumps, 

valves, compressor, etc.) with electricity, with the aim of 

strictly limiting consumption to need, and to significantly 

improve alternator efficiency, 

• Valeo is now an indisputable player in the hybrid combustion 

engine field, with its micro-hybrid solutions (i-Stars 

integrated alternator/starter motor and Re-Start reinforced 

starter motor) and more recently mild-hybrids (8-15kW) 

associated with new electrical energy management 

strategies and associated storage devices (batteries or 

ultra-capacities), 

• Valeo, with its Electric Vehicle Consortium partners (Leroy 

Sommer, Johnson Controls-Saft, GKN, Michelin, Leoni), 

is continuing to develop integrated solutions for power 

electronics (inverters - chargers, converters) and climate 

control solutions (with heat pump) for future electric 

vehicles. The objective is to significantly increase vehicles 

travel range, in particular in difficult weather conditions 

(cold/hot), 

• more recently, Valeo has developed new innovative 

solutions for recovering energy lost during vehicle braking 

or energy lost in exhaust from internal combustion engines 

(Exhaust heat recovery), in order to work towards achieving 

maximum use of the on-board energy; 

Weight reduction and the energy budget: 

• reducing the weight of parts has recently become an 

important priority for electric vehicles (lower weight means 

greater travel range), but for a long time it has been a 

permanent R&D objective for Valeo’s engineers. In this 

context, Valeo aims to use new materials (technical plastics 

under engine covers, light alloys, etc.), develop new designs 

to increase mass or volume power ratings (electric motors, 

power electronics, etc.) an incorporate features to reduce 

volume and weight. This also involves more conventional 

product lines such as wipers (AquaBlade® solution) or LED 

lighting systems, 

• Valeo is also developing new approaches aimed at 

optimizing vehicle energy budgets with the use of virtual 

simulation platforms. This approach enables overall 

optimization of the vehicle energy budget, taking into 

account operations and synergies between the different 

systems while in use (for example, between the engine 

and its combustion system and/or the air conditioning 

system). This is how new technological solutions emerge 

and new strategies are proposed (for example, optimizing 

the energy recovery phases while the vehicle is braking and 

accelerating, in particular for hybrid motorizations). 


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PAGE 26 



Intelligent driving, for which the main levers are as follows: 

• Valeo is continuing to develop its range of components 

and systems (ultrasound sensors, radars, cameras) with, in 

particular, new data fusion techniques aimed at improving 

the modeling and integration of the environment close to 

the vehicle, in particular in an urban environment, 

• Valeo expands its product offering each year (Park4U TM , 

360 Vue TM ) adding increasingly sophisticated assisted 

driving features in order to increase comfort and safety 

in the urban environment. In the near future, these driving 

modes will also take into account minimum energy 

consumption targets in line with the powertrain system, in 

this way contributing to the CO 2 reduction, 

• With various partners, Valeo is also developing innovative 

human-machine interfaces (HMI) that will accompany the 

imminent emergence of the connected and communicating 

vehicle, for example, the smart phone connected and 

controlled by an on-board touchscreen, the “Smart key- 

Smart phone concept”, the Smart phone NFC (Near Field 

Communication) controlling access to the vehicle, and the 

“Always Connected” concept (in particular for the electric 

car) in order to manage the battery charge state, program 

its route or control the car’s thermal preconditioning. 

1.C.3.2. Valeo listens to consumers 

In order to anticipate consumer needs and societal changes, 

and to refocus its product strategy accordingly, Valeo takes a 

proactive approache based on five types of studies: 

focus groups through which a qualitative survey can be 

performed by means of group meetings and enabling 

consumers’ attitude towards a new product to be analyzed; 

societal surveys segmenting the automotive market and 

positioning Valeo innovations within it; 

online surveys sent directly to end customers and intended 

to assess approval of the Group’s innovations; 

consumer clinics to test products and validate new features 

developed by Valeo in a real situation; 

2030 scenarios in order to understand and anticipate 

changes to powertrain systems. 

1.C.3.3. Actions taken in 2010 

In 2010, Valeo continued its R&D efforts, taking the following 

actions: 

Faced with an ever more demanding market in terms 

of new products, Valeo has developed the necessary 

processes for reducing design lead times for new products. 

Thus, the Group works upstream to improve the in-house 


efficiency of projects, ensuring the appropriateness of 

actions scheduled and checking that existing competences 

correspond to those required. Major efforts are made to 

reduce the cost of Research and Development, in order to 

satisfy market expectations. 

Valeo maintained its partnerships with a number of leading 

universities and schools such as l’École des Mines – 

ParisTech and ESIGELEC, in France, for electronics. 

Valeo proposed projects for “competitive clusters” on 

themes relating to energy, power trains, mechatronics, 

software, as well as safety, comfort and connectivity. 

Regarding energy and powertrains, Valeo is also working 

on future combustion engines, on hybrid and electric cars 

and on electrification of accessories. Valeo also invested 

in the governance of some of these groups (MOVEO, 

System@tic Paris-Région), which enables Valeo to help 

bring universities, industry and research closer together. 

Valeo and IFP Energies nouvelles have signed a framework 

agreement in the field of Powertrain Systems concerning 

both internal combustion engines and hybrid and 

electric motorization systems. Taking advanatage of their 

complementarity, this collaboration will allow both partners 

to increase their understanding and their technical vision of 

the market for Powertrain Systems and to jointly develop 

the powertrain technologies and systems for tomorrow. 

Valeo signed a cooperation, development and license 

agreement with Ibeo Automotive Systems GmbH in the 

laser scanner technology field. This agreement will give 

Valeo exclusive access to Ibeo’s expertise and know-how 

and enable Ibeo’s laser scanner technology to be developed 

for production applications. This Ibeo technology will 

complement the Valeo range of radar, infrared, ultrasound 

and vision sensor systems. 

In 2010, Valeo participated in more than forty collaborative 

research programs, having received a subsidy, of which 

more than half related directly to CO 2 reduction and low-CO 2 

vehicles. More than 60 partners - research laboratories or 

innovative small and medium size companies - participated 

in these programs alongside Valeo. 

At the end of 2010, Valeo had four specialist development 

centers – “Group Technical Service Centers” serving the 

entire Group: in Egypt, on the Cairo site for software 

development; in India on the Chennai site for mechanical 

design and simulation; in China on the Wuhan sites for 

mechanical design and simulation dedicated to lighting 

and on the Shenzen site for electronic circuit design. The 

headcount for these activities doubled in 2010, resulting 

in the implementation of one of the Group’s priorities over 

this period.

1.C.4. Industrial footprint and real estate portfolio 

The Group optimizes its industrial footprint on an ongoing 

basis in relation to customer demand, markets and labor 

costs. 

1.C.4.1. Production, R&D and distribution sites 

Geographic distribution at 12/31/2010 

Production 

plants 

1 



In 2010, Valeo continued the deployment of its sites as part 

of its globalization strategy and approach to accompanying 

its automaker customers around the world. 

Research 

centers 

Development 

centers 

Distribution 

platforms 

Number of 

employees 

Western Europe 

Germany, Belgium/Netherlands, Spain, France, 

Ireland, Italy, United Kingdom 

Eastern Europe 

Hungary, Poland, Czech Republic, Romania, 

42 16 15 5 24,200 

Russia, Slovakia, Turkey 

North America 

14 4 3 9,592 

United States, Mexico 

South America 

13 1 5 6,213 

Argentina, Brazil 

Asia 

8 4 1 4,382 

China, South Korea, India, Japan, Thailand 

Africa 

29 3 9 1 12,115 

South Africa, Egypt, Tunisia 3 1 1,428 

TOTAL 109 20 38 10 57,930 

1.C.4.2. Real estate portfolio 

At December 31, 2010, the Group’s real estate portfolio (land 

and buildings) had a net book value of 538 million euros 

(see Chapter 5, section 5.B.6, Note 5.3 to the consolidated 

financial statements). It is largely composed of production 

sites, mostly wholly owned. 

The Group’s equipment is largely made up of technical 

facilities, materials and tools. At December 31, 2010, they 

had a net book value of 845 million euros, excluding fixed 

assets under construction (see Chapter 5, section 5.B.6, 

Note 5.3 to the consolidated financial statements). 

Environmental constraints result from the regulations 

applicable in this area to all Group establishments (see 

Chapter 1, section 1.C.2.4.2 “Environment”; Chapter 2, 

section 2.A.2 “Industrial and environmental risks” and 

Chapter 3, section 3.A. “Environmental policy and sustainable 

development”). 


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PAGE 28 



1.C.5. Investments over the past three years 

1.C.5.1. 2010 

As from the year ended December 31, 2010, it is deemed 

more relevant to present the book value of recognized 

investments. Divestments are summarized for the data 

relating to 2008 and 2009. 

In 2010, investments in property, plant and equipment stood 

at 318 million euros (1) , or 3.3% of total sales. The Group 

invested heavily in additional capacity in the Powertrain 

Systems Business Group to develop its torque converter 

businesses in Mexico and in China and to develop microhybrid 

systems development (39 million euros). In the Comfort 

& Driving Assistance Systems Business Group, the Groups 

invested in ultrasonic sensor and camera capability lines (12 

million euros). 

In order to take advantage of potential future growth, 

investment in emerging countries, mainly in Asia, 

Eastern Europe and Mexico, remained high, represented 

approximately 50% of the amounts invested. 

Investment in intangible assets reached 150 million euros (1) , 

corresponding to 1.6% of revenue, including 143 million euros 

corresponding to capitalized development expenses. 

On May 19, 2010, Valeo acquired a 33.3% stake in the Indian 

electrical systems production company based at Pune, 

owned by the N.K. Minda Group, thus raising its stake to 

100%. 

Valeo made no significant investments nor did it take a 

controlling interest in any companies headquartered in 

France. 

In 2011, given that the order book reached a historic high 

in 2010, Valeo plans to increase its capital investments in 

2011, particularly in order to adapt Group production capacity 

to meet demand in high-growth areas (Asia and emerging 

economies). 


1.C.5.2. 2009 

In 2009, investments in property, plant and equipment stood 

at 324 million euros (1) , or 4.3% of total sales (divestments of 

304 million euros). Given the decline in business, investments 

in capacity were lower than in 2008. However, the Group did 

make major capacity investments in the Powertrain Systems 

Business Group to develop the torque converter businesses 

in Mexico and China, and to develop micro-hybrid systems. 

Investments relating to growth plans and our customers’ 

projects were maintained. Investment in emerging countries, 

such as China and Brazil, remained high at more than 5% 

of total sales, in order to take advantage of the potential for 

future growth. 

Investments in intangible assets stood at 155 million euros (1) 

(divestments of 150 million euros) including 147 million euros 

of capitalized development expenditure, representing an 

increase from 1.7% of sales in 2008 to 2% in 2009. 

1.C.5.3. 2008 

In 2008, the Group invested 478 million euros in property, 

plant and equipment, or 5.5% of revenue (divestments of 

468 million euros). The Group made major investments related 

to the development of production capacity for new products 

in 2008. These investments concerned several Product 

Families: Transmissions, with the installation of capacity in 

torque converters in Mexico and in China, Electrical Systems 

for future micro-hybrid StARS production, Interior Controls 

for ultrasound sensors production in Germany and Security 

Systems, with completion of a plant in Slovakia that supplies 

door closing systems. In Brazil, the Group extensively 

upgraded its facilities and increased space for its Thermal, 

Lighting and Electrical Systems activities. 

Investments in intangible assets amounted to 160 million euros, 

or 1.8% of total revenue (divestments of 160 million euros). 

(1) Acquisitions (see Chapter 5, section 5.B.6., Notes 5.2 and 5.3 to the consolidated financial statements)

1.D. Core businesses 

Valeo’s operational structure is organized around four 

Business Groups: 

Powertrain Systems; 

Thermal Systems; 

Comfort and Driving Assistance Systems; 

Visibility Systems. 

1.D.1. Powertrain Systems 

Powertrain Systems combines all the activities related to 

powertrains. Its mission is to develop innovative solutions 

aimed at reducing fuel consumption and CO 2 emissions, 

without compromising on the pleasure and the dynamism 

of driving. These innovations cover a complete product 

range, from optimization of internal combustion engines 

to varyingly high electrification of cars, from Stop-Start to 

the electric car. 

Powertrain Systems has five Product Groups: 

Electrical systems; 

Transmission systems; 

Engine management systems; 

Air circuit systems; 

Systems for hybrid and electric vehicles. 

1.D.1.1. Electrical systems 

This Product Group offers electrical systems which control 

the car’s key functions, such as electrical energy generation 

and management. 

1 


Core businesses 

The Business Groups, under the responsibility of the Group’s 

Chief Operating Officer, are responsible for encouraging the 

growth and profitability of the Product Groups across all its 

markets. 

Section 1.B.1 of this Chapter sets out Group sales broken 

down by Business Group. 

This Group’s traditional products are starter motors and 

alternators. 

Numerous innovations complement this range: 

High performance alternators; 

Stop-Start systems. Valeo offers two Stop-Start 

technologies: technology based on a starter alternator 

and technology based on reinforced starter. The second 

generation of the i-StARS micro-hybrid system (i-Starter 

Alternator Reversible System), based on a starter alternator, 

was launched in 2010 on PSA Peugeot Citroën’s HDi diesel 

engine, with both manual and automatic transmission. It 

is distinguished by the integration of the electronics on the 

electrical machine. This Stop-Start function can also be 

provided by an improved starter motor, moving up from 

50,000 start cycles to 300,000 start cycles so as to meet 

the numerous restarts required by this function; 

Mild hybrid systems, which add energy recovery functions 

to the braking to reuse the energy in acceleration phases. 

Valeo offers a range of electric motors which work at higher 

powers and thus higher voltages. 


PAGE 29

1 Core 

PAGE 30 


businesses 

1.D.1.2. Transmission systems 

Transmission Systems develops and produces systems that 

transfer the power from the engine to the transmission. The 

solutions it offers incorporate innovative systems that dampen 

noise, vibrations and harshness. This Product Group covers 

all types of transmission: manual, automatic, dual clutch and 

hybrid. 

Among the technologies developed by Valeo Transmissions, 

the dual dry clutch is one of its key innovations, representing 

a viable alternative to hydraulic automatic transmissions 

with planetary gear trains. With two clutches (one for even 

gears and one for odd gears), this system allows the driver 

to change gears with no interruption to torque and no jolting, 

with the convenience of automatic transmission and the 

sporty response of manual transmission. Dry clutches also 

improve efficiency, cutting consumption by 4-6%. 

Torque converters with a lock-up function, wide clearance 

damper and an optimized hydraulic circuit are associated 

with the market, for automatic and continuous variation 

transmissions. They offer improved comfort and markedly 

lower fuel consumption in comparison with previous 

generations of automatic transmissions. 

Other products from this Product Group include, inter alia, 

various clutch mechanisms (clutches with and without selfadjusting 

technology; clutch discs with a new generation 

of multi-louver dampers offering effective protection from 

vibrations; environmentally friendly clutch facings, release 

bearings with built-in automatic self-centering; hydraulic 

clutch actuators), flexible flywheels and dual mass flywheels. 

1.D.1.3. Engine management systems 

This Product Group offers electronic powertrain management 

systems. By improving engine performance continually, 

innovations in engine management help to reduce the 

environmental impact of vehicles while increasing driving 

pleasure. 

Valeo designs optimized system architectures, which 

represent new engine developments and offers its customers 

a complete range of engine components, such as: 

engine management systems for gasoline and NGV (natural 

gas vehicle) engines; 

engine control units for direct and indirect injection gasoline 

engines or those adapted to alternative energies (NGV, Flex 

Fuel); 

ignition component such as coils and ramps and high 

energy “top plugs”; 


injectors for gasoline and NGV engines; 

a range of sensors for fluid management, temperature 

and pressure measurement, engine or transmission 

optimization; 

canister valves. 

1.D.1.4. Air circuit systems 

This Product Group offers air circuit management systems, 

from inlet to exhaust, in order to meet requirements for 

reducing CO emissions and pollutant gases. 

2 

Valeo designs components and systems for controlling 

the flow and temperature of the air circuit and exhaust 

fumes. These improve the performance of gasoline and 

diesel engines in compliance with the regulations governing 

pollutant or greenhouse gas emissions internationally, such 

as European standards Euro 5 & 6 and, eventually, Euro 7 or 

the American Tier2 Bin5 standards. 

The products from this Product Group are: 

single and dual inlet manifolds; 

high or low pressure EGR (Exhaust Gas Recirculation) 

modules incorporating EGR valves, exhaust gas coolers 

and by-pass modules; 

Valves and throttles for gasoline applications. 

1.D.1.5. Systems for electric and hybrid 

vehicles 

Valeo is committed to supporting the development of new 

electric vehicles, with the goal of presenting innovative 

solutions. 

The aim of offering automakers a complete electric powertrain 

has led to the creation of a French consortium, which brings 

together all the technological leaders in this field. The interest 

is in being able to optimize all the components and obtain 

a cost/service ratio similar to that of a traditional internal 

combustion engine. 

In the consortium, Valeo acts as system integrator on 

powertrain control. An innovative design for the electronic 

power module will combine three major components: the 

inverter, charger and voltage converter. This architecture 

will reduce the cost of an electric powertrain considerably 

because the charger will be completely built in to the inverter. 

The range, a critical point for the electric vehicle, has been 

improved in all-electric modes by using a high efficiency 

inverter.

1.D.2. Thermal Systems 

Thermal Systems develops systems designed to provide first, 

thermal energy management of the powertrain and second, 

comfort of each passenger for all phases of the vehicle’s use. 

With the optimizations that they provide, these systems make 

a significant contribution: 

reducing fuel consumption and CO 2 emissions as well as 

pollutant gases and harmful particles in vehicles equipped 

with internal combustion engines; 

increasing range and battery life in hybrid and electric 

vehicles. 

Thermal Systems has four Product Groups: 

Climate control systems; 

Powertrain thermal control systems; 

Compressors; 

Front end modules. 

1.D.2.1. Climate control systems 

These systems ensure passengers are comfortable. 

The key component of these systems is the HVAC (Heating, 

Ventilation and Air Conditioning). This module distributes 

purified heated or chilled air. The HVAC is tailored to each 

type of vehicle, starting from simple heaters with mechanical 

manual controls, through to automatic electronic control 

devices that regulate the air flow, its humidity and temperature 

constantly, based on the needs communicated by the driver 

and the outside climatic conditions. If these appliances are 

multizone, they can also be adjusted for comfort individually, 

i.e. matched to each passenger’s comfort needs. 

The main components of a HVAC are the heat exchangers, 

the additional heating module used while starting, the fan 

unit which blows the air through the heat exchangers, the 

distribution valve systems, the fan and valve control electronics 

and the air filter. The air filter range is complemented by 

additional modules intended to obtain ideal air quality inside 

the vehicle. 

In vehicles with an internal combustion engine, the heat 

exchanger for heating the vehicle uses the heat lost from the 

engine and the heat exchanger intended for cooling - the 

evaporator - is connected to another heat exchanger - the 

condenser - placed in the front of the vehicle, as well as a 

compressor that circulates the refrigerant between these heat 

exchangers. The new refrigerants meet the most stringent 

environmental standards. 

1 



The advent of hybrid and electric motorizations has caused 

the disappearance of the heat energy used for heating 

the passenger compartment and the need of temperature 

regulation of other components, such as the electric motor 

itself, its control electronics, the batteries, etc. 

System architectures matched perfectly to these changes 

have been developed. Those based on the heat pump 

system reduce to the minimum the power drawn from the 

batteries. Comfort in the passenger compartment is thus 

guaranteed without reducing the vehicle’s range between 

successive charges. 

A broad selection of technologies is also available to regulate 

the temperature of the batteries, which is needed if they are 

to work properly and to increase their working life. 

1.D.2.2. Powertrain thermal control systems 

This Product Group consists of the systems and modules 

related to the internal combustion engine powertrain: 

engine temperature management systems, the main 

components of which are fan units, high and low 

temperature cooling radiators and regulation valves. They 

contribute to the optimization of the engine’s performance. 

The THEMIS TM valve in particular, thanks to its zero output 

function, enables a marked reduction in fuel consumption; 

modules for cooling the air which enters the engine, with 

heat exchangers, air distributors, valves and manifolds. 

They help to optimize the air density, improving the fill of 

the cylinders; 

heat exchangers incorporated into exhaust gas recycling 

systems (EGR), developed by the Powertrain Systems 

Business Group. They help to optimize the air / fuel mix 

admitted into the cylinders. 

Finally, the Ultimate CoolingTM system helps, with its innovative 

architecture, improve the efficiency of the aforementioned 

systems. The reduction in the number of exchangers set in 

the front side of the vehicle, the correct distribution of the 

other exchangers within the engine compartment, made 

possible by using a single thermal fluid, significantly improves 

the performance of the exchangers. This architecture is also 

perfectly adapted to the thermal energy management needs 

of all the other types of powertrains, hybrid and electric. Its 

modular nature allows automakers to significantly simplify 

management of various engine types. 


PAGE 31

1 Core 

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businesses 

1.D.2.3. Compressors 

This Product Group has a complete range of compressors 

matched to every type of motorization and all vehicle 

categories. 

economic, low displacement, mechanically-driven 

compressors: with pistons, pallets, fixed or variable 

cylinders; 

external control compressors, which reduce fuel 

consumption substantially; 

electric compressors, based on spiral technology, for hybrid 

and electric motorizations. 

1.D.3 Comfort and Driving Assistance Systems 

Comfort and Driving Assistance Systems develops interface 

systems between the driver, the vehicle and its environment, 

helping to improve comfort and safety. 

These systems are thought to optimize the interaction of 

the driver with the vehicle by providing useful indications in 

real time (central console, intelligent key); by simplifying or 

automating certain maneuvers (parking, on board access, 

controls in the steering wheel); or again by alerting or even 

acting on the vehicle controls in case of danger or incorrect 

maneuvering. Sensors (radars, ultrasound, cameras) also 

allow for monitoring the driving environment. 

The Group has four Product Groups: 

Driving assistance; 

Interior controls; 

Cabin electronics; 

Access mechanisms. 

1.D.3.1. Driving assistance 

Valeo is the only automotive supplier in the world offering the 

mass production of all three of the technologies for detection 

around the vehicle which can be used in applications to help 

with maneuvering and parking: ultrasonics, cameras and 

radars. This makes Valeo a partner of choice for automakers, 

with the development of future systems that will incorporate 

several types of sensors in order to offer new features. As well 

as making urban driving safer, driving assistance systems also 

enhance the flow of traffic, thereby reducing CO 2 emissions. 

Ultrasonics and infrared sensors are used in the Park4U TM 

system for semi-automatic parking and also activate the 

rain/light/humidity detection system with its multifunctional 


1.D.2.4. Front end modules 

These modules are an integral part of the vehicle structure. 

They usually house the fan unit and some of the heat 

exchangers. 

The incorporation of controlled valves which adjust the air 

flow entering the vehicle helps to reduce fuel consumption 

by increasing the efficiency of the heat exchangers and 

improving the aerodynamics of the vehicle. 

The Safe4U ® system also offers a structure which provides 

increased protection for pedestrians in the event of a crash. 

sensors. Combined with a camera, the ParkVue TM system 

provides the driver with perfect visibility behind the vehicle 

and a precise indication of distances; 

The radars form part of the blind spot detection systems 

and the systems that detect vehicles when reversing out of 

a parking space with limited visibility. These systems warn 

the driver when a vehicle is present in one of the blind spots 

on either side of the vehicle; 

The 360 Vue TM multi-camera system offers total vision 

around the vehicle. Front cameras give a view in front of 

the vehicle at a blind crossing or on leaving a car park. 

1.D.3.2. Interior controls 

The Interior Controls Product Group plays a major role 

in human-machine interfaces and offers innovative and 

ergonomic solutions. Relying on long experience and in-depth 

knowledge of vehicle architectures, this Product Group 

develops well-known high quality solutions and a robust 

design for top-of-the-range markets as well as for emerging 

and mass markets. It comprises: 

top column modules, which represent the electronic 

communication hub between the safety features and the 

cabin’s central electronics system. Valeo was the first 

supplier to have integrated in 2009 a “FlexRay” system in 

a top column module (communication protocol used in the 

automobile industry for security-related systems); 

switching and driver interface modules (HMI or humanmachine-interface). 

The new interfaces manage airconditioning 

systems and multimedia applications and 

are ergonomically designed for ease of use while ensuring 

optimal safety;

steering angle sensors (angle and torque sensors); 

electronic control units for the cabin and battery 

management. 

1.D.3.3. Cabin electronics 

Cabin Electronics covers the full range of access and starter 

motor systems: remote controls, receivers and immobilizers, 

hands-free entry and starter systems which are experiencing 

strong growth on all markets. 

This Product Group also offers very innovative systems 

capable of communication with the car by radio within a 

range that can be several hundred meters. It is therefore 

possible to check via an intelligent key a certain number 

of parameters (door locking, inside temperature, etc.) and 

to activate certain comfort features remotely, such as preheating 

or pre-ventilation. 

At the World Motor Show in Paris in 2010, in partnership 

with Orange, Valeo presented a virtual key system based 

on NFC (Near Field Communication) contactless technology 

and mobile telephony. This simplifies the use of a single car 

1.D.4. Visibility Systems 

Providing perfect visibility on the road contributes to the safety 

of the driver and the passengers. Visibility Systems’ task is to 

design and produce efficient and innovative systems which 

support the driver at all times, by day and by night. 

Visibility Systems has three Product Groups: 

Lighting systems; 

Wiper systems; 

Wiper motors. 

1.D.4.1. Lighting systems 

Lighting quality has a direct impact on road safety. The 

Lighting Systems Product Group develops a wide range of 

products which meet the demands of road safety: to have 

perfect vision and be perfectly visible. Lighting systems also 

play a full part in the statement of identity unique to each 

model. 

The different solutions provided are as follows: 

main headlamps with LED, xenon or halogen technology; 

LED lighting, which significantly reduces the energy 

consumption of headlamps and therefore CO 2 emissions. 

LEDs also offer radically new opportunities in terms of style, 

1 



by several people, while maintaining a very high level of theft 

prevention. 

Cabin Electronics also includes cabin computers, which mainly 

equip the various vehicles of the PSA and Renault-Nissan 

Groups. 

1.D.3.4. Access mechanisms 

This Product Group produces mechanical access systems 

having very high anti-theft levels (handles, locks, bolts and 

steering locks). It also produces systems that help to improve 

on-board access comfort (motorized opening and closing of 

the trunk, door closing assistance, electric steering locks for 

hands-free entry systems, etc.). 

In particular, Valeo won new contracts in 2010 with the new 

“Optimum” generation of locks. No awkward mechanical 

resistance is felt during lock use, and the system offers a 

constant effort level throughout the lifetime of the vehicle. 

The design’s robust construction also reduces the costs and 

system validation times on new vehicles. 

and enable automakers to distinguish their vehicles from 

others and convey their innovative values; 

The NEO (New Efficient Optics) technology, which is 

a hybrid solution between conventional reflectors and 

elliptical lens models. The Peugeot 508 is equipped with 

NEO technology using a new generation halogen lighting 

system with unsurpassed performance; 

High performance lighting systems, whether with xenon lamps 

or LEDs, emit a light flow twice as great as that supplied by 

conventional halogen lamps and offer unequalled comfort 

for night driving. 

camera-assisted adaptive headlamps, allowing motorists 

to enjoy ideal night-time lighting without dazzling oncoming 

traffic. The BeamAtic® Premium function offers the driver 

the convenience of driving on the road without dazzling 

other drivers; 

daytime running lights (DRLs) with LEDs or traditional bulbs 

- designed for vehicle visibility; 

rear lights and high-mounted stop lamps with LEDs or 

traditional bulbs; 

fog lights and auxiliary lights; 

lighting and signaling controllers; 

cigar lighters, multifunction sockets and USB ports. 


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businesses 

1.D.4.2. Wiper systems 

Maintaining visual contact with the road under all 

circumstances is essential if the driver is to anticipate dangers 

properly. The Wiper systems Product Group develops 

technologies which, by combining efficiency and weight 

reduction, clean the windscreen and the rear window while 

minimizing or even eliminating any visual obstruction. 

These are mainly: 

latest generation flat/traditional arm and blade sets; 

totally electronic wiper systems without linkages or 

mechanisms; 

USB windscreen washing and de-icing systems; 

rear wiper modules with built-in washing; 

the AquaBlade ® system, which ensures perfect road 

visibility in all driving conditions and a significant reduction 

in the weight of the windshield wiper system. 

1.D.5. Aftermarket products and services 

Valeo Service is under the responsibility of the Group’s Chief 

Operating Officer. In cooperation with the Business Groups/ 

Product Groups, it supplies original equipment spares to 

automakers and replacement parts to the independent 

aftermarket. 

Its role is to offer to all aftermarket channels worldwide a 

wide range of products and services to help make repairs 

easier and to provide greater safety, comfort and pleasure to 

drivers and passengers. Valeo Service also offers support and 

services that are constantly being enhanced and developed, 

in areas such as diagnostics, training, sales and marketing, 

and technical support. 

Valeo Service, organized around five markets (repair, 

maintenance, crash, post-equipment and trucks) offers 

176 product ranges, covering 12 functions for light, 

commercial and industrial vehicles, as well as trucks: wiper 

systems (under the Valeo, Marchal, PJ and SWF brand 

names); transmissions; lighting and signaling; climate control; 

engine cooling; electrical systems; electrical accessories; 

security systems; switches; braking and engine management. 

Its range of spare products and related services include the 

following innovations: 

speed/visio ® NOMAD , the plug&play version of the 

speed/visio head-up speed display system. With 

GPS technology, the speed is displayed directly on the 


1.D.4.3. Wiper motors 

Valeo wiper motors are characterized by standardization, 

range coverage, innovative vehicle installation solutions, 

integrated electronics and reduction of weight and energy 

consumption. 

These consist of: 

a new line of electronic wiper motors deployed worldwide, 

offering a range of solutions adapted to the latest vehicle 

architectures; 

a line of rear window wiper motors for simplified vehicle 

integration. 

windscreen, without obstructing the driver’s field of view 

and an alarm warns the driver if he exceeds the selected 

speed limit. 

Uni-Click ® , a unique connection system which covers 95% 

of the European car inventory fitted with flat blade wipers. 

Valeo CLASSIC, a product range devoted entirely to 

vehicles from the segment known as D4 D5: vehicles aged 

10 years and over, with a high mileage. This is a market 

with considerable potential, given that the average age of 

a vehicle in Europe is constantly increasing and that the 

relationship of car owners to their cars is always changing. 

Launched in 2010, covering starter motors and alternators, 

this economic range is a quality alternative to premium 

price products. 

Five new car bulb ranges in order to meet the car owner’s 

different needs: 

• an “Essential” range: Valeo’s premium quality standard, 

• a “Long Life” range: bulbs with a longer working life, 

• a “+50% Light” range: more light to see further on highways, 

• a “Blue Effect” range: a blue-tinted headlamp close to that 

of xenon lights, 

• an “Aqua Vision” range: for optimum visibility in bad 

weather without dazzling.

1.D.6. Highlights of the year 

1.D.6.1. Strategic operations 

Valeo’s acquisitions/disposals strategy is designed to reinforce 

the four Business Groups and increase the organic growth 

potential of the Group. This strategy relies on the following 

four major guidelines: 

focusing on the Group’s Product Lines; 

reducing CO 2 emission, and expanding into Asia and 

emerging countries; 

the degree of vertical integration (Make-Or-Buy); 

acquiring majority stakes in Valeo’s joint ventures. 

In line with its development strategy in emerging countries, 

Valeo has upped its presence on the Indian market by 

acquiring a 100% stake in its joint venture in electrical systems 

production in India, in which it previously held a 66.7% stake 

and which is now called Valeo Engine and Electrical Systems 

India Private Ltd. 

Because the Group wants to dispose of non-core businesses, 

it sold the headlamp leveling actuators business to a 

group of investors supported by the European investment 

fund Syntegra Capital and the regional development fund 

Picardie Investissements. Valeo has also sold its Telma speed 

controller business, which manufactures electromagnetic 

retarders, to the current management team. 

1.D.6.2. Commercial successes 

2010 was a record year for orders, reflecting the success 

of the Group’s strategy for its two growth lines, which are: 

selling innovative products which reduce CO 2 emissions and 

expanding in emerging countries. Orders, which accounted 

for 1.6 times the original equipment sales for the year, 

increased substantially in all regions: Europe, North America, 

South America and Asia, mainly in China. New orders won 

accounted for a sum of 12.5 billion euros. 

1.D.6.2.1. Powertrain Systems 

Electrical Systems 

Various orders for Stop-Start systems based on a starter 

motor (ReStart), a very high efficiency system for restarting 

diesel engines, with the major European, Asian and 

American automakers. 

Various orders for the new ranges of high efficiency 

alternators for reducing CO 2 emissions. 

1 



The 2 nd generation of the i-StARS micro-hybrid system 

entered volume production in Europe and in Japan on 

gasoline and diesel engines. This system is based on a 

belt-driven alternator-starter; Stop-Start can be used 

conveniently and with improved availability compared with 

systems based on a starter motor and also guarantees 

improved electrical energy management. This represents 

the first step in hybridization. 

Various orders in China from local automakers, which have 

reinforced the position of the Powertrain Systems Business 

Group in this burgeoning market. 

Transmission Systems 

Transmission Systems posted much improved sales in 2010, 

in particular in China, North America and India, again with 

new products. 

First production order for the dual dry clutch and the 

corresponding dual mass flywheel. 

Valeo won several orders for torque converters for use with 

6-speed, continuously variable automatic transmissions for 

American and Japanese automakers in the Asian and North 

American markets. These products will equip gasoline 

engines from 1.6l to 3.2l for front-wheel drive vehicles. 

Production is underway at plants in Atsugi in Japan, Taegu 

in Korea, Nanjing in China and, since 2010, in San Luis 

Potosi in Mexico. 

In the manual field, the general European and Korean 

automakers chose Valeo for the supply of self-adjusting 

clutches and dual mass flywheels, in particular PSA, BMW 

and Hyundai. 

In China, the Products Group also obtained new orders for 

dual mass flywheels and torque converters and, in USA, an 

initial order for flywheels for hybrid vehicles. 

Engine Management Systems 

First order from a European car automakers for engine 

control computers intended for new gasoline engines with 

direct injection. 

New contract in China for the supply of engine control and 

ignition computers for gasoline applications. Production 

takes place on the Wuxi site. 

Air Circuit Systems 

New contract for the air inlet valve for 1.4l and 1.6l Euro6 

diesel engines. 

New contract for a new inlet module fitted with supercharger 

cooler and EGR valve for 1.6l and 2.0l Euro6 diesel engines. 


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businesses 

Systems for Electric and Hybrid Vehicles 

The Products Group won a large contract for power 

modules intended for the next generation of electric 

vehicles to be produced by a French automaker. 

1.D.6.2.2. Thermal Systems 

Thermal Systems has outperformed in terms of orders in all 

its product lines. A significant part of its orders were gained in 

the emerging countries, mainly in China but also in India with 

local automakers, in South America and in Eastern Europe. 

Orders also remained strong on the European and American 

markets, with a strong push with the German automakers. 

The orders also correspond in large part to systems and 

modules tied to developments in powertrain groups that help 

to reduce fuel consumption and CO emissions. 

2 

Climate Control Systems won a record number of orders 

in 2010, thanks to significant sales successes with various 

automakers such as General Motors, Daimler, Renault- 

Nissan, Subaru and Chery. 

Thermal Systems, from the Powertrains Group, won a large 

number of orders with a German automaker, mainly as a 

result of a water-cooled air inlet module, comprising the 

cooler, valves and manifolds. This high value-added module 

will be used on 800,000 vehicles per year and will have a 

significant impact on lowering CO 2 emissions produced by 

these vehicles. Other orders were generated, mainly with 

automakers in Germany and North American automakers, 

but with a large proportion in China and South America. 

The Compressors Products Group, already well established 

in Asia, has laid the foundations for subsequent growth 

in Europe with French automakers, and a new presence 

in the USA. An initial order has been received for a lowcost 

compressor in India, confirming the growing interest 

of automakers who want to equip their entry-level vehicles. 

1.D.6.2.3. Comfort and Driving Assistance Systems 

Driving assistance products 

For ultrasonics systems: 

• “Park assist” parking aid: a new global vehicle platform 

aimed at an emerging market. 

• Park4U ® : the success of the semi-automatic parking 

sector continues, with a new European client, an extension 

to other vehicles for a current Asian client and a global 

multinational platform. 

For radars: 

• Blind spot detection system and “Cross Traffic Alert”: a 

new global vehicle platform aimed at an emerging market. 


For cameras: 

• 360 Vue TM multi-camera system: this innovation has once 

again been clearly successful in terms of new orders, 

notably with two new European clients and extensions 

to other vehicles for two other current European top-end 

clients. 

Interior Controls: 

2010 was a record year for orders, with an orders/sales ratio 

of 1.8. 

Among major orders to be noted: 

The first integrated central console incorporating a 

touchscreen. 

An improvement to the market share in top of column 

modules for future years with the acquisition of 3 major 

platforms, including a global “low cost” vehicle and one of 

the largest international platforms in volume terms. 

Major climate control contracts in China and in North 

America, as well as 2 multiplexed façade contracts 

combining air conditioning and audio. 

A new roof module incorporating multiple HMI features, as 

well as anti-theft alarms. 

Acquisition of a new key account for angle and torque 

sensors for the European, Chinese and North American 

markets. 

Cabin Electronics 

Folding key for Ford. 

Access Mechanisms 

New orders for the Optimum innovative locking range: 

After winning a first contract with PSA Peugeot-Citroën 

in 2009, other automakers turn have opted for Valeo’s 

modular and standard design and we can now deploy the 

complete range. 

The Optimum locking system will then be industrialized 

worldwide through the Valeo plants, i.e. Europe, Brazil, 

Russia and China. 

Orders are very satisfactory for trunk and tailgate opening 

and closing systems, as well as electrical steering locks: 

• new contracts for actuators to open/close trunks and 

tailgates for a German automaker, 

• several significant orders to supply electrical locks in Europe 

and in the United States. 

Valeo Access Mechanisms Products Group has improved its 

position with two unbeatable German automakers: 

• locks and keys for the European and South American 

markets, 

• side door handles.

1.D.6.2.4. Visibility Systems 

Visibility Systems completed the decade with a very 

promising growth profile. A new site opened its doors 

in Chennai, India, in excellent conditions. And 2010 was 

highlighted by a growth in activity with, most notably, 

firm orders up compared with 2009. The size of these 

firm orders, in particular in growing markets, ensured the 

continuation of Valeo lighting and wiper systems on an 

increasing number of models in the future. 

The LED market confirmed its strong growth. Front 

headlamps with LEDs with a novel design appeared 

on production vehicles. The LED low beam headlamp, 

developed in partnership with Ichikoh, is fitted to the Nissan 

Leaf, the first 100% electric car in mass production, in a 

well-observed launch on the market (some other very large 

projects are being developed for some automakers). Finally, 

the application from 2011 of a European Directive making 

it compulsory to fit daytime running lights on new vehicles 

has helped to spread DRLs with LEDs over a wide range of 

models. LEDs are therefore confirmed on the market both 

as satisfying the demand for energy saving systems and 

as developing a given distinctive style. 

BeamAtic ® Premium confirmed its success with the 

launch of the Volkswagen Phaeton and Passat fitted with 

anti-dazzle headlamps. Shortly, BeamAtic ® Premium will 

also be available on more accessible ranges. 

In 2010, Valeo introduced the Direct Drive electronic wiper 

system to the world market on the Mercedes SLS AMG. 

This technology is particularly suited to the reduced areas 

under the hood or vehicles with large area windshields, and 

has burgeoned with various automakers, both in Europe 

and North America. It brings reduced weight, low bulk and 

standardization to a number of vehicle ranges. 

The advantages of AquaBlade ® , combining windshield 

cleaning efficiency without obstructing the driver’s view 

while at the same time reducing washer fluid consumption 

by half, have attracted a number of automakers all over the 

world. Firm orders have also been taken for this technology. 

Valeo took part in “eSafety Challenge 2010” which was held 

on July 13, 2010 at Millbrook in the United Kingdom. As part 

of this event, Valeo presented its latest driving assistance 

and visibility technologies, including advanced xenon lighting 

systems and the revolutionary BeamAtic ® Premium system. 

The aim of eSafety Challenge was to make the public 

aware of technological automobile innovations aimed at 

improving road safety. The eSafety challenge is the result of 

a partnership between the European Commission, the IAF 

(International Automobile Federation) and the eSafetyAware 

1 



association (which brings together 39 organizations from the 

automotive industry, including Valeo), and is sponsored by 

the Euro NCAP organization. The event tries to demonstrate 

how new technologies make a safer driving mode possible, 

while reducing road safety risks. 

1.D.6.2.5. Aftermarket 

Customer satisfaction is a priority for Valeo Service. In 2010, 

Valeo’s aftermarket business again placed it at the center of 

its concerns through: 

the development of a range of driving assistance products 

with the launch of speed/visio ® NOMAD , the plug&play 

version of speed/visio , a heads-up speed display system 

using GPS technology; 

the extension of the wiper system range with Uni-Click ® , 

a universal connection system for connecting a wiper 

blade with several types of wiper arm, the objective being 

to reduce the number of different parts in the Premium 

Flat Blade range and thus storage space on customers’ 

premises; 

the deployment of a new range of products completely 

devoted to vehicles that are more than 10 years old and/ 

or with high mileage: Valeo CLASSIC. This is a market 

with considerable potential, given that the average age 

of a vehicle in Europe is increasing constantly and that 

car owners’ budgets devoted to repair and maintenance 

change with the age and use of the vehicle. This range, 

which only covers alternators and starter motors at present, 

is a quality alternative to Valeo’s Premium range and is ideal 

for users with a modest budget; 

the opening of new divisions worldwide, such as Valeo 

Service USA in January 2010; 

the improvement of logistic services offered to customers 

with, in particular, the opening of new warehouses in China 

and in the USA for improved on-the-spot service; 

awards obtained in Russia, in Germany and in the United 

States by the Valeo and SWF wiper blades; 

the election of Valeo Service as “Supplier of the Year 2010” 

by Groupauto International. This recognition underlined 

the quality of Valeo’s portfolio worldwide, for goods and 

services, and its commitment to always satisfying its 

customers; 

the global recovery of the markets, mainly in North America, 

South America and Asia in the automakers’ distribution 

channel (OES - Original Equipment Spares) has benefited 

Valeo significantly; 


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businesses 

the development of the Valeo range of spare parts towards 

a more complete offer with improved technical and 

customer support to increase sales; 

the extension of the Valeo OES offer with the creation of 

low-cost ranges in order to reach the entry-level segments 

and enlargement to a complete range for all brands. 

1.D.6.3. Operational excellence 

1.D.6.3.1. Quality 

At the end of 2010, the Group’s Quality level reached a 

historic record of 7,300 PPB (defective parts per billion), 

an improvement of almost 50% compared with 2008 and 

stable compared with 2009. 21% of the Group’s sites were 

at 0 PPB, which represents an improvement of over 20% 

compared with the situation in the previous year. At the same 

time, total non-quality costs (direct costs, special transport 

and warranty costs) increased by 7%, impacted mainly by 

rapid sales growth, which generated exceptionally high 

transport costs. 

1.D.6.3.2. Supplier integration 

By supporting its customers with its 109 sites located in 

27 countries across 4 continents, Valeo now has a strong 

position from which to speed up the process of bringing its 

supply base into line with the best performances observed 

among the benchmark suppliers in each purchasing segment, 

which benefit from global cost bases that are structurally the 

most competitive. 

Thanks to the results obtained, Valeo is able to integrate 

a growing number of these suppliers at very early stages 

in new projects. 

In 2010, many projects started in production with more 

than 70% of purchasing coming from these benchmark 

suppliers. 

This strategy helped sales grow by 30% in low-cost 

countries. 


The widespread implementation of levers to reduce 

purchasing costs helped lessen the effects of record 

inflation in raw materials. The main levers are: 

• product and supplier base benchmarks at Group level, 

• joint productivity projects between Valeo and suppliers, 

• the dynamic management of quotas and the allocation of 

new business. 

The Group pursued its program to streamline its supply 

base and concentrate on the best suppliers for each 

technology, at a global level. In 2010, the Group set, 

with its new organization, a new objective to streamline 

the supply base, which aims at reducing the number of 

suppliers accounting for 95% of its purchases by 30% 

over the next 3 years. 

A supplier risk plan aimed at preventing the consequences 

of the economic crisis on sourcing, led by the Supplier Risk 

Committee under the authority of the Group Purchasing 

Department, was deployed in all Product Groups. All 

suppliers were assessed by Valeo in order to anticipate 

and respond as quickly as possible to potentially critical 

situations in terms of sourcing. The effectiveness of this 

plan allowed Valeo to protect its customers from defaults 

that put pressure on most areas of sourcing within the 

industry. 

1.D.6.4. Awards 

In 2010, the Group enjoyed widespread recognition by its 

customers and partners for the quality of its goods and 

services, attesting to the Group’s operational excellence. 

1.D.6.4.1. Innovation rewarded 

The “Nissan Global Supplier Award” in the innovation class to 

Valeo Radar Systems for the development of radar sensors 

for blind spot detection. 

The “Superior Technical Award” from Toyota North America 

awarded to the Lighting Systems Product Group (Valeo 

Sylvania site in the United States and Hainaut in Belgium) for 

development of wide angle fog lamps.

1.D.6.4.2. Outstanding operational excellence 

Automaker customers continued to recognize the high 

standard of the Group’s services, particularly in the area 

of Quality. 

Best supplier award from the Chinese automaker Chery, 

awarded to the Nanjing (China) site, operated by the 

Transmission Systems Product Group. 

Best supplier award from GM Daewoo Auto & Technology, 

awarded to the Valeo Pyeong Hwa (Korea) joint venture 

company, operated by Transmission Systems Product 

Group. 

Best supplier award from the Indian automaker Maruti 

Suzuki in the design and development class, awarded 

to the Chennai site (India), operated by the Transmission 

Systems Product Group. 

Best supplier of the year award from GM, awarded to the 

San Luis Potosi (Mexico) site, operated by the Transmission 

Systems Product Group. 

Best production performance award from Mitsubishi 

Motors in North America, awarded to the Juarez (Mexico) 

site, operated by the Wiper Systems Product Group. 

Best project award, awarded by the Toyota European 

Association of Manufacturers, awarded to the Hainaut 

(Belgium) site, operated by the Lighting Systems Product 

Group. 

1 



Best supplier award from the Group Auto Union 

International, in the marketing class, awarded to Valeo 

Service. 

Honda Quality award, awarded to the Access Mechanisms 

Product Group in North America. 

Toyota China Quality award, awarded to the Foshan (China) 

site, operated by the Lighting Systems Product Group. 

Top Quality Award from Toyota Peugeot-Citroën Automobile 

(TCPA), awarded to the Humpolec (Czech Republic) site, 

operated by the Compressors Product Group. 

Toyota Peugeot-Citroën Automobile (TCPA) Quality award, 

awarded to the Rakovnik (Czech Republic) site, operated 

by the Climate Control Product Group and to the Créteil 

(France) site, operated by the Access Mechanisms Product 

Group. 

Quality and Logistics performance award, awarded by 

Honda Brazil to the Campinas (Brazil) site, operated by 

the Wiper Systems Product Group. 

Quality target achieved award, awarded by Mitsubishi 

to the Chonburi (Thailand) site, operated by the Climate 

Control Product Group. 

Dongfeng Peugeot-Citroën Automobile (DPCA) Quality 

performance award, awarded to the Wuhan (China) site, 

operated by the Lighting Systems Product Group. 


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markets 

1.E. Main markets 

1.E.1. Introduction to the Group’s markets 

In order to meet the demand of customers, in particular 

international automakers operating on several continents, 

Valeo has to be able to deliver under acceptable economic 

and logistic conditions in all regions. 

Moreover, in order to seize the major growth opportunities 

in Asia and in emerging countries, the Group must increase 

its industrial and development presence in these regions. 

However, Europe, the United States and Japan are still the 

areas for technological growth and innovation. Valeo must 

maintain a strong presence in these areas, both in industrial 

facilities and in R&D terms. 

2010 was highlighted particularly by the start-up of a new 

lighting business in India, as well as a limited increase in its 

capacity in this country for its clutch business. 

The very strong increase in customer demand for products 

and solutions that reduce CO emissions also required 

2 

increases to capacity, for example for torque converters, 

mainly in China and Mexico. Driving assistance systems, 

such as ultrasonic sensors and cameras, were also greatly 

in demand, which required the installation of considerable 

additional capacity, in particular in Germany and in China. 

In 2010, world automobile production reached 74 million 

passenger cars, up by 3.8 million compared with the previous 

record, set in 2007 (70.2 million vehicles produced) (1) . 

(1) Source: JD Power Global Automotive Production Forecast January 2011. 

(2) Including Africa. 


Global automotive production (1) 

(in millions of passenger cars) 

80 

70 

60 

50 

40 

30 

20 

+6% - 4% -12% +25% 

07 08 09 10 

In 2010 (compared with 2009) passenger car production 

grew by 14% in Europe (19 million vehicles produced); 28% 

in Asia (36.8 million vehicles produced); 39% in North America 

(11.8 million vehicles produced) and 12% in South America 

(4.1 million vehicles produced) (1) . 

Valeo’s original equipment passenger car sales are set out 

in Chapter 5, section 5.A.1.1 of this Reference Document. 

World automobile production was broken down as follows in 

2010 (2) : 50% in Asia (of which 23% in China), 26% in Europe, 

16% in North America, 6% in South America and 3% in the 

Middle East and in Africa. The Group’s background anchors 

it particularly in Europe, where it still achieved 60% of its 

revenue in 2010 (2) . The final objective is to rely on these sound 

bases and grow strongly in other areas to bring the Asian 

share to more than 35% of Group revenue. With this in mind, 

Valeo will most likely look towards external growth.

Global automotive production by region 

52% 

Asia 

and Middle East 

16% 

North America 

6% 

South America 

26% 

Europe and Africa 

Source: Valeo estimates and JD Power Global Automotive Production 

Forecast, January 2011 

Valeo consolidated sales by region 

19% 

Asia, Middle East 

and Oceania 

60% 

Europe and Africa 

13% 

North America 

8% 

South America 

In terms of customers, Valeo can rely on its traditional base of 

European and American automakers, but must also increase 

its presence with the Asian automakers and, in particular, the 

Chinese and Indian automakers who post very high growth 

figures. In China, for example, half the market is held by local 

automakers. 

1 


Main markets 

Global automotive production by manufacturer’s 

country of origin 

5% 

Other 

50% 

Asian 


9% 

French 

14% 

German 

22% 

American 

Source: Valeo estimates and JD Power Global Automotive Production 

Forecast, January 2011 

Valeo OEM sales by manufacturer’s country of origin 

9% 

Other 

22% 

Asian (2) 

18% 

American 

(1) excluding Nissan 

(2) including Nissan 

23% 

French (1) 

28% 

German 

PAGE 41

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PAGE 42 


markets 

1.E.2. Valeo’s competitive positioning 

Valeo currently enjoys very good competitive positions on its 

main product lines. The Group’s ambition is to become or 

remain one of the three top automotive suppliers in the world 

over all its product lines. 

The Group’s main competitors are the main automotive 

suppliers in the world specialized in the automotive industry, 


like Robert Bosch, Continental, Denso, Delphi, Visteon or 

Magneti Marelli; as well as other more specialist manufacturers 

such as Behr, Tokaï Rika, Koito, Remy or LuK. 

Over almost all of Valeo’s main product lines, the market is 

fairly concentrated, with the three top automotive suppliers in 

the world representing more than 60% of the global market. 

According to an in-house estimate by Valeo, the Group is among the three leading players in the market across its main product 

lines and is positioned as follows: 

Driving assistance systems 

Valeo 

Bosch 

Panasonic 

57% of global market 

Electrical systems 


Denso 

Bosch 

Interior controls 

Kostal 

Tokaï Rika 


34% of global market 44% of global market 

Thermal systems 

Denso 


Visteon 


>50% of global market 59% of global market 

Wiper systems 


Bosch 

Denso 


Transmission systems 

LuK 


ZF Sachs 

Lighting systems 

Koito 


Magneti Marelli

2.A. Main risks AFR 44 

2.A.1. Operational risks 44 

2.A.2. Industrial and environmental risks 45 

2.A.3. Legal risks 46 

2.A.4. Market risks 48 

2.A.5. Liquidity risks 49 

2.A.6. Credit and counterparty risks 51 

RISK FACTORS 

2.B. Insurance and risk coverage 51 



2 

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PAGE 44 

Risk Factors 

risks 

2.A. Main risks 

2.A.1. Operational risks 

2.A.1.1. Risks associated with the 

automotive equipment industry 

Risk: 

The Group’s sales are dependent on the level of automotive 

production, especially in Europe, Asia and North America. 

Production itself is affected by a number of factors, 

including consumer confidence, employment trends, 

disposable income, vehicle inventory levels, interest rates 

and consumers’ access to credit. The volume of production 

is also influenced by government initiatives, especially those 

designed to encourage vehicle acquisition, trade agreements, 

new regulations and industrial action such as strikes and 

walkouts. 

Following the crisis which hit the automotive industry in 

2009, Valeo benefited from a significant improvement in the 

automotive market in its main production areas in 2010. 

The recovery of the automotive market, as well as strict 

management of its costs and an improvement in its industrial 

performance, allowed Valeo to post a significant improvement 

in net earnings in 2010, with positive net income after losses 

over two consecutive financial years. 

A fresh decline in the automotive market could again affect 

Valeo’s net income. 

Likewise, a sharp drop in automotive production could put 

some of Valeo’s manufacturing customers into bankruptcy, 

which would affect the Group’s financial position. 

Management of risk: 

Valeo has the necessary expertise and resources to underlake 

the new restructuring measures which would be needed if 

the automotive market experienced another downturn. In this 

case Valeo, as in the past, would have to take specific actions 

in order to deal with a difficult economic environment. 

The actions undertaken from 2008 to 2010 enabled the 

Company to lower its “break-even point” to 7.6 billion euros 

by the end of 2010. 

In addition, since the Group enjoys considerable diversification 

in sales by customer, region and product, it is less vulnerable 

to negative trends in one of its markets. 


2.A.1.2. Risks related to the marketing of 

vehicle models produced 

Risk: 

Supply contracts take the form of open orders for all or 

part of the equipment needs of a vehicle model, with no 

volume guarantee. They are granted directly for the vehicle’s 

individual functions and are generally valid for the model’s 

lifespan. Valeo’s earnings can therefore be impacted by the 

worsening economic situation and the decline in auto sales, 

as well as by the failure of a model to sell well and/or the 

failure of the Group to be selected to provide equipment for 

a new range of vehicles. 


The risks are broadly diversified, with Valeo’s wide range of 

products and services used by a great number of customers, 

in a very large number of vehicle models. 

2.A.1.3. Risks related to new product 

development 

Risk: 

Valeo’s sales and income depend on the ability of the Group 

to develop new products and to achieve the technological 

progress needed to remain competitive. 

This is because regulatory or technological developments can 

render Valeo products obsolete or make them less attractive 

to automakers. The Group’s competitiveness and market 

share growth hinges on its ability to foresee such changes 

and develop new products. Therefore, the Group maintains 

an in-depth technology watch and conducts a systematic 

technological review of products, modules and systems in 

each Product Line ten years out. 

The Group is exposed to the risks inherent in developing 

and manufacturing new products and, more particularly, the 

absence of positive market response, development delays, 

and product malfunction.


The Group employs every means necessary to remain at 

the cutting edge of technological developments. Research 

and Development is of key importance for the Group. Valeo 

operates 20 research centers and 38 development centers 

around the world, and net expenditure on Research and 

Development represented 5.6% of Group sales in 2010. 

However, no assurance can be given that the Group 

will be able to respond satisfactorily to all regulatory and 

technological developments, so as to maintain a competitive 

product offering. 

For more on our Research and Development policy, see 

Chapter 1, section 1.C.3. 

2.A.1.4. Supplier risks 

Risk: 

Valeo is highly integrated with its suppliers, as part of the 

drive to continually improve the quality of products delivered 

to automakers. This does not mean, however, that there are 

ownership links between Valeo and its suppliers. 

Valeo is exposed to the risk of a default by one of its suppliers 

that could cause an interruption of supply that prevents the 

Group from delivering to its customers. 

However, manufacturing purchases are spread over a broad 

list of suppliers, with several suppliers for each business 

and in each region. Ninety-five percent of Valeo’s needs are 

handled by 1,020 suppliers. 



Risk Factors 2 

Main risks 

The Group ensures the dependability of its supplies through 

continual financial monitoring of its suppliers using multiple 

criteria. The Group keeps a watch list of suppliers at risk. 

These suppliers are constantly monitored and emergency 

stockpiles are built up as needed and/or a policy of not relying 

on a single supplier for any given product is instituted. 

2.A.1.5. Political or social instability risks 

Risk: 

2.A.2. Industrial and environmental risks 

2.A.2.1. General principles of protection 

and management of environmental 

and industrial risks 

The Group has always had a policy of providing the highest 

level of protection of its sites against natural disasters, 

technological risks and environmental risks. Problems and 

accidents in the Group’s plants or a tightening of standards in 

force, could generate additional costs or capital expenditures 

for the Group in order to correct problems, achieve 

compliance and/or pay any fines. 

At the request of the Group Risk Insurance Environment 

Department, regular inspections are carried out by 

independent external consultants to verify application of the 

Given the large number of countries in which Valeo has a 

presence, the Group’s business can be affected by various 

political risks such as war, terrorist acts, armed conflicts or 

labor unrest. 


In order to protect itself against such risks, Valeo has put in 

place various alerts and safety plans. 

Alert measures consist of actions to permanently monitor the 

political and social situation in all countries, not only those 

where Valeo operates, but also those to which its employees 

might have to travel. 

Safety plans include such measures as: 

ban on travel to the countries in question; 

evacuation of expatriates; 

heightened security at operating sites. 

risk management policy. Valeo’s audit program has been 

in place for 20 years, and is a major component of its risk 

reduction policy. Every site is audited, on average, once every 

three years. The purpose of these on-site audits is to assess 

performance and the progress that has been made. 

2.A.2.2. Environmental risks 

In the various countries in which Valeo operates, its business 

is subject to diverse and evolving environmental regulations 

that require compliance with increasingly strict environmental 

protection standards. 

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Risk Factors 

risks 

As described in Chapter 3, section 3.A (“Environmental Policy 

and Sustainable Development”), Valeo’s environmental policy 

is designed to control and minimize environmental risks as 

far as possible. The Group Risk Insurance Environment 

Department is in charge of managing environmental risks. 

To carry out its duties, the Department has set up a dedicated 

Health, Safety, Security, Environment organization involving all 

Group departments. The Group’s Environmental Assurance 

Risks Department is assisted by a Health, Safety, Environment 

(HSE) manager for each of the Business Groups and the 

Service Business. HSE managers are appointed at each 

Valeo site to ensure that procedures are properly applied. 

These managers lend their expertise to site management 

and verify compliance with regulations and Valeo standards. 

A self-assessment tool enables each site to assess its 

management of environment, health and workplace-safety 

risks. By the end of 2011, this tool will be operational for 

assessing risk management with respect to the safely and 

security of facilities. 

The Group’s policy has banned the use of asbestos in 

products and processes at all production plants for many 

years now, even in countries that still allow its use. Some of 

the companies in the Group have been sued about asbestos 

use. For example, some suits have been initiated by former 

employees, primarily in France. 

Provisions for site restoration amounted to 22 million euros 

at December 31, 2010. Of this amount, 2.5 million euros was 

earmarked for work to bring facilities into compliance with 

environmental regulations. No individual provision constituted 

a material amount. 

2.A.3. Legal risks 

2.A.3.1. Intellectual property risks (patents 

and trademarks) 

Valeo’s Research and Development policy means that it is 

the source of its own innovations, giving it control over the 

patents that it needs to do business. Less than 4% of the 

Group’s sales rely on outside patents or licensing. 

The major intellectual property risk that Valeo faces is 

counterfeiting which can have an immediate effect on sales 

and net income, and gradually harm the reputation and quality 

image of the products involved. 


2.A.2.3. Industrial risks: technological and 

natural risks 

The vast majority of Valeo’s sites are classified HPR (Highly 

Protected Risk) and have an automatic sprinkler system 

for fires and highly-trained teams to deal with all kinds of 

risk situations. 

All sites in seismic risk zones have been built or upgraded 

to comply with the most recent seismic regulations. 

Valeo sites are not located in flood zones or, if they are, 

are equipped with systems that protect them against flood 

risks. 

New Valeo sites are located far from sites representing a 

significant potential risk (Seveso sites, etc.) which could 

have a domino effect that endangers Valeo’s sites. 

2.A.2.4. Crisis management 

The Valeo Risk Management Manual contains a specific 

directive on the prevention of emergencies and on situationspecific 

contingency plans. This directive requires each site 

to draw up an emergency plan for dealing with potential 

incidents. 

A crisis management tool was put in place in 2008 

that enables each site to be aware of its potential crisis 

situations and make effective preparations for them. 

As far as possible and where warranted, Valeo’s industrial 

expertise and the innovations generated by the Group’s 

research are covered by patents to protect its intellectual 

property. Valeo is therefore a major patent filer in its business 

sector, as set out in Chapter 1, section 1.C.3. These patents, 

covering the major automotive markets, provide the Group 

with an effective weapon against counterfeiting. 

To spot infringements of its patented rights, the Group 

has for several years conducted surveillance at Chinese 

customs, so that it can be alerted to questionable products, 

whether imported or exported. Beyond that, whenever 

products shown at industry trade shows seem to involve the

eproduction of patented technologies, Valeo pursues every 

lawful course available to stop and penalize the infringement. 

Valeo also has a trademark protection unit in France that 

monitors products in its business sector. 

In the normal course of its business, Valeo is paid royalties 

for patents licensed to other companies. 

2.A.3.2. Risks related to product and 

service liability 

Valeo is exposed to warranty claims by customers with 

respect to the products and services it sells. Sales of 

products and services are covered by statistical provisions 

that are regularly reviewed to reflect past return rates and to 

cover the expected cost of customer returns. In all, provisions 

for customer warranty claims came to 170 million euros at 

December 31, 2010. 

Although Valeo follows a policy aimed at achieving a degree of 

quality excellence, the Group can, at times, be confronted by 

major quality and safety issues resulting in a large-scale recall 

campaign for a given production period. If a quality problem 

were to trigger a major recall, it could have a substantial 

impact on the Group’s financial position and image. To protect 

itself against this risk, the Group has an insurance policy that 

covers recall costs (above the deductible amount),i.e, the cost 

of returning vehicles to the garage and removing and installing 

the parts, with the Group bearing the cost of the parts. 

Valeo is also exposed to the risk of liability claims for damages 

caused by defective products sold or services rendered by 

the Group. To protect itself against this risk, Valeo has taken 

out an insurance policy to cover the financial impact of these 

claims. However, it is uncertain whether this insurance policy 

would be adequate to cover the full financial impact of such 

claims. 

Finally, Valeo is exposed to the risk of being sued by 

its customers for failure to comply with contractual 

commitments, which result from their demands regarding 

operational performance, such as management excellence 

in development and industrialization projects, the ability to 

meet demand in terms of volumes, and absolute mastery 

of logistics in all circumstances. The Quality function and its 

Project Quality network, as well as the Purchasing, Industrial 

and Logistics functions, are responsible for managing these 

risks. 

2.A.3.3. Claims, litigation, governmental, 

legal and arbitration proceedings 



Main risks 

In the day-to-day management of the Group’s business, 

some companies may be involved in legal proceedings and, 

more specifically, lawsuits brought by some of its current or 

former employees for asbestos-related damages. 

Each of the known cases involving Valeo or a Group company 

is examined at the end of the year and the provisions deemed 

necessary after seeking advice from legal counsel are set 

aside to cover the estimated risks. 

The amount of these provisions is shown in Chapter 5, 

section 5.B.6, in Note 5.9 to the consolidated financial 

statements. 

Even though the outcome of the current lawsuits cannot 

be foreseen, Valeo’s view today is that they will not have a 

material impact on the Group’s financial position. However, 

Valeo cannot rule out new lawsuits stemming from events or 

facts that are unknown at present, or where the associated 

risk cannot be determined and/or quantified yet. Such 

lawsuits could have a significant harmful impact on the 

Group’s net income or on its image. 

To the best of Valeo’s knowledge, and excluding the new 

asbestos-related actions brought in France by former 

employees, during the past 12 months there were no 

governmental, legal or arbitration proceedings, including 

proceedings in process, pending or expected, that may have, 

or have had in the recent past, a significant impact on the 

financial position or profitability of the Company or the Group. 

Status of legal proceedings with Thierry Morin 

On June 16, 2009, Valeo filed a complaint against Thierry 

Morin with the Nanterre Commercial Court and petitioned 

to have the Memorandum of Understanding signed by the 

Company and Thierry Morin on March 20, 2009, voided for 

false cause or misrepresentation. In a subsidiary petition, 

Valeo asked for repayment of 30% of the termination payment 

made to Thierry Morin and the reintroduction of the continued 

employment requirement for the exercise of his stock options, 

as a result of the rejection of the Memorandum of Agreement 

by the Valeo Annual General Meeting. Thierry Morin has cited 

Pascal Colombani, Behdad Alizadeh, Gérard Blanc, Jérôme 

Contamine, Michael Jay, Philippe Guedon, Georges Pauget, 

Erich Spitz, Daniel Camus and Helle Kristoffersen in the 

case. By order of December 2, 2010, the Presiding Judge 

of the Commercial Court of Nanterre appointed a mediator 

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Risk Factors 

risks 

whose task is to mediate between the parties, to hear their 

respective points of view and, if necessary, to negotiate a 

memorandum of understanding. The period for mediation 

is three months, renewable once at the mediator’s request. 

2.A.4. Market risks 

The Group is exposed to market risks because it does 

business on an international scale. It uses financial derivatives 

to manage and reduce its exposure to changes in foreign 

exchange rates, raw materials prices and interest rates. In 

general, these risks are managed centrally by Valeo on behalf 

of all Group companies. 

In 2008, Valeo tightened its liquidity management and 

counterparty monitoring requirements in response to 

the economic environment. Within the Group, the Cash 

Management function of the Finance Department establishes 

and enforces rules on external financing risk management and 

market risk management relating to changes in interest rates, 

currency values and raw material prices. The function relies, 

among other things, on a cash management system that 

monitors the main liquidity indicators and all of the financial 

derivatives used at central level to hedge interest rate and 

currency risks. Valeo’s General Management receives periodic 

reports about market trends and their impact on the Group’s 

liquidity and the value of the derivatives portfolio, details of 

hedging transactions and their consequences for the fixed 

rate/variable rate debt mix, along with a monthly report on 

credit risk relating to customer receivables. 

2.A.4.1. Foreign currency risk 

Group entities may be exposed to transaction risks with 

respect to purchases or sales transacted in currencies other 

than their functional currency. Subsidiaries’ current and future 

business transactions and investments are generally hedged 

for periods of less than six months. Subsidiaries principally 

hedge their transactions with Valeo, the parent company, 

which then hedges net Group positions with external 

counterparties. Hedge accounting as defined by IAS 39 is 

not applicable in this case, and the Group’s foreign currency 

derivatives are therefore treated as trading instrument. 

However, on an exceptional basis, the Group establishes 


Furthermore, Valeo dismissed Thierry Morin before the agreed 

date on real and serious grounds. On October 30, 2009, 

Thierry Morin filed a complaint against Valeo with the Paris 

Labor Tribunal and asked for termination benefits totaling 

2,441,000 euros. These proceedings are still ongoing. 

specific hedges for major individual transactions and applies 

hedge accounting rules. 

The Group is also exposed to foreign currency risk through 

its investments in foreign subsidiaries, in the event of 

exchange rate movements against the functional currency. 

The Group’s policy is to hedge this risk on a case-by-case 

basis. No derivative instrument of this sort was recognized in 

the Group’s statement of financial position at December 31, 

2010. 

The Group is also exposed to foreign currency risk when it 

provides financing to subsidiaries whose functional currency 

is not the euro. This exposure consists mainly of Valeo’s 

uncollateralized euro loans to subsidiaries located in Eastern 

Europe (see an analysis of this risk in Chapter 5, section 5.B.6, 

Note 6.2.1.1 to the consolidated financial statements). 

A statement of the Group’s gross and net exposures is given 

in Chapter 5, section 5.B.6 Note 6.2.1.1 to the consolidated 

financial statements. 

2.A.4.2. Commodity risk 

The Group uses a variety of raw materials as part of its 

industrial activity, including steel, non-ferrous metals and 

resins, amounting to 1,275 million euros in purchases 

in 2010. Certain raw materials such as steel and plastics 

cannot be hedged, since they are not listed on an organized 

exchange. In such cases, the Group negotiates contracts 

with its suppliers, typically on an annual basis, to ensure that 

selling prices are indexed as far as possible to the changes 

in purchase prices for these materials. 

Exposure to non-ferrous metals, such as aluminum, 

processed aluminum, copper and zinc, is hedged with leading 

banks using conventional hedging instruments that usually 

have maturities of six months or less. The Group hedges 

volumes not covered by a matching price escalation clause 

in agreements with customers. The Group favors hedging

instruments which do not involve physical delivery of the 

underlying commodity. These transactions are recognized 

as cash flow hedges in accordance with IAS 39. For the 

year ended December 31, 2010, an unrealized gain of 

16 million euros from hedging has been recognized directly 

in stockholders’ equity. At December 31, 2009, an unrealized 

gain of 10 million euros was recognized in stockholders’ 

equity. At December 31, 2008, an unrealized loss of 13 million 

euros was recognized, following a significant downturn in 

production volumes, the resulting over-hedging and a sharp 

fall in prices for these materials. 

Inventory values are not significantly affected by the rise in 

prices of raw materials because of the rapid turnover and 

optimization of logistical flows to reduce inventories. Exposure 

to commodity risk and an analysis of sensitivity to this risk 

are dealt with in the notes to the consolidated financial 

statements (Chapter 5, section 5.B.6., Note 6.2.1.2). 

2.A.4.3. Interest rate risk 

The Group uses interest rate swaps to convert interest rates 

on its debt into either a variable or a fixed rate, either at 

origination or during the term of the Ioan. 

At December 31, 2010, 85% of long-term debt was at fixed 

rates versus 72% at the end of 2009. 

The repayment of the convertible bond on January 3, 2011 

brought this ratio to 78.6%. 

Exposure to interest rate risk and an analysis of sensitivity 

to this risk are discussed in the notes to the consolidated 

financial statements (Chapter 5, section 5.B.6., Note 6.2.1.3). 

2.A.5. Liquidity risks 

2.A.5.1. Cash management policy 

At December 31, 2010, Valeo had 1,316 million euros in 

cash and cash equivalents (compared with 86 million euros 

at December 31, 2009) breaking down as 335 million euros 

in cash at bank and in hand and 981 million euros in cash 

equivalents, mainly corresponding to securities issued by 

money market funds. 

Other sources of liquidity were as follows: 

2.A.4.4. Equity risks 

2.A.4.4.1. Treasury shares 



Main risks 

Under IAS 32, treasury shares are deducted from 

stockholders’ equity at the date of acquisition and changes in 

value are not recognized. When treasury shares are acquired 

or sold, stockholders’ equity is adjusted to reflect the fair 

value of the shares purchased or sold. The acquisition of 

3,559,156 treasury shares in 2010, and the disposal of 

2,672,637 shares, led to a decrease of 31 million euros in 

stockholders’ equity at December 31, 2010, compared with 

December 31, 2009. 

A detailed presentation of movements in treasury shares, both 

as part of the liquidity agreement and as hedging for stock 

purchase option or free share plans, is provided in Chapter 6, 

section 6.E.4. 

2.A.4.4.2. Equity investments for pension funds 

Pension fund assets comprised 186 million euros in equities 

at December 31, 2010, or 56.4% of the assets invested. The 

strength of the markets in 2010 led to a revaluation of the 

funds positioned on this market segment (see Chapter 5, 

section 5.B.6, Note 5.9.2 to the consolidated financial 

statements). The diversification of the funds among different 

asset classes is decided by the investment committees or, 

where appropriate, on the advice of the trustees, acting on 

proposals from external advisers. The funds are managed 

by specialized asset management companies. A Valeo 

oversight committee, assisted by the same advisers, meets 

periodically to assess the relevance and performance of the 

various investments. 

confirmed bank credit lines totaling 1.1 billion euros, with an 

average maturity of two years. These credit lines, none of 

which had been drawn down at December 31, 2010, were 

negotiated with ten leading banks rated AA- on average by 

S&P and Aa3 on average by Moody’s; 

These lines of credit are subject to a commitment by Valeo 

to maintain the ratio of net debt to EBITDA below 3.25 

by the end of 2010 and beyond. In this case, EBITDA is 

equal to the Group’s operating margin, before depreciation, 

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amortization and impairment. Consequently, it excludes 

other income and expenses, except for restructuring costs 

in excess of 75 million euros in 2010 and then 50 million 

euros in subsequent years. The ratio for the 12 months to 

December 31, 2010 stood at 0.254; 

a loan agreement for 75 million euros signed in October 

2010 between Valeo and the European Investment Bank 

(EIB). Under this agreement, Valeo can borrow 75 million 

euros up to March 2012 at a variable rate of interest over 

seven years, repayable in four annual instalments after a 

grace period of four years. This loan was granted as part 

of funding for costs incurred by the Group in research 

projects looking at ways to reduce fuel consumption and 

CO 2 emissions and improve active safety. This loan had not 

been drawn down at December 31, 2010; 

a short-term commercial paper financing program for a 

maximum amount of 1.2 billion euros. However, access 

to the commercial paper market will remain restricted as 

long as the credit rating given by Moody’s remains below 

investment grade (see section 2.5.A.2, “Ratings”, below). 

Group gross debt stood at 1,679 million euros at December 31, 

2010 (prior to the Group’s redemption of 463 million euros in 

OCEANE bonds on January 3, 2011) consisting of short-term 

debt of 77 million euros and long-term debt of 1,602 million 

euros (95% of the total). The average weighted maturity of 

long-term debt was 1.8 years at the end of 2010. Financial 

debt with a maturity of over one year included the following: 

two syndicated loans totaling 225 million euros maturing 

on July 29, 2012. Since the end of June 2009, these two 

loans have been subject to the covenants applicable to the 

lines of credit, whereby the Group’s net debt to EBITDA 

ratio must be below 3.25 at the end of 2010 and beyond; 

600 million euros worth of Euro Medium Term Notes, 

maturing on June 24, 2013 and issued as part of a EMTN 

program capped at 2 billion euros. The program includes 

an option allowing noteholders to request early redemption 

or buy back their notes in the event of a change of control 

of Valeo that leads to the note’s rating being downgraded 

to below investment grade, assuming it was previously 

rated in that category, or, if the previous rating was below 

investment grade, to being downgraded by one rating 

category (e.g., from Ba1 to Ba2); 


a seven year loan from the European Investment Bank of 

225 million euros, repayable in four equal annual payments 

starting in August 2013. This loan is covered by the same 

financial commitment regarding the ratio of net debt to 

EBITDA as that applicable to the lines of credit. This loan 

was granted as part of funding for costs incurred by the 

Group in research projects looking at ways to reduce fuel 

consumption and CO 2 emissions and improve active safety 

The 463 million euro debt represented by bonds convertible 

to new shares and/or exchangeable for existing shares was 

repaid on January 3, 2011 with available cash. 

The Group’s bank credit lines and long-term debt include 

“cross default” clauses. This means that if a given amount 

of financial debt is deemed to be in default, then the other 

financial debt amounts may also be deemed to be in default. 

Some of the covenants provide for a grace period before 

triggering the default clause, which would give Valeo between 

20 and 30 days to remedy the situation. 

At the end of the reporting period, the Group expects to 

comply with all debt covenants over the next 12 months. 

2.A.5.2. Credit rating 

The long-term and short-term credit ratings were downgraded 

on two occasions in 2009 - on January 7 (from Baa3/negative 

outlook to Ba1/negative outlook, and from Prime 3 to Not 

Prime respectively); and on August 12 (downgrading of the 

long-term rating to Ba2 with a stable outlook) - placing Valeo’s 

debt in the speculative category. 

In 2010, the rating was revised upwards on July 29 (from 

Ba2 to Ba1 stable) and then by a change of outlook, from 

stable to positive, on December 9. The rating remains in the 

speculative category, however. 

Access to the commercial paper market remained restricted 

for Valeo in 2010, and will remain so, as long as the 

classification of the Group’s debt has not been revised to 

investment grade. The upward trend, however, should reduce 

the Group’s financing costs.

2.A.6. Credit and counterparty risks 

2.A.6.1. Commercial credit risk 

Valeo is exposed to credit risk and, more specifically, the 

risk of default by its automotive customers. Valeo works 

with all automakers in the sector. At December 31, 2010 

Valeo’s largest customer accounted for around 18% of the 

Group’s accounts and notes receivable. Nevertheless, the 

composition of the portfolio is such as to lessen customer 

risk. 

The average days’ sales outstanding stood at 56 days at 

December 31, 2010, compared to 61 days at end-2009. 

Valeo also generates more than 15% of its net sales in 

the aftermarket, with automakers representing 7% and 

independent dealer networks 8%. The Group’s highly 

diversified customer base of independent dealer networks is 

constantly monitored and the risk of default is covered by a 

credit insurance policy. These customers accounted for 6% 

of the Group’s customer receivables at December 31, 2010. 

For more information on the aging of customer receivables 

and impairment of doubtful receivables, see Notes 5.7 and 

6.2.3 to the 2010 consolidated financial statements, found 

in Chapter 5.B, section 5.B.6. 

2.A.6.2. Credit risk on financial investment 

instruments 

Cash equivalents comprise marketable securities (981 million 

euros at December 31, 2010, prior to the Group’s redemption 

of 463 million euros in convertible bonds on January 3, 2011) 

represented by money market funds invested in short-term 

money market securities issued by the best-rated banks, 

companies and governments in the eurozone. These money 

market funds incur very little capital risk, in keeping with the 

2.B. Insurance and risk coverage 

The Group’s insurance strategy is combined with a strong 

risk prevention and protection approach, and aimed at 

covering the major risks to which the Group is exposed. The 

Group self-insures its recurring risks with a view to optimizing 

insurance costs. 


Insurance and risk coverage 

Group’s cash management policy. Under the accounting rules 

in force, these instruments are valued at their market value, 

which is approximate their carrying amount. 

In addition, at the end of 2010, pension fund assets allocated 

to finance medium- and long-term pension liabilities were 

primarily invested in equities (see section 2.A.4.4.2) and 

bonds. Bonds comprised sovereign debt (18% of total 

pension fund assets) issued primarily by the American, British 

and Japanese governments, and corporate bonds (20% 

of total pension fund assets) issued primarily by European 

and American corporations. These securities are managed 

by leading asset management companies, but they are still 

sensitive to trends in the credit market. 

2.A.6.3. Counterparty risk 

The Group is exposed to counterparty risk on financial market 

transactions carried out for the purposes of managing risks 

and cash flows. Limits have been set by counterparty, taking 

into account the ratings of the counterparties provided by 

rating agencies. This also has the effect of avoiding excessive 

concentration of market transactions with a limited number 

of banks. Dedicated reporting also makes it possible to 

track counterparty risks very closely on each market (foreign 

exchange, interest rates and commodities). 

The Group invests its surplus liquidity, according to the 

objectives set out in section 2.A.5, with asset management 

companies that are in many cases subsidiaries of the leading 

banks from the Group’s bank loan consortium. The securities 

are held separately by custodians to ensure that Valeo retains 

ownership in the event that the parent bank or management 

company defaults. 

All Group companies have taken out insurance policies with 

first-rate insurance companies for all major risks that could 

have a material impact on their business, results, or assets 

and liabilities. 


PAGE 51

2 Insurance 

PAGE 52 

Risk Factors 

and risk coverage 

The risks covered include: 

property damage: covered events relate to technological 

risks (in particular fire, explosion and electrical damage) 

as well as natural disasters (in particular floods and 

earthquakes). Property is insured based on the replacement 

cost of buildings, equipment and inventories; 

business interruption: these are cases where activity is 

interrupted or reduced following an event insured under 

damage coverage, or by extension of coverage to one of 

the following events: physical impossibility of accessing 

a site, lack of suppliers and loss of power. Business 

The annual coverage limits of these policies are as follows: 


interruption is insured on the basis of loss of gross margin 

and covers a period of 18 months; 

merchandise and equipment transportation and business 

interruption following transportation incidents; 

liability of all kinds of domage towards customers and third 

parties; 

liability towards employees for occupational illnesses and 

accidents; 

liability for workplace risks. 

Type of insurance Coverage limit (in euros) 

Property damage and business interruption 700 million 

General liability and product and environmental liability 200 million 

Merchandise and equipment transportation Value of the goods transported 

Directors’ and officers’ liability 130 million 

Employee-related liability claims 50 million 

The Group paid a total of 10 million euros in premiums for its insurance coverage in 2010.

3.A. Environmental policy 

and sustainable development 54 

3.A.1. Strategy and management of Valeo’s 

environmental and sustainable development 

policy 55 

3.A.2. Valeo environmental management 

and performance in 2010 60 

3.A.3. Table of environmental indicators 75 

3.B. Social and societal policy 77 

3.B.1. Employment 77 

3.B.2. Work time organization 81 

3.B.3. Gender equality and diversity 

3.B.4. Labor relations and collective 

82 

bargaining agreements 83 

3.B.5. Health and safety in the workplace 84 

3.B.6. Remuneration 86 

3.B.7. Training 

3.B.8. Employment and insertion of workers 

87 

with disabilities 89 

3.B.9. Social and cultural activities 89 

3.B.10. Subcontracting 

3.B.11. Role of the Company in youth training 

90 

and employment 90 

CORPORATE SOCIAL 

RESPONSIBILITY 

3.C. Valeo’s voluntary commitment 

to sustainable development 91 



3 

3.C.1. Commitment to sustainable development 

in the area of research and innovation 91 

3.C.2. Valeo’s active involvement in working groups 91 

PAGE 53

3 Environmental 

PAGE 54 

Corporate Social Responsibility 

policy and sustainable development 

3.A. Environmental policy and sustainable 

development 

In the first years of the new millennium, a clearer understanding 

of the major environmental challenges facing our planet 

developed across all stakeholder groups. 

2010 demonstrated, once again, that the challenges of 

sustainable development remain central to global concerns. 

Several international summits bear testimony to this concern, 

particularly the 2010 Cancun Conference on Climate Change 

Summit and the Nagoya Conference on Biodiversity Summit. 

In addition, the awareness instilled by governments among 

consumers about the relationship between greenhouse gases 

and global warming has fostered increased research into 

modes of transport with low or even zero carbon footprints 

and the development of new technologies. 

Against this backdrop, Valeo has continued to make 

corporate social responsibility one of its main priorities. The 

Group is more determined than ever to implement an active 

environmental, health and safety policy, while pursuing its 

commitment to address the challenges of climate change. 

In 2010 Valeo increased its investment in research aimed 

at the development of low CO emission vehicles, electric 

2 

and hybrid solutions, and improved efficiency for combustion 

engines. With 612 patents filed (20% higher than the average 

for the past five years), Valeo ranks among the top French 

companies in filing patents. 

The market for innovative products that reduce CO emissions 

2 

is estimated to be growing at 20% yearly. Accordingly, Valeo’s 

goal is to be the leading partner of automobile manufacturers 

in their efforts to reduce CO emissions. One of the Group’s 

2 

main ambitions is to encourage technological innovation and 

the development of eco-friendly solutions and systems. To 

do so, Valeo will intensify its Research and Development 

(R&D) efforts with a view to offering products that reduce 

CO emissions. The Group expects to see its sales double 

2 

in this area by 2013, reaching 1 billion euros. 


Towards Zero Emission Vehicles 

In 2009 Valeo published The Zero Emission Vehicle 

(available at http://www.valeo.com/fr/publications.html), 

a summary document that sets out Valeo’s forecast for 

developments of alternatives to internal combustion 

engine vehicles. 

At the end of 2010, Valeo and BAIC (Beijing Automotive 

Industry Corporation) presented to the Beijing Governor 

an electric demo car equipped with a complete Valeo 

electric powertrain system, demonstrating the Group’s 

expertise in systems that reduce electric vehicles’ energy 

consumption. 

The partnership between Valeo and BAIC started in early 

2010 with the intent to bring an electric vehicle to series 

production in 2011. This demo car is the first concrete 

achievement of this partnership. 

Jacques Aschenbroich, Chief Executive Officer of 

Valeo declared: “The development of this vehicle with 

our partner, BAIC, demonstrates Valeo’s expertise in 

powertrain systems designed to reduce vehicle CO2 emissions and improve energy efficiency. It also confirms 

our know-how in electric and hybrid vehicle technology 

worldwide.” 

The Group continues to develop and deploy procedures 

and programs aimed at promoting environmental protection 

at its plants. This chapter sets out Valeo’s commitments 

to the environment and sustainable development. These 

are illustrated by the results the Group has achieved in 

protecting the environment and managing natural resources 

in a sustainable way. Valeo has set the same targets for 

its subsidiaries both in France and outside France. To 

measure its environmental performance, Valeo focuses on 

its plants and looks at performance from a product life cycle 

standpoint, covering all phases from design to manufacturing, 

use, and end-of-life. The environmental indicators presented 

below were established on the basis of the provisions 

of Articles L. 225-102-1 and R. 225-105 of the French 

Commercial Code.

Corporate Social Responsibility 3 

Environmental policy and sustainable development 

3.A.1. Strategy and management of Valeo’s environmental 

and sustainable development policy 

3.A.1.1. Valeo’s active role in meeting CRS 

challenges 

When it comes to CO , critics often single out the responsibility 

2 

of the auto industry and more specifically the impact that 

vehicles have therein. Members of the auto industry therefore 

must consider the environment and the requirements of 

sustainable development throughout the value chain of the 

products they create. 

Valeo, as a leading automotive equipment manufacturer, is 

very aware of its position as a key link in the auto industry. 

Energy 

consumption 

and atmospheric 

emissions 

Consumption 

of natural 

resources 

Hazardous 

substances 

Design 

Energy-efficient products 

for fitting on vehicles 

Weight reduction 

Use of easily 

recyclable /recycled 

raw materials 

Eradication of hazardous 

substances in products 

Application of 

REACH regulation 

Product 

innovation 

The Group is continuously improving its risk management and 

discovering new opportunities through the development and 

deployment of environmental, health and safety management 

systems. Despite unavoidable time lags between Research 

and Development, industrial production and market launch, 

Valeo is always able to deliver products that meet current 

market demands and respond to a maturing market with 

ever greater demands for innovations that reduce the 

environmental impact of vehicles. 

The Group has adopted the approach of improving the 

performance of its products throughout the value chain: 

upstream, by striving to reduce the use of raw materials, 

natural resources and hazardous materials; 

during manufacturing, by minimizing the consumption 

of energy, water, raw materials and packaging in our 

production plants; 

in the use of our products by offering innovative, lowenergy 

solutions; and 

at the end of the product life cycle, by developing clean 

and recyclable solutions. 

Transport 

Optimized logistics 

and fleet 

Optimized packaging 

Logistics 

optimization 

Plant 

Energy efficient plants 

Reduction of emissions 

Reduction of 

production scrap/waste 

Recovery/Recycling of 

materials and energy 

Reduced use of 

solvents, CMR substances 

& heavy metals 

Management 

of industrial risks 

3.A.1.2. A comprehensive sustainable 

development strategy 

Valeo’s corporate social responsibility requires that all 

environmental, social and societal impacts of the Group’s 

operations, and of its products, are taken into consideration. 

This is why one of Valeo’s primary strategic efforts is to 

concentrate its research and innovation on reducing the 

environmental impacts of its processes and products. 

During investor day, held on March 10, 2010, lowering CO 2 

emissions across all market segments was considered the 

main growth driver for Valeo over the next ten years. 


PAGE 55


PAGE 56 



This strategy covers four key aspects of the Group’s 

operations: 

products that meet sustainable development requirements 

throughout their life cycle; 

sustainable supplier management; 

a production system that respects people and the 

environment; 

a logistics system low on CO 2 emissions. 

The strategy is based on four pillars that support the 

operational implementation of the policy: 

objectives that reflect these priorities and lead to ongoing 

improvements; 

a dedicated organizational structure that ensures the policy 

is effectively deployed and monitored; 

charters and procedures that set out the Group’s 

commitments and methods; 

tools for the coordinating and management of the policy. 


Sustainable 

supplier 

management 

Natural 

resources 

Dedicated 

organisation 

Global 

Warming 

Products 

that meet 

sustainable 

development 

requirements 

Charters 

and 

procedures 

CSR 

Objectives 

A logistics 

system 

low in CO2 

emissions 

Coordination 

and 

Management 

A production 

system that 

respects the people 

and the 

environment 

Hazardous 

substances 

For over 20 years, the Group has been working on the environmental management of its products and processes (the Group’s 

social performance is presented in section 3.B). Valeo has confirmed its long-term commitment to Corporate Social Responsibility 

(CSR) through its adherence to the UN Global Compact since 2003. The Company is now considering extending its policy more 

systematically towards societal issues, in particular with respect to other stakeholders such as its suppliers and local communities. 

3.A.1.3. Ambitious CRS objectives bolstered by a dedicated organizational structure, framework 

documents and management tools 

3.A.1.3.1. Ambitious objectives for 2010-2012 

Valeo has set ambitious short-term targets to achieve concrete, operational implementation of its commitment to sustainable 

development. 

Issue Objective Target Unit Deadline 

Environmental 

performance of 

production sites 

Reduction of energy use -10% MWh/€m 2012 

Reduction of intensity of water use -7% m3 /€m 2012 

Reduction of intensity of use of packaging materials -15% kg/€m 2012 

Reduction of intensity of waste production -15% t/€m 2012 

Waste recovery rate (%) 15% % 2012 

Low carbon emissions 

of infrastructures and 

logistics 

Reduction of Valeo Group’s carbon footprint (1) Improved average energy efficiency of buildings 

-10% 

-12% 

t CO /€m 2 

kWh/m 

2012 

2 2012 

Certification ISO 14001 certification 

OHSAS 18001 certification 

100% No. of sites 2012 

(1) The Valeo Group’s carbon footprint was initially estimated in 2009 and then in 2010. See section 3.A.2.1 for a description of the scope of the carbon footprint 

evaluation. 

These objectives were set with reference to the performance for 2009.

Valeo results for the 2008-2010 period 

Issue Indicators used 

Results 2008 vs. 

2007 2007 



Results 2009 vs. 

2008 

Results 2010 vs. 

2009 Total since 2007 

Energy consumption Energy consumption/sales ratio -1.50% -3.50% -6% -10% 

Water consumption Water consumption/sales ratio 0% -14.40% -20% -31% 

Packaging materials 

consumption 

Packaging consumption/sales ratio -4.30% -16.10% Stable -20% 

Waste production Waste recovery rate (%) 4.10% 6.50% +1% 12% 

Carbon footprint CO /sales ratio 2 NA NA Stable NA 

3.A.1.3.2. A dedicated organizational 

structure for implementing and 

monitoring the CSR policy 

The three key areas of the sustainable development policy 

are managed by the following departments: 

Risk Insurance Environment Health Safety Department 

manages the Company’s commitments and actions 

regarding the work environment and health and safety at 

the workplace; 

the Human Resources Department handles the Group’s 

employment and social issues. 

All corporate functions are also involved in the policy. 

At every Valeo site, a Health, Safety, Environment (HSE) 

manager is responsible for the practical implementation of 

the Group’s HSE procedures. The HSE managers share their 

expertise with site management and check that the site is in 

compliance with regulations and Valeo standards. 

In each of the Company’s four Business Groups and the 

Valeo Service Department, the Risk Insurance Environment 

Department works closely with the HSE managers. They 

provide technical assistance to the HSE managers at the 

sites that report to it, and also provide feedback to the Risk 

Management Committee. They contribute to ensuring that 

the improvement process constantly moves forward and 

conduct fundamental groundwork in support of the sites: 

they help with the application of procedures and see that 

the sustainability objectives assigned by the Group are 

met; they report the best practices of which they are aware 

and support the expenditure requirements identified during 

on-site inspections; 

they pass-on the conclusions, lessons and action plans 

resulting from the internal on-site audits. 

The Risk Management Committee is the central steering 

body of the Risk Insurance Environment Department. It 

consists of the four HSE managers of the Business Groups, 

the HSE manager from the Valeo Service Department and the 

Group’s Director. It meets every two months in order to share 

feedback and further develop the Group’s sustainability policy. 

In 2011, country HSE managers will be named, in order to 

coordinate the sustainability actions taken in every country 

where Valeo has a presence. 

3.A.1.3.3. Framework documents relating 

to the Group’s commitments 

and operating methods 

Valeo bases its CSR policy on a body of documents, each 

with a different scope: 

The Sustainable Development Charter 

The Sustainable Development Charter was drawn up in 2008 

to respond to the human, environmental and economic issues 

involving the Group’s stakeholders: employees, customers, 

shareholders, suppliers, local communities and public 

authorities. This Sustainable Development Charter sets out 

Valeo’s commitments in fifteen points, in particular: improving 

its environmental performance, disseminating and observing 

its Code of Ethics, deploying management systems and 

promoting the same approach among all stakeholders. It lists 

the general commitments on the issues detailed in specific 

documents: 

an Environmental Charter; 

an Occupational Health and Safety Charter; 

a Facilities Safety Charter; 

a Security Charter. 

These charters were drawn up as part of an integrated risk 

management system covering the environment, occupational 

health and safety, the security of people, assets and 

information, and the safety of buildings and facilities. 

Code of Ethics 

Revised in 2005, Valeo’s Code of Ethics has been introduced 

across the Group and with all suppliers. 

The Code of Ethics aims to ensure that Valeo operates in 

accordance with national and international rules of ethics and 

law. It describes the body of rules and practices that the 

Valeo Group and its subsidiaries agree to observe during 

the exercise of their activities, in addition to the laws and 


PAGE 57


PAGE 58 



regulations applicable in the countries where they exercise 

such activities, whether national or international. 

This Code of Ethics covers fundamental rights (prohibition of 

child labor, the use of disabled workers, discrimination, sexual 

and moral harassment, health and safety in the workplace), 

support for sustainable development (environment, human 

resources, and society), business ethics (relations with 

customers, service providers and suppliers, competition 

law), and professional ethics (confidentiality, protection of the 

Group’s assets, loyalty and conflicts of interest). 

The Risk Management Manual 

The manual contains all the Valeo directives with respect 

to the environment, occupational health and safety, as well 

as the safety and security of our facilities. These directives 

are applied with the same attention to detail at all Group 

sites. For more than 20 years, the Group has tracked its 

performance in continuous improvement through regular 

inspections performed by external consultants. In 2010, the 

Group worked on an update of the manual, which will result 

in a new version in 2011. The aim of the revision is to expand 

and clarify the directives, so that the process of gradually 

making our management systems more uniform can be taken 

to the next level. A regulatory-monitoring tool was developed 

and is being tested on a number of Group sites at this time. 

This tool will allow sites to review legislative texts which apply 

to them. 

The Eco-design Standard Directive 

The Group’s CSR policy also includes product design, in the 

“Eco-design standard” directive, that aims to ensure that 

environmental impact is taken into account in the design 

phase of new products. The directive is based on the main 

regulations and standards in effect, such as European 

Directive 2000/53/EC on end-of-life vehicles, the REACH 

regulation, ISO 22 628 (Road vehicles - Recyclability and 

recoverability -- Calculation method) and ISO 14 040 (Ecodesign). 

The directive is supplemented by eco-design guidelines 

issued per business line or Product Line. 

3.A.1.3.4. Policy coordination and monitoring tools 

A quarterly reporting tool for performance indicators 

The environmental data published in this report applies to 

all Valeo Group production and distribution sites worldwide, 


excepting those of the minority-owned affiliates. The financial 

data reported by the Group (sales, R&D expenditure, etc.) is 

checked for consistency against the data reported by the 

sites. The environmental indicators for 2010 cover a total of 

115 sites, including eight Valeo Service sites and one storage 

site: 

centers dedicated only to R&D, offices and sites that have 

been acquired, sold or closed during 2010 are not covered 

by the reporting; 

data for companies that are 50% controlled by Valeo are 

taken into account for 50%, data for companies in which 

Valeo has a stake of more than 50% are included in full. 

Most indicators are expressed in terms of total quantity as well 

as quantity consumed or emitted per million euros. Quantity 

per million euros is calculated by dividing total quantity by 

total sales for the relevant sites. 

Operating levels were significantly higher in 2010 and 

consequently impacted certain environmental indicators, 

particularly in absolute terms. The Group’s environmental 

performance is therefore better understood using indicators 

linked to sales ratios, many of which show significant 

improvement. 

The representativeness of each indicator is measured by a 

response rate. This rate is expressed as total sales of sites 

responding to the indicator divided by total sales of all sites 

in the reporting scope. The 2010 response rate was excellent 

with 100% from nearly all sites. As in previous years, the 

responses from the sites were consolidated and checked by 

an independent, outside firm in order to ensure quality and 

representativeness. Section 3.A.2 lays out the Valeo Group’s 

environmental performance for 2010. 

Independently certified management systems 

To demonstrate its commitment to do better every year on 

reducing its environmental impact and improving the health 

and safety of its employees, Valeo has introduced a number 

of independently certified management systems. 

Since 1998, Valeo has been expanding ISO 14001 certification 

to all of its majority-owned sites as well as its distribution 

facilities. At the end of 2010, 98% of Valeo sites were ISO 

14001 certified. 

The deployment process of OHSAS 18001 certification 

began in 2005. Since 2007 the extension of this certification 

to all sites has been one of the Group’s objectives. In 2010 

89% of sites were OHSAS 18001 certified, an indication of

the progress Valeo has made in terms of health and safety 

management. Furthermore, our 2010-2012 objectives 

estimate that 100% of sites will be ISO 14001 and OHSAS 

18001 certified by 2012. 

In 2009 the Group started revising its ISO 14001 and OHSAS 

18001 management systems in order to gradually standardize 

the Group’s management systems and procedures and thus 

allow for multi-site certifications. This revision contributes to 

better risk control and better exchange of expertise and best 

practices, while applying more stringent requirements to sites. 

% of ISO 14001 certified sites, % of OHSAS 18001 

certified sites 

77% 

52% 

94% 

78% 

88% 

76% 

90% 

82% 

98% 

89% 

06 07 08 09 10 

% of ISO 14001 certified sites 

% OHSAS 18001 certified sites 

Auditing benchmarks in areas that affect the 

environment, health, safety, security and sustainability 

Valeo’s risk management policy is set out in the Group’s Risk 

Management Manual. 

This entails regular inspections by independent external 

consultants to ensure the application of the risk management 

policy, at the request of the Risk Insurance Environment 

Department. Valeo’s audit program has been in place for 

nearly 20 years, and is a major component of its risk reduction 

policy. Every site is audited about once every three years. 



The purpose of these on-site audits is to evaluate the site’s 

performance and progress in the following five areas: 

environment; 

workplace health and safety; 

ethics; 

safety of buildings and facilities; 

security of facilities and data. 

Based on audit findings and a ranking of risks, sites draw 

up action plans to improve their performance. Progress 

on action plans is reported to the Group’s Risk Insurance 

Environment Department. 

After every external audit, the external consultant rates each 

site in the areas indicated according to objective criteria. 

Every year, each site ratings are reported to General 

Management. 

In parallel, there is a Sustainable Development Audit 

Reference Standard, which extends the scope of current 

audits to include ethical, social and societal issues. These 

audits are used to evaluate the extent to which the sites 

are aware of the challenges of sustainable development 

and to ensure effective implementation of the Sustainable 

Development Charter. 

A risk management self-diagnostic tool for sites 

The self-diagnostic tool, put in place in 2008, allows HSE 

managers to track their site’s performance as action plans 

move forward and consequently the effectiveness of their 

environmental, health and safety risk management systems. 

This tool has been deployed to evaluate environmental and 

safety monitoring in the workplace and will be deployed in 

2011 with regard to the safety of facilities. It will be deployed 

at a later stage with regard to the security of facilities and 

information. This self-evaluation tool fits into Valeo’s 

comprehensive process for managing the Group’s risks, 

particularly in that it places responsibility on the sites for 

implementing and executing their own HSE performance 

monitoring. 

In 2011, the country HSE managers will be able to set 

up cross-site self-diagnostic tools to make the process 

more reliable, standardize methods and raise the overall 

performance level. 


PAGE 59


PAGE 60 



3.A.2. Valeo environmental management and performance in 2010 

Valeo’s comprehensive environmental approach covers the 

entire product life cycle, from the design phase to end-of-life 

disposal and including the product’s manufacture, use and 

transportation. 

This section presents the management systems the Group 

has installed together with its results in addressing these 

issues and meeting the challenge of reducing its carbon 

footprint, and its overall environmental impact, and of 

reaching the objectives set for 2012. 

For each corporate commitment, it describes the strategy 

adopted by Valeo in product design and site management. 

Charts with comments are presented to give an at-a-glance 

view of Group performance and trends over the past five 

years. Examples of actions taken at Group and local level 

illustrate the Group’s performance. Lastly, text boxes outline 

the forthcoming measures that Valeo has chosen in order 

to continue the progress being made on its environmental 

endeavors. 

3.A.2.1. Valeo’s commitment to reducing 

its carbon footprint by 10% 

from 2009 to 2012 

To obtain an overall evaluation of its activities’ impact on the 

environment, Valeo has decided to use the carbon footprint 

principle. This approach aims to evaluate the quantity of 

greenhouse gas emissions generated directly or indirectly 

by Valeo activities and products from a life cycle standpoint. 

The items covered by this evaluation are as follows: 

raw materials: CO 2 emissions generated by the production 

of raw materials and components mainly used by Valeo: 

metals (steel, aluminum, copper, zinc), plastics, electronic 

components; 

manufacturing: fossil fuel consumption, electricity 

consumption, packaging material consumption, waste 

generation; 

transport: inbound and outbound logistics, home-work 

travel, business trips, vehicle fleet. 


Estimate of Valeo’s carbon footprint – 2010 data 

1.5% 0.7% 

Personnel transport 

Transport 

(home-work) 

(business trips) 

1.1% 

2.9% 

Logistics (air + express) 

Combustion and processes 

2.1% 

9.3% 

Logistics (road/rail/sea) 

Electricity 

(indirect emissions) 

26.5% 

Materials (other) 

0.1% 

Waste 

55.8% 

Materials (metals) 

These figures highlight the significant extent to which 

materials contribute to the Group’s carbon footprint. Raw 

materials account for around 80% of the greenhouse gas 

emissions generated directly or indirectly by the Valeo Group. 

Among the materials consumed, metals (chiefly steel and 

aluminum) make up 56% of the footprint. 

Emissions generated indirectly through electrical consumption 

at the Valeo sites make up around 10%. In total, indirect 

emissions represent over 90% of the overall carbon footprint 

of the Group. 

Direct emissions, accounting for less than 10% of the Group’s 

overall carbon footprint, can be divided into three items: CO2 emissions generated by fossil fuel consumption at industrial 

sites, emissions generated by logistics, and finally emissions 

generated by transport of people. 

In 2009, an initial evaluation was made based on information 

available within the Group. The Valeo Group’s carbon footprint 

in 2009 was measured at approximately 3.5 million metric 

tons of CO equivalent. 

2 

In 2010 the Group’s carbon footprint amounted to 4.4 million 

metric tons of CO equivalent. 

2 

When compared to Valeo’s sales, the data shows that the 

Group has reduced its CO 2 emissions by nearly 1% 

compared with 2009 and has therefore stabilized its 

carbon footprint.

Emissions 

2009 

(eq. t CO 2 ) 

This progress supports the critical actions Valeo has chosen 

in order to reduce the Group’s CO 2 emissions: 

choice of lighter-weight materials at the product design 

stage; 

environmental plant management in terms of raw 

materials usage, packaging and waste management; 

logistical optimization undertaken by the Group. 

In parallel, in 2010 Valeo continued its efforts to develop 

lower-emission solutions for vehicle usage, which were 

sought by automakers as a way to meet one of the industry’s 

major challenges. 

3.A.2.2. Valeo’s commitment to reducing the 

environmental impact of its products 

over their life cycle 

3.A.2.2.1. Product innovation: factoring 

sustainable development into R&D 

Improving the environmental performance of products over 

the various stages of their life cycle, especially during the 

in-service phase, has to begin with the design phase of the 

R&D programs. 

For this reason, Valeo has included energy consumption, 

weight, choice of materials (green materials, recycled, 

recyclable) and elimination of undesirable substances among 

its project evaluation criteria. 




(eq. t CO 2 ) 

Since 2007 Valeo adopted an Eco-design Standard 

directive and eco-design guidelines by Product Line. 

The directive guides designers in assessing the full range of 

environmental impacts during every stage in the life cycle of 

the product being designed: 

type, number and quantity of raw materials; 

production, packaging, transport and distribution; 

use and maintenance; 

Change/ 

sales (1) 

Indirect emissions 

Electricity (indirect emissions) 336,078 410,513 -4% 

Materials (metals) 1,887,007 2,470,085 3% 

Materials (other) 895,900 1,173,076 3% 

Direct emissions 

Combustions and processes 108,087 129,051 

Waste 1,938 2,845 14% 

Logistics (road/rail/sea) 87,032 92,766 -16% 

Logistics (air + express) 33,764 49,560 


(home-work) 


(bussiness trips) 

Total 3,496,090 4,429,749 -0.48% 

-6% 

15% 

89,841 68,636 -40% 

56,412 33,217 -54% 

(1) Refers to the change in the "Total Emissions 2009/Sales 2009" and the "Total Emissions 2010/Sales 2010" ratios. 

disassembly, recycling, reuse, recovery, disposal. 

The designers are provided with a tool that consists of a 

detailed matrix of improvement measures and design 

guidelines to help them include all these dimensions in the 

new product development project. The items in the matrix 

touch on design and production, such as the use of raw 

materials, production processes and logistics. But above all 

they make it possible to factor in sustainable development 

constraints from the use of the product, as this phase of the 

product accounts for 90% of its total impact. 

Valeo has also published an Eco-design checklist in order to 

track and report the integration of these aspects embedded 

into new projects. These easy-to-use tools ensure that ecodesign 

criteria are observed in the product design process, 

making it possible to verify that this has been done, and also 

simplifying the integration of sustainable development criteria 

into the design of new products. 

In 2008 this directive was incorporated as a recommended 

guide for product development. All projects at the 

development phase are now conducted according to the 

recommendations of this directive. 


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In addition, Valeo’s R&D programs adhere to two main 

principles: 

anticipating technological breakthroughs, in particular with 

work on electric and hybrid vehicles; 

continuously enhancing the performance of combustionengine 

vehicles. To this end, Valeo develops innovative 

products to optimize flows of electric current, heat and 

mechanical energy within the vehicle. 

In 2010, a consortium was created on Valeo’s initiative to 

work on this matter with five other automotive suppliers: Leroy 

Somer (engines/generators), Johnson Controls (batteries), 

GKN (transmissions), Michelin (tires) and Leoni (cables). The 

goal was to produce an electric drive-train that met the needs 

of the market. 

In addition, this year Valeo developed a high-level simulation 

tool making it possible to measure a vehicle’s energy 

consumption using programmable variables. This tool is 

used to optimize the Group’s innovation portfolio and to select 

projects which promise especially low energy usage when 

the vehicle is driven. 

Alongside internal programs, Valeo is involved in joint 

European R&D programs. Among these 60 projects, 43 

are devoted to developing all-electric vehicles and 

associated electronics. 

The European Investment Bank provides up to 300 million 

euros in financing for Valeo R&D programs devoted to 

projects with high environmental added value. The total cost 

of these programs is 645 million euros. The programs include 

those that reduce fuel consumption and emissions, such as 

the hybrid solutions Valeo has developed. This project falls 

within the European Clean Transport Facility. 


Close-up on Valeo low CO 2 emission projects 

The two R&D projects Valeo presented to the French 

ministry of sustainable development in late 2009, 

MYGHALE (Mild HYbride GénérALisablE) and VEGA/ 

THOP, began to be developed in 2010. Their respective 

aims are to develop an affordable hybrid solution with a 

major impact on worldwide CO emissions (25% to 30%) 

2 

and to develop a new thermal system for electric vehicles 

that provides heat comfort comparable to the one found 

in internal combustion engine vehicles, in any season, 

with the least possible impact on the vehicle’s need for 

outside energy. In 2010, new projects were added to 

the portfolio, including: 

HYBRELEC, a project developing two vehicles, one 

entirely electric and the other hybrid but rechargeable on 

the traditional grid (the plug-in hybrid). These two vehicles 

will be platforms for experimentation and optimization of 

systems. The project is being carried out by the MOVEO 

competitive cluster and its outcome is expected in 

June 2012. 

VelV, a PSA-managed project launched in 2010. It aims 

to create a three-wheeled electric car for city use. The 

purpose is to offer a way to make very short trips using 

a very compact vehicle. Total financing for this project 

amounts to 70 million euros, with results scheduled for 

late 2011. 

3.A.2.2.2. Eco-products: planning a range of Valeo 

products with lower environmental impact 

Reducing the weight of raw materials used 

and incorporating more recycled or green materials 

into our products 

Consumption of natural resources such as water, minerals 

and oil generally increases with human activity. However, 

given that some of the resources are limited and nonrenewable, 

global economic development could deplete 

supply and threaten the ability of future generations to enjoy 

an environment as diverse as today. 

Commodity prices on world markets (metal, oil - and therefore 

plastics) also show that the use of natural resources has 

become a major economic issue as well as an environmental 

challenge. Because of the products it makes and the 

packaging and industrial processes it uses, Valeo uses natural 

resources such as water, metals and plastics derived from 

oil. In order to limit its impact on the environment, Valeo is 

taking action along two lines: limiting its consumption of raw 

materials and making greater use of recyclable and recycled 

materials.

Valeo is pursuing its efforts to minimize the impact of 

its products, especially the impact they may have on 

ecosystems, the natural environment and protected animal 

and plant species. 

Valeo is working to reduce the weight of raw materials used 

in product design. For example, the incorporation of StARS 

electronics on the rear of the alternator will result in significant 

weight reduction and a reduction in the consumption of raw 

materials. Valeo is also working towards producing an engine 

less than one liter in size which would reduce raw material 

consumption accordingly. 

Lastly, in 2010 Valeo carried out a major effort to reduce 

the weight of headlamps that are on the market, with a 

goal of reducing the weight of each element (ring, casing, 

components, glass, reflector, etc.) by an average of 30%. 

In 2010 Valeo developed innovative processes for the 

manufacture of plastics, particularly by incorporating grades 

of recycled plastic and natural materials, such as linen, 

into some of its products. 

Eliminating hazardous substances from products 

The European Regulation of December 18, 2006, commonly 

known as REACH, established a single system for the 

Registration, Evaluation and Authorization of Chemicals. 

It took effect on June 1, 2007, replacing more than forty 

directives and regulations. 

REACH is aimed at increasing knowledge of the properties 

of chemical substances manufactured or marketed in the 

European Union so as to contain the risks of using them and, 

where necessary, restrict or ban their use. For the purposes 

of the REACH Regulation, the Valeo Group is considered 

primarily a downstream consumer of the chemicals employed 

in its operations. As such, Valeo must take steps to ensure 

safety along its supply chain and businesses. It must make 

an inventory of the substances used to make its products or 

needed to keep its industrial plants working. 

Valeo actively participates in projects conducted by 

professional associations, at both European and international 

level, and respects the recommendations of the Automotive 

Industry Guide published in 2007. 

Valeo has organized itself specifically to ensure that it is 

in compliance with REACH. A REACH correspondent has 

been designated in each Valeo entity and at each Valeo plant. 

The Valeo Group has thus set up a network of 242 REACH 

managers. The R&D, Procurement and Quality departments 

are responsible for ensuring full product knowledge and for 

communicating on the subject with outside players (suppliers, 

customers and authorities). In 2010, the Procurement, HSE 



and R&D Departments updated their Internal Procedures to 

include REACH requirements. 

REACH training tools have been made available to all those 

involved in the Group and are regularly updated to incorporate 

successive amendments. 

In addition, the Group began working jointly with its suppliers 

to ensure that their products were modified to comply with 

REACH. This task is carried out by the Product Lines, through 

their R&D teams. 

Since 2008, Valeo has ensured its compliance with regulatory 

requirements by identifying and pre-registering 13 imported 

substances or preparations deemed “critical” to its operations, 

with the European Chemicals Agency. 

In 2010, the Group continued to identify its products 

containing chemical substances of very high concern 

(SVHC : Substance of Very High Concern) on the lists published 

by the European Chemicals Agency. 

This year three new lists came out. Using IMDS (International 

Material Data System) software, which is specific to the 

auto industry, the Group has continued to keep track of the 

references with at least one substance of very high concern 

from one of these lists. Due to Valeo’s responsiveness and 

network of REACH correspondents, over 1,500 products 

were identified in 2010. 

Developing products to reduce vehicle fuel consumption 

Carbon dioxide (CO ) is one of the six greenhouse gases 

2 

(GHGs) that are building up in the atmosphere and causing 

global warming. The transport sector accounts for about onequarter 

of GHG emissions worldwide, with road transport 

contributing 18%. This figure is for vehicle usage alone and 

does not include emissions arising from energy consumed 

in producing components and assembling vehicles at the 

plant. With population and economic growth expected over 

the coming decades, all members of the industry will have 

to balance the strong demand for individual and commercial 

mobility against the increasing scarcity of fossil fuels and the 

ever more pressing need to combat climate change. 

Valeo contributes in two ways: (i) by developing products 

and technologies to reduce vehicle fuel consumption, and 

thereby CO emissions; and (ii) by implementing cleaner, 

2 

energy-saving manufacturing processes at its production 

sites. 

One expression of Valeo’s long-standing commitment to 

environmental protection and the fight against global warming 

is its decision to develop environmentally friendly products 

and systems. Taken together, recent Valeo innovations 

can reduce vehicle fuel consumption, and thus CO 2 

emissions, by up to 20%. 


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Up to 20% reduction in fuel consumption 

The following table shows the energy savings due to Valeo 

technologies. It consists of figures typically used in the 

Technologies 

Energy control High-performance air-conditioning system 

LED headlamp 

Thermal 

management 


industry, based on simulations assuming average vehicle 

use. The simulation program can also provide more accurate 

results based on data for actual use. 

Reductions (not necessarily 

cumulative) 

UltimateCoolingTM 3 to 5% 

THEMISTM valveTM 2 to 4% 

Transmission 

automation 

Dual-clutch transmission with electro-mechanical actuators 4 to 6% 

Air intake Exhaust gas recirculation (EGR) cooler 5 to 7% 

Hybridization StARS micro-hybrid system 6 to 15% 

High output alternators 1 to 2% 

Reinforced starter 4 to 5% 

Engine control e-Valve system Up to 20% 

The Valeo e-Valve technology is based on a variable 

electromagnetic valve control system that replaces the 

conventional mechanical system. It delivers fuel savings of 

up to 20%, improved engine performance and enhanced 

driving comfort. 

The StARS starter-alternator is a micro-hybrid system 

making it possible to stop and restart the engine instantly 

and silently. StARS saves fuel (from 6% to as much as 15%) 

and significantly reduces pollutant emissions when the vehicle 

stops at a red light or in a traffic jam. The second generation 

of this Stop-Start system was introduced in the second half of 

2010 by PSA for its e-HDi engines, and lowers CO emissions 

2 

further, on average by 5 grams per kilometer. Carrying on from 

the starter-alternator, the “high output” alternator (under 

development) will be more efficient than the starter-alternator 

and therefore more fuel efficient. 

Likewise, the reinforced starter carries out the same Stop- 

Start function, but at a lower cost, which means it can be 

installed on mid-range vehicles. 

The main function of EGR cooling systems is to reduce the 

formation of nitrogen oxides in diesel engines. 

Recently, EGR cooling systems have been developed for 

gasoline engines to achieve fuel savings of between 5% and 

7% through higher compression ratios. 

Providing an alternative to hydraulic automatic transmissions, 

the dual dry clutch has separate clutches for odd and even 

gears. This solution combines the comfort of an automatic 

3% 

1% 

transmission with the lower fuel consumption of a manual 

transmission (4% to 6% reduction in CO emissions). 

2 

The THEMISTM valve, part of the engine cooling system, 

manages the flow of coolant through the engine, the radiator 

and the passenger compartment heating system. Fuel 

savings of between 2% and 4%, reduced pollutant emissions 

and improved performance of climate control systems are a 

few of the many advantages of the THEMISTM valve. 

UltimateCoolingTM is a new cooling system that optimizes 

thermal energy management by having all fluids transit 

through a single cooling circuit. Alongside fuel savings of 

between 3% and 5%, the UltimateCoolingTM system also 

improves vehicle body design by reducing front overhang (by 

20% to 40% compared with conventional cooling systems). 

Valeo’s high-efficiency air-conditioning system features 

innovative lightweight components with a computerized 

control algorithm for optimum efficiency at all times. This 

reduces energy consumption by around 3% and leads to 

significant fuel savings. 

The new generation of Valeo LED headlamps will reduce 

consumption by two-thirds compared to bulbs. The color 

and performance of the white LEDs are similar to daylight, 

providing excellent visual comfort, increased visibility, a longer 

service life and a lower energy consumption rate. 

In addition, Valeo has developed a windscreen washing 

system that distributes the window washing fluid uniformly 

over the whole length of the wiper blade. The AquaBlade ®

system thus improves driving safety with a more uniform 

wiper action. There is no break in visibility since the fluid 

is transparent and instantly wiped off the windscreen. 

Optimum use of the cleaning fluid considerably reduces the 

regulatory on-board quantity (under 2kg per vehicle), which 

in turn contributes a reduction in vehicle weight and in CO2 emissions. 

In the same Product Line, Valeo now offers wiper blades of 

natural rubber, which are more effective, quieter, longer-lasting 

and less carbon intensive. In 2010, Valeo and BAIC (Beijing 

Automotive Industry Corporation) presented to the Beijing 

Governor an electric demo car equipped with a complete 

Valeo electric powertrain system, demonstrating the Group’s 

expertise in systems that reduce electric vehicles’ energy 

consumption. Due to its permanent magnet synchronous 

engine, offering a wide speed range, Valeo’s electric drive train 

provides both good acceleration at low and medium speeds 

and a higher top speed, all with a single gear transmission. 

Developed by Valeo in partnership with Leroy Somer and 

GKN, this system includes an electric engine, an inverter, 

a transmission, a charger, a governor and an DC-to-DC 

converter. The partnership between Valeo and BAIC started 

in early 2010 with the intend to bring an electric vehicle into 

series production in 2011. This demo car is the first concrete 

achievement of this partnership. 

In December 2010 Valeo and IFP Energies Nouvelles 

announced a framework contract concerning powertrain 

groups. The skill sets of the two partners will create synergies 

and accelerate the development of clean powertrain systems. 

In the years ahead, the Valeo Group will continue to 

pursue product innovation of the kind favored in Europe. 

We will expand our assembly of components that reduce 

automotive CO 2 emissions, reflecting market growth now 

estimated at 20% a year. 

Reducing the impacts of products at the end of their life 

Valeo is also concerned with reducing the impacts of 

products at the end of their life. The “Eco-design standard” 

directive calls for specific requirements, in three areas: heavy 

metals, recyclability and re-use. Thus, in the initial product 

design stage, the Valeo Group aims to minimize the number 

of parts, use fewer different metals, facilitate disassembly and 

favor products that are reusable. In accordance with the EU 

Directive on end-of-life vehicles (ELV), Valeo is committed to 

taking steps in terms of vehicle design. The directive aims 

among other things to prohibit, except where technically 

infeasible, the use of heavy metals such as mercury, lead, 



cadmium and hexavalent chromium and to favor recycling 

when these metals are used. A French government order of 

December 24, 2004 sets out the conditions on which such 

substances may still be used. To give one example, Valeo 

has been among the first to adopt lead-free welding in its 

electronic housings. 

The ELV Directive was amended in February 2010: and 

now provides that the exemption granted for the use of 

lead, particularly in the case of soldering, will be revised 

by 2014 at the latest and, with respect to soldering on 

glass, by 2012. Consequently, lead in soldering electronic 

components will be prohibited for all vehicles put on the 

road after January 1, 2016. 

Consumption of heavy metals 

29 

294 

14 

131 

11 

96 

5 

37 

3 

25 

06 07 08 09 10 

Response rate 

Heavy metal consumption/sales (kg/€M) 

Heavy metal consumption (t) 

2006 2007 2008 2009 2010 

97.5% 100% 98.9% 100% 100% 

Heavy metal consumption has fallen continuously since 

2005 and dropped significantly again this year (down 46% 

from 2009 in proportion to sales). 


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To achieve results like these, the Product Lines have taken 

action in a number of areas over the years: 

eliminating lead in soldered electronic components; 

changing the surface treatment process from chromium 

VI to chromium III; 

eliminating cadmium as a coloring agent. 

In the years to come, the Group will continue to go beyond 

the initial scope of the ELV Directive, with the goal of 

reaching zero heavymetal content in its products. This 

goal will drive ongoing technological efforts by the Group’s 

Product Lines and R&D Departments. 

3.A.2.2.3. An ethical product: Valeo 

intends to extend its corporate 

responsibility to its supply chain 

In order to observe its commitment to offer lightweight, safe 

and environmentally friendly products and thereby control 

its risks related to brand image, regulations, resource 

conservation and uninterrupted supply, the Group is aware 

that it needs to involve its suppliers in making its supply 

chain more secure. 

The Group plans to create environmentally efficient, mutually 

beneficial long term relationships with its suppliers, ones 

that will keep them in business for a long time to come. 

In 2009, Valeo carried out systematic internal audits of 

its suppliers (some 2,400 suppliers), working up a new 

evaluation grid for identifying those who were at-risk. 

Valeo makes sure that its suppliers observe their legal 

obligations For instance, after the Group had identified 

the so-called substances of very high concern (SVHC), it 

made a list of the suppliers of the affected components so 

that they could be questioned as to their strategy for using 

these substances and, based on their answers, Valeo could 

devise its own strategy. Valeo’s objective remains to market 

only those products that meet its customers’ requirements, 

that is to say products that do not contain any substances 

of very high concern or that have the necessary regulatory 

exemptions. 

At the end of 2010, all Valeo Product Lines had been through 

this identification process. The Group now applies a productby-product 

strategic analysis whereby priority is given to 

those suppliers offering alternative products that do not 

contain any SVHC. 

Finally, it is Valeo’s intention to help promote and defend its 

principles by orienting its purchasing policies towards 

partners who are equally aware of their responsibilities. 

For this reason, Valeo published the “Supplier Quality Manual” 


which was translated into 15 languages and sent to suppliers. 

Suppliers must agree to the contents as well as to possibly 

being audited by the Group concerning these matters. The 

document mentions the Group’s chief concerns regarding 

national and international regulations, fundamental rights, 

freedom of association, forced labor and child labor, antidiscrimination 

and anti-corruption measures, worker’s rights, 

workplace health and safety, and the environment. 

Valeo plans to step up its effort in 2011 by including 

relevant sustainability criteria in the evaluation grid used 

in auditing suppliers. 

3.A.2.3. Valeo is committed 

to improving the performance 

of its plants and operations 

The actual implementation of the Group’s sustainability 

strategy takes place in the plants. There the principles set 

out in our charters are applied. Many local initiatives are also 

carried out for the sake of lowered environmental impact and 

to incorporate sustainability into the manufacturing process 

in the best way possible. 

Valeo has developed the concept of the generic plant, which 

formalizes and describes how sustainability is to be applied 

at our production sites. 

The life cycle of a site consists in finding a suitable location, 

building the site, operating the site, and ultimately closing or 

selling it. Accordingly: 

plants are usually located close to customer sites. Plants 

are located in existing industrial zones or ones that are 

under construction, to benefit from local infrastructure and 

skilled subcontractors; 

when choosing plant locations, the Group systematically 

performs audits to determine (i) whether there are 

any potential environmental liabilities such as soil or 

groundwater pollution; (ii) whether the surrounding area is 

hazardous or particularly sensitive; and (iii) whether there 

are risks of natural disasters such as floods or earthquakes; 

construction or rehabilitation of plant facilities includes 

sustainable development criteria relating to plant 

construction, working conditions for employees, plant 

operating conditions, compliance with regulations, Valeo 

risk prevention standards, optimization of resource 

consumption, and reduction of emissions and solid waste; 

over and above the constraints and specifications 

(architectural, environmental, organizational, etc.), the key 

requirement is formation of a “project team”, which from the

outset includes consultants in environmental and equipment 

safety matters. The project team is tasked with applying the 

best possible sustainable development solutions at each 

stage in the life cycle of the site (construction, operation, 

expansion, and closure); 

the operational phase of each site is governed by Group 

directives concerning employee health and safety, the 

environment, safety of facilities and general security. If soil 

or groundwater pollution is suspected during this phase, it 

is investigated and if necessary, appropriate action is taken; 

when a business is sold or shut down, Valeo systematically 

performs an audit, usually along with an investigation of the 

soil and groundwater, to determine whether any pollution 

has occurred during the operational phase. If pollution is 

discovered, the necessary measures are taken. If a site is 

closed permanently without being transferred to another 

owner, all waste, raw materials, products and equipment 

are removed, and site maintenance continues. 

Most of these indicators show that Valeo increased in absolute 

terms its consumption of energy and resources, as well as 

its amount of emissions, due to the rebound in business 

and production in 2010. Nonetheless, at constant business 

levels, Valeo’s performance, expressed as a proportion of 

sales, improved on nearly all environmental aspects on which 

the Group focused. 

3.A.2.3.1. Improving energy efficiency 

and reducing greenhouse gases 

from buildings and industrial processes 

Aware of the need to optimize the energy efficiency of its 

buildings and manufacturing processes, Valeo intensified 

its management of this issue in 2010 by launching a major 

campaign. The campaign aims to accurately identify the 

best practices and opportunities for improvement, and 

then to pass the information obtained on to the sites for 

implementation. 

The campaign, organized in conjunction with an outside 

consulting firm specializing in energy management and 

efficiency, included the following elements in 2010: 

in-depth audits on the energy efficiency of a sample of the 

Group’s sites; 

identification of operations/processes/equipment offering 

energy saving opportunities both in the short term and in 

the long term, by means of further investment. 

The campaign will continue in 2011, with: 

the formal definition of a code of practice for the sites in 

order to support the process, identify potential action plans 

and highlight advantages and disadvantages; and 

the training of “energy efficiency” correspondents, 

responsible for circulating information, providing assistance 

to the plants and coordinating the policy. 



In rolling out this campaign, Valeo is confident it will be able 

to reduce its energy consumption and achieve the ambitious 

objective it has set for 2012. 

The Group is also considering implementing an ISO 50001 

energy efficiency management system. 

Energy consumption 

185 

1,868 

202 

1,861 

199 

1,682 

192 

1,433 

181 

1,716 

06 07 08 09 10 

Response rate 

Energy consumption/sales (MWh/€M) 

Total energy consumption (GWh) 

2005 2006 2007 2008 2009 2010 

98.7% 96.2% 99.7% 98.9% 100% 100% 

Energy consumption distribution 

64 

34 

06 07 08 09 10 

Electricity (%) 

Gaz (%) 

Response rate 

64 

32 

66 

32 

67 

30 

2 0 1 0 2 0 2 1 

67 

31 

2 0 

Fuel oil (%) 

Other energies (%) 

2006 2007 2008 2009 2010 

Electricity 97.8% 99.7% 98.9% 100% 100% 

Gas 96.8% 99.7% 98.9% 100% 100% 

Fuel oil 98.1% 99.6% 98.9% 100% 100% 


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In 2010, Valeo consumed 1,716 GWh of energy, or 20% 

more than in 2009 given the increase in activity. However, 

measured in relative terms (MWh/€m of sales), the Group’s 

energy consumption has dropped by 10% since 2007, 

reflecting Valeo’s efforts to limit its energy consumption 

and reduce CO emissions. 

2 

The energy mix is relatively stable, with electricity 

accounting for around 67% of the total and gas for around 

31%. This reflects the Group’s policy of using primarily 

these two energy sources, with marginal use of fuel oil. 

The efforts deployed to limit energy consumption have 

considerably reduced the emission of greenhouse gases at all 

sites and for the Group as a whole. Valeo started measuring 

fossil fuel combustion emissions in 2001. Building climate 

control, ventilation, lighting and process energy requirements 

are planned from the initial plant design stage to control 

energy expenditure in operations. 

CO 2 emissions (direct emissions only) 

12 

123,971 122,151 

13 13 

107,338 

11 

85,115 


11 

101,207 

06 07 08 09 10 

Response rate 

Greenhouse gas emissions/sales (eq.t CO 2 /€M) 

Greenhouse gas emissions (eq.t CO 2 ) 

2006 2007 2008 2009 2010 

96.9% 99.7% 98.9% 100% 100% 

Direct emissions are emissions generated by combustion 

of gas and fuel oil at Valeo sites (as opposed to indirect 

emissions, generated elsewhere by the production of the 

electricity consumed at Group sites). 

In 2010 the Group’s direct CO emissions, expressed as 

2 

a proportion of sales, fell by 3% compared with 2009 and 

have fallen by 18% since 2007, a performance reflecting 

the Group’s commitment to limiting energy consumption 

in particular by optimizing the energy consumed by 

manufacturing processes. Whenever a new process is 

designed, an energy audit is carried out to optimize its 

operation. 

All sites are seeking to cut energy consumption by adopting 

specific initiatives, a few examples of which are given below: 

The Limoges site (France) equipped a tunnel oven with an 

energy harvester, thereby reducing its gas consumption by 

36%. The same site installed 42m² of solar panels, thereby 

providing three quarters of the energy necessary to provide 

warm water for the showers and economizing 30,000kWh 

of electricity per year, or the equivalent of about two metric 

tons of CO 2 equivalent. 

The Châtellerault (France) site signed an energy performance 

contract with its partner Siemens. The contract includes 

productivity commitments for gas consumption. 

The San Luis Potosi (Mexico) site completely automated its 

ventilation and heating system, which now automatically 

switches on at 10am and shuts off at 5.30pm, thereby 

generating an annual reduction in consumption of 30% 

to 40%. The site has also launched a detailed campaign 

to increase employee awareness of the energy savings 

achievable via proper use of lighting and computer 

equipment. 

The Hainaut (Belgium) site equipped all its compressors 

with heat exchangers. The heat retrieved is then re-diffused 

via five space heaters. The consumption of gas for heating, 

in terms of the requirement for degrees of heating per day, 

was thereby reduced by 15% between November 2009 

and November 2010. 

At all Valeo sites, employees are made aware of the everyday, 

common sense things they can do to save energy. 

3.A.2.3.2. Reducing transport-related energy 

consumption and emissions 

Valeo’s business operations require inbound supplies 

of raw materials and parts from suppliers, the transfer of 

parts between sites, and outbound deliveries to automaker 

customer sites and dealer networks. All of this generates 

a multitude of transport lines and a high consumption of 

packaging.

The evaluation of the Group’s carbon footprint reveals that 

logistics-related emissions amount to some 140kt of CO2 equivalent or 3.5% of the total. Overland and sea transport 

account for around two thirds of emissions (mostly from truck 

transport). Air freight, although not used as regularly, has a 

high carbon impact and so also accounts for around one third 

of logistics emissions. 

In order to reduce its carbon footprint, Valeo has undertaken 

initiatives for lower carbon logistics and reduced packaging. 

Logistics still accounts for around 3.5% of the Group’s global 

carbon footprint, but compared to sales has nevertheless 

decreased by 4% between 2009 and 2010. 

In the area of transport, Valeo has initiated an in-depth 

review designed to identify new scope for logistical and 

environmental optimization: improved management of the 

(inbound) subcontracting chain, optimization of transport 

between sites, coordination with customers. The very 

broad program of initiatives deployed in 2009 and pursued 

in 2010 has diminished the environmental impact of all the 

Group’s logistical activities and reduced both consumption 

of packaging and production of waste. 

Optimization of trailer and container loads. Steps have 

been taken to allow for average loads of 85%, and measure 

the achievement of targets. Valeo is currently applying the 

same approach to optimizing filling of the boxes used to 

transport products. 

Optimization of trailer load factors and adjustment of 

trailer sizes for the delivery of all inbound products 

is underway, the objective being to achieve a volume 

saving of between 15% and 20%. Optimization requires 

traceability, scheduling and accurate planning at the 

workshops. 

Cutting the number of external warehouses by storing 

stock in plant warehouses has already reduced flows. 

Valeo’s sites equally strive to make space for stock on 

consignment from vendors, thereby eliminating the need 

for intermediate storage and the related transport. 

With effect from 2010, certain transport lines are organized 

in such a way that the trucks cover several vendors 

before delivery to Valeo, thereby reducing the overall 

distance covered in comparison with individual return trips 

and avoiding empty return journeys. 

An ambitious objective of reducing urgent transport by 

50% has been set, inasmuch as such transport generally 

involves the use of taxis, planes, helicopters etc. which emit 

significant quantities of greenhouse gases. 



Use of recyclable containers has been developed. The 

objective is to apply this policy to all suppliers. At present, 

65% of deliveries are sent in recyclable containers. 

Surveys are performed on the Group’s main carriers in 

order to verify their fleet quality (trucks compliant with Euro 

4, 5 and 6 standards). 

These Group-wide initiatives are combined with local 

pilot schemes such as the truck-train transport program 

in the United States, where customers’ demand and the 

organization of the transport network constitute favorable 

factors for such an approach. 

Valeo is also a member of Galia, an industry body created to 

improve the exchange of electronic data and optimize the 

logistics and packaging required for product movements 

throughout the industry. Valeo has made proposals, which 

the industry has accepted, designed to generalize the use 

of recyclable packaging. Valeo has defined packaging 

specifications and proposed standard units to its partners. 

Valeo is also working on a standard packaging solution 

for long-distance maritime transport, designed to reduce 

raw material packaging content and allow both for improved 

filling of containers and for reuse of the packaging. This 

initiative is currently under trial in the Thermal Systems 

Business Group in partnership with Chinese suppliers. 

The automotive industry envisages transforming this initiative 

into an industry standard with a view to publication during 

the first half of 2011. 

Valeo’s objective for 2011 is to continue optimizing its 

logistics and reducing its carbon footprint. 

3.A.2.3.3. Eradication of hazardous 

substances used at the sites 

Exposure to hazardous substances is an issue in terms of 

products as well as production processes. 

Hazardous substances generally have carcinogenic, 

mutagenic or reprotoxic properties that can harm the health 

of any person exposed to them: plant workers, vehicle 

repairmen, etc. 

Alongside actions taken to bring products into compliance, 

the Group is continuing to eradicate all substances used 

at its industrial sites that are deemed hazardous. In 

2008, a new European Regulation called CLP (Classification 

Labeling and Packaging), following on from GHS (Global 

Harmonized System), required new safety data sheets to 


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include information on the evaluation of chemical risks (based 

on REACH registration). 

To this end, sites follow a procedure that involves identifying 

prohibited substances, looking for replacement substances 

(at an acceptable price), testing them and having them 

approved by customers. Most of the hazardous products 

still in use at Valeo sites are either products undergoing 

an approval process or products for which substitutes are 

currently available only at excessively high costs. 

With the REACH regulation, the sites must comply with 

utilization requirements for the substances concerned as 

indicated by the manufacturers and distributors. 

In 2010 new practical guidelines, adapted to the 

constraints of REACH, were drawn up for use at Valeo’s 

sites. 

Consumption of chlorinated solvents 

107 

1,096 

80 

700 

84 

710 

29.5 

220 

06 07 08 09 

Response rate 


12 

114 

10 

Chlorinated solvent consumption/sales (kg/€M) 

Chlorinated solvent consumption (t) 

2006 2007 2008 2009 2010 

98.2% 100% 98.9% 100% 100% 

Consumption of carcinogenic, 

mutagenic and reprotoxic (CMR) substances 

1,138 

111 

Response rate 

44 

405 

56 

474 

25 

188 

06 07 08 09 

CMR consumption/sales (kg/€M) 

CMR consumption (t) 

14 

134 

2006 2007 2008 2009 2010 

98.2% 99.4% 98.9% 100% 100% 

In 2010 Valeo continued to make significant progress in its 

efforts to reduce consumption of CMRs and chlorinated 

solvents and atmospheric emission of VOC and lead. 

The reduction achieved forms part of a positive trend, 

since 2007. During this period, the consumption of CMRs 

(relative to sales) fall by 68% and that of chlorinated 

solvents by 85%, while VOC emissions fell by more 

than 30% and those of lead were virtually eliminated, 

plummeting from 20 to 0.1g per million euros of sales. 

The number of listed chemicals has decreased at all sites, and 

limitations have been set on the quantities of chemicals used. 

Actions have already been undertaken to reduce reliance 

on hazardous substances and chlorinated products such 

as paints. Product Lines strive to replace such hazardous 

substances by alternative ones whenever possible. 

In the years to come, Valeo will pursue efforts to eradicate 

all hazardous substances from its plants. In addition, the 

sites will continue efforts to achieve compliance with the 

Reach Directive. 

10

3.A.2.3.4. Limiting the quantity 

of packaging materials 

Packaging is essential to the handling of Valeo products. 

Packaging is required for transport, it facilitates storage, 

protects products and in the case of aftermarket products, 

helps to sell them. To serve all these various functions Valeo 

uses many different kinds of packaging materials, mainly 

paper and paperboard, wood, plastic and metal. 

Packaging materials consumption 

6,669 

63,248 

Response rate 

7,882 

72,065 

7,546 

63,839 

6,332 6,335 

47,160 

60,072 

06 07 08 09 10 

Total packaging materials consumption/sales (kg/€M) 

Total packaging materials consumption (t) 

2005 2006 2007 2008 2009 2010 

92.5% 90.4% 99.1% 98.9% 99.2% 100% 

Breakdown of packaging materials consumption 

10 

57 

32 

Response rate 

58 

31 

9 

5 6 

1 2 2 1 

06 07 08 09 10 

Plastics (%) 

Paperboard (%) 

64 

30 

7 

63 

Wood (%) 

Other (%) 

2006 2007 2008 2009 2010 

Plastic 92.1% 99.1% 98.9% 100% 100% 

Paperboard 92.9% 99.1% 98.9% 100% 100% 

Wood 94.4% 99.1% 98.9% 99.2% 100% 

63 

30 

28 

2 



Packaging material consumption compared to sales 

remained stable in 2010 following the 16% reduction 

achieved in 2009. The efforts made by sites continued, 

but the Group’s reorganization led to new manufacturing 

circuits, as well as transfers between sites and suppliers, 

which still need to undergo logistical optimization. 

Valeo promotes the use of reusable packaging (through 

the use of reusable crates, now widespread at Valeo 

sites), recyclable materials (plastics, paperboard) and 

recycled materials (plastics, paper and paperboard). New 

initiatives for reducing the use and increasing the reuse of 

packaging materials were undertaken in 2010, in particular 

the introduction of logistical loops which enable the same 

packaging to be used for incoming and outgoing products. 

For example, the Ben Arous (Tunisia) site stores packaging 

to use for products returned to suppliers. Whereas the 

Sainte Florine site uses component cardboard boxes for its 

finished products which has resulted in annual savings of 

35,000 euros. 

Valeo will continue its efforts in 2011 with a view to 

reducing its use of packaging materials and increasing 

reuse and recovery at its sites. 

3.A.2.3.5. Reducing water consumption 

341 

3,463 

367 

3,377 

368 

3,106 

315 

2,343 

253 

06 07 08 09 10 

Response rate 

2,402 

Total volume of water consumption/sales (m 3 /€m) 

Total volume of water consumption (thousands of m 3 ) 

2006 2007 2008 2009 2010 

96.9% 99.7% 98.7% 100% 100% 


PAGE 71


PAGE 72 



The three-year environmental objectives set for the 

sites include a target for controlling water consumption. 

The implementation of actions to reach these targets 

at a number of sites has brought about a progressive 

drop in water consumption since 2006. In 2010, water 

consumption as a proportion of sales, decreased by 

20%. The indicator has fallen for all the Group’s Product 

Lines and sites reflecting the implementation of locally 

developed plans. 

Total water consumption increased by 2.5%, about 

ten times less than the increase in sales. Several sites 

achieved particularly significant reductions; such as the 

Shashi site (China) where a major water leak was repaired 

and the Timisoara site (Romania) where an open cooling 

system was eliminated. 

Cutting water consumption is a particular concern in 

countries where water resources are scarce. For example, 

the Campinas site in Brazil has been treating its wastewater 

since June 2008 and recycling 45% of the total. The rest of 

the water is used in a roof cooling system. 

Group sites have developed innovative solutions for reducing 

water consumption. For example, the San Luis Potosi site 

(Mexico) now waters its lawns using reused and treated water, 

thereby saving 50% of the previous cost of watering. 60% 

of the site’s total water consumption comes from treated 

water. This site has also replaced all of its manual taps with 

automatic water-saving taps, thereby saving 20% of total 

consumption. 

Each Group site is encouraged to implement techniques 

to further reduce water consumption in the years ahead 

such as by controlling leaks, changing individual behavior 

or replacing open flow cooling systems. The recovery of 

stormwater and wastewater is another avenue to be 

explored on a case by case basis. 

3.A.2.3.6. Reducing waste production at the sites 

The Group’s main waste products are, in descending order 

of volume, metal, wood and plastics. Almost all metal waste 

is sold for recycling. Wood is recycled and the remainder is 

used for heating. Two-thirds of the plastic is sold for recycling. 

The above figures do not include exceptional waste such as 

that arising from dismantling or demolition. 


Waste production 

Recovery rate 

20 

15 

10 

5 

0 

138,772 

Response rate 

159,223 

146,543 

150,952 

72% 74% 77% 

113,132 

82% 83% 

06 07 08 09 

5 

0 

% not recovered waste/€M 

% recovered waste/€M 

Total quantity of waste generated (t) 

Waste generated (t/€M) 

2006 2007 2008 2009 2010 

97.4% 99.7% 98.9% 98.9% 99.7% 

96.8% 94.7% 98.9% 98.9% 99.7% 

The volume of waste generated in 2010 rose compared 

with 2009. The recycling rate continued to rise, reaching 

83% in 2010. The proportion of hazardous waste 

remained stable. 

Waste production 

Hazardous and non-hazardous waste 

14 

17 17 

15 

06 07 08 09 

Quantity of non-hazardous waste/€M 

Quantity of hazardous waste/€M 

Total quantity of waste generated (t/€M) 

16 

10 

10 

11.8 14.8 14.5 12.9 13.9 

2.2 2.2 2.5 2.1 2.1

Response rate 

2006 2007 2008 2009 2010 

97.4% 100% 98.9% 100% 99.7% 

In 2010, Valeo’s sites continued to implement local initiatives 

for reducing their waste generation and increasing their 

recycling rates: 

The San Luis Potosi (Mexico) site organized two in-house 

competitions, one lasting a week and the other three 

months, as a means of increasing employee awareness of 

the importance of sorting and reducing waste. 

In Poland, the Skawina site installed special compactors 

for the cans and plastic bottles used in its canteen and 

cafeteria. 

Also in Poland, the Chrzanów site worked together with 

its waste collector in order to recycle the major part of its 

conventional waste, thereby achieving annual savings of 

10,000 euros. 

The Ben Arous (Tunisia) site has set up an on site waste 

program. 

The Group’s objective for 2011 is to continue efforts 

to cut waste production and increase material recycling 

and reuse. 

3.A.2.3.7. Reducing noise and 

other forms of pollution 

Minimizing all forms of pollution, to ensure that its industrial 

activities are properly integrated into their environment is 

another of the Group’s ongoing objectives. This objective 

applies as much to the performance of products developed 

by the Group as to the processes used to make them. 

Operations at Valeo sites are not particularly noisy, and the 

Group is careful to locate new sites far from residential areas. 

Valeo has issued a Group directive describing practices 

and processes to limit noise inside its plants. For several 

years, the Valeo Group has pursued a policy promoting 

the use of collective protection systems (noisy machines 

are insulated from their surroundings) while continuing to 

educate employees on the need to wear individual protection 

equipment. 

At its sites, Valeo continues to strive for an overall reduction 

of noise and other forms of pollution by developing innovative 

and more effective products and processes. For example, 

the Kyungju site (South Korea) has replaced its phosphatebased 

lubricant with a cold forging lubricant that generates 

practically no airborne emissions (SOx, NOx, dust) and 

reduces wastewater emissions by 90%. 



Odor pollution, usually associated with emissions of volatile 

organic compounds (VOCs), can be particularly unpleasant 

for residents. Processes have been implemented to reduce 

the use or emission of these compounds, such as replacing 

solvent paints with water-based paints or eliminating 

trichloroethylene in the manufacture of clutch facings. In 

2010, the generation of VOCs compared to sales was down 

27% year on year, a performance which highlights Valeo’s 

commitment to the issue. 

The Valeo sites concerned are equipped with treatment 

systems to keep emissions below the threshold of 

perceptibility: bio-filtration, absorption, condensation and 

incineration, the last-mentioned being the most widely used. 

The Group has offered to work with the French Ministry of 

Sustainable Development on the safety of former sites that 

have not belonged to Valeo for more than 30 years. This 

comprehensive approach is part of its policy on “corporate 

citizens”. 

3.A.2.3.8. Ensuring high-level operational safety 

and the security of installations 

Group policy has always been to assure the highest possible 

levels of protection at its sites against natural disasters and 

technological risks. This is why: 

the majority of Valeo’s sites are classified HPR (Highly 

Protected Risk) and have an automatic sprinkler system 

for fires and regular staff training in dealing with all kinds 

of risk situations; 

all sites in seismic risk zones have been built or upgraded 

to comply with the most recent seismic regulations; 

Valeo sites are not located in flood zones or, if they are, 

are equipped with systems that protect them against flood 

risks; 

new Valeo sites are located far from sites representing a 

significant potential risk (Seveso sites, etc.) that could have 

a domino effect on them; 

the Risk Management Manual contains a specific directive 

on the prevention of crisis situations and on situationspecific 

contingency plans. This directive requires each site 

to draw up an emergency plan for dealing with potential 

incidents. 

As part of its comprehensive risk management policy, Valeo in 

2007 issued the finalized version of the Valeo Emergency and 

Recovery Management (VERM) tool devoted to preventing 

emergency situations. This is a framework tool to help design 

and implement emergency, crisis management and recovery 

plans as an integral part of any Valeo site’s risk management 

system. 


PAGE 73


PAGE 74 



The VERM approach unifies procedures for managing the 

emergency situations anticipated in the Group’s reference 

lists and thereby bolsters the site’s ability to act in any kind 

of crisis. Deployment was continued in 2010. 

On the security front, Valeo is continuing to reinforce 

security measures relating to facilities (access control, videosurveillance, 

intrusion detection) to improve the quality of 

its security systems. It also conducts physical and virtual 

intrusion tests to verify effectiveness. The fundamental 

aspects of health, safety and security performance at the 

sites are tested on an ongoing basis in order to pursue 

improvements. 

3.A.2.3.9. Providing for health and 

safety in the workplace 

Valeo attaches the highest importance to its risk management 

policy, which is designed to ensure the health and safety of its 

employees, and the security of its assets as well as to provide 

the basis of sustainable development. 

The Group’s Code of Ethics demonstrates how Valeo has 

committed itself to complying with a certain number of ethical 

and social values included in the UN’s Global Compact, 

more particularly in the area of employment. The Group’s 

Sustainable Development Charter also sets out requirements 

for the protection of persons and assets, the practical 

application of which is embodied in its Risk Management 

Manual which includes the Group’s standards in respect of 

health and safety in the workplace. 

In 2010, two campaigns were organized during which 

employees from the Group’s sites worldwide took part in 

various activities designed to raise awareness in the areas 

of protecting the environment and ensuring safety in the 

workplace. A Safety Week was organized in April 2010 to 

coincide with the World Day for Safety and Health at Work. The 

activities organized focused on the four fundamental pillars 

of safety: equipment (including protection and ergonomics), 

training, attitude and constant improvement. For example, 

the Itatiba site (Brazil) undertook an innovative experience as 

part of this Safety Week: a group of actors came to the plant 

to perform a play about safety in the workplace. 

In June 2010, to coincide with the World Environment Day, the 

Group’s sites worldwide took part in Valeo Environment Week 

by organizing activities designed to protect the workplace and 

the planet. In Nogent-le-Rotrou (France), for example, the 

week was devoted to an awareness campaign with posters 

focusing on a new theme each day, including issues such as 

safety in the workplace. A satisfaction survey disclosed that 

75% of the site’s employees had appreciated the campaign. 


Worldwide, the Group devoted 7,296 hours of training related 

to its Code of Ethics and 103,136 hours to health and safety 

in the workplace. Training concerns sustainable development 

and environmental issues remained a key priority with 22,790 

hours of training. 

Other local initiatives are illustrative of site managers’ concern 

with issues of health and safety at work: 

The San Luis Potosi site (Mexico) prepared a poster 

campaign on valeo’s environmental policy and the iso 14001 

standard, as well as information sheets dealing with the 

standard and the environment. The site has also started 

reporting on the number of accident-free days and displays 

posters explaining the proper use of tools and protective 

equipment. 

The same site has started making accident-prone zones, 

highly visible using a 1.6M tall red outline to alert employees 

and has equally set up a first aid program. 

The Gravatai site (Brazil) treats safety as a daily concern and 

at the end of 2010, was able to announce 436 consecutive 

accident-free days. 

The Skawina site (Poland) holds lotteries if no accidents 

have been recorded for three consecutive months, equating 

with about 300,000 working hours. Three times fewer 

accidents were reported in 2010 thanks to this initiative. 

In 2010, the Tuam site (Ireland) inaugurated a room devoted 

to health and safety in the workplace, used for first aid, 

medical surveillance, emergency consultations and individual 

interviews with employees wishing to raise particular safety 

issues. 

The Veszprem site (Hungary) organized a Healthy Week in 

the plant, during which appropriate nutritional meals were 

served. The same site organizes awareness campaigns for 

local residents particularly in respect of recycling. 

The Skawina site (Poland) organized a health campaign 

for its employees focusing on smoking, stress, the use of 

computers for extended periods of time, cardio-vascular 

health and hearing. The site’s medical statistics showed a 

5% fall in muscular complaints. 

The Angers site (France) arranged for the inspection and 

repair of its employees’ windshields as a means of reducing 

the risk of accident during travel to and from work. This type 

of action improves the sense of wellbeing at work, provides 

a different perception of the Company and contributes to 

road safety.

3.A.3. Table of environmental indicators 



2006 2007 2008 2009 2010 

Total revenue across all sites in reporting scope (gross) 10,486 9,222 8,555 7,448 9,482 

Number of sites in reporting scope 138 119 119 118 115 

ISO 14001 certified sites (%) 77% 94% 88% 89% 98% 

OHSAS 18001 certified sites (%) 52% 74% 76% 81% 89% 

Total volume of water consumption (thousands of m 3 ) 3,463 3,377 3,106 2,343 2,402 

Total volume of water consumption/revenue (m 3 /€m) 341 367 368 315 253 

Total energy consumption (GWh) 1,868 1,861 1,682 1,433 1,716 

Total energy consumption/revenue (MWh/€m) 185 202 199 192 181 

Electricity (%) 64% 64% 66% 67% 67% 

Gas (%) 34% 32% 32% 30% 31% 

Fuel oil (%) 2% 1% 2% 2% 2% 

Other energy sources (%) 0% 0% 0% 1% 0% 

Consumption of chlorinated solvents (metric tons) 1,096 739 710 220 114 

Consumption of chlorinated solvents/sales (kg/€m) 107 80 84 29.5 12 

Consumption of heavy metals (metric tons) 294 131 96 37 25 

Consumption of heavy metals/sales (kg/€m) 29 14 11 5 3 

Consumption of CMR substances (metric tons) 1,138 406 474 188 134 

Consumption of CMR substances/sales (kg/€m) 111 44 56 25 14 

Consumption of packaging materials (metric tons) 63,248 72,065 63,839 47,160 60,072 

Consumption of packaging materials/sales (kg/€m) 6,669 7,882 7,546 6,332 6,335 

Proportion of plastic packaging (%) 10% 10% 5% 6% 7% 

Proportion of paperboard packaging (%) 57% 58% 64% 63% 63% 

Proportion of wood packaging (%) 32% 31% 30% 30% 28% 

Proportion of other packaging materials (%) 1% 2% 2% 1% 2% 

Consumption of recycled plastics (metric tons) 6,150 7,184 6,751 7,490 10,269 

Volume of industrial effluents emissions (thousands of m 3 ) 748 918 809 642 684 

Volume of industrial effluent emissions/sales (m 3 /€m) 76 103 96 86,3 72 

Heavy metal content in effluents (kg) 278 242 142 278 563 

Heavy metal content in effluents/sales (kg/€m) 0 0 0 0 0.06 

VOC atmospheric emissions (metric tons) 1,489 1,296 1,107 1,001 926 

VOC atmospheric emissions/sales (kg/€m) 153 141 132 134 98 

TCE atmospheric emissions (metric tons) 327 51 89 42 19 

TCE atmospheric emissions/sales (kg/€m) 32 6 10.5 5.6 2 


PAGE 75


PAGE 76 




2006 2007 2008 2009 2010 

Lead atmospheric emissions (kg) 52 173 137 11 1 

Lead atmospheric emissions/sales (g/€m) 5 20 16.5 1.5 0 

Greenhouse gas emissions (metric tons CO 2 equivalent) 123,971 122,151 107,338 85,115 101,207 

Greenhouse gas emissions/sales (metric tons CO 2 equivalent/€m) 12 13 13 11 11 

Total waste generated (metric tons) (both hazardous and 

non-hazardous) 138,794 159,223 146,543 113,133 150,952 (1) 

Total waste generated/sales (metric tons/€m) 14 17 17 15 16 (1) 

Hazardous waste (metric tons) 23,296 20,485 21,195 15,579 19,732 

Non-hazardous waste (metric tons) 115,498 138,738 125,347 97,554 131,220 

Waste reuse rate (%) 72% 74% 77% 82% 83% 

Number of fines and compensation awards 3 1 10 4 3 

Amount of fines and compensation awards (€ thousands) 4 1 4.1 112.7 8 

Provisions and guarantees for environmental risks 

(€ thousands) 3,091 4,289 1,386 2,358 2,571 

Functional expenditure to prevent environmental 

consequences of operations (€ thousands) 16,417 19,789 19,930 11,740 11,123 

Capital expenditure excluding decontamination costs to 

prevent environmental consequences of operations 

(€ thousands) 4,244 3,552 4,898 2,080 1,796 

Decontamination costs (€ thousands) 1,240 1,427 1,217 1,358 710 

(1) The 2010 figure excludes the Pianezza site (Italy) which mistakenly included dismantling waste in its reporting. 

Waste volumes and sales have been removed from the 2010 scope.

3.B. Social and societal policy 

The social indicators below are based on the provisions 

of Articles L.225-102-1 and R.225-104 of the French 

Commercial Code. 

The Valeo Group has chosen to base its social indicators 

on data from all its companies worldwide. There are some 

exceptions to this, which are listed on a case-by-case basis. 

In response to the new requirements of the automotive 

industry and the increasing globalization of its markets and 

3.B.1. Employment 

3.B.1.1. Number of employees 

3.B.1.1.1. Change in employment over three years 


Social and societal policy 

customers, in 2010 the Group reorganized itself into four 

Business Groups including 109 production sites, 20 research 

centers, 38 development centers and 10 distribution platforms 

across 27 countries. The role of its National Directorates 

was also reinforced. The new organization is designed to 

accelerate the Group’s growth and improve its productivity. 

2008 2009 2010 

Engineers and managers 11,468 10,834 11,375 

Administrative staff, technicians and supervisors 8,243 7,433 7,637 

Operators 29,898 28,789 31,767 

REGISTERED HEADCOUNT 49,609 47,056 50,779 

Temporary staff 1,531 5,054 7,151 

TOTAL HEADCOUNT 

o/w: 

51,140 52,110 57,930 

Permanent staff 48,631 44,705 47,146 

Temporary staff 2,509 7,405 10,784 

At December 31, 2010 the Group employed 57,930 people 

worldwide, an increase of 11.2% on 2009 following the 

upturn in the automotive market. 

There was also a rise in the number of temporary and 

permanent employees at the end of 2010 owing to the 

temporary impact of vehicle scrappage programs in Europe 

and the strong recovery in vehicle production in emerging 

countries. 

On a consolidated basis, temporary staff thus represented 

18.6% of total employees at the end of 2010 as opposed to 

14.2% at the end of 2009. 

The proportion of engineers and managers fell slightly to 

22.4% of total employees at the end of 2010 compared with 

23.0% at the end of 2009 and 23.1% at the end of 2008. 


PAGE 77

3 Social 

PAGE 78 


and societal policy 

3.B.1.1.2. International composition of the Group’s workforce 

The Group’s growing worldwide presence is reflected in the increasingly international face of its workforce. Today, 75.1% of 

employees are based in a country other than France, compared with 66.5% in 2000. 

Total headcount outside France 

1995 2000 2005 2009 2010 

14,125 50,002 50,273 36,492 43,490 


Western 

Europe 

Eastern 

Europe Africa 

North 

America 

South 

America Asia 

Total headcount at December 31, 2010 24,200 9,592 1,428 6,212 4,383 12,115 

as a % of the total headcount in 2010 41.8% 16.6% 2.5% 10.7% 7.6% 20.9% 

Compared with 2009, the headcount fell by 1.6% in Western 

Europe but rose by 48.2% in North America, 16.8% in Eastern 

Europe, 7% in Africa, 2.2% in South America and 27.6% 

3.B.1.1.3. Generational turnover 

Registered headcount by age bracket 

20,000 

15,000 

10,000 

5,000 

0 

< 20 

years 

20/29 

years 

30/39 

years 

40/49 

years 

50/59 

years 

Admin/Technicians/Supervisors 

Operators 

Engineers & Managers 

> 60 

years 

in Asia, notably as a result of the rebound in automotive 

production in those regions. 

At December 31, 2010 the breakdown of the Group’s 

permanent headcount was as follows: 

1% aged under 20; 

26.2% aged between 20 and 29; 




0.6% aged 60 or over. 

A total 42.4% of engineers and managers are in the 30-39 

age bracket, compared with just 34.6% of administrative staff, 

technicians and supervisors and 33.7% of operators. A total 

29.8% of operators are in the 20-29 age bracket. 

Because of the large numbers of new staff recruited each 

year, generational turnover is significant.

3.B.1.2. New hires 

With its strong corporate image and experience, the Group 

did not encounter any particular problems with recruitment 

during the year, apart from certain highly localized difficulties 

3.B.1.2.1. Permanent contracts 

Number of hires on permanent contracts 



concerning positions requiring advanced specialization 

or specific language skills and in catchment areas where 

competition for skilled labor is fierce. 

2008 2009 2010 (1) 

Engineers and managers 1,724 713 1,470 

Administrative staff, technicians and supervisors 540 194 432 

Operators 3,430 1,729 3,712 

TOTAL 5,694 2,636 5,614 

(1) Excluding the joint venture in Pune, India. 

During the first quarter of 2010, Valeo increased its forecast 

for automotive production in 2010 and as a result, new hires 

on permanent contracts increased by 113% overall compared 

Breakdown of hires on permanent contracts by geographic area 

Western 

Europe 

with 2009, although they remained 1.42% below their 

level of 2008. 

Eastern 

Europe Africa 

North 

America 

South 

America Asia (1) 

Total permanent hires, 2010 537 688 140 1,151 1,087 2,010 

As a % of hires on permanent contracts, 2010 9.6% 12.2% 2.5% 20.5% 19.4% 35.8% 


The primary focus of the Group’s recruitment efforts was in high-growth areas: North and South America and Asia. 

3.B.1.2.2. Fixed-term contracts 

Number of hires on fixed-term contracts 

2008 2009 2010 (1) 

Engineers and managers 131 73 123 


Operators 1,616 3,746 4,871 

TOTAL 1,840 3,884 5,062 



PAGE 79

3 Social 

PAGE 80 



A total of 5,062 new hires on fixed-term contracts were made 

during the year, an increase of 30% on 2009 in response to 

the temporary surge in activity following the introduction of 

vehicle scrappage schemes, and the pick-up in automotive 

production in North America and emerging countries. 

Breakdown of hires on fixed-term contracts by geographic area 


Western 

Europe 

A total of 3,633 employees were on fixed-term contracts 

at December 31, 2010, compared with 2,350 in 2009 and 

978 in 2008. 

Eastern 

Europe Africa 

North 

America 

South 


Total fixed-term hires, 2010 2,160 650 58 1,286 35 873 

As a % of fixed-term hires, 2010 42.7% 12.8% 1.1% 25.4% 0.7% 17.3% 


Compared with 2009, the number of new hires on fixed-term 

contracts fell by 6 points in Eastern Europe, 4.2 points in 

Asia, 8.9 points in Africa, 7.8 points in North America and 

3.B.1.3. Departures 

0.4 points in South America. In contrast, the number rose by 

11.7 points in Western Europe. 

2008 2009 2010 (1) 

Contract terminations: 4,167 3,806 2,058 

▪ o/w layoffs 2,238 2,619 733 

Resignations 3,937 2,038 2,141 

Early retirement 191 225 115 

Retirement 417 285 247 


Valeo terminated 2,058 contracts in 2010, or 4.4% of 

permanent staff (8.5% in 2009 and 8.6% in 2008). 

Layoffs accounted for 35.6% of the total compared with 69% 

in 2009 and nearly 54% in 2008. 

The drop in layoffs reflects the upturn in automotive 

production. 

Other contract terminations were for personal reasons 

whether or not of a disciplinary nature. 

Early retirements and retirements amounted to 0.8% of 

permanent staff (1.1% in 2009 and 1.2% in 2008). 

In 2010 the number of resignations was up 5% on 2009, 

and still remains one of the main reasons for departures. 

Resignations represented 4.5% of the permanent headcount 

in 2010 (4.6% in 2009 and 8.1% in 2008). By socioprofessional 

category, resignations represented 6.9% of the permanent 

headcount of engineers and managers, 3% of the permanent 

headcount of administrative staff, technicians and supervisors 

and 4.3% of the permanent headcount of operators.

Breakdown of departures in 2010 by geographic area 

Western 

Europe 

Eastern 

Europe Africa 

North 

America 



South 


Layoffs 624 38 19 21 2 29 

85.2% 5.2% 2.6% 2.9% 0.3% 3.9% 

Dismissals 202 141 3 163 615 201 

15.2% 10.6% 0.2% 12.3% 46.4% 15.2% 

Resignations 445 347 36 400 224 689 

20.8% 16.2% 1.7% 18.7% 10.5% 32.2% 

Early retirement 111 0 0 4 0 0 

96.5% 0.0% 0.0% 3.5% 0.0% 0.0% 

Retirement 129 14 1 17 8 78 

52.4% 5.7% 0.4% 6.7% 3.2% 31.6% 


Valeo is firmly committed to a forward-looking employment 

and skills management policy. The Group implements 

measures to delay and where possible avoid layoffs, such 

as granting leave or vacations, cutting overtime, reducing 

temporary staffing and sub contracting, and putting 

employees on short-time working. When there is a clear need 

3.B.2. Work time organization 

3.B.2.1. Length of work time 

Working week of full-time employees 

The work of employees at the Group’s 110 production 

sites, 21 research centers and 40 development centers and 

to optimize industrial facilities, Valeo undertakes restructuring 

operations. In this case, the Group works in concert with 

labor organizations and uses all available mechanisms to 

find alternative employment, including internal redeployment, 

outplacement, takeover of the plant by another owner or 

reindustrialization of local labor pools. 

10 distribution platforms is organized on the basis of statutory 

working time, which varies between countries and ranges 

from 35 to 48 hours per week. 

The most frequent statutory working week is 40 hours. 

In France, the agreement on the reduction of work time, signed with trade unions on April 20, 2000, establishes the following 

number of hours for the working week: 

Engineers and managers (time-by-day) 215 days/year 

Administrative staff, technicians and supervisors 35 hours 

Employees without paid overtime hours 37.5 hours 

Operators 35 hours 

Working week of part-time employees 

Part-time work is considered to be any work schedule with 

fewer hours than the standard work week at the entity in 

question. Average work hours for part-time employees 

consequently vary from 16 to 36 hours per week, depending 

on the country and the socioprofessional category. 


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3.B.2.2. Work schedules 

Breakdown of personnel by work schedule as a % 


2008 2009 2010 (1) 

Day workers 48% 48% 45% 

2x8 hour shifts 23% 21% 19% 

3x8 hour shifts 23% 23% 29% 

Night workers 5% 6% 6% 

Weekend workers 0% 1% 1% 


Most production employees work as part of 2x8, 3x8 or 

night shifts in order to optimize plant utilization. In 2010 the 

Group had 27,680 shift workers, representing 55% of the 

total headcount. 

3.B.2.3. Overtime 

In 2010, 5,463,551 hours of overtime were paid (versus 

4,393,339 in 2009 and 4,897,136 in 2008), of which 86.9% 

went to production workers (87.7% in 2009 and 82.5% in 

2008). 

This paid overtime corresponds to 5.6% of total possible 

work hours (i.e. the number of basic hours that could be 

worked by all Group employees). 

3.B.2.4. Part-time 

A total of 1,072 employees were working part-time in the 

Group in 2010, or 2.1% of the registered headcount (versus 

2.2% in 2009, 2.4% in 2008 and 2.5% in 2007). 

3.B.3. Gender equality and diversity 

3.B.3.1. Male – female breakdown 

Valeo is keen to promote equality between men and women, 

on a comparable basis, in terms of career development, 

training possibilities, wages and rank within the Company. 

Valeo draws up a comparative gender status report for the 

Group’s French companies every year. This report serves as a 

Women accounted for 74.5% of this number (versus 76.9% 

in 2009 and 79.1% in 2008). 

The breakdown of part-time workers by category was as 

follows: engineers and managers: 8.8%; administrative staff, 

technicians and supervisors: 14.8% and operators: 76.4%. 

3.B.2.5. Absenteeism 

In 2010, the Group-wide absenteeism rate (ratio of hours of 

absence to possible work hours) was 2.35% (versus 2.55% 

in 2009). The reasons for absence were broken down as 

follows: illness, 81.4% (versus 82.3% in 2009), unauthorized 

absence, 4.2% (versus 2.9% in 2009), authorized absence 

such as unpaid leave, 4.6% (versus 4.2% in 2009), workplace 

and commuting accidents, 3.9% (versus 4% in 2009), strikes, 

3.4% (versus 4.2% in 2009), suspensions, 0.1% (versus 0.2% 

in 2009), and other reasons, 2.5%. 

Absenteeism is higher in France than for the Group as a 

whole, at a rate of 3.04%. 

basis for annual negotiations between labor and management 

on targets for gender equality in the workplace and on 

measures to achieve these targets. 

The proportion of female engineers and managers in the 

Group is rising. In 2010, it rose 0.5 points on 2009 and 0.7 

points on 2008.

Breakdown of women by socioprofessional category 



(as a % of the registered headcount in 2010) 2008 2009 2010 (1) 

Engineers and managers 18.3% 18.5% 19.0% 

Administrative staff, technicians and supervisors 25.5% 24.6% 24.3% 

Operators 38.9% 38.1% 37.1% 


Through partnerships with leading French business schools and associations such as “Elles Bougent”, Valeo is striving to 

increase the percentage of female employees. 

Proportion of women among new hires on permanent contracts over three years 

Engineers and managers 

Administrative staff, 

technicians and supervisors Operators Total 

Women % Women % Women % Women % 

2008 419 24.2% 179 33.2% 1,205 35.1% 1,803 31.7% 

2009 144 20.2% 44 22.7% 419 24.2% 607 23.0% 

2010 (1) 304 20.7% 116 26.9% 1,012 27.3% 1,431 25.5% 


3.B.3.2. Diversity 

The presence of the Valeo Group in 27 countries promotes 

diversity. 

In 2010 the Group’s workforce comprised employees of 96 

different nationalities. 

The ten most prevalent nationalities within the Group are: 

French, Chinese, Brazilian, Mexican, Polish, German, 

Spanish, Korean, American and Czech. 

The countries where Valeo has the largest number of 

nationalities are: France (60 nationalities), Germany (44 

nationalities), United States (25 nationalities), Ireland (22 

nationalities), Italy (21 nationalities) and Czech Republic (20 

nationalities). 

The two most diversified entities are Valeo Equipements 

Electriques Moteur in France, with 26 nationalities in a 

headcount of 343 employees, and Connaught Electronics in 

Ireland, with 22 nationalities in a headcount of 440 employees. 

3.B.4. Labor relations and collective bargaining agreements 

Valeo has developed an active contract-based labor relations 

policy. In 2010, 269 agreements were signed (compared 

with 315 in 2009 and 267 in 2008) in 18 countries. These 

agreements covered a range of subjects and were based on 

national laws. 

Among these agreements, 82 (26%) concerned work time, 77 

(24.4%) wages, 31 (9.8%) profit-sharing and incentive plans, 

and 33 (10.5%) premiums or bonuses. 

Examples of these agreements are given below: 

Western Europe 

France: 2010 wage agreements, agreements on profitsharing 

and incentive plans, agreements on forward jobs 

and skills planning, agreements on the organization of work 

time and leave, agreements on pensions, health, insurance 

benefits and wellbeing at work and labor provisions in the 

corporate articles of association; 

Italy: agreements on the organization of work time and 

leave, unemployment benefits and short-distance mobility; 

Germany: agreements on the organization of work time and 

leave, agreements on the payment of bonuses; 

Spain: collective bargaining agreements, agreements on 

the organization of work time and leave; and 

Benelux: collective bargaining agreements. 


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Eastern Europe 

Czech Republic: collective bargaining agreements, wage 

agreements; 

Romania: collective labor agreement; 

Hungary: wage agreements and agreements on the 

organization of work time and leave. 

North America 

Mexico: wage agreements and agreements on the 

organization of work time and leave. 

South America 

Brazil: wage agreements, collective bargaining agreements, 

agreements on profit-sharing and incentives; and 

Argentina: wage agreements. 

Asia 

Japan: wage agreements, agreements on the payment of 

bonuses, agreements on the organization of work time 

and leave; 

3.B.5. Health and safety in the workplace 

In the field of safety and working conditions, the objective is 

to move towards “zero accidents”. 

Valeo considers health and safety in the workplace as a 

key priority. Systematic audits are performed by external 

consultants to better assess and control risks and improve 

the quality of Valeo’s Group-wide standards. In 2010, a new 

diagnostic tool was developed which allows each Health, 

Safety and Environment Manager to audit compliance with 

the applicable Group standards. The tool is used in addition 

to the audits performed by external consultants and makes 

it possible to assess the performance of sites on a more 

frequent basis. 

In 2010, in keeping with its principles of continuous 

improvement, Valeo continued the deployment of tools for 

analyzing each occupational accident or incident. These tools 

were implemented in 2007 and are fine-tuned year by year, 

with real involvement by management, leading to a significant 

fall in the number of accidents. For example, in 2010, the 

occurrence of occupational accidents, involving lost-time or 

not, was down 66% on 2007. 

With effect from 2010, performance in matters of safety has 

become an integral part of management evaluation, at all 

levels, with a view to increasing teams’ awareness of the 

issue and commitment to addressing it. 


China: agreement on employment contracts; and 

Korea and Thailand: wage agreements. 

Africa 

Tunisia: agreements on the organization of work time and 

leave. 

The European Works Council includes representatives from 

the following countries: Germany, Belgium, Spain, France, 

Hungary, Italy, Poland, Czech Republic, Romania, Slovakia, 

the United Kingdom and Ireland. The enterprise agreement 

on the European Works Council was revised in July 2008. 

The Council met five times in 2010. 

The countries in which employees are fully or partially covered 

by a collective bargaining agreement are the following: 

Argentina, Belgium, Brazil, Czech Republic, France, Germany, 

Hungary, India, Italy, Japan, Mexico, Romania, South Africa, 

South Korea, Spain, Thailand, Tunisia, Turkey and the United 

States. 

Independently of the systematic audits, Valeo uses two 

indicators to gauge the efficiency of measures taken: 

frequency (number of lost-time accidents per million hours 

worked); 

severity (number of days lost owing to an occupational 

accident per thousand hours worked). 

In 2010 the number of occupational accidents, involving 

lost-time or not, was stable at 1,924 as in 2009. Their 

severity decreased with 339 lost-time occupational accidents 

compared with 348 in 2009 (and 515 in 2008 and 555 in 

2007), a fall of 39% over three years. 

Generally speaking, the main causes of lost-time accidents 

concern machines or processes (55.3%) or ergonomics 

(12.1%). 

Following its “Well-being and efficiency at the workstation” 

project launched in 2007, in 2010 Valeo initiated the drafting of 

a substantive agreement on the theme of well-being at work, 

as a result of which a survey of the social climate at all the 

Group’s French sites was performed by external consultants. 

Each site now has a Well-being at Work Commission which 

brings together the Site Director, the HR Manager, the Health, 

Safety and Environment Manager, the occupational doctor, 

the nurse and a staff member designated by each eligible 

trade union including the secretary of the Health, Safety and 

Working Conditions committee (CHSCT). A training plan for

the parties involved in the agreement, site Well-being at Work 

Commissions and the CHSCT was launched in 2010 and will 

continue in 2011. 

For the time being the project has only been deployed in 

France but the Group is currently considering an international 

extension. 

Group Frequency Rate 1 (FR1) 

Lost-time accidents 

5.47 5.24 4.08 3.96 

07 08 09 10 

Number of lost-time accidents 

per million hours worked. 

FR1 calculation: (Number of lost-time accidents x 1,000,000)/number of 

hours worked. 

Group Frequency Rate 2 (FR2) 

Accidents involving lost-time or not 

49.54 33.75 22.57 16.64 

07 08 09 10 

Number of accidents involving lost-time 

or not per million hours worked 

FR2 calculation: (Number of accidents, involving lost-time or not x 

1,000,000)/ number of hours worked. 

Group Severity Rate 1 (SR1) 



0.14 0.13 0.10 0.08 

07 08 09 10 

Number of days lost owing to occupational 

accidents per thousand hours worked 

Severity ratio 1: (number of days lost owing to occupational accidents 

1,000)/Number of hours worked. 

The employees included in the calculation of the number of accidents 

include all Valeo’s employees whatever their type of employment contract. 

The employees included in the calculation of the number of hours worked 

include all Valeo’s employees, whatever their type of employment contract, 

with the exception of certain interns, temporary personnel and external 

service providers. (Source M.A.F I.03.21). 

France 

2008 2009 2010 

Frequency 9.72 7.28 7.76 

Severity 0.21 0.20 0.18 

In France, the Group’s frequency and severity rates for 2010 

are below its industry average namely 19.57 for the frequency 

of lost-time accidents and 1.05 for their severity (source 

CNAMTS code 343ZB - 2009 – latest survey). 

16.4% of the Group’s training hours in 2010 were devoted 

to safety. 59.6% of employees attended at least one training 

session devoted to safety in 2010 compared with 51.5% 

in 2009. 


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3.B.6. Remuneration 

3.B.6.1. Changes in remuneration and social charges 

(in millions of euros) 2008 2009 2010 (1) 

Payroll excluding social charges and temporary staff 1,496 1,354 1,460 

Social charges 367 358 404 

Pension charges for defined benefit plans 26 25 26 

Pension charges for defined contribution plans 88 79 71 

Total loaded payroll cost 1,977 1,816 1,961 

Loading rate 30.4% 32.3% 32.5% 


(in millions of euros) 2008 2009 2010 (1) 

Loaded personnel costs (including temporary staff) 2,106 1,888 2,114 

% of revenue 24.3% 25.2% 21.9% 


Breakdown by geographic area in 2010 

(in millions of euros) France 


Europe 

(excluding 

France) 

Rest of the 

world (1) 

Payroll excluding social charges 573 478 409 

Social charges 212 103 89 

Loaded personnel costs (excluding pension costs) 785 581 498 

Loading rate 37.0% 21.5% 21.8% 


The highest registered headcount is in France, with 12,266 employees at December 31, 2010. 

3.B.6.2. Profit-sharing, incentives 

and employee savings plans 

3.B.6.2.1. Profit-sharing 

In 2010, two of the Group’s fifteen French companies set 

aside a special profit-sharing reserve of 6,004,600 euros. 

3.B.6.2.2. Incentives 

Employees at ten of the Group’s fifteen French companies 

received a total of 6,987,706 euros as part of incentive plans 

for 2010. 

3.B.6.2.3. Employee savings plans 

Group savings plan 

The Group savings plan (PEG) was set up on November 13, 

2001 under a collective agreement signed by Group 

Management and four trade unions. An addendum to this 

agreement was added on September 17, 2008. 

The PERCO (collective pension savings plan) was put in place 

on September 17, 2008 under a collective agreement signed 

by Group Management and four trade unions. 

French employees can invest sums received through profitsharing 

and incentives, and make voluntary payments into the 

Group Savings Plan or, as of January 1, 2009, the collective

pension savings plan. PERCO assets are invested in the same 

funds as the Group savings plan. Employees can also transfer 

assets from the PEG to the PERCO. Voluntary contributions 

are matched by Valeo for amounts of up to 275 euros for 

the PEG and 750 euros for the PERCO per year and per 

employee, based on payments made. 

These agreements only concern French companies in the 

Group. 

At December 31, 2010 in France, 10,300 employees 

were part of the Valeo PEG (down 4.9% on December 31, 

2009). Over the same period, the headcount in France fell 

by 6.4%, from 13,108 at December 31, 2009 to 12,266 at 

December 31, 2010. At December 31, 2010, 84% of the 

French employees had joined the Valeo PEG, compared with 

82.6% in 2009. 

Total assets invested by employees in the PEG amounted to 

43,394,959 euros spread across seven mutual funds. 

3.B.7. Training 

Training over the past three years 

In 2010, the Group spent 25,231,511 euros on training, up 

25% on 2009 in absolute terms and equally rising in relative 

terms at 1.73% of the payroll, excluding social charges, 

compared with 1.49% in 2009. 

As part of its training policy, the Group reinforced its 

investment in training to benefit the greatest number of 

employees. A total 81.4% of employees took part in at least 

one training program during the year (compared with 77.1% 



At December 31, 2010, 932 employees had joined the Valeo 

PERCO, representing 7.6% of the registered headcount in 

France. Total assets invested by employees in the Valeo 

PERCO amounted to 2,842,138 euros spread across five 

mutual funds. 

In 2008, the management of these mutual funds was placed 

in the hands of Crédit Agricole Asset Management and BNP 

Paribas Asset Management. 

Global employee share ownership 

In 2008, Valeo chose a single service provider, CREELIA, a 

subsidiary of Crédit Agricole Asset Management, to manage 

employee savings accounts. 

Following a proposal from Group Management, on June 24, 

2010 the Board of Directors of Valeo decided to grant each 

eligible employee the right to receive three free Valeo shares. 

The operation took place during the 4th quarter of 2010 and 

benefited 42,922 employees over 30 countries. 

in 2009), for an average of 23 hours per person. The average 

investment per person trained rose by 9.7% (from 556 euros 

to 610 euros per person trained). 

The breakdown of training for new hires and job instruction 

training (62%), the development of new cross-cutting skills 

(paving the way for internal mobility) or progress within one 

of the Group’s business areas (38%) shifted in 2010 in favor 

of the latter category. 

2008 2009 2010 (1) 

Number of hours of training provided 1,065,792 780,413 944,671 

Training expense €25,223,395 €20,180,632 €25,231,511 

Number of persons trained 40,730 36,285 41,317 

% of persons trained, Total 82.1% 77.1% 81.4% 

▪ Engineers and managers 87.6% 86.9% 88.4% 

▪ Administrative staff, technicians and supervisors 85.7% 82.5% 93.9% 

▪ Operators 79.0% 72.0% 75.9% 



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Breakdown of training hours per subject category in 2010 (1) 

Environment 

Other 


1% 9% 

5% 


5 priorities 

26% 

21% 

Technical-product 

Average number of hours of training per socioprofessional category 

Integration 

2% 

Communication/Training 

9% 

Languages and 

intercultural 

8% 

Management 

3% 

Office systems 

16% 

Safety 

2008 2009 2010 (1) 

Engineers and managers 38 33 37 


Operators 18 14 16 

TOTAL 26 22 23 


The Group’s training strategy involves developing the skills 

of employees through a range of educational methods. 

This strategy makes it possible to accommodate varying 

requirements in terms of time and geographical mobility, and 

to provide resources suited to the subjects addressed, the 

methods used and the individual pace of learning, with: 

face-to-face or remote sessions (by videoconferencing, 

telephone etc.) conducted by outside specialists or Valeo 

experts, encouraging sharing of experience and good 

practices between participants; 

field training initiatives, involving local management to 

increase operator flexibility or multi-skilling, or the 5 Priorities 

Schools to develop expertise in Valeo methods and tools; 

online self-training modules (Valeo C@mpus), with or 

without tutoring, either to acquire theoretical basics before 

a session in the classroom or in the field or as part of 

an individual training program, carried out in stages and 

alternating theory with periods of supervised practice. 

Training requirements are analyzed on the basis of assessment 

interviews for given jobs, business development or internal 

mobility. Individual Career Development Plans in three stages 

are drafted to support the improvement in skills: theory, 

practical application and experience-sharing, supervised 

presentation and feedback. 

To support the Group’s policy of innovation and technological 

development, programs relating to materials, products, 

production systems and manufacturing processes continue 

to rank highest in terms of the number of training hours, 

accounting for 21% of the total. These programs, led by 

Group technical experts or outside specialists, are constantly 

evolving under the guidance of the Research and Development 

(R&D) department and the Valeo Technical Institutes. 

In 2010, as in 2009, the Group placed the emphasis on 

training in safety (16% of total hours for 60% of registered 

employees), with the “Play Safe” module. The Group also 

continued training in ergonomics with a program entitled 

“Well-being and efficiency at the workstation”. Deployed 

as an e-learning course and available in eleven languages, 

this program includes practical exercises to be carried out 

at the workstation. Co-managed by line managers and 

safety managers, with strong personnel involvement, these 

sessions aim to prevent musculoskeletal disorders and the 

risk of accidents. 

The Group also gave priority to training in quality assurance 

methods and tools, including Quick Response Quality Control 

(QRQC). QRQC is a technique for detecting, analyzing 

and processing quality deficiencies of all kinds. The “other

usiness training” category totaled 26% of training hours in 


Training in the 5 Priorities, induction programs and the 

corporate culture continue to account for a significant 

proportion of training (14%), as do language training and 

intercultural relations (9%), owing to the Group’s worldwide 

presence and the development of international activities in 

all business lines. 



The Group is also devoting considerable efforts (8%) to the 

development of managerial skills, particularly through active 

cooperation with the CEDEP (European Center for Continuing 

Education). It is developing e-learning and on-site programs 

designed to simulate real-life situations and to promote the 

personal development of managers. 

3.B.8. Employment and insertion of workers with disabilities 

When it revised its Code of Ethics in 2005, Valeo reaffirmed 

its commitment to promoting respect for human dignity and 

value in the workplace as well as equal rights for all workers. 

Accordingly, the Valeo Group participates in programs 

to foster the employment and insertion of workers with 

disabilities. 

A total of 768 employees with disabilities were working 

for the Group at end-December 2010. The percentage of 

disabled employees remained stable at 1.5% of the registered 

headcount between 2009 and 2010. 

3.B.9. Social and cultural activities 

In most of the countries in which it operates, the Group 

makes financial contributions to sports, educational, cultural 

and charity organizations. In 2010, 36 million euros, or 2.45% 

of the payroll excluding social charges, was channeled into 

social programs. 

In France in 2010, Valeo devoted 9.1 million euros, or 0.6% 

of the payroll excluding social charges, to social programs 

(11.1 million euros in 2009 and 10.3 million euros in 2008). 

These amounts break down as follows: 26.6% on cafeteria 

facilities and restaurant vouchers, 11.7% on cultural 

outings, 7.4% on transport subsidies, 7.5% on sports clubs 

and recreational activities, 3.8% on medical services and 

vaccination campaigns, 4.5% on daycare and holiday camps 

for employees’ children, 0.2% on charity organizations, 0.9% 

on libraries and 37.7% on other kinds of activities. 

In addition, Valeo has a culture of sustainable development 

through which it is involved in a number of corporate, social 

and environmental initiatives. 

To measure the progress and the reach of these efforts, 

the Group put in place a special reporting process in 2008, 

covering relevant local, national and international initiatives. 

Reports show that Valeo is a major player in the life of local 

communities, especially in providing institutional support, 

In France, the headcount at end-December 2010 included 

409 employees with disabilities (414 at year-end 2009 and 

428 at year-end 2008), making up 3.3% of the registered 

headcount. The total value of subcontracting and service 

contracts with sheltered workshops and special employment 

centers was close to 1.4 million euros in 2010 (1.5 million 

euros in 2009). 

At the end of 2010, Valeo engaged an audit of all its French 

sites with a view to identifying the future focus of improvement 

in the employment of workers with disabilities. 

promoting culture and education, organizing transport, 

contributing to employee health and providing housing aid. 

Numerous specific examples may be quoted at Valeo’s sites: 

Social initiatives 

organization of vaccination campaigns; 

creation or improvement of transport services; 

implementation of medical prevention programs. 

Societal initiatives 

organization of awareness campaigns on environmental 

topics; 

organization of blood donor campaigns; 

organization of gift campaigns for schools. 

As part of its investment in sustainable development, each 

Group site may interact directly with the local population. 

Most of the people employed at Valeo sites are drawn from 

the surrounding labor pools. 

The plants forge relationships with local authorities and 

government departments in order to integrate and become 

part of the regional economic fabric. Ties are also developed 

with educational institutions, universities and professional 

schools with a view to fostering the insertion, training and 

recruitment of future employees. 


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3.B.10. Subcontracting 

Valeo engages subcontractors to perform specific services at 

its sites, such as cleaning, maintenance, IT and administrative 

support and security services. 

Subcontracting expenditure amounted to 186.1 million euros 

in 2010, or 12.7% of Group payroll excluding social charges. 

In France, this item amounted to 77.8 million euros, or 5.3% 

of the payroll excluding social charges. 

The Group is vigilant in ensuring that its subsidiaries comply 

with principles of national labor law and fundamental 

international agreements from the International Labour 

Organization in their dealings with subcontractors and, 


in particular, that subcontractors and suppliers respect 

the provisions of the Valeo Code of Ethics concerning 

fundamental human rights. 

Valeo requires all its suppliers around the world to adopt 

the commitments made by the Group to sustainable 

development. To this end, a document titled “Valeo 

Requirements for Suppliers” was drawn up and translated 

into 15 languages in 2007. Valeo suppliers throughout the 

world are required to accept its content and to agree to be 

audited by Valeo in this area. 

3.B.11. Role of the Company in youth training and employment 

The Group is also continuing to contribute to the basic 

training of young people with 2,593 interns, of whom 23% 

are women, 713 apprentices, of whom 25% are women, 

and 150 international corporate volunteers, of whom 31% 

are women. 

3.B.11.1. International perspective 

Valeo is maintaining and strengthening a policy of relations 

with higher education, in particular by developing partnerships 

with universities and schools of international renown and 

fostering diversity within its workforce. 

In 2010, the Group participated in a large number of events 

where it was able to make contact with future graduates, 

particularly in universities in China, India and Japan, during 

the international corporate volunteer forum organized by 

UbiFrance in Paris and during the Franco-German forum 

organized in Strasbourg. The Group was also represented 

at the “Top Women, Top Careers” forum in Brussels, with the 

objective of attracting applications from female engineers or 

those seeking a career in industry. 

Valeo also sponsors ShARE, an association of students from 

Asia’s top universities. It took an active part in organizing 

the association’s global seminar in Shanghai last December. 

3.B.11.2. In France 

To meet its recruitment requirements in France, Valeo has 

strengthened its relations with a number of partners including: 

Supélec, in connection with the PERCI program for 

teaching and research in cooperation with industry; 

IFP School, following the signature of a partnership 

agreement providing for the development of joint teaching 

initiatives in the area of innovative automotive technologies; 

ESTACA and SUPMECA, by sponsoring the activities of 

the “Elles Bougent” association; 

Audencia Nantes, through a partnership set up to develop 

an engineering program; 

ESEO, as part of research into onboard systems; 

ESIGELEC, as part of a partnership agreement signed with 

the school. 

Valeo also played an active role in many school forums, 

including those organized by Arts et Métiers ParisTech, 

Sup’Optique, Centrale Paris-Supélec, ESEO Angers, ESO, 

Supméca, UTC Compiègne, Audencia Nantes and EDHEC. 

Valeo also sponsors the “Elles Bougent“ association, through 

which it promotes careers in transport among female high 

school students. The Group was involved in organizing 

the “Elles Bougent au Mondial de l’automobile” day which 

enabled about a hundred high school and university students 

to take part in job presentation groups with assistance from 

Valeo sponsors. 

Valeo contributed actively to the promotional campaign 

on apprenticeships conducted by FIEV (the French trade 

association of vehicle component vendors) by helping 

prepare a set of documentation including testimonials by 

Valeo Service employees.


Valeo’s voluntary commitment to sustainable development 

3.C. Valeo’s voluntary commitment to sustainable 

development 

3.C.1. Commitment to sustainable development in the area of research 

and innovation 

3.C.1.1. Recognition for the Group’s 

investment in Research and 

Development 

In July 2009 the European Investment Bank (EIB), in 

conjunction with the European Commission, granted the 

Valeo Group 225 million euros of financing in the framework 

of its Risk Sharing Financial Facilities program. The financing 

is designed to assist the Group in its expenditure on research 

projects in the areas of reducing fuel consumption and CO2 emissions and improving active safety features. The total 

investment in these projects is expected to reach 645 million 

euros over four years. 

The grant of this loan was subject to the achievement of 

particularly high standards of environmental policy. To this 

end, Valeo was subject to an audit of its environmental 

performance which demonstrated its compliance with the 

EIB’s requirements. 

Valeo is one of the foremost European beneficiaries of such 

funding. 

In October 2010, the Group was granted additional funding 

of 75 million euros under the program, thereby once again 

demonstrating recognition of its industrial commitment to 

reducing CO 2 emissions and producing green innovation, and 

of its continuing commitment to R&D investment to prepare 

for the future as the crisis is left behind. 

3.C.1.2. Industry-wide commitment 

3.C.2. Valeo’s active involvement in working groups 

3.C.2.1. European Road Transport Research 

Advisory Council 

Valeo is Vice-Chairman of the European Road Transport 

Research Advisory Council (ERTRAC), charged with orienting 

and coordinating road transport research policy on behalf of 

the European Commission. 

ERTRAC’s mission is to explore the opportunities for 

road transport innovation in Europe and pass on specific 

recommendations, in particular from industry, to the 

European commissioners responsible for research, business, 

Valeo has invested in France’s Level 2 Automotive Equipment 

Manufacturers’ Modernization Fund (FMEA2), alongside 

Bosch France, Faurecia, Hutchinson, Plastic Omnium, and 

the two major French automobile manufacturers Renault 

and PSA, in order to provide smaller automotive equipment 

manufacturers with up to 4 million euros of financing via 

the FMEA2 fund held by France’s Fonds Stratégique 

d’Investissement (Strategic Investment Fund-FSI). 

The FMEA (1 and 2) is a venture capital fund created on 

January 20, 2009, at the French government’s initiative, in 

order to support the automotive industry. It is jointly owned 

by the FSI, Renault SA and PSA Peugeot Citroën. It acquires 

minority equity or quasi-equity interests in automotive 

equipment manufacturers engaging in industrial projects liable 

to create value and market competitiveness. 

competition and digital technology. ERTRAC has already 

developed common vision, identified research priorities, 

drawn up a Strategic Research Agenda for the coming two 

decades and launched implementation of the program. 

The European Commission uses ERTRAC’s research as a 

basis for decisions in respect of investment in future road 

transport research programs, and with the focus on deploying 

the resources and technological solutions most liable to 

produce the least polluting, most intelligent and safest 

possible forms of transport. 


PAGE 91

3 Valeo’s 

PAGE 92 


voluntary commitment to sustainable development 

3.C.2.2. International Transport Forum 

Valeo is also a member of the Research Center of the 

International Transport Forum (ITF), an inter-governmental 

organization within the OECD bringing together the transport 

ministers of all the OECD countries, several Central and 

Eastern European countries and the ASEAN member 

countries. Its purpose is to develop focuses and priorities 

for work and cooperation engaged in by the companies 

operating in those countries. Valeo has been particularly 

active in promoting carbon-free road transport and stressing 

the necessity for each member state to implement programs 

to preserve the environment. Valeo is a member of the 

executive council alongside other industrial players and air, 

rail and maritime operators. 


3.C.2.3. Automotive Industry Platform 

Valeo helped create both the French Automotive Industry 

Platform, set up on April 28, 2009 at the initiative of the 

French government, and the CCFA (French automakers’ 

association) and CLIFA (French Liaison Committee for 

Automotive Suppliers), both of which represent automotive 

manufacturers and their suppliers. The platform’s purpose is 

to develop cooperation between the parties for the benefit of 

the automotive industry as a whole. For Valeo, this platform 

also provides a basis for its commitment to engage in regular 

reviews of customer/vendor best practices, via input from the 

Group’s Purchasing Department.

4.A. Corporate governance structure 94 

4.A.1. Corporate governance structure 94 

4.A.2. Corporate officers’ experience 

4.A.3. Declarations concerning the Group’s 

102 

corporate officers 

4.A.4. Executive managers’ transactions 

104 

in the Company’s shares 104 

4.B. Compensation of corporate officers 105 

4.B.1. Executive corporate officers 105 

4.B.2. Non-executive Directors 113 

4.B.3. Other Group executive managers 114 


of the Board of Directors 116 

4.C.1. Composition of the Board and 

appointments of Directors 116 

4.C.2. Roles and responsibilities of the Board 

of Directors 117 

4.C.3. Directors’ rights and duties – Compensation 117 

4.C.4. Board Committees 118 

CORPORATE 

GOVERNANCE 

4.D. Report of the Chairman of the Board 

of Directors on the composition of 

the Board, the application of the 

principle of gender equality, 

the conditions in which the Board’s 

work is prepared and organized, 

and the internal control and risk 

management procedures put in 

place by the Valeo Group AFR 119 



4 

4.D.1. Composition of the Board of Directors 119 

4.D.2. Preparation and organization 

of the Board of Directors’ work 121 

4.D.3. Corporate Governance Code 130 

4.D.4. Special arrangements for attendance 

at Shareholders’ Meetings 131 

4.D.5. Information likely to have an impact 

in the event of a public tender offer 131 

4.D.6. Internal control and risk management 

procedures 131 

4.E. Statutory Auditors’ report prepared 

in accordance with article L. 225-235 

of the French Commercial Code 

and dealing with the report 

of the Chairman of the Board 

of Directors of Valeo AFR 136 

4.F. Statutory Auditors’ special report 

on related-party agreements and 

commitments 138 

PAGE 93

4 Corporate 

PAGE 94 

Corporate governance 

governance structure 

4.A. Corporate governance structure 

4.A.1. Corporate governance structure 

4.A.1.1. Executive Management 

The Group’s Executive Management team includes the 

Chairman, the Chief Executive Officer, and Valeo’s Functional 

and Operational Directors on the Operational Committee. At 

its meeting of March 20, 2009, Valeo’s Board of Directors 

elected to separate the role of Chairman of the Board of 

Directors from that of Chief Executive Officer. At its meeting of 

January 20, 2011, the Board of Directors decided to maintain 

the separation of the duties of Chairman of the Board and 

Chief Executive Officer, subject to the renewal of the terms 

of office of Pascal Colombani and Jacques Aschenbroich. 

The Group’s Chairman and Chief Executive Officer are: 

Chairman of the Board of Directors (non-executive): 

Pascal Colombani 

(Current term of office began on March 20, 2009, and expires 

at the close of the Shareholders’ Meeting that will be held 

to approve the financial statements for the year ended on 

December 31, 2010, and at which the renewal of his term of 

office will be proposed). 

In his capacity as Chairman of the Board of Directors, Pascal 

Colombani organizes and presides over the proceedings of 

the Board of Directors, and reports on Board meetings to 

the Shareholders’ Meeting. He ensures that the Company’s 

governance bodies function effectively and in particular that 

the Directors are able to perform their duties. 

Chief Executive Officer: Jacques Aschenbroich 

(Current term of office began on March 20, 2009, and expires 

at the close of the Shareholders’ Meeting that will be held 

to approve the financial statements for the year ended on 

December 31, 2010, at which the renewal of his term of office 

will be proposed). 

In his capacity as Chief Executive Officer, Jacques 

Aschenbroich has the broadest ranging powers to act in any 

circumstances in the Company’s name. He exercises these 

powers within the limits of the Company’s corporate purpose 

and subject to the provisions of the law, the Company’s 

bylaws or internal regulations. The Chief Executive Officer 

represents the Company in its relations with third parties and 

the legal system. In compliance with internal regulations, the 

prior approval of the Board of Directors must be obtained for 

the acquisition or sale of any subsidiary, holding, or any other 

asset or investment, for a sum of more than 50 million euros. 


Operations Committee 

Michel Boulain 

Head of Human Resources 

Robert Charvier 

Chief Financial Officer 

Robert de La Serve 

Head of Valeo Service Activity 

Édouard de Pirey 

Head of Corporate Strategy and Planning 

Antoine Doutriaux 

Head of Visibility Systems Business Group 

Martin Haub 

Head of Research & Development and Product Marketing 

Hans-Peter Kunze 

Head of Sales and Business Development 

Géric Lebedoff 

General Counsel 

Claude Leïchlé 

Deputy Head of Powertrain Systems Business Group 

Alain Marmugi 

Head of the Thermal Systems Business Group 

Christophe Périllat-Piratoine 

Chief Operating Officer 

Michael Schwenzer 

Head of the Powertrain Systems Business Group 

Marc Vrecko 

Head of the Comfort and Driving Assistance Systems 

Business Group

4.A.1.2. Composition of the Board of Directors 

At December 31, 2010, the members of the Board of Directors were: 

Pascal Colombani; 

Jacques Aschenbroich; 

Gérard Blanc; 

Daniel Camus; 

Jérôme Contamine; 

Michel de Fabiani; 

On February 24, 2011, the Board of Directors, acting on 

the recommendation of the Appointment, Compensation 

and Governance Committee, decided to appoint Ulrike 

Steinhorst as Director to replace Behdad Alizadeh for his 

remaining term of office, i.e., until the end of the Shareholders’ 

Meeting called to approve the financial statements for the year 

Philippe Guédon; 

Michael Jay; 

Helle Kristoffersen; 

Noëlle Lenoir; 

Georges Pauget. 

The table below provides information about Directors holding office during 2010: 

Name and 

business address 

of the Director 


French 

65 


43, rue Bayen 

75017 Paris 

France 

Number 


shares 

held 

* Current directorships and positions. 

First 

appointed 

Start 

of current 

term of 

office 

End of 

current term 

of office 

Corporate governance 4 

Corporate governance structure 

ending December 31, 2011. At the same meeting the Board 

of Directors also recognized, on the recommendation of the 

Appointment, Compensation and Governance Committee, 

Ulrike Steinhorst’s status as an Independent Director, as 

defined by the Internal Regulations. 

Main position 

held in the 

Company 

600 05/21/2007 05/21/2007 Shareholders’ Chairman of 

Meeting called the Board of 

to approve the Directors 

2010 financial 

statements 

Main position 

outside 

the Company 

Senior Adviser, 

A.T. Kearney 

Other directorships and 

positions held in companies 

other than Valeo subsidiaries 

during the past five years 

▪ Director: British Energy Group 

Plc* (until June 9, 2011), Alstom 

SA*, Rhodia SA*, Technip SA*, 

Energy Solutions Inc.*, EDF, IFP, 

Cogéma 

▪ Member, French Academy of 

Technology (Académie des 

technologies)* 

▪ Chairman of the Supervisory 

Board, Areva 

▪ Chairman of the Board of 

Directors, ENS Cachan 

▪ Chairman, Association 

française pour l’avancement 

des sciences 

▪ Senior Advisor, Detroyat et 

Associés, Arjil Banque 


PAGE 95

4 Corporate 

PAGE 96 



Name and 



Jacques 

Aschenbroich 

French 

56 


43, rue Bayen 

75017 Paris 

France 

Number 


shares 

held 


First 

appointed 


Start 

of current 

term of office 

End of 

current term 

of office 

7,000 03/20/2009 03/20/2009 Shareholders’ 

Meeting 

called to 

approve 

the 2010 

financial 

statements 

Main 

position Main position 

held in the outside 

Company the Company 

Chief 

Executive 

Officer 

▪ Chairman of Valeo 

Finance, Valeo 

Service, Valeo SpA, 

Valeo (UK) Limited 

▪ Director, Valeo 

Service España, S.A. 





▪ Chairman, CEO and Director, 

SEPR-Société européenne des 

produits réfractaires – France 

▪ Chairman and CEO, Saint-Gobain 

Glass France 

▪ Chairman, Saint-Gobain Sekurit 

France 

▪ Vice-Chairman, Chairman, CEO 

and Director, Saint-Gobain 

Corporation (US) 

▪ Chairman and CEO, Saint-Gobain 

Advanced Ceramics Corp. (US) 

▪ Chairman: Saint-Gobain Abrasives 

Inc. (US), Saint-Gobain Advanced 

Ceramics Corp. (US), and Saint- 

Gobain Ceramics & Plastics Inc. 

(US) 

▪ Chairman: Saint-Gobain 

Corporation Foundation Inc. (US), 

and Saint-Gobain Ceramics & 

Plastics Inc. (US) 

▪ Director: École nationale 

supérieure des mines ParisTech*, 

Saint-Gobain Corporation 

(US), Saint-Gobain Corporation 

Foundation Inc. (US), Saint- 

Gobain Performance Plastics 

Corp. (US), Saint-Gobain 

Containers Inc. (US) Solaglas 

Ltd (UK), Saint-Gobain Sekurit 

Hanglas Polska (Poland), Saint- 

Gobain Sekurit Benelux SA 

(Belgium), Saint-Gobain Sekurit 

Italia (Italy), Grindwell Norton Ltd. 

(India), Saint-Gobain Glass India 

Ltd. (India) and Saint-Gobain 

Sekurit India (India), Saint-Gobain 

KK (Japan), Hankuk Glass 

Industries Inc. (South Korea), 

Saint-Gobain Glass Mexico 

(Mexico), Saint-Gobain Sekurit 

Mexico (Mexico), ESSO SAF. 

▪ Member of the Supervisory 

Board: Saint-Gobain Autoglas 

GmbH (Germany), and Saint- 

Gobain Glass Deutschland GmbH 

(Germany) 

▪ Member of the Advisory Board, 

AvanCis GmbH & Co KG 

(Germany)

Name and 



Behdad Alizadeh 

French 

49 

Pardus Europe 

SAS 

21, avenue 

George V 

75008 Paris 

France 

(Member of 

the Board of 

Directors until 

08/17/2010) 

Gérard Blanc 

French 

68 

Marignac Gestion 

SAS 

17, rue Joseph 

Marignac 

31300 Toulouse 

France 

Independent 

Daniel Camus 

French 

58 

151, boulevard 

Haussmann 

75008 Paris 

France 

Independent 

Number 


shares 

held 


First 

appointed 

Start 

of current 


End of 

current term 

of office 

Main 




100 06/20/2008 06/20/2008 08/17/2010 Chairman, Pardus 

Europe SAS 

500 05/21/2007 05/21/2007 Shareholders’ 

Meeting 

called to 

approve 


financial 

statements 

500 05/17/2006 06/03/2010 Shareholders’ 

Meeting to 

be called 

to approve 

the 2013 

financial 

statements 

Chairman and CEO, 

Marignac Gestion SAS 







▪ Partner, Pardus Capital 

Management L.P. 


Board, Atos Origin* 

▪ Member of the Board of 

Directors, Governor’s Committee 

on Scholastic Achievement* 

▪ Managing Director and Head of 

Merchant Banking, Bank of New 

York 


Directors, Caliber Collision 

Centers 


Directors, Mid West Wholesale 

Distribution 

▪ Director, Sogeclair* 

▪ Executive Vice President of 

Operations, Airbus 

Group Executive Vice ▪ Member of the Supervisory 

President in charge of Board: Morphosys (Germany)*, 

International Activities SGL Carbon (Germany)*, Vivendi 

and Strategy, EDF group SA*, EnBW (Germany), Dalkia SA 

until December 1, ▪ Chairman of the Board of 

2010, previously Chief Directors, EDF International* 

Operating Officer in ▪ Director: EDF Energy (UK)*, 

charge of Finance Edison (Italy), and Transalpina di 

and International 

Development, 

EDF group 

until March 29, 2010 

Energia (Italy) 


PAGE 97

4 Corporate 

PAGE 98 



Name and 



Jérôme 

Contamine 

French 

53 

Sanofi- Aventis 

174, avenue de 

France 

75635 Paris 

Cedex 13 

France 

Independent 

Number 


shares 

held 


First 

appointed 


Start 

of current 


End of 

current term 

of office 

2,000 05/17/2006 06/03/2010 Shareholders’ 

Meeting to 

be called to 

approve the 

2013 financial 

statements 

Main 




Executive Vice-President 

and Chief Financial 

Officer, Sanofi-Aventis 





Sanofi-Aventis group 

▪ President, SECIPE* and Sanofi 1* 

▪ Manager, Sanofi 4* and 

Sanofi-Aventis North America* 

▪ CEO: Sanofi-Aventis Europe* and 

Sanofi-Aventis Participations* 

▪ Director: Sanofi Pasteur Holding*, 

Merial Ltd. (UK)*, and Zentiva NV 

(Netherlands) 

Outside Sanofi-Aventis group 

▪ Executive General Manager, Veolia 

Environnement (until January 16, 

2009) 


Directors, VE Services-Ré 

▪ Chairman, VE Europe Services 

(Belgium) 

▪ Director: Veolia Transport, Veolia 

Propreté, VE Services-Ré, Veolia 

UK (UK), Veolia Environmental 

Services Plc (UK), Veolia ES 

Holdings Plc (UK), Veetra, Venac 

(US) 

▪ CEO and Chairman of Venao (US) 

▪ Managing Director, Veolia UK (UK) 

▪ Chairman, VE IT 

▪ Member of the Management 

Board, Vivendi Environnement 

▪ Member of the Supervisory Board: 

Veolia Eau and Dalkia France 

▪ Member: Dalkia’s A and B 

Supervisory Boards 

▪ Director, Rhodia

Name and 



Michel 

de Fabiani 

French 

65 

Franco-British 

Chamber of 

Commerce and 

Industry 

(CCI Franco- 

Britannique) 

31, rue Boissy 

d’Anglas 

75008 Paris 

France 

Philippe Guédon 

French 

77 

Espace 

Développement 

16, rue Troyon 

92316 Sèvres 

France 

Independent 

Michael Jay 

British 

64 

House of Lords 

Westminster 

London SW1A 

OPW United 

Kingdom 

Independent 

Number 


shares 

held 


First 

appointed 

Start 

of current 


End of 

current term 

of office 

500 10/20/2009 10/20/2009 Shareholders’ 

Meeting 

called to 

approve 


financial 

statements 

500 03/31/2003 05/21/2007 Shareholders’ 

Meeting 

called to 

approve 


financial 

statements 

500 05/21/2007 05/21/2007 Shareholders’ 

Meeting 

called to 

approve 


financial 

statements 

Main 

position Main position(s) 



Chairman, Franco- 

British Chamber of 

Commerce and Industry 

(CCI Franco- 

Britannique) 

Managing Partner, 

Espace Développement 

Member of the House of 

Lords in the UK 







▪ Chairman and CEO, BP France 

▪ Regional President Europe, BP 

group 

▪ Vice-President, Europia 

(European Oil Industry 

Association) (Brussels, Belgium) 


Directors, British Hertford 

Hospital Corporation (Levallois, 

France)* 

▪ Founding President: Cercle 

économique Sully, and 

Association for the Promotion of 

Ecological Vehicle (Association 

pour la promotion des véhicules 

écologiques)* 

▪ Director: BP France*, Rhodia 

group*, Vallourec group*, 

EB Trans SA (Luxembourg)*, 

Star Oil Mali, SEMS (Morocco) 

▪ Chairman and Chief Executive 

Officer, Matra 

▪ Chairman of the Supervisory 

Board, Matra Automobile 

▪ Director: Crédit Agricole* and 

EDF* 

▪ Non-executive Director: 

Associated British Foods (ABF)*, 

Candover Investments Plc* 

▪ Independent member of the 

House of Lords* 

▪ Chairman, House of Lords 

Appointments Commission* 

▪ Vice-Chairman, Business 

for New Europe* 

▪ Chairman: Merlin (an international 

medical charity)*, and Culham 

Languages and Sciences (an 

educational charity)* 

▪ Permanent Under Secretary, 

Foreign & Commonwealth Office 

▪ Trustee, British Council 


PAGE 99

4 Corporate 

PAGE 100 



Name and 



Helle 

Kristoffersen 

French 

46 

Total 

2, place Jean 

Millier 

La Défense 6 

92078 Paris 

La Défense 

Cedex 

France 

Independent 

Noëlle Lenoir 

French 

62 

Jeantet et 

Associés 

87, avenue Kléber 

75116 Paris 

France 

Independent 

Number 


shares 

held 


First 

appointed 


Start 

of current 


End of 

current term 

of office 

500 03/22/2007 05/21/2007 Shareholders’ 

Meeting 

called to 

approve 


financial 

statements 

1,000 06/03/2010 06/03/2010 Shareholders’ 

Meeting 

called to 

approve 

the 2013 

financial 

statements 

Main 




Deputy, Vice President 

of Strategy and 

Business Intelligence, 

Total 

Partner, Jeantet et 

associés 





▪ Senior Vice President of Vertical 

Markets, Alcatel-Lucent 

▪ Vice President of Economic 

Analysis, Alcatel group 

▪ Vice President of Corporate 

Strategy, Alcatel-Lucent 

▪ President, Institute of Europe 

(Institut de l’Europe) at HEC* 

▪ Member, American Law Institute*, 

French Academy of Technology*, 

French Association of Women 

Lawyers (Association française 

des femmes juristes)*, High Level 

Group of Company Law Experts 

at the European Commission* 

▪ Director, Generali France* 

▪ Municipal Advisor, Valmondois 

(Val d’Oise, France)* 

▪ Founding Chairman, Cercle 

des Européens* 

▪ Honorary Chairman, les amis 

d’Honoré Daumier* 

▪ Associate Professor, HEC* 

▪ Lecturer, Paris I Panthéon- 

Sorbonne* 

▪ Member of the Steering 

Committee, Association des 

maires de France

Name and 



Georges Pauget 

French 

63 

Economie, 

Finance et 

Strategie S.A.S. 

89 avenue de 

Wagram 

75017 Paris 

France 

Independent 

Number 


shares 

held 


First 

appointed 

Start 

of current 


End of 

current term 

of office 

100 04/10/2007 05/21/2007 Shareholders’ 

Meeting to 

be called 

to approve 


financial 

statements 

Main 




Chairman, Économie, 

Finance et Stratégie 

SAS 







▪ Honorary Chairman of the Board 

of Directors, LCL – Le Crédit 

Lyonnais* 

▪ Chairman: Amundi group* 


Directors, Viel & Cie* 

▪ Chairman: Insead OEE Data 

Service*, and the Institut pour 

l’éducation financière du public 

(IEFP)* 


Board, Eurazeo* 

▪ Chairman, Fédération bancaire 

française (FBF) 

▪ Director: Danone Communities*, 

Club Med*, Banca Intesa 

▪ Representative, Crédit Agricole 

SA at the Club des Partenaires 

of Association TSE (Toulouse 

School of Economics)* 

▪ CEO, Crédit Lyonnais 

▪ Chairman, Crédit Lyonnais 

▪ CEO, Crédit Agricole S.A. 

▪ Chairman, Crédit Agricole 

Corporate and Investment Bank 

▪ Chairman, Finance Innovation 

“Competition Cluster” Europlace* 

▪ Chairman, Projet Monnet for 

European bank cards* 

▪ Scientific Director, and Chair 

of Asset Management, Paris 

Dauphine* 

▪ Associate Professor, Université 

de Paris Dauphine* 

▪ Visiting Professor, University of 

Beijing* 


PAGE 101

4 Corporate 

PAGE 102 



4.A.2. Corporate officers’ experience 

Pascal Colombani is Chairman of the Board of Directors 

and Director of Valeo and Senior Advisor for innovation, 

high technology and energy at the A.T. Kearney strategic 

consultancy firm. He is a member of the French Academy of 

Technology, a Director of Alstom, British Energy Group Plc., of 

Rhodia, and of Energy Solutions Inc. In January 2000, he was 

appointed Managing Director of the French Atomic Energy 

Commission (Commissariat à l’Énergie Atomique – CEA), a 

position that he held until December 2002. The instigator of 

the restructuring of the industrial holdings of the CEA and the 

creation of Areva in 2000, he chaired the Supervisory Board 

of Areva until May 2003. Between 1997 and 1999, he was the 

Director of Technology at the French Ministry for Research. 

Pascal Colombani spent close to 20 years (1978-1997) at 

Schlumberger in various positions, in the US and in Europe, 

before becoming Chairman and CEO of its Japanese 

subsidiary in Tokyo. 

Pascal Colombani is a graduate of the École Normale 

Supérieure de Saint-Cloud, and is a holder of the agrégation 

(a high level teaching qualification) in physics and a doctorate 

in science. 

Jacques Aschenbroich is the Chief Executive Officer and a 

member of the Board of Directors of Valeo. He is a Director 

of École nationale supérieure des mines ParisTech. He held 

several positions in the French administration, including 

serving in the Prime Minister’s Office in 1987 and 1988. He 

then pursued an industrial career in the Saint-Gobain group 

from 1988 to 2008. After having managed subsidiaries in 

Brazil and Germany, he became Managing Director of the Flat 

Glass Division of Compagnie de Saint-Gobain and went on 

to become Chairman of Saint-Gobain Vitrage in 1996. Then, 

as Senior Vice-President of Compagnie de Saint-Gobain from 

October 2001 to December 2008, he managed the flat glass 

and high performance materials sectors as from January 2007 

and, as the Vice-Chairman of Saint-Gobain Corporation and 

General Delegate to the United States and Canada, he directed 

the operations of the group as from September 1, 2007. 

He was also a Director with Esso SAF until June 2009. 

Jacques Aschenbroich graduated in engineering from École 

des mines. 

Gérard Blanc is Chairman and CEO of Marignac Gestion SAS 

and a Director of Sogeclair. Earlier in his career he held the 

position of Executive Vice President of Programs at Airbus 

until 2003 when he was appointed Executive Vice-President 

of Operations, a position he held until 2005. 

Gérard Blanc graduated from HEC business school in Paris. 

Daniel Camus was, until December 1, 2010, Group Executive 

Vice President in charge of International Activities and Strategy at 

EDF group. After working in the chemicals and pharmaceuticals 

industry for 25 years within the Hoechst-Aventis group in 

Germany, the United States, Canada and France, he joined 

the EDF group in 2002, as Chief Operating Officer in charge 

of Finance and International Development. He is a member 


of the Supervisory Boards of Morphosys (Germany), of SGL 

Carbon (Germany) and of Vivendi. 

Daniel Camus is a docteur d’État in economic sciences, a 

holder of the agrégation in management sciences and of a 

Lauréat from the Institut d’Études Politiques de Paris (IEP). 

Jérôme Contamine has been Executive Vice-President and 

Chief Financial Officer of Sanofi-Aventis since March 16, 2009. 

He joined Veolia in 2000 as Executive Vice-President of Finance, 

before becoming Executive Vice-President responsible for 

cross-functional activities in 2002, and Senior Executive Vice- 

President of Veolia Environnement in 2003 until January 16, 

2009. Between 1988 and 2000, he held several financial 

positions within the Elf group including Financing and Treasury 

Director (1991 to 1994), Deputy Director in Europe and the US 

for the Exploration and Production Division, and CEO of Elf 

Norway (1995-1998). In 1999 he was appointed Director of the 

integration group with Total, tasked with reorganizing the new 

merged entity, TotalFinaElf, and in 2000 became Vice-President 

of Continental European and Central Asian Operations for the 

Exploration and Production Division of Total. 

Jérôme Contamine graduated from École Polytechnique, was 

a former student at École nationale d’administration and is 

a special advisor to the French Audit Commission (Cour des 

comptes). 

Michel de Fabiani is the first Frenchman to become 

President, in 2005 and again in 2009, of the Franco-British 

Chamber of Commerce and Industry, an institution founded 

in 1873 to promote and develop business and trade between 

France and the UK. 

He is also a Member of the Board of BP France, the 

Rhodia group, the Vallourec Group and EB Trans/ 

Luxembourg. In addition, he is Chairman of the Board of 

British Hertford Hospital Corporation in Levallois (France) and 

Founding President of the Cercle économique Sully and of the 

Association for the Promotion of Ecological Vehicles. 

After joining the BP group in 1969, he held a number of 

positions in the Nutrition, Chemicals, Finance and Oil sectors in 

Milan, Paris and Brussels. In May 1995, Michel de Fabiani was 

named Chairman and CEO of BP France. In September 1997, 

he was appointed CEO of the BP/Mobil Joint Venture in Europe 

and in 1999, President Europe of the BP group and Vice- 

President of Europia in Brussels until 2004, when he left his 

executive functions after 35 years with the BP group. 

Michel de Fabiani graduated from École des Hautes Études 

Commerciales de Paris. 

Philippe Guédon has been Managing Partner of Espace 

Développement since 2003. 

He joined Simca in 1956 as an After-Sales Service Engineer 

and went on to become a Research Engineer until 1965. 

He then joined Matra, where he also held the position of 

Research Engineer, and subsequently Technical Director until

1983. In that year he was appointed Chairman and Chief 

Executive Officer of Matra – a position he occupied until 2003. 

Philippe Guédon was the designer of the Matra 530, the 

Bagheera, the Rancho, the Murena, the Espace and the 

Avantime. 

In 1956 he graduated as an engineer from Arts et Métiers, 

an engineering school in Angers, France. 

Michael Jay is an independent member of the House of Lords 

in the UK. He is also a non-executive Director of Associated 

British Foods (ABF) and Candover Investments Plc, Chairman 

of the House of Lords Appointments Commission, Chairman 

of Merlin (an international medical charity), and of Culham 

Languages and Sciences (an educational charity), Vice 

Chairman of Business for New Europe and a Director of Crédit 

Agricole and of EDF. 

Michael Jay was also a member of the European Sub- 

Committee on EU Law and Institutions and the House of 

Lords Select Committee on International Institutions. He is 

also a member of, GLOBE, an inter-parliamentary group on 

climate change. 

Between 2002 and 2006 he held the position of Permanent 

Under-Secretary at the UK Foreign Office and in this role was 

Head of the Diplomatic Service. 

In 2005 and 2006 he served as the UK Prime Minister’s 

personal representative at the G8 summits at Gleneagles 

and Saint Petersburg. 

Michael Jay is an Honorary Fellow of Magdalen College, Oxford. 

Helle Kristoffersen is Deputy Vice President of Strategy and 

Business Intelligence at Total. 

She has been Senior Vice-President of Vertical Markets, 

at the Alcatel-Lucent group since January 1, 2009. Until 

December 31, 2008, she was Vice-President of Corporate 

Strategy and Secretary of the Strategy Committee of the 

Alcatel-Lucent group (previously the Alcatel group) which she 

joined in 1994 as Head of Financial Operations. 

Between 1989 and 1991 she worked as an analyst in the 

mergers and acquisitions department at Banque Lazard & 

Cie before joining the Bolloré group where she held the 

following positions: Deputy Financial Director responsible for 

mergers and acquisitions, Head of Operational Strategy for 

the Maritime Division and Head of Mergers and Acquisitions 

reporting to the Chairman and CEO. 

Helle Kristoffersen is a graduate of École Normale Supérieure 

and of École nationale de la statistique et de l’administration 

économique (ENSAE). She also holds a Masters degree in 

econometrics from Université Paris I Panthéon-Sorbonne. 

Noëlle Lenoir is a member of the Conseil d’État (France’s 

highest administrative court) and a partner in the law firm 

Jeantet et associés since 2009. During her career she has 

held some of the highest positions in the French State; as 

well as being the first woman to be appointed as a member 

of the French Constitutional Council (Conseil constitutionnel) 

(1992-2001), she was Deputy Minister of European Affairs 

from 2002 to 2004. Since 2004, Noëlle Lenoir has mainly 

worked as a lawyer with the law firms Debevoise & Plimpton 

LLP (2004-2009) and Jeantet et associés (since 2009). She 

has been a Director of Generali France since 2008. 



Noëlle Lenoir is also Chairman of the Institute of Europe at 

HEC, Associate Professor at HEC, Member of the American 

Law Institute, of the French Academy of Technology, of French 

Association of Women Lawyers and of the High Level Group 

of Company Law Experts at the European Commission, 

Honorary Chairman of les amis d’Honoré Daumier, Founding 

Chairman of the Cercle des Européens. 

Noëlle Lenoir is a lecturer at Université Paris I Panthéon- 

Sorbonne. 

Noëlle Lenoir holds a postgraduate degree in public law and 

is a graduate from Institut d’études politiques de Paris (IEP). 

Georges Pauget is President of Economie Finance et 

Stratégie SAS. He has spent his entire career with the Crédit 

Agricole group where he held the positions of Chief Executive 

Officer and Chairman of the Executive Committee from 

September 2005 to March 1, 2010. He is Honorary Chairman 

of the Board of Directors, LCL – Le Crédit Lyonnais, Chairman 

of Amundi group since December 2009, and Chairman of the 

Board of Directors at Viel & Cie. He is also Chairman of Insead 

OEE Data Service and of the IEFP (Institute for the Financial 

Education of the Public). Georges Pauget is a member of 

the Supervisory Board of Eurazeo, and a Director of Danone 

Communities and of Club Med. He is also Chairman of 

Europlace’s Finance Innovation “Competition Cluster”, a global 

business and research cluster dedicated to financial services, 

and of the Monnet Project on European bank cards. He was 

the permanent representative of Crédit Agricole SA on the 

Supervisory Board of Fonds de garantie des dépôts, as well as 

Chief Operating Officer, member of the Executive Committee 

and Director of the Regional Banks Division of Crédit Agricole 

SA. He has also been Chairman of the Board of Directors of 

LCL – Le Crédit Lyonnais, Chairman of the Board of Directors 

of Calyon, until March 2010, Chairman of the Executive 

Committee of LCL – Le Crédit Lyonnais, and permanent 

representative of LCL – Le Crédit Lyonnais at theFondation de 

France, Chairman of the Executive Committee of Fédération 

bancaire française (FBF) until September 2009, and Chairman 

of the Union des assurances fédérales. 

Georges Pauget holds a Doctorate in economics and a 

Masters in economics with a specialization in econometrics 

from the University of Lyon (Université de Lyon). 

Ulrike Steinhorst has been Chief of Staff of the Executive 

Chairman of EADS, Louis Gallois, since April 2007. Ulrike 

Steinhorst started her career as a technical advisor to the 

Minister of European Affairs in charge of relations with Germany 

during its reunification. From 1990 to 1998, she worked at EDF 

in the International Management Division, then she was Head of 

International Issues then Institutional Issues within the General 

Management of the group, and finally, Head of International 

Subsidiaries in the Industrial Division. In 1999, she joined 

Degussa AG group where she first held the position of Human 

Resources Director of a division, then that of Head of Senior 

Management Career Development at group level. She then 

took charge of the subsidiary Degussa France and became 

responsible for the group’s representation office in Brussels. 

Ulrike Steinhorst graduated from Université Paris II - Panthéon 

and from École nationale d’administration. 


PAGE 103

4 Corporate 

PAGE 104 



4.A.3. Declarations concerning the Group’s corporate officers 

4.A.3.1. Conflicts of interest 

Some corporate officers hold positions as managers and/or 

corporate officers in groups that could sign contracts with Valeo 

in connection with commercial and/or financial operations (as 

financial advisors and/or underwriters and/or lenders). In so 

far as these contracts are negotiated and signed in normal 

conditions, there is no conflict of interest, to the best of the 

Company’s knowledge, between the duties of these corporate 

officers to Valeo and their private interests and/or other duties. 

4.A.3.2. Service contracts between the 

members of the Board of Directors 

and the Company or any of its 

subsidiaries 

With the exception of the regulated agreements described in 

this chapter, section 4.D.2.8, no service contracts have been 

entered into between the members of the Board of Directors 

and the Company or any of its subsidiaries providing for the 

granting of benefits. 

4.A.3.3. Other declarations concerning 

members of the Board of Directors 

To the best of the Company’s knowledge, there are no family 

ties between the members of the Board of Directors. 

As far as the Company is aware, in the past five years no 

member of the Board of Directors has (i) received a conviction 


for a fraudulent offense; (ii) been involved in any bankruptcies, 

receiverships or liquidations, (iii) been issued any official public 

incriminations and/or sanctions by statutory or regulatory 

authorities (including designated professional bodies); or (iv) 

been disqualified by a court of law from acting as a member 

of the administrative, management or supervisory bodies of 

an issuer, or from acting in the management or conduct of 

the affairs of any issuer. 

As far as the Company is aware, none of the members of the 

Board of Directors has agreed to any restrictions concerning 

the disposal of their interests in the Company’s share capital 

within a certain period of time, other than the restrictions 

set down by the applicable laws and regulations or the 

Company’s bylaws. 

In addition, in a letter dated August 17, 2010, Pardus 

Capital Management L.P. (“Pardus”) sent Valeo notice of 

the cancellation of the agreement with Pardus and Behdad 

Alizadeh (“Pardus Agreement”), which was accordingly 

terminated ipso jure after a period of four months, i.e. 

December 18, 2010. (see Chapter 6, section 6.F.6.3.2). 

Other than the declarations of the FSI (see Chapter 6, 

section 6.F.6.3.1.), and since the cancellation of the 

agreement signed between Pardus Capital Management L.P. 

fund (“Pardus”) and Behdad Alizadeh (“Pardus Agreement”), 

no arrangement or agreement has been signed with the main 

shareholders, or with customers or suppliers, in which one of 

them is selected to become a Director of Valeo or a member 

of General Management. 

4.A.4. Executive managers’ transactions in the Company’s shares 

In 2010, Noëlle Lenoir, a Director, acquired 1,000 Company 

shares at a unit price of 27 euros on August 30. Daniel Camus, 

a member of the Board of Directors acquired 300 Company 

shares at a unit price of 26.505 euros on August 31, 2010. 

Michel de Fabiani, a Director, acquired 400 Company shares 

at a unit price of 27.70 euros on 31 August. Philippe Guédon, 

a Director, acquired 400 Company shares at a unit price of 

30.166 euros on September 13, 2010. Helle Kristoffersen, 

a Director, acquired 300 Company shares at a unit price of 

39.175 euros on November 8, and 100 Company shares at 

a unit price of 39.210 euros on November 9, 2010. Pascal 

Colombani, Chairman of the Board of Directors, acquired 

500 Company shares at a unit price of 38.50 euros on 

November 10, 2010. Gérard Blanc, a member of the Board 

of Directors acquired 350 Company shares at a unit price 

of 39.39 euros on November 10. Michael Jay, a Director, 

acquired 400 Company shares at the unit price of 37.7964 

euros on November 12, 2010.

4.B. Compensation of corporate officers 

4.B.1. Executive corporate officers 

At its meeting on March 20, 2009, the Board of Directors 

decided to separate the duties of Chairman of the Board and 

Chief Executive Officer, acting on the recommendation of the 

Appointment, Compensation and Governance Committee 

and following the resignation of Thierry Morin as Chairman 

and Chief Executive Officer. The Board then appointed Pascal 

Colombani to be Chairman of the Board of Directors and 

Jacques Aschenbroich to be Chief Executive Officer. 

At its meeting on January 20, 2011, Valeo’s Board of Directors 

decided, acting on the recommendation of the Appointment, 

Compensation and Governance Committee, to maintain 

the separation of the duties of Chairman of the Board and 

Chief Executive Officer, subject to the renewal of Pascal 

Colombani’s and Jacques Aschenbroich’s terms of office. 

4.B.1.1. Compensation of Pascal Colombani 

for his role as Chairman 

of the Board of Directors 

The Board of Directors sets the compensation paid by Valeo 

to Pascal Colombani, the Chairman of the Board of Directors, 

based on recommendations made by the Appointment, 

Compensation and Governance Committee. 

4.B.1.1.1. Fixed compensation and benefits in kind 

The Board of Directors decided that Pascal Colombani 

would receive a fixed annual compensation of 250,000 euros 

as Chairman of the Board of Directors. In 2010, Pascal 

Colombani was paid 250,000 euros as compensation for 

his role as Chairman of the Board of Directors (compared 

with 195,564 euros in 2009). 

4.B.1.1.2. Variable compensation 

Pascal Colombani does not receive any variable 

compensation. 

4.B.1.1.3. Attendance fees 

Pascal Colombani does not receive attendance fees. 


Compensation of corporate offi cers 

In 2009, Pascal Colombani was paid 11,700 euros in 

attendance fees for the period in which he was a Director, 

before being appointed Chairman of the Board of Directors. 

After his appointment as Chairman, the Board of Directors 

decided at its meeting on April 9, 2009, acting on on the 

recommendation of the Appointment, Compensation and 

Governance Committee, that the Chairman of the Board 

would not be paid attendance fees. 

4.B.1.1.4. Compensation paid by companies 

controlled by Valeo 

Pascal Colombani does not receive any compensation by 

companies controlled by Valeo. 

4.B.1.1.5. Stock options and performance shares 

During 2010, no stock options or performance shares 

were granted to Pascal Colombani (no stock options or 

performance shares were granted to Pascal Colombani in 

2009). 

Performance shares are in the form of free shares as detailed 

in Article L. 225-197-1 of the French Commercial Code (Code 

de commerce). 

4.B.1.1.6. Pension plans 

Pascal Colombani is not covered by a supplementary pension 

plan for his role in the Valeo Group. 

4.B.1.1.7. Severance payments 

Pascal Colombani is not entitled to severance payments. 

4.B.1.1.8. Compensation paid to the Chairman of the 

Board of Directors over the last two years 

The following tables show the compensation paid and the 

options and shares granted to Pascal Colombani over the 

last two years. 


PAGE 105

4 Compensation 

PAGE 106 


of corporate offi cers 

Summary of compensation paid and options and shares granted to Pascal Colombani 

(in euros) 2009 2010 

Compensation 207,264 250,000 

Value of options granted during the year 0 0 

Value of performance shares granted during the year 0 0 

TOTAL 207,264 250,000 

Summary of compensation paid to Pascal Colombani 

(in euros) 

Amount owed Amount paid Amount owed Amount paid 

Fixed compensation 195,564 195,564 250,000 250,000 

Variable compensation 0 0 0 0 

Exceptional compensation 0 0 0 0 

Attendance fees 11,700 11,700 0 0 

O/w attendance fees paid by Valeo 11,700 11,700 0 0 

O/w attendance fees paid by controlled companies 0 0 0 0 

Benefits in kind 0 0 0 0 

TOTAL 207,264 207,264 250,000 250,000 

Stock options granted to Pascal Colombani during the year 

Plan no.and date 

Type of option 

(purchase/ 

subscription) 


Value of options 

according to the 

method used 

for consolidated 

accounts 

2009 2010 

Number of options 

granted during the 

year Strike price Exercise period 

Not applicable Not applicable Not applicable 0 Not applicable Not applicable 

Stock options exercised by Pascal Colombani during the year 

Plan no. and date 


exercised during 

the year Strike price 

Not applicable 0 Not applicable 

Performance shares granted to Pascal Colombani 

Performance shares granted by the 

Annual Shareholders’ Meeting during 

the year to Pascal Colombani by 

Valeo or any Group company 

Plan no. 

and date 

Number 

of shares 

granted 

during the 

year 

Value of 

shares 

according 

to method 

used for 

consolidated 

accounts 

Acquisition 

date 

Shares 

available 

as at 

Performance 

requirements 

Not applicable 0 Not applicable Not applicable Not applicable Not applicable

Performance shares that became available to Pascal Colombani 

Allocations of stock options – information concerning stock options 

Not applicable. 

Employment contract, supplementary pension plans and benefits 

4.B.1.2. Compensation of Jacques 

Aschenbroich for his role as Chief 

Executive Officer 

The Board of Directors sets the compensation paid by Valeo to 

Jacques Aschenbroich, the Chief Executive Officer, based on 

recommendations made by the Appointment, Compensation 

and Governance Committee. Jacques Aschenbroich does 

not have an employment contract with the Valeo Group. 

The CEO’s overall compensation is determined taking into 

account the supplementary retirement plan from which he 

benefits (see section 4.B.1.2.6). 

4.B.1.2.1. Fixed compensation and benefits in kind 

At its meeting on April 9, 2009, the Board of Directors set 

Jacques Aschenbroich’s fixed annual compensation at 

850,000 euros. 

At the same meeting, the Board also decided to grant 

coverage to Jacques Aschenbroich under the unemployment 

insurance fund for Company managers, the mandatory 

health, death and disability insurance plan, and insurance 

in case of death, disability or accidents occurring during 

business travel. In 2010, Valeo paid Jacques Aschenbroich 

fixed compensation of 867,009 euros (compared with 

689,550 euros in 2009). This consists of fixed compensation 

Employment 

contract 

Plan no.and date 



Number of 

shares that 

became available 

during the year 

Acquisition 

requirements 


Supplementary 

pension plans 

Compensation 

or benefits 

owed or likely 

to be owed on 

termination 

or change of 

position 

of 850,000 euros (compared with 664,919 euros in 2009) 

and 17,009 euros (compared with 24,631 euros in 2009) as 

benefits in kind. 

4.B.1.2.2. Variable compensation 

Payments 

relating to noncompetition 

clause 


Chairman of the Board of Directors 

First appointed as a Director: 05/21/2007 

Term of office began: 03/20/2009 

Term of office ended: Shareholders’ Meeting called to 

approve the 2010 financial statements No No No No 

After consulting the Committee of Wise Men (Comité des 

sages), (a body set up by the French employers’ Federation 

(MEDEF) to contribute to the proper application of the 

principles of restraint, fairness and consistency in executive 

managers’ pay that can be consulted by Boards of Directors, 

Compensation Committees and Shareholders’ Meetings) and 

in keeping with the recommendation of the Appointment, 

Compensation and Governance Committee, the Board of 

Directors, at its meeting on July 29, 2009, decided that the 

variable compensation to be paid to Jacques Aschenbroich 

for 2009 shall be pro-rated in consideration of his appointment 

on March 20, 2009, and that it shall depend on the following 

criteria: 

quantitative criteria for up to 90% of fixed compensation, 

including: (i) Group liquidity and renewal of lines of credit, 

(ii) Group free cash flow before restructuring costs and 

financial expenses, (iii) positive Group operating margin in 

the second half of the year, (iv) EBITDA and (v) amounts 

invested (property, plant and equipment and R&D) during 

the year; 


PAGE 107


PAGE 108 



qualitative criteria for up to 30% of the fixed compensation, 

including: (i) simplification and strengthening of the 

organizational structure and (ii) the new strategy for Valeo 

up to 2015. 

The cap on variable compensation was set at 120% of 

Jacques Aschenbroich’s fixed compensation. However, in 

view of the economic climate, the Board decided that, if the 

application of these criteria resulted in variable compensation 

greater than 60% of fixed compensation, this variable 

component would be capped at 60% of fixed compensation. 

At its meeting on February 24, 2010, the Board of Directors 

noted that Jacques Aschenbroich’s variable compensation 

would exceed 60% of his fixed compensation according to 

the criteria. Therefore, the Board decided, in keeping with 


and Governance Committee and the rules on pay caps cited 

above, that Jacques Aschenbroich’s variable compensation 

for 2009 would be capped at 60% of his fixed compensation. 

Consequently, it stood at 398,952 euros. 

At the same meeting, the Board of Directors decided that the 

variable compensation to be paid to Jacques Aschenbroich 

for 2010 would depend on: 

quantitative criteria, including: (i) operating margin, (ii) 

operating cash flow, (iii) orders booked by the Group, and 

(iv) net income; 

qualitative criteria including: (i) quality of financial 

communications and (ii) implementation of a strategy for 

Valeo. 

The amounts of variable compensation expressed as a 

percentage of basic fixed compensation are as follows: 

operating margin: 0 to 30%; 

operating cash flow: 0 to 15%; 

orders booked: 0 to 20%; 

net income: 0 to 15%; 

The amounts for the qualitative criteria are 0% to 15% for 

the quality of financial communications and 0% to 25% for 

implementation of a strategy. 

The cap on variable compensation was set at 120% of 

Jacques Aschenbroich’s fixed compensation. 

At its meeting on February 24, 2011, the Board of Directors 

noted that all the quantitative and qualitative criteria had been 

met. The Board noted that the application of these criteria 

would set Jacques Aschenbroich’s variable compensation 

for 2010 at 120% of his fixed compensation, i.e. 1,020,000 

euros (compared with 398,952 euros in 2009). 

At the same meeting, the Board of Directors, acting on 


and Governance Committee, decided that the variable 

compensation to be paid to Jacques Aschenbroich for 2011 

would depend on: 

quantitative criteria, including: (i) operating margin, (ii) 

operating cash flow, (iii) net income, (iv) the ROCE and (v) 

orders booked by the Group; 


qualitative criteria, including: (i) quality of financial 

communications and (ii) strategic vision. 

The amount of variable compensation as a percentage of 

the basic fixed compensation would be from 0% to 15% for 

each quantitative criterion: 

For the qualitative criteria, the quality of the financial 

communication was attributed a value of 0% to 10%, and 

strategic vision was attributed a value of 0% to 35% of fixed 

compensation. 

The cap on variable compensation for 2011 was set at 120% 

of Jacques Aschenbroich’s fixed compensation. 

4.B.1.2.3. Attendance fees 

In 2010, no attendance fees were paid to Jacques 

Aschenbroich for his directorship at Valeo. At its meeting 

of April 9, 2009, the Board of Directors, acting on the 


Governance Committee, decided that the Chief Executive 

Officer would not be paid attendance fees because of his 

terms of office within the Group. 

4.B.1.2.4. Compensation paid by companies 

controlled by Valeo 

In 2010, Jacques Aschenbroich did not receive any 

compensation from companies controlled by Valeo. At its 

meeting of April 9, 2009, the Board of Directors, acting on 

the recommendation of the Appointment, Compensation and 

Governance Committee, decided that the Chief Executive 

Officer would not be paid attendance fees because of his 

terms of office within the Group. 

4.B.1.2.5. Stock options and performance shares 

At its meeting on June 24, 2010, the Board of Directors 

decided the allocation de 100,000 stock purchase options 

and of 50,000 performance shares to Jacques Aschenbroich. 

Performance shares are in the form of free shares as detailed 

in Article L. 225-197-1 of the French Commercial Code. 

All the stock purchase options and 50% of the performance 

shares granted to the CEO are conditional upon the 

achievement of a level of operating margin for 2010 fixed by 

the Board of Directors and which must be higher than the 

annual guidance. 

Allocation of the remaining 50% of the performance shares is 

also conditional on achieving the target operating margin for 

2011 and on renewal of Jacques Aschenbroich’s appointment 

as a Director by the Company’s Shareholders’ Meeting held to 

approve the accounts for the financial statements for the year 

ended December 31, 2010. In addition, all the performance 

shares granted to Jacques Aschenbroich provided that his 

term of office as Chief Executive Officer has not expired 

the vesting date (the presence condition, however, is to be

waived by the Board of Directors at its discretion unless his 

departure is attributable to gross negligence or misconduct). 

The stock purchase options can only be exercised two years 

after their allocation, provided Jacques Aschenbroich’s term 

of office has not expired on the date they are exercised 

(presence condition, however, to be waived by the Board of 

Directors at its discretion unless his departure is attributable 

to gross negligence or misconduct). In addition, the shares 

granted to Jacques Aschenbroich are subject to minimum 

holding periods. Any shares he acquires from the exercise 

of his stock purchase options must be held for a minimum 

of four years following their allocation. He shall also keep at 

least 50% of any performance shares granted as registered 

shares until the end of his term of office. 

Lastly, should he exercise the options granted to him, and 

after selling the number of shares necessary for financing the 

exercise of the option and payment of tax, any social security 

contributions and transaction costs, Jacques Aschenbroich 

shall keep at least 50% of the remaining shares resulting 

from exercising said options in registered form until the end 

of his term of office. 

As the use of hedging mechanisms to protect the value of 

options and performance shares is formally prohibited, Valeo 

hereby declares that, to the best of its knowledge, Jacques 

Aschenbroich has not acquired any such hedging instruments 

to cover his options and performance shares. 

The shares to which the purchase options give access and 

the performance shares granted to Jacques Aschenbroich 

during 2010 represented respectively 0.13% and 0.06% of 

the Company’s capital at December 31, 2010. 

4.B.1.2.6. Pension plans 

At its meeting on April 9, 2009, the Board of Directors 

discussed the total compensation of Jacques Aschenbroich 

and agreed to the principle that he would be covered by the 

existing defined-benefit supplementary retirement plan that 

applies to the executive managers of Valeo and its French 

subsidiaries (or the new plan under consideration to replace 

the existing plan), and that he would be credited with five 

additional years of service in view of his age and the fact 

that he is not covered by any other supplementary retirement 

plan at present. This decision was taken out of concern for 

retaining the new Chief Executive Officer and motivating 

him with regard to the Company’s objectives, protecting its 

corporate interest and following market practices. 

However, in view of ongoing changes in laws and 

regulations, the Board decided to defer the implementation 

of a supplementary retirement plan until a later meeting. 

However, the Board did take into consideration the benefit 

of a supplementary retirement plan when it determined the 

total compensation of Jacques Aschenbroich. 

At its meeting on October 20, 2009, the Board of Directors 

decided to admit Jacques Aschenbroich to the new “add- 



on” defined-benefit retirement plan for the Group’s executive 

managers. The main characteristics of this plan are described 

in this chapter, section 4.B.3. 

In view of Jacques Aschenbroich’s age (55 at that time) and 

the fact that he is not covered by any other supplementary 

retirement plan, the decision was made to credit Jacques 

Aschenbroich with an additional five years of pensionable 

service when he took up his new responsibilities. 

The new retirement plan has been in force since January 1, 


4.B.1.2.7. Severance payments 

and non-competition payments 

At its meeting on February 24, 2010, the Board of Directors, 

acting on the recommendation of the Appointment, 

Compensation and Governance Committee and after 

consulting the Committee of Wise Men, decided to make 

Jacques Aschenbroich eligible for severance payments 

that would be paid in the event of termination related to a 

change in control or strategy (except on the grounds of gross 

misconduct in the performance of his duties). 

The amount of benefits will depend on the termination date: 

6 months compensation (fixed and variable) if the 

termination date is in 2010; 

12 months in the event of forced departure in 2011; 

18 months in the event of forced departure in 2012; and 

24 months in the event of forced departure in 2013. 

The termination benefits will be subject to the following 

performance criteria: 

payment of all or part of the exceptional target-based 

bonus at least twice in the last three years (or the last 

year if terminated after one year and the last two years if 

terminated after two years); 

positive net income during the last-fiscal year; 

operating margin during the last-fiscal year exceeding 

3.6%; 

gross margin during the last-fiscal year exceeding 16%; 

a ratio of new orders to original equipment sales exceeding 

1.3 on average over the previous two fiscal years (or the 

last year if terminated after one year). 

The compensation used to calculate the termination benefits 

will be the average compensation (fixed and variable) paid for 

the two fiscal years preceding the departure (or the previous 

fiscal year if the departure occurs in 2010). For the purposes 

of this calculation, compensation paid for 2009 shall be 

deemed to be the compensation that would have been paid 

for a full year. 


PAGE 109


PAGE 110 



The total amount of termination benefits to be paid will be 

calculated according to the following scale: 

if 5 criteria were met: Jacques Aschenbroich would receive 

100% of the termination benefits; 







if fewer than 2 criteria were met: Jacques Aschenbroich 

would receive 0% of the termination benefits; 

The Board will reduce the termination benefits calculated 

above by 20% if a plan for significant job cuts is introduced in 

the year preceding the termination of Jacques Aschenbroich’s 

employment. 

The termination benefits owed will be paid in a single payment 

within a month of the Board of Directors’ assessment of the 

fulfillment of the criteria for receiving the termination benefits. 

The Board of Directors also reserved the right to require 

Jacques Aschenbroich to abide by a non-competition clause. 

If the Company invokes this clause, Jacques Aschenbroich 

shall be prohibited from working in any way for an automotive 

equipment manufacturer or, more generally for any of Valeo’s 

competitors. The clause shall apply for 12 months after the 

end of his term of office as Chief Executive Officer of Valeo 

for any reason. 

If this clause is invoked, Jacques Aschenbroich will be 

given a non-competition payment equal to 12 months of 

compensation (the same compensation used to calculate 

the termination benefits). The payment will be made in equal 

monthly installments over the entire period to which the noncompetition 

clause applies. 

The Company retains the right to waive the non-competition 

clause, in which case no payment will be owed. 

If the Company invokes the non-competition clause, the 

amount owed will be offset against the severance payments. 

For example, the maximum amounts to be paid to Jacques 

Aschenbroich in the form of a non-competition indemnity 

and/or severance payments would be as follows: 

Termination with noncompetition 

clause 

invoked 



clause 

waived 

Termination in 2010 12 months 6 months 

Termination in 2011 12 months 12 months 



If the non-competition clause is invoked, Jacques 

Aschenbroich will receive at least the amount of the noncompetition 

indemnity, and the amount due under the noncompetition 

clause and the severance payments will be paid: 

(i) up to the amount owed under the non-competition clause, 

in accordance with the relevant payment rules set out for 

same, (ii) in addition to, where applicable, any surplus owed 

under the payment rules for the severance payments. 

At its meeting on February 24, 2011, the Board of Directors, 


Compensation and Governance Committee, decided to 

renew the severance payments for a period of 24 months as 

from 2013, subject to the renewal of Jacques Aschenbroich’s 

directorship by the Shareholders’ Meeting called to approve 

the financial statements for the year ended December 31, 

2010 and the renewal of his term of office as Chief Executive 

Officer. 

At its meeting on February 24, 2011, the Board of Directors, 


Compensation and Governance Committee, also noted 

that the non-competition indemnity to which Jacques 

Aschenbroich is entitled will be maintained without any 

modification, subject to the renewal of his directorship by 

the Shareholder’s Meeting called to approve the financial 

statements for the year ended December 31, 2010, and the 

renewal of his term of office as Chief Executive Officer by the 

Board of Directors at its meeting following the Shareholders’ 

Meeting. 

Thus, were the Company to exercise the non-competition 

indemnity, the potential amount due would continue to be 

offset against his severance payments, such that, depending 

on the circumstances, the maximum amount likely to be paid 

to Jacques Aschenbroich on the basis of the non-competition 

clause plus the termination benefits would be equal to: 


clause 

invoked 


clause 

waived 


Termination in 2012 

Termination in 2013 

18 months 18 months 

and beyond 24 months 24 months

4.B.1.2.8. Compensation paid to the Chairman of the Board of Directors over the last two years 



The following tables show the compensation paid and options and shares granted to Jacques Aschenbroich over the last two 

years. 

Summary of compensation paid and options and shares granted to Jacques Aschenbroich 

(in euros) 2009 2010 

Compensation 1,088,502 1,887,009 

Value of options granted during the year 0 695,000 

Value of performance shares granted during the year 0 1,065,000 

TOTAL 1,088,502 3,647,009 

Summary of compensation paid to Jacques Aschenbroich 

(in euros) 


Amount owed Amount paid Amount owed Amount paid 

Fixed compensation 664,919 664,919 850,000 850,000 

Variable compensation 398,952 0 1,020,000 398,952 

Exceptional compensation 0 0 0 0 

Attendance fees 0 0 0 0 

o/w attendance fees paid by Valeo 0 0 0 0 

o/w attendance fees paid by controlled companies 0 0 0 0 

Benefits in kind (1) 24,631 24,631 17,009 17,009 

TOTAL 1,088,502 689,550 1,887,009 1,265,961 

(1) Company car, annual contribution to the unemployment insurance fund for Company managers and annual contribution to pension fund. 

Stock options granted to Jacques Aschenbroich during the year 


Type of option 

(purchase/ 

subscription) 

Value of options 

according to the 

method used 

for consolidated 

accounts 


granted during the 

year Strike price Exercise period 

06/24/2010 Purchase €695,000 100,000 €24,07 Until 06/24/2018 (1) 

(1) Obligation to hold 50% of shares until the end of his term of office. The performance conditions to which these options are subject are set out in section 4.B.1.2.5 

Stock options exercised by Jacques Aschenbroich during the year 

Plan no. and date Number of options exercised during the year Strike price 



PAGE 111


PAGE 112 



Performance shares granted to Jacques Aschenbroich 

Performance shares granted by the 

Shareholders’ Meeting during the 

year to Jacques Aschenbroich by 

Valeo or any Group company Plan no. and 

date 


Number 

of shares 

granted 

during the 

year 

Value of 

shares 

according 

to method 

used for 

consolidated 

accounts 

Acquisition 

date 

Shares 

available 

as at 

Performance 

requirements 

(1) (2) 

06/24/2010 50,000 1,065,000 06/24/2012 06/24/2014 

(1) Obligation to keep at least 50% of any shares granted as registered shares until the end of his term of office. 

(2) The performance conditions to which these performance shares are subject are indicated in section 4.B.1.2.5. 

Performance shares that became available to Jacques Aschenbroich 


Allocations of stock options – information concerning stock options 

Not applicable. 

Employment contract, supplementary pension plans and benefits 



First appointment: 03/20/2009 

Term of office began: 03/20/2009 

Term of office ended: Shareholders’ 

Meeting called to approve the 2010 

financial statements 

Employment 

contract 

Number of shares 

that became available 


Acquisition 

requirements 


Supplementary 

pension plans 

Compensation or 

benefits owed or 

likely to be owed 

on termination or 

change of position 

Payments relating 

to non-competition 

clause 

No Yes Yes Yes 

The pension plan 

covering Jacques 

Aschenbroich 

is detailed in 

sections 4.B.1.2.6 and 

4.B.3. 

See section 4.B.1.2.7 

for a description of 

these benefits. 

See section 4.B.1.2.7 

for a description of 

these payments

4.B.2. Non-executive Directors 

Non-executive Directors are paid attendance fees. Until 

July 27, 2010, the Board of Directors allocated attendance 

fees as follows: each Director was paid a fixed annual portion 

of 17,000 euros plus a variable portion of 1,900 euros per 

meeting attended, with an overall cap of 30,300 euros per 

year. Directors who also sit on a Board Committee, except 

for the Committee Chairmen, were paid an additional variable 

portion of 1,900 euros per meeting attended, with an overall 

cap of 17,100 euros per year. Each Director who chaired a 

committee was paid a fixed portion of 7,000 per year and a 

variable portion of 1,900 euros per meeting attended, with 

an overall cap of 24,100 euros per year. 

The rules regarding the payment of attendance fees were 

amended by the Board of Directors on July 27, 2010, namely: 

each Director will be paid a fixed annual fee of 22,000 euros 

plus 2,000 euros per meeting attended. Directors who also sit 

on a Board Committee (other than the Committee Chairmen) 

will be paid an additional 2,000 euros per committee meeting 

attended. Each Director who chaired a Committee (other 

than the Audit Committee) will be paid a fixed fee of 12,000 

euros per year plus 2,000 euros per meeting attended, and 

the Chairman of the Audit Committee will receive 15,000 

euros per year plus 2,000 euros per meeting attended. These 

payments are not capped; but in the event the total cost of 



these provisions should exceed the budget of 600,000 euros 

approved by the Ordinary and Extraordinary Shareholders’ 

Meeting of June 28, 2008, a rule of three is applied according 

to the following formula: (amount of Director’s fees paid to 

a particular Director divided by the sum of all fees paid to all 

Directors) multiplied by 600,000 euros. 

Directors’ fees are paid every six months, according to the 

following attendance rules: 

the variable portion is paid based on the number of 

meetings that the Director has actually attended; and 

the fixed portion is paid if the Director’s average attendance 

rate at Board meetings or, where applicable, at Committee 

meetings is equal to or greater than 50% during the 

preceding half-year, otherwise Directors receive no 

attendance fees. 

Apart from Pascal Colombani and Jacques Aschenbroich, no 

Board member was paid any other compensation or benefits 

by the Company during the year. No Director was granted 

stock options or free shares. No Director holds any stock 

purchase or stock subscription options. 


PAGE 113


PAGE 114 



Summary of attendance fees and other compensation paid to corporate officers 

Attendance fees paid to Board members amounted to 397,400 euros in 2010, compared with 363,550 euros in 2009. Attendance 

fees were distributed as follows: 

(in euros) 

Executive Directors 

2009 2010 2009 2010 

Pascal Colombani 11,700 0 195,564 250,000 

Jacques Aschenbroich 0 0 689,550 1,265,961 

Thierry Morin (1) Non-executive Directors 

0 0 3,514,201 0 

Behdad Alizadeh (2) 0 0 0 0 

Gérard Blanc 37,900 45,000 0 0 

Daniel Camus 45,050 54,000 0 0 

Jérôme Contamine 52,500 50,500 0 0 

Michel de Fabiani (3) 8,050 44,900 0 0 

Pierre-Alain De Smedt (4) 9,350 0 0 0 

Philippe Guédon 41,700 52,800 0 0 

Michael Jay 43,600 37,200 0 0 

Helle Kristoffersen 36,000 43,100 0 0 

Noëlle Lenoir (5) 0 22,900 0 0 

Georges Pauget 41,700 47,000 0 0 

Erich Spitz (6) 36,000 0 0 0 

TOTAL 363,550 397,400 4,399,315 1,515,961 


Attendance fees 

Other compensation 

(fixed, variable or exceptional 

compensation, benefits in kind) 

(1) Thierry Morin resigned from his positions as CEO on March 20, 2009. 

(2) Behdad Alizadeh waived his attendance fees and resigned from his directorship on August 17, 2010. 

(3) Michel de Fabiani was co-opted to be a Director on October 20, 2009. 

(4) Pierre-Alain De Smedt resigned his directorship on February 12, 2009. 

(5) Noëlle Lenoir was appointed Director by the Shareholders’ Meeting of June 3, 2010, on the recommendation of the Board of Directors of February 2, 2010. 

(6) Erich Spitz resigned his directorship on October 20, 2009. 

4.B.3. Other Group executive managers 

The other executive managers are members of the Operations 

Committee, which is made up of 13 members and the Chief 

Executive Officer. Total gross compensation paid to the 

members of the Operations Committee (excluding the Chief 

Executive Officer but including two members who ceased 

their functions in November and December 2010) came to 

9,283,265 euros in 2010 (compared with 6,550,955 euros in 

2009) of which 6,273,000 euros as fixed compensation and 

2,843,027 euros as variable compensation, 113,471 euros 

as benefits in kind and 53,767 euros in Service Medals. 

The Board of Directors of June 24, 2010, on the 

recommendation of the the Appointment, Compensation 

and Governance Committee, decided to grant 280,000 stock 

purchase options and 75,000 free shares to the members of 

the liaison committee, of which 177,500 options and 55,500 

free shares to the members of the Operational Committee 

(excluding Jacques Aschenbroich). 

All the stock purchase options and 50% of the free shares 

granted to members of the liaison committee are conditional 

upon the achievement of a level of operating margin for 2010 

fixed by the Board of Directors and which must be higher 

than the annual guidance. The allocation of the remaining 

50% of free shares is also conditional upon a target level of 

operating margin for 2011. 

At the recommendation of the the Appointment, Compensation 

and Governance Committee, the Board of Directors decided,

at its meeting on October 20, 2009, to implement a new 

supplementary pension plan to replace the existing plans 

for Group executives in place at the date the new plan is 

implemented, including Jacques Aschenbroich. Entitlements 

under the old plan were frozen on December 31, 2009. 

The main characteristics of the new supplementary pension 

plan are as follows: 

the supplementary pension is capped by the nature of 

the plan at 1% of the reference salary per year of service 

starting on January 1, 2010, up to a limit of 20%; 

the supplementary pension is capped with regard to the 

base used to calculate the entitlements: the supplementary 

pension, all plans combined, is capped at 55% of the 

reference salary, based exclusively on the fixed salary. 

The reference salary is the average of the last 36 months 

of basic fixed compensation and excludes the variable 

component and exceptional compensation. Valeo, or one 

4.B.3.1.1. Stock options granted and exercised during the year 

Options granted to the ten employees receiving the 

highest number of options and options exercised by the 

ten employees exercising the highest number of options, 

excluding corporate officers 

Options granted in 2010 by Valeo and/or other Group 

companies to the ten employees of the issuer or other Group 

companies receiving the highest number of options. 

Options exercised in 2010 by the ten employees of the issuer 

or other Group companies holding the highest number of 

options. 

Number of 

options granted 

/exercised 



of its subsidiaries must be the beneficiary’s last employer 

before settlement of the pension entitlements, but the 

beneficiary does not need to be present in the Group at the 

time of the settlement. Jacques Aschenbroich was credited 

with five years of service upon taking up his tenure (see 

section 4.B.1.2.6). 

4.B.3.1. Information about stock options 

and performance shares 

The policies governing the award of stock options and free 

shares are detailed in the report by the Chairman of the Board 

of Directors relating to their composition, the application of 

the principle of gender balancing, the conditions under which 

the Board’s work is prepared and organized as well as internal 

control and risk management procedures. 

Weighted 

average strike 

price Expiration date 

Date of Board 

meeting 

150,000 €24,07 06/24/2018 06/24/2010 

190,869 (1) €31.14 (1) 11/25/2010 

03/03/2011 

11/06/2011 

11/08/2012 

11/17/2013 

11/20/2014 

11/15/2015 

11/25/2002 

3/03/2003 

11/06/2003 

11/08/2004 

11/17/2005 

11/20/2006 

11/15/2007 

(1) Of which 1,369 that result from the public share buyback offer and simplified public tender offer; and, in accordance with applicable regulations and the contract 

governing the OCEANE bond issue, the conversion/exchange ratio applicable to the bonds was increased from 1 share per bond to 1.013 shares per bond. 

4.B.3.1.2. Performance shares 

Free shares granted to the ten employees receiving the highest number of free shares, 

excluding corporate officers 

Number of free 

shares granted 

Date of Board 

meeting 

Shares granted free of consideration in 2010 by Valeo to the ten employees of Valeo or related entities, 

as defined in Article L.225-197-2 of the French Commercial Code, who received the highest number of 

such shares 47,500 06/24/2010 


PAGE 115

4 Organization 

PAGE 116 


and operation of the Board of Directors 

4.B.3.2. Pensions and other postemployment 

benefits 

At December 31, 2010, the total amount of provisions 

set aside by Valeo and its subsidiaries for the payment of 

pensions and other post-employment benefits to members of 

the Board of Directors and the Group’s executive managers 

came to 13 million euros, as opposed to 10 million euros at 



of the Board of Directors 

On March 31, 2003 the Company’s Board of Directors 

adopted a set of Internal Procedures, which have since been 

amended. The last change took place on April 9, 2009. 


At December 31, 2010 total provisions set aside and the total 

amount paid by Valeo and its subsidiaries for these benefits to 

former Board members and other executive managers of the 

Group came to, respectively, 5.2 million euros, as opposed to 

3.9 million euros at December 31, 2009 and 96,600 euros, 

as opposed to 93,000 euros at December 31, 2009. 

These Internal Procedures define the Board’s operating 

methods and the rules to be followed when appointing Board 

members. They are applied alongside the provisions set down 

by law, the applicable regulations and the Company’s bylaws. 

4.C.1. Composition of the Board and appointments of Directors 

The Company’s bylaws provide that the Board of Directors 

must comprise at least 3 and no more than 18 members 

(subject to any amendments in line with changes in the 

applicable law). The Board of Directors had 11 members 

at December 31, 2010, and has 12 members at the date 

hereof. There are no Directors elected by employees or any 

non-voting Directors. 

Directors are appointed by shareholders at Shareholders’ 

Meeting on the recommendation of the Board of Directors, 

which in turn receives proposals from the Appointment, 

Compensation and Governance Committee. 

Members of the Board are appointed for renewable four-year 

terms which expire at the close of the Ordinary Shareholders’ 

Meeting called to approve the accounts for the year in which 

their terms expire. They can be re-elected. Where one or 

more seats on the Board become vacant due to the death 

or resignation of any member or members, the Board of 

Directors may appoint new members on a temporary basis 

until the next Shareholders’ Meeting, in accordance with the 

applicable legislation. The term of office of the Chairman may 

not exceed his term of office as a Director. 

At its meeting of January 20, 2011, the Board of Directors 


Compensation and Corporate Governance Committee, 

decided to propose to the Shareholders’ Meeting convened 

to approve the financial statements for the year ended 

December 31, 2010, the renewal of Directors’ terms of office 

by a system of rotation, in order to avoid the simultaneous 

renewal of members of the Board and promote a harmonious 

renewal of Directors. 

The proportion of Board members over the age of 70 may 

not exceed one-third. This age limit applies both to individuals 

and to permanent representatives of legal entities holding 

directorships. The Chairman’s term of office expires at the 

latest at the close of the Shareholders’ Meeting held to 

approve the financial statements for the year in which he/ 

she reaches his/her seventieth birthday. 

Directors may be removed from office by the Annual 

Shareholders’ Meeting at any time.

4.C.2. Roles and responsibilities of the Board of Directors 

The Board of Directors represents all shareholders. It 

determines the Company’s overall business strategies and 

oversees their implementation. Subject to the powers directly 

vested in Shareholders’ Meetings and within the limits of the 

corporate purpose, the Board of Directors deals with any 

issues relating to the efficient functioning of the Company 

and makes any and all decisions relating thereto. The Board 

devotes one meeting per year to reviewing the Group’s overall 

industrial and financial strategies. 

The Chairman convenes meetings of the Board as often as 

required in the general interest of the Company and at least 

six times a year. The dates for the meetings are issued at the 

beginning of each year at the latest. In 2010, the Board of 

Directors held nine meetings with a 99% average attendance 

rate (in person or by proxy). 

Board meetings are chaired by the Chairman of the Board 

or, in his absence, by any Director who has been temporarily 

authorized to chair Board meetings or a Vice-Chairman. 

Board meetings are only validly constituted if at least half of 

the members are present or deemed present (in accordance 

with the law and the Company’s bylaws), excluding members 

attending by proxy. Decisions are taken based on a 

majority vote of the members present, deemed present, or 

represented, in accordance with the law and the Company’s 

bylaws. Each member who is present or represented has 

one vote and each member present may only represent one 

4.C.3. Directors’ rights and duties – Compensation 

The Board’s Internal Procedures impose certain duties on 

Directors in order to ensure that they are aware of the rules 

and regulations applicable to them, conflicts of interest are 

avoided, they dedicate the necessary time and attention to 

their duties and respect the applicable law relating to multiple 

directorships. 

Members of the Board of Directors are also responsible for 

ensuring that they have all the necessary information to carry 

out their duties. To this end, the Chairman provides Directors 

with the data and documents required in order for them to 

fully perform their duties. 

As compensation for the work carried out by Directors, 

Shareholders’ Meetings may grant an annual fixed amount of 

attendance fees which may be freely allocated by the Board 

among its members. The Board may also grant Directors 

exceptional compensation for specific assignments or tasks 

entrusted to them. The Board of Directors is responsible for 

setting the Chairman’s compensation. 

Article 14 of the Company’s bylaws stipulates that each 

Director must hold at least 100 Valeo registered shares 


Organization and operation of the Board of Directors 

other member. In the case of a split decision, the Chairman 

has the casting vote. 

Minutes are drawn up after each Board Meeting, which are 

signed by the Chairman and one other Director. 

In accordance with its Internal Procedures, the Board of 

Directors includes an assessment of Board performance on 

the agenda of one meeting per year. For 2010, this assessment 

was performed in January 2011. A detailed questionnaire was 

sent to all Directors concerning their assessment of the way in 

which the Board operates and suggestions for improvement. 

The topics covered included the operation, composition and 

the missions of the Board, Directors’ access to information, 

the choice of issues discussed, the quality of the discussions, 

and the general running of the Board Committees. 

The Directors’ replies were analyzed internally and the 

findings were presented at the Appointment, Compensation 

and Governance Committee’s meeting held on January 19, 

2011. The report was also presented and discussed at the 

Board meeting held on January 20, 2011. The results of this 

assessment are provided in the report of the Chairman of the 

Board of Directors on the composition and the application 

of the principle of gender balancing, on the conditions for 

preparing and organizing the work conducted by the Board 

and on internal control and risk management procedures that 

are set forth in section 4.D.2.6. 

throughout his or her term of office. The Board of Directors’ 

meeting of July 27, 2010, held on the recommendation of the 


decided to adjust this minimum shareholding threshold to 

500 shares. A proposal to amend the Company’s bylaws 

accordingly will be submitted for the approval of the 

Shareholders’ Meeting convened to approve the financial 

statements for the year ended December 31, 2010. 

On accepting their position, each member of the Board 

of Directors and the Group’s Executive Management 

team agrees to a Code of Conduct in relation to trading 

in the Company’s securities. This Code sets out the legal 

and regulatory provisions applicable to them in relation to 

declaring transactions concerning those securities. 

It also specifies the periods during which members of the 

Board and the Group’s Executive Management team are 

prohibited from trading in the Company’s securities and 

reiterates that they are formally prohibited from conducting 

any such transactions based on insider information. 


PAGE 117

4 Organization 

PAGE 118 


and operation of the Board of Directors 

4.C.4. Board Committees 

The Board of Directors has set up committees in order to 

enhance its operation and provide assistance with preparing 

decisions. 

The Board currently has three standing committees – the 

Audit Committee, the Appointment, Compensation and 

Governance Committee, and the Strategy Committee. 


Further details relating to the composition and operation 

of these standing Committees are provided in the report of 

the Chairman of the Board of Directors on the application 

of the principle of gender balancing, the preparation and 

organization of the Board’s work and internal control 

procedures described in section 4.D.2.5.


Report of the Chairman of the Board of Directors 

4.D. Report of the Chairman of the Board of Directors 

on the composition of the Board, the application 

of the principle of gender equality, the conditions 

in which the Board’s work is prepared 

and organized, and the internal control 

and risk management procedures put in place 

by the Valeo Group 

This report of the Chairman of the Board of Directors 

was presented to the Appointment, Compensation and 

Governance Committee (as regards information relating to 

the composition of the Board, application of the principle 

of gender equality, and the conditions in which the Board’s 

work is prepared and organized) and to the Audit Committee 

4.D.1. Composition of the Board of Directors 

The articles of association provide that the Board of Directors 

must have between 3 and 18 members appointed for a 

period of four years. At the beginning of 2010, the Board 

had 11 members. Behdad Alizadeh, Jacques Aschenbroich, 

Gérard Blanc, Daniel Camus, Pascal Colombani, Jérôme 

Contamine, Michel de Fabiani, Philippe Guédon, Michael 

Jay, Helle Kristoffersen and Georges Pauget. 

At its meeting of February 24, 2010, the Board of Directors, 

acting on a recommendation of the Appointment, 

Compensation and Governance Committee, proposed to the 

Shareholders’ Meeting of June 3, 2010 that Noëlle Lenoir be 

appointed as a Director of the Company. 

The Shareholders’ Meeting of June 3, 2010 subsequently 

appointed Noëlle Lenoir as a Director of the Company. 

(as regards information relating to internal control and risk 

management procedures). It was approved by the Board 

of Directors on February 24, 2011, in accordance with 

Article L.225-37 of the French Commercial Code (Code de 

commerce). 

At its meeting of August 19, 2010, the Board of Directors 

acknowledged Behdad Alizadeh’s resignation from his 

directorship, effective as of August 17, 2010. 

Thus, since August 19, 2010, the Board of Directors was 

made up of the following 11 members: Jacques Aschenbroich, 

Gérard Blanc, Daniel Camus, Pascal Colombani, Jérôme 

Contamine, Michel de Fabiani, Philippe Guédon, Michael Jay, 

Helle Kristoffersen, Noëlle Lenoir and Georges Pauget. For 

details of the directorships and other positions performed by 

members of the Board of Directors over the last five years, 

see section 4.A.1.2 of this chapter. 

The Board of Directors meeting of February 24, 2011 decided 

to co-opt Ulrike Steinhorst as a Director of the Company 

to replace Behdad Alizadeh for the remainder of his term 

of office, i.e. until the end of the Shareholders’ Meeting 

convened to approve the 2011 financial statements. 


PAGE 119

4 Chairman 

PAGE 120 


of the Board of Directors’ report 

Summary of the expiration dates of Directors’ terms of office: 

Expiration of term of office Directors whose term of office is due to expire 

Shareholders’ Meeting called to approve the financial 

statements for the year ended December 31, 2010 


Jacques Aschenbroich, Gérard Blanc, Pascal Colombani, Michel de Fabiani, Philippe 

Guédon, Michael Jay, Helle Kristoffersen, Georges Pauget, 


statements for the year ended December 31, 2011 Ulrike Steinhorst 


statements for the year ended December 31, 2013 Daniel Camus, Jérôme Contamine, Noëlle Lenoir 

None of the Directors were elected by employees. 

In accordance with the independence criteria set out in the 

Board’s Internal Regulations, on January 20, 2011 the Board 

of Directors reviewed whether or not its members could 

still be classified as independent. In compliance with the 

AFEP/MEDEF’s Corporate Governance Code for Listed 

Companies (adopted by Valeo), the Board’s Internal 

Regulations classify as independent a Director who has no 

relations whatsoever with the Company, the Group or the 

Group’s management that may compromise his or her ability 

to exercise freedom of judgment. 

In particular, independence is presumed to exist when a 

Director: 

is not an employee or a corporate officer of the Company, 

or an employee or Director of one of its consolidated 

subsidiaries, and has not been in such a position in the 

past five years; 

is not a corporate officer of a company in which the 

Company holds a directorship, either directly or indirectly, or 

in which an employee appointed in that role, or a corporate 

officer of the Company (currently in office or having held 

such office in the past five years), is a Director; 

is not a customer, supplier, investment banker or commercial 

banker that is material for the Company or Group, or for 

which the Company or Group represents a significant 

portion of the business of the Director concerned; 

is not related by close family ties to a corporate officer; 

has not been an auditor of the Company in the past five 

years; 

has not been a Director of the Company for more than 

12 years on the date he/she was appointed to his/her 

current term of office. 

For Directors holding at least 10% of the Company’s capital 

or voting rights, or representing a legal entity that holds such 

a stake, the classification as independent takes into account 

the Company’s share ownership structure and any potential 

conflicts of interest that may exist. 

In application of these criteria, the Board of Directors noted 

that: 

one Director holds the position of Chairman of the Board 

of Directors: Pascal Colombani, and therefore cannot be 

considered independent; 

one Director holds the position of Chief Executive Officer: 

Jacques Aschenbroich, and therefore cannot be considered 

independent; 

one Director’s appointment was put forward by one of the 

Company’s major shareholders, holding more than 10% of 

its capital and voting rights: Michel de Fabiani; given the 

Company’s share ownership structure and the conflicts 

of interest that could arise, Michel de Fabiani may not be 

considered an independent Director; and 

eight Directors are considered independent according to 

the definition set forth in the Internal Regulations: Gérard 

Blanc, Daniel Camus, Jérôme Contamine, Philippe 

Guédon, Michael Jay, Helle Kristoffersen, Noëlle Lenoir 

and Georges Pauget. 

The Board of Directors’ meeting of February 24, 2011 that 

decided to co-opt Ulrike Steinhorst as Director also noted that 

Ulrike Steinhorst is considered independent according to the 

definition established in the Company’s Internal Regulations. 

Application of the principle of equal 

representation of men and women 

on the Board of Directors 

At the beginning of the 2010 fiscal year, Helle Kristoffersen 

was the only woman on Valeo’s Board of Directors. At its 

meeting of February 24, 2010, the Board of Directors, acting 

a recommendation of the Appointment, Compensation and 

Governance Committee, decided to recommended to the 

Shareholders’ Meeting that Noëlle Lenoir be appointed as 

a Director of the Company. Noëlle Lenoir was appointed 

Director by the Shareholder’s Meeting of June 3, 2010 under 

its sixth resolution. This appointment raised the number of 

women on the Board of Directors to two, representing more 

than 18% of the Directors. 

In addition, on February 24, 2011, the Board of Directors, 


Compensation and Governance Committee, decided to 

appoint Ulrike Steinhorst as Director to replace Behdad 

Alizadeh for the remainder of Mr. Alizadeh’s term of office, i.e. 

until the end of the Shareholders’ Meeting called to approve 

the financial statements for the year ending December 31, 

2011.



This appointment raised the number of women on the Board of Directors to three, representing more than 25% of the Directors. 

4.D.2. Preparation and 

organization of the Board 

of Directors’ work 

4.D.2.1. Internal Regulations 

On March 31, 2003 the Board of Directors adopted Internal 

Regulations defining the operation of the Board in addition 

to applicable legal and regulatory requirements and the 

provisions of the Company’s articles of association. Internal 

Regulations have also been drawn up for the Board’s 

committees. 

Pursuant to a decision of the Board of Directors’ meeting 

of February 12, 2009, the Internal Regulations applicable to 

the Audit Committee were amended in line with Executive 

Order 2008-1278 of December 8, 2008 regarding statutory 

auditors. 

The Internal Regulations applicable to the Board and those 

applicable to the Board’s committees were amended 

on April 9, 2009 acting on the recommendations of the 

Appointment, Compensation and Governance Committee 

following the change in governance adopted by the Board on 

March 20, 2009 (separation of the roles of Chairman of the 

Board and Chief Executive Officer of the Company). 

The Company’s Internal Regulations are available on the 

Company’s website (www.valeo.com). 

4.D.2.2. Rules governing the operation 

and organization of the Board, 

and their application 

4.D.2.2.1. Average notice period for 

calling Board meetings 

In accordance with the Internal Regulations, each Director is 

notified of the dates of Board meetings at the beginning of 

each fiscal year at the latest. The average notice period for 

calling a meeting of the Board of Directors is approximately 

ten days. 

4.D.2.2.2. Representation of Directors 

A Director may be represented at Board meetings by another 

Director. The proxy must be given in writing. During the 2010 

fiscal year, seven Directors were represented by proxy at 

Board meetings. 

4.D.2.2.3. The Chairman of Board meetings 

Board meetings are chaired by the Chairman of the Board or, 

in his absence, by a Vice-Chairman or a Director designated 

by the Board of Directors. All nine Board meetings held during 

the 2010 fiscal year were chaired by the Chairman of the 

Board of Directors. 

4.D.2.2.4. Directors’ participation in Board meetings 

The Internal Regulations allow Directors to participate in Board 

meetings by any videoconferencing or telecommunications 

technology that enables them to be identified and ensures that 

they actually participate in the meeting. Accordingly, Directors 

who take part in Board meetings through such means are 

deemed to be present for the purposes of calculating the 

quorum and majority, except at meetings dedicated to the 

preparation of the annual parent company and consolidated 

financial statements and the related management report (as 

provided for in Articles L.232-1 and L.233-16 of the French 

Commercial Code). The Chairman is required to state in the 

relevant notice of meeting whether these methods can be 

used for certain meetings. Directors wishing to participate in 

a Board meeting by these methods must contact the Board 

Secretary at least two working days before the meeting date 

(except in an emergency) in order to ensure that the relevant 

technical information can be exchanged and tests performed 

before the meeting takes place. 

4.D.2.2.5. Frequency of Board meetings and 

average attendance rates of Directors 

In accordance with its Internal Regulations, the Board of 

Directors meets at least six times a year. In 2010, it met on 

nine occasions. 

The average attendance rate of the members of the Board 

of Directors (in person or via proxy) during 2010 was 99%. 

The average attendance rate of the members of the Board 

of Directors in person during 2010 was 90.1%. 

4.D.2.3. Directors’ access to information 

4.D.2.3.1. Directors’ access to information 

Each Director is given all the information required to perform 

his or her duties. The agenda for any upcoming Board 

meeting and details of agenda items requiring upfront 

analysis, are provided within a sufficient time frame (except 

in an emergency), and at least 48 hours before the meeting, 

provided that this is not incompatible with confidentiality 

requirements. The information provided to Directors may 

include the Group’s business plan, a market analysis for 

each of its main businesses, key performance indicators 


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used by General Management, minutes of committee 

meetings, extracts from performance charts used by General 

Management, information about business activity in the 

coming months (orders, etc.), cash flow forecasts covering 

at least three months and indicators used to monitor working 

capital. 

Induction seminars on the specificities of the Company, 

its business lines and its industry sector are given to new 

Directors. 

4.D.2.3.2. Guests of the Board 

During the year, the General Counsel, as Secretary to the 

Board, attended all Board meetings. Out of the nine Board 

of Directors’ meetings, the Group’s Chief Financial Officer 

and Human Ressources Director attended seven meetings 

and one meeting respectively. Lastly, the Group’s Statutory 

Auditors attended certain Board meetings. 

4.D.2.4. Role of the Board 

The principal role of the Board of Directors is to determine 

the Company’s business strategies and ensure that they are 

implemented effectively. 

In 2010, the Board of Directors notably: 

reviewed the Group’s strategy, examined and approved 

provisional management data and the budget for 2010; 

approved the appointment of two statutory auditors; 

assessed the Board’s operating procedures and considered 

whether the Directors could be considered as independent 

in light of the criteria in the Internal Regulations; 

established all the items of the compensation to be awarded 

to the Chief Executive Officer (variable compensation, 

termination benefits, non-competition indemnities) in 

accordance with the recommendations of the AFEP/ 

MEDEF Code (adopted by Valeo); 

reviewed in several stages and adopted the free shares and 

stock options plans for employees and corporate officers; 

approved the candidacy of Noëlle Lenoir as a Company 

Director; 

approved the financial statements and consolidated 

financial statements of the Group for the 2009 fiscal year; 

approved the management report and the Chairman’s 

report on the conditions in which the Board’s work is 

prepared and organized, and the internal control and risk 

management procedures put in place by the Group for 

2009; 

convened the Ordinary and Extraordinary Shareholders’ 

Meeting; 

decided to implement a share buyback program; 


authorized the Chief Executive Officer to issue sureties, 

endorsements and guarantees; 

authorized the Chief Executive Officer to issue bonds (within 

or outside the scope of the rollover of the EMTN program); 

discussed staff training and the negotiation of a Groupwide 

agreement for the prevention of workplace stress and 

psychosocial risks; 

examined strategic questions; 

established new rules for the allocation of attendance fees; 

modified the composition of the Appointment, 

Compensation and Governance Committee and of the 

Audit Committee; 

decided to modify the minimum number of shares to be 

held by each Director; 

duly noted the resignation of a Director (Behdad Alizadeh) 

and the cancellation of the agreement concluded between 

the Company and Pardus Capital Management L.P.; 

examined the interim financial statements, reviewed the 

forecasts for the second half of 2010, analyzed strategic 

transactions and considered Valeo’s position in terms of 

competitiveness; 

examined the shareholder structure, notably in view of the 

withdrawal of Pardus Capital Management L.P.; and 

reviewed the quarterly consolidated financial statements 

and the forecasts and projections prepared for each period. 

4.D.2.5. Committees created by the Board 

The Board of Directors has set up several committees in 

order to enhance its operation and provide assistance with 

preparing its decisions. These include: the Audit Committee, 

the Appointment, Compensation and Governance 

Committee, and the Strategy Committee. 

The work of the Audit Committee, the Appointment, 

Compensation and Governance Committee, and the Strategy 

Committee in 2010 was presented on a regular basis to the 

Board of Directors throughout the year in the form of reports. 

4.D.2.5.1. Audit Committee 

At the beginning of 2010 the Audit Committee had four 

members, the majority of whom were independent Directors 

as defined by the criteria set out in the Internal Regulations: 

Daniel Camus (Chairman of the Audit Committee) Gérard 

Blanc, Michel de Fabiani and Georges Pauget. 

On July 27, 2010 the Board of Directors acknowledged 

Gérard Blanc’s request to withdraw from the Audit Committee. 

Since that date, the Audit Committee has been composed 

of Daniel Camus (Chairman of the Audit Committee), Michel 

de Fabiani and Georges Pauget.

The Audit Committee therefore has three members including a 

Chairman appointed by the Board of Directors. The Chairman 

and the Chief Executive Officer are not members of the Audit 

Committee but may be invited to attend its meetings. 

All of the members of the Audit Committee except Michel de 

Fabiani are independent Directors according to the criteria 

set out in the Internal Regulations. 

The role and responsibilities of the Audit Committee are as 

follows: 

a) As regards the financial statements, the role of the 

Committee is to: 

• monitor any issues linked to the preparation of financial and 

accounting information, 

• ensure that the accounting policies adopted to prepare the 

consolidated and parent company financial statements are 

relevant, consistent and properly applied, and that material 

transactions are accounted for appropriately, 

• monitor the statutory audit work on the parent company 

and consolidated financial statements, and at the end 

of the reporting period, review and give an opinion 

on the draft interim and annual parent company and 

consolidated financial statements prepared by the Finance 

Department before they are presented to the Board. For 

this purpose, all draft financial statements and any other 

useful documentation and information should be provided 

to the Audit Committee before the Board reviews the 

financial statements. In examining the financial statements, 

the Audit Committee should also be provided with (i) a 

memorandum from the Statutory Auditors outlining the 

key findings and accounting options applied; and (ii) a 

memorandum from the Chief Financial Officer describing 

the Company’s risk exposure and material off balance 

sheet commitments. The Audit Committee meets with 

the Statutory Auditors, the Chief Financial Officer (without 

General Management being present, where appropriate), 

and with General Management, to discuss depreciation, 

amortization, provisions, goodwill, consolidation principles 

and accounting policies, among other subjects, 

• examine the draft interim financial statements, interim 

reports and reviews of operations and earnings prior to 

publication, as well as any financial statements drawn up 

in connection with specific transactions (contributions, 

mergers, market operations, interim dividend payments, 

etc.), 

• analyze the scope of consolidation, and the reasons why 

certain companies may not have been consolidated, 

• assess the risks to which the Company is exposed and any 

material off-balance-sheet commitments, and 

• review the accounting and financial treatment of acquisitions 

or disposals in excess of 50 million euros per transaction, 

based on the opinion of the Strategy Committee where 



appropriate, and review any key transactions which could 

have given rise to a conflict of interests. 

b) In the area of internal control and auditing, the Audit 

Committee’s role is to: 

• follow up on any issues that arise in relation to internal 

control over financial and accounting information, and 

monitor the process used to prepare financial information, 

• check that Internal Procedures are defined for compiling 

and verifying information and for ensuring that data is 

reliable and reported in a timely manner, and review the 

Statutory Auditors’ work plan, 

• ensure that internal control and risk management systems 

are effective, 

• meet with the people in charge of Internal Audit and Internal 

Control, give an opinion on how their departments are 

organized, and keep informed of their work program, 

• have the Group’s external auditors report on the conditions 

in which their work is carried out and on Management’s 

comments on a regular basis, 

• assess compliance with rules, principles and 

recommendations guaranteeing the independence of 

Statutory Auditors and monitor their independence, 

particularly by examining the risks to independence and 

the measures taken to mitigate such risks, in conjunction 

with the Statutory Auditors, 

• supervise the procedure for selecting or renewing 

statutory audit engagements based on the best, and not 

the lowest, tender; express an opinion on the statutory 

audit fees requested; give an informed opinion on the 

choice of Statutory Auditors and inform the Board of its 

recommendation, and 

• obtain details of fees paid by the Company and the Group 

to the statutory audit firm and its network, and of any 

services provided in direct relation to the statutory audit 

engagement; ensure that the amount or percentage that 

such fees represent in relation to the total revenues of the 

audit firm or network does not risk compromising their 

independence. 

c) As regards financial policies, the role of the Audit 

Committee is to: 

• be informed by General Management of the Group’s 

financial position and of the methods and techniques used 

to define financial policy; to keep regularly abreast of the 

main thrusts of the Group’s financial strategy, 

• review upfront any documents to be published on 

accounting and financial matters or events liable to affect 

the Group’s financial position or outlook, 

• give an opinion on the resolutions submitted to 

Shareholders’ Meetings relating to the parent company or 

consolidated financial statements, 


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• at General Management’s request, give an opinion on 

any resource allocation decisions which, in light of the 

beneficiaries or because of potential conflicts of interest, 

could give rise to difficulties in interpretation as to their 

compliance with legislative rules and the Company’s 

articles of association, and 

• review any financial or accounting matter referred to it by 

the Chairman, the Board, General Management or the 

Statutory Auditors, as well as any conflicts of interest which 

are brought to its attention. 

The Audit Committee liaises mainly with General Management, 

the Finance Department and with the Company’s Statutory 

Auditors. The Committee may interview members of the 

Finance Department or the Statutory Auditors without the 

members of General Management or executive corporate 

officers being present, if it decides to do so and has previously 

notified the Chairman and Chief Executive Officer. The 

Committee can also interview third parties if this is deemed 

useful for the achievement of its assignments. It may also 

seek the assistance of external auditing experts whenever it 

needs to. The Audit Committee must be provided with regular 

summaries of internal audit reports. 

The Audit Committee met four times in 2010 with an 

attendance rate of 86.6%. 

During these meetings, the Committee: 

examined the financial statements for the year ended 

December 31, 2009 and notably: 

• reviewed the accounting framework, R&D costs, the 

accounting treatment of a contracted loans, quality risk, 

pension commitments, the results of impairment tests on 

tangible and intangible assets and the early retirement 

commitments linked to asbestos exposure, 

• met with the Statutory Auditors, 

• examined the “Internal Control and Risk Management” 

section of the Chairman’s report for 2009; 

organized the accounting audits of the first quarter of 2010 

by the statutory auditors and reviewed the consolidated 

results of the Group for the first quarter of 2010; 

examined the reports compiled by the statutory auditors; 

examined the draft press releases relating to the 2009 

financial statements and 2010 first quarter sales; 

examined the consolidated financial statements drawn 

up at June 30, 2010 and notably the accounting 

framework, charges in the scope of consolidation and 

certain material income and expense items (quality risks, 

restructuring costs relating to the implementation of Valeo’s 

new organization, pension commitments and litigation 

concerning the early pension plan for employees exposed 

to asbestos); interviewed the Internal Audit Director and 

reviewed the Internal Audit Department’s activities in the 


first half of 2010, particularly as regards internal control and 

risk management; 

examined the schedule of the Internal Audit Department’s 

assignments for 2010; and 

examined a mapping of the risks to which Valeo is exposed. 

The Audit Committee’s work was in line with the objectives 

defined for it during the year. The Audit Committee’s work was 

facilitated by the presence of Statutory Auditors, the Group’s 

Chief Financial Officer and the Group Accounting Director at all 

of the Audit Committee’s meetings. The Committee was also 

assisted by the work of the Internal Audit Department. The 

presentations made by the Statutory Auditors mainly related 

to the findings of their audit of the annual parent company and 

consolidated financial statements and their limited review of 

the interim financial statements. The Audit Committee did not 

have any reservations concerning the annual parent company 

and consolidated financial statements or the interim financial 

statements presented to it. 

4.D.2.5.2. Appointment, Compensation 

and Governance Committee 

In accordance with its Internal Regulations, which were 

not modified during 2010, the majority of the Committee’s 

members must be independent Directors as defined by 

the criteria set out in the Internal Regulations. The acting 

Chairman is involved in the Committee’s work, except where 

deliberations concern the Chairman’s compensation or the 

renewal of his term of office. 

At the start of 2010, the Appointment, Compensation 

and Governance Committee had five members: Jérôme 

Contamine (Chairman of the Appointment, Compensation 

and Governance Committee), Behdad Alizadeh, Philippe 

Guédon, Michael Jay and Georges Pauget. All members 

were considered independent with the exception of Behdad 

Alizadeh. 

On July 27, 2010, the Board of Directors, acting on a 

recommandation of the Appointment, Compensation and 

Governance Committee, decided to appoint Noëlle Lenoir 

as a member of the Appointment, Compensation and 

Governance Committee. 

At its meeting of August 19, 2010, the Board of Directors 

acknowledged the resignation of Behdad Alizadeh, effective 

as of August 17, 2010. 

Since that date, the Appointment, Compensation and 

Governance Committee has been composed of five 

members, all independent: Jérôme Contamine (Chairman 

of the Appointment, Compensation and Governance 

Committee), Philippe Guédon, Michael Jay, Noëlle Lenoir 

and Georges Pauget.

According to its Internal Regulations, the roles and 

responsibilities of the Appointment, Compensation and 

Governance Committee include the following: 

a) concerning compensation: 

• studying and making recommendations concerning the 

compensation paid to corporate officers (particularly in 

relation to the variable portion of their compensation and 

any benefits due), 

• recommending to the Board an aggregate amount of 

attendance fees payable to Directors and the rules for 

allocating amounts to each Director, and 

• giving its opinion to the Board of Directors on the Group’s 

general stock option policy and specific stock option 

grants. 

b) concerning selection and appointments: 

• preparing the composition of the Company’s governing 

bodies, by making recommendations regarding the 

appointment of corporate officers and Directors and 

ensuring that it is in a position to recommend to the Board 

possible successors should any unforeseen vacancies 

arise, and 

• reviewing the status of each Director in light of the 

independence criteria set out in the Board’s Internal 

Regulations. 

c) concerning corporate governance: 

• analyzing how the Board and its committees operate, and 

• assessing and updating corporate governance rules and 

in particular, ensuring that the assessment of the Board’s 

operation is carried out in line with market practices. 

In carrying out its duties, the Committee may meet with 

Company and Group Executive Management teams. Where 

appropriate, and provided that it previously informs the 

Chairman of the Board and the Chief Executive Officer, it 

may be assisted by independent consultants. 

The Appointment, Compensation and Governance 

Committee met four times in 2010 with an attendance rate 

of 90%. During these meetings, the Committee: 

played a part in the Board’s self-assessment of its work 

during 2009, with the assistance of an independent 

consultant; 

examined and issued recommendations concerning the 

different items of the compensation of the Chief Executive 

Officer (variable income due for 2009 and 2010, amounts 

due under the non-competition clause and the termination 

benefits, grant of stock options and free shares); 

examined the policy for granting stock options and free 

shares to employees and corporate officers; 

examined the succession plan and the development of the 

Group’s senior managers; 

examined the independence of Directors in 2009; 

launched a process to find a new Director to complement 

the Board of Directors’ existing expertise; 



issued proposals concerning the renewal of Board of 

Directors’ terms of office on a rotating basis. 

examined the application by the Company of the 

AFEP-MEDEF’s Corporate Governance Code; 

put forward recommendations concerning the composition 

of the Board’s Special Committees; 

proposed the modification of the minimum number of 

shares to be held by each Director; 

issued proposals concerning the renewal of attendance 

fees, and 

examined the proposal from the tribunal to commence 

mediation in the framework of the proceedings against the 

former Chairman and Chief Executive Officer, Thierry Morin. 

4.D.2.5.3. Strategy Committee 

The Strategy Committee was created further to a decision 

of the Board of Directors on October 20, 2008. Internal 

Regulations were drawn up for the Committee in accordance 

with the Board’s decision of December 16, 2008, on the 


Governance Committee. The Internal Regulations, approved 

by the decision of the Board of Directors’ meeting of April 9, 

2009 following the separation of the roles of Chairman of 

the Board and Chief Executive Officer pursuant to a Board 

decision of March 20, 2009, were not amended in 2010. 

The Strategy Committee comprises several Directors and a 

Chairman appointed by the Board. 

At the beginning of 2010 the independent Directors of the 

Strategy Committee were: Gérard Blanc, Philippe Guédon 

and Helle Kristoffersen; and the following non-independent 

Directors: Pascal Colombani and Behdad Alizadeh. Pascal 

Colombani was Chairman of the Strategy Committee. 

On April 9, 2009, acting on a recommendation of the 


the Board of Directors decided that the Chief Executive Officer 

Jacques Aschenbroich would be the permanent guest of the 

Strategy Committee without becoming a member thereof. 

On August 19, 2010, the Board of Directors acknowledged 

the resignation of Behdad Alizadeh. Since that date, the 

Strategy Committee has thus been composed of four 

members including a Chairman, appointed by the Board 

of Directors, and the permanent guest, the Chief Executive 

Officer of the Company. 

In accordance with its Internal Regulations, the Strategy 

Committee is responsible for submitting to the Board its 

opinions and recommendations on: 

the review of the Group’s key strategies, market trend 

information, analyses of research activities, competition 

benchmarking and the resulting medium and long-term 

outlook for the business; and 

the analysis of the Group’s development projects, particularly 

external growth transactions involving acquisitions and 

disposals of subsidiaries, equity investments and other 


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assets, and any investments or borrowings in excess of 

50 million euros per transaction. 

In conjunction with the Chairman of the Board, the Committee 

may invite other Directors to participate in its debates or 

meet with any other competent person (senior management, 

independent consultants) to discuss matters dealt with by 

the Committee. 

The Strategy Committee met four times in 2010 with an 

attendance rate of 100%. 

During these meetings, the Committee: 

examined the “Equity Story” of the Company; 

organized a strategy seminar for face-to-face discussions 

with heads of the Business Groups; and 

discussed the Group’s medium-term business plan for 2011- 

2015 and identified key strategic areas for development. 

4.D.2.6. Assessment of the operation of the 

Board of Directors 

In accordance with the Internal Regulations, the Board carried 

out a self-assessment to review its operating procedures 

and ensure that its meetings are properly organized. The 

assessment for 2010 was conducted internally using 

a questionnaire. All of the Directors responded to the 

questionnaire either in writing or orally. 

The questionnaires set out to compile Directors’ assessments 

of how the Board functions, along with any suggestions they 

might have to improve it. The issues covered include the 

operation and composition of the Board, the information 

provided to the Directors, the variety of subjects dealt with, 

the quality of discussions and the general functioning of the 

Board’s Specialized Committees. 

The Directors’ responses were analyzed internally and set 

out in a report submitted to the Appointment, Compensation 

and Governance Committee meeting of January 19, 2011. 

The report was presented and discussed at the Board of 

Directors’ meeting of January 20, 2011. In their responses to 

the questionnaire, Directors said that they were very satisfied 

with the operations of the Board and its Committees. The 

members of the Board of Directors concluded that even if 

certain areas for improvement were highlighted, an analysis 

of the questionnaire responses clearly showed that the work 

within the Board of Directors and its Committees is conducted 

in a climate of trust and is shared and appreciated by all. 

4.D.2.7. Shareholdings and corporate 

transactions 

The Company’s articles of association required each Director 

to hold at least 100 shares throughout his or her term of 

office. 


The Board of Directors’ meeting of July 27, 2010, acting 

on a recommandation of the Appointment, Compensation 

and Governance Committee, decided to adjust this 

minimum shareholding threshold to 500 shares. A proposal 

to amend the Company’s articles of association accordingly 

will be submitted for the approval of shareholders at the 

Shareholders’ Meeting convened to approve the 2010 


On accepting their positions, each member of the Board of 

Directors and the Group’s executive managers agreed to 

a Code of Conduct in relation to trading in the Company’s 

securities. Under the terms of the Code, Directors must 

declare to the Group’s General Counsel any transactions that 

they have entered into involving the Company’s securities, 

within the five trading days following the transaction. In 

accordance with applicable regulations, this information must 

then be disclosed to the Autorité des Marchés Financiers 

(AMF), and subsequently made public in accordance with 

the provisions of the AMF’s General Regulations. 

4.D.2.8. Agreements governed by Article 

L. 225-38 of the French Commercial 

Code already approved by the 

Shareholders’ Meeting which 

continued to be implemented during 

the year 

The following agreements, already approved by a 

Shareholders’ Meeting, were pursued during 2010: 

the agreements authorized by the Board of Directors at its 

meeting of December 15, 2005 and entered into between 

the Company and the Group’s operating subsidiaries in 

connection with trademark royalties agreements; 

the agreement authorized by the Board of Directors at its 

meeting of May 21, 2008 and entered into between the 

Company, Pardus Capital Management L.P. and Behdad 

Alizadeh. This agreement was lawfully cancelled on 

December 18, 2010, as the interest held by Pardus had 

fallen to below 8% of the Company’s share capital. 

The following agreements contain commitments to the Chief 

Executive Officer, Jacques Aschenbroich: 

a commitment in the form of life insurance in the event of 

death, incapacity or any accidents that may occur as a 

result of business travel (Board of Directors’ decision of 

April 9, 2009). This policy is described in section 4.B.1.2.1 

of this Chapter; 

a commitment in the form of a defined benefits pension 

plan (Board of Directors’ decision of October 20, 2009). 

This plan is described in sections 4.B.1.2.6 and 4.B.3 of 

this Chapter; 

commitments in the form of termination benefits and noncompetition 

indemnities (Board of Directors’ decision of

February 24, 2010). Acting on a recommendation of the 


and based on the opinion of the Committee of Wise Men 

(a body introduced by the MEDEF to oversee executive 

compensation practices), the Board of Directors meeting 

of February 24, 2010 decided that in the event of his 

departure from the Group due to a change in control or 

strategy (i.e. forced resignation or removal from his position 

as Chief Executive Officer), Jacques Aschenbroich would 

be entitled to severance payments, except in the event of 

gross professional misconduct. The Board also decided 

that he would be bound by a non-competition clause 

in the event of his departure from the Company. These 

commitments were approved by the Shareholders’ Meeting 

of June 3, 2010. Both the termination benefits and the noncompetition 

indemnities that could potentially be paid to 

Jacques Aschenbroich in the event of his departure are 

described in section 4.B.1.2.7 of this Chapter. 

A special report by the Statutory Auditors will be drawn up in 

respect of the regulated agreements described in this section. 

4.D.2.9. Agreements subject to the approval 

of Shareholders’ Meeting 

Severance payments (Board decision 

dated February 24, 2011) 

At its meeting on February 24, 2011, the Board of 

Directors, acting on a recommandation of the Appointment, 

Compensation and Governance Committee, decided 

to extend the terms of the termination benefits offered to 

Jacques Aschenbroich to 24 months of fixed and variable 

compensation beyond 2013, subject to the renewal of his 

term of office as Director by the Shareholder’s Meeting 

convened to approve the 2010 financial statements and the 

renewal of his term of office as Chief Executive Officer. This 

commitment will be the subject of a special report by the 

Statutory Auditors. 

At the same meeting of February 24, 2011, on a 

recommandation of the Appointment, Compensation 

and Governance Committee, the Board of Directors also 

acknowledged that the non-competition clause and its 

associated payments, the defined-benefit supplementary 

pension plan and life insurance in case of death, incapacity or 

accidents that may occur as result of business travel, to which 

Jacques Aschenbroich is entitled, will be maintained without 

any modification, subject to the renewal of his term of office as 

Director by the Shareholders’ Meeting convened to approve 

the 2010 financial statements and the renewal of his term of 

office as Chief Executive Officer by the Board of Directors’ 

meeting following the aforementioned Shareholders’ Meeting. 



4.D.2.10. Authorizations granted regarding 

sureties, endorsements 

and guarantees governed 

by Article R.225-35 of the French 

Commercial Code 

Further to a decision dated February 24, 2010, on a 


Governance Committee, the Board of Directors authorized 

the Chief Executive Officer – and any person so designated by 

the Chief Executive Officer – to issue sureties, endorsements 

and guarantees in the Company’s name up to a maximum 

amount of 40 million euros for a period of 12 months, and to 

maintain in effect the sureties, endorsements and guarantees 

previously issued. 

During 2010, no further commitments of this type were made 

by the Company’s Chief Executive Officer. 

Further to a decision dated February 24, 2011, on a 


Governance Committee, the Board of Directors authorized 

the Chief Executive Officer – and any person so designated by 

the Chief Executive Officer – to issue sureties, endorsements 

and guarantees in the Company’s name up to a maximum 

amount of 40 million euros for a period of 12 months, and to 

maintain in effect the sureties, endorsements and guarantees 

previously issued. 

4.D.2.11. General management of 

the Company and limitations on the 

powers of the Chief Executive Officer 

Acting on a recommendation of the Appointment, 

Compensation and Governance Committee, at its meeting 

of March 20, 2009 the Board of Directors decided to separate 

the roles of Chairman and Chief Executive Officer. This 

decision was designed to (i) improve the way in which the 

Board operates by appointing a single person solely to chair 

Board meetings; and (ii) reinforcing the Board’s oversight of 

the general management of the Company. 

The Chairman of the Board organizes and presides over 

the work performed by the Board of Directors and presents 

a report on its activities to the Shareholders’ Meeting. He 

ensures the correct functioning of the Company’s managerial 

and administrative bodies and makes sure that all the 

Directors are able to perform their duties. 

The Chief Executive Officer has the widest possible powers 

to act in the Company’s name, within the limits provided for 

by law, the Company’s articles of association or its Internal 

Regulations. The Chief Executive Officer also represents 

the Company in its relations with third parties or in any legal 

proceedings. 


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Compensation and Governance Committee, at its meeting 

of March 20, 2009 the Board of Directors decided that the 

Chief Executive Officer must obtain the prior agreement of the 

Board for acquisitions or disposals of any subsidiaries, equity 

investments or other assets, or for any other investments 

exceeding 50 million euros per transaction. 

This sole limitation to the powers of the Chief Executive 

Officer is reflected in the Internal Regulations as amended 

pursuant to a decision of the Board on a recommendation of 

the Appointment, Compensation and Governance Committee 

on April 9, 2009. 

The way in which General Management operates was not 

modified during 2010. 

At its meeting on January 20, 2011, the Board of Directors 

decided to continue to separate the functions of Chairman 

of the Board and Chief Executive Officer, subject to renewal 

of the term of office of Pascal Colombani and Jacques 

Aschenbroich as Directors. 

4.D.2.12. Stock purchase/subscription option 

and performance shares policy 

4.D.2.12.1. Stock purchase/subscription option policy 

At its meeting on June 24, 2010, the Board of Directors, on 

a recommandation of the Appointment, Compensation and 

Governance Committee, decided to grant one million stock 

purchase options to the employees and corporate officers of 

the Company, breaking down as follows: (i) 100,000 stock 

purchase options to the Chief Executive Officer, (ii) 280,000 

stock purchase options to the members of the liaison 

committee, and (iii) 620 000 stock purchase options to the 

Company’s employees, with some of these options being 

reserved for high-potential categories. 

All the stock purchase options granted to the Chief Executive 

Officer and members of the liaison committee are conditional 

upon the achievement of a level of operating margin for the 

fiscal year 2010 set by the Board of Directors and which must 

be higher than the annual guidance. The stock purchase 

options may only be exercised after a minimum of two years 

from their allocation date, and on condition, in the case of 

the Chief Executive Officer, that he is still in office on the 

date on which they are exercised (this presence condition 

may however be lifted by the Board of Directors, unless the 

Chief Executive Officer’s departure is attributable to gross 

negligence or misconduct). In addition, the shares granted 

to Jacques Aschenbroich are subject to minimum holding 

periods. Any shares he acquires from the exercise of his 

purchase options must be held for a minimum of four years 

following their allocation. 

Lastly, should he exercise the options allocated to him, and 

after selling the number of shares necessary for financing the 

exercise of the option and payment of tax, any social security 


contributions and transaction costs, Jacques Aschenbroich 

shall keep at least 50% of the remaining shares resulting 

from exercising said options in registered form until he leaves 

office. 

At December 31, 2010, the stock subscription options in 

circulation represented 1.2% of the Company’s share capital 

and the stock purchase options represented 5.6%. The 

combined total amounted to 6.8% of the Company’s share 

capital. 

The Board of Directors has taken into consideration the 

AFEP-MEDEF recommendations published on October 6, 2008 

regarding the compensation of executive corporate Officers of 

companies whose shares are admitted to trading on a regulated 

market when awarding stock purchase or stock subscription 

options. This is in line with the Board’s decision of December 16, 

2008 to base any future stock awards on the AFEP/MEDEF’s 

Corporate Governance Code which incorporates these 

recommendations (see section 4.D.3). 

The stock purchase/subscription options granted 

and exercised during 2010 are presented in detail in 

section 4.B.3.1.1 of this Chapter. 

4.D.2.12.2. Performance shares policy 

At its meeting on June 24, 2010, the Board of Directors, 


and Governance Committee, decided to grant 400,000 

free shares to the employees and corporate officers of the 

Company, breaking down as follows: (i) 50,000 free shares 

to the Chief Executive Officer, (ii) 75,000 free shares to the 

liaison committee members and (iii) 275,000 free shares to 

the Company’s employees, with some of these free shares 

being reserved for high-potential categories. 

As part of this grant, 133,000 free shares were allocated to 

the Company’s personnel on the basis of three free shares 

per employee and not subject to any performance conditions. 

50% of the free shares granted to the Chief Executive Officer 

and members of the liaison committee are conditional upon 

the achievement of a level of operating margin for the financial 

year 2010 set by the Board of Directors and which must 

be higher than the annual guidance. The allocation of the 

remaining 50% of free shares is conditional upon a target level 

of operating margin for 2011. In addition, all the free shares 

attributed to Jacques Aschenbroich are conditional upon 

his being Chief Executive Officer on the vesting date (this 

presence condition may be lifted by the Board of Directors, 

unless the Chief Executive Officer’s departure is attributable 

to gross negligence or misconduct). 

In addition, the shares granted to the Chief Executive Officer 

are subject to minimum holding periods. He must hold 50% 

of the vested free shares in the form of registered shares until 

the termination of his functions with Valeo. 

The free shares in circulation at December 31, 2010 

represented 0.5% of the Company’s share capital.

The Board of Directors has taken into consideration the 

AFEP-MEDEF recommendations regarding the compensation 

of executive corporate Officers of companies whose shares 

are admitted to trading on a regulated market, in line with the 

Board’s decision of December 16, 2008 to base any future stock 

awards on the AFEP-MEDEF’s Corporate Governance Code 

which incorporates these recommendation. (see section 4.D.3). 

Detailed information regarding free shares is presented in 

section 4.B.3.1.2. 

4.D.2.13. Principles and rules adopted 

by the Board in respect 

of compensation and other benefits 

granted to executive corporate 

officers and members of the Board 

of Directors in 2010 

Apart from Pascal Colombani and Jacques Aschenbroich, no 

Board member was paid any compensation or benefits other 

than attendance fees by the Company during 2010. For more 

information on this subject, see section 4.B.2 of this chapter. 

4.D.2.13.1. Basis for allocating attendance fees 

In accordance with the Internal Regulations applicable to the 

Board of Directors and the Appointment, Compensation and 

Governance Committee, the Board has powers to decide how 

attendance fees should be allocated. It bases its decision on 

the rules recommended by the Appointment, Compensation 

and Governance Committee for allocating these fees and 

the suggested amounts payable to each Director, taking into 

account Directors’ attendance rates at Board and Committee 

meetings. 

Basis for the payment of attendance fees 

until July 27 2010 


Compensation and Governance Committee, the Board of 

Directors’ meeting of December 16, 2008 decided on the 

following allocation of attendance fee for 2009 according to 

the following rules (NB: Behdad Alizadeh indicated that he 

would waive any attendance fees at the Board meeting of 

July 28, 2008): 

(i) each Director received: 

fixed portion: 17,000 euros/year; 

variable portion: 1,900 euros/meeting attended, 

the total capped at 30,300 euros; 

(ii) each Director who is a member (but not Chairman) of a 

Board Committee also received: 

fixed portion: 0; 


the total capped at 17,100 euros; 



(iii) each Director who is also Chairman of a Board Committee 

received: 

fixed portion: 7,000 euros/year, 


the total capped at 24,100 euros. 

Basis for the payment of attendance fees 

since July 27, 2010 

On July 27, 2010, the Board of Directors, on a 

recommandation of the Appointment, Compensation and 

Governance Committee, decided, as of that date, to pay 

attendance fees on the following basis: 

(i) each Director receives: 


variable portion: 2,000 euros/meeting attended; 

(ii) each Director who is a member (but not Chairman) of a 

Board Committee also receives: 

fixed portion: 0; 


(iii) each Director who is a member of a committee (s) and 

Chairman of the Audit Committee also receives: 



(iv) each Director who is a Chairman of a Committee (other 

than the Audit Committee) also receives: 


variable portion: 2,000 euros/meeting attended. 

These payments are not capped; but if the budget of 600,000 

euros is exceeded in any one year, the following formula is 

applied: 

(fees paid to an individual Director/total fees paid to all 

Directors) multiplied by 600,000 euros. 

The amount of attendance fees paid to each Director during 

the year is disclosed in section 4.B.2 of this Chapter. It should 

be noted that the Company’s policy is to pay the full fixed 

portion of attendance fees when the Director’s average 

attendance rate for Board meetings over the previous 

6-month period is at least 50%. Failing this, the full amount 

of the fixed portion is not paid. 

Since February 12, 2009, no corporate officer has received 

attendance fees in respect of the posts he or she holds within 

the Group. 

Acting on the recommendation of the Appointment, 

Compensation and Governance Committee, the Board 

of Directors’ meeting of February 12, 2009 decided that 

attendance fees would no longer be payable to the Chairman 

and Chief Executive Officer for offices held within the 

Group. Similarly, the Board of Directors’ meeting of April 9, 

2009, acting on a recommendation of the Appointment, 

Compensation and Governance Committee, it was decided 

that attendance fees would no longer be payable to the 


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4 Chairman 

PAGE 130 



Chairman or the Chief Executive Officer (if these positions 

are separated) for offices held within the Group. 

4.D.2.13.2. Remuneration paid to executive 

corporate officers 

The compensation packages of the Company’s corporate 

officers are determined by the Board of Directors acting on 

recommendations from the Appointment, Compensation 

and Governance Committee and in compliance with the 

AFEP/MEDEF’s Corporate Governance Code. 

The fixed compensation of each corporate officer was 

established by the Board of Directors’ meeting of April 9, 

2009. The decision applies for an indefinite period and it has 

not been modified since that date. 

The variable compensation of corporate officers is determined 

on a case-by-case basis. No variable compensation is paid 

to the Chairman of the Board. The principles governing the 

variable compensation payable to the Chief Executive Officer 

have been submitted to the MEDEF’s Committee of Wise 

4.D.3. Corporate Governance Code 

The Company applies AFEP-MEDEF’s Corporate Governance 

Code for Listed Companies published in December 2008 

and revised in April 2010. As regards rules on auditor 

independence, the Company refers to the French audit 

profession’s Code of Ethics incorporated into Annex 8-1 of 

Book VIII of the regulatory section of the French Commercial 

Code. 

The following should also be noted: 

directorships are not currently renewed on a rotating basis; 

however, the Board of Directors has decided to propose to 

the Shareholders’ Meeting convened to approve the 2010 

financial statements an amendment to the Company’s 

articles of association that would introduce a rotation 

system for the renewal of terms of office; 

the Company’s Internal Regulations and articles of 

association require that Directors hold a minimum of 

100 shares; however, the Board of Directors has decided 

to propose to the Shareholders’ Meeting convened to 

approve the 2010 financial statements an amendment to 

the Company’s articles of association that would raise this 

minimum threshold to 500 shares; 

major internal restructuring operations are not expressly 

subject to the Board’s prior agreement; in practice, 

however, the Board does discuss them; 

stock purchase/subscription options and free shares 

outstanding at December 31, 2010 represented 7.3% of 

the share capital. Stripping out stock purchase options 


Men for approval. See section 4.B.1.2.2 of this chapter for a 

description of these principles. 

The Board of Directors’ meeting of June 24, 2010, acting 


and Governance Committee, decided to grant 100,000 

stock purchase options and 50,000 free shares to the 

Chief Executive Officer, i.e. a maximum percentage of 

respectively 10% and 12.5% of the overall budgets submitted 

for approval to the shareholders (for more information on 

stock purchase options and performance shares policy, see 

sections 4.D.2.12.1 and 4.D.2.12.2 of this Chapter.) 

There is no specific pension plan for senior executive 

corporate officers. The Chairman is not eligible for any pension 

plan in connection with his corporate office. No pension plan 

other than the plan covering the Group’s senior management 

is available to the Chief Executive Officer (see section 4.B.3.) 

However, in accordance with its decision of April 9, 2009, the 

Board of Directors decided to credit Jacques Aschenbroich 

with five additional years of service at the start of his tenure, 

in view of his age (55 at the time) and the fact that he was not 

covered by any other supplementary pension plan. 

plans with a strike price systematically higher than the 

average acquisition cost of Valeo shares held in treasury at 

the time of the grant, the total number of stock subscription 

options and free shares outstanding at December 31, 2010 

represented 1.7% of the capital; 

the grant of performance shares to the Chief Executive 

Officer is subject to the achievement of specific targets, 

the presence of the Chief Executive Officer in office at the 

time of their allocation and any shares thus granted are 

subject to defined minimum holding thresholds. The grant 

of performance shares is not conditional upon the purchase 

of a specific quantity of shares when such shares become 

available; and 

the Chief Executive Officer is eligible for a supplementary 

pension plan with effect from January 1, 2010. The 

Board of Directors’ meeting of October 20, 2009, on a 

recommandation of the Appointment, Compensation 

and Governance Committee, decided to credit Jacques 

Aschenbroich, upon his appointment, with five additional 

years of service in view of his age (55 at the time) and the 

fact that he did not have any other supplementary pension 

plan. This supplementary pension plan requires that the 

Chief Executive Officer end his/her professional career 

within the Group. 

The French version of the AFEP/MEDEF’s Corporate 

Governance Code for Listed Companies published in 

December 2008 and revised in April 2010 can be downloaded 

at www.code-afep-medef.com.



4.D.4. Special arrangements for attendance at Shareholders’ Meetings 

Article 26 of the Company’s articles of association states that 

shareholders taking part in the meeting by videoconference or 

other telecommunications technologies that allow them to be 

identified in accordance with prevailing law and regulations, 

are deemed to be present for the purposes of calculating 

the quorum and majority, provided the Board of Directors 

publishes a decision to that effect in the notice of meeting. 

4.D.5. Information likely to have an impact in the event 

of a public tender offer 

Details concerning the information likely to have an impact in the event of a public tender offer, pursuant to Article L.225-100-3 

of the French Commercial Code, are provided in Chapter 6, section 6.F.6. 

4.D.6. Internal control and risk management procedures 

This report, like all previous annual reports, presents the 

internal control and risk management procedures that have 

been implemented by the Group in a purely descriptive way, 

using the “reference framework” established by the Autorité 

des marchés financiers (AMF) as its basis. The Chairman 

instructed the Audit Director to gather all the information in this 

report, which was drawn up by incorporating contributions 

from several departments (notably Finance and Management 

Control, the Legal Department, the Risks and Insurance 

Department, etc.). 

4.D.6.1. Definition and aims of internal 

control and risk management 

Definition 

Internal control as defined by the Group is the process 

implemented by Management and employees to provide 

reasonable assurance regarding the due and proper 

management of operations with regard to the following 

objectives: 

reliability of financial and management data; 

compliance with laws and regulations; 

safeguarding of assets; 

effectiveness and efficiency of operations. 

As with any control system, Valeo’s internal control procedures 

can provide reasonable but not absolute assurance that the 

Group’s objectives will be achieved and that certain risks will 

be prevented from materializing. The purpose of the system 

put in place by Valeo is to reduce the probability of risks 

occurring and their potential impact. 

Applicable standards 

Valeo has adopted a definition of internal control in line 

with that provided by the COSO (Committee of Sponsoring 

Organizations of the Treadway Commission), the findings of 

which were published in 1992 in the United States. There are 

no significant discrepancies between Valeo’s internal control 

organization and the procedures and principles described 

in the AMF’s internal control reference framework and its 

Application Manual. 


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4 Chairman 

PAGE 132 



4.D.6.2. Scope of internal control and risk 

management 

Valeo’s internal control procedures are applied to the entire 

Valeo Group, defined as the parent company Valeo and all 

of its fully consolidated subsidiaries. 

4.D.6.3. Components of Valeo’s internal 

control and risk management 

systems 

Valeo’s internal control procedures are based on the five 

components defined in the COSO framework: 

Control environment 

The control environment sets the tone of an organization, 

influencing the level of awareness of its people to the need 

for controls. 

Valeo’s internal control system is organized around a four-tier 

operational structure: Group level, Business Group/Product 

Group level, National Directorate level and Operational Entities 

level. The Group sets strategic guidelines, allocates resources 

to the Business Groups/Product Groups, and develops 

synergies between Business Groups through functional 

networks and National Directorates. The Business Groups 

and the National Directorates control the performance of 

the operational entities and play a key role of coordination 

and support between the entities, notably with regard to the 

pooling of resources, the allocation of R&D expenditure and 

the optimization of production among the different industrial 

sites. Each level is directly involved in implementing the internal 

control system. For this purpose, the Group has established 

operating principles and rules with appropriate delegation 

of powers, starting with those of the Chief Executive Officer, 

which precisely define the areas and levels of decision-making 

for each operational manager. 

Valeo’s policies and behavioral principles are set out in a 

Code of Ethics, the aim of which is to allow the Group to 

develop, while complying fully with national and international 

legal and ethical rules. The Code places major emphasis 

on upholding fundamental rights with respect to child labor, 

employment of the disabled, discrimination and harassment, 

and health and safety at work. It also highlights the Group’s 

commitment to sustainable development, based on respect 

for the environment and the relentless drive for environmental 

protection, both of which are a priority for the Group. Finally, 

the Code of Ethics deals with societal issues and business 

conduct. Available on the intranet and translated into 19 

languages, the Code has been sent out to all of the Group’s 

employees. 


Risk management assessment and procedures 

Internal control concerns the ongoing identification and 

analysis of risks that may impact the objectives set by the 

Group, forming a basis for determining how those risks 

should be managed. By identifying possible risk factors, the 

Group can more accurately define what control activities are 

appropriate. 

As part of its drive for ongoing improvement in internal 

control, the Group set up a Risk Committee in 2009. This 

Committee has six permanent members (the Directors of the 

Strategic Operations, Finance, Risk Insurance Environment, 

Accounting, Internal Audit and Special Projects Departments). 

Representatives of the Legal and Human Resources 

Departments may also attend the Risk Committee as 

appropriate. The Risk Committee meets at least twice a 

year and is tasked with properly identifying and managing 

all risks to which the Group is exposed. Its work involves 

the identification and analysis of risk conducted within the 

Business Groups and the functional networks. The risk 

management procedure is described below: 

the Strategic Operations Department focuses specifically 

on operational risk, in particular, country risk, risks relating 

to the development and industrialization of new products 

and risks associated with customer warranty claims; 

the Legal Department manages the Group’s legal risks, and 

particularly those related to intellectual property (patents 

and brands) and to legal action in the event of faulty 

products and/or services sold; 

the Risk Insurance Environment Department ensures 

compliance with environmental regulations, and manages 

the country risks arising from political, economic and 

social instabilities as well as those risks linked to natural 

phenomena and product development; 

the Human Resources Department ensures compliance 

with labor law and compliance with the Company’s Code 

of Ethics; 

the Finance Department analyzes, quantifies and 

manages risks arising on the Group’s financial activities 

(mainly currency, interest rate, commodity, liquidity and 

counterparty risks). 

Along with the functional networks and the National 

Directorates, the Business Groups are responsible for 

identifying and assessing risks within their remit, and for 

ensuring compliance with local regulatory requirements. 

They are also responsible for ensuring that the guidelines 

and recommendations defined at Group level are properly 

applied throughout the operational entities. 

The main risks and the procedures for managing such 

risks are formally discussed in Chapter 2, section 2.A “Risk 

factors”.

The main risks identified are: 

Operational risk, which includes notably all risks related 

to the Group’s activities as an automative equipment 

manufacturer, the risks related to the development and 

industrialization of new products, supplier risk and country 

risk triggered by political and social instability; 

legal risks, comprising notably risks relating to intellectual 

property and risks relating to products and services 

provided; 

industrial and environmental risks; market risks, comprising 

currency, interest rate, equities and commodity price risks; 

and 

liquidity, credit and counterparty risks. 

These risks are analyzed in depth and are rated according 

to a matrix based on their potential impact, likelihood of 

occurrence and associated level of control in order to 

determine the degree of exposure. This framework is then 

examined in detail and a number of action plans may be 

defined where necessary. 

Risk maps are updated on an annual basis. The findings of 

the latest update were presented to the Audit Committee 

meeting on November 17, 2010, attended by the Chief 

Executive Officer. A two-year audit plan was drawn up on 

the basis of these findings, with a focus on the most acute 

risk areas. 

Control activities 

Control activities are the policies and procedures that help 

ensure that General Management directives are carried out. 

They are performed throughout the organization, at all levels 

and in all functions. 

The Group has a Financial and Administrative Manual that 

contains all the financial and management procedures. 

It is used throughout the Company on a daily basis. The 

Administrative and Financial Manual has two main parts: 

part one concerns the rules governing management and 

internal control; and 

part two determines how the main items of the balance 

sheet and income statement should be measured and 

presented. 

Every year, letters of representation regarding compliance 

with financial standards, internal control standards and 

management standards are sent to the different levels of the 

operational organization to be signed. At the end of 2010, 

the Directors and the Financial Directors of the Business 

Groups, the Financial Directors of the National Directorates 

and the Financial Directors and Controllers of each entity had 

all signed these letters of representation. 



In addition to the Administrative and Financial Manual, the 

functional departments have drawn up special rules and 

procedures that are consistent with financial and management 

standards: 

the Constant Innovation Charter, which provides a strict 

definition of the management principles applicable to 

development projects; 

marketing procedures and sales practices; 

human resources procedures; 

purchasing procedures, aimed at integrating suppliers in 

order to facilitate quality control; 

the Risk Management Manual in relation to security, 

health and safety and the environment, together with the 

Insurance Manual. Valeo has undertaken to comply at a 

minimum with local regulations concerning safety and the 

environment, and with even higher standards in certain 

cases; 

legal procedures that set down the principles with which 

the Group must comply, mainly concerning the laws and 

regulations applicable in the countries where the Group 

operates, and compliance with the Group’s contractual 

obligations and rules protecting the Group’s intellectual 

property. 

Details of these rules and procedures can be consulted on 

the Group’s intranet by the staff concerned. 

In terms of quality, Valeo has set its own standards – 

Valeo 1000 and Valeo 5000. In addition, the QRQC (Quick 

Response Quality Control) method ensures the prompt 

implementation of corrective action, and the Lessons Learned 

Cards (LLC) process enables the Group to monitor best 

practices and explore avenues for improvement. 

Since September 2000, the Group has organized Valeo 

Finance Academy seminars with the aim of developing 

internal control and financial management skills. By combining 

modules (on accounting, cash flow, management control and 

internal control) with case studies and simulations, these 

yearly training sessions help the Group’s younger financial 

managers to get better acquainted with the methods and 

tools used in financial control. 

Information and communication 

Pertinent information must be identified, captured and 

communicated in a form and timeframe that enable all of the 

Group’s staff to carry out their responsibilities and perform the 

controls required of them. The information originating from 

the management system is analyzed and distributed once a 

month to all operational personnel. A monthly summary is 

presented to the Group’s Operating Committee, comprising 

the Chief Executive Officer, the Head of Strategic Operations, 

and twelve other Functional or Operational Directors. 


PAGE 133

4 Chairman 

PAGE 134 



The Finance Department is responsible for preparing the 

parent company and the consolidated financial statements, 

and reports to the Chief Executive Officer. The budget and 

monthly reporting procedure is a critical tool for Valeo in 

managing its operations. Any variances can be identified, 

analyzed and dealt with during the year, thereby increasing the 

reliability of the account closing process for interim and annual 

financial statements. The same information system is used 

for the consolidation and reporting processes, thus ensuring 

that the Group has constant control over the preparation and 

processing of financial information. The Group has put in place 

an integrated business software application, which is being 

deployed throughout its principal operational entities. As well 

as providing a structured framework, this application makes 

it possible to determine user profiles and monitor access 

controls, enabling the Group to comply with regulations 

concerning the separation of tasks (see section 4.D.6.4). 

Organizing and managing the internal control system 

The internal control system is supervised jointly by the Audit 

Committee, General Management, the Risk Committee, the 

functional divisions, the Business Groups/Product Families 

and the National Directorates. 

The internal control system is audited by Valeo’s Internal 

Audit Department, whose task is to carry out assignments 

within the Group to ensure that the procedures set up 

function properly. Based on observations made during 

these assignments, recommendations are put forward to the 

audited operational entities, which are subsequently required 

to implement appropriate action plans. The Internal Audit 

team is also called upon at regular intervals to carry out audits 

of performance indicators, and to coordinate the updates 

to the Group’s financial and management procedures. The 

Internal Audit Department’s work and findings are presented 

each financial year to the Audit Committee, in accordance 

with that Committee’s Internal Regulations. 

For 2010, the Internal Audit Department also conducted 

cross-cutting assignments examining continuous inventories 

and the vehicle scrappage process, and the monitoring of 

R&D project profitability. It also conducted internal control 

review assignments in operational entities located in emerging 

countries and at a recently created shared services center. 

The functional divisions fall within the scope of Valeo’s internal 

control procedures, and therefore in 2010, a diagnosis of 

the fiscal function was established in order to identify the 

procedures, key controls, roles and responsibilities for the 

main sub-processes and any areas for improvement. 

The application of Valeo’s quality, industry, project management 

and safety standards is regularly checked via VAQ (Valeo 

Audit Qualité) audits, and the environmental and safety 

aspects are overseen by the Risk Insurance Environment 

Department. Valeo has launched a certification program for 


its manufacturing sites in accordance with the ISO 14001 

standard relating to environmental management and the 

OHSAS 18001 standard concerning occupational health and 

safety. At December 31, 2010, these two standards had been 

awarded to 104 and 94 sites respectively, out of a total of 

106 sites. The percentage of ISO 14001 and OHSAS 18001 

certified sites is therefore 98% and 89%, respectively. 

Teams from the Information Systems Department audit the 

proper use of the integrated business software application 

by the operational entities, focusing in particular on safety, 

information processing and the implementation of the Group’s 

control tools. 

4.D.6.4. Description of the internal control 

assessment process 

The Group continued to assess its internal control system 

during the year. Valeo now has reliable information for 

monitoring, measuring and assessing the relevance and 

correct implementation of existing internal control procedures 

in relation to the reliability of financial reporting by all of its 

operational entities. 

The approach is based on the following principles: 

1) each operational entity carries out a self-assessment using 

a questionnaire that focuses on seven processes: 

accounts closing procedures, 

sales, receivables management and payments received, 

procurement, payables management and payments made, 

monitoring of assets, 

monitoring of inventories, 

payroll and human resources, and 

cash flow. 

In addition to the standard self-assessment questionnaire, 

which comprises 130 key control points, specific controls 

have been established and deployed for Valeo Service in 

order to take into account the risks related to the distribution 

of universal aftermarket parts. Smaller or start-up units 

are required to complete a simplified self-assessment 

questionnaire comprising 65 key control points relating to 

the seven aforementioned processes. The Group has also 

produced a specific questionnaire for holding companies 

covering 45 control points relating to five processes. 

Rules relating to documentation and testing – particularly 

regarding the size of the sample used – have been defined 

to ensure uniformity between the sites. A special database of 

internal control best practices has been posted on the Group’s 

intranet. In addition, Valeo leverages a tool for reporting the 

findings of its internal control self-assessment procedures to 

centralize documentation relating to the controls and tests.

This tool is also used for real-time monitoring of action plans 

implemented to improve internal control. The Group’s Internal 

Audit team supervises the tool, trains and monitors personnel 

who use it and oversees the self-assessment process. 

The results of the self-assessment campaign are submitted 

to the Audit Committee and communicated to the Business 

Groups/Product Groups. 

2) Valeo has set up a procedure aimed at reviewing user 

profiles and access controls for the integrated business 

software package deployed at most of the Group’s sites. 

The underlying aim of this process is to establish consistent 

internal control practices across all operational entities. 

Using matrices that show incompatibilities for each of the 

processes, optimized standard user profiles have been 

identified. Whenever the software is deployed for the first 

time, the Internal Audit team provides manuals and tracks 

incompatibility matrices, in liaison with each site. 

Internal Audit carries out a half-yearly review of access to the 

integrated business application at all operational entities. The 

review looks at access to sensitive transactions and key users 

(name and capacity), and analyzes incompatibilities and the 

corresponding remedial action plans. As part of improving the 

internal control assessment linked to the integrated business 

software package, the half-yearly review was supplemented 

in 2010 by a review of security settings and access controls. 

4.D.6.5. Procedures for preparing and 

processing financial and accounting 

information for the financial 

statements of the Company and the 

Group 

The Finance Department is in charge of the internal control 

procedures pertaining to the preparation and processing 

of financial information. Production and analysis of this 

information is handled as follows: 

the Group Accounting Department prepares and 

disseminates the accounting procedures used by the 

Group, making sure they are consistent with prevailing 

accounting standards. The Accounting Department, 

along with the Management Control Department, carries 

out regular checks to ensure that operations have been 

correctly recorded in the accounting books; 

the Consolidation Department (reporting to the Group 

Accounting Department) is responsible for preparing 

half-yearly and annual consolidated financial statements 

under IFRS. All Group entities send out detailed monthly 

information that includes an income statement, business 

analysis, summary balance sheet, cash flow statement, 



and analytical statements. Each half-yearly and annual 

report is drawn up on the basis of detailed period-end 

closing instructions, which include the close schedule, 

changes in the scope of consolidation, classification of and 

movements in the main balance sheet items, the process 

for reconciling inter-company transactions within the Group, 

and the supervision of off balance sheet commitments (the 

entities are required to provide an exhaustive list of their 

commitments and also to monitor them); 

the Management Control Department assesses the 

economic performance of the Group, analyzes the 

relevance of reported information, and prepares a summary 

of management indicators for General Management. Its 

analyses focus on sales and the order book, analyses 

of margins and of EBITDA per Business Group/Product 

Groups and per geographic zone; and 

the Taxation Department coordinates the Group’s tax policy 

and advises the operational entities, National Directorates 

and, where necessary, Business Groups/Product 

Groups on all issues relating to tax law and also on the 

implementation of the tax consolidation system in France. 

4.D.6.6. Outlook 

The Group will pursue ongoing efforts to improve its internal 

control procedures, with the aim of constantly adapting its 

management and control tools in line with changes in its 

structure and objectives. In 2011, the internal control system 

will evolve in order to take into account the strengthening of 

the National Directorates and the implementation of shared 

services centers during 2010. 

The Group’s aim is to develop pertinent and effective internal 

controls at each level of responsibility, based on: 

an appropriate control environment; 

the accountability of all parties involved, and particularly 

operational staff key to the internal control processes and 

responsible for driving forward ongoing internal control 

improvements; and 

consideration of the cost of implementing internal controls 

with regard to the level of risk exposure. 

These efforts are wholly supported by the Group’s General 

Management team. 


Chairman of the Board of Directors 


PAGE 135

4 Statutory 

PAGE 136 


Auditors’ report 

4.E. Statutory Auditors’ report prepared in accordance 

with article L. 225-235 of the French Commercial 

Code and dealing with the report of the Chairman 

of the Board of Directors of Valeo 

Year ended December 31, 2010 

This is a free translation into English of a report issued in French and is provided solely for the convenience of English-speaking 

readers. This report should be read in conjunction with, and is construed in accordance with, French law and professional 

auditing standards applicable in France. 

To the Shareholders, 

In our capacity as Statutory Auditors of Valeo and in accordance with article L. 225-235 of the French Commercial Code, we 

hereby present our report dealing with the report prepared by the Chairman of your Company in accordance with article L. 225-37 

of the French Commercial Code for the financial year ended December 31, 2010. 

The Chairman is responsible for preparing and submitting for the approval of the board of directors, a report describing the 

internal control and risk management procedures implemented by the company and disclosing other information as required 

by article L. 225-37 of the French Commercial Code dealing in particular with corporate governance. 

Our own responsibility is to: 

Communicate to you any observations we may have as to the information contained in the Chairman’s report and relating to 

the Company’s internal control and risk management procedures in the area of the preparation and processing of financial 

and accounting information; and 

Attest that the report includes the other disclosures required by article L. 225-37 of the French Commercial Code. It should 

be noted that we are not responsible for verifying the fair presentation of those other disclosures. 

We have performed our work in accordance with the professional standards applicable in France. 

Information relating to the Company’s internal control and risk management procedures in the area of the preparation 

and processing of financial and accounting information 

Our professional standards require the application of procedures designed to assess the fair presentation of the information 

contained in the Chairman’s report and relating to the Company’s internal control and risk management procedures in the area 

of the preparation and processing of financial and accounting information. 

Those procedures involve in particular: 

obtaining an understanding of the underlying internal control and risk management procedures in the area of the preparation 

and processing of financial and accounting information presented in the Chairman’s report, and of the related documentation; 

obtaining an understanding of the work performed as a basis for preparing that information and the existing documentation; 

determining if any major internal control weaknesses in the area of the preparation and processing of financial and accounting 

information identified by us during the course of our engagement have been appropriately disclosed in the Chairman’s report. 

On the basis of the procedures performed, we have nothing to report on the information relating to the Company’s internal 

control and risk management procedures in the area of the preparation and processing of financial and accounting information 

contained in the report of the Chairman of the board of directors prepared in accordance with article L. 225-37 of the French 




Statutory Auditors’ report 

Other disclosures 

We hereby attest that the report of the Chairman of the board of directors includes the other disclosures required by 

article L. 225-37 of the French Commercial Code. 

Courbevoie and Neuilly-sur-Seine, February 24, 2011 

The Statutory Auditors 

French original signed by 

MAZARS ERNST & YOUNG et Autres 

David Chaudat Lionel Gotlib Jean-François Ginies Gilles Puissochet 


PAGE 137

4 Statutory 

PAGE 138 


Auditors’ special report on related-party agreements and commitments 

4.F. Statutory Auditors’ special report on related-party 

agreements and commitments 

General Meeting of Shareholders to approve the financial statements for the year ended December 31, 2010 

This is a free translation into English of a report issued in French and is provided solely for the convenience of English-speaking readers. This 

report should be read in conjunction with, and is construed in accordance with, French law and professional auditing standards applicable in 

France. 

To the Shareholders, 

In our capacity as Statutory Auditors of your Company, we hereby report on certain related-party agreements and commitments. 

We are required to inform you, on the basis of the information provided to us, of the terms and conditions of those agreements 

and commitments indicated to us, or that we may have identified in the performance of our engagement. We are not required to 

comment as to whether they are beneficial or appropriate or to ascertain the existence of any such agreements and commitments. 

It is your responsibility, in accordance with Article R.225-31 of the French Commercial Code (Code de commerce), to evaluate 

the benefits resulting from these agreements and commitments prior to their approval. 

In addition, we are required, where applicable, to inform you in accordance with Article R.225-31 of the French Commercial 

Code (Code de commerce) concerning the implementation, during the year, of the agreements and commitments already 

approved by the General Meeting of Shareholders. 

We performed those procedures which we considered necessary to comply with professional guidance issued by the French 

auditing body (Compagnie Nationale des Commissaires aux Comptes) relating to this type of engagement. These procedures 

consisted in verifying that the information provided to us is consistent with the documentation from which it has been extracted. 

AGREMENTS AND COMMITMENTS SUBMITTED FOR APPROVAL 

BY THE GENERAL MEETING OF SHAREHOLDERS 

Agreements and commitments authorized during the year 

We hereby inform you that we have not been advised of any agreements or commitments authorized in the course of the 

year to be submitted to the General Meeting of Shareholders for approval in accordance with Article 225-38 of the French 

Commercial Code (Code de commerce). 

Agreements and commitments authorized after closing 

We have been advised of certain related party agreements and commitments which received prior authorization from your 

Board of Directors after closing. 

Severance payment for Jacques Aschenbroich 

On the recommendation of the Appointment, Compensation and Governance Committee, and subject to the renewal by 

the Shareholders’ Meeting called to approve the financial statements for the year ended December 31, 2010 of Jacques 

Aschenbroich’s terms of office as Director and Chief Executive Officer, the Board of Directors’ meeting of February 24, 2011, 

decided to renew the severance payment that would be payable to Jacques Aschenbroich if he were forced to leave his position 

following a change of control or strategy (except in the event of gross professional misconduct when performing his duties) by 

setting it at 24 months of his fixed and variable remuneration from 2013. 

The severance payment to which Jacques Aschenbroich would be entitled if he left his position are described in the Company’s 

2010 management report. 



Statutory Auditors’ special report on related-party agreements and commitments 

AGREEMENTS AND COMMITMENTS ALREADY APPROVED BY THE GENERAL 

MEETING OF SHAREHOLDERS 

Agreements and commitments approved in previous years which continued to be implemented 

during the last fiscal year 

In accordance with Article R.225-30 of the French Commercial Code (Code de commerce), we have been advised that the 

implementation of the following agreements and commitments which were approved by the General Meeting of Shareholders 

in prior years continued during the year. 

Brand licensing agreements 

The brand licensing agreements signed in 2005 between Valeo and several operational subsidiaries continued to be implemented 

in 2010. 

These agreements allow some of the Group’s operational entities to identify themselves as belonging to the Group by making 

available to them all of the Group’s knowledge, values, and business and employee-related potential. They are renewable by 

tacit agreement on an annual basis. 

Consideration for the service is based on sales of the Product Family. The amounts billed to the operational entities for 2010 

were as follows: 

Company (in millions of euros) Amounts invoiced 

VALEO Vision 3.9 

VALEO Equipements Electriques Moteur 2.9 

VALEO Systèmes d’Essuyage 2.1 

VALEO Sécurité Habitacle 1.4 

VALEO Interior Controls 3.4 

TOTAL 13.7 

Agreement signed with Pardus Capital Management L.P. 

In 2008, an agreement was signed with Pardus Capital Management L.P. (hereafter referred to as Pardus) concerning: 

the appointment of a representative of Pardus on Valeo’s Board of Directors; 

the fair dealings of Pardus and its representative towards Valeo and its Board of Directors; 

dealings between Pardus and Valeo’s competitors; 

Pardus’ stake in Valeo’s capital; 

Pardus’ participation in Valeo’s Shareholders’ Meetings; 

Pardus’ disposal of Valeo shares; 

the term of the agreement. 

Pardus informed the AMF and Valeo on August 13, 2010, that following different transfers of securities it only held 7.58% of 

Valeo’s share capital and 7.36% of its voting rights from this date. 

Since Pardus’ interest fell to below 8% of Valeo’s share capital, in accordance with the agreement between Pardus, Behdad 

Alizadeh and Valeo, Behdad Alizadeh resigned as a Director with effect from August 17, 2010. 

Pardus sent Valeo notice of termination of the agreement dated August 17, 2010. In accordance with the provision of the 

agreement, it was automatically terminated after a four-month notice period, i.e. on December 18, 2010. 


PAGE 139

4 Statutory 

PAGE 140 


Auditors’ special report on related-party agreements and commitments 

Agreements and commitments involving Jacques Aschenbroich, Chief Executive Officer 

Life insurance 

The commitment made to Jacques Aschenbroich in 2009 for life insurance covering death, disability or any consequences of 

an accident during a business trip continued in 2010. Valeo paid a premium of 2,300 euros inclusive of VAT for the period from 

April 30, 2010 to April 30, 2011. 

Pension plan 

The commitment made to register Jacques Aschenbroich in 2009 with the new defined benefits pension plan applicable to the 

Group’s Senior Corporate Executives from January 1, 2010 by according him five years’ length of service continued in 2010. 

The main characteristics of this plan are as follows: 

cap according to type of plan: supplementary pension of 1% of the reference salary for each year of service, capped at 20%; 

cap on the base for calculating rights: the supplement, all plans combined, cannot exceed 55% of the reference salary, 

which is only based on the fixed salary. 

Agreements and commitments approved during the past fiscal year which were not 

implemented during the past fiscal year 

In addition, we have been advised that the following agreements and commitments which were approved by the General 

Meeting of Shareholders on June 3, 2010, based on the statutory auditors’ report dated May 17, 2010 were not implemented 

during the year. 

Termination benefits and non-competition payments 

The agreements granting Jacques Aschenbroich termination benefits if he were forced to leave his position following a change 

of control or strategy (except in the event of gross professional misconduct when performing his duties) and a non-competition 

payment if he left the Company were authorized by the Board of Directors’ meeting of February 24, 2010 and presented in the 

Statutory Auditors’ special report to the Shareholders’ Meeting on June 3, 2010. 

The severance indemnity and non-competition payment to which Jacques Aschenbroich is entitled if he leaves the Company 

are described in the Company’s 2010 management report. 





David Chaudat Lionel Gotlib Jean-François Ginies Gilles Puissochet

5.A. Analysis of 2010 consolidated 

results AFR 142 

5.A.1. Sales and profitability 142 

5.A.2. Financial position 144 

5.B. 2010 Consolidated financial 

statements AFR 146 

5.B.1. Consolidated statement of income 146 

5.B.2. Consolidated statement 

of comprehensive income 147 

5.B.3. Consolidated statement 

of financial position 148 

5.B.4. Consolidated statement of cash flows 149 

5.B.5. Consolidated statement of changes 

in stockholders’ equity 150 

5.B.6. Notes to the consolidated financial 

statements 152 

5.B.7. Statutory auditors’ report 

on the consolidated financial statements 208 

FINANCIAL AND ACCOUNTING 

INFORMATION 

5.C. Subsequent events and outlook 210 

5.C.1. Subsequent events 210 

5.C.2. Outlook 210 

5.D. Analysis of Valeo’s results AFR 212 



5 

PAGE 141

5 Analysis 

PAGE 142 

Financial and accounting information 

of 2010 consolidated results 

5.A. Analysis of 2010 consolidated results 

The consolidated financial statements for the Valeo Group 

were prepared in accordance with the International Financial 

Reporting Standards (IFRS) published by the International 

Accounting Standards Board (IASB), as approved by the 

5.A.1. Sales and profitability 

5.A.1.1. Review of operations 

During 2010, automotive production growth for each region 

was as follows (1) : 

Sales in Europe (and Africa) climbed 15%, despite the 

discontinuation of the vehicle scrappage incentive scheme 

in certain countries, and a fall in new registrations in 2010 

(down 4% on 2009). The increase in sales mainly reflects 

the impact of destocking in 2009 which did not recur 

in 2010, and an increase in exports outside Europe; 

Sales in Asia (and others) jumped 28% year on year, due 

mainly to continued growth in China (up 31%); 

Sales for each Business Group broke down as follows: 


European Union. The accounting principles are explained in 

detail in the Notes to the consolidated financial statements 

in Chapter 5, section 5.B.6, Note 1. 

Sales in North America surged 39% compared to 2009, 

reflecting the severe impact of the decline in production in 

the comparison period; 

Sales in South America advanced 12% year on year. 

Taking advantage of the favorable environment in the 

automotive market and the outperformance of Valeo’s original 

equipment business compared to its main markets, in 2010 

the Group posted consolidated sales of 9,632 million euros, 

up 28% compared with 2009 (7,499 million euros). On a 

like-for-like basis (2) , consolidated sales advanced by 24%. 

The four Business Groups, corresponding to its four 

reportable segments for accounting purposes, contributed 

equally to Group consolidated sales growth in 2010. 

Revenue 

(in millions of euros) 2010 2009 

Change 

2010/2009 

Comfort and Driving Assistance Systems 1,704 1,344 +27% 

Powertrain Systems 2,683 2,011 +33% 

Thermal Systems 2,933 2,258 +30% 

Visibility Systems 2,354 1,938 +21% 

Eliminations (intra-Business Group revenue and other) (42) (52) 

Consolidated sales 9,632 7,499 +28% 

Sales of original equipment stood at 7,952 million euros 

(83% of consolidated revenue), breaking down as 

7,529 million euros for original equipment passenger car 

segment and 423 million euros for original equipment nonpassenger 

car segment. Compared with 2009, original 

equipment passenger car sales advanced 26% (on a like-for- 

like basis (2) ), thereby outperforming global automotive 

production (up 25% year on year), and sales for the original 

equipment non-passenger car segment surged by 58%. This 

stellar performance by the original equipment business was 

observed across the Group’s main production regions. 

(1) Source: JD Power Global Automotive Production Forecast, January 2011. 

(2) Data on a constant exchange rate basis is obtained by recalculating sales for the current year on the basis of the average exchange rate 

used for the preceding year. 

Data on a constant Group structure basis is obtained by (1) adding to sales for the previous year, the share of sales arising from the 

additional interests acquired in an entity, during a period comparable to the period during which the entity was owned in the most 

recently elapsed year; (2) by eliminating from sales for the current year, sales attributable to recently acquired or non-consolidated entities 

during the most recently elapsed year; and (3) by eliminating from sales for the previous year, sales of entities sold during the most 

recently elapsed year. 

When a change in Group structure occurs, the previous year is restated using the consolidation method adopted for the most recently 

elapsed year.

Due to their momentum, each Business Group posted growth 

in original equipment sales in line with or in excess of the 

uptrend in global automotive production (up 25% over 2010): 

Comfort and Driving Assistance Systems: up 27% on a 

like-for-like basis (1) ; 

Powertrain Systems: up 31% on a like-for-like basis (1) ; 

Thermal Systems: up 23% on a like-for-like basis (1) ; 

Visibility Systems: up 24% on a like-for-like basis (1) . 

Aftermarket sales totaled 1,445 million euros (15% of 

consolidated revenue), up 16% compared with 2009 (1,242 

million euros). 

Miscellaneous sales and tooling revenue amounted to 

235million euros (up 3% compared with 2009). 

Europe and Africa accounted for the largest proportion 

of Valeo’s sales in 2010 (60%), followed by Asia, the 

Middle East and the Pacific (19%), North America (13%) and 

South America (8%). 

Original equipment passenger car sales in Europe (and 

Africa) came in at 4,472 million euros, up 20% compared 

with 2009 and outperforming growth in local automotive 

production, which advanced 15% over the same period. This 

segment accounts for 59% of total original equipment sales, 

compared with 64% for 2009. This decrease is essentially 

related to the high production volumes observed in 2009 

following the implementation of the scrappage incentive 

scheme in the main European countries. 

Original equipment passenger car sales in Asia, the 

Middle East and the Pacific totaled 1,461 million euros, 

i.e., 19% of total original equipment passenger car sales 

(17% in 2009), up 48% compared with the same year-ago 

figure. On a like-for-like basis1 , sales advanced by 36% (48% 

in China). Over the same period, passenger car production 

grew by 28% in Asia (31% in China). 

Original equipment passenger car sales in North America 

amounted to 995 million euros, a leap of 69% compared 

with the same year-ago period. North America accounted for 

13% of total original equipment passenger car sales (10% 

Financial and accounting information 5 

Analysis of 2010 consolidated results 

in 2009). On a like-for-like basis (1) , original equipment sales 

in North America surged 60% compared with 2009, thereby 

outperforming growth in local automotive production, which 

advanced 39% over the same period. 

Original equipment passenger car sales in South America 

stood at 601 million euros, up by 27% compared with 2009, 

reflecting the sharp appreciation in the value of the Brazilian 

real against the euro in 2010. This segment accounted for 

8% of total original equipment passenger car sales (8% 

in 2009). On a like-for-like basis1 , original equipment sales 

in South America grew by 8% compared with 2009, thereby 

underperforming growth in local automotive production, 

which advanced 12% over the same period. 

5.A.1.2. Results 

Thanks to higher sales, improved productivity and optimized 

investments, the Group recorded an improvement in its gross 

margin, which came in at 18% of sales (or 1,735 million 

euros) versus 15.8% before the crisis, and 15.2% in 2009 

(1,138 million euros). 

Research and Development expenses totaled 537 million euros, 

or 5.6% of sales (versus 5.7% in 2007, before the crisis, and 

6.3% in 2009). The Group is focusing on projects in the area 

of fuel consumption and CO emissions reduction, and active 

2 

security improvement. 

Thanks in particular to the implementation of the new 

organization, administrative expenses were limited to 

410 million euros, or 4.3% of sales (versus 5% in 2009). 

Consequently, administrative and selling expenses totaled 

581 million euros, or 6% of sales (versus 7.1% during the 

same period in 2009). 

The Group’s operating margin (2) therefore totaled 

617 million euros, or 6.4% of sales (versus 133 million euros 

or 1.8% of sales in 2009). 

EBITDA (3) amounted to 1,150 million euros, or 11.9% of sales 

(versus 670 million euros in 2009). 

(1) Data on a constant exchange rate basis is obtained by recalculating sales for the current year on the basis of the average exchange rate 

used for the preceding year. 

Data on a constant Group structure basis is obtained by (1) adding to sales for the previous year, the share of sales arising from the 

additional interests acquired in an entity, during a period comparable to the period during which the entity was owned in the most 

recently elapsed year; (2) by eliminating from sales for the current year, sales attributable to recently acquired or non-consolidated entities 

during the most recently elapsed year; and (3) by eliminating from sales for the previous year, sales of entities sold during the most 

recently elapsed year. 

When a change in Group structure occurs, the previous year is restated using the consolidation method adopted for the most recently 

elapsed year. 

(2) Operating income before other income and expenses (see Note 4.5 to the consolidated financial statements, Chapter 5, section 5.B.6). 

(3) EBITDA corresponds to operating income before amortization, depreciation, impairment losses and other income and expenses (see Note 

3.2 to the consolidated financial statements, Chapter 5, section 5.B.6). 


PAGE 143

5 Analysis 

PAGE 144 


of 2010 consolidated results 

All the Business Groups contributed to the improvement in the Group’s operating performance in 2010. 

EBITDA 

% of sales 2010 2009 


Change 2010 / 

2009 

Comfort and Driving Assistance Systems 11.5 7.9 +3.6pts 

Powertrain Systems 11.1 10.3 +0.8pts 

Thermal Systems 12.5 8.0 +4.5pts 

Visibility Systems 11.2 7.5 +3.7pts 

Other income and expenses represented net other expense 

of 27 million euros, or -0.3% of sales, including provisions for 

employee-related costs in connection with implementation of 

the new organization announced in March 2010. 

The Group’s operating income amounted to 590 million euros, 

or 6.1% of sales (versus 84 million euros or 1.1% of sales 

in 2009). 

Income before taxes came in at 490 million euros versus a 

pre-tax loss of 67 million euros in 2009 : 

the cost of net debt amounted to 67 million euros, up 12% 

versus 2009, despite the decrease in net debt during 2010. 

This is a reflection of the poor returns on liquidity generated 

5.A.2. Financial position 

5.A.2.1. Stockholders’ equity 

At December 31, 2010, stockholders’ equity amounted to 

1,770 million euros versus 1,284 million euros at December 

31, 2009. This 486 million euro increase corresponds mainly 

to net income for the period, i.e. 384 million euros, and to 

a favorable foreign exchange impact for 164 million euros, 

linked primarily to the appreciation of the yen and the Brazilian 

real against the euro. Moreover, Valeo did not pay a dividend 

in 2010. 

5.A.2.2. Provisions 

The statement of financial position at December 31, 2010 

showed total provisions of 1,183 million euros (including a 

non-current portion of 806 million euros), compared with 

1,113 million euros at the previous year-end (including a 

non-current portion of 749 million euros). 

by the Group during the year, as well as the rise in the cost 

of gross debt; 

other financial income and expenses showed a net financial 

expense of 32 million euros, versus a net financial expense 

of 57 million euros in 2009, including losses on currency 

and commodities hedges in an amount of 17 million euros. 

The effective tax rate came out at 21% thanks to the 

recognition of deferred tax assets in certain countries. 

After taking into account net income attributable to minority 

interests in an amount of 19 million euros, net income 

attributable to owners of the Company for 2010 stood 

at 365 million euros, or 3.8% of sales, versus a net loss of 

153 million euros for 2009. 

Total provisions for reorganization expenses and employeerelated 

costs fell by 57 million euros year-on-year to 

107 million euros. This decrease corresponds mainly to 

utilizations during the year and to the reversal of surplus 

provisions related to the headcount adjustment plan covering 

5,000 redundancies announced at the end of 2008, and for 

which a provision was set aside. 

Provisions for pensions and other post-employment 

benefits amounted to 651 million euros at year-end, i.e., a 

41 million euro increase compared with end-2009. Actuarial 

gains and losses had a positive 30 million euro impact on 

provisions in 2010, while the fall in the discount rates adopted 

for each geographic area contributed to the increase in the 

benefit obligation. 

Other provisions increased from 339 million euros at 

December 31, 2009 to 425 million euros at December 31, 

2010. They included 170 million euros for customer warranties 

and 255 million euros for other risks and disputes, primarily of 

an employee, environmental, tax and legal nature.

5.A.2.3. Cash flows and debt 

Cash flow from operating activities amounted to 997 million 

euros, compared with 599 million euros in 2009. This 

significant increase reflects both the strong improvement in 

the Group’s net income in 2010, and strict management of 

working capital. 

Excluding changes in Group structure, investing activities 

represented net cash outflows of 490 million euros in 2010, 

remaining broadly in line with the net cash outflows of 

487 million euros recorded in 2009. 

Changes in Group structure represented net cash inflows of 

22 million euros, corresponding to the sales of the headlamp 

levelling device and electromagnetic retarder businesses for 

15 million euros and 7 million euros, respectively. In 2009, 

changes in the scope of consolidation resulted in net outflows 

of 10 million euros. 

Financing activities represented net cash outflows of 84 million 

euros, and included 36 million euros in stock buybacks and 

the payment of 65 million euros in interest. 

5.A.2.4. Commitments 

The main commitments given are as follows: 


Analysis of 2010 consolidated results 

In 2009, financing activities generated net cash inflows of 

176 million euros, and included 195 million euros from the 

subscription to the European Investment Bank (EIB) loan. It 

should be noted that Valeo did not pay a dividend in 2009 

or 2010. 

In view of the items above, and including the impact of 

exchange rate movements, the year-on-year increase in 

consolidated cash and cash equivalents was 452 million 

euros, compared with an increase of 292 million euros 

in 2009. 

At December 31, 2010, net debt (the sum of debt, short-term 

loans and bank overdrafts, less cash and cash equivalents 

and loans and other long-term financial assets) stood at 

278 million euros representing a significant decrease on 

end-December 2009, when it stood at 722 million euros. The 

ratio of net debt to stockholders’ equity (excluding minority 

interests) was 16% at December 31, 2010, compared with 

59% at December 31, 2009. 

The high levels of net cash generated in 2010 enabled 

the Group to reduce its debt to a particularly low level at 


(in millions of euros) 2010 2009 2008 

Lease commitments 121 103 100 

Sureties, endorsements and guarantees 4 2 2 

Irrevocable commitments to purchase assets 144 88 93 

Other commitments given 148 141 140 

TOTAL 417 334 335 

These commitments are described in Chapter 5, Section 5.B.6, Note 6.3 to the 2010 consolidated financial statements. 


PAGE 145


PAGE 146 


Consolidated fi nancial statements 

5.B. 2010 Consolidated financial statements 

In accordance with Article 28 of European Regulation 

no. 809/2004 of April 29, 2004, the present document 

incorporates by reference the following information: 

the consolidated financial statements and the statutory 

auditors’ report concerning the financial year ended 

December 31, 2009 on pages 125 to 187 and 188 to 189 

of the Registration Document registered with the Autorité 

5.B.1. Consolidated statement of income 


des marchés financiers on March 23, 2010 under number 

D.10-0149; 

the consolidated financial statements and the statutory 

auditors’ report concerning the financial year ended 

December 31, 2008 on pages 115 to 173 and 174 to 175 

of the Registration Document registered with the Autorité 

des marchés financiers on March 17, 2009 under number 

D.09-0128. 

(in millions of euros) Notes 2010 2009 

CONTINUING OPERATIONS 

NET Revenue 4.1 9,632 7,499 

Cost of sales 4.2 (7,897) (6,361) 

GROSS MARGIN 1,735 1,138 

% of net revenue 18.0% 15.2% 

Research and Development expenditure, net 4.4 (537) (473) 

Selling expenses (171) (156) 

Administrative expenses (410) (376) 

OPERATING MARGIN 617 133 

% of net revenue 6.4% 1.8% 

Other income and expenses 4.5 (27) (49) 

OPERATING INCOME 590 84 

Interest expense 4.6 (83) (69) 

Interest income 4.6 16 9 

Other financial income and expenses 4.7 (32) (57) 

Share in net earnings (losses) of associates 5.4 (1) (34) 

INCOME (LOSS) BEFORE INCOME TAXES 490 (67) 

Income taxes 4.8 (104) (79) 

INCOME (LOSS) FROM CONTINUING OPERATIONS 

DISCONTINUED OPERATIONS 

386 (146) 

Income (loss) from discontinued operations, net of tax (2) - 

NET INCOME (LOSS) FOR THE YEAR 

Attributable to: 

384 (146) 

▪ Owners of the Company 365 (153) 

▪ Minority interests 

Earnings (loss) per share: 

19 7 

▪ Basic earnings (loss) per share (in euros) 4.9.1 4.86 (2.04) 

▪ Diluted earnings (loss) per share (in euros) 

Earnings (loss) per share from continuing operations: 

4.9.2 4.86 (2.04) 

▪ Basic earnings (loss) per share (in euros) 4.89 (2.04) 

▪ Diluted earnings (loss) per share (in euros) 4.89 (2.04) 

The Notes are an integral part of the consolidated financial statements.

5.B.2. Consolidated statement of comprehensive income 


2010 Consolidated fi nancial statements 


Net income (loss) for the year 384 (146) 

Translation adjustment 164 48 

o/w income taxes - - 

Actuarial gains (losses) on defined benefit plans (20) (13) 

o/w income taxes 

Cash flow hedges: 

10 3 

▪ gains (losses) taken to equity 10 12 

▪ (gains) losses transferred to income (loss) for the period (14) 8 

o/w income taxes - (2) 

Remeasurement of available-for-sale financial assets (1) 4 

o/w income taxes - - 

Other comprehensive income for the year, net of tax 139 59 

Total comprehensive income (loss) for the year 

Attributable to: 

523 (87) 

▪ Owners of the Company 496 (93) 

▪ Minority interests 27 6 

The Notes are an integral part of the consolidated financial statements. 


PAGE 147


PAGE 148 



5.B.3. Consolidated statement of financial position 

(in millions of euros) Notes 12/31/2010 12/31/2009 

ASSETS 

Goodwill 5.1 1,210 1,146 

Other intangible assets 5.2 544 535 

Property, plant and equipment 5.3 1,655 1,665 

Investments in associates 5.4 104 94 

Non-current financial assets 107 74 

Deferred tax assets 5.5 198 117 

Non-current assets 3,818 3,631 

Inventories 5.6 621 482 

Accounts and notes receivable 5.7 1,449 1,251 

Other current assets (1) 200 180 

Taxes recoverable 10 15 

Other non-current financial assets 24 13 

Assets held for sale 2 1 

Cash and cash equivalents 5.10.4 1,316 860 

Current assets 3,622 2,802 

TOTAL ASSETS 7,440 6,433 

LIABILITIES AND EQUITY 

Share capital 5.8.1 236 235 

Additional paid-in capital 5.8.2 1,412 1,402 

Retained earnings and other 5.8.4 60 (404) 

Stockholders’ equity 1,708 1,233 

Minority interests 5.8.7 62 51 

Stockholders’ equity including minority interests 1,770 1,284 

Provisions - long-term portion 5.9 806 749 

Debt - long-term portion 5.10.2 1,097 1,526 

Subsidies and grants - long-term portion 19 25 

Deferred tax liabilities 5.5 22 25 

Non-current liabilities 1,944 2,325 

Accounts and notes payable 1,987 1,648 

Provisions - current portion 5.9 377 364 

Subsidies and grants - current portion 9 13 

Taxes payable 53 18 

Other current liabilities (1) 703 663 

Current portion of long-term debt 5.10.2 505 40 

Other current financial liabilities: 15 5 

Short-term debt 5.10.3 77 73 

Current liabilities 3,726 2,824 

TOTAL LIABILITIES AND EQUITY 7,440 6,433 

(1) The presentation of the statements of financial position at December 31, 2009 is different from that published in February 2010. VAT recoverable 

and payable have been adjusted to reflect the net position of each legal entity. 



5.B.4. Consolidated statement of cash flows 



(in millions of euros) Notes 2010 2009 

CASH FLOWS FROM OPERATING ACTIVITIES 

Net income (loss) for the year 384 (146) 

Equity in net earnings (losses) of associates 1 34 

Net dividends received from associates 4 2 

Expenses (income) with no cash effect 5.11.1 524 445 

Cost of net debt 67 60 

Income taxes (current and deferred) 104 79 

Gross operating cash flows 1,084 474 

Income taxes paid (118) (89) 

Changes in working capital 5.11.2 31 214 

Net cash provided by operating activities 997 599 

CASH FLOWS FROM INVESTING ACTIVITIES 

Outflows relating to acquisitions of intangible assets (153) (150) 

Outflows relating to acquisitions of property, plant and equipment (323) (304) 

Inflows relating to disposals of property, plant and equipment 12 10 

Net change in non-current financial assets (26) (43) 

Impact of changes in scope of consolidation 5.11.3 22 (10) 

Net cash from (used in) investing activities (468) (497) 

CASH FLOWS FROM FINANCING ACTIVITIES 

Dividends paid to owners of the Company - - 

Dividends paid to minority interests in consolidated subsidiaries (13) (7) 

Issuance of share capital 8 1 

Sale (purchase) of treasury stock (36) 8 

Issuance of long-term debt 28 228 

Interest paid (65) (52) 

Interest received 13 4 

Repayments of long-term debt (11) (6) 

Acquisition of minority interests (8) - 

Net cash from (used in) financing activities (84) 176 

Effect of exchange rate changes on cash 7 14 

NET CHANGE IN CASH AND CASH EQUIVALENTS 452 292 

Net cash and cash equivalents at beginning of year 787 495 

Net cash and cash equivalents at end of year 

O/w: 

1,239 787 

▪ Cash and cash equivalents 1,316 860 

▪ Short-term debt (77) (73) 



PAGE 149


PAGE 150 



5.B.5. Consolidated statement of changes in stockholders’ equity 

Number 

of shares (in millions of euros) 


Share 

capital 

Additional 

paid-in 

capital 

Translation 

adjustment 

Retained 

earnings 

Stockholders’ equity including 

minority interests 

Stockholders’ 

equity 

Minority 

interests Total 

75,557,498 

Stockholders’ equity 

at January 1, 2010 235 1,402 74 (478) 1,233 51 1,284 

Dividends - - - - - (14) (14) 

(886,519) Treasury stock - - - (31) (31) - (31) 

Capital increase 1 10 - - 11 - 11 

419,181 Share-based payment - - - 6 6 - 6 

Other movements - - - (7) (7) (2) (9) 

Transactions with owners 

Net income (loss) 

1 10 - (32) (21) (16) (37) 

for the year - - - 365 365 19 384 

75,090,160 

Other comprehensive 

income (loss), net of tax: 

Translation adjustment - - 156 - 156 8 164 

Actuarial gains and losses 

Gain (loss) on cash flow 

hedges recognized 

- - - (20) (20) - (20) 

in equity 

(Gain) loss on cash flow 

hedges taken to income 

- - - 10 10 - 10 

(loss) for the year 

Remeasurement of 

available-for-sale financial 

- - - (14) (14) - (14) 

assets 

Total other 

comprehensive income 

- - - (1) (1) - (1) 

(loss) 

Total comprehensive 

- - 156 (25) 131 8 139 

income (loss) 


- - 156 340 496 27 523 

at December 31, 2010 236 1,412 230 (170) 1,708 62 1,770

Number 

of shares (in millions of euros) 

Share 

capital 

Additional 

paid-in 

capital 

Translation 

adjustment 



Retained 

earnings 

Stockholders’ equity including 

minority interests 

Stockholders’ 

equity 

Minority 

interests Total 

75,067,118 

Stockholders ’ equity 

at January 1, 2009 235 1,402 25 (351) 1,311 51 1,362 

Dividends - - - - - (7) (7) 

490,380 Treasury stock - - - 8 8 - 8 

75,557,498 

Capital increase - - - - - 1 1 

Share-based payment - - - 7 7 - 7 

Other movements - - - - - - - 

Transactions with owners 

Net income (loss) 

- - - 15 15 (6) 9 

for the year - - - (153) (153) 7 (146) 

Other comprehensive 

income (loss), net of tax 

Translation adjustment - - 49 - 49 (1) 48 

Actuarial gains and losses - - - (13) (13) - (13) 

Gain (loss) on cash flow 

hedges recognized 

in equity - - - 12 12 - 12 

(Gain) loss on cash flow 

hedges taken to income 

(loss) for the year - - - 8 8 - 8 

Remeasurement of 

available-for-sale financial 

assets - - - 4 4 - 4 

Total other comprehensive 

income (loss) 

Total comprehensive 

- - 49 11 60 (1) 59 

income (loss) 


- - 49 (142) (93) 6 (87) 

at December 31, 2009 235 1,402 74 (478) 1,233 51 1,284 



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PAGE 152 



5.B.6. Notes to the consolidated financial statements 

CONTENTS 

NOTE 1. Accounting policies 153 

1.1. Accounting standards applied 153 

1.2. Basis of preparation 153 

1.3. Consolidation methods 154 

1.4. Foreign currency translation 154 

1.5. Net revenue 155 

1.6. Gross margin, operating margin 

and operating income 155 

1.7. Financial income and expenses 155 

1.8. Current and deferred taxes 155 

1.9. Earnings per share 156 

1.10. Business combinations and 

transactions with minitory interests 156 

1.11. Intangible assets 156 

1.12. Property, plant and equipment 157 

1.13. Impairment of assets 157 

1.14. Financial assets and liabilities 158 

1.15. Inventories 160 

1.16. Share-based payment 160 

1.17. Pensions and other employee benefi ts 160 

1.18. Provisions 161 

1.19. Subsidies and grants 161 

1.20. Assets held for sale and discontinued 

operations 162 

1.21. Restatement of prior year fi nancial 

information 162 

NOTE 2. Changes in the scope of consolidation 162 

2.1. Transactions carried out in 2010 162 

2.2. Transactions carried out in 2009 163 

NOTE 3. Segment reporting 163 

3.1. Key segment performance indicators 164 

3.2. Reconciliation with Group data 164 

3.3 Reporting by geographic area 165 

3.4 Breakdown of revenue by major customer 165 


NOTE 4. Notes to the statement of income 166 

4.1. Net revenue 166 

4.2. Cost of sales 166 

4.3. Personnel expenses 166 

4.4 Research and Development 

expenditure, net 167 

4.5. Other income and expenses 167 

4.6. Cost of net debt 168 

4.7. Other fi nancial income and expenses 168 

4.8. Income taxes 169 

4.9. Earnings per share 169 

4.10. Income (loss) from discontinued 

operations 170 

NOTE 5. Notes to the statement of fi nancial 

position 170 

5.1. Goodwill 170 

5.2. Other intangible assets 171 

5.3. Property, plant and equipment 172 

5.4. Investments in associates 174 

5.5. Deferred taxes 175 

5.6. Inventories 175 

5.7. Accounts and notes receivable 176 

5.8. Stockholders’ equity 176 

5.9. Provisions 179 

5.10. Debt 185 

5.11. Breakdown of cash fl ows 188 

NOTE 6. Additional disclosures 190 

6.1. Financial instruments 190 

6.2. Risk management policy 193 

6.3 Off-balance sheet commitments 199 

6.4. Contingent liabilities 200 

6.5. French statutory training entitlement 200 

6.6. Related party transactions 201 

6.7. Joint ventures 202 

6.8. Events after the reporting period 202 

NOTE 7. List of consolidated companies 203

Note 1. Accounting policies 

The consolidated financial statements of the Valeo Group for 

the year ended December 31, 2010 include the accounts of 

Valeo, its subsidiaries, and the Group’s share of associates 

and jointly controlled entities. 

Valeo is an independent Group fully focused on the design, 

production and sale of components, integrated systems and 

modules for the automobile sector. It is one of the world’s 

leading automotive suppliers. 

Valeo is a French legal entity listed on the Paris Stock Exchange, 

whose head office is at 43, rue Bayen, 75017 Paris. 

Valeo’s consolidated financial statements were authorized 

for issue by the Board of Directors on February 24, 2011. 

They will be submitted for approval to the next Annual General 

Meeting of shareholders. 

1.1. Accounting standards applied 

The financial statements are prepared in accordance with 

International Financial Reporting Standards (IFRS) published 

by the International Accounting Standards Board (IASB) and 

endorsed by the European Union. The IFRS as adopted by 

the European Union can be consulted on the European 

Commission website (1) . 

1.1.1. Standards, amendments and interpretations 

adopted by the European Union and 

obligatorily applicable for reporting periods 

beginning on or after January 1, 2010 

IFRS 3 (revised) – “Business Combinations” and IAS 

27 (revised) – “Consolidated and Separate Financial 

Statements” 

IFRS 3 – “Business Combinations” is applicable prospectively 

to all business combinations for which the designated 

acquisition date is on or after December 31, 2009. IAS 27 

(revised) – “Consolidated and Separate Financial Statements” 

is effective as from January 1, 2010. The application of these 

two revised standards does not have a material impact on the 

Group’s financial statements at December 31, 2010. 

(1) http://ec.europa.eu/internal_market/accounting/ias/standards_en.htm 



Other amendments and interpretations obligatorily 

applicable for reporting periods beginning on or after 

January 1, 2010 as well as the annual improvements 

to IFRS published in April 2009, do not have a material 

impact on the Group’s financial statements. 

1.1.2. Standards, amendments and interpretations 

published by the International Accounting 

Standards Board (IASB) but not obligatorily 

applicable for reporting periods 

beginning on or after January 1, 2010 

and not early adopted by the Group 

The Group has not early adopted any standards, amendments 

or interpretations published by the IASB but not obligatorily 

applicable as of January 1, 2010. No such standards, 

amendments or interpretations are expected to have a 

material impact on the Group’s financial statements. 

1.1.3 Overview of IFRS 1 transition options 

On its transition to lFRS in 2005, and in accordance with 

lFRS 1, the Group chose not to retrospectively restate: 

business combinations carried out prior to January 1, 2004 

(IFRS 3); 

pensions and other employee benefits (IAS19). As a 

result, the balance of actuarial gains and losses previously 

recognized under French GAAP was reset to zero as of 

January 1, 2004; 

the translation of financial statements of foreign operations 

(IAS 21), leading to the elimination of cumulative translation 

adjustments as of January 1, 2004; 

equity instruments, with the exception of those granted 

after November 7, 2002 that had not yet fully vested at 

January 1, 2005 (IFRS 2). 

1.2. Basis of preparation 

The financial statements are presented in euros and are 

rounded to the closest million. 

They have been prepared in accordance with the general 

accounting principles of IFRS: 

true and fair view; 

going concern; 


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PAGE 154 



accrual basis of accounting; 

consistency of presentation; 

materiality and aggregation; 

no offsetting. 

Preparation of the financial statements requires Valeo to make 

estimates and assumptions which could have an impact 

on the reported amounts of assets, liabilities, income and 

expenses. These estimates and assumptions concern both 

risks specific to the automotive supply business such as 

those relating to quality and safety (see Chapter 2, section 

2.A.1), as well as more general risks to which the Group is 

exposed on account of its industrial operations across the 

globe. After a 12% drop in worldwide automotive production 

in 2009, the industry saw a significant upturn in 2010, with 

a 25% jump in worldwide output. In this far more upbeat 

environment, many of the Group’s indicators have improved. 

The Group exercises its judgment based on past experience 

and other factors considered to be decisive given the 

circumstances, and reviews the resulting estimates and 

assumptions on a continuous basis. Given the uncertainties 

inherent in any assessment, the amounts reported in Valeo’s 

future financial statements may differ from the amounts 

resulting from these estimates. 

Key estimates and assumptions adopted by the Group 

to prepare its financial statements for the year ended 

December 31, 2010 chiefly concern: 

the measurement of the recoverable amount of property, 

plant and equipment and intangible assets (see Note 4.5.3); 

the amount of provisions (see Note 5.9), particularly 

regarding restructuring costs and employee benefits 

obligations; 

the measurement of deferred tax assets (see Note 5.5). 

1.3. Consolidation methods 

The consolidated financial statements include the accounts 

of Valeo and companies under its direct and indirect control. 

The proportionate consolidation method is used when the 

contractual arrangements for control of a company specify 

that it is under the joint control of at least two venturers. 

Companies of this type are called joint ventures. ln this case, 

the Group’s share of each asset and liability and each item 

of income and expenses is aggregated, line-by-line, with 

similar items of fully integrated companies in its consolidated 


All significant inter-company transactions are eliminated (for 

joint ventures the elimination is made to the extent of the 

Group’s ownership interest in the company), as are gains 


on inter-company disposals of assets, inter-company profits 

included in inventories and inter-company dividends. 

Companies over which Valeo exercises significant influence 

(associates) are accounted for by the equity method. Valeo 

is presumed to exercise significant influence over companies 

in which it owns more than 20% of the voting rights. The 

equity method consists of replacing the carrying amount of 

the investments with the initial cost of the acquisition, plus 

or minus the Group’s equity in the associate’s earnings after 

the acquisition date, adjusted where appropriate in order to 

comply with Group accounting principles. 

Companies acquired during the period are consolidated as 

from the date the Group exercises (sole or joint) control or 

significant influence. 

1.4. Foreign currency translation 

Foreign currency financial statements 

The Group’s consolidated financial statements are presented 

in euros. 

The financial statements of each consolidated Group 

company are presented in its functional currency. The 

functional currency is the currency of the principal economic 

environment in which it operates, and is generally the local 

currency. 

The financial statements of foreign subsidiaries whose 

functional currency is not the euro are translated into euros 

as follows: 

statements of financial position items are translated at the 

year-end exchange rate; 

income statement items are translated into euros at the 

exchange rates applicable at the transaction dates or, in 

practice, at the average exchange rate for the period, as 

long as this is not rendered inappropriate as a basis for 

translation by major fluctuations in exchange rates during 

the period; 

unrealized gains and losses arising from the translation of 

the financial statements of foreign subsidiaries are recorded 

through other comprehensive income. 

Foreign currency transactions 

Transactions carried out in a currency other than the 

company’s functional currency are translated using the 

exchange rate prevailing at the transaction date. Monetary 

assets and liabilities denominated in a foreign currency are 

translated at the year-end exchange rate. Non-monetary 

assets and liabilities denominated in foreign currency are 

recognized at the historical exchange rate prevailing at the 

transaction date.

Differences arising from the translation of foreign currency 

transactions are recognized in income, with the exception 

of differences relating to loans and borrowings which are in 

substance an integral part of the net investment in a foreign 

subsidiary. These are recorded under translation adjustment 

in other comprehensive income, within consolidated 

stockholders’ equity, for their net-of-tax amount until the net 

investment is disposed of, at which time they are recognized 

in income. 

1.5. Net revenue 

Net revenue primarily include sales of finished goods and all 

tooling revenues. Sales of finished goods and tooling revenues 

are recognized at the date on which the Group transfers 

substantially all the risks and rewards of ownership to the 

buyer and retains neither continuing managerial involvement 

nor effective control over the goods sold. ln cases where the 

Group retains control of future risks and rewards related to 

tooling, any customer contributions are recognized over the 

duration of the project over a maximum period of four years. 

1.6. Gross margin, operating margin 

and operating income 

Gross margin is defined as the difference between net revenue 

and cost of sales. Cost of sales primarily corresponds to the 

cost of goods sold. 

Operating margin is equal to the gross margin less net 

Research and Development expenditure and selling and 

administrative expenses. 

Net Research and Development expenditure is equal to 

the costs incurred during the period, including amortization 

charged against capitalized development costs, less 

contributions received from customers in respect of 

development expenditure, sales of prototypes, research tax 

credits and the portion of research and development subsidies 

granted to the Group and taken to income. Contributions 

received from customers are taken to income over the period 

during which the corresponding products are sold, within a 

maximum period of four years. Subsidies and grants received 

are recognized in income in line with the stage of completion 

of the projects to which they relate. 

Operating income includes all income and expenses other 

than: 

interest income and expense; 

other financial income and expenses; 

equity in net earnings of associates; 

income taxes; 

income / (loss) from discontinued operations. 



ln order to facilitate interpretation of the statement of income 

and Group performance, unusual items that are material to the 

consolidated financial statements are presented separately 

within operating income under “Other income and expenses”. 

1.7. Financial income and expenses 

Financial income and expenses comprise interest expense, 

interest income and other financial income and expenses. 

Interest expense corresponds to interest paid on debt 

and interest income to interest earned on cash and cash 

equivalents. 

Other financial income and expenses notably include: 

gains and losses interest rate hedging transactions; 

gains and losses on foreign exchange or commodity 

transactions that do not meet the definition of hedges 

under IAS 39 – “Financial Instruments: Recognition and 

Measurement”; 

write-downs taken in respect of credit risk as well as the 

cost of credit insurance; 

the effect of unwinding discounts on provisions to reflect 

the passage of time, including the discount on provisions 

for pensions and other employee benefits; 

the expected return on pension and other employee benefit 

plan assets. 

1.8. Current and deferred taxes 

lncome tax expense includes current income taxes and 

deferred taxes of consolidated companies. Deferred taxes 

are accounted for using the liability method for all temporary 

differences between the tax base and the carrying amount 

of assets and liabilities in the consolidated financial 

statements and for all tax loss carry forwards. The main 

temporary differences relate to provisions for pensions and 

other employee benefits, other temporarily non-deductible 

provisions and capitalized development expenditure. Deferred 

tax assets and liabilities are measured at the tax rates that are 

expected to apply when the temporary differences reverse, 

based on tax rates that have been enacted or substantively 

enacted by the end of the reporting period. 

Taxes relating to items recognized directly in other 

comprehensive income are also recognized in other 

comprehensive income and not in income. 

Deferred tax assets are only recognized to the extent that it 

appears probable that the Valeo Group will generate future 

taxable profits against which these tax assets will be able to 

be recovered. 


PAGE 155


PAGE 156 



The Group reviews the probability of future recovery of 

deferred tax assets on a periodic basis for each tax entity. 

This review can, if necessary, lead the Group to no longer 

recognize deferred tax assets that it had recognized in prior 

years. 

Taxes payable and tax credits receivable on planned dividend 

distributions by subsidiaries are recorded in the statement 

of income. 

Deferred tax assets and liabilities are offset when a legally 

enforceable right exists to set off current tax assets against 

current tax liabilities and the deferred tax assets and liabilities 

concern income taxes levied by the same taxation authority. 

In France, Valeo elected for tax consolidation. The tax 

group includes the parent company and its principal French 

subsidiaries that are eligible for tax consolidation. 

Valeo also elected for tax consolidation for its subsidiaries 

in other countries where this is permitted by local legislation 

(Germany, ltaly, Spain, the United Kingdom and the United 

States). 

ln France, the 2010 Finance bill approved in December 

2009 introduced a new tax called Contribution Économique 

Territoriale (CET) to replace the former business tax. There 

are two components to the CET: the Contribution Foncière 

des Entreprises (CFE) and the Cotisation sur la Valeur Ajoutée 

des Entreprises (CVAE). Valeo considers that the CVAE 

component meets the definition of income tax provided by 

lAS 12 and the lFRlC, insofar as value added represents the 

intermediate level of income systematically used as the tax 

base in calculating the amount of CVAE due in accordance 

with French tax rules. 

1.9. Earnings per share 

Basic earnings per share (before dilution) are calculated by 

dividing consolidated net income (loss) for the period by the 

weighted average number of shares outstanding during the 

year, excluding the average number of shares held in treasury 

stock. 

Diluted earnings per share are calculated by including 

equity instruments such as stock subscription options and 

convertible bonds when these have a potentially dilutive 

impact. This is particularly the case for stock subscription 

options when their exercise price is below the market price 

(average Valeo share price over the period). When funds 

are received on the exercise of these rights (as is the case 

with subscription options), they are deemed to be allocated 

in priority to the purchase of shares at market price. This 

calculation method – known as the treasury stock method – 

serves to determine the “unpurchased” shares to be added 


to the shares of common stock outstanding for the purposes 

of computing the dilution. When funds are received at the 

date of issue of dilutive instruments (such as for convertible 

bonds), net income is adjusted for the net-of-tax interest 

savings which would result from the conversion of the bonds 

into shares. 

1.10. Business combinations and transactions 

with minitory interests 

The acquisition price corresponds to the fair value, at the date 

of exchange, of the assets transferred, liabilities assumed 

and equity instruments issued by the acquirer. This does 

not include acquisition-related costs, which are included in 

expenses in the period in which they are incurred. 

All identifiable assets acquired and liabilities and contingent 

liabilities assumed are recognized at their fair value at the 

date control is transferred to the Group (acquisition date). Fair 

value is calculated in the currency of the acquiree. Any excess 

of the acquisition cost over the fair value of the identifiable 

assets acquired and liabilities and contingent liabilities 

assumed at the acquisition date, is recorded in assets as 

goodwill. Goodwill arising on the acquisition of associates 

is included in the carrying amount of shares in associates. 

Goodwill is not amortized but is tested for impairment at least 

once a year and whenever there is an indication that it may 

be impaired. Impairment tests are carried out as described 

in Note 1.13. Impairment losses recognized against goodwill 

in the income statement cannot be reversed. 

The revised IAS 27 has modified the accounting treatment 

applicable to minority interests. Changes in minority interests 

that do not result in a change of control are now recognized in 

equity. In the event of an acquisition of additional shares in an 

entity already controlled by the Group, the difference between 

the acquisition price of the shares and the additional interest 

acquired by the Group in consolidated equity is recorded 

in stockholders’ equity. The value of the entity’s identifiable 

assets and liabilities (including goodwill) for consolidation 

purposes remains unchanged. 

1.11. Intangible assets 

Separately acquired intangible assets are initially recognized at 

cost in accordance with IAS 38. Intangible assets acquired in 

a business combination are recognized at fair value separately 

from goodwill. Intangible assets are subsequently carried 

at cost, less accumulated amortization and accumulated 

impairment losses.

Intangible assets are tested for impairment using the 

methodology described in Note 1.13. 

Innovation can be analyzed as either Research or 

Development. Research is planned investigation undertaken 

with the prospect of gaining new scientific or technical 

knowledge and understanding. Development is the 

application of research findings with a view to creating new 

products, before the start of commercial production. 

Research costs are recognized in expenses in the period in 

which they are incurred. 

Development expenditure is capitalized where the Group can 

demonstrate: 

that it has the intention, and the technical and financial 

resources to complete the development; 

that the intangible asset will generate future economic 

benefits; and 

that the cost of the intangible asset can be measured 

reliably. 

Capitalized development costs therefore correspond to 

projects for specific customer applications that draw on 

approved generic standards or technologies already applied 

in production. These projects are analyzed on a case-by-case 

basis to ensure they meet the criteria for capitalization as 

described above. 

They are subsequently amortized on a straight-line basis over 

a maximum period of four years as from the start of volume 

production. 

Other intangible assets are amortized on a straight-line basis 

over their expected useful lives: 

software 3 to 5 years 

patents and licenses based on their useful lives 

other intangible assets 

(excluding customer relationships) 3 to 5 years 

customer relationship intangibles up to 25 years 

1.12. Property, plant and equipment 

Property, plant and equipment are carried at cost less 

any depreciation and impairment losses recognized. Cost 

includes expenses directly attributable to the acquisition of 

the asset and the estimated cost of the Group’s obligation 

to rehabilitate certain assets, where appropriate. Material 

revaluations, recorded in accordance with laws and regulations 

applicable in countries in which the Group operates, have 

been eliminated in order to ensure that consistent valuation 

methods are used for all fixed assets in the Group. 



Tooling specific to a given project is subjected to an economic 

analysis of contractual relations with the automaker in order to 

determine which party has control over the associated future 

risks and rewards. Tooling is capitalized in the statements 

of financial position when Valeo has control over these risks 

and rewards, or is carried in inventories (until it is sold) if no 

such control exists. 

Any financing received from customers in respect of tooling 

is recognized in statement of financial position liabilities and 

taken to income proportionately to the depreciation charged 

against the related assets. 

Finance leases transferring substantially all the risks and 

rewards related to ownership of the leased asset to the 

Group, are accounted for as follows: 

the leased assets are recognized in property, plant and 

equipment in the Group’s statements of financial position 

at the inception of the lease, at an amount equal to the 

lower of their fair value and the present value of future 

minimum lease payments. This amount is then reduced 

by depreciation and any impairment losses recognized as 

described in Note 1.13; 

the corresponding financial obligation is recorded in debt; 

minimum lease payments are apportioned between the 

finance charge and the reduction of the outstanding liability. 

Leases in which the lessor retains substantially all the risks 

and rewards related to ownership of the leased asset to the 

Group are classified as operating leases. Lease payments 

under an operating lease are recognized as an operating 

expense on a straight-line basis over the lease term. 

All property, plant and equipment except land are depreciated 

over their estimated useful lives using the components 

approach. Depreciation is calculated on a straight-line basis 

over these estimated useful lives: 

buildings 20 years 

fixtures and fittings 8 years 

machinery and tooling 4 to 8 years 

other property, plant and equipment 3 to 8 years 

1.13. Impairment of assets 

Property, plant and equipment and intangible assets with 

definite useful lives are tested for impairment whenever 

objective indicators exist that they may be impaired. The main 

impairment indicators used by the Group for Cash-Generating 

Units (CGUs) are described in Note 4.5.3. Goodwill, other 

intangible assets with indefinite useful lives and intangible 

assets not yet ready to be brought into service are tested 

for impairment at least once a year and whenever there is an 

indication that they may be impaired. 


PAGE 157


PAGE 158 



Impairment tests 

Impairment tests compare the recoverable amount of a 

non-current asset with its net carrying amount. If the asset’s 

carrying value is greater than its recoverable amount, it is 

written down to its recoverable amount. The recoverable 

amount of an asset or a CGU is the higher of its fair value 

less costs to sell and its value in use. 

Cash-Generating Units (CGUs) 

CGUs are operating entities generating independent cash 

flows. Based on the Group’s organizational structure in 2010, 

CGUs generally correspond to groups of production sites 

belonging to the same Product Line or Product Group. 

Since the fair value less costs to sell of Group CGUs can 

seldom be reliably estimated, Valeo applies value in use 

(unless otherwise specified) to calculate the recoverable 

amount of a CGU, in accordance with paragraph 20 of IAS 

36. Value in use corresponds to the present value of future 

cash flows expected to derive from the use of an asset or 

CGU. 

Impairment tests are carried out as follows: 

the value in use of CGUs is calculated using post-tax cash 

flow projections covering a period of five years, prepared 

on the basis of the budgets and medium-term plans drawn 

up by Group entities. The projections are based on past 

experience, macroeconomic data for the automotive 

market, order books and products under development; 

cash flows beyond the five-year period are extrapolated 

using a perpetuity growth rate; 

cash flows are discounted based on a rate which reflects 

current market assessments of the time value of money 

and the risks specific to the asset (or group of assets). 

This rate corresponds to a post-tax weighted average cost 

of capital (WACC). The use of a post-tax rate results in 

recoverable amounts that are similar to those that would 

have been obtained by applying pre-tax rates to pre-tax 

cash flows. 

The growth rates and discount rates used for impairment 

testing in the period are set out in Note 4.5.3. 

Any impairment recognized against the assets in the CGU is 

allocated first, to reduce the carrying amount of any goodwill 

allocated to the CGU, and then to the other CGU assets in 

proportion to their carrying amounts. 

Goodwill 

Due to changes in the Group’s organizational structure in 

2010, the Group tested goodwill for impairment at the level of 

the Business Groups defined in Note 3 on segment reporting. 

Goodwill is tested for impairment using the same methodology 

and assumptions as those described above for CGUs. 


Reversal of impairment 

Impairment losses recognized on goodwill can never be 

reversed. 

Impairment losses recognized on assets other than goodwill 

may only be reversed if there are indicators that the 

impairment may no longer exist or may have decreased. If 

this is the case, the carrying amount of the asset is increased 

to its revised estimated recoverable amount. The increased 

carrying amount of an asset attributable to a reversal of an 

impairment loss cannot exceed the carrying amount that 

would have been determined had no impairment loss been 

recognized for the asset. 

1.14. Financial assets and liabilities 

Recognition and measurement principles regarding financial 

assets and liabilities are defined in lAS 32 and lAS 39. 

1.14.1. Available-for-sale financial assets 

This category includes shares in non-consolidated companies. 

Available-for-sale financial assets are recognized at fair value 

upon initial recognition, with any subsequent changes in fair 

value recognized through other comprehensive income or in 

income for the period in the event of a significant or prolonged 

decline in fair value. The fair value of investments listed on an 

active market is their market value. 

Unlisted investments whose fair value cannot be estimated 

reliably are carried at cost, and are classified in non-current 

financial assets. 

1.14.2. Long-term loans and receivables 

This category consists essentially of long-term loans, which 

are measured on an amortized cost basis using the effective 

interest rate. They are shown on the statements of financial 

position as non-current financial assets. 

1.14.3. Other non-current financial assets 

Other non-current financial assets are measured at fair value, 

with changes in fair value recognized in income. 

1.14.4. Current financial assets and liabilities 

Current financial assets and liabilities include trade receivables 

and payables, derivative financial instruments, and cash and 

cash equivalents.

Trade receivables and payables 

Trade receivables and payables are initially recognized at fair 

value and subsequently carried at amortized cost. The fair 

value of accounts receivable and accounts payable is deemed 

to be their nominal amount, since periods to payment are 

generally less than three months. 

Accounts receivable may be written down for impairment. 

If an event triggering a loss is identified during the financial 

year subsequent to initial recognition of the receivable, the 

write-down will be calculated by comparing the estimated 

future cash flows discounted at the original effective interest 

rate to the carrying amount in the statements of financial 

position. Impairment is recognized in operating income or 

other financial expenses if it relates to a risk of insolvency 

of the debtor. 

Derivative financial instruments 

Derivatives are recognized in the statements of financial 

position at fair value under other current financial assets or 

other current financial liabilities. The accounting impact of 

changes in the fair value of derivatives depends on whether 

or not hedge accounting is applied. 

When hedge accounting is applied: 

for fair value hedges of recognized assets and liabilities, 

the hedged item of these assets or liabilities is stated at 

fair value. The change in fair value relating to the effective 

portion of the hedge is recognized through income and 

offset by symmetrical changes in the fair value of the 

hedging instrument; 

for future cash flow hedges, the change in fair value of the 

derivatives relating to the effective portion of the hedge is 

recognized directly in other comprehensive income, while 

the ineffective portion is taken to other financial income 

and expenses; 

Changes in the fair value of derivatives that do not qualify for 

hedge accounting are recognized in other financial income 

and expenses. 

Foreign currency derivatives 

Although they act as hedges for the Group, foreign currency 

derivatives do not always meet the criteria for hedge 

accounting. In these cases, changes in the fair value of the 

derivatives are recognized in other financial income and 

expenses and are offset, as applicable, by changes in the 

fair value of the underlying receivables and payables. 

The Group applies hedge accounting to a limited number 

of highly probable future transactions generally considered 

significant. In these cases, changes in the fair value of the 

derivatives are recognized in other comprehensive income for 



the effective portion of the hedge, and subsequently taken 

to operating income when the hedged item itself affects 

operating income. The ineffective portion of the hedge is 

recognized in other financial income and expenses. 

Metals derivatives 

In principle, the Group applies cash flow hedge accounting. 

The effective portion of the hedge is reclassified from other 

comprehensive income to operating income when the hedged 

position itself affects income. The ineffective portion of the 

hedge is recognized in other financial income and expenses. 

Where a forecast transaction is no longer highly probable, the 

cumulative gains and losses carried in other comprehensive 

income are transferred immediately to financial income and 

expenses. 

Interest rate derivatives 

The Group generally applies fair value hedge accounting 

when it uses interest rate derivatives swapping fixed-rate 

debt for variable-rate debt. Changes in the fair value of debt 

attributable to changes in interest rates, and symmetrical 

changes in the fair value of the interest rate derivatives, are 

recognized in other financial income and expenses for the 

period. 

Variable interest rate hedges protect the Group against 

the impact of fluctuations in interest rates on its interest 

payments. These hedges are eligible for cash flow hedge 

accounting. The hedging instrument is measured at fair 

value and recognized in the statements of financial position. 

Changes in the fair value of the hedging instrument relating 

to the effective portion of the hedge are recognized in 

other comprehensive income, while changes relating to the 

ineffective portion are recognized in income. Amounts carried 

in other comprehensive income in respect of the effective 

portion of the hedge are taken to income as the interest 

expenses hedged themselves affect income. 

Certain interest rate derivatives are not designated as hedging 

instruments within the meaning of lAS 39. Changes in the fair 

value of these derivatives are recognized in other financial 

income and expenses for the period. 

Cash and cash equivalents 

Cash and cash equivalents are comprised of marketable 

securities such as money-market funds with a low price 

volatility risk; deposits and very short-term risk-free securities 

maturing within three months which can be readily sold or 

converted into cash; and cash at bank. 

These current financial assets are carried at fair value through 

income and are held with a view to being sold in the short 

term. 


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1.14.5. Debt 

Bonds and other loans 

Bonds and loans are valued at amortized cost. The amount 

of interest recognized in financial expenses is calculated 

by applying the loan’s effective interest rate to its carrying 

amount. Any difference between the expense calculated 

using the effective interest rate and the actual interest 

payment impacts the value at which the loan is recognized. 

Hedge accounting is generally applied to debt hedged by 

interest rate swaps. The debt is remeasured to fair value, 

reflecting changes in interest rates. 

OCEANE bonds 

Bonds convertible into new shares and/or exchangeable 

for existing shares (“OCEANE”) grant bearers an option 

for conversion into common Valeo shares. These bonds 

constitute a hybrid financial instrument which must be split 

into its two components in accordance with lAS 32: 

the value of the debt component is calculated by 

discounting the future contractual cash flows at the market 

rate applicable at the bond issue date (taking account of 

credit risk at the issue date) for a similar instrument with 

the same characteristics but without a conversion option; 

the value of the equity component is calculated as the 

difference between the proceeds of the bond issue and 

the amount of the debt component. 

Short-term debt 

This caption mainly includes credit balances with banks and 

commercial paper issued by Valeo for its short-term financing 

needs. Commercial paper has a maximum maturity of three 

months and is valued at amortized cost. 

1.15. Inventories 

lnventories are stated at the lower of cost and net realizable 

value. Cost includes the cost of raw materials, labor and other 

direct manufacturing costs on the basis of normal activity 

levels. These costs are determined by the “First-in-First-out” 

(FlFO) method which, due to the rapid inventory turnover 

rate, approximates the latest cost at the end of the reporting 

period. 

lmpairment losses are recognized on the basis of the net 

realizable value. 

As indicated in Note 1.12, tooling specific to a given project 

is recorded in inventories until it is sold, when control over the 

future economic benefits and risks associated with the assets 

are transferred back to the constructor. A provision is made 

for any potential loss on the tooling contract (corresponding 

to the difference between the customer’s contribution and 

the cost of the tooling) as soon as the amount of the loss 

is known. 


1.16. Share-based payment 

Some Group employees receive compensation in the form 

of share-based payment. 

Employee stock option and free share plans lead to the 

recognition of a personnel expense. 

This expense corresponds to the fair value of the instrument 

issued, and is recognized over the applicable vesting period. 

Fair value is estimated on the basis of valuation models 

adapted to the characteristics of the instruments (Black- 

Scholes-Merton model for options, etc.). The Group regularly 

reviews the number of potentially exercisable options. Where 

appropriate, the impact of any changes in these estimates is 

recorded in income. 

1.17. Pensions and other employee benefits 

Pensions and other employee benefits are measured in 

accordance with IAS 19. 

Short-term benefits 

Group employees are entitled to short-term benefits such as 

paid annual leave, paid sick leave, bonuses and other benefits 

(such as termination benefits), payable within 12 months of 

the end of the period in which the corresponding services are 

rendered by employees. 

These benefits are recorded in current liabilities. 

Post-employment and other long-term benefits 

These cover two categories of employee benefits: 

post-employment benefits, which include statutory 

retirement bonuses, supplementary pension benefits, and 

coverage of certain medical costs for retirees and early 

retirees; 

other long-term benefits payable (during employment), 

corresponding primarily to long-service bonuses. 

Benefits offered to each employee depend on local legislation, 

collective bargaining agreements, or other agreements in 

place in each Group entity. 

These benefits are broken down into: 

defined contribution plans, under which the employer pays 

fixed contributions on a regular basis and has no legal or 

constructive obligation to pay further contributions: these 

are recognized in expenses based on calls for contributions; 

defined benefit plans, under which the employer guarantees 

a future level of benefits. 

An obligation is recognized in respect of defined benefit plans 

under liabilities in the statements of financial position. 

The provision for pensions and other employee benefits is 

equal to the present value of Valeo’s future benefit obligation 

less, where appropriate, the fair value of plan assets in funds

allocated to finance such benefits and any adjustments made 

in respect of unrecognized past service cost. An asset is 

only recognized on overfunded plans if it represents future 

economic benefits that are available to the Group. 

The provision for long-term benefits is equal to the present 

value of the benefit obligations. The expected cost of 

these benefits is recorded in personnel expenses over the 

employee’s working life in the company. 

The calculation of these provisions is based on valuations 

performed by independent actuaries using the projected unit 

credit method and final salaries. These valuations incorporate 

both macroeconomic assumptions specific to each country 

in which the Group operates (discount rate, expected longterm 

return on plan assets, and increases in salaries and 

medical costs) and demographic assumptions, including rate 

of employee turnover, retirement age and life expectancy. 

Discount rates are determined by reference to market 

yields at the valuation date on high quality corporate bonds 

with a term consistent with that of the employee benefits 

concerned. Expected long-term returns on plan assets are 

estimated taking into account the structure of the investment 

portfolio for each country. The rates for 2010 are disclosed 

in Note 5.9.2. 

The effects of differences between previous actuarial 

assumptions and what has actually occurred (experience 

adjustments) and the effect of changes in actuarial 

assumptions (assumption adjustments) give rise to actuarial 

gains and losses. Actuarial gains and losses arising 

on long-term benefits payable during employment are 

recognized immediately in income. However, actuarial gains 

and losses arising on post-employment benefits are taken 

directly to other comprehensive income net of deferred tax, 

in accordance with the option available under IAS 19. 

Past service costs may arise on the adoption of or change in 

a defined benefit plan. Past service costs relating to long-term 

employee benefits are recognized immediately in income. 

Past service costs arising on vested pension obligations are 

recognized in income, while past service costs relating to 

non-vested obligations are amortized on a straight-line basis 

over the average period remaining until the corresponding 

rights are vested by employees. 

The expense recognized in the income statement includes: 

service cost for the period, the amortization of past service 

cost, and the impact of any plan curtailments or settlements 

recorded in operating income; 

the impact of unwinding the discount on the obligation and 

the expected return on plan assets recognized in financial 

income and expenses. 

1.18. Provisions 



A provision is recognized when the Group has a legal or 

constructive obligation resulting from a past event, where 

it is probable that future outflows of resources embodying 

economic benefits will be necessary to settle the obligation, 

and where the obligation can be estimated reliably. Provisions 

are measured in accordance with IAS 37 and taking into 

account assumptions deemed most probable. 

Commitments resulting from restructuring plans are 

recognized when an entity has a detailed formal plan and 

has raised a valid expectation in those affected that it will 

carry out the restructuring by starting to implement that plan 

or by announcing its main features. 

A provision for warranties is set aside to cover the estimated 

cost of returns of goods sold, on a statistical basis or based 

on specific quality risks. Statistical warranty provisions cover 

risks related to contractual warranty obligations, and are 

determined based on both historical data and probability 

calculations. Provisions for specific quality risks cover costs 

arising in specific situations not covered by usual warranties. 

The corresponding expense is recognized in cost of sales. 

A provision for onerous contracts is recognized when the 

unavoidable costs of meeting the obligations under the 

contract exceed the economic benefits expected to be 

received by the Group under said contract. 

This caption includes provisions intended to cover 

commercial, labor and tax risks arising in the ordinary course 

of operations. 

When the effect of the time value of money is material, the 

amount of the provision is discounted using a rate that 

reflects the market’s current assessment of this value and 

the risks specific to the liability concerned. The increase in the 

provision related to the passage of time (termed “unwinding”) 

is recognized through income in other financial income and 

expenses. 

1.19. Subsidies and grants 

This caption comprises aid received from public bodies 

to help finance costs incurred by the Group mainly in its 

Research and Development and investment projects, and 

includes benefits in the form of financing granted at reduced 

interest rates. 

These subsidies and grants are initially recognized in liabilities 

in the statements of financial position and subsequently taken 

to income under operating margin as the costs to which they 

relate materialize. 


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1.20. Assets held for sale and discontinued 

operations 

When the Group expects to recover the value of an asset 

or a group of assets through its sale rather than through 

continuing use, such assets are presented separately under 

“Assets held for sale” in the statements of financial position. 

Any liabilities related to such assets are also presented under 

a separate caption in statements of financial position liabilities. 

Assets classified as held for sale are valued at the lower of 

their carrying amount and their estimated sale price less costs 

to sell, and are therefore no longer subject to depreciation 

and amortization. Any impairment losses or proceeds from 

the disposal of these assets are recognized through operating 

income. 

ln accordance with lFRS 5, discontinued operations represent 

a separate major line of business of the Group; an operation 

that forms part of a single coordinated plan to dispose of 

a separate major line of business; or a company acquired 

solely with a view to resale. Classification as a discontinued 

operation occurs at the date of sale or at an earlier date if the 

business meets the criteria to be recognized as an asset held 

for sale. lncome or losses generated by these operations, as 

well as any capital gains or losses on disposal, are presented 

net of tax on a separate line of the income statement. To 

Note 2. Changes in the scope of consolidation 

2.1. Transactions carried out in 2010 

2.1.1. Acquisition of minority interests 

in Indian Electrical Systems firm 

On May 19, 2010, Valeo increased its take in the Indian 

Electrical Systems firm based in Pune to 100%. This firm 

was previously 66.7%-owned by Valeo and 33.3%-owned 

by N.K. Minda, and was already fully consolidated in the 

Group’s financial statements. The entity manufactures starters 

and alternators for passenger vehicles, and has changed its 

name to Valeo Engine and Electrical Systems India Private 

Ltd. In accordance with the revised IAS 27, this acquisition 

of minority interests led to a decrease of 8 million euros in 

consolidated equity at December 31, 2010. 


provide a meaningful year-on-year comparison, the same 

treatment is applied to the previous year. 

1.21. Restatement of prior year financial 

information 

IFRS requires previously published comparative periods to 

be retrospectively restated in the event of: 

operations meeting the criteria set out in IFRS 5 on noncurrent 

assets held for sale and discontinued operations; 

business combinations (recognition of the definitive fair 

value of the assets acquired and liabilities and contingent 

liabilities assumed if fair value had been estimated on 

a provisional basis at the end of the previous reporting 

period); 

changes in accounting policies (subject to the transitional 

provisions applicable upon the first-time adoption of new 

standards); 

corrections of accounting errors. 

2.1.2. Sale of headlamp levelers business 

At June 30, 2010, Valeo sold its lighting modules business 

– consisting primarily of headlamp levelers – to European 

investment fund Syntegra Capital. This transaction generated 

a capital gain of 7 million euros, recorded under the caption 

“Other income and expenses”. The business contributed 

9 million euros to consolidated net revenue for the first 

six months of 2010 (12 million euros for the year ended 

December 31, 2009).

2.1.3. Sale of speed controller business 

On August 31, 2010, Valeo sold Telma, a manufacturer 

of electromagnetic retarders, to Torque Industry (Holding) 

Limited. The sale did not have a material impact on the 

Group’s financial statements. The business contributed 

30 million euros to consolidated net revenue in the first 

eight months of 2010 (39 million euros in the year to 

December 31, 2009). 

Note 3. Segment reporting 

In accordance with IFRS 8 – “Operating Segments” effective 

as from January 1, 2009, the Group’s segment information 

is presented on the basis of internal reports that are regularly 

reviewed by the Group’s executive management in order 

to allocate resources to the segments and assess their 

performance. Executive management represents the chief 

operating decision maker within the meaning of IFRS 8. 

Four reportable segments were identified, corresponding to 

Valeo’s organization into Business Groups. This organization, 

set up in 2009, was rounded out in 2010 with the creation 

of 16 Product Groups. There is no aggregation of operating 

segments. 

The Group’s four reportable segments are: 

Comfort and Driving Assistance Systems, comprising 

four Product Groups: Driving assistance, Interior controls, 

Interior electronics and Access mechanisms. These 

systems improve safety and driving comfort by offering 

easy access and enhanced 360° visibility around the 

vehicle, while creating an ergonomic, intuitive relationship 

with one’s environment; 

Powertrain Systems, comprising five Product Groups: 

Electrical systems, Transmission systems, Engine 

management systems, Air management systems and 

Hybrid and electric vehicle systems. This Business Group 

develops innovative solutions to reduce fuel consumption 

and CO 2 emissions, while maintaining driving pleasure. 

These solutions include a complete range of products for 

the electrification and hybridization of vehicles; 

Thermal Systems, comprising four Product Groups: Climate 

control, Powertrain thermal systems, Compressors and 

front-end modules. The technologies developed by this 

Business Group contribute to optimizing cabin comfort and 

to reducing energy consumption; 



2.2. Transactions carried out in 2009 

2.2.1 Acquisition of an interest in Valeo Fawer 

Compressor (Changchun) Co., Ltd 

On November 2, 2009, Valeo acquired an additional interest in 

Valeo Fawer Compressor (Changchun) Co., Ltd, a company 

based in Changchun which develops and manufactures 

compressors, bringing the Group’s total interest in this 

company to 100%. The new company was fully consolidated 

as from November 2009 and is now known as Valeo 

Compressor (Changchun) Co., Ltd. Prior to the acquisition, 

Valeo and Fawer respectively held 60% and 40% of the 

acquired entity, which was proportionately consolidated in the 

Group’s previous financial statements. This acquisition did not 

have a material impact on the Group’s financial statements 

for the year ended December 31, 2009. 

Visibility Systems, comprising three Product Groups: 

Lighting systems, Wiper systems and Wiper motors. These 

systems offer better visibility solutions for all weather and 

driving conditions. The systems developed by this Business 

Group contribute to safety by improving the visibility of both 

the vehicle and the driver, while saving energy. 

Each of these Business Groups is also responsible for the 

manufacture and for part of the distribution of products 

for the aftermarket. Accordingly, income and expenses 

for Valeo Service, which sells almost exclusively products 

manufactured by the Group, have been reallocated among 

the Business Groups identified. 

Holding companies, disposed businesses and eliminations 

between the four operating segments defined above are 

shown in the “Other” segment. 

The key performance indicators for each segment are: 

net revenue; 

EBITDA, which represents operating income (loss) before 

depreciation and amortization of property, plant and 

equipment and intangible assets, impairment losses 

recorded in operating margin, and other income and 

expenses (see Note 1.6); 

net Research and Development expenditure; 

investments in property, plant and equipment and intangible 

assets; 

segment assets, comprising property, plant and equipment 

and intangible assets (including goodwill), and inventories. 


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3.1. Key segment performance indicators 

The key performance indicators for each segment are shown below: 


(in millions of euros) 

Net revenue 


Comfort 

and Driving 

Assistance 

Systems 

Powertrain 

Systems 

Thermal 

Systems 

Visibility 

Systems Other Total 

▪ segment (excluding Group) 1,675 2,660 2,910 2,326 61 9,632 

▪ intersegment (Group) 29 23 23 28 (103) - 

EBITDA 

Research and Development 

196 297 367 264 26 1,150 

expenditure, net 

Investments in property, plant 

(140) (146) (133) (121) 3 (537) 

and equipment and intangible assets 127 158 88 89 6 468 

Segment assets 862 1,170 1,033 929 36 4,030 

2009 


Net revenue 

Comfort 

and Driving 

Assistance 

Systems 

Powertrain 

Systems 

Thermal 

Systems 

Visibility 

Systems Other Total 

▪ segment (excluding Group) 1,315 1,999 2,243 1,922 20 7,499 

▪ intersegment (Group) 29 12 15 16 (72) - 

EBITDA 

Research and Development 

106 207 180 146 31 670 

expenditure, net 

Investments in property, plant 

(118) (126) (124) (110) 5 (473) 

and equipment and intangible assets 112 167 86 110 4 479 

Segment assets 800 1,127 908 959 34 3,828 

3.2. Reconciliation with Group data 

The table below reconciles EBITDA with consolidated operating income: 


EBITDA 

Depreciation and amortization of property, plant and equipment and intangible assets, and impairment 

1,150 670 

losses (1) (533) (537) 

Other income and expenses (27) (49) 

Operating income 590 84 

(1) Impairment losses recorded in operating margin only.

Total segment assets reconcile to total Group assets as follows: 




Segment assets 4,030 3,828 

Accounts and notes receivable 1,449 1,251 

Other current assets 200 180 

Taxes recoverable 10 15 

Assets held for sale 2 1 

Financial assets 1,551 1,041 

Deferred tax assets 198 117 

Total Group assets 7,440 6,433 

3.3 Reporting by geographic area 



External net 

revenue by market 

Net revenue by 

production area 

Non-current 

assets (1) 

France 1,360 2,476 746 

Other European countries and Africa 4,424 3,693 721 

North America 1,215 1,099 237 

South America 756 721 147 

Asia 1,877 1,947 452 

Eliminations - (304) - 

TOTAL 9,632 9,632 2,303 

2009 


External net 

revenue by market 

Net revenue by 

production area 

Non-current 

assets (1) 

France 1,208 2,161 785 

Other European countries and Africa 3,704 3,046 753 

North America 752 675 206 

South America 575 554 145 

Asia 1,260 1,265 405 

Eliminations - (202) - 

TOTAL 7,499 7,499 2,294 

(1) Non-current assets consist of property, plant and equipment and intangible assets (excluding goodwill) and investments in associates. Goodwill balances cannot 

be broken down by geographical area as they are allocated to Business Groups which belong to several areas. 

3.4 Breakdown of revenue by major customer 

Three major global auto makers represent 43.6% of the Group’s revenue (45.5% in 2009), and each of these individually accounts 

for more than 10% of the Group’s revenue. 


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Note 4. Notes to the statement of income 

4.1. Net revenue 

Group net revenue rose 28.4% to 9,632 million euros in 2010 

from 7,499 million euros in 2009. Revenue growth results 

chiefly from the rise in worldwide automotive production. It 

includes a negative impact of 0.2% resulting from changes 

4.2. Cost of sales 

Cost of sales can be analyzed as follows: 


in the scope of consolidation and a positive foreign currency 

impact of 4.6%. 

On a comparable Group structure and exchange rate basis, 

consolidated net revenue for 2010 climbed 24.0% year-onyear. 


Raw materials consumed (5,365) (4,115) 

Labor (1,297) (1,125) 

Direct production costs and production overheads (883) (764) 

Depreciation and amortization (1) (357) (365) 

Other 5 8 

Cost of sales (7,897) (6,361) 

(1) This amount does not include amortization charged against capitalized development costs, which is recognized in net Research and Development 

expenditure. 

4.3. Personnel expenses 

2010 2009 

Total employees at December 31 (1) 57,930 52,110 

(1) Including temporary staff. 

The statements of income present operating expenses by function. Operating expenses include the following personnel-related 

expenses: 


Wages and salaries (1) 1,638 1,451 

Social charges 404 358 

Share-based payment 6 7 

Pension expenses under defined contribution schemes 71 79 

(1) Including temporary staff. 

Pension expenses under defined benefit schemes are set out in Note 5.9.2.

4.4 Research and Development expenditure, net 




Research and Development expenditure (754) (688) 

Contributions received and subsidies 197 182 

Capitalized development expenditure 143 147 

Amortization and impairment of capitalized development expenditure (123) (114) 

Research and Development expenditure, net (537) (473) 

4.5. Other income and expenses 


Claims and litigation (8) (19) 

Restructuring costs (18) (4) 

Impairment of fixed assets (9) (23) 

Other 8 (3) 

Other income and expenses (27) (49) 

4.5.1. Claims and litigation 

The amount of 8 million euros recognized on the “Claims and 

litigation” line for the year ended December 31, 2010 mainly 

includes additions to provisions for disputes with current or 

former employees. 

4.5.2. Restructuring costs 

In March 2010, the Group announced that its new-look 

organization based around four Business Groups, new 

shared service centers and the more prominent role given 

to National Directorates, would lead to a restructuring plan. 

Most staff departures under this plan will take place in 2011. 

Restructuring costs associated with this plan were recorded 

in first-half 2010 and partially offset by a write-back of 

the remaining provisions set aside for the worldwide staff 

reduction plan launched in December 2008. 

4.5.3. Impairment of fixed assets 

Property, plant and equipment and intangible assets 

(excluding goodwill) 

Year ended December 31, 2010 

The main impairment indicators used by the Group as the 

basis for impairment tests of Cash-Generating Units (CGUs) 

include a negative operating margin for 2010 or a fall of more 

than 20% in revenue between 2009 and 2010. The scope of 

the CGUs to be tested for impairment is defined at the end 

of October and may be extended at the end of the period 

if events occur that could have an adverse impact on the 

assets concerned. 

The tests are carried out using the following assumptions: 

perpetuity growth rate of 1%: this rate is the same as that 

used in 2009, and remains below the average long-term 

growth rate for the Group’s business sector; 

post-tax discount rate (WACC) of 8.9% (8.5% in 2009): this 

rate was calculated using the method defined in 2007 by 

an independent expert, and is based on a sample selection 

of 20 automotive suppliers. 

No impairment losses were recognized by the Group as a 

result of these tests. 

Impairment for a total of 9 million euros in 2010 chiefly results 

from impairment tests carried out on specific intangible assets 

belonging to the Engine management systems Product 

Group for which impairment losses were identified. 


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PAGE 168 



Year ended December 31, 2009 

The Group recorded net write-downs of 16 million euros 

against CGUs as a result of impairment tests in 2009, 

concerning mainly: 

property, plant and equipment and intangible assets 

(excluding goodwill) relating to three CGUs within the Wiper 

Systems Product Family in Western Europe (11 million euros); 

impairment losses recognized against Lighting Systems and 

Interior Controls CGUs based in Europe (4 million euros). 

Sensitivity of CGU impairment tests to the discount rate 

An increase and a decrease of 1% in the discount rate would 

have had no impact on the results of these impairment tests 

in 2010 and 2009. 

4.5.4. Other 


Goodwill 

No impairment losses were recognized against goodwill for 

the year ended December 31, 2010 as a result of impairment 

tests. 

In light of the planned sale of the electromagnetic retarders 

business at December 31, 2009 (see Note 2.1.3), a 7 million 

euro write-down had been recognized against a portion of 

goodwill allocated to this CGU in order to reflect the entity’s 

market value. 

Sensitivity of goodwill impairment tests 

to the discount rate 

A 1% increase in the discount rate or a one-year push-back 

in medium-term business plans would have no impact on 

the results of goodwill impairment tests in the year ended 


In 2010, this item mainly includes capital gains on the disposal of the headlamp levelers business (see Note 2.1.2). 

4.6. Cost of net debt 


Interest expense (1) (83) (69) 

Interest income 16 9 

Cost of net debt, net (67) (60) 

(1) Including 9 million euros in 2010 finance costs on undrawn credit lines. 

The cost of net debt increased in 2010 despite the fall in debt over the period. This reflects a sharpe wise in the carry rate due 

to the decline in risk-free returns on the Group’s liquidity. 

4.7. Other financial income and expenses 


Interest expense on unwinding of discount on pension obligations (1) (48) (48) 

Expected return on plan assets (1) 20 16 

Currency gains (losses) on cash flow hedges - - 

Currency gains (losses) on other transactions (2) (12) 

Gains (losses) on commodity transactions (trading and ineffective portion) 1 (5) 

Gains (losses) on fair value hedges (interest rate) - - 

Additions to provisions for credit risk (2) (3) 

Gains (losses) on disposals of financial assets - - 

Unwinding of discount on provisions (excluding pension obligations) (1) (4) 

Miscellaneous - (1) 

Other financial income and expenses (32) (57) 

(1) See Note 5.9.2.

4.8. Income taxes 

4.8.1. Income tax expense 




Current taxes (173) (75) 

Deferred taxes 69 (4) 

Income taxes (104) (79) 

4.8.2. Effective tax rate 

The Group recognized income tax expense of 104 million euros in 2010. 


Net income (loss) before income taxes 

excluding equity in net earnings (losses) of associates 491 (33) 

Standard tax rate in France (34.4) (34.4) 

Theoretical income taxes 

Impact of: 

(169) 11 

▪ unrecognized deferred tax assets and unused tax losses (current year) (1) 20 (110) 

▪ income taxed at other rates 40 22 

▪ utilization of prior-year tax losses 3 9 

▪ permanent differences between book income and taxable income 8 (6) 

▪ tax credits 6 4 

▪ other impacts (2) (12) (9) 

Group income taxes (104) (79) 

(1) No deferred tax assets are recognized in France and in the United States. The income tax expense for 2010, reflecting an effective tax rate of 21.2%, takes 

into account deferred tax assets recognized in certain countries for 69 million euros due to legal restructuring measures or an improvement in economic 

outlook. 

(2) At the end of 2009, Valeo considered that the Cotisation sur la Valeur Ajoutée des Entreprises (CVAE) tax met the definition of income tax set out in IAS 

12. Accordingly, a provision for deferred tax was set aside against income for 9 million euros in the year ended December 31, 2009. Income tax in 2010 

includes a net expense of 12 million euros in respect of the CVAE. 

4.9. Earnings per share 

4.9.1. Basic earnings per share 


Net income (loss) attributable to owners of the company (in millions of euros) 365 (153) 

Weighted average number of ordinary shares outstanding (in thousands of shares) 75,168 75,312 

Basic earnings (loss) per share (in euros) 4.86 (2.04) 


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4.9.2. Diluted earnings per share 

Note 5. Notes to the statement of financial position 

5.1. Goodwill 


Net goodwill at January 1 1,146 1,154 

Acquisitions during the year - 1 

Price adjustments in respect of acquisitions made in previous years 1 - 

Disposals, net (1) (5) - 

Translation adjustment 68 (2) 

Impairment losses - (7) 

Net goodwill at December 31 1,210 1,146 

Including accumulated impairment losses at December 31 - (7) 

(1) See Note 2.1.3. 

Year-on-year changes in goodwill chiefly result from translation 

adjustment due to fluctuations in the Japanese yen and US 

dollar. 



Net income (loss) attributable to owners of the company (in millions of euros) 365 (153) 

Weighted average number of shares outstanding (in thousands of shares) 75,168 75,312 

Stock options (in thousands of options) 49 - 

OCEANE bonds (in thousands of options) 

Weighted average number of shares used for the calculation of diluted earnings 

2 - 

(loss) per share (in thousands of shares) 75,219 75,312 

Diluted earnings (loss) per share (in euros) 4.86 (2.04) 

4.10. Income (loss) from discontinued operations 

Discontinued operations did not have a material impact on consolidated income in either 2010 or 2009. 

The impairment loss recognized in 2009 related to the planned 

divestment of the electromagnetic retarders business, which 

had a carrying amount that was 7 million euros above its 

estimated market value at the end of that year.

The main goodwill balances are broken down as follows: 




Comfort and Driving Assistance Systems 311 305 

Powertrain Systems 271 267 

Thermal Systems 343 301 

Visibility Systems 284 272 

Other 1 1 

TOTAL 1,210 1,146 

5.2. Other intangible assets 


Amortization 

2009 

Gross carrying and impairment Net carrying Net carrying 


amount 

losses 

amount 

amount 

Software 185 (170) 15 21 

Patents and licenses 84 (57) 27 24 

Capitalized development expenditure 1,018 (630) 388 360 

Customer relationship intangibles and other intangible assets 179 (65) 114 130 

Intangible assets 1,466 (922) 544 535 

Customer relationship intangibles were valued within the 

context of acquisitions mostly carried out in 2005. Similarly, 

patents and licenses include assets relating to technology 

Changes in intangible assets in 2010 and 2009 are analyzed below: 


(in millions of euros) Software 

acquired. Impairment losses were recognized in 2010 on 

certain assets acquired as part of a business combination 

(see Note 4.5.3). 

Patents and 

licences 

Capitalized 

development 

expenditure 

Other 

intangible 

assets Total 

Gross at January 1, 2010 177 63 865 182 1,287 

Accumulated amortization and impairment (156) (39) (505) (52) (752) 

Net at January 1, 2010 21 24 360 130 535 

Acquisitions 2 - 143 5 150 

Disposals - - (1) (1) (2) 

Changes in scope of consolidation - - (1) - (1) 

Impairment 1 (2) (17) (9) (27) 

Amortization (11) (7) (106) (8) (132) 

Translation adjustment 1 1 10 9 21 

Reclassifications 1 11 - (12) - 

Net at December 31, 2010 15 27 388 114 544 


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2009 

(in millions of euros) Software 


Patents and 

licences 

Capitalized 

development 

expenditure 

Other 

intangible 

assets Total 

Gross at January 1, 2009 170 62 757 191 1,180 

Accumulated amortization and impairment (142) (34) (436) (43) (655) 

Net at January 1, 2009 28 28 321 148 525 

Acquisitions 3 - 147 5 155 

Disposals - - (2) - (2) 

Changes in scope of consolidation - - (2) 2 - 

Impairment (1) - (14) - (15) 

Amortization (14) (5) (100) (10) (129) 

Translation adjustment - - 2 (2) - 

Reclassifications 5 1 8 (13) 1 

Net at December 31, 2009 21 24 360 130 535 

5.3. Property, plant and equipment 


Depreciation 

2009 

Gross carrying and impairment Net carrying Net carrying 


amount 

losses 

amount 

amount 

Land 164 (14) 150 137 

Buildings 1,057 (669) 388 390 

Plant and equipment 3,671 (2,951) 720 711 

Specific tooling 1,308 (1,183) 125 153 

Other tangible assets 420 (365) 55 63 

Tangible assets in progress 220 (3) 217 211 

TOTAL 6,840 (5,185) 1,655 1,665 

No material amounts of property, plant and equipment had been pledged as security as December 31, 2010. 

Finance leases included within property, plant and equipment can be analyzed as follows: 


Land - - 

Buildings - - 

Plant and equipment 5 5 

Specific tooling - - 

Other 2 2 

Non-current assets in progress - - 

TOTAL 7 7

Changes in property, plant and equipment in 2010 and 2009 are analyzed below: 


(in millions of euros) Land Buildings 

Plant and 

equipment 



Specific 

tooling 

Other 

tangible 

assets 

Tangible assets 

in progress Total 

Gross carrying amount 

at January 1, 2010 151 1,001 3,471 1,298 415 214 6,550 

Accumulated depreciation and impairment (14) (611) (2,760) (1,145) (352) (3) (4,885) 

Net carrying amount at January 1, 2010 137 390 711 153 63 211 1,665 

Acquisitions - 12 96 35 13 162 318 

Disposals (3) (2) (1) (2) - (3) (11) 

Changes in scope of consolidation - (1) (5) (1) - (1) (8) 

Impairment - - - (1) - (1) (2) 

Depreciation (1) (46) (217) (90) (27) - (381) 

Translation adjustment 16 19 34 7 3 10 89 

Reclassifications 

Net carrying amount at December 31, 

1 16 102 24 3 (161) (15) 

2010 150 388 720 125 55 217 1,655 

2009 

(in millions of euros) Land Buildings 

Plant and 

equipment 

Specific 

tooling 

Other tangible 

assets 

Tangible 

assets in 

progress Total 

Gross carrying amount at January 1, 2009 151 935 3,339 1,234 426 267 6,352 

Accumulated depreciation and impairment (15) (569) (2,599) (1,077) (353) - (4,613) 

Net carrying amount at January 1, 2009 136 366 740 157 73 267 1,739 

Acquisitions - 7 87 50 12 168 324 

Disposals - (1) (3) (2) (1) (3) (10) 

Changes in scope of consolidation - - 3 (1) - - 2 

Impairment 2 - (18) (1) 1 (2) (18) 

Depreciation (1) (44) (222) (91) (33) - (391) 

Translation adjustment (1) 6 11 1 1 2 20 

Reclassifications 

Net carrying amount at December 31, 

1 56 113 40 10 (221) (1) 

2009 137 390 711 153 63 211 1,665 

In accordance with IFRS 5, buildings for which the Group is actively seeking buyers are classified in “Assets held for sale” in 

the statements of financial position. 


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5.4. Investments in associates 

Changes in the “Investments in associates” caption can be analyzed as follows: 


Investments in associates at January 1 94 133 

Share in net earnings (losses) of associates (1) (34) 

Dividend payments (4) (3) 

Impact of changes in scope of consolidation - - 

Translation adjustment (1) 17 (6) 

Other (2) 4 

Investments in associates at December 31 104 94 

(1) In 2010, translation adjustments mainly reflect the impact of the appreciation in the yen on interests in Ichikoh. 


Ownership interest 

(%) 

Carrying amount 


2010 2009 2010 2009 

Ichikoh 31.6 31.6 70 63 

Faw Valeo Climate Control 36.5 36.5 28 25 

Other - - 6 6 

Investments in associates - - 104 94 

Ichikoh industries Ltd. is listed on the Tokyo Stock Exchange. The market value of Valeo’s interest in Ichikoh is 66 million euros 

at December 31, 2010 (33 million euros at December 31, 2009). The carrying amount of the investment is justified by its value 

in use for Valeo. 

Summarized financial data in respect of associates are set out below: 


Total assets 722 618 

Total liabilities 536 495 

Net revenue 981 731 

Net income (loss) for the year (4) (109)

5.5. Deferred taxes 

Deferred taxes broken down by temporary differences are shown below: 




Loss carryforwards 894 846 

Capitalized development expenditure (98) (93) 

Pensions and other employee benefits 162 147 

Other provisions 91 87 

Inventories 27 25 

Provisions for reorganization costs 32 38 

Tooling - 1 

Non-current assets (2) (14) 

Other 100 80 

Deferred taxes, gross 1,206 1,117 

Unrecognized deferred tax assets (1,030) (1,025) 

Deferred taxes 

O/w: 

176 92 

▪ Deferred tax assets 198 117 

▪ Deferred tax liabilities (22) (25) 

At December 31, 2010, deferred tax assets not recognized by the Group can be analyzed as follows: 

(in millions of euros) Tax basis 

Potential tax 

saving 

Tax losses available for carryforward from 2011 through 2014 17 4 

Tax losses available for carryforward in 2015 and thereafter 1,108 418 

Tax losses available for carryforward indefinitely 1,241 425 

Current tax loss carryforwards 2,366 847 

Unrecognized deferred tax assets on temporary differences - 183 

Total unrecognized deferred tax assets - 1,030 

The unrecognized deferred tax assets shown above chiefly concern France and the United States. 

5.6. Inventories 

At December 31, 2010, inventories break down as follows: 


Gross carrying 

Net carrying Net carrying 


amount Impairment 

amount 

amount 

Raw materials 274 (46) 228 162 

Work-in-progress 73 (9) 64 49 

Finished goods, supplies and specific tooling 382 (53) 329 271 

Inventories, net 729 (108) 621 482 


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Impairment losses taken against inventories amounted to 108 

million euros at December 31, 2010 (105 million euros at 

December 31, 2009) including an allowance (net of reversals) 

of 10 million euros during the period. 

5.7. Accounts and notes receivable 


Allowances to provisions for impairment of inventories net of 

reversals in 2009 amounted to 14 million euros. 


Accounts and notes receivable, gross 1,471 1,277 

Impairment (22) (26) 

Accounts and notes receivable, net 1,449 1,251 

At December 31, 2010, gross accounts and notes receivable not yet due and less than one month past due totaled 

1,400 million euros and 39 million euros, respectively, and represent 98% of total gross accounts and notes receivable (see 

Note 6.2.3.). 

5.8. Stockholders’ equity 

5.8.1. Share capital 

At December 31, 2010, share capital totaled 236 million 

euros, comprising 78,628,798 shares of fully paid-up 

common stock with a par value of 3 euros. Shares that have 

been registered in the name of the same holder for at least 

four years carry double voting rights (2,299,257 shares at 

December 31, 2010). 

Valeo’s share capital would rise to 239 million euros 

(79,581,590 shares) in the event that the stock subscription 

options granted to Valeo Group employees were exercised. 

The Group seeks to maintain a solid capital base in order to 

retain the confidence of investors, creditors and the market, 

and to secure its future development. Its objective is to strike 

a balance between levels of debt and equity, and to prevent 

the net debt to equity ratio from exceeding 100% on a longterm 

basis. 

The Group may be required to buy back treasury stock on 

the market to cover its obligations with regard to stock option 

plans and free share awards, as well as company savings 

plans and the liquidity contract (see Chapter 6, Section 6.E). 

The following employee stock subscription, stock purchase and free share plans approved by the Group’s Annual General 

Meeting were outstanding at December 31, 2010: 

Terms and conditions of stock subscription option plans 

Year in which plan was set up 


subject to options 

Exercise price of 

options 

(in euros) (1) 


not yet issued at 

December 31, 2010 (2) Expiration date 

2003 700,000 23.51 161,259 2011 

2003 780,000 32.91 282,490 2011 

2004 1,123,200 28.46 509,043 2012 

TOTAL 2,603,200 952,792 

(1) Exercise price equal to 100% of the average Valeo share price over the 20 trading days preceding the meeting of the Board of Directors granting the stock 

subscription options. 

(2) The number of shares includes the impact of the public share buyback offer and simplified public tender offer in 2005, which increased the share allocation 

ratio to 1.01 Valeo share from 1 Valeo share.

Terms and conditions of stock purchase option plans 



subject to options 

Exercise price 

of options 

(in euros) (1) 





December 31, 2010 (2) Expiration date 

2003 500,000 32.91 188,519 2011 

2004 280,800 32.74 144,081 2012 

2005 650,000 32.32 323,730 2013 

2006 187,000 33.75 187,000 2014 

2006 1,309,250 32.63 759,007 2014 

2007 250,000 36.97 250,000 2015 

2007 1,677,000 36.82 1,194,500 2015 

2008 426,750 31.41 343,500 2016 

2010 1,000,000 (3) 24.07 984,450 2018 

TOTAL 6,280,800 4,374,787 

(1) Exercise price equal to 100% of the average Valeo share price over the 20 trading days preceding the meeting of the Board of Directors granting the stock 

subscription options. 

(2) The number of shares includes the impact of the public share buyback offer and simplified public tender offer in 2005, which increased the share allocation 

ratio to 1.01 Valeo share from 1 Valeo share. 

(3) Including 611,635 shares granted contingent on the Group meeting performance conditions. 

Terms and conditions of free share awards 


Number 

of free shares 



December 31, 2010 Year of vesting 

2010 400,000 (1) 388,494 2012/2014 

TOTAL 400,000 388,494 

(1) Including 178,112 shares granted contingent on the Group meeting performance conditions. 

Movements in these plans can be analyzed as follows: 


Number of options and 

free shares granted 

Weighted average 

exercise price 

Options not exercised at January 1 5,513,419 32.68 

Options granted / Free shares to be issued 1,400,000 17.19 

Options cancelled (148,191) 27.42 

Options expired (209,740) 41.06 

Options exercised (852,552) 27.95 

Options not exercised / Free shares not issued at December 31 (1) 5,702,936 29.34 

Options which can be exercised at December 31 3,986,492 33.33 

(1) The number of shares does not include the impact of the public share buyback offer and simplified public tender offer in 2005. 


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2009 

Options not exercised at January 1 

6,634,464 33.43 

Options granted / Free shares to be issued - - 

Options cancelled (416,445) 32.12 

Options expired (638,850) 44.24 

Options exercised (65,750) - 

Options not exercised / Free shares not issued at December 31 (1) 5,513,419 32.68 

Options which can be exercised at December 31 3,672,669 31.93 


Number of options and 

free shares granted 

(1) The number of shares does not include the impact of the public share buyback offer and simplified public tender offer in 2005. 

Weighted average 

exercise price 

The principal data and assumptions underlying the valuation of equity instruments at fair value are provided below for 

2010 only, since no new plan was awarded in 2009: 


Free shares Stock options 

Other 

Other 

France Italy countries France countries 

Share price at grant date (euros) 23.81 23.81 23.81 23.81 23.81 

Expected volatility (%) - - - 40.9 40.9 

Risk-free rate (%) 1.3 1.3 1.8 1.8 1.3 

Dividend rate (%) 2.3 2.4 - 1.8 1.3 

Duration of the option (years) - - - 8 8 

Fair value of equity instruments (euros) 21.3 20.1 22.1 6.9 5.2 

Expected volatility is determined as being the implicit volatility at the grant date. The maturity used (four years for options allotted 

to employees in France and two years for other options) corresponds to the period during which the availability of options is 

restricted by tax legislation, and is considered to represent the life of the option. 

An expense of 6 million euros was booked in 2010 in respect of stock options plans and free share awards (7 million euros 

in 2009). 

5.8.2. Additional paid-in capital 

Additional paid-in capital represents the net amount received 

by Valeo, either in cash or in assets, in excess of the par value 

on issuance of Valeo shares. 

5.8.3. Translation adjustment 

At December 31, 2010, this caption primarily includes gains 

arising from the translation of the net assets of Valeo’s 

Brazilian and Japanese subsidiaries. 

5.8.4. Retained earnings 

Retained earnings include income for the year of 

384 million euros prior to appropriation. 

5.8.5. Dividends per share 

The balance of the parent company’s distributable 

retained earnings amounts to 1,540 million euros in 2010 

(1,455 million euros in 2009), before appropriation of 2010 

net income. 

No dividends were paid in either 2010 or 2009. 

5.8.6. Treasury stock 

At December 31, 2010, Valeo owns 3,538,638 of 

its own shares, representing 4.5% of share capital 

(December 31, 2009: 2,652,119 shares, representing 3.4% 

of share capital).

5.8.7. Minority interests 

Changes in minority interests can be analyzed as follows: 




Minority interests at January 1 51 51 

Equity in net earnings 19 7 

Dividends paid (14) (7) 

Capital increase - 1 

Translation adjustment 8 (1) 

Changes in scope of consolidation (2) - 

Minority interests at December 31 62 51 

5.9. Provisions 

Changes in provisions can be analyzed as follows: 


Provisions for 

restructuring 

costs 

Provisions for 

pensions and 

other employee 

benefits Other provisions Total 

Provisions at January 1, 2009 314 611 302 1,227 

Amounts used during the year (151) (61) (68) (280) 

Impact of changes in scope of consolidation - - - - 

Translation adjustment (2) (3) 4 (1) 

Reclassification - 2 4 6 

Additions 31 22 126 179 

Unwinding of discount 3 32 - 35 

Reversals (31) (9) (29) (69) 

Actuarial gains and losses recognized through equity - 16 - 16 

Provisions at December 31, 2009 164 610 339 1,113 

Amounts used during the year (69) (59) (56) (184) 

Impact of changes in scope of consolidation - (2) (1) (3) 

Translation adjustment 4 23 16 43 

Reclassification (8) - 10 2 

Additions 53 26 165 244 

Unwinding of discount 1 28 - 29 

Reversals (38) (5) (48) (91) 

Actuarial gains and losses recognized through equity - 30 - 30 

Provisions at December 31, 2010 107 651 425 1,183 

Of which current portion (less than 1 year) 69 63 245 377 


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5.9.1. Provisions for restructuring costs 

Provisions for restructuring costs amount to 107 million euros at December 31, 2010 and 164 million euros at December 31, 

2009. The decrease in this caption over the period mainly reflects expenses and reversals of residual amounts set aside in 

respect of the announced plan to cut 5,000 jobs worldwide, for which a provision had been set aside at the end of 2008. 

5.9.2. Provisions for pensions and 

other employee benefits 

Description of the plans in force within the Group 

The Group’s commitments in relation to pensions and other 

employee benefits primarily concern the following defined 

benefit plans: 

termination benefits (France, Italy, South Korea); 

supplementary pension benefits (France, Germany, Japan, 

United Kingdom, United States) which top up the statutory 

pension schemes in force in those countries; 

the payment of certain medical and life insurance costs for 

retired employees (United States); 


certain of the above-mentioned benefits granted specifically 

under early retirement schemes (France, Germany, United 

States); 

other long-term benefits (long-service bonuses in France, 

Germany, Japan and South Korea). 

Costs relating to all of these benefits are recognized 

in accordance with the accounting policy described in 

Note 1.17. 

Actuarial assumptions 

To calculate discount rates for the year ended December 31, 

2010, the Group used the same benchmarks as in previous 

years. 

The discount rates used in the countries representing the Group’s most significant obligations were as follows: 

Benchmark 


(%) 

Basis Basis 

iBoxx Euro-Corporate AA 10-year+ Euro zone 4.8 5.3 

iBoxx £-Corporate AA 15-year+ United Kingdom 5.5 5.7 

Citigroup Pension Discount Curve United States 5.2 5.7 

10-year government bonds Japan 1.5 2.0 

10-year government bonds South Korea 4.5 5.3 

The sensitivity of the Group’s main obligations to a 0.5% rise or fall in discount rates is set out below. 

Expected long-term returns on plan assets are estimated taking into account the structure of the investment portfolio for each 

country, and are as follows for the Group’s principal plans: 

(%) 2010 2009 

United States 7.3 8.0 

United Kingdom 5.7 6.7 

Japan 2.2 2.7 

The weighted average long-term salary inflation rate was 3.5% 

at December 31, 2010, unchanged from December 31, 2009. 

The rate of increase for medical costs in the United States used 

to value the Group’s main obligations at December 31, 2010 

was 9.9% in 2010 and 9.7% in 2011, gradually reducing to 

5% by 2032. This assumption is largely similar to that used 

in 2009.

Breakdown of obligations 



Other 

European 

countries 



North 

America Asia Total 

Present value of unfunded obligations 133 249 102 45 529 

Present value of funded obligations 19 64 323 53 459 

Market value of plan assets (3) (42) (245) (40) (330) 

Deficit 149 271 180 58 658 

Unrecognized past service cost (7) - - - (7) 

Provisions recognized at December 31, 2010 142 271 180 58 651 

Permanent employees at December 31, 2010 (1) 12,180 16,858 4,837 8,949 42,824 

(1) Permanent employees shown in the tables above do not include permanent staff in South America, for whom no obligation was recognized in respect of 

pensions or other long-term benefits in 2009 or 2010. The Group’s pension obligations in North America are significant, since a significant portion of these 

obligations relate to retired personnel or employees having left the Group. 

2009 


Other 

European 

countries 

North 


Present value of unfunded obligations 125 229 91 41 486 

Present value of funded obligations 17 56 281 46 400 

Market value of plan assets (2) (37) (197) (33) (269) 

Deficit 140 248 175 54 617 

Unrecognized past service cost (7) - - - (7) 

Provisions recognized at December 31, 2009 133 248 175 54 610 

Permanent employees at December 31, 2009 (1) 13,072 16,588 3,931 7,047 40,638 

(1) Permanent employees shown in the tables above do not include permanent staff in South America, for whom no obligation was recognized in respect 

of pensions or other long-term benefits in 2009 or 2010. The Group’s pension obligations in North America are significant, since a significant portion 

of these obligations relate to retired personnel or employees having left the Group. 


PAGE 181


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Movements in provisions 



Other 

European 

countries 

North 


Provisions at January 1, 2009 120 217 220 54 611 

Actuarial gains and losses recognized through equity 11 29 (24) - 16 

Amounts used during the year (12) (15) (24) (10) (61) 

Impact of changes in scope of consolidation - - - - - 

Reclassification 2 - - - 2 

Translation adjustment - 1 (6) 2 (3) 

Expenses (income) for the year: 12 16 9 8 45 

▪ Service cost 8 3 1 7 19 

▪ Interest cost 8 15 22 3 48 

▪ Past service cost (1) - - - (1) 

▪ Expected return on plan assets - (2) (13) (1) (16) 

▪ Other (3) - (1) (1) (5) 

Provisions at December 31, 2009 133 248 175 54 610 

Actuarial gains and losses recognized through equity 6 19 11 (6) 30 

Amounts used during the year (9) (15) (28) (7) (59) 

Impact of changes in scope of consolidation (2) - - - (2) 

Reclassification - - - - - 

Translation adjustment - 1 14 8 23 

Expenses (income) for the year: 14 18 8 9 49 

▪ Service cost 8 6 1 9 24 

▪ Interest cost 7 15 23 3 48 

▪ Past service cost 4 - - (2) 2 

▪ Expected return on plan assets - (3) (16) (1) (20) 

▪ Other (5) - - - (5) 

Provisions at December 31, 2010 142 271 180 58 651 

Of which current portion (less than 1 year) 16 13 29 5 63 

An expense of 49 million euros was recognized in 2010 in respect of pensions and other employee benefits (45 million euros 

in 2009). In accordance with the method described in Note 1.17, 24 million euros were included in operating items and 

28 million euros in other financial income and expenses. Other income and expenses include a write-back of 3 million euros on 

pension obligations in France following the restructuring plan announced in 2010 (Note 4.5.2.).

Movements in obligations 



Other 

European 

countries 



North 


Benefit obligations at January 1, 2010 142 285 372 87 886 

Service cost 8 6 1 9 24 

Interest cost 7 15 23 3 48 

Benefits paid (8) (16) (21) (7) (52) 

Actuarial gains and losses 6 21 21 (7) 41 

Impact of changes in scope of consolidation (2) - - - (2) 

Reclassification (1) - - - (1) 

Other - - - (2) (2) 


Benefit obligations at December 31, 2010 152 313 425 98 988 

Changes in actuarial gains and losses, resulting in an increase in the benefit obligation, stem mainly from the fall in interest 

rates in countries where the Group’s obligations are the most significant, in particular the United States, Germany, France and 

the United Kingdom. 

2009 


Other 

European 

countries 

North 


Benefit obligations at January 1, 2009 128 246 377 92 843 

Service cost 4 3 1 7 15 

Interest cost 8 15 22 3 48 

Benefits paid (11) (14) (21) (15) (61) 

Actuarial gains and losses 11 32 7 1 51 

Impact of changes in scope of consolidation - - - - - 

Reclassification 2 - - - 2 

Other - - (1) (1) (2) 

Translation adjustment - 3 (13) - (10) 

Benefit obligations at December 31, 2009 142 285 372 87 886 


PAGE 183


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Movements in plan assets 




Other 

European 

countries 

North 


Plan assets at January 1, 2010 2 37 197 33 269 

Expected return on plan assets - 3 16 1 20 

Contributions paid to external funds 2 3 21 3 29 

Benefits paid (1) (4) (14) (3) (22) 

Actuarial gains and losses - 2 10 (1) 11 


Plan assets at December 31, 2010 3 42 245 40 330 

The fair value of plan assets continued to rise in 2010, 

reflecting equity market trends and translation adjustment 

mainly recognized on assets in the United States and Japan 

for 23 million euros. The actual return on plan assets was 

31 million euros in 2010 compared to 51 million euros 

in 2009. Experience adjustments generated on plan assets 

in an amount of 11 million euros reflect the difference between 

2009 


actual and estimated returns on these assets. These actuarial 

differences were credited to equity at December 31, 2010. 

Contributions of 29 million euros were paid to external funds in 

2010. Contributions in 2011 are estimated at 28 million euros. 

The Group is not exposed to margin calls on its pension 

obligations due to the nature of its plan assets. 

Other 

European 

countries 

North 


Plan assets at January 1, 2009 1 29 157 38 225 

Expected return on plan assets - 2 13 1 16 

Contributions paid to external funds 2 3 16 4 25 

Benefits paid (1) (2) (13) (9) (25) 

Actuarial gains and losses - 3 31 1 35 

Translation adjustment - 2 (7) (2) (7) 

Plan assets at December 31, 2009 2 37 197 33 269 

Breakdown of plan assets 


Other 

European 

countries 

North 


Cash at bank - - 12 7 19 

Shares 3 26 144 13 186 

Government bonds - 8 32 20 60 

Corporate bonds - 8 57 - 65 

Breakdown of plan assets at December 31, 2010 3 42 245 40 330 

Cash at bank - - 4 6 10 

Shares 2 25 125 10 162 

Government bonds - 6 10 17 33 

Corporate bonds - 6 58 - 64 

Breakdown of plan assets at December 31, 2009 2 37 197 33 269

Data for previous financial years 



Obligations, financial assets and actuarial gains and losses for previous financial years can be analyzed as follows: 

(in millions of euros) 2010 2009 2008 2007 2006 

Obligations 988 886 843 933 1,074 

Financial assets (330) (269) (225) (300) (301) 

Net obligations 

Actuarial (losses) gains recognized 

658 617 618 633 773 

in other comprehensive income (1) (30) (16) (56) 79 27 

(1) Actuarial gains and losses recognized in oher comprehensive income in 2010 for 30 million euros mainly include 49 million euros of actuarial losses due 

to changes in assumptions regarding pension obligations and 11 million euros of actuarial gains due to experience adjustments on financial assets. 

Sensitivity of obligations to discount rates and the rate 

of increase in medical costs 

The discount rates applied in each region have a significant 

impact on the amount of the Group’s benefit obligations. A 

0.5% rise in discount rates would reduce the projected benefit 

obligation by around 57 million euros and service cost by 

around 2 million euros in 2011. A 0.5% fall in discount rates 

would increase the projected benefit obligation by around 

62 million euros and service cost by around 2 million euros 

in 2011. 

5.9.3. Other provisions 

A 1% rise or fall in the rate of increase for medical costs in 

the US would not have a material impact on the obligation 

or expense for the period. 

Sensitivity of plan assets to rates of return 

A decrease of 1% in the expected return on plan assets 

would reduce the financial income recognized on these 

assets in 2011 by around 3 million euros. An increase of 

1% in the expected return on plan assets would have the 

opposite effect. 


Provisions for product warranties 170 156 

Other 255 183 

Other provisions 425 339 

In 2010, the “Other” caption includes provisions for tax 

risks (79 million euros) and provisions for site rehabilitation 

or environmental obligations (22 million euros). The balance 

5.10. Debt 

5.10.1. Gross debt 

At December 31, 2010, the Group’s gross debt can be analyzed as follows: 

of this caption is intended to cover disputes with current or 

former employees, commercial litigation and other operational 

risks. 


Long-term debt (Note 5.10.2) 1,097 1,526 

Current portion of long-term debt (Note 5.10.2) 505 40 

Short-term debt (Note 5.10.3) 77 73 

Gross debt 1,679 1,639 


PAGE 185


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5.10.2. Long-term debt 

Analysis of long-term debt 


Bonds 598 597 

OCEANE bonds 463 453 

Syndicated loans 223 223 

European Investment Bank loan 201 197 

Lease obligations 8 7 

Other borrowings 81 61 

Accrued interest 28 28 

Long-term debt 1,602 1,566 

Long-term debt includes: 

600 million euros worth of eight-year bonds issued by 

Valeo on June 24, 2005 and paying a fixed coupon of 

3.75%. These bonds were issued in the context of the 

Euro Medium Term Notes program. The effective interest 

rate on these bonds is 3.89%; 

463 million euros worth of bonds convertible for new shares 

and/or exchangeable for existing shares (“OCEANE”) 

issued on August 4, 2003, representing 9,975,454 bonds 

with a nominal value of 46.4 euros each. The interest on 

these bonds was 2.375% per annum payable in arrears 

on January 1 of each year. Bearers of the bonds could 

request conversion and/or exchange into common stock 

until December 23, 2010, on the basis of 1.013 Valeo share 

for one bond. The effective interest rate of the OCEANE 

bonds is 4.54% (4.46% excluding the call). These bonds 

were redeemed in full on January 3, 2011; 

two seven-year syndicated loans for a total amount of 

225 million issued on July 29, 2005. These loans were 

renegotiated in June 2009. Based on a quantitative and 

qualitative analysis of the changes in these loans, the Group 

did not consider that its initial debt had been extinguished 

and it was therefore maintained in the statements of 

financial position. These loans and the related hedges have 

the following characteristics: 

• the first loan is at a variable rate and incorporates a floor 

and a cap limiting the interest rate to between 5.51% and 

7.71% at all times. The loan is hedged by a swap offsetting 

the optional position on the loan, placing Valeo as a net 

variable-rate borrower (3-month Euribor +4%), 


• the second loan is at a variable rate, hedged by a derivative 

which has identical characteristics to those of the loan, 

placing Valeo as a net variable-rate borrower (3-month 

Euribor +4%); 

a 225 million euro loan taken out with the European 

Investment Bank (EIB) at the end of July 2009. The loan 

is for a seven-year term, repayable in four equal annual 

installments as from 2013, and bears variable interest 

(6-month Euribor +2.46%). An interest rate swap was 

taken out in respect of this new loan, exchanging Euribor 

for a fixed rate of 3.37%. This EIB reduced-rate loan 

was granted as part of funding for costs incurred by the 

Group in research projects looking at ways to reduce fuel 

consumption and CO 2 emissions and improve active safety. 

In accordance with IAS 20, a subsidy was calculated as 

the difference between the market interest rate for a similar 

loan at the date the loan was granted, and the interest 

rate granted by the EIB. The subsidy was estimated at 

28 million euros and was recognized within liabilities in 

the statements of financial position. It is booked against 

Research and Development expenditure at the same time 

as the completion of the projects it is intended to finance. 

The impact on income in 2010 is 3 million euros. The loan 

is carried at amortized cost for an amount of 201 million 

euros at December 31, 2010, and has an effective interest 

rate of 6.10%. 

Covenants relating to borrowings and debt are detailed in 

Note 6.2.2.

Maturities of long-term debt 

(in millions of euros) 2012 2013 2014 2015 



2016 and 

beyond Total 

Bonds - 598 - - - 598 

Syndicated loans 223 - - - - 223 

EIB loan - 38 53 55 55 201 

Lease obligations 1 1 1 1 - 4 

Other borrowings 28 5 6 7 25 71 

TOTAL 252 642 60 63 80 1,097 

Current portion of long-term debt 


OCEANE 463 - 

Lease obligations 4 2 

Other borrowings 10 10 

Accrued interest 28 28 

Current portion of long-term debt 505 40 

The current portion of long-term debt relates mainly to OCEANE bonds for 463 million euros, redeemed in January 2011, and 

accrued interest not yet due of 28 million euros, of which 12 million euros relates to bonds and 11 million euros to the OCEANE 

bond issue. 

5.10.3. Short-term debt 


Commercial paper 13 5 

Short-term loans and overdrafts 64 68 

Short-term debt 77 73 

The 64 million euros recorded on the “Short-term loans and overdrafts” line are mainly overdraft facilities. 

5.10.4. Cash and cash equivalents 


Marketable securities 981 633 

Cash 335 227 

Cash and cash equivalents 1,316 860 

Marketable securities consist of money market funds (SICAV) for 981 million euros. 


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5.10.5. Net debt 

Net debt is defined as all long-term debt, short-term debt and bank overdrafts, less loans, other non-current financial assets 

and cash and cash equivalents. 

Breakdown of net debt 


Long-term debt (Note 5.10.2) 1,097 1,526 

Current portion of long-term debt (Note 5.10.2) 505 40 

Loans and other non-current financial assets (85) (57) 

Long-term debt 1,517 1,509 

Short-term debt (Note 5.10.3) 77 73 

Cash and cash equivalents (Note 5.10.4) (1,316) (860) 

Net cash and cash equivalents (1,239) (787) 

Net debt 278 722 

Loans and other non-current financial assets relate mainly to investments in Brazil, consisting of certificates of deposits maturing 

after three months. 

5.10.6. Analysis of net debt by currency 

Net debt can be analyzed as follows by currency: 


Euro 528 876 

US dollar (26) (35) 

Yen (13) 4 

Brazilian real (81) (67) 

Korean won (59) (21) 

Chinese yuan (27) (24) 

Other currencies (44) (11) 

TOTAL 278 722 

5.11. Breakdown of cash flows 

5.11.1. Expenses (income) with no cash effect 


Expenses (income) with no cash effect 

Depreciation, amortization and impairment of non-current assets 543 560 

Net additions to (reversals from) provisions (21) (127) 

Losses (gains) on sales of non-current assets (4) 5 

Expenses related to share-based payment 6 7 

TOTAL 524 445 


5.11.2. Changes in working capital 




Changes in working capital 

Inventories (110) 69 

Accounts and notes receivable (138) (79) 

Accounts and notes payable 275 193 

Other receivables and payables 4 31 

TOTAL 31 214 

5.11.3. Impact of changes in the scope of consolidation 

Changes in the scope of consolidation in 2010 had a positive impact of 22 million euros on consolidated cash flows. This amount 

relates mainly to sales of the headlamp levelers business (Note 2.1.2) and the electromagnetic retarders business (Note 2.1.3). 

At December 31, 2009, changes in the scope of consolidation had a negative impact of 10 million euros. This amount mainly 

resulted from: 

cash outflows of 7 million euros on the sale of the Wiring Harness activity in December 2007, which had no impact on income 

(loss) for 2009; 

acquisition of the entire capital stock of Valeo Fawer Compressor (Changchun) Co., Ltd in November 2009. This company 

was previously proportionately consolidated and is now fully consolidated, generating a cash outflow of 4 million euros. 


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Note 6. Additional disclosures 

6.1. Financial instruments 

6.1.1. Fair value of financial instruments 

Recognition and measurement principles regarding financial assets and liabilities are defined in IAS 32 and IAS 39. 

The classification of financial instruments into specific categories is described in Note 1.14. 


ASSETS 

Non-current financial assets: 


2010 2010 carrying amount under IAS 39 2009 

Carrying 

amount 

Amortized 

cost 

Fair value 

through 

equity 

Fair value 

through 

income 

Carrying 

amount 

▪ Investments in non-consolidated companies 3 - 3 - 2 

▪ Loans 85 85 - - 57 

▪ Deposits and guarantees 17 - - 17 12 

▪ Other non-current financial assets 2 - - 2 3 

Accounts and notes receivable 

Other current financial assets: 

1,449 1,449 - - 1,251 

▪ Hedging derivatives 17 - 17 - 10 

▪ Trading derivatives 7 - - 7 3 

Cash and cash equivalents 1,316 - - 1,316 860 

LIABILITIES 

Bonds 598 598 - - 597 

OCEANE convertible bonds (debt component) 463 463 - - 453 

Syndicated loans 223 223 - - 223 

EIB loan 201 201 - - 197 

Other long-term debt 117 117 - - 96 

Accounts and notes payable 

Other current financial liabilities: 

1,987 1,987 - - 1,648 

▪ Hedging derivatives 13 - 11 2 3 

▪ Trading derivatives 2 - - 2 2 

Short-term debt 77 77 - - 73 

The principal terms and conditions of borrowings (bonds, OCEANE convertible bonds, syndicated loans and the EIB loan) are 

detailed in Note 5.10.2, while the basis for recognition is set out in Note 1.14.

IFRS 7 establishes a hierarchy of valuation techniques used 

to price financial instruments. The following categories are 

identified: 

Level 1: prices directly based on quoted prices in active 

markets; 

Level 2: prices established using valuation techniques 

drawing on observable inputs; 

Level 3: prices established using valuation techniques 

drawing on non-observable inputs. 

Level 2 is used to measure the fair value of the Group’s 

derivative financial instruments. 

The fair value of bonds is calculated on the basis of listed 

prices in an active bond market, and amounted to 610 

million euros at December 31, 2010 and 568 million euros at 


The fair value of the syndicated loans and EIB loan is estimated 

by discounting future cash flows at the market rate of interest 

6.1.2. Fair value of derivatives 

At December 31 



as of the end of the reporting period, taking into account the 

Group’s issuer spread. Issuer spreads were estimated at 1.28% 

for the syndicated loans and 1.30% for the EIB loan (source: 

Markit Reuters). These reflect the spread on Valeo 1.3-year 

and 5-year credit default swaps respectively. At December 

31, 2010, the fair values of these instruments are estimated 

at 232 million euros for the EIB loan and 234 million euros for 

the syndicated loans (228 million euros and 240 million euros, 

respectively, at December 31, 2009). 

When the OCEANE convertible bonds matured, the price of 

the Valeo share was below the exercise price of the convertible 

option. As a result, the value of the bond’s option component 

was close to zero, while the bond component approximated 

par. As only a relatively small number of bondholders chose to 

exercise their conversion option, the bonds were legitimately 

valued at par, i.e. 463 million euros at December 31, 2010. 

The fair value of these bonds was estimated at 453 million 

euros as of December 31, 2009. The fair value of other debt 

components is equal to their carrying amount. 


ASSETS 

Hedging derivatives: 

▪ Foreign currency derivatives 1 - 

▪ Commodity derivatives 

Trading derivatives: 

16 10 

▪ Foreign currency derivatives 7 2 

▪ Commodity derivatives - 1 

Total other current financial assets 24 13 

LIABILITIES 

Hedging derivatives: 

▪ Interest rate derivatives (13) (3) 

▪ Commodity derivatives 

Trading derivatives: 

- - 

▪ Foreign currency derivatives (2) (2) 

▪ Commodity derivatives - - 

Total other current financial liabilities (15) (5) 

The impact of financial instruments on income (loss) for the years ended December 31, 2010 and December 31, 2009 is set 

out in Note 4.7. 


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6.1.2.1. Fair value of foreign currency derivatives 



Nominal Fair value Nominal Fair value 

Forward foreign currency purchases 41 2 15 1 

Forward foreign currency sales (22) - (28) - 

Currency swaps (289) 6 128 1 

TOTAL ASSETS (270) 8 115 2 

Forward foreign currency purchases 12 - 31 (1) 

Forward foreign currency sales (30) (1) (9) - 

Currency swaps 30 (1) 69 (1) 

TOTAL LIABILITIES 12 (2) 91 (2) 

Net impact - 6 - - 



The fair value of currency hedges is computed using the following valuation method: future cash flows are calculated using 

forward exchange rates at year-end and are then discounted using the interest rate of the functional currency. This method 

corresponds to level 2 in the fair value hierarchy. 

6.1.2.2. Fair value of commodity (metals) derivatives 





Swaps – Purchases 105 16 85 11 

Swaps – Sales - - - - 

TOTAL ASSETS 105 16 85 11 

Swaps – Purchases 4 - 5 - 

Swaps – Sales - - (3) - 

TOTAL LIABILITIES 4 - 2 - 

Net impact - 16 - 11 

The fair value of metals derivatives is computed using the following valuation method: future cash flows are calculated using 

forward commodity prices and forward exchange rates at year-end and are then discounted using the interest rate of the 

functional currency. This method corresponds to level 2 in the fair value hierarchy. 

6.1.2.3. Fair value of interest rate derivatives 





Interest rate swaps 450 (13) 450 (3) 

TOTAL LIABILITIES 450 (13) 450 (3) 

The fair value of interest rate swaps is computed by discounting future cash flows based on market interest rates at year-end. 

This method corresponds to level 2 in the fair value hierarchy.

6.2. Risk management policy 

6.2.1. Market risks 

6.2.1.1. Foreign currency risk 

Exposure to foreign currency risk 

A detailed description of the Group’s policy for managing 

foreign currency risk is provided in Chapter 2, section 2.A.4.1. 

The principal hedging instruments used by the Group are 

forward purchases and sales of foreign currencies, as well 

as swaps and options. The foreign currency derivatives used 



A detailed description of the Group’s risk management policy is provided in Chapter 2, sections 2.A.4, 2.A.5 and 2.A.6. 

by the Group are not recognized as hedging instruments 

within the meaning of IAS 39. Exceptionally, the Group applies 

hedge accounting to highly probable future cash flows from 

the date the derivatives are contracted. 

At December 31, 2010, a gain of 1 million euros was 

recognized in stockholders’ equity in respect of derivatives 

used as hedging instruments. 

The Group’s net exposure to foreign currency risk based on notional amounts arises on the following main currencies (excluding 

entities’ functional currencies): 



USD JPY EUR Total Total 

Accounts and notes receivable 69 10 301 380 369 

Other financial assets 360 1 139 500 388 

Accounts and notes payable (51) (25) (327) (403) (366) 

Long-term debt - (44) (365) (409) (403) 

Gross exposure 378 (58) (252) 68 (12) 

Forward sales (394) (10) (30) (434) (341) 

Forward purchases 58 66 9 133 73 

Net exposure 42 (2) (273) (233) (280) 

In the table above, the EUR column represents the euro 

exposure of Group entities whose functional currency is not 

the euro. Exposure arises on subsidiaries based in Eastern 

Europe – mainly the Czech Republic – which are financed in 

euros by Valeo SA. 

At December 31, 2009, the breakdown by currency of the net 

exposure in the statements of financial position for a negative 

amount of 280 million euros is as follows: 

21 million euros relating to the US dollar; 

13 million euros relating to the yen; 

(314) million euros relating to the euro. 


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Analysis of the sensitivity of net equity to foreign currency risk 

The sensitivity analysis was based on an exchange rate of 1.34 US dollars, 108.65 Japanese yen and 26.06 Czech koruna to 

1 euro at December 31, 2010 (USD 1.44, JPY 133.15 and CZK 26.47, respectively, at December 31, 2009). 

An increase of 10% in the value of the euro against these currencies at December 31, 2010 and December 31, 2009 would 

have the following impacts: 




Income gain 

(loss) 

Equity gain 

(loss) 

USD exposure (4) - 

JPY exposure - - 

EUR exposure (4) (24) 

TOTAL (8) (24) 

2009 


Income gain 

(loss) 

Equity gain 

(loss) 

USD exposure (2) - 

JPY exposure (1) - 

EUR exposure (5) (26) 

TOTAL (8) (26) 

For the purpose of these analyses, it is assumed that all other variables, including interest rates, remained unchanged. 

Assuming that all other variables remained unchanged, a 10% fall in the value of the euro against these currencies would have 

the opposite effect to the one shown above. 

6.2.1.2. Commodity risk 

Exposure to commodity risk 

A detailed description of the Group’s policy for managing commodity risk is provided in Chapter 2, section 2.A.4.2. 

The Group favors hedging instruments which do not involve physical delivery of the underlying commodity, such as swaps and 

options based on the average monthly price. 

Volumes of non-ferrous metals hedged at December 31, 2010 and December 31, 2009 break down as follows: 

(in tons) 2010 2009 

Aluminium 28,000 22,000 

Secondary aluminium 9,000 8,000 

Copper 7,000 9,000 

Zinc 4,000 5,000 

TOTAL 48,000 44,000 

Base metals derivatives used by the Group are designated 

as cash flow hedges. An unrealized gain of 16 million euros 

related to existing hedges was recognized directly in other 

comprehensive income in accordance with IAS 39. 

An unrealized gain of 11 million euros recognized in other 

comprehensive income at December 31, 2009 and arising 

on commodity hedges purchased in second-half 2009 was 

reclassified in full to operating income in the first half of 2010.



Analysis of the sensitivity of net equity to metal price risk 

The table below shows the impact on equity and income of a 10% variation in metal futures prices at December 31, 2010 and 

2009. 


Income gain Equity gain Income gain Equity gain 


(loss) 

(loss) 

(loss) 

(loss) 

Impact of a 10% rise in metal futures prices - 10 - 8 

Impact of a 10% fall in metal futures prices - (10) - (8) 

For the purposes of the sensitivity analysis, it is assumed that all other variables remain unchanged over the period. 

6.2.1.3. Interest rate risk 

Exposure to interest rate risk 

The Group’s policy for managing interest rate risk is detailed 

in Chapter 2, section 2.A.4.3. 

The Group uses interest rate swaps to convert the interest 

rates on its debt into either a variable or a fixed rate, either 

at origination or during the term of the loan. Cash and cash 

equivalents are mainly invested in variable-rate instruments. 

Debt is essentially at fixed rates. 

The interest rate derivatives used by the Group to hedge 

against changes in the value of its fixed-rate debt are 

designated as fair value hedges under IAS 39. These 

derivatives are recorded at fair value in the statements of 

financial position, with changes in fair value taken to income. 

For the effective portion of the hedge, the impact on income 

is offset by a symmetrical revaluation of the hedged item. 

On August 5, 2009, the Group set up an interest rate swap to 

hedge the variable-rate interest on its EIB loan. This derivative 

qualifies for cash flow hedge accounting. The fair value of 

the swap is initially recognized in the statements of financial 

position, with subsequent changes in fair value taken to 

other comprehensive income until the hedged interest falls 

due. At December 31, 2010, the impact in stockholders’ 

equity of changes in the fair value of this swap was a negative 

9 million euros. 

At the end of the reporting period, the Group’s net interest rate position based on nominal values can be analyzed as follows: 

At December 31, 2010 

Less than 1 year 1 to 5 years More than 5 years Total nominal amount 

Fixed Variable Fixed Variable Fixed Variable Fixed Variable 


portion portion portion portion portion portion portion portion Total 

Financial liabilities 505 77 749 295 25 56 1,279 428 1,707 

Loans - - - (85) - - - (85) (85) 

Cash and cash equivalents - (1,316) - - - - - (1,316) (1,316) 

Net position before hedging 505 (1,239) 749 210 25 56 1,279 (973) 306 

Derivative instruments - - 62 (62) 56 (56) 118 (118) - 

Net position after hedging 505 (1,239) 811 148 81 - 1,397 (1,091) 306 

At December 31, 2009 

Less than 1 year 1 to 5 years More than 5 years Total nominal amount 

Fixed Variable Fixed Variable Fixed Variable Fixed Variable 


portion portion portion portion portion portion portion portion Total 

Financial liabilities 40 73 1,315 117 24 113 1,379 303 1,682 

Loans - - - (57) - - - (57) (57) 

Cash and cash equivalents - (860) - - - - - (860) (860) 

Net position before hedging 40 (787) 1,315 60 24 113 1,379 (614) 765 

Derivative instruments - - (112) 112 113 (113) 1 (1) - 

Net position after hedging 40 (787) 1,203 172 137 - 1,380 (615) 765 


PAGE 195


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Analysis of sensitivity to interest rate risk 

At December 31, 2010, 85% of long-term debt is at fixed rates (72% at December 31, 2009). 

Fixed-rate debt carried at amortized cost is not included in the calculation of sensitivity to interest rate risk. The Group’s exposure 

to interest rate risk therefore arises solely on its variable-rate debt. 

The tables below show the impact on income and equity of a sudden 1% rise in the interest rates applied to variable-rate 

financial assets and liabilities, after hedging: 




Income gain 

(loss) 

Equity 

gain (loss) 

Impact of a 1% rise in interest rates 10 9 

2009 


Income gain 

(loss) 

Equity gain 

(loss) 

Impact of a 1% rise in interest rates 6 9 

Similarly, at December 31, 2010, a sudden 1% fall in interest rates would have the opposite impacts for the same amount. 

6.2.1.4. Equity risk 

A detailed description of the Group’s policy for managing equity risk is provided in Chapter 2, section 2.A.4.4. 

The assets making up pension funds are detailed in Note 5.9.2. 

The Group’s cash and cash equivalents are set out in Note 5.10.4. 

6.2.2. Liquidity risk 


liquidity risk is provided in Chapter 2, section 2.A.5. 

The Group borrows long-term funds either through banks 

or public debt markets. In 2003, Valeo issued 463 million 

euros worth of bonds convertible for new shares and / or 

exchangeable for existing shares (“OCEANE”) maturing in 

2011. In 2005, it issued a 600 million euros Medium Term 

Note maturing in 2013. It also took out two syndicated 

loans for a total of 225 million euros maturing in 2012, and 

contracted a loan with the European Investment Bank (EIB) 

for 225 million euros maturing in 2016. 

At December 31, 2010, Valeo has 1,316 million euros in cash, 

less the amounts needed to redeem the OCEANE convertible 

bonds at January 3, 2011. The Group had 860 million euros 

in cash at December 31, 2009. Its other liquidity sources are: 

confirmed bank credit lines totaling 1.1 billion euros with 

an average maturity of two years. None of these credit 

lines had been drawn down at December 31, 2010 or 

December 31, 2009; 

a short-term commercial paper financing program for a 

maximum amount of 1.2 billion euros, and a medium- and 

long-term Euro Medium Term Notes financing program for 

a maximum amount of 2 billion euros. Valeo’s access to 

the commercial paper market remains restricted since its 

short-term debt is still rated “not prime”. On July 29, 2010, 

Valeo’s rating was upgraded from Ba2 to Ba1 with a stable 

outlook, and then upgraded from a stable to a positive 

outlook on December 9, 2010. However, Valeo’s debt is 

still not classified as investment grade; 

a loan agreement for 75 million euros signed in October 

2010 with the European Investment Bank (EIB). Under 

this agreement, Valeo can borrow 75 million euros up to 

March 2012 at a variable rate of interest over seven years, 

repayable in four annual instalments after a grace period 

of four years. This loan was granted as part of funding for 

costs incurred by the Group in research projects looking at 

ways to reduce fuel consumption and CO 2 emissions and 

improve active safety. This loan had not been drawn down 

at December 31, 2010.

Covenants: The credit lines, two syndicated loans, EIB loan 

and 75 million euro credit facility are subject to an early 

repayment clause related to the Group’s net debt/ EBITDA 

ratio, which must not exceed 3.25 at December 31, 2010 

or thereafter. EBITDA in this case represents the Group’s 

operating margin before depreciation, amortization and 

impairment. Other income and expenses are therefore 

excluded from EBITDA, with the exception of restructuring 

costs totaling more than 75 million euros in 2010 and 

50 million euros thereafter. Failure to comply with this ratio 

would cause the credit lines to be suspended – triggering 

early repayment of any drawdowns already made - and the 

syndicated loans and EIB loan to be repaid. At December 31, 

2010, the ratio calculated over 12 months was 0.25. 

Credit lines with banks and the Group’s long-term debt are 

also subject to cross-default clauses, whereby if a specified 

amount of debt is likely to be called for early repayment; 

other debt could also become repayable. Some agreements 



allow a grace period before the cross-default clause becomes 

enforceable. 

At the end of the reporting period, the Group believes these 

covenants will be respected over the following 12 months. 

The Euro Medium Term Notes program includes an option 

granted to the bondholders who can request early repayment 

or redemption of their bonds in the event of a change of 

control at Valeo which leads to a downgrade in the bond’s 

rating to below investment grade. Such a change of control 

is deemed to occur if a stockholder (or several stockholders 

acting in concert) acquires more than 50% of Valeo’s share 

capital or holds more than 50% of its voting rights. If Valeo’s 

bonds had previously been rated below investment grade, 

bondholders may request the early repayment or redemption 

of their bonds in the event of a change in control at Valeo 

resulting in a one category downgrade in the rating (e.g. from 

Ba1 to Ba2). 

Residual contractual maturities of non-derivative financial instruments can be analyzed as follows: 

Future cash flows presented below, both interest payments and reimbursements are not discounted. The forward interest rate 

curve at December 31, 2010 was used for variable-rate interests. 


Carrying Contractual 

Contractual cash flows 

amount cash flows 

Payment schedule 


Total 2011 2012 2013 2014 2015 

2016 and 

beyond 

Bonds 598 669 23 23 623 - - - 

OCEANE bonds 463 474 474 - - - - - 

Syndicated loans 223 243 10 233 - - - - 

EIB loan 201 273 8 9 67 66 63 60 

Other long-term debt 117 117 42 29 6 7 8 25 

Accounts and notes payable 1,987 1,987 1,987 - - - - - 

Short-term debt 77 77 77 - - - - - 

The cash available to the Group allowed Valeo to meet the redemption obligations on its OCEANE convertible bonds on 

January 3, 2011. 


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Residual contractual maturities of derivative financial 

instruments can be analyzed as follows: 

The European Central Bank (ECB) closing rates and forward 

rates at December 31, 2010 have been used to value 



Forward foreign currency contracts 

used as hedges: 


Carrying 

amount 

Contractual 

cash flows 

foreign exchange derivatives. The London Metal Exchange 

(LME) forward rates at December 31, 2010 were used for 

commodity derivatives, while the forward interest rate curve 

at December 31, 2010 was used for interest rate swaps. 

Contractual cash flows 

payment schedule 

Total 2011 2012 2013 2014 2015 

2016 and 

beyond 

▪ Assets 2 2 2 - - - - - 

▪ Liabilities 

Currency swaps used as hedges: 

(1) (1) (1) - - - - - 

▪ Assets 6 6 6 - - - - - 


Commodity derivatives: 

(1) (1) (1) - - - - - 

▪ Assets 16 16 16 - - - - - 


Interest rate swaps: 

- - - - - - - - 

▪ Assets - - - - - - - - 

▪ Liabilities (13) (14) (6) (5) (2) (1) - - 

6.2.3. Credit risk 


credit risk is provided in Chapter 2, section 2.A.6. 

Credit risk can be analyzed as follows: 

Counterparty risk 

The Group is exposed to counterparty risk on financial market 

transactions carried out for the purposes of managing risks 

and cash flows. Limits have been set by counterparty, taking 

into account the ratings of the counterparties provided by 

rating agencies. This also has the effect of avoiding excessive 

concentration of market transactions with a limited number 

of banks. 

The table below presents an aged analysis of accounts and notes receivable: 


Commercial credit risk 

Valeo is exposed to credit risk arising on its commercial 

operations, particularly the risk of default by its customers. 

Valeo operates exclusively in the automotive industry, which 

had a tough year in 2009 but has since benefited from a 

more favorable economic climate. Nevertheless, Valeo 

continues to closely monitor default risk. The average days’ 

sales outstanding stood at 56 days at December 31, 2010, 

compared to 61 days at December 31, 2009. 

At December 31, 2010, Valeo’s largest customer accounts for 

18% of the Group’s accounts and notes receivable. 


amount 2010 


amount 2009 

Not yet due 1,400 1,208 

Less than 1 month past due 39 39 

More than 1 month but less than 1 year past due 22 22 

More than 1 year past due 10 8 

TOTAL 1,471 1,277 

Past-due balances were impaired totaling 22 million euros (26 million euros in 2009).

6.3 Off-balance sheet commitments 

To the best of Valeo’s knowledge, no other significant 

commitments exist or exceptional events have occurred other 

than those disclosed in the notes to the financial statements, 

that are likely to have a material impact on the business, 

financial position, results or assets and liabilities of the Group. 

6.3.1. Off-balance sheet commitments 

relating to the consolidated Group 

6.3.1.1. Put options 

At December 31, 2010, Hitachi and Valeo owned 34% 

and 66%, respectively, of Japanese firm Valeo Unisia 

Transmissions K.K. 



Hitachi has a put option that may be exercised if its interest 

in the company falls below 15%. If the put is exercised, all of 

the shares it owns at that time will be sold to Valeo, with the 

price to be fixed by Valeo and Hitachi or by an independent 

expert if the parties fail to reach an agreement. 

If Valeo sells all or some of its shares representing more than 

51% of the shares of the joint venture (or a lower percentage 

of shares if the sale deprives Valeo of its right to appoint 

the majority of the members of the joint venture’s Board of 

Directors), Hitachi reserves the right to offer its own shares 

to said third parties (“drag-along” right). If said third parties 

refuse to buy the shares, Hitachi may sell them to Valeo. 

At December 31, 2010, the joint venture had total equity of 

49 million euros prior to appropriation of income. 

6.3.1.2. Other commitments given 

Other commitments given relate to guarantees granted by Valeo in connection with divestments. 


Other commitments given 139 134 

TOTAL 139 134 

6.3.2. Off-balance sheet commitments relating to Group financing 

Off-balance sheet commitments relating to Group financing are detailed in Note 6.2.2. on liquidity risk. 

6.3.3. Off-balance sheet commitments relating to operating activities 

6.3.3.1. Lease commitments 

Future minimum lease commitments in force at December 31, 2010 (excluding capital leases) are as follows: 


Less than 1 year 38 38 

1 to 5 years 66 54 

More than 5 years 17 11 

TOTAL 121 103 

Lease rentals recognized in expenses in the year are as follows: 


Rent 51 51 


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Lease commitments in respect of capital leases are as follows at December 31: 


Future minimum lease payments 


1 to 5 years 6 5 

More than 5 years 1 

TOTAL FUTURE MINIMUM LEASE PAYMENTS 9 9 

Of which interest charges 

Present value of future lease payments 

(1) (2) 


1 to 5 years 4 5 

More than 5 years - - 

TOTAL PRESENT VALUE OF FUTURE LEASE PAYMENTS 8 7 

6.3.3.2. Other commitments given 

Valeo has also given the following commitments: 


Guarantees given 4 2 

Non-cancelable asset purchase commitments 144 88 

Other commitments given 9 7 

TOTAL 157 97 

The following items recognized in assets in the Group’s statements of financial position have been pledged as security: 


Property, plant and equipment 1 1 

Financial assets 13 12 

TOTAL 14 13 

6.3.3.3. Commitments received 

No material commitments were granted to Valeo in 2010. 

6.4. Contingent liabilities 

The Group has contingent liabilities relating to legal 

proceedings arising in the normal course of its business. 

Known claims and litigation involving Valeo or its subsidiaries 

were reviewed at the end of the reporting period. Based on 

the advice of legal counsel, all necessary provisions have 

been made to cover the related risks. 

Although the outcome of the proceedings in progress 

cannot be predicted, Valeo considers that they will not have 

a material impact on the Group’s financial position at the 

end of the reporting period. However, new proceedings 

may be initiated against the Group as a result of facts or 


circumstances unknown at the date of this report or for which 

the risk cannot yet be determined and/or quantified. Such 

proceedings could therefore have a significant adverse impact 

on the Group’s net income. 

6.5. French statutory training entitlement 

Under the French law of May 4, 2004 on professional training, 

all of the Group’s French employees, regardless of their 

qualifications, are entitled to statutory training hours which 

can be accumulated and used at the employees’ initiative, 

subject to the employer’s agreement. As of 2004, each 

employee is entitled to at least 20 training hours per year.

The cumulative volume of training hours corresponding 

to Group employees’ vested rights under the French 

statutory training entitlement was 1,131,693 hours at 

6.6. Related party transactions 

6.6.1. Management remuneration 



December 31, 2010 (1,034,000 hours at December 31, 2009), 

representing a usage rate of around 5.2%. 

Management is comprised of the 15 members of the Group’s Operating Committee. Remuneration paid to management in 

2010 and 2009 is shown in the table below: 


Salaries and other short-term benefits 9 7 

TOTAL 9 7 

The Group recognized 2 million euros in respect of stock 

subscription and purchase options and free share awards 

in 2010 (1 million euros in 2009). It also recorded expenses 

in relation to pension obligations for management personnel 

in an amount of 1 million euros (2 million euros in 2009). 

6.6.2. Transactions with associates 

At December 31, 2010, provisions included in the Group’s 

statements of financial position in respect of these pension 

obligations amounted to 12 million euros (10 million euros at 

December 31, 2009). 

The consolidated financial statements include transactions carried out in the normal course of business between the Group 

and its associates. These transactions are carried out at market prices. 


Sales of goods and services 18 11 

Purchases of goods and services (9) (10) 

Interest and dividends received 4 3 


Operating receivables 5 3 

Operating payables 4 7 

6.6.3. Transactions with joint ventures 

The consolidated financial statements include transactions carried out in the normal course of business between the Group 

and joint ventures. These transactions are carried out at market prices. 


Sales of goods and services 27 17 

Purchases of goods and services (30) (14) 

Interest and dividends received 19 16 


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Operating receivables 12 9 

Operating payables 9 6 

Net debt 11 7 

6.7. Joint ventures 

The following amounts are recorded in the Group’s consolidated financial statements in respect of proportionately consolidated 

joint ventures: 


Non-current assets 100 84 

Current assets 215 154 

Non-current liabilities 27 22 

Current liabilities 162 110 

Net revenue 457 315 

Operating expenses 419 289 

6.8. Events after the reporting period 

On February 23, 2011 Valeo announced the signing of 

an agreement with RHJ International SA and Nissan to 

acquire 100% of the Japanese automotive supplier Niles. 

The transaction amounts to 320 million euros (enterprise 

value). This operation would reinforce Comfort and Driving 


Assistance Systems Business Group and strengthen the 

Group’s position in Asia. 

The agreement is subject to various preconditions such as 

approval of the anti-trust authorities, before it can enter into 

effect.

Note 7. List of consolidated companies 




Company 

EUROPE 

France 

Valeo (parent company) 

% voting rights % interest % voting rights % interest 

DAV 100 100 100 100 

Équipement 1 100 100 100 100 

Équipement 11 100 100 100 100 

Équipement 2 100 100 100 100 

SC2N 100 100 100 100 

Société de Participations Valeo 100 100 100 100 

Telma (3) - - 100 100 

Valeo Bayen 100 100 100 100 

Valeo Embrayages 100 100 100 100 

Valeo Équipement Électriques Moteur 100 100 100 100 

Valeo Études Électroniques 100 100 100 100 

Valeo Finance 100 100 100 100 

Valeo Four Seasons (2) 50 50 50 50 

Valeo Interior Controls (3) - - 100 100 

Valeo Management Services 100 100 100 100 

Valeo Matériaux de Friction 100 100 100 100 

Valeo Plastic Omnium S.N.C. (2) 50 50 50 50 

Valeo Sécurité Habitacle 100 100 100 100 

Valeo Service 100 100 100 100 

Valeo Systèmes de Contrôle Moteur 100 100 100 100 

Valeo Systèmes d’Essuyage 100 100 100 100 

Valeo Systèmes Thermiques 100 100 100 100 

Valeo Thermique Habitacle (3) - - 100 100 

Valeo Vision 

Spain 

100 100 100 100 

Telma Retarder España, S.A. 100 100 100 100 

Valeo Climatización, S.A. 100 100 100 100 

Valeo España, S.A. 100 100 100 100 

Valeo Iluminación, S.A. 99.8 99.8 99.8 99.8 

Valeo Materiales de Fricción, S.A. (3) - - 100 100 

Valeo Plastic Omnium S.L. (2) 50 50 50 50 

Valeo Service España, S.A. 100 100 100 100 

Valeo Sistemas de Seguridad y de Cierre, S.A . (3) - - 100 100 

Valeo Sistemas Electricos, S.L. 100 100 100 100 

Valeo Termico, S.A. 100 100 100 100 

(1) Company accounted for by the equity method. 

(2) Company consolidated on a proportionate basis. 

(3) Company sold or wound up in 2010 and fully consolidated in 2009. 

(4) Company consolidated on a proportionate basis in 2009 and fully consolidated in 2010. 

(5) Company sold or wound up in 2010 and accounted for by the equity method in 2009. 


PAGE 203


PAGE 204 



Company 

Portugal 


Cablagens Do Ave 

Italy 

100 100 100 100 

Valeo Commutazione S.r.l. (3) - - 99.9 99.9 

Valeo Service Italia, S.p.A. 99.9 99.9 99.9 99.9 

Valeo Sistemi di Climatizzazione, S.p.A. (3) - - 99.9 99.9 

Valeo, S.p.A. 

Germany 

100 100 99.9 99.9 

Valeo Auto-Electric Beteiligungs GmbH 100 100 100 100 

Valeo Auto-Electric GmbH 100 100 100 100 

Valeo Compressor Europe GmbH 100 100 100 100 

Valeo Germany Holding GmbH (3) - - 100 100 

Valeo GmbH 100 100 100 100 

Valeo Grundvermögen Verwaltung GmbH 100 100 100 100 

Valeo Holding Deutschland GmbH 100 100 100 100 

Valeo Klimasysteme GmbH 100 100 100 100 

Valeo Klimasysteme Verwaltung SAS & Co. KG 100 100 100 100 

Valeo Schalter und Sensoren GmbH 100 100 100 100 

Valeo Service Deutschland GmbH 100 100 100 100 

Valeo Sicherheitssysteme GmbH 100 100 100 100 

Valeo Verwaltungs-Beteiligungs GmbH & Co. KG 100 100 100 100 

Valeo Wischersysteme GmbH 

United Kingdom 

100 100 100 100 

Telma Retarder Ltd (3) - - 100 100 

Valeo (UK) Limited 100 100 100 100 

Valeo Climate Control Limited 100 100 100 100 

Valeo Engine Cooling UK Limited 100 100 100 100 

Valeo Management Services UK Limited 100 100 100 100 

Valeo Service UK Limited 

Ireland 

100 100 100 100 

Connaught Electronics Limited 100 100 100 100 

HI-KEY Limited 

Belgium 

100 100 100 100 

Valeo Service Belgique 100 100 100 100 

Valeo Vision Belgique 

Luxembourg 

100 100 100 100 

Coreval 100 100 100 100 







2010 2009




Company 

Netherlands 


Valeo Holding Netherlands B.V. 100 100 100 100 

Valeo International Holding B.V. 100 100 100 100 

Valeo Service Benelux B.V. 

Czech Republic 

100 100 100 100 

Connaught Electronics CZ Spol S.r.o. (3) - - 100 100 

Valeo Autoklimatizace k.s. 100 100 100 100 

Valeo Compressor Europe S.r.o. 100 100 100 100 

Valeo Vymeniky Tepla k.s. 

Slovakia 

100 100 100 100 

Valeo Slovakia S.r.o. 

Poland 

100 100 100 100 

Valeo Autosystemy Sp.ZO.O. 100 100 100 100 

Valeo Electric and Electronic Systems Sp.ZO.O. 100 100 100 100 

Valeo Service Eastern Europe Sp.ZO.O. 

Hungary 

100 100 100 100 

Valeo Auto-Electric Hungary LLC 

Romania 

100 100 100 100 

Valeo Lighting Assembly S.R.L 100 100 100 100 

Valeo Lighting Injection SA 100 100 51 51 

Valeo Sisteme Termice S.R.L. 

Russia 

100 100 100 100 

Valeo Climate Control Tomilino LLC 95 95 95 95 

Valeo Service Limited Liability Company 

Turkey 

100 100 100 100 

Nursan OK (5) - - 40 40 

Valeo Otomotiv Dagitim A.S. 100 100 100 100 

Valeo Otomotiv Sistemleri Endustrisi A.S. 

AFRICA 

Tunisia 

100 100 100 100 

DAV Tunisie 100 100 100 100 

Valeo Embrayages Tunisie S.A. 100 100 100 100 

Valeo Tunisie S.A. 

Morocco 

100 100 - - 

Cablinal Maroc S.A. 

Egypt 

100 100 100 100 

Valeo Interbranch Automotive Software Egypt 

South Africa 

100 100 100 100 

Valeo Systems South Africa (Proprietary) Ltd. 51 51 51 51 







PAGE 205


PAGE 206 



Company 

NORTH AMERICA 

United States 


Telma Retarder Inc. (3) - - 100 100 

Valeo Climate Control Corp. 100 100 100 100 

Valeo Compressor North America, Inc. 100 100 100 100 

Valeo Electrical Systems, Inc. 100 100 100 100 

Valeo Engine Cooling, Inc. 100 100 100 100 

Valeo Friction Materials, Inc. (3) - - 100 100 

Valeo Front End Module, Inc. 100 100 100 100 

Valeo Investment Holdings, Inc. 100 100 100 100 

Valeo Radar Systems, Inc. 100 100 100 100 

Valeo Switches and Detection Systems, Inc. 100 100 100 100 

Valeo Sylvania, LLC (2) 50 50 50 50 

Valeo, Inc. 

Mexico 

100 100 100 100 

Delmex de Juarez S de RL de CV 100 100 100 100 

Telma Retarder de Mexico, SA de CV 100 100 100 100 

Valeo Climate Control de Mexico Servicios S de RL de CV 100 100 100 100 

Valeo Climate Control de Mexico, SA de CV 100 100 100 100 

Valeo Sistemas Electricos Servicios S de RL de CV 100 100 100 100 

Valeo Sistemas Electricos, SA de CV 100 100 100 100 

Valeo Sistemas Electronicos, S de RL de CV 100 100 100 100 

Valeo Sylvania Iluminacion, S de RL de CV (2) 50 50 50 50 

Valeo Sylvania Services S de RL de CV (2) 50 50 50 50 

Valeo Termico Servicios, S de RL de CV 100 100 100 100 

Valeo Transmisiones Servicios de Mexico S de RL de CV 

SOUTH AMERICA 

Brazil 

100 100 100 100 

Valeo Sistemas Automotivos Ltda 

Argentina 

100 100 100 100 

Cibie Argentina, SA 100 100 100 100 

Emelar Sociedad Anonima 100 100 100 100 

Valeo Embragues Argentina, SA 100 100 100 100 

Valeo Termico Argentina, SA 

ASIA 

Thailand 

100 100 100 100 

Valeo Compressor (Thailand) Co. Ltd 98.5 98.5 98.5 98.5 

Valeo Compressor Clutch (Thailand) Co. Ltd 97.3 97.3 97.3 97.3 

Valeo Siam Thermal Systems Co. Ltd 74.9 74.9 74.9 74.9 

Valeo Thermal Systems Sales (Thaïland) Co. Ltd 74.9 74.9 74.9 74.9 







2010 2009




Company 

South Korea 


Dae Myong Precision Corporation 100 100 100 100 

Valeo Compressor Korea Co., Ltd 100 100 100 100 

Valeo Electrical Systems Korea, Ltd 100 100 100 100 

Valeo Pyeong HWA Co. Ltd (2) 50 50 50 50 

Valeo Pyeong HWAInternational Co. Ltd (2) 50 50 50 50 

Valeo Samsung Thermal Systems Co., Ltd (2) 50 50 50 50 

Valeo Thermal Systems Korea Co. Ltd 

Japan 

100 100 100 100 

Ichikoh Industries Limited (1) 31.6 31.6 31.6 31.6 

Valeo Engine Cooling Japan Co. Ltd (3) - - 100 100 

Valeo Thermal Systems Japan Corporation 100 100 100 100 

Valeo Unisia Transmissions K.K. 

China 

66 66 66 66 

Faw-Valeo Climate Control Systems Co. Ltd (1) 36.5 36.5 36.5 36.5 

Foshan Ichikoh Valeo Auto Lighting Systems Co. Ltd (2) 50 50 50 50 

Guangzhou Valeo Engine Cooling Co. Ltd 100 100 100 100 

Huada Automotive Air Conditioner Co. Ltd (1) 30 30 30 30 

Hubei Valeo Autolighting Company Ltd 100 100 100 100 

Nanjing Valeo Clutch Co. Ltd (2) 55 55 55 55 

Shanghai Valeo Automotive Electrical Systems Company Ltd (2) 50 50 50 50 

Taizhou Valeo-Wenling Automotive Systems Company Ltd 100 100 100 100 

Telma Vehicle Braking System (Shanghai) Co. Ltd (3) - - 70 70 

Valeo Auto Parts Trading (Shanghai). Co. Ltd 100 100 100 100 

Valeo Automotive Air Conditioning Hubei Co. Ltd 55 55 55 55 

Valeo Automotive Security Systems (Wuxi) Co. Ltd 100 100 100 100 

Valeo Automotive Transmissions Systems (Nanjing) Co. Ltd 100 100 100 100 

Valeo Engine Cooling (Foshan) Co. Ltd 100 100 100 100 

Valeo Engine Cooling (Shashi) Co. Ltd 100 100 100 100 

Valeo Compressor (Changchun) Co. Ltd 100 100 100 100 

Valeo Interior Controls (Shenzhen) Co. Ltd 100 100 100 100 

Valeo Lighting Hubei Technical Center Co. Ltd 100 100 100 100 

Valeo Management (Beijing) Co. Ltd 

Valeo Shanghai Automotive Electric Motors 

100 100 100 100 

& Wiper Systems Co., Ltd 

Indonesia 

55 55 55 55 

PT Valeo AC Indonesia (1) India 

49 49 49 49 

Amalgamations Valeo Clutch Private Ltd (2) 50 50 50 50 

Minda Valeo Security Systems Private Ltd (2) Valeo India Private Ltd 

50 50 50 50 

(formely Valeo Engineering Center (India) Private Ltd) 100 100 100 100 

Valeo Friction Materials India Limited 60 60 60 60 

Valeo Lighting Systems (India) Private Ltd 

Valeo Engine and Electrical Systems India Private Ltd. 

100 100 95 95 

(formerly Valeo Minda Electrical Systems India Private Ltd) 100 100 66.7 66.7 







PAGE 207


PAGE 208 



5.B.7. Statutory auditors’ report on the consolidated financial 

statements 

For the year ended December 31, 2010 

This is a free translation into English of the statutory auditors’ report on the consolidated 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 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 balances, transactions or disclosures. This report also includes information relating to the specific verification of 

information given in the group’s management report. 

This report should be read in conjunction with and construed in accordance with French law and professional auditing standards 

applicable in France. 

In compliance with the assignment entrusted to us by your annual general meeting, we hereby report to you, for the year ended 

December 31, 2010, on: 

the audit of the accompanying consolidated financial statements of Valeo; 

the justification of our assessments; 

the specific verification required by law. 

1. 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 December 31, 2010 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. 

Without qualifying our opinion, we draw your attention to the matter set out in Note 1.1.1 to the consolidated financial statements, 

which describes the new standards and interpretations which have been applied by your company as from January 1, 2010. 

2. Justifications 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: 

Notes 1.13 and 4.5.3 of the notes to the consolidated financial statements set out the methods implemented by the company 

to test acquisition goodwill, assess whether there is any indication of impairment of the fixed assets and, where applicable, 

perform an impairment test for these same assets. Our work consisted in examining the methods and assumptions used by 

Valeo during the implementation of these tests and verifying that the notes to the consolidated financial statements provide 

appropriate information. 




Notes 1.17 and 5.9.2 of the notes to the consolidated financial statements specify the methods of valuing pension commitments 

and similar benefits. Our work consisted in reviewing the actuarial data and assumptions used as well as the calculations 

made and verifying that the notes provide appropriate information. 

Note 1.18 of the notes to the consolidated financial statements describes the methods for valuing provisions intended to cover 

Valeo’s obligations in respect of guarantees granted to its clients and specific quality risks. Our work consisted in examining 

the available documentation and the translation into figures of the assumptions used and assessing the reasonableness of 

the estimates used. 

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. 

3. 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. 




David Chaudat Lionel Gotlib Jean-François Ginies Gilles Puissochet 


PAGE 209

5 Subsequent 

PAGE 210 


events and outlook 

5.C. Subsequent events and outlook 

5.C.1. Subsequent events 

Acquisition of Niles: Valeo signs agreement to 

purchase the Japanese company Niles 

Valeo announced on February 23, 2011 the signing of an 

agreement with RHJ International SA and Nissan to acquire 

Niles, a Japanese automotive supplier which would reinforce 

Valeo’s Comfort and Driving Assistance Systems Business 

Group. The transaction amounts to 320 million euros 

(enterprise value). Valeo intends to use this acquisition to 

strengthen its competitive positioning on the human machine 

automobile interfaces market and in Asia (Japan, China, 

Taiwan) and with Japanese manufacturers notably Nissan. 

This acquisition is part of the strategy which was presented 

to shareholders in 2010. 

The agreement is subject to various preconditions, such as 

approval of the anti-trust authorities, before it enters into 

effect. 

Movements in the share capital 

Pardus Investments Sarl declared that it had crossed on 

January 12, 2011 under the threshold of 5% of Valeo’s share 

capital. Further to this transaction, Padus Investments Sarl 

held 4.96% of the capital and 4.82% of the voting rights. 

5.C.2. Outlook 

Outlook announced on February 24, 2011 in 

2010 results press release 

In 2011, Valeo forecasts an increase in global automotive 

production of 5%, broken down by region as follows: 

Europe, 0%; 

Asia, +5%; 

North America, +8%; 

South America, +7%. 


Appointment 

Christophe Périllat-Piratoine has been appointed as 

the Group’s Chief Operating Officer with effect from 

March 1, 2011. He will replace Luc Blériot who has occupied 

this position since 2005 and who is retiring. Marc Vrecko will 

become President of the Comfort and Driving Assistance 

Systems Business Group. 

Bond issuance 

Valeo announced on March 10, 2011 that among the options 

it is considering in the context of managing its debt maturity 

profile is a possible issuance of bonds in an amount of 

approximately €500 million, which could be carried out along 

with a partial redemption of its bonds maturity on June 24 

2013. Both of these scenarios would be subject to market 

conditions. 

At the date of publication of this document and to the best 

of Valeo’s knowledge, no other event has occurred since 

December 31, 2010 that is likely to have a material impact 

on the business, financial position, earnings or assets and 

liabilities of the Group. 

Based on these market assumptions, indexation clauses and 

commodity hedges in place, Valeo sets as its objectives for 

2011: 

to outperform original equipment market sales in its main 

regions of production; 

to achieve full-year operating margin slightly higher than 

2010.

Outlook announced on March 9, 2011 during 

an investor day in Paris 

As announced when its 2010 results were released last 

February 24, Valeo is ahead of the 2013 targets set in March 

2010, which included: 

around €10 billion in revenue; 

Operating margin rate (1) of 6-7%; 

Return on capital employed (2) of more than 30%. 

Valeo intends to step up the strategy presented in March 

2010 and is setting new targets for 2015. 


Subsequent events and outlook 

Based on the record €12.5 billion in orders booked last year, 

Valeo is confident in its ability to outperform automotive 

production by an average 3% per year over the 2011-2015 

period, thanks to: 

innovation and new products, particularly in CO 2 emissions 

reduction; 

expansion in Asia and emerging markets. 

Consequently, assuming growth in global automotive output 

of around 5% a year over the 2011-2015 period, of which 

around 4.4% per year in Europe and Africa, 4.7% in North 

America, 5.3% in South America and 5.8% in Asia (3) and 

barring any exogenous macroeconomic events impacting its 

industry, Valeo now expects to achieve in 2013 and in 2015, 

through organic growth, the following financial targets: 

2013 2015 

Revenue ≈ €12 bn €14 bn 

Operating margin (1) ≈ 7% > 7% 

Free cash flow (4) +€1.8 bn 

Period 2011-2015 

Capital turnover (5) 5 > 5 

ROCE (2) > 30% > 30% 

All of the assumptions are described in detail in Robert 

Charvier’s presentation at the March 9, 2011 Investor Day, 

which may be downloaded from the Publications section of 

the www.valeo.com website. 

Lastly, Valeo wants to play an active role in any industry 

consolidation, while maintaining a disciplined financial strategy 

aligned with its commitment to restoring its investment grade 

rating. 

(1) Operating income before other income and expenses. 

(2) Operating margin/capital employed before goodwill, over the last 12 months. 

(3) These assumptions are based on output forecasts by specialized firms JD Power and Associates and IHS Global Insight, as well as on 

Valeo’s own analysis of the market outlook. 

(4) Free cash flow corresponds to net operating cash flow less net disbursements on tangible/intangible assets. 

(5) Sales / capital employed before goodwill, over the last 12 months. 


PAGE 211

5 Analysis 

PAGE 212 


of Valeo’s results 

5.D. Analysis of Valeo’s results 

Having incorporated its activities as operating subsidiaries 

in 2002, Valeo SA is now the Group’s holding and cash 

management company and does not carry on any operating 

activities. 

Valeo announced an operating loss of 23 million euros 

in 2010 compared with an operating loss of 11 million euros 

in 2009. The increase in the Valeo share price resulted in the 

recognition of provisions in respect of the stock option and 

free share plans within operating expenses in 2010. 

Financial items represented net financial income of 159 million 

euros in 2010, compared to net financial expense of 32 million 

euros in 2009. This change was mainly due to a steep fall 

in impairment charges and provisions for non-consolidated 

investments following a significant improvement in the 

forecasts and outlook for subsidiaries and investments as a 

result of the more favorable economic environment. 

Non-recurring items represented net expense of 19 million 

euros in 2010 compared with net expense of 6 million euros 

one year earlier, primarily reflecting provisions for tax and 

employee-related disputes. 

Income tax expense for 2010 amounted to 9 million euros, 

compared with income tax benefit of 19 million euros 

in 2009. In 2010, Valeo recognized income in respect of tax 

consolidation in an amount of 15 million euros, less provisions 


set aside for the risk of paying tax benefits back over to 

tax-consolidated entities. 

Valeo’s net income amounted to 126 million euros, versus a 

net loss of 30 million euros in 2009. 

Valeo recognized no sumptuary expenses that were not 

deductible for tax purposes in 2010. 

At December 31, 2010, Valeo SA’s stockholders’ equity stood 

at 3,317 million euros, up 137 million euros compared with 

end-December 2009. Valeo did not pay a dividend in 2010. 

Since January 1, 2009, Valeo has applied the new payment 

terms in its dealings with suppliers, as required under the 

French Economic Modernization Act, suppliers are paid 

45 days after the end of the month of the invoice date for 

all new orders issued after January 1, 2009, and for open 

orders on that date. If the payment terms applied before 

the Act came into force called for shorter settlement 

periods, no changes were made. Net trade payables at 

December 31, 2010 stood at 6 million euros, payable in full 

in January 2011. At 31 December 2009, the trade payables 

balance was 6.4 million euros, including 0.1 million euros 

payable before December 2009 and 6.3 million euros payable 

in January 2010.

6.A. Stock market data 214 

6.A.1. Per share data 214 

6.A.2. Share performance over 18 months 

6.A.3. Share price from January 1, 2008 

215 

through February 28, 2011 216 

6.A.4. Monthly trading volumes 216 

6.B. Investor relations 217 

6.B.1. Individual shareholder relations 217 

6.B.2. Institutional shareholder relations 217 

6.C. Dividend 218 

6.D. Capital ownership 218 

6.D.1. Ownership structure 

6.D.2. Direct or indirect stockholdings in the 

Company brought to the Company’s 

attention (Articles L.233-7 and 233-12 

218 

of the French Commercial Code) 219 

6.D.3. Directors’ interests 221 

6.D.4. Employee share ownership 221 

VALEO AND ITS 

SHAREHOLDERS 

6.E. Share buyback program AFR 222 



6 

6.E.1. Current share buyback program 222 

6.E.2. Share buyback program submitted 

to the next Annual Shareholders’ 

Meeting called to approve the financial 

statements for the year 

ended December 31, 2010. 222 

6.E.3. Cancellation of treasury shares 224 

6.E.4. Treasury shares 224 

6.F. Additional disclosures 225 

6.F.1. Changes in share capital 225 

6.F.2. Authorized, unissued capital AFR 226 

6.F.3. Other securities giving access to the capital 227 

6.F.4. Other securities 232 

6.F.5. Other information on the capital 232 

6.F.6. Factors likely to be material in the event 

of a public tender offer AFR 233 

PAGE 213

6 Stock 

PAGE 214 

Valeo and its shareholders 

market data 

6.A. Stock market data 


2010 2009 2008 2007 2006 

Market capitalization at year-end 

(in billions of euros) 3.34 1.92 0.83 2.21 2.45 

Number of shares 78,628,798 78,209,617 78,209,617 78,209,617 77,580,617 

Highest share price (in euros) 45.70 25.46 28.60 45.89 35.40 

Lowest share price (in euros) 20.07 8.00 9.22 27.75 25.00 

Average share price (in euros) 29.035 15.546 20.93 37.71 30.58 

Share price at year-end (in euros) 42.47 24.53 10.615 28.20 31.53 

6.A.1. Per share data 

(in euros) 2010 2009 2008 2007 

Earnings per share 4.86 (2.04) (2.73) 1.06 

Dividend 1.20 (1) (2) 0 0 1.20 (2) 

(1) Dividend of 1.20 euros proposed at the Shareholders’ Meeting called to approve the financial statements for the year ending December 31, 2010 

(2) Eligible for the 40% tax allowance provided for in Article 158-3-2° of the French General Tax Code (Code général des impôts – CGI) or, at the choice of the 

shareholder, subject to the 19% flat-rate withholding tax provided for in Article 117 quater i.1 of said Code.

6.A.2. Share performance over 18 months 

6 


Stock market data 

Price (in euros) 

Trading volume 

(no. of shares) Trading 

Closing Volume on Volume on volume 

Date 

High Low (average) Euronext MTFs (in millions of euros) 

September 2009 19.90 16.52 18.157 13,081,870 3,808,407 245.28 

October 2009 22.52 17.05 19.796 20,416,315 4,557,680 418.72 

November 2009 20.16 17.65 19.332 11,404,439 3,482,126 224.39 

December 2009 25.46 19.13 22.623 13,994,866 4,349,581 322.74 

January 2010 27.36 22.35 25.207 12,477,765 3,912,015 318.84 

February 2010 25.38 20.07 22.138 15,745,391 4,887,052 363.37 

March 2010 28.59 22.00 25.240 16,700,529 5,148,935 430.63 

April 2010 27.83 24.65 26.044 15,127,021 6,808,338 396.13 

May 2010 25.77 20.36 22.806 16,926,314 7,136,536 387.79 

June 2010 25.75 21.43 24.049 14,735,613 5,724,020 366.14 

July 2010 27.89 21.55 24.312 16,148,464 7,418,492 416.14 

August 2010 29.92 26.13 27.696 15,021,508 6,848,101 439.07 

September 2010 34.44 27.79 30.618 13,488,158 6,036,819 436.12 

October 2010 40.22 32.78 35.528 12,753,820 5,233,118 473.28 

November 2010 43.96 37.25 39.893 12,346,390 4,767,890 506.64 

December 2010 45.70 39.00 43.181 10,170,964 3,963,922 446.86 

January 2011 47.80 41.20 44.209 11,872,521 5,994,268 529.46 

February 2011 45.67 40.00 42.830 15,560,437 7,869,447 679.05 

Source: Euronext Paris and CA Cheuvreux 


PAGE 215

6 Stock 

PAGE 216 


market data 

6.A.3. Share price from January 1, 2008 through February 28, 2011 

Euros 

50 

40 

30 

20 

10 

0 

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F 

08 

09 10 11 

Valeo STOXX 600 A&AP (European automobiles and parts index) CAC 40 

6.A.4. Monthly trading volumes 

Trading volumes (Euronext + MTF) 

35,000,000 

30,000,000 

25,000,000 

20,000,000 

15,000,000 

10,000,000 

5,000,000 

0 

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F MAM J J A S OND J F 

06 


07 

08 09 10 11

6.B. Investor relations 

Valeo aims to provide a steady flow of exhaustive and detailed 

information in real time to its diverse financial community, 

6.B.1. Individual shareholder relations 

Based on the Company’s estimates, individual shareholders 

control approximately 5% of Valeo’s share capital. These 

shareholders, who are mostly domiciled in France, have 

access to the following communication tools: 

a toll-free line (0 800 814 045) (available in France only) 

available to individual shareholders in France since 1998. 

In 2010, this service dealt with over 140 calls, mainly relating 

to Valeo’s share price and the Shareholders’ Meeting; 

the www.valeo.com website which is aimed at providing 

information to all shareholders. The Investor Relations 

section of the site provides real-time stock market and 

shareholder information, including the latest share prices, 

ownership structure, dividends, and documents relating to 

Shareholders’ Meetings. Financial publications can also be 

6.B.2. Institutional shareholder relations 

Valeo places great importance on holding frequent meetings 

with investors and analysts. These meetings are organized 

in major global financial centers (Europe and North America). 

They take various forms, including one-on-one meetings, 

group events, conference calls, themed or general investor 

conferences, and site visits. In all, some 650 institutional 

investors participated in these events, either individually or 

in small groups, with almost one-half meeting Valeo’s Chief 

Executive Officer. 

The objective of the Group’s Investor Relations Department 

is to serve as an interface between the Group and investors 

and analysts, in order to keep them informed of Valeo’s 

strategy, products, key events, financial targets and the ways 

of achieving them. 

6 


Investor relations 

comprising current and prospective private and institutional 

shareholders, as well as financial analysts. 

consulted online, such as annual and interim reports and 

financial presentations, as well as all press releases and 

prospectuses. In addition, visitors to the site can submit 

financial questions to the Group’s spokesperson; 

two issues of the shareholders’ newsletter were published 

in 2010, in May and December; 

the share registrar service has been provided by Société 

Générale since the end of 2000. This service, used by 

almost 3,700 shareholders – mainly individual shareholders 

– provides a share information line on 0825 820,000 

(available in France only), for questions concerning 

dividends, tax issues and placing orders. 

Contact: 

Thierry Lacorre 

Investor Relations Director 


43, rue Bayen 

F-75848 Paris Cedex 17 

France 

Tel.: +33 (0) 1 40 55 37 93 

Fax: +33 (0) 1 40 55 20 40 

E-mail: thierry.lacorre@valeo.com 

Provisional financial communication calendar: 

First-quarter net sales for 2011: April 21, 2011 

First-half results for 2011: July 27, 2011 

Third-quarter net sales for 2011: October 20, 2011 

Full-year results for 2011: second half of February 2012 


PAGE 217


6 Dividend 

PAGE 218 

6.C. Dividend 

Dividends per share over the past three years were as follows: 

Year 

Dividend per share 

(in euros) 


Tax allowance 

(in euros) 

Total 


2007 1.20 

Eligible for the 40% tax allowance 

provided for in Article 158-3-2 

of the French General Tax Code 92 

2008 0 0 

2009 0 0 

At the Shareholders’ Meeting to be held to approve the financial statements for the year ended December 31, 2010, Valeo’s 

Board of Directors will recommend payment of a dividend of 1.20 euros for each share eligible for dividends. 

6.D. Capital ownership 

6.D.1. Ownership structure 

6.D.1.1. Ownership structure 

at December 31, 2010 

% of capital (% of voting rights) 

3.07% (5.53%) 

Caisse des Dépôts 

et consignations (CDC) 

5.11% (4.97%) 

Pardus Investment 

Sarl 

Total number 

of shares: 

78,628,798 

Number of 

voting rights: 

80,928,055 

5.88 % (5.71%) 

Fonds Stratégique 

d’Investissement (FSI) 

4.96% (4.81%) 

Lazard Asset 

Management LLC 

2.53% (2.46%) 

Dimensional Fund 

Advisors Inc. 

78.45% (76.52%) 

(1) Including 3,538,638 treasury shares (4.5% of the share capital). 

Others (1) 

6.D.1.2. Ownership structure 

at February 24, 2011 

% of capital (% of voting rights) 

5.88% (5.71%) 

Fonds Stratégique 

d’Investissement (FSI) 

3.07% (5.53%) 

Caisse des Dépôts 

et Consignations (CDC) 

2.0% (1.94%) 

AQR Capital Mgmt 

74.55% (72.75%) 

Others (1) 

Total number 

of shares: 

78,628,798 

Number of 

voting votes: 

80,925,538 

4.96% (4.81%) 

Lazard Asset Management LLC 

2.53% (2.46%) 

Dimensional Fund 

Advisors Inc. 

4.96% (4.82%) 

Pardus 

Investment Sàrl 

2.05% (1.98%) 

(1) Including 3,419,127 treasury shares (4.35% of the share capital). 

Citadel 

Equity Fund

6 


Capital ownership 

6.D.2. Direct or indirect stockholdings in the Company brought to the 

Company’s attention (Articles L.233-7 and 233-12 of the French 

Commercial Code) 

To the best of the Company’s knowledge, the following 

details of the number of shares and voting rights, presented 

below, were prepared based on data brought to the attention 

of the Company in accordance with Articles L.233-7 and 

L.233-12 of the French Commercial Code (Code de 

commerce), and where applicable, on information voluntarily 

provided by Company stockholders concerning the number 

of shares and voting rights per stockholder, based on the 

Number 

of shares % 

Company’s share capital and voting rights at December 31 

of each of the three years – 2008, 2009 and 2010 – under 

consideration, and on February 24, 2011. The Company’s 

share capital at December 31, 2010 was divided into 

78,628,798 shares, representing 80,928,055 voting rights, 

including 3,538,638 shares held as treasury shares. 

12/31/2008 12/31/2009 

Number 

of voting 

rights (2) % 

Number 

of shares % 

Number 

of voting 

rights (2) % 

Pardus (1) 15,450,000 19.75 15,450,000 18.99 15,450,000 19.75 15,450,000 19.18 

Caisse des dépôts et consignations 4,681,559 5.99 6,748,860 8.29 2,410,992 3.08 4,478,293 5.56 

Fonds stratégique d’investissement 

Barclays Global Investors UK. 

4,620,567 5.91 4,620,567 5.74 

Holding Limited (3) 3,798,812 4.86 3,798,812 4.72 

AQR Capital Management, LLC 1,582,308 2.02 1,582,308 1.94 1,533,743 1.96 1,533,743 1.90 

UBS (4) 2,422,556 3.10 2,422,556 3.01 

M&G Investment Management Limited 1,780,731 2.28 1,780,731 2.19 1,416,450 1.81 1,416,450 1.76 

Morgan Stanley (5) 2,949,810 3.77 2,949,810 3.63 

The Goldman Sachs Group, Inc. (5) 3,468,372 4.43 3,468,372 4.26 

Employee share ownership (6) 940,328 1.20 940,328 1.16 123,746 0.16 247,492 0.31 

Treasury shares (7) 3,142,499 4.02 2,652,119 3.39 

Other 44,214,010 56.54 48,441,626 59.54 43,780,632 55.98 46,575,612 57.82 

Total 78,209,617 100 81,362,035 100 78,209,617 100 80,543,525 100 

(1) As part of a reorganization of its equity holdings, Pardus Special Opportunities Master Fund L.P. transferred its Valeo stock to its subsidiary Pardus 

Investments Sàrl (filing dated June 30, 2008). 

(2) Registered shares held by the same shareholder for four or more years carry double voting rights (see Chapter 7, section 7.A.11). 

(3) Stockholdings at December 31, 2008 below the thresholds for mandatory reporting set by legislation. 

(4) Stockholdings at December 31, 2008 below the thresholds for mandatory reporting set by company bylaws and legislation. 

(5) Stockholdings at December 31, 2009 below the thresholds for mandatory reporting set by company bylaws and legislation. 

(6) For more information on employee share ownership, see section 6.D.4. 

(7) For more information on treasury shares, see section 6.E.4. 


PAGE 219

6 Capital 

PAGE 220 


ownership 


Number of 

shares % 

12/31/2010 02/24/2011 

Number 

of voting 

rights (3) % 

Number of 

shares % 

Number 

of voting 

rights (3) % 

Fonds stratégique d’investissement 4,620,567 5.88 4,620,567 5.71 4,620,567 5.88 4,620,567 5.71 

Caisse des dépôts et consignations 2,410,992 3.07 4,478,293 5.53 2,410,992 3.07 4,478,293 5.53 

Pardus Investment Sàrl 4,021,044 5.11 4,021,044 4.97 3,902,445 4.96 3,902,445 4.82 

Lazard Asset Management LLC 3,896,190 4.96 3,896,190 4.81 3,896,190 4.96 3,896,190 4.81 

Dimensional Fund Advisors 1,989,654 2.53 1,989,654 2.46 1,989,654 2.53 1,989,654 2.46 

Citadel Equity Fund 1,614,159 2.05 1,614,159 1.98 

AQR Capital Management 1,573,489 2.00 1,573,489 1.94 

Employee share ownership (1) 94,900 0.12 189,800 0.23 94,900 0.12 189,800 0.23 

Treasury shares (2) 3,538,638 4.50 3,419,217 4.35 

Other 58,056,813 73.83 61,732,507 76.29 56,629,150 70.09 58,660,941 72.49 

TOTAL 78,628,798 100 80,928,055 100 78,628,798 100 80,925,538 100 

(1) For more information on employee share ownership, see section 6.D.4. 

(2) For more information on treasury shares, see section 6.E.4. 

(3) Registered shares held by the same stockholder for four or more years carry double voting rights (see Chapter 7, section 7.A.12). 

To the best of the Company’s knowledge, there were not any 

stockholders other than Fonds stratégique d’investissement 

(FSI), Caisse des dépôts et consignations (CDC), Pardus 

Investments Sàrl, Lazard Asset Management LLC and 

Dimensional Fund Advisors, with direct or indirect holdings 

of 2% or more of the Company’s share capital and voting 

rights at December 31, 2010. 

To the best of the Company’s knowledge, there were 

not any stockholders other than FSI, CDC and Pardus 

Investments Sàrl with direct or indirect holdings of 5% or 

more of the Company’s share capital and voting rights at 



stockholders other than FSI, CDC, Pardus Investments Sàrl, 

Lazard Asset Management LLC, Dimensional Fund Advisors, 

Citadel Equity Fund and AQR Capital Management, with 

direct or indirect holdings of 2% or more of the Company’s 

share capital and voting rights at February 24, 2011. 


stockholders other than FSI and CDC with direct or indirect 

holdings of 5% or more of the Company’s share capital and 

voting rights at February 24, 2011. 

To the best of the Company’s knowledge, CDC directly held 

at February 24, 2011, 2,410,992 shares in the Company, 

i.e. 3.07% of the capital, and 4,478,293 voting rights, i.e. 

5.53% of the total voting rights, and it held indirectly via the 

FSI 4,620,567 shares, i.e. 5.88% of the capital and 5.71% of 

the voting rights. CDC’s direct and indirect holdings through 

FSI now represent 8.95% of the share capital and 11.24% 

of the Company’s voting rights. 

In a filing received June 1, 2010, Pardus Investments Sàrl 

reported that it had reduced its interest in the Company’s 

capital and voting rights below the 15% disclosure threshold 

on May 28, 2010, and that it held 11,640,456 shares, 

representing as many voting rights, i.e., 14.88% of the capital 

and 14.45% of the voting rights. This reduction was the result 

of a distribution of 1,903,894 shares in the Company held 

by Pardus Investments Sàrl to investors in Pardus Special 

Opportunities Master Fund LP. In a filing received July 20, 

2010, Pardus Investments Sàrl reported that it had reduced 

its interest in the Company’s voting rights below the 10% 

disclosure threshold on July 15, 2010, to 7,830,908 shares in 

the Company, representing as many voting rights, i.e., 10.01% 

of the capital and 9.72% of the voting rights. This reduction 

was the result of a distribution of 1,904,774 shares held 

by Pardus Investments Sàrl to investors in Pardus Special 

Opportunities Master Fund LP. In a filing received August 13, 

2010, Pardus Investments Sàrl reported that it had reduced 

its interest in the Company’s capital and voting rights 

below the 10% disclosure threshold on August 12, 2010, 

to 5,926,134 shares, representing as many voting rights, 

i.e., 7.58% of the capital and 7.36% of the voting rights. This 

reduction was the result of a distribution of 1,904,774 shares 

held by Pardus Investments Sàrl to investors in Pardus 

Special Opportunities Master Fund LP. In a filing received 

September 17, 2010, Pardus Investments Sàrl reported that 

it had reduced its interest in the Company’s voting rights 

below the 5% disclosure threshold on September 13, 2010, 

to 4,021,044 shares, representing as many voting rights, 

i.e., 5.14% of the capital and 4.99% of the voting rights. This 

reduction was the result of a distribution of 1,905,090 shares 

in the Company held by Pardus Investments Sàrl to investors 

in Pardus Special Opportunities Master Fund LP. In a filing 

received January 14, 2011, Pardus Investments Sàrl 

reported that it had reduced its interest in the Company’s 

capital and voting rights below the 5% disclosure threshold 

on January 12, 2011, to 3,902,445 shares, representing as 

many voting rights, i.e., 4.96% of the capital and 4.82% of

the voting rights. This reduction was the result of a sale of 

the Company’s shares on the market. 

In a letter received July 29, 2010, Lazard Asset 

Management LLC, acting on behalf of funds it manages and 

clients under mandate, reported that it had raised its interest 

in the Company’s capital and voting rights above the 5% 

disclosure threshold on July 28, 2010, and held, on behalf of 

the said funds and clients, 4,041,498 shares in the Company, 

representing as many voting rights, i.e., 5.17% of the capital 

and 5.02% of the voting rights. This increase was the result 

of an acquisition of the Company’s shares on the market. 

In a letter received September 20, 2010, Lazard Asset 

Management LLC, acting on behalf of funds it manages and 

clients under mandate, reported that it had reduced its interest 

in the Company’s capital and voting rights below the 5% 

disclosure threshold on September 17, 2010, and held, on 

6.D.3. Directors’ interests 

At December 31, 2010, Pascal Colombani, Jacques 

Aschenbroich and other members of the Board of Directors 

held less than 1% of Valeo’s capital and voting rights in a 

personal capacity. The number of shares held by each 

6.D.4. Employee share ownership 

At December 31, 2010, employees held a total of 

94,900 shares under Group employee share ownership plans, 

directly or through two mutual funds, representing 0.12% of 

the Company’s share capital. At December 31, 2009, they 

held 123,746 shares, or 0.16% of the share capital. 

6 


Capital ownership 

behalf of the said funds and clients, 3,896,190 shares in the 

Company, representing as many voting rights, i.e., 4.96% of 

the capital and 4.81% of the voting rights. This reduction was 

the result of the closure of an account managed by Lazard 

Asset Management LLC. 

To the best of the Company’s knowledge, Dimensional Fund 

Advisors holds 1,989,654 shares in Valeo, i.e., 2.53% of the 

capital and 2.46% of the voting rights. 

To the best of the Company’s knowledge, Citadel Equity Fund 

holds 1,614,159 shares, i.e., 2.05% of the capital and 1.98% 

of the voting rights. 

To the best of the Company’s knowledge, AQR Capital 

Management holds 1,573,489 shares, i.e., 2% of the capital 

and 1.94% of the voting rights. 

member of the Board of Directors is given in Chapter 4, 

section 4.A.1.2. 

In addition, during its meeting of June 24, 2010 the Board of 

Directors decided to award 1,000,000 stock purchase options 

and 400,000 free shares to the Company’s employees, with 

some of these options and shares being reserved for the 

CEO, members of the Liaison Committee and high potential 

categories. 


PAGE 221

6 Share 

PAGE 222 


buyback program 

6.E. Share buyback program 

6.E.1. Current share buyback program 

In the fourteenth resolution of the Ordinary and Extraordinary 

Shareholders’ Meeting held on June 3, 2010, in accordance 

with Articles L.225-209 et seq. of the French Commercial 

Code, the Company’s shareholders granted the Board of 

Directors an authorization to trade in the Company’s shares, 

including by delegation. This authorization may be used for 

the following purposes: (i) to allocate shares on the exercise of 

stock purchase options pursuant to the provisions of Articles 

L.225-177 et seq. of the French Commercial Code, (ii) to 

award or sell shares to employees by way of profit-sharing 

bonuses and in connection with company savings plans on 

the terms stipulated by law, particularly Articles L.3332-1 

et seq. of the French Labor Code (Code du Travail), (iii) to 

grant free shares in accordance with the provisions of 

Articles L.225-197-1 et seq. of the French Commercial Code, 

(iv) to allocate shares on redemption, conversion, exercise, 

exchange or any other action, (v) to cancel some or all of the 

shares, thus acquired, (vi) to allocate shares (as exchange, 

payment or otherwise) in connection with external growth 

transactions, a merger, demerger or contribution, (vii) to 

ensure liquidity in the secondary market for the Company’s 

shares in accordance with a liquidity agreement entered into 

with an investment services provider that complies with the 

Code of Ethics recognized by the French financial markets 

authority (Autorité des Marchés Financiers-AMF). 

The number of shares that may be acquired as part of the 

above share buyback program may not represent more 

than 10% of the Company’s capital at any time. Moreover, 

the number of shares acquired to be retained and used 

subsequently in respect of a merger, demerger or contribution, 

may not exceed 5% of the capital. 


The purchase price may not exceed 45 euros per share. 

This authorization was given for an 18-month period as of the 

Shareholders’ Meeting of June 3, 2010 and superseded the 

unused portion of previous authorizations given to the Board 

of Directors to carry out share buyback programs. 

A description of the 2010 renewal of the Company’s share 

buyback program was drawn up in accordance with 

Articles 241-1 et seq. of the AMF’s General Regulations. 

In 2010 Valeo carried out a number of share sale and 

purchase transactions under the above mentioned share 

buyback program, as well as the program authorized at the 

Shareholders’ Meeting of June 3, 2010. 

During the year, the Company purchased 2,271,770 shares at 

an average price of 29.67 euros and sold 2,233,770 shares 

at an average price of 28.98 euros, under the liquidity 

agreement signed on April 22, 2004 with an investment 

services provider which complies with the Code of Ethics of 

the French Association of Investment Companies (Association 

française des entreprises d’investissement, AFEI) (for more 

details, see section 6.E.4.). 

At December 31, 2010, Valeo held 3,538,638 treasury 

shares, representing 4.50% of the Company’s capital. At that 

date, each of the shares had a unit value of 28.219 euros. At 

December 31, 2009, Valeo held 2,652,119 treasury shares 

representing 3.39% of the share capital. 

The number of shares held in treasury at December 31, 2010 

broke down as 3,454,638 shares to be allocated on the 

exercise of stock purchase options and 84,000 to be used 

in connection with the above-mentioned liquidity agreement. 

6.E.2. Share buyback program submitted to the next Annual 


statements for the year ended December 31, 2010. 

The Ordinary and Extraordinary Shareholders’ Meeting 

that will be called on June 8, 2011 will be asked to 

repeal the fourteenth resolution approved by the Annual 

Shareholders’ Meeting of June 3, 2010 and to approve a 

new resolution, authorizing the implementation of a new 

share buyback program, in accordance with the provisions 

of Articles L.225-209 et seq. of the Commercial Code, Title IV 

of Book II of the AMF General Regulation and European 

Commission Regulation 2273/2003 of December 22, 2003.

The features of the new share buyback program are as 

follows: 

6.E.2.1. Number of shares and percentage 

of capital held by the issuer 

At January 31, 2011, Valeo directly or indirectly held 

3,511,411 shares, representing 4.47% of the Company’s 

capital. 

6.E.2.2. Breakdown of shares owned 

by Valeo by purpose 

At January 31, 2011: 

3,453,411 shares to be allocated on the exercise of stock 

purchase options; 

58,000 shares to be allocated under the liquidity agreement 

signed on April 22, 2004 with CA Cheuvreux and amended 

by an additional clause on June 24, 2005, which complies 

with the Code of Ethics of the AFEI, approved by the AMF 

on March 22, 2005 (which has since become the Code 

of Ethics of Association française des marchés financiers 

(AMAFI) approved by the AMF on October 1, 2008). 

6.E.2.3. Purposes of the new share buyback 

program 

Under the new share buyback program, which will be 

submitted to the Ordinary and Extraordinary Shareholders’ 

Meeting on June 8, 2011, Valeo would like to buy back, 

directly or indirectly, its own shares, for the following purposes: 

to allocate shares on the exercise of stock purchase 

options pursuant to the provisions of Articles L.225-177 

et seq. of the French Commercial Code; or 

to grant free shares in accordance with the provisions of 

Articles L.225-197-1 et seq. of the French Commercial 

Code; or 

to award or sell shares to employees by way of profitsharing 

bonuses and in connection with company savings 

(or related) plans on the terms stipulated by law, particularly 

Articles L.3332-1 et seq. of the French Labor Code; or 

generally, to meet the company’s obligations in connection 

with stock options or other share allocation programs for 

employees or corporate officers of the issuer or a related 

company; or 

to allocate shares on exercise of rights attached to 

securities providing access to equity by redemption, 

conversion, exchange, presentation of a warrant, or any 

other method; or 

Valeo and its shareholders 6 

Share buyback program 

to cancel some or all of the shares thus acquired, subject 

to the adoption of another resolution by the Extraordinary 

Shareholders’ Meeting, regarding the delegation to the 

Board of Directors with a view to reducing share capital 

by canceling treasury shares and in the terms indicated 

therein; or 

to allocate shares (as exchange, payment or otherwise) in 

connection with external growth transactions, a merger, 

demerger or contribution; or 

to ensure liquidity in the secondary market for the 

Company’s shares in accordance with a liquidity agreement 

entered into with an investment services provider that 

complies with the Code of Ethics recognized by the AMF; 

or 

to allow the implementation of any market practice that may 

be authorized in the future by the AMF and, more generally, 

the implementation of any other operation which complies 

with the regulation in force. 

6.E.2.4 Maximum stake in the Company’s 

capital and maximum number 

of shares that could potentially 

be purchased under the new share 


The maximum stake that can be purchased under the new 

share buyback program cannot exceed 10% of the total 

number of shares making up the Company’s capital (e.g. 

78,628,798 shares at January 31, 2011). 

Pursuant to Article L.225-210 of the French Commercial 

Code, the number of shares that Valeo may hold at any time 

may not represent over 10% of the Company’s capital. 

Given the number of shares the Company currently owns, 

i.e. 3,511,411 shares at January 31, 2011 (4.47% of the 

Company’s capital) and subject to adjustments affecting the 

number of shares held by the Company and the amount of 

capital after the Ordinary and Extraordinary Shareholders’ 

Meeting on June 8, 2011, a total of 4,351,468 shares (5.53% 

of the Company’s registered capital at January 31, 2011) 

could be available for purchase. 

The securities covered by the buyback program are 

exclusively shares. 

6.E.2.5. Maximum unit purchase price 

The purchase price of shares under the new share buyback 

program may not exceed 70 euros per share. This price could 

be adjusted in the event of a change in the nominal share 

price, capital increase by capitalization of reserves, a free 


PAGE 223

6 Share 

PAGE 224 



share grant, a stock split or reverse stock split, distribution 

of reserves, or any other assets, redemption of the share 

capital, or any other operation on shareholders’ equity, in 

order to factor in the impact of these operations on the value 

of the share. 

6.E.2.6. Term of the new share buyback program 

In accordance with the resolution that will be submitted to 

the Ordinary and Extraordinary Shareholders’ Meeting for 

approval on June 8, 2011, the new share buyback program 

6.E.3. Cancellation of treasury shares 

In the thirteenth resolution of the Ordinary and Extraordinary 

Shareholders’ Meeting of June 9, 2009, the Company’s 

shareholders gave the Board of Directors a 26-month 

authorization to reduce the Company’s capital by canceling 

6.E.4. Treasury shares 

At December 31, 2010 the Company held, directly or 

indirectly, 3,538,638 treasury shares (4.50% of the share 

capital) with a unit value based on the purchase price 

of 28.219 euros and a par value of 3 euros. On December 31, 

2009, Valeo held 2,652,119 treasury shares (3.39% of the 

share capital). 

The shares purchased in 2010 were used exclusively for: 

covering stock option plans or other share allocations to 

employees; and 

implementing a liquidity agreement. 

The share purchases were made in accordance with 

authorizations granted by the Shareholders’ Meetings 

of June 9, 2009 and June 3, 2010 to the Board of Directors 

to buy back Company shares. The seventh resolution of the 

Shareholders’ Meeting of June 9, 2009 authorized the Board 

of Directors (with the possibility of delegation) to purchase, 

or order the purchase of, the Company’s shares so as to: 

implement any Company stock purchase option plans 

under the provisions of Articles L.225-177 et seq. of the 

French Commercial Code; or 

award or sell shares to employees by way of profit-sharing 

bonuses and implement employee savings plans under 


The maximum amount that can be spent under the new share 

buyback program will be fixed at 546 million euros, fees and 

commissions included. Valeo reserves the right to use the full 

amount authorized under the program. 

would be authorized for an 18-month period as of the 

meeting, i.e. until December 8, 2012. 

treasury shares. Under this authorization, the number of 

shares cancelled in any given 24-month period may not 

exceed 10% of the Company’s share capital. 

the provisions of Articles L.3332-1 et seq. of the Labor 

Code; or 

allocate free shares under the provisions of 

Articles L.225-197-1 et seq. of the French Commercial 

Code; or 

to allocate shares on the exercise of rights attached to 

securities giving access to the capital by redemption, 

conversion, exchange, presentation of a warrant or any 

other method; or 

cancel some or all shares bought back subject to 

approval by the Extraordinary Shareholders’ Meeting of 

the thirteenth resolution relative to the delegation to the 

Board of Directors to reduce the share capital by canceling 

treasury shares pursuant to the relevant terms; or 

allocate shares (as exchange, payment or otherwise) in 

connection with external growth transactions, a merger, 

demerger or contribution; or 

ensure liquidity in the secondary market for the Company’s 

share under a liquidity agreement entered into with an 

investment services provider that complies with the Code 

of Ethics approved by the AMF.

The fourteenth resolution of the Ordinary and Extraordinary 

Shareholder Meeting of June 3, 2010 authorized the Board 

of Directors (with the possibility of delegation) to purchase 

or order the purchase of the Company’s shares with a view 

to carry out the aforementioned operations (but allowed the 

cancelation of bought back shares without requiring the 

adoption of another resolution). 

At December 31, 2010 the number of treasury shares to be 

allocated upon exercise of stock options stood at 3,454,638 

compared with 2,606,119 at December 31, 2009. 

The remaining treasury shares (84,000 at December 31, 

2010 versus 46,000 at December 31, 2009) are earmarked 

for use under a liquidity agreement that complies with the 

Code of Ethics of AFEI signed with an investment services 

6.F. Additional disclosures 

6.F.1. Changes in share capital 

At December 31, 2010 Valeo’s share capital comprised 

78,628,798 shares with a par value of 3 euros each, fully 

paid-up and traded on Euronext Paris. The share capital 

was increased on December 31, 2010 by 1,257,543 euros 

through the issuance of 419,181 shares as a result of the 

exercise of stock options during 2010. 

At December 31, 2010 a potential maximum of 952,792 shares 

could be issued upon exercise of stock options awarded to 

Year Type of operation 


Additional disclosures 

provider on April 22, 2004. At December 31, 2010, 

84,000 shares and 11,929,673.68 euros had been allocated 

to this liquidity agreement compared with 46,000 shares 

and 9,635,328.31 euros at December 31, 2009. On the date 

the liquidity agreement was signed, 220,000 Valeo shares 

and 6,600,000 euros were allocated for its implementation. 

Under the liquidity agreement and via an investment services 

provider, Valeo acquired 2,271,770 shares at an average price 

of 29.67 euros and sold 2,233,770 shares at an average First- 

In-First-Out price of 28.98 euros. Trading and transaction fees 

incurred under the liquidity agreement totaled 175,000 euros, 

with no change from 2009. These shares were not reallocated 

to other purposes provided for under the share buyback 

program. 

the Group’s employees and corporate officers. At that date, 

9,974,244 OCEANE bonds were outstanding and convertible 

or exchangeable in circulation, all of which were redeemed 

by Valeo on January 3, 2011. 

To the best of the Company’s knowledge, none of these 

shares have been pledged. 

Changes in the Company’s capital since December 31, 2006 

are as follows: 

Changes 


Par value Premium Total 

Number 

of shares 

Total number 

of shares 

2006 Issuance of shares on exercise of stock 

subscription options - 2 2 70,260 77,580,617 

2007 Issuance of shares on exercise of stock 

subscription options 2 15 17 629,000 78,209 ,617 

2008 - - - - - 78,209,617 

2009 - - - - - 78,209,617 

2010 Issuance of shares on exercise of stock 

subscription options 1 10 11 419,181 78,628,798 


PAGE 225

6 Additional 

PAGE 226 


disclosures 

6.F.2. Authorized, unissued capital 

Authorizations granted 

Date of Shareholders’ Meeting 

(duration of authorization and expiration date) Maximum amount of issue 

1. Authorization to increase capital with pre-emptive rights 

Issuance of shares and/or share equivalents (A) 

Shareholders’ Meeting of June 9, 2009 – 8th resolution 

(authorization given for a maximum of 26 months, expiring 

on August 9, 2011) 

Capital increase by capitalization of reserves, profits or additional 

paid-in capital (B) 

Shareholders’ Meeting of June 9, 2009 – 10 th resolution 



2. Authorization to increase capital without pre-emptive rights 

Issuance of shares and/or share equivalents (C) 




Issuance of shares to members of the employee share ownership 

plan (D) 

Shareholders’ Meeting of June 3, 2010 – 17 th resolution 

Expiring on August 3, 2012 (26 months) 

3. Authorization to increase capital with or without pre-emptive rights 

Overallocation option as part of capital increase with 

or without pre-emptive rights (E) 




4. Authorization to allocate stock purchase options and free shares 

Allocation of stock purchase options 

Shareholders’ Meeting of June 3, 2010 – 15th resolution 

Expiring on July 3, 2011 (13 months) 

Allotment of free shares, existing shares or share to be issued 

to Group employees and corporate officers (F) 

Shareholders’ Meeting of June 3, 2010 – 16 th resolution 


5. Treasury shares 

Authorization to trade in the Company’s shares 

Shareholders’ Meeting of June 3, 2010 – 13th resolution 

Expiring on December 3, 2011 (18 months) 

Capital decrease through the cancellation of treasury shares 

Shareholders’ Meeting of June 9, 2009 – 13 th resolution 



40 million euros 

(A) + (B) + (C) + (D) + (E) + (F) 

combined ceiling = 132 million euros 


Included in combined ceiling 





The ceiling for each issuance is 

specified in the applicable regulation 

(currently 15% of the initial issuance) 

Included in ceiling for (C) 


Maximum number of shares allocated 

under the option: 1,000,000 

Maximum number of shares (existing 

or to be issued) allocated: 400,000 


Maximum number of shares that may be 

acquired: 10% of the capital 

Maximum number of shares that can 

be held by the Company: 10% of the 

capital 

Maximum amount allocated to share 

buyback program: 350 million euros 

Maximum repurchase price: 45 euros 

Maximum number of shares that can be 

cancelled over 24 months: 10% of the 

capital 

Utilization 

of authorizations 


None 

None 

None 

None 

None 

Board of Directors’ 

Meeting of June 24, 2010 

Allocation of 1,000,000 

stock 

options 

Board of Directors’ 

Meeting of June 24, 


Allotment of 400,000 

free shares 

Total purchased since 

the start of the program 

at December 31, 2010 

2,350,825 shares 

None

6.F.3. Other securities giving access to the capital 

6.F.3.1. Bonds convertible into new shares 

and/or exchangeable for existing 

shares (OCEANE) 

Under the terms of the authorization granted by the 

Shareholders’ Meeting of June 10, 2002 (and confirmed 

on March 31, 2003 when the Company’s management 

structure was changed), on July 25, 2003 Valeo issued 

9,975,754 bonds convertible into new shares and/or 

exchangeable for existing shares (OCEANEs) with a nominal 

value of 46.40 euros each, representing an aggregate nominal 

value of 462,874,985.60 euros. 

These bonds – which matured on January 1, 2011 – are 

quoted on Euronext Paris. They bore interest at 2.375% per 

annum and since August 4, 2003, may be exerciced at any 

time. The bond issue is described in detail in the prospectus 

registered with the Commission des Opérations de Bourse 

on July 25, 2003 under the number 03-707. 

On June 20, 2005, the Board of Directors adjusted the 

exercise conditions of the OCEANE bonds following the public 

share buyback offer and simplified public tender offer carried 

out in May and June 2005, which resulted in Valeo purchasing 

its own shares at an amount higher than the publicly quoted 

price. This adjustment was made in order to maintain the 

rights of the bondholders in accordance with Article R.228-90 

of the French Commercial Code and with the OCEANE bond 

issue contract. Consequently, the conversion/exchange ratio 

applicable to the OCEANE bonds was amended from 1 share 

for 1 bond to 1.013 shares for 1 bond. 

On December 31, 2010, the holders of 1,510 OCEANE 

bonds had requested conversion/exchange for a total of 

1,530 shares (after the adjustment of the exercise conditions 

related to the public share buyback and simplified public 

tender offer). 

On January 3, 2011 all of the OCEANE bonds still in circulation 

were redeemed. 



6.F.3.2. Stock option plans and allotment 

of free shares 

The policy for governing the allocation of stock options, and 

the policy on the allotment of free shares are described in 

Chapter 4, section 4.D.2.12. 

The table below presents the stock option plans in force 

since 2002. 

In accordance with Article R.225-138 of the French 

Commercial Code, following the public share buyback offer 

and simplified public tender offer, on June 20, 2005 the Board 

of Directors adjusted the number of shares underlying the 

Company’s stock options. As a result, the exercise ratio 

was raised from 1 share for 1 stock option to 1.01 share for 

1 stock option, with the number of shares to be allocated 

on the exercise of options rounded up to the nearest whole 

number. 

At December 31, 2010, 4,371,450 stock purchase options 

were outstanding, exercisable for 4,374,787 shares (of 

which 3,337 related to the public share buyback offer and 

the simplified public tender offer). In addition, 942,992 stock 

subscription options were outstanding, exercisable for 

952,792 new shares (including 9,800 related to the public 

share buyback offer and the simplified public tender offer). 


PAGE 227

6 Additional 

PAGE 228 


disclosures 

Share subscription option plans in force at December 31, 2010 

Shareholders’ Meetings Plan characteristics Options granted 

Date 

of Share- 

holders’ 

Meeting 

No. of 

option Term Date (1) 

06/10/2002 1,500,000 8 years 

03/31/2003 1,500,000 8 years 


Exercise 

price 

No. of 

grantees 

No. of 

Options 

o/w 

granted to 

corporate 

officers 

o/w granted 

to exec mgrs 

and corporate 

officers 

o/w granted 

to exec mgrs 

excl corporate 

officers 

o/w granted 

to the top 10 

grantees (2) 

Conditional 

options 

07/01/2002 € 43,84 699 420,000 0 0 2,500 96,700 0 

11/25/2002 € 28,30 229 600,000 0 0 159,500 107,500 0 

03/31/2003 € 23,51 755 700,000 160,000 100,000 52,750 44,000 0 

11/06/2003 € 32,91 1,005 780,000 61,000 61,000 117,766 77,395 0 

04/05/2004 1,500,000 8 years 11/08/2004 € 28,46 1,094 1,123,200 160,000 160,000 169,600 134,400 0 

TOTAL SHARE 

SUBSCRIPTION PLANS 3,623,200 381,000 321,000 502,116 459,995 0 

(1) Date of Board of Directors/Supervisory Board /Management Board meeting. 

(2) Including directors who are not corporate officers. 

Stock purchase option plans in force at December 31, 2010 


Date 

of Shareholders’ 

Meeting 

No. of 

options Term Date (1) 

Exercise 

price 

No. of 

grantees 

No. of 

Options 

o/w 

granted to 

corporate 

officers 

o/w granted 

to exec mgrs 

and corporate 

officers 

o/w granted 

to exec mgrs 

excl corporate 

officers 

o/w granted 

to the top 10 

grantees (2) 

Conditional 

options 

03/31/2003 1,500,000 8 years 

11/06/2003 € 32,91 1,005 500,000 39,000 39,000 75,484 49,605 0 

04/05/2004 1,500,000 8 years 

11/08/2004 € 32,74 1,094 280,800 40,000 40,000 42,400 33,600 0 

05/03/2005 4,500,000 8 years 

11/17/2005 € 32,32 1,082 650,000 0 0 94,300 48,900 0 

03/03/2006 € 33,75 2 187,000 150,000 150,000 37,000 0 0 

11/20/2006 € 32,63 1,298 1,309,250 0 0 251,000 175,000 0 

03/07/2007 € 36,97 2 250,000 200,000 

(i) 

11/15/2007 € 36,82 1,330 1,677,000 150,000 

(i) (ii) 

200,000 

(i) 

150,000 

(i) (ii) 

50,000 0 0 

350,000 

(ii) 

230,000 

(ii) 

174,250 

(ii) 

03/20/2008 € 31,41 596 426,750 0 0 0 78,000 0 

06/03/2010 1,000,000 8 years 06/24/2010 € 24,07 728 1,000,000 0 

100,000 

(i) (iii) 

177,500 

(iii) 

150,000 

(iii) 

611,365 

(iii) 

TOTAL STOCK PURCHASE 

PLANS 6,280,800 579,000 679,000 1,077,684 765,105 785,615 


(2) Including directors who are not corporate officers. 

(i) Share purchase options subject to the holding period described in Chapter 3, section 3.H.1.5 of the 2008 Registration Document. 

(ii) O/w 50% conditional (50% for the chairman and COO and 25% for other directors): subject to the Group achieving 2008 operating margin at least 3.8% of 

operating revenue, with proportional and linear allocation of between 3.8 and 4.1%. 

(iii) O/w 100% conditional (CEO and Liaison Committee), 50% or 25% (other Directors). Criteria: 2010 operating margin targets (see Chapter 4, section 

4.D.2.12.1).

Impact of 

tender offers 

(56,330 at 

June 21, 

2005 

2,724 

4,568 

6,022 

7,185 

10,682 

31,181 

Impact of 

tender offers 

(56,330 at 

June 21, 2005 

4 263 

2,787 

7,050 

Exercise date and conditions Number of subscription option plans 

Start 

Expiration 

date 

50% – 2 years; 

100% – 3 years 06/30/2010 

50% – 2 years; 

100% – 3 years 11/24/2010 

50% – 2 years; 

100% – 3 years 03/30/2011 

50% – 2 years; 

100% – 3 years 11/05/2011 

50% – 2 years; 

100% – 3 years 11/07/2012 

Options 

outstanding 

on 

12/31/2009 

172,200 

1,722 

100,960 

1,009 

215,830 

2,172 

390,624 

4,359 

702,420 

7,027 

1,582,034 

16,289 

Exercised 

at 

Exercised 12/31/2010 

in 2010 (cumula- 

(year) tive) 

63,420 

635 

53,840 

549 

105,961 

1,139 

191,718 

1,919 

414,939 

4,242 

0 

0 0 

338,210 

3,231 

363,755 

3,536 

197,469 

2,063 

258,918 

2,592 

1,158,352 

11,422 

Cancelled 

in 2010 

(year) 

172,200 

1,722 

37,540 

374 

2,330 

24 

5,333 

60 

6,700 

67 

224,103 

2,247 

Cancelled 

at 

12/31/2010 

(cumulative) 

420,000 

2,724 

261,790 

1,337 

176,585 

887 

303,201 

1,962 

360,280 

3,049 

1,521,856 

9,959 

Exercise date and conditions Number of stock purchase option plans 

Start 

Expiration 

date 

50% – 2 yrs; 

100% – 3 yrs 11/05/2011 

50% – 2 yrs; 

100% – 3 yrs 11/07/2012 

outstanding 

on 

12/31/2009 

250,780 

2,562 

176,605 

1,783 

exercised 

exercised at 

in 2010 12/31/2010 

(year) (year) 

60,747 

624 

32,133 

327 

118,441 

1,214 

46,208 

515 

cancelled 


(year) 

3,417 

35 

1,825 

22 

cancelled 

at 


(cumulative) 

194,943 

1,146 

91,945 

838 



Options 

outstanding 

on 


Number of 

shares to be 

subscribed 

(options + 

buyback) 


Residual 

grantees 

0 

0 0 0 

0 

0 0 0 

159,660 

1,599 161,259 101 

279,330 

3,160 282,490 317 

504,002 

5,041 509,043 453 

942,992 

9,800 952,792 - 

outstanding 

on 


No. of 

stocks to be 

purchased 

(Options + 

buyback) 

No. of 

residual 

grantees 

186,616 

1,903 188,519 317 

142,647 

1,434 144,081 453 

50% – 2 yrs; 

100% – 3 yrs 11/16/2013 422,750 89,990 90,455 9,030 235,815 323,730 323,730 525 

50% – 2 yrs; 

100% – 3 yrs 03/02/2014 187,000 0 0 0 0 187,000 187,000 2 

50% – 2 yrs; 

100% – 3 yrs 11/19/2014 928,500 144,243 144,243 25,250 406,000 759,007 759,007 679 

50% – 2 yrs; 

100% – 3 yrs 03/06/2015 250,000 0 0 0 0 250,000 250,000 2 

100% – 3 yrs 11/14/2015 1,270,750 31,500 31,500 44,750 451,000 1,194,500 1,194,500 993 

100% – 3 yrs 03/19/2016 366,000 0 0 22,500 83,250 343,500 343,500 481 

100% – 2 yrs 06/23/2018 1,000,000 0 0 15,550 15,550 984,450 984,450 715 

4,852,385 

4,345 

358,613 

951 

430,847 

1,729 

122,322 

57 

1,478,503 

1,984 

4,371,450 

3,337 4,374,787 

PAGE 229

6 Additional 

PAGE 230 


disclosures 

Free shares in force on December 31, 2010 


Date of 

Shareholders’ 

Meeting 

5th March 

2005 

No. of 

options Term Date (1) 

4,500,000 - 


Exercise 

price 

No. of 

grantees 

No. of 

Options 

o/w granted 

to corporate 

officers 

o/w granted 

to exec 

mgrs and 

corporate 

officers 

o/w 

granted 

to exec 

mgrs excl 

corporate 

officers 

o/w granted 

to the top 10 

grantees (2) 

Conditional 

options 

11/17/2005 - 1,082 600,000 0 0 141,450 73,350 300,000 

03/03/2006 - 2 63,000 50,000 50,000 13,000 0 36,500 

11/20/2006 - 116 100,000 0 0 0 18,500 0 

03/07/2007 - 155 100,000 0 0 0 0 0 

06/03/2010 400,000 - 

50,000 55,500 47,500 178,022 

06/24/2010 - 723 267,000 0 

(i) (i) 

(i) 

(i) 

- 44,333 133,000 0 3 

(i) 

TOTAL FREE SHARE GRANTS 1,263,000 50,000 100,003 209,989 139,380 514,612 


(2) Including Directors who are not corporate officers. 

(i) O/w a portion is subject to achieving operating margin targets for 2010 and a portion to an operating margin target for 2011. 

39 

(i) 

30 

(i) 

90 

(i)

Date and conditions Number of Shares 

Start of exercise period 

Expiration 

date 

Remaining 

to be transferred 

at 

12/31/2009 

Ownership 

Ownership transferred 

transfer- 

at 

red in 2010 12/31/2010 

(year) (cumulative) 

Cancelled 


(year) 

Cancelled 

at 


(cumulative) 

O/w 

ownership 

remains to 

be transferred 

at 




No. of shares 

that could be Residual 

transferred grantees 

Vesting period: 2yrs 3mths 

50% cond 

1/2 on 2006 perf, 

half on 2007 perf ( * ) Vesting period: 2yrs 3mths 

50% cond 

partly 2006 perf 

- 0 0 223,575 0 376,425 0 0 0 

partly on 2007 perf ( * ) - 0 0 26,500 0 36,500 0 0 0 

Vesting period: 3 yrs - 0 0 65,750 0 34,250 0 0 0 

Vesting period: 3 yrs 

Vesting period: 

France : 2 yrs 

- 79,000 79,000 79,000 0 21,000 0 0 0 

Other countries: 4 yrs - 0 0 0 3,510 3,510 263,490 263,490 710 

Vesting period: 

France : 2 yrs 

Other countries: 4 yrs 

- 0 0 0 7,996 7,996 125,004 125,004 41,668 

- 79,000 79,000 394,825 11,506 479,681 388,494 388,494 

(*) Performance 2006 consolidated Group operating margin before non-recurring expenditure as a % of total operating revenue at least 4.5%. 

(*) Performance 2007 consolidated Group operating margin before non-recurring expenditure as a % of total operating revenue at least 5%. 


PAGE 231

6 Additional 

PAGE 232 


disclosures 

6.F.4. Other securities 

The company has had access to a Euro Medium Term Notes 

(EMTN) program since October 2002, last renewed on April 

1, 2010. Valeo issued 600 million euros worth of notes under 

6.F.5. Other information on the capital 

6.F.5.1. Change in control 

To the best of the Company’s knowledge, there are no 

shareholder pacts or agreements in force that could lead to 

a change in control of the Company. 

6.F.5.2. Capital under option 

At the date of this Registration Document, no capital of 

any member of the Group was under option or agreed 

conditionally or unconditionally to be put under option. 

6.F.5.3. Disclosure thresholds 

In accordance with Article L.233-7 of the French Commercial 

Code, any individual or legal entity, acting alone or in 

concert, that holds a number of shares representing over 

5%, 10%, 15%, 20%, 25%, 30%, 33.33%, 50%, 66.66%, 

90% or 95% of the Company’s capital or voting rights, is 

required to disclose to the Company and the AMF by letter 

that the related disclosure threshold has been exceeded. 

Said disclosure must be within five trading days from of the 

date when the threshold is exceeded and must also state 

the total number of shares and voting rights held by the 

shareholders concerned. The disclosures are subsequently 

published by the AMF. This disclosure obligation also applies 

when an interest in the Company’s capital and/or voting 

rights is reduced to below the above-mentioned thresholds. 

If any shareholder fails to comply with these disclosure 

requirements, the shares in excess of the relevant threshold 

will be stripped of voting rights at any and all Shareholders’ 

Meetings held within the two-year period from the date when 

the omission is remedied. 

Since the Shareholders’ Meeting of March 31, 2003, Article 9 

of the Valeo bylaws states that, in addition to the applicable 

statutory disclosure thresholds, any individual or legal entity, 

acting alone or in concert, that raises or reduces its interest 

in the Company’s capital or voting rights, directly or indirectly, 


this program on June 24, 2005. The notes have an eight-year 

term and bear fixed interest of 3.75%. 

to above or below 2% respectively (or any multiple thereof), is 

required to disclose to the Company by registered letter with 

return receipt requested that the relevant disclosure threshold 

has been crossed. Said disclosure must be made within 

15 days from the date when the threshold is crossed and the 

shareholder concerned must state their own identity as well 

as that of any parties acting in concert with the shareholder. 

In accordance with the seventh paragraph of Article L.228-1 

of the French Commercial Code, this disclosure requirement 

also applies to shares held through an intermediary. Noncompliance 

with the above obligations is subject to the 

penalties set out in Article L.233-14 of the French Commercial 

Code, at the request of one or several shareholders together 

holding at least 2% of the Company’s capital or voting rights, 

as recorded in the minutes of the Shareholders’ Meeting. 

6.F.5.4. Shareholder identification 

Registered and bearer shares are recorded in shareholders’ 

accounts in accordance with applicable laws and regulations. 

However, a bank, broker or other intermediary may register 

on behalf of shareholders who are domiciled outside France 

in accordance with Article 102 of the French Civil Code (Code 

Civil). This registration may be made in the form of a joint 

account or several individual accounts, each corresponding 

to one shareholder. Any such intermediary must inform the 

Company or the intermediary managing the Company’s 

account that it is holding the shares on behalf of another 

party. 

The Company is entitled to identify all holders of shares and 

other securities redeemable, exchangeable, convertible or 

otherwise exercisable for shares carrying rights to vote at 

Shareholders’ Meetings, in accordance with the procedure 

provided for in Article L.228-2 et seq. of the French 


In order to identify holders of bearer shares, in accordance 

with the applicable laws and regulations, the Company is 

entitled to request, at any time, from the central depository

esponsible for its securities issues account, in exchange for 

a fee, the name – or, in the case of corporate shareholders, 

the company name – nationality, year of birth – or, in the case 

of corporate shareholders, the year of incorporation – and 

address of holders of bearer shares and other securities 

redeemable, exchangeable, convertible or otherwise 

exercisable for shares carrying rights to vote at Shareholders’ 

Meetings, together with details of the number of shares held 

by each such shareholder and of any restrictions applicable 

to the securities concerned. 

Based on the list provided by the above-mentioned 

organization, where the Company considers that shares 

may be held on behalf of third parties, it may request, in 

accordance with the same conditions, either through the 

organization or directly from the parties mentioned on the list, 

the same information concerning the holders of the shares. 

If one of the parties mentioned on the list is a bank, broker 

or other intermediary, it must disclose the identity of the 

shareholders for whom it is acting. The information is provided 

directly to the financial intermediary managing the Company’s 

share account, which shall pass on said information either 

to the Company or the above-mentioned central depository, 

as applicable. 

For registered shares and other securities redeemable, 

exchangeable, convertible or otherwise exercisable for 

shares, any intermediary holding the securities on behalf 

of a third party must disclose the identity of the person or 



entity for whom it is acting as well as the number of shares 

held by each, upon simple request by the Company or its 

representative, which may be made at any time. 

The Company may also request from any corporate 

shareholder holding over 2.5% of the Company’s capital or 

voting rights, information concerning the identity of persons 

or companies holding either directly or indirectly over one 

third of the corporate shareholder’s capital or voting rights. 

If an individual or corporate shareholder is asked to provide 

information in accordance with the above conditions and 

fails to provide it by the applicable deadline, or provides 

incomplete or incorrect information, the shares or other 

securities redeemable, exchangeable, convertible or 

otherwise exercisable for shares recorded in the shareholder’s 

account shall be stripped of voting rights for all Shareholders’ 

Meetings held until the identification request has been fulfilled, 

and the payment of any corresponding dividends shall also 

be deferred until that date. 

In addition, if an individual or company registered in the 

Company’s shareholders’ account deliberately ignores their 

obligations, the Company or one or more shareholders 

holding at least 5% of the Company’s capital may apply to the 

court of the place in which the Company’s registered office 

is located to obtain an order to totally or partially strip the 

shares concerned of their voting rights and the corresponding 

dividend, for a maximum period of five years. 

6.F.6. Factors likely to be material in the event of a public tender offer 

6.F.6.1. Agreements entered into by the 

Company that would change 

or terminate if there were a 

change in control of the Company, 

with the exception of those 

agreements whose disclosure would 

seriously harm its interests (except 

in the event of a legal obligation 

to disclose) 

As specified above in “Risks and uncertainties” (Chapter 

2, section 2.A.5. “Liquidity risk”), the bond issue 

of 600 million euros, maturing on June 24, 2013 and issued 

as part of a medium and long-term Euro Merdium Term 

Notes financing program capped at 2 billion euros, includes 

an option allowing bondholders to request early redemption 

of their bonds in the event of a change of control of Valeo 

that leads to the bond’s rating being downgraded to below 

investment grade, assuming it was previously rated in that 

category, or, if the previous rating was below investment 

grade, to a downgrade of one rating category (e.g. from 

Ba1 to Ba2). 

Some of Valeo’s customers have a clause in their general 

purchasing conditions allowing them to terminate their 

contract with Valeo in the event of a change in control. 

One joint venture of minor importance in terms of the 

Group’s overall operations (Valeo Systems South Africa) 

is subject to a change of control clause that could be 

activated in the event of a takeover by one of the other 

partners’ competitors. 


PAGE 233

6 Additional 

PAGE 234 


disclosures 

6.F.6.2. Agreements providing for 

indemnities payable to employees 

or members of the Board of Directors 

if they resign or are dismissed 

without real or serious cause 

or if their employment contract 

is terminated as a result of a public 

tender offer 

As explained in Chapter 4, section 4.B.1.2.7, Jacques 

Aschenbroich, the Chief Executive Officer, is eligible for 

termination benefits equal to between 6 and 24 months of 

his annual fixed and variable compensation. These benefits 

would be paid in the event of termination related to a change 

in control or of strategy (except on the grounds of gross 

misconduct in the performance of his duties). The payment 

of these benefits depends on achieving performance criteria 

and the amount of the benefits owed will be offset against the 

amount owed under the non-competition clause. 

The Board reserved the right to subject Jacques Aschenbroich 

to a non-competition clause that would prohibit him from 

working in any way or for any reason for an automotive 

equipment manufacturer or, more generally for any of 

Valeo’s competitors for 12 months after termination of his 

employment as Chief Executive Officer. In this case, Jacques 

Aschenbroich would be paid a non-competition payment 

equal to 12 months of compensation (calculated using 

the same compensation used to calculate the termination 

benefits). The Company retains the right to waive the noncompetition 

clause, in which case no payment will be owed. 

For further details, see Chapter 4, section 4.B.1.2.7. 


6.F.6.3. Agreements that could restrict 

the transfer of shares and 

the exercise of voting rights 

6.F.6.3.1. Relations with FSI 

The Board Meeting of October 20, 2009 decided to co-opt 

Michel de Fabiani, whose name was put forward by FSI, to be 

a Director, replacing Erich Spitz. On this occasion, and after 

considering the specific current ownership structure of Valeo, 

FSI, which is a 51% owned subsidiary of Caisse des dépôts 

et consignations (CDC) and included in the consolidated CDC 

financial statements, sent a letter dated October 19, 2009 

confirming that all of the shares that the CDC group holds in 

Valeo will vote the same way at the Shareholders’ Meetings 

and the Group would support the resolutions approved by the 

Board of Directors and that FSI would not increase its holding 

beyond 15% of the share capital without the consent of the 

Valeo Board. FSI also confirmed that it was now an insider, as 

understood under the applicable regulations, as was Michel 

de Fabiani, in the context of monitoring FSI’s equity holding 

in Valeo and preserving the Group’s interest. 

6.F.6.3.2. Agreement with Pardus 

On May 21, 2008, the Company signed an agreement with 

Pardus Capital Management LP (hereafter, “Pardus”) and 

Behdad Alizadeh, which was submitted to and approved by 

the Shareholders’ Meeting of June 20, 2008. The purpose 

of this agreement was to: (i) establish the conditions for the 

appointment of a Pardus representative to the Board of 

Directors, (ii) define certain rules of conduct and loyalty for 

Pardus and its representative towards Valeo and its Board 

of Directors, (iii) limit Pardus’ interest in the Company’s 

capital, and (iv) set out certain conditions for the sale of 

Valeo shares by Pardus. In a letter dated August 17, 2010, 

Pardus sent Valeo notice of the cancelation of this agreement, 

which was accordingly terminated ipso jure after a period of 

four months, i.e., December 18, 2010. This termination had 

no consequences for the Company’s shareholders.

7.A. Principal legal and statutory provisions 

236 

7.A.1. Company name and headquarters 236 

7.A.2. Legal structure and governing law 236 

7.A.3. Corporate governance 236 

7.A.4. Date of incorporation and term 236 

7.A.5. Corporate purpose 237 

7.A.6. Registration particulars 237 

7.A.7. Fiscal year 237 

7.A.8. Dividends 237 

7.A.9. Liquidation surpluses 238 

7.A.10. Shareholders’ Meetings 238 

7.A.11. Double voting rights 

7.A.12. Changes in share capital and rights 

238 

attached to shares 239 

7.B. Information on subsidiaries and affiliates 

239 

7.C. Major contracts 242 

7.D. Consultation of documents 242 

7.D.1. Documents made public by Valeo 242 

7.D.2. Annual information document 

Annual, interim and quarterly financial 

information, share buyback programs, 

242 

and other information (www.valeo.com) 243 

ADDITIONAL 

INFORMATION 



7 

Declarations regarding crossing 

thresholds (published on the AMF 

website at www.amf-france.org) 244 

Information relating to the company’s 

total share capital and voting rights 

(www.valeo.com) 244 

Information published by Valeo 

in Bulletin des annonces légales 

obligatoires (BALO) and available on 

the BALO website (www.journal-officiel. 

gouv.fr/balo) 244 

Information published by Valeo in 

financial publications 245 

Press releases published on the Valeo 

website (www.valeo.com) 245 

7.E. Information related 

to the Statutory Auditors 247 

7.E.1. Statutory Auditors and Alternate 

Statutory Auditors 247 

Statutory Auditors 247 

Alternate Statutory Auditors 247 

7.E.2. Fees paid to the Statutory Auditors AFR 248 

7.F. Person responsible for 

the Registration Document AFR 249 

7.F.1. Name of the person responsible 

for the Registration Document 

containing the annual financial report 249 

7.F.2. Declaration by the person responsible 

for the Registration Document 249 

PAGE 235

7 Principal 

PAGE 236 

Additional information 

legal and statutory provisions 

7.A. Principal legal and statutory provisions 

7.A.1. Company name and headquarters 

The name of the Company is Valeo and its headquarters are located at 43, rue Bayen, 75017 Paris, France, 

tel.: +33 (0) 1 40 55 20 20. 

7.A.2. Legal structure and governing law 

Valeo is a Limited Company (société anonyme) with a Board of Directors. It is governed by French law, notably the provisions 

of Book II of the French Commercial Code (Code de Commerce) and various provisions of the regulatory section of the 

French Commercial Code. 

7.A.3. Corporate governance 

With a view to increasing the transparency of information 

disclosed to the public, the Company has set up a number 

of procedures to ensure that it complies with best corporate 

governance practices. Further information is provided in 

the report of the Chairman of the Board of Directors on the 

7.A.4. Date of incorporation and term 


composition of the Board, the application of the principle of 

gender equality, the conditions in which the Board’s work is 

prepared and organized, and the internal control and risk 

management procedures put in place by the Valeo Group 

(section 4.D). 

The Company was incorporated on February 10, 1923 and its term was extended for a further 99 years on February 10, 1972.

7.A.5. Corporate purpose 

The Company’s corporate purpose is as follows (Article 3 of 

the articles of association): 

the research, manufacturing, sale, trade and supply of all 

products, equipment and services for the industrial and 

retail sectors, that may be manufactured and developed 

by factories of the Company or of companies of its Group 

or that may be of interest to their customers; 

7.A.6. Registration particulars 

Additional information 7 

Principal legal and statutory provisions 

and more generally, engaging in any transactions 

whatsoever, including industrial, commercial, financial, real 

estate and other property transactions, sales, acquisitions, 

capital contributions, etc., directly or indirectly related to 

the corporate purpose or contributing to its extension or 

development. 

The Company is registered at the Paris Companies Registry under the number 552 030 967 RCS Paris. 

7.A.7. Fiscal year 

The Company’s fiscal year covers a twelve-month period from January 1 to December 31. 

7.A.8. Dividends 

Each share entitles its holder to a proportion of income equal 

to the proportion of capital represented by the share. 

Distributable income is composed of net income for the year 

less any prior year losses and amounts appropriated to the 

legal reserve, plus any income carried forward. Furthermore, 

shareholders in an Annual General Shareholders’ Meeting 

may decide to distribute amounts taken from available 

reserves and/or retained earnings. In this case, the related 

resolution approved by the Annual General Shareholders’ 

Meeting must clearly specify the reserve account from which 

the distributed amounts are to be taken. 

Shareholders may resolve to pay out a dividend only after 

approving the financial statements for the year and noting that 

amounts are available for distribution. The dividend payment 

terms are defined by the Annual General Shareholders’ 

Meeting or by default, the Board of Directors. 

The Board of Directors may decide to pay an interim dividend 

for the current year or the year-ended before the financial 

statements are approved, subject to the conditions set down 

by law. 

At the Annual General Shareholders’ Meeting called to 

approve the financial statements, shareholders may decide 

to offer a stock dividend alternative representing all or part of 

the dividend, or interim dividend in cash or stock, as provided 

for by law. 

Dividends unclaimed after a period of five years from the date 

they were made payable are paid to the French State. 


PAGE 237

7 Principal 

PAGE 238 


legal and statutory provisions 

7.A.9. Liquidation surpluses 

Liquidation surpluses are allocated between the shareholders in proportion to their interests in the Company’s capital. 

7.A.10. Shareholders’ Meetings 

Ordinary and Extraordinary Shareholders’ Meetings are called 

and conduct business in accordance with the conditions set 

down by law. 

In accordance with Article R.225-85 of the French Commercial 

Code, shareholders may participate in Shareholders’ 

Meetings subject to submitting evidence of ownership of 

their shares. Share ownership is evidenced by an entry in 

Valeo’s share register in the name of the shareholder (or of the 

intermediary acting on their behalf) or in the register of bearer 

shares held by an accredited intermediary. Such entries must 

be recorded by 0.00 hours (12:00 am) (CET) on the third 

working day preceding the date of the Meeting. In the case 

of bearer shares, the accredited intermediary shall provide a 

participation certificate for the shareholders concerned, which 

must be attached to the corresponding postal voting or proxy 

form or to the admission card made out in the name of the 

shareholder or in the name of the registered intermediary 

representing the shareholder. 

Subject to the above-mentioned conditions, all shareholders 

are entitled to attend Shareholders’ Meetings provided they 

have settled all capital calls related to their shares. 

7.A.11. Double voting rights 

Each shareholder has a number of votes corresponding to 

the number of shares held or represented by proxy. 

However, since the Shareholders’ Meeting of June 16, 1992, 

Article 23 of the Company’s articles of association provides 

that double voting rights are attached to all fully-paid shares 

that have been registered in the name of the same holder 

for at least four years. In the case of a capital increase paid 

up by capitalizing reserves, income or share premiums, the 

new registered shares allocated to a shareholder in respect 

of existing shares with double voting rights will also carry 

double voting rights from the date of issue. Double voting 


Shareholders who are unable to attend a meeting in person 

may choose one of the following three options: 

give proxy to their spouse or another shareholder; 

cast a postal vote; or 

return the signed form of proxy to the Company without 

naming a person to represent them, in accordance with 

the applicable laws and regulations. 

In compliance with the conditions set down by the applicable 

laws and regulations, shareholders may send proxy and 

postal voting forms for Annual General Shareholders’ 

Meetings either in paper format or, if authorized by the Board 

of Directors in the notice of meeting, in electronic form. 

In accordance with Article R.225-79 of the French Commercial 

Code, amended by decree on June 23, 2010, a change in 

the articles of association will be voted on by shareholders 

during the Ordinary and Extraordinary Shareholders’ Meeting 

of June 8, 2011 to allow for notification of the appointment 

and revocation of corporate officers via electronic means. 

Minutes of Shareholders’ Meetings are drawn up, and copies 

and extracts thereof are certified and delivered, in accordance 

with the law. 

rights are automatically stripped from any registered shares 

that are converted into bearer shares or transferred. However, 

registered shares are not stripped of voting rights and the 

above four-year qualifying period continues to run following 

the transfer of shares included in the estate of a deceased 

shareholder, or in connection with the settlement of the marital 

estate, or an inter vivos gift to a spouse or relative in the direct 

line of succession. Double voting rights may be removed at 

an Extraordinary General Shareholders’ Meeting, subject to 

the approval of shareholders entitled to double voting rights, 

at a special meeting held for that purpose.


Information on subsidiaries and affi liates 

7.A.12. Changes in share capital and rights attached to shares 

Any changes in the Company’s share capital or voting rights attached to shares are subject to the applicable law as the articles 

of association do not contain any specific provisions in relation to such operations. 

7.B. Information on subsidiaries and affiliates 

The overall legal and operational structure of the Group is 

described in Chapter 1, section 1.C.1. 

Following the creation of subsidiaries for its industrial 

activities in 2002, Valeo is now solely a holding and cash 

management company for the Group. As such, Valeo 

centralizes the management of market risks to which its 

operating subsidiaries are exposed, including changes in 

interest rates and fluctuations in exchange rates and the 

prices of quoted commodities. Valeo also centralizes the 

financing requirements of these subsidiaries and is generally 

the sole counterparty of the financial institutions that provide 

the funding to cover these requirements. The related assets 

(cash and marketable securities) and liabilities (external 

debt) are included in Valeo’s balance sheet. Valeo is also 

responsible for upholding the image of the Valeo brand. To 

this end, it has entered into brand licensing agreements with 

certain of its operating subsidiaries. 

Group-wide control and support functions, encompassing 

accounting, legal counsel, information technology, 

procurement, real-estate management and supply chain 

management, are performed by Valeo Management Services, 

which bills a fee to the French subsidiaries. 

The Group’s operating assets and liabilities are carried by its 

subsidiaries, mainly by the industrial and commercial entities 

listed in the table on the following pages. 

The commercial entities listed in this table are active only 

on the independent aftermarket, in the countries where they 

are present. Sales to vehicle manufacturers are handled 

directly by the Business Groups/Product Groups involved 

in the production process. The commercial activities 

of the Business Groups/Product Groups with a given 

customer are coordinated by the networks of the Sales and 

Business Development Function, described in Chapter 1, 

section 1.C.2.3. A list of consolidated companies (including 

their geographic location) is given in the notes to the 

consolidated financial statements, Chapter 5, section 5.B.6, 

Note 7. 


PAGE 239

7 Information 

PAGE 240 


on subsidiaries and affi liates 

Industrial 

Commercial 

France Germany, Belgium, 

UK, Eire, 

Netherlands 


European Union Europe 

outside EU 

Italy 

Spain 

Hungary, Poland 

Czech Republic 

Roumania, Slovakia 

MAIN INDUSTRIAL AND COMMERCIAL ENTITIES 

Direct and indirect interests by country where the Group is established 

(as a % of interest at December 31, 2010) 

Turkey 

Russia 

Africa North America 

Tunisia 

South Africa 

Egypt 

United States 

VALEO EMBRAYAGES VALEO SCHALTER UND 

SENSOREN GmbH 

VALEO S.p.A. 

(Italy) 

VALEO AUTO-ELECTRIC 

HUNGARY LLC 

(Hungary) 

VALEO OTOMOTIV 

SISTEMLERI 

ENDUSTRISI A.S. 

(Turkey) 

VALEO EMBRAYAGES 

TUNISIE SA 

VALEO, INC. 

100 100 

99.9 100 100 100 

100 

VALEO MATÉRIAUX 

DE FRICTION 

VALEO WISCHERSYSTEME 

GmbH 

VALEO SERVICE ITALIA 

S.p.A. 

VALEO ELECTRIC AND 

ELECTRONIC SYSTEMS 

Sp.zo.o. (Poland) 

VALEO OTOMOTIV 

DAGITIM A.S. 

(Turkey) 

DAV TUNISIE 

VALEO INVESTMENT 

HOLDINGS, INC. 

100 

100 99.9 

100 100 

100 

100 

VALEO ÉQUIPEMENTS 

ÉLECTRIQUES MOTEUR 

100 

VALEO SICHERHEITS- 

SYSTEME GmbH 

100 

VALEO ESPAÑA S.A. 

100 

VALEO SERVICE 

EASTERN EUROPE 


100 

VALEO CLIMATE 

CONTROL 

TOMILINO LLC 

(Russia) 

VALEO SYSTEMS SOUTH 

AFRICA (Proprietary) 

Limited 

51 

VALEO ELECTRICAL 

SYSTEMS, INC. 

100 

VALEO SÉCURITÉ 

HABITACLE 

100 

VALEO SYSTÈMES 

D’ESSUYAGE 

100 

VALEO VISION 

100 

DAV 

100 

SC2N 

100 

VALEO FOUR SEASONS 

50 

VALEO KLIMASYSTEME 

GmbH 

100 

VALEO COMPRESSOR 

EUROPE GmbH 

100 

VALEO SERVICE 

DEUTSCHLAND GmbH 

100 

VALEO VISION 

BELGIQUE 

100 

VALEO SERVICE 

BELGIQUE 

100 

VALEO SERVICE UK LIMITED 

(UK) 

VALEO ILUMINACIÓN S.A. 

(Spain) 

99.8 

VALEO SISTEMAS 

ELÉCTRICOS S.L. 

(Spain) 

100 

VALEO CLIMATIZACIÓN S.A. 

(Spain) 

100 

VALEO SERVICE 

ESPAÑA S.A 

100 

VALEO 

TÉRMICO, S.A. 

(spain) 

100 

VALEO 

AUTOSYSTEMY 


100 

VALEO VYMENIKY 

TEPLA k.s. 

(Czech Republic) 

100 

VALEO 

AUTOKLIMATIZACE k.s. 


100 


EUROPE S.r.o. 


100 

VALEO LIGHTING 

ASSEMBLY S.r.l. 

(Roumania) 

100 


INJECTION S.A. 

(Roumania) 

95 

VALEO SERVICE 

LIMITED 

LIABILITY COMPANY 

(Russia) 

100 

VALEO INTERBRANCH 

AUTOMOTIVE SOFTWARE 

(Egypt) 

100 

VALEO CLIMATE 

CONTROL CORP. 

100 

VALEO SYLVANIA LLC 

50 

VALEO SWITCHES & 

DETECTION SYSTEMS, INC. 

100 

VALEO RADAR 

SYSTEMS, INC. 

100 

VALEO ENGINE 

COOLING, INC. 

100 

VALEO FRONT END 

MODULE, INC. 

VALEO SERVICE 

100 

VALEO SYSTÈMES 

THERMIQUES 

100 

VALEO ENGINE 

COOLING UK Ltd 

(UK) 

100 

100 

VALEO 

SISTEME TERMICE S.r.l. 

(Roumania) 

100 

100 

VALEO COMPRESSOR NORTH 

AMERICA, INC. 

100 

100 

VALEO SYSTÈMES DE 

CONTRÔLE MOTEUR 

100 

CONNAUGHT 

ELECTRONICS LIMITED 

(Eire) 

100 

VALEO SLOVAKIA S.r.o. 

(Slovakia) 

100 

VALEO 

ÉTUDES ÉLECTRONIQUES 

100 

VALEO SERVICE 

BENELUX B.V. 

(Netherlands) 

100

North America South America Asia 

Mexico Brazil 

Argentina 

China 


Information on subsidiaries and affi liates 

South Korea, Japan 

Thailand, Indonesia 


ELECTRICOS SA de CV 

100 

DELMEX DE JUAREZ 

S. de R.L. de CV 

100 

VALEO SISTEMAS ELECTRONICOS 


100 

VALEO CLIMATE CONTROL 

DE MEXICO SA de CV 


AUTOMÓTIVOS Ltda 

(Brazil) 

100 

VALEO EMBRAGUES 

ARGENTINA S.A. 

100 

EMELAR Sociedad 

Anónima 

(Argentina) 

100 

CIBIE ARGENTINA S.A. 

TAIZHOU VALEO-WENLING 

AUTOMOTIVE SYSTEMS 

COMPANY LIMITED 

100 

HUBEI VALEO AUTO LIGHTING 

COMPANY LTD 

100 

VALEO AUTOMOTIVE AIR 

CONDITIONING HUBEI Co. Ltd 

55 

FAW-VALEO CLIMATE CONTROL 

SYSTEMS Co. Ltd 

VALEO ELECTRICAL SYSTEMS KOREA Ltd 

100 

VALEO PYEONG HWA Co. Ltd 

(Korea) 

50 

VALEO PYEONG HWA 

INTERNATIONAL Ltd 

(Korea) 

50 

VALEO SAMSUNG THERMAL 


(Korea) 

VALEO FRICTION 

MATERIALS INDIA 

LIMITED 

60 

AMALGAMATIONS 

VALEO CLUTCH 

PRIVATE LIMITED 

50 

MINDA VALEO 

SECURITY SYSTEMS 


50 

VALEO INDIA 


100 

100 

36.5 

50 

100 

VALEO SYLVANIA ILUMINACIÓN 


50 

NANJING VALEO 

CLUTCH Co. Ltd 

55 

VALEO THERMAL SYSTEMS KOREA Co. Ltd 

100 

VALEO ENGINE AND 

ELECTRICAL SYSTEMS 

INDIA PRIVATE LIMITED 

100 

VALEO SHANGHAI AUTOMOTIVE 

ELECTRIC MOTORS & WIPER 


55 

SHANGHAI VALEO AUTOMOTIVE 

ELECTRICAL SYSTEMS 

VALEO UNISIA TRANSMISSIONS K.K. 

(Japan) 

66 

VALEO THERMAL 

SYSTEMS JAPAN CORPORATION 


SYSTEMS 

(India) PRIVATE Ltd 

100 

Co. Ltd 

50 

HUADA AUTOMOTIVE AIR 

CONDITIONER Co. Ltd 

30 

VALEO LIGHTING HUBEI 

TECHNICAL CENTER Co. Ltd 

100 

VALEO INTERIOR CONTROLS 

(SHENZHEN) Co. Ltd 

100 

VALEO AUTOMOTIVE SECURITY 

SYSTEMS (WUXI) Co. Ltd 

100 

ICHIKOH INDUSTRIES LIMITED 

(Japan) 

31.6 

VALEO THERMAL SYSTEMS 

SALES (THAILAND) Co. Ltd 

74.9 

VALEO SIAM THERMAL SYSTEMS Co. Ltd 

(Thailand) 

74.9 


(THAILAND) Co. Ltd 

100 


(CHANGCHUN) Co. Ltd 

100 

98.5 


CLUTCH (THAILAND) Co. Ltd 

VALEO ENGINE COOLING 

(FOSHAN) Co. Ltd 

97.3 

100 

PT VALEO AC INDONESIA 

FOSHAN ICHIKOH 

VALEO AUTO 

LIGHTING SYSTEMS Co. Ltd 

50 

VALEO AUTO 

PARTS TRADING 

(SHANGHAI) Co. Ltd 

100 

VALEO AUTOMOTIVE 

TRANSMISSIONS SYSTEMS 

(NANJING) Co. Ltd 

100 

49 

India 


PAGE 241

7 Major 

PAGE 242 


contracts 

7.C. Major contracts 

In 2009 the Group received financing from the EIB for its 

R&D projects designed to reduce fuel consumption and 

CO2 emissions and to improve active safety. This financing 

involved two loans for a total of up to 300 million euros. 

In March 2010, Valeo sold its speed controller business, 

Telma. 

7.D. Consultation of documents 

7.D.1. Documents made public by Valeo 

The Company’s press releases and annual Registration 

Documents filed with the French securities regulator, Autorité 

des marchés financiers (AMF) (including historical financial 

information relating to the Company and the Group), as well 

as any updates thereto can be accessed on the Company’s 

website at www.valeo.com. Copies are also available on 

request from the Company’s headquarters. 

In accordance with Article 221-3 of the AMF General 

Regulations, the regulated information defined in Article 221-1 

of these Regulations is posted on the Company’s website 

and remains on line for at least five years after the related 

documents are issued. 

7.D.2. Annual information document 

This annual information document has been prepared in 

compliance with Article L. 451-1-1 of the French Monetary 

and Financial Code (Code monétaire et financier) and 


In May 2010, Valeo acquired the N.K. Minda Group’s minority 

interest in the joint venture specialized in the production of 

electrical systems in Pune, India. 

With the exception of the above-mentioned contracts, neither 

Valeo nor any of the Group’s companies signed any major 

contracts in the last two years other than those related to the 

normal course of their activity. 

As recommended by the AMF in its report on corporate 

governance and internal control issued on December 8, 

2009, the Board of Directors’ Internal Procedures are also 

posted on the Company’s website. The articles of association, 

minutes of Shareholders’ Meetings, statutory auditors’ reports 

and all other corporate documents are availble at Valeo’s 

headquarters in accordance with the law and the Company’s 

articles of association. 

Article 222-7 of the General Regulations of the AMF. It lists 

the information published or made public by Valeo between 

March 7, 2010 and March 10, 2011.

Annual, interim and quarterly financial information, share buyback programs, and other 

information (www.valeo.com) 

March 7, 2011 

February 7, 2011 

January 10, 2011 


December 13, 2010 



November 8, 2010 

October 18, 2010 


September 13, 2010 


August 2, 2010 

July 29, 2010 




June 7, 2010 

May 9, 2010 

April 22, 2010 


March 24, 2010 




Consultation of documents 

Monthly press release containing weekly share buyback statements - February 2011 statement 

Monthly press release containing weekly share buyback statements - January 2011 statement 

Monthly press release containing weekly share buyback statements - December 2010 statement 

Interim statement regarding the liquidity agreement at December 31, 2010 

Implementation of the share buyback authorization 

Share buyback authorization 

Monthly press release containing weekly share buyback statements - November 2010 statement 

Monthly press release containing weekly share buyback statements - October 2010 statement 

Implementation of the partial share buyback management agreement 

Monthly press release containing weekly share buyback statements - September 2010 statement 

Partial management of the share buyback agreement 

Monthly press release containing weekly share buyback statements - August 2010 statement 

Monthly press release containing weekly share buyback statements - July 2010 statement 

Interim results for first-half 2010 

Press release: First-half 2010 results 

Interim statement regarding the liquidity agreement 

Monthly press release containing weekly share buyback statements - June 2010 statement 

Monthly press release containing weekly share buyback statements - May 2010 statement 

Monthly press release containing weekly share buyback statements - April 2010 statement 

Press release: First quarter 2010 results 

Monthly press release containing weekly share buyback statements - March 2010 statement 

2009 review of operations 

2009 Registration Document 

Monthly press release containing weekly share buyback statements - February 2010 statement 


PAGE 243

7 Consultation 

PAGE 244 


of documents 

Disclosure thresholds (published on the AMF website www.amf-france.org) 









Pardus Investments reports reducing its interests in Valeo’s capital and voting rights below the 

5% disclosure threshold 

Lazard Asset Management LLC, acting on behalf of funds managed by it and for discretionary 

clients, reports reducing its interests in the capital and voting rights of Valeo below the 5% disclosure 

threshold 

Pardus Investments reports reducing its interests in Valeo’s voting rights below the 5% disclosure 

threshold 



Lazard Asset Management LLC, acting on behalf of funds managed by it and discretionary clients, 

reports having increased its interests in Valeo’s capital and voting rights above the 5% disclosure 

threshold 

Pardus Investments reports reducing its interests in Valeo’s voting rights below the 10% disclosure 

threshold 



Information relating to the company’s total share capital and voting rights (www.valeo.com) 

Information covering the period March 1, 2010 through February 24, 2011, updated monthly and available on the company’s 

website under Investor Relations/Regulated Information. 

http://www.valeo.com/en/home/investor-relations/regulated-information.html 

Information published by Valeo in Bulletin des annonces légales obligatoires (BALO) and available 

on the BALO website (www.journal-officiel.gouv.fr/balo) 





Notice of redemption to holders of Oceanes (convertible/exchangeable bonds) 

Approval of the 2009 parent company and consolidated financial statements by the Annual General 

Shareholders’ Meeting on June 3, 2010 

Convening notice for the Annual General Shareholders’ Meeting of June 3, 2010 

Notice of the Annual General Shareholders’ Meeting of June 3, 2010

Information published by Valeo in financial publications 





Press release in Les Echos announcing the second-half and full-year 2010 results 

Press release in Les Echos announcing quarterly revenue 

Press release in Les Echos announcing the interim results 

Press release in Les Echos announcing quarterly revenue 

Press releases published on the Valeo website (www.valeo.com) 

March 2011 

March 10, 2011 

March 9, 2011 

February 2011 





January 2011 


December 2010 





October 2010 


September 2010 






Consultation of documents 

Valeo announces a possible issuance of bonds in an amount of approximately 500 million euros 

Valeo publishes its new medium-term targets 

Valeo: 2010 second-half results 

Valeo signs agreement to acquire Japanese company Niles 

Appointment of Fabienne de Brébisson as Corporate Communications Vice-President 

Valeo files record number of patents in 2010 

Valeo appoints Christophe Périllat-Piratoire Chief Operating Officer 

New electric demo car developed by Valeo and BAIC 

Signature of a cooperation agreement between Valeo and Ibeo Automotive Systems 

Valeo and IFP Énergies nouvelles sign a framework contract for powertrains 

Moody’s affirms Valeo’s Ba1 rating and upgrades its outlook from “stable” to “positive” 

Valeo revises upwards its operating margin guidance for 2010 : The Group forecasts a second-half 

margin higher than that of the first-half 

Valeo and Orange present an innovative concept for easy vehicle sharing. 

Valeo: partners Modulowatt on its project for automatic docking to a battery charging station 

Valeo full-LED headlamps on two concept cars 

Valeo’s new multifunction faceplate and hands-free access and start system to equip the future 

Peugeot 508 


PAGE 245

7 Consultation 

PAGE 246 


of documents 









August 2010 


July 2010 




June 2010 




May 2010 





April 2010 



A world first for Valeo’s Park4U ® on the new Volkswagen Touran and Sharan 

First launch for Valeo’s BeamAtic ® Premium lighting system with Volkswagen 

Valeo-Ichikoh Alliance equips the Nissan Leaf Electric Vehicle with LED low beam headlamps 

A world first for Valeo’s 360Vue ® system on the new Volkswagen Touareg 

Valeo unveils its specific technologies for electric vehicles featured on its show car at the Paris Motor 

Show 

Valeo: Valeo revises upwards automotive production estimates for 2010 

Valeo unveils its Electric Show Car at the Paris Motor Show 

Valeo launches first dual direct drive wiper system on the market 

Valeo’s Board of Directors takes note of Behdad Alizadeh resignation and of termination by Pardus 

of the May 21, 2008 Agreement 

Valeo: 2010 first-half results 

Valeo enters North American automatic transmission market with torque converter produced in new 

plant in Mexico 

Valeo presents visibility and driving assistance technologies at the eSafety Challenge 2010 

New Valeo micro-hybrid system to equip PSA Peugeot Citroën e-HDi diesel models 

Valeo: 2010 Combined Annual Meeting of Shareholders 

Valeo specifies its results outlook for the first-half 2010 

Valeo announces the creation of an Advisory Board to support the Group in the implementation of 

its strategy 

Valeo: Annual General Meeting of Shareholders: supplementary information concerning certain 

resolutions 

Valeo acquires 100% of its electrical systems entity in India 

Publication of the Meeting Notice for the 2010 Valeo Annual General Shareholders’ Meeting 

Valeo: 2010 first quarter results


Information related to the Statutory Auditors 

7.E. Information related to the Statutory Auditors 

7.E.1. Statutory Auditors and Alternate Statutory Auditors 

Statutory Auditors: 

Ernst & Young et Autres, represented by Jean-François 

Ginies and Gilles Puissochet – 41 rue Ybry, 92576 Neuillysur-Seine 

Cedex, France 

• Member of the Compagnie régionale des Commissaires 

aux comptes de Versailles 

• Term of office began: Shareholders’ Meeting of June 3, 

2010 (first term) 

• End of current term of office: term expires at the close 

of the Ordinary Shareholders’ Meeting called to approve 


2015; 

Mazars, represented by Lionel Gotlib and David Chaudat 

– 61, rue Henri Régnault 92075 Paris La Défense Cedex, 

France 



• Term of office began: Shareholders’ Meeting of June, 3 


• End of current term of office: Term expires at the close of 

the Ordinary Shareholders’ Meeting called to approve the 

financial statements for the year ended December 31, 2015. 

The term of the statutory auditors PricewaterhouseCoopers 

Audit and Salustro Reydel, member of KPMG, was not 

renewed at the Ordinary and Extraordinary General 

Shareholders’ Meeting of June 3, 2010 called to approve the 

financial statements for the year ended December 31, 2009. 

Alternate Statutory Auditors: 

Auditex, represented by Emmanuel Roger – Faubourg 

de l’Arche, 11 allée de l’Arche – 92037 Paris La Défense 

Cedex, France 





• End of current term of office: Term expires at the close 



2015; 

Philippe Castagnac – 44 rue de la Faisanderie – 75116 

Paris, France 


aux comptes de Paris 



• End of current term of office: Term expires at the close 



2015. 


PAGE 247

7 Information 

PAGE 248 


related to the Statutory Auditors 

7.E.2. Fees paid to the Statutory Auditors 


(in millions of euros) Ernst & Young % Mazars % 

AUDIT 

Issuer 0.0 0.0 

Consolidated subsidiaries 3.1 2.1 

Statutory audit and contractual audits 3.1 2.1 



Audit-related services 0.2 0.0 

SUB-TOTAL AUDIT 

OTHER SERVICES PROVIDED BY MEMBERS OF 

THE AUDITORS’ NETWORKS TO CONSOLIDATED 

SUBSIDIARIES 

3.3 94% 2.1 95% 

Legal and tax advisory services 0.1 0.1 

Other 0.1 0.0 

SUB-TOTAL OTHER SERVICES 0.2 6% 0.1 5% 

TOTAL 3.5 100% 2.2 100% 

2009 

(in millions of euros) PwC % KPMG % 

AUDIT 



Statutory audit and contractual audits 4.2 2.2 



Audit-related services 0.1 0.1 

Sub-total Audit 

OTHER SERVICES PROVIDED BY MEMBERS OF 

THE AUDITORS’ NETWORKS TO CONSOLIDATED 

SUBSIDIARIES 

4.3 90% 2.3 88% 

Legal and tax advisory services 0.4 0.3 

Other 0.1 0.0 

SUB-TOTAL OTHER SERVICES 0.5 10% 0.3 12% 

TOTAL 4.8 100% 2.6 100% 



Person responsible for the Registration Document 

7.F. Person responsible for the Registration Document 

7.F.1. Name of the person responsible for the Registration Document 


Jacques Aschenbroich, Chief Executive Officer of Valeo 

7.F.2. Declaration by the person responsible for the Registration 

Document 

“I hereby declare that, having taken all reasonable care to 

ensure that such is the case, the information contained in 

this Registration Document is, to the best of my knowledge, 

in accordance with the facts and contains no omissions likely 

to affect its import. 

I further declare that, to the best of my knowledge, the 

accounts have been prepared in accordance with applicable 

accounting standards and that they give a true and fair 

view of the assets, liabilities, financial position, and results 

of the Company and of all the companies included in the 

consolidation scope, and that the information provided in the 

Management Report in Chapter 8, section 8.D gives a fair 

and true view of the activity, results and financial position of 

the Company and of all the companies in the consolidation 

scope, and of the main risks and uncertainties to which they 

are exposed. 

I obtained a statement from the Statutory Auditors at the end 

of their engagement in which they affirm that they have read 

the whole Registration Document, of which this document 

is a free translation from the original, and examined the 

information about the financial position and the accounts 

contained therein. 

The consolidated financial statements for the year ended 

December 31, 2010 are the subject of a report by the 

Statutory Auditors which appears in Chapter 5, section 

5.B.7. of the present Registration Document, which contains 

observations of a purely technical nature. 

The consolidated financial statements for the year ended 

December 31, 2009 are the subject of a report by the 

Statutory Auditors which appears in Chapter 4, section 4.G. 

of the Registration Document filed with the Autorité des 

Marchés Financiers (AMF) on March 23, 2010, reference 

number D.10-0149, which contains observations of a purely 

technical nature. 

The parent company financial statements for the year 

ended December 31, 2008 are the subject of a report by 

the Statutory Auditors, which appears in Chapter 5, section 

5.E. of the French version of the Registration Document filed 

with the Autorité des Marchés Financiers (AMF) on March 17, 

2009, reference number D.09-0128, which contains an 

observation.” 

Paris, March 28, 2011 




PAGE 249

7 Person 

PAGE 250 


responsible for the Registration Document 


8.A. Cross-reference table 

for the Registration Document 252 

8.B. Cross-reference table with 

employment and environmental 

disclosures required by the 

New Economic Regulations Act , 

introduced by Decree no. 2002-221 256 

CROSS-REFERENCE 

TABLES 

8.C. Cross-reference table for the Annual 

Financial Report 257 

8.D. Cross-reference table 

of the Management Report 

as provided for by Articles 

L. 225-100 et seq. of the French 

Commercial Code 258 



8 

PAGE 251

8 Cross-reference 

PAGE 252 

Cross-reference tables 

table for the Registration Document 

8.A. Cross-reference table for the Registration 

Document 

This cross-reference table lists the main headings provided for by European Commission Regulation 809/2004 of April 29, 2004 

(the “Regulation”) and gives reference to the sections and, when appropriate, the chapters in this document where information 

can be found regarding each of these headings. It also refers to the Registration Document sections and chapters of the fiscal 

year ended December 31, 2009, registered with the French financial markets authority (Autorité des Marchés Financiers-AMF) 

on March 23, 2010, under number D.10-149 (“RD 2009”) and, where necessary, to the Registration Document sections and 

chapters of the fiscal year ended December 31, 2008, registered with the AMF on March 17, 2009 under number D.09-128 

(“RD 2009”). 

No. Headings appearing in Appendix 1 of the Regulation Chapters/Sections 

1. Persons responsible 

1.1 Names and functions of persons responsible 7.F.1 

1.2 Declaration by persons responsible 7.F.2 

2. Statutory Auditors 

2.1 Name and address of the Statutory Auditors 7.E.1 

2.2 Information on the resignation of the Statutory Auditors N/A 

3. Selected financial information 

3.1 Selected historical financial information 1.B and 5.F.1 

3.2 Selected financial information for interim periods N/A 

4. Risk factors 2 

5. Information relating to the issuer 

5.1. History and development of the issuer 

5.1.1 Legal and commercial name of the issuer 7.A.1. 

5.1.2 Place of registration and registration number 7.A.6. 

5.1.3 Date of incorporation and length of life 7.A.4. 

5.1.4 Registered office, legal form, legislation under which the issuer operates, its country 

of incorporation, and the address and telephone number of its registered office 

7.A.1 and 7.A.2 

5.1.5 Important events in the development of the issuer’s business 1.A.1. 

5.2. Investments 

5.2.1 Principal investments made 1.C.5 

5.2.2 Principal investments in progress 1.C.5 

5.2.3 Principal future investments 1.C.5 

6. Business overview 

6.1. Principal activities 

6.1.1 Nature of the issuer’s operations and its principal activities 1.D 

6.1.2 New products 1.D 

6.2. Principal markets 1.E.1 

6.3. Exceptional factors N/A 

6.4. Dependence on patents, licenses, contracts and manufacturing processes 1.C.3 and 2.A.3.1 

6.5. The basis for any statements made by the issuer regarding its competitive position 1.E.2 

7. Organizational structure 

7.1. Brief description of the Group 1.C.1 and 7.B 

7.2 List of significant subsidiaries 7.B and 5.B.6 (Note 7) 

8. Property, plant and equipment 

8.1. Material property, plant and equipment 1.C.4 

8.2 Environmental issues that may affect the issuer’s utilization of property, plant and equipment 1.C.4.2, 2.A.2 and 3.A 


Cross-reference tables 8 

Cross-reference table for the Registration Document 


9. Operating and financial review 

9.1. Financial position 5.A.2. 

Chapters 1-3 of RD 2009 


9.2. Operating results 5.A.1 and 5.D 



9.2.1 Significant factors materially affecting the issuer's income from operations 5.A and 2.A.1.1 

9.2.2 Explanation of material changes in net sales or revenues 5.A 

9.2.3 Any policies or factors that have materially affected or could materially affect, 

directly or indirectly, the issuer’s operations 

5.A and 2.A.1.1 

10. Capital resources 

10.1. Issuer's capital resources 5.A.2.1, 5.A.2.2, 5.B.5, 5.B 6 (Notes 5.8, 

5.10 and 5.11), 6.F.1 and 6.F.2 

10.2. Source and amounts of cash flows 5.A.2.3, 5.B.4, and 5.B.6 (Note 5.11) 

10.3. Information on the borrowing requirements and funding structure 5.A.2.3, 2.A.5 and 5.B.6 

(Notes 5.10, 6.1, 6.2) 

10.4. Restrictions on the use of capital resources 2.A.5 and 5.B.6 (Note 6.2.2) 

10.5. Anticipated sources of funds 2.A.5 and 5.B.6 (Note 6.2.2) 

11. Research and development, patents and licenses 1.B.4, 1.C.3, 1.D.6, 5.B.6 (Note 5.2) 

12. Trend information 

12.1 Most significant recent trends in production, sales and inventory, and costs 

and selling prices since the end of the last fiscal year 

5.C 

12.2 Known trends, uncertainties, demands, commitments or events that are reasonably likely 

to have a material effect on the issuer's prospects 

5.C 

13. Profit forecasts or estimates 

13.1 Statement setting out the principal assumptions upon which the issuer has based 

its forecasts or estimate 

N/A 

13.2 Report prepared by the auditors N/A 

13.3 Preparation of the profit forecast or estimate N/A 

13.4 Statement on the validity of a forecast previously included in a prospectus N/A 

14. Administrative, management and supervisory bodies, and senior management 

14.1. Members - statements 4.A.1, 4.A.2, 4.A.3.3, 4.D.1 and 4.D.2.7 

14.2. Conflicts of interest 4.A.3.1 

15. Compensation and benefits 

15.1. Compensation and benefits in kind 4.B, 4.D.2.12, 4.D.2.13 and 5.B.6 

(Note 6.6.1) 

15.2. Retirement and similar benefits 4.B.1.1.6, 4.B.1.2.6, 4.B.3, 4.B.3.2, 5.A.2.2 

and 5.B.6 (Note 5.9.2) 

16. Board practices 

16.1. Terms of office of members of the Board of Directors 4.A.1.2. 

16.2. Service contracts with members of the administrative bodies 4.A.3.2. 

16.3. Information about the Audit Committee and Compensation Committee 4.C.4 and 4.D.2.5 

16.4. Statement regarding corporate governance 4.D.3 and 7.A.3 

17. Employees 

17.1. Number of employees 1.C.1.1, 1.C.4.1 and 3.B.1.1 

17.2. Shareholdings and stock options 4.A.1.2, 4.B.1.1.5, 4.B.1.2.5, 

4.B.3.1 and 4.D.2.12 

17.3. Arrangements for involving employees in the capital of the issuer 3.B.6.2.3 and 6.D.4 


PAGE 253


PAGE 254 


table for the Registration Document 


18. Major shareholders 

18.1. Identification of principal shareholders 6.D 

18.2. Existence of differing voting rights 6.D.2 and 7.A.1.1 

18.3. Control of the issuer 6.D.2 

18.4. Arrangements which may result in a change in control of the issuer 6.F.5.1 

19. Related party transactions 4.D.2.8, 4.D.2.9, 4.F, 5.B.6 

(Note 6.6) and 6.F.6.3 

Sections 3.J.4-4.F.6.7-5.A.2.8-5.A.2.9 

of RD 2009 

Sections 3.J.4-4.F.5.8 -5.A.2.8-5.A.2.9 

of RD 2008 

20. Financial information concerning the issuer’s assets and liabilities, financial position 

and profits and losses 

20.1. Historical financial information 5.B 



20.2. Pro forma financial information N/A 

20.3. Financial statements 5.D 

20.4. Auditing of historical annual financial information 

20.4.1 Statement that the historical financial information has been audited 5.B.7 

Sections 4.G-7.B of RD 2009 

Sections 4.G-7.B of RD 2008 

20.4.2 Other information audited by the Auditors 4.E and 4.F 

Sections 5.B of RD 2009 

Sections 5.B of RD 2008 

20.4.3 Source of financial data not extracted from the issuer’s audited financial statements N/A 

20.5. Age of latest financial information 12/31/2010 

20.6. Interim and other financial information 

20.6.1 Half-yearly or quarterly financial information N/A 

20.6.2 Interim financial information N/A 

20.7 Dividend policy 7.A.8 

20.7.1 Amount of dividends 6.C 

20.8. Legal and arbitration proceedings 2.A.3.3, 5.B.6 (Notes 4.5.1 and 6.4) 

20.9. Significant change in the financial or trading position 5.B.6 (Note 6.8) and 5.C.1 



Cross-reference table for the Registration Document 


21. Additional information 

21.1. Share capital 

21.1.1 Amount of issued capital 6.D.2 and 6.F.1 

21.1.2 Shares not representing capital 6.F.4 

21.1.3 Shares held by the issuer itself 6.D.2 and 6.E.4 

21.1.4 Convertible securities, exchangeable securities and securities with warrants 6.F.3 

21.1.5 Information about the terms and conditions of any acquisition rights and/or obligations 

over authorized but unissued capital or an undertaking to increase the capital 

6.F.2 

21.1.6 Information about any capital of any member of the group which is under option 

or agreed conditionally or unconditionally to be put under option 

6.F.5.2 

21.1.7 Share capital history 6.F.1 

21.2. Memorandum and Articles of Association 

21.2.1 Description of the issuer's objects and purposes 7.A.5. 

21.2.2 Summary of any provision on the issuer’s articles of association, statutes, 

charter or bylaws with respect to the members of the administrative, 

management and supervisory bodies 

4.C and 4.D.2 

21.2.3 Description of the rights, preferences and restrictions attaching to each class of shares 7.A.8, 7.A.9 and 7.A.11 

21.2.4 Description of the actions necessary to amend the rights of the shareholders 7.A.12 

21.2.5 Description of the conditions governing the manner in which annual shareholders’ 

meetings and extraordinary shareholders’ meetings are called 

7.A.10 

21.2.6 Description of any provision that would have an effect of delaying, deferring, 

or preventing a change in control of the Company 

6.F.6.3 

21.2.7 Indication of any provision governing the ownership threshold above which shareholder 

ownership must be disclosed 

6.F.5.3 

21.2.8 Description of the conditions governing changes in the capital, where such conditions 

are more stringent than is required by law 

7.A.12 

22. Material contracts 7.C 

23. Third party information and statement by experts and declarations of interest 

23.1 Statement or report attributed to a person as an expert N/A 

23.2 Information from a third party N/A 

24. Documents on display 7.D 

25. Information on holdings 1.A.2, 5.B.6 (Notes 2, 5.4 and 7) and 7.B 


PAGE 255


PAGE 256 


table with employment and environmental disclosures required by the New Economic Regulations Act 

8.B. Cross-reference table with employment 

and environmental disclosures required 

by the New Economic Regulations Act , introduced 

by Decree no. 2002-221 

Disclosures made pursuant to Art. R. 225-104 and R. 225-105 of the French Commercial Code Chapters/sections 

Art.1 Company information 

1° Total workforce, hirings, recruitment problems if any, layoffs and reasons, 

overtime, contracted labor 

3.B.1 and 3.B.2 

Workforce reduction, employment protection plans, redeployments, rehiring and support measures N/A 

2° Organization of the work week, workday of full-time employees, workday 

of part-time employees, absenteeism and reasons 

3.B.2 

3° Compensation and changes in compensation, employer payroll contributions, application 

of employment law regarding profit-sharing, stock ownership and employee savings plans, 

and gender parity 

3.B.3 and 3.B.6 

4° Labor relations and collective bargaining agreements 3.B.4 

5° Health and safety conditions 3.B.5 

6° Training 3.B.7 and 3.B.11 

7° Employment and integration of workers with disabilities 3.B.8 

8° Social welfare initiatives 3.B.9 

9° Extent of subcontracting and the promotion and observance by subsidiaries 

of the core conventions of the International Labour Organization 

3.B.10 

Art.2 Environmental information 

1° Consumption of water, raw materials and energy 

Measures taken to improve energy efficiency 

Use of renewable energy 

Conditions for land use 

Emissions into the air, water and ground that seriously impact the environment 

and appear on official lists prepared by ministries concerned with the environment and industry 

Sound or smell pollution 

Waste 

3.A.2.3 

2° Measures taken to mitigate negative impacts on biological diversity, 

natural environments and protected animal and plant species 

3.A.2.3 

3° Environmental assessments and certification efforts 3.A.1.3.4 

4° Measures taken to ensure that the Company’s business operations comply 

with environmental legislation and regulations 

3.A.1.3.3 

5° Total environmental protection expenditure 3.A.3 

6° Internal organization, training and information given to employees and programs implemented 

with regard to the environment 


3.A.1 

3.A.2.3.9 

3.A.3 

7° Amount of provisions and guarantees for environmental risks 3.A.3 

8° Amount of fines paid during the year for non-compliance with environmental laws and regulations 

and action taken to repair damages caused 

3.A.3 

9° Extension of standards 1 to 6 to subsidiaries 3.A (introduction) 

10° Account taken of the impact of operations on employment and regional development in France 

Description of relationships maintained with equal-opportunity groups, educational institutions, 

environmental-protection groups, consumer groups and neighboring local communities 

3.B.8, 3.B.9, 3.B.10 and 3.B.11


Cross-reference table for the Annual Financial Report 

8.C. Cross-reference table for the Annual Financial 

Report 

Annual financial report Chapters/sections 

1. Parent company financial statements 5.D 

2. Consolidated financial statements 5.B 

3. Management report (French Monetary and Financial Code) 

Article L.225-100 of the French Commercial Code 

Analysis of business trend 5.A.1 

Analysis of results 5.A.1 

Analysis of financial position 5.A.2 

Principal risks and uncertainties 2.A 

Summary table of powers currently delegated by the Annual General Shareholders’ Meeting 

to the Board of Directors with respect to capital increases 

Article L.225-100-3 of the French Commercial Code 

6.F.2 

Factors likely to be material in the event of a public tender offer 

Article L.225-211 of the French Commercial Code 

6.F.6 

Buyback by the Company of its own shares 6.E 

4. Declaration by the person responsible for the Registration Document 7.F.2 

5. Statutory Auditors’ report on the financial statements N/A 

6. Statutory Auditors’ report on the consolidated financial statements 5.B.7 

7. Statutory Auditors’ special report on related-party agreements and commitments 4.F 

8. Fees paid to the Statutory Auditors 7.E.2 

9. Report by the Chairman of the Board on corporate governance, internal controls 

and risk management (Article L.225-37 of the French Commercial Code) 

4.D 

10. Statutory Auditors’ report on the Chairman’s Report 4.E 


PAGE 257


PAGE 258 


table of the Management Report 

8.D. Cross-reference table of the Management Report 

as provided for by Articles L. 225-100 et seq. 

of the French Commercial Code 

Management Report - French Commercial Code 

Operations report 

Chapters/sections 

1. Financial position and operations of the Company in the past year 5.D 

2. Results of operations of the Company, its subsidiaries and companies under its control 5.A.1 

3. Key financial performance indicators 1.B 

4. Review of the business, results of operation and financial position 5.A 

5. Material events occurring between the balance-sheet date and the date the report was prepared 5.C.1 

6. Developments and outlook 5.C.2 

7. Research and Development activity 1.C.3 

8. Supplier payment cycles 5.D 

9. Changes in the presentation of the annual parent company financial statements 

5.A, 5.B.3, 5.B.6 

and methods of measurement 

(Note 1.21) 

10. Description of major risks and uncertainties 2.A 

11. Information on facilities classified as high-threshold Seveso sites N/A 

12. Use of financial instruments 5.B.6 (Notes 1.14, 6.1 

and 6.2) 

13. Investments over the past three years 1.C.5 

14. Material investments or controlling interests taken during the year in companies 

with registered offices in France 


1.C.5.1 

15. Information on how the Company takes into account the social and environmental consequences 

of its operations 

8.B 

16. Key environmental and social indicators 

Governance 

8.B 

17. General Management body of the Company 4.A.1.1 

18. List of all directorships and positions held in companies by each corporate officer 

during the past fiscal year 

4.A.1.2 

19. Compensation and benefits in kind paid to each corporate officer during the past fiscal year 4.B 

20. Breakdown into the fixed, variable and extraordinary components of such compensation and benefits, 

4.B.1.1, 4.B.1.2 and 

and the calculation method 

4.D.2.13.2 

21. Commitments given on behalf of executive corporate officers and other Group executive managers 4.B.1 and 4.B.3 

22. Terms and conditions for transferring free shares to executive corporate officers during their term of office 4.B.1.2.5 and 4.B.2.12 

23. Transactions in the company’s shares carried out by Directors and by those 

with whom they have close relationships 

4.A.4 

24. 

Share ownership structure and share capital 

Share ownership structure and changes during the fiscal year 6.D and 6.F.1 

25. Status of employee stock-ownership plans 6.D.4 

26. Treasury shares bought and sold by the Company 6.E 

27. Name of companies controlled and equity interest 5.B.6 (Note 7) 

28. Stock disposals to adjust reciprocal shareholdings N/A 



Cross-reference table of the Management Report 

Management Report - French Commercial Code Chapters/sections 

29. Amount of dividends and other distributed earnings paid during the past three fiscal years 6.C 

30. Disclosures likely to be material in the event of a public tender offer 6.F.6 

31. 

Other disclosures 

Sumptuary expenses 5.D 

32. Five-year financial summary N/A 

33. Injunctions or monetary penalties for anti-competitive practices N/A 

34. Information on stock option plans granted to corporate officers and employees 4.B.3.1, 4.D.2.12.1 

35. Information on free shares granted to corporate officers and employees 4.B.3.1, 4.D.2.12.2 

36. Summary table of powers currently delegated by the Annual Shareholders’ Meeting to the Board 

of Directors with respect to raising new equity and the use made of such delegations during the year 

6.F.2 


PAGE 259

PAGE 260 


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without use of acid, recyclable, biodegradable, and certified ISO 9001 and 14001.. 

The English language version of this report is a free translation from the original, which was prepared in French. All possible care has been 

taken to ensure that the translation is an accurate presentation of the original. However, in all matters of interpretation, views or opinions 

expressed in the original language version of the document in French take precedence over the translation.

43, rue Bayen - 75848 Paris c edex 17 - France / Tel.: 33 (0)1 40 55 20 20 - Fax: 33 (0)1 40 55 21 71 

Valeo French «Société Anonyme» with a capital of 234 628 851 euros - 552 030 967 RCS Paris 

valeo.com

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