Fives_Annual_Report_2010.pdf

Profile 01

Foreword from the Chairman 02

Key figures 04

Highlights 06

At the heart of Fives 08

Corporate governance 10 Corporate Social Responsibility 12 Human Resources 16 Innovation 20

International 24

Markets 30

Aluminium 32 Steel 36 Glass 40 Automotive & Logistics 42 Cement 46 Energy 50

Designing today the plants of the future

Fives - 27 / 29 rue de Provence - 75009 Paris - www.fivesgroup.com

Table of contents

2010 Annual Report

The concept…This year, we have decided against publishing factually representative photographs of our equipment and installations in favor of introducing a little art and imagination into the world of industry. We have also looked in a new way at the physical aspect of industry and used it as the basis for a graphic recomposition that illustrates our commitment: ‘‘Designing today, the plants of the future’’.

Couv PANOfives 2010 EN.indd 1 22/06/11 14:28

Our vision: only innovative solutions will allow future industrial growth that is both sustainable

and profitable. Fives provides new industrial solutions to address these challenges.

*consolidation scope at Dec. 31, 2010

METALS

AluminiumFives Solios

SteelFives BronxFives CelesFives DMSFives IndustriesFives Stein

CEMENT

Fives FCB Fives Pillard

AUTOMOTIVE& LOGISTICS

Fives Cinetic

ENERGY

Fives Cail Fives CryogenieFives NordonFives North AmericanFives Pillard

€ 1,049 million of sales

of which close to 55% in emerging countries

€ 223 million of shareholders’ equity

5,639 employees*

The concept… continued >

Created as original artwork or assembled in a montage, these images originate from real-life pictures. Open the page to discover the originals.

Fives in 2010

Page 42 • Crankshaft being grinded by a Landis machine

Page 44 • High speed parcel sorting system

Page 48 • Strip conveyors in a cement plant

Page 52 • Brazed aluminium heat exchanger

Page 50 • Gas burner flamePage 46 • Clinker melting in a cement furnace

0 • Steel slabs conveyor bridge Page 32 • Stock of aluminium ingots Page 36 • Steel coming out of the furnace

Page 40 • Plate of photovoltaic glass Page 38 • Heart of a stainless rolling mill

Page 34 • Partial view of a fume treatment center on an anode baking furnace

Page 14 • Aluminium plant under construction

Page 16 • View of the interior of a cement plant’s furnace

Page 20 • Steel coil Page 26 • Tin-plate annealing line Page 22 • Winding stainless steel strip

Page 18 • Carbon steel slab

Inside cover • Battery of cooling fans for a cement plant furnace shell

Page 4 • Series of anode conveyors Page 12 • View of a sugar plant from a beet field

Page 6 • Partial view of a green anode plant under construction, dedicated to aluminium production

Page 1 • High-automated sorting system

Page 8 • Gas treatment center, aluminium plant




METALS



CEMENT



Fives Cinetic

ENERGY





5,639 employees*



Fives in 2010

2 • Crankshaft being grinded by a Landis machine



Page 52 • Brazed aluminium heat exchanger

Page 50 • Gas burner flamePage 46 • Clinker melting in a cement furnace

Page 30 • Steel slabs conveyor bridge Page 32 • Stock of aluminium ingots Page 36 • Steel coming out of the furnace

Page 40 • Plate of photovoltaic glass Page 38 • Heart of a stainless rolling mill







Page 4 • Series of anode conveyors Page 12 • View of a sugar plant from a beet field







METALS



CEMENT



Fives Cinetic

ENERGY





5,639 employees*



Fives in 2010

Page 42 • Crankshaft being grinded by a Landis machine



2 • Brazed aluminium heat exchanger

Page 50 • Gas burner fl amePage 46 • Clinker melting in a cement furnace

Page 30 • Steel slabs conveyor bridge Page 32 • Stock of aluminium ingots Page 36 • Steel slabs coming out of the furnace

Page 40 • Plate of photovoltaic glass Page 38 • Heart of a stainless steel rolling mill







Page 4 • Series of anode conveyors Page 12 • View of a sugar plant from a beet fi eld





ProfileFives Overview 2010

Located in nearly thirty countries and with more than 5,600 employees across six continents, the Group is known for its technological expertise and competence in executing large-scale international projects. The Group’s know-how and solid field experience allow it to manage projects as a whole while respecting deadlines and fulfilling performance commitments.

The effectiveness of its R&D programs enables Fives to design forward-thinking industrial solutions that anticipate client needs in terms of profitability, safety and compliance with environmental standards.This strategy is also supported by a human resources policy putting people first which promotes initiative-taking, technical excellence and team spirit.

An industrial engineering group, Fives designs and supplies process equipment, production lines and turnkey plants for the world’s largest industrial groups in the aluminium, steel, glass, automotive & logistics, cement, energy and sugar sectors.

2010 and the opening months of 2011 were also marked by a number of successfulcommissioning operations in all our business sectors, but especially in Steel, withthe operational startup of several rolling mills and treatment lines in China, Korea,Brazil and India; in Aluminium, with the startup of installations supplied by Fives Solios for the Qatalum plant; and in Cement, with the acceptance of turnkey plants handed over by Fives FCB to QNCC in Qatar, Titan in Egypt, Vinaincon Corporation in Vietnam, and the successful startup of Holcim Apasco in Mexico.

More than just a year of transition, 2010 ultimately proved to be a year of recovery. Given its strong order backlog at year end 2010 together with the orders taken in the first quarter of this year, Fives is set for a very good 2011, and should see increases in all its key performance indicators.

In the longer term, the markets served by the Group will continue to be supported by growing urbanization and infrastructure needs, the quest for energy-saving and eco-friendly technical solutions, and the demographics of the emerging markets in which Fives now generates nearly 55% of its revenue. In each of its business lines, the Group possesses the expertise and the technologies needed to satisfy these underlying trends.

It is by remaining faithful to its roots and culture, by building on its strengths (cost control, risk management and project management expertise), by continuing to put innovation and international growth at the heart of its strategy and by attracting and integrating new talent to enhance Group diversity that Fives will embark on a new and profitable path to growth.

Fives Foreword from the Chairman 2010 Overview

2

Fives is set for a very good 2011, and should see increases in all its key

performance indicators.

€214 million of cash and €223 million of equity, Fives is well placed to step up its pace of growth in the years to come.

The many major commercial successes achieved in 2010 reflect the competitiveness of the Group’s products and services. They also validate the strategy of recent years, prioritizing innovation and development as well as the Group’s growing presence in the world’s emerging economies.

Fives DMS secured a number of orders in China for rolling mills and production line mechanical equipment, not only with traditional customers like Baosteel and Tisco, but also with newcomers, such as Jisco and ESS. At the start of the year, Fives Stein began work on an order of strategic importance: two silicon steel annealing line process furnaces for Baosteel, thereby taking a foothold in a market of the future. Fives Solios was awarded a series of orders in Saudi Arabia for the future Ma’aden Aluminium plant, a joint venture between the state-owned Saudi Arabian Mining Co. and Alcoa. A number of landmark orders were received in the Automotive and Logistics Division, most notably from Ford and General Motors in the USA, Renault in Morocco, PSA Peugeot Citroën in Russia, MNG Cargo in Turkey and Yamato in Japan. In Energy, Fives Nordon once again won major contracts from EDF for the maintenance of its nuclear power plants in France.

Just as it did in 2009, Fives ended 2010 with an acquisition. Following on from the Japanese company Decker - now Cinetic Decker Filling K.K. - it was the turn of Bronx International Inc. and its British subsidiary Bronx Taylor Wilson Ltd. to join the Group through a transaction finalized on November 30, 2010. Bronx International is an engineering company that leads the world in the

design and supply of finishing equipment and mechanical processing for pipes and tubes. Among its customers are some of the world’s major steelmaking corporations and tube manufacturers, such as Vallourec and Baosteel. In 2010, Bronx, which has since become Fives Bronx, reported consolidated sales of approximately $80 million.

2010 also ended on another positive note: the Group order backlog rose during the year to once again break through the symbolic €1 billion barrier. With total orders in excess of €1.2 billion in 2010 and due to rise further this year, driven in particular by the fast-growing economies of the emerging markets, Fives can go into 2011 with renewed confidence.

As forecast, sales was significantly lower in 2010, at €1,049 million (down 18% on 2009) as a result of a smaller order backlog at the start of the year (€834 million, compared with €1,359 million a year earlier). The effects of this lower sales figure on consolidated operating profit were offset by the action taken in all Group subsidiaries to reduce costs and working capital requirements, whilst simultaneously increasing spending on commercial activity and Research & Development. In fact, consolidated operating profit, at €59.2 million, actually ended 5% up on 2009, also thanks to the sustained margins generated from contracts under implementation. With net profit of €33.5 million, up significantly (66%) on 2009,

Frédéric Sanchez Chairman of the Executive Board

More than just a year of transition, 2010 ultimately proved to be a year of recovery

Fives Key figures 2010 Overview

Breakdown of sales by geographical area: with its multi-sector expertise and international presence, Fives has benefitted from the investments made in growing industries and geographic areas. Although the metals sector continues to make the largest contribution to sales, 2010 saw impressive progress from both Automotive and Energy divisions. In terms of geographic distribution, sales for the year were driven substantially by contracts in Asia, with markets in China and India remaining very active despite the global crisis. In the rest of the world, the distribution of sales was well balanced.

Closing net cash position and shareholders' equity: Fives maintains a particularly strong and healthy financial structure.Despite having funded the acquisition of Bronx, at the end of 2010, from its own cash reserves, the Group was able to maintain a high level of cash through to the end of the year, and is able to report a strong balance sheet. The notable growth in shareholders’ equity also attests to the sound management applied throughout the global economic crisis.

Research & Development: innovation is central to Fives' strategy.Group expenditure on R&D, which increased once again in 2010 to end the year at the record level of €19.8 million, has increased by nearly 70% in five years. Fives once again confirms its ambition to increase its technological lead and continue to offer innovative solutions to its clients.

4

2010, a very successful year for Fives

Research & Development

15.2

2008

11.8

2006

12.8

2007 2009

18.4

2010

19.8

(€ millions)

R&D budget

2010 Figures

Metals (aluminium and steel) Automotive/Logistics Energy Cement

2010 Figures

Asia and Oceania France The Americas Africa and Middle East Europe (excluding France)

Breakdown of sales by end market and geographical area

27.1%

12.0%

11.9%

20.8%34.7%

18.4%

26.3%29.2%

19.6%

Order intake and closing order book: in 2010, Fives again achieved a high level of order intake (the third best performance in the company’s history).After the recession of 2009, Fives succeeded in extracting maximum benefit from the economic recovery that began in 2010. With the help of sustained commercial activity, the Group was able to rebuild its order book, and started 2011 with excellent forward visibility of workloads in the majority of its business lines.

Sales, operating profit and operating profit before amortization: against the backdrop of lower business levels as a result of a reduced opening order book, Fives returned a remarkable operating performance to deliver a set of results superior to those for 2009.This performance was achieved thanks to the Group’s ability to manage and execute contracts and the quality of technologies it delivers. It also illustrates the responsiveness of the Group, which was successful in implementing the necessary adaptive measures from the start of the crisis.

(€ millions)

Closing net cash position Shareholders’ equity

235.8

182.2

2008

229.8

181.3

2009

214.0222.8

2010

233.8

149.9

2006

253.3

159.1

2007

Closing net cash position

and shareholders' equity

(€ millions)

Sales Operating profit Operating profit before amortization

2008 2009 20102006 2007

1,137

1,352

1,025

1,283

1,04988.7

74.662.3 74.8

53.1

64.471.2

56.1

59.2

75.9

Sales, operating profit and operating

profit before amortization

(€ millions)

Order intake Closing order book

1,5031,402

2007

1,2901,359

2008

727834

2009

1,2241,117

20102006

1,207

989

Order intake and closing order book

Thanks to the Group's cohesion, reactivity, financial

stability and technological lead in the majority of

its business lines, Fives performed remarkably well

throughout the turbulence caused by the global crisis over

the past two years, and delivered excellent results for 2010.

Fives Highlights 2010 Overview

aCquiSitiOn

in november, Fives acquired Bronx international inc., and its uK subsidiary Bronx/taylor-Wilson Ltd., a world leader in the design and supply of finishing equipment and mechanical processing for pipes and tubes. Bronx’ direct customers are producers of steel and non-ferrous bars, pipes and tubes, among them large industrial groups from the steel sector.

Fives Bronx, headquartered in North Canton, Ohio (USA), has a widespread commercial outreach and a large range of facilities established across the world. Fives Bronx employs approximately 70 staff and achieved sales of around $80 million in 2010, fuelled by good business results in particular in Brazil, Russia and Asia.

Through this acquisition, the Fives group strengthens its metal activities through the expansion of its product offering.

6

January

• Fives Cinetic was awarded a contract by Renault to supply all the handling equipment for the sheet-metal and final assembly shops of its greenfield project in Tangier, Morocco. This new plant will produce 175,000 vehicles per year across a range of three models.

• Fives Nordon was selected by Areva to design and supply surge lines for the Taishan 1 and 2 EPR in China.

February

Fives Solios was awarded a new contract by Vedanta to supply turnkey firing and process control systems for four anode baking furnaces at the Balco aluminium plant in Korba. This demonstrates the competitiveness of its offer on the Indian market thanks to the Group's local subsidiary Fives India.

March

In China, the renowned steelmaker Baosteel once again demonstrated its trust in the Group with an order for two horizontal furnaces to equip new grain-oriented silicon steel annealing lines.

april

• Nine years after commissioning the first bright annealing line at its Baoxin plant in Ningbo, China, Baosteel awarded Fives DMS the contract to supply a second bright annealing line which will produce 80,000 tonnes of austenitic and ferritic stainless steel strips per year.

• Also in China, following an order placed for a slab reheating furnace at the beginning of 2010, Handan Steel ordered two more billet reheating furnaces from Fives Stein’s local subsidiary, confirming the superiority of Digit@l Furnace® technology.

• Fives Stein was also awarded a record contract for twelve flat glass lehrs by Chinese glassmaker Xinyi Glass. This order includes eight complete lehrs for photovoltaic glass production lines.

May

• Jisco (Jiuquan Iron & Steel Co. Ltd.), China’s third-largest producer of stainless steel, signed a major contract with Fives DMS for the supply of four 20-roll cold rolling mills for the second phase of its plant expansion project.

• PSA Peugeot Citroën appointed Fives Cinetic to build the assembly workshop for its production facility in Kaluga, Russia.

• Fives Cinetic was also awarded a contract to automate seven sorting centers by MNG Kargo, one of Turkey’s leading express courier companies.

June

• After the successful start-up in 2008 of the world’s largest hot annealing and pickling line, Fives DMS was once again selected by Tisco (Taiyuan Iron & Steel Co., Ltd.) to supply a stainless steel bright annealing line with the world’s highest annual production capacity, at 150,000 tonnes.

• At the same time, Fives DMS was selected by Tisco to supply a cold rolling mill dedicated to the production of “bright” strips. This new rolling mill breaks all records, and will be the world's largest in terms of production capacity at 133,000 tonnes per year, and in terms of rolling speed at 1,200 meters per minute.

• Fives Nordon signed a five-year framework agreement with EDF CIPN for the P’4 reactors of its nuclear power stations in France. The contract is for nuclear island standards compliance and performance upgrading conversion works for the twelve units concerned.

• In China, Fives Cryogenie was awarded a contract by Daqing Petrochemical Company to supply seventeen heat exchangers, two cold boxes and eight separation drums. This comes as part of the company’s plans to increase the ethylene production capacity of its Daqing site to 1.2 million tonnes per year. Its presence in China positions Fives Cryogenie as the only local supplier with European expertise.

august

In the United States, Fives Cinetic was awarded an order by Chrysler for the conversion of an engine assembly line, crankshaft, cylinder head and cylinder block machining lines and automatic storage and retrieval systems.

October

Thanks to the heating quality and the energy and environmental performances delivered by its Digital technology, Fives Stein won an order for two slab reheating furnaces in the United States for Allegheny Ludlum Corp., the world-leading producer of a broad range of carbon steel, stainless steel and high value-added special steel.

november

• Yamato Transport appointed Fives Cinetic to design and supply a fully-automated sorting center as part of its plans to build a new logistics terminal adjoining Haneda International Airport in Tokyo. The system will incorporate three cross belt sorters and six slide sorters to provide the capacity to handle 66,000 items per hour, using a highly adaptable operating mode to cope with peak flows and volumes.

• Fukuyama Transporting, one of Japan’s leading transporters, awarded Fives Cinetic a contract to supply a sorting system for its new logistics terminal. The system will incorporate cross belt technology capable of handling 11,000 items per hour, dispatched to 73 different destinations.

December

• Ma’aden Aluminium Company, the joint venture formed by the state-owned Saudi Arabian Mining Co. and Alcoa, selected Fives Solios technology as part of the construction, on the Ras Az Zwar site in Saudi Arabia, of the world’s largest integrated aluminium production facility. The Group will supply two green anode plants, each with a capacity of 40 tonnes per hour, as well as a liquid pitch unloading and storage terminal. Fives Solios also received orders, to be included in the order book for the first semester of 2011, for four gas treatment centers on electrolysis pots and fifteen melting and holding furnaces to be used for the production of aluminium billets, slabs and ingots.

• As part of its contribution to the construction of the Flamanville EPR, Fives Nordon received an additional order from Areva for coating of reactor wall penetrations.

in 2010, Fives was awarded a

number of significant contracts

•Corporategovernance

•CorporateSocialResponsibility

•HumanResources

•Innovation

8

At the heart of FivesFives Overview 2010

Fives Corporate governance 2010 Overview

10

A strategy conducted by an Executive Board…

A strategy driven by an Executive Board, working closely with its Executive committeethe Executive Board• Frédéric Sanchez Chairman of the Executive Board• Lucile Ribot Member of the Executive Board - Group Chief Financial Officer• Martin Duverne Member of the Executive Board - In charge of the Energy and Logistics divisions

the Executive BoardComposed of three members, Frédéric Sanchez (Chairman), Martin Duverne and Lucile Ribot, the Executive Board is responsible for Fives’ management and implements the Group’s strategy. It meets as often as required.

the Supervisory Board Composed of seven members, Jacques Lefèvre (Chairman), Guillaume Jacqueau (Vice-Chairman), James Arnell, Stéphane Etroy, Fabrice Georget, Arnaud Leenhardt, Vincent Pautet,

the Supervisory Board meets at least four times a year to review the quarterly report submitted to it by the Executive Board.Throughout the year, it performs the checks and controls it considers appropriate and may request any documents it deems useful in the accomplishment of its role. the accounts commitee and the appointments and Remuneration committee are each composed of certain members of the Supervisory Board and provide insights for its decisions.

the Executive committeethe Executive committee meets at least once every two months under the chairmanship of Frédéric Sanchez.Composed of the members of the Executive Board and the Group’s main operating managers, this autority for strategic orientation and information exchange meets to examine specific issues and assist the Executive Board in reaching decisions concerning matters falling within its domain. In particular, the Executive committee deliberates on matters of common interest and on questions of coordination between the Group’s various entities.

the Executive committeeFrom left to right and top to bottom• Daniel Brunelli-Brondex Head of the Aluminium division• Jean-Marie Caroff Head of the Group International Development

Department• alain Cordonnier CEO of Fives FCB (Cement division)• Michel Dancette Head of the Corporate Social Responsibility

Department

• Jean-Paul Sauteraud Head of the Group Legal Department• Michelle XY Shan Vice-President Business Development China• Jean-Camille uring Head of the Automobile division• Paule Viallon Head of the Group Human Resources Department

… and supported by an operational Executive committee

The subsidiaries’ management committees are now all aware of the Group’s CSR challenges. The next step is to work locally, company by company, and find a way

of engaging with the teams, close to their everyday operations.

Fives Corporate Social Responsibility 2010 Overview

• EnvironmentFives is under an obligation to monitor its environmental footprint in two ways: on the one hand in its own operating locations and on the other hand via the equipment it develops for high energy consuming industries with significant environmental footprints, such as the production of steel, glass, aluminium and cement.

• MarketSince the end of 2007, all Group subsidiaries share the same brand name, visual identity and reputation. Subsidiaries’ practices and their risk management policies are therefore naturally liable to receive closer scrutiny. Furthermore, the Group’s high performances in terms of energy efficiency, environment and safety must be highlighted to give the Group a leading edge on its markets. Finally, Fives’ business activities rely to a large extent on the work done and equipment supplied by sub-contractors, whose record will have a direct effect on the Group’s own; and so securing their progressive CSR commitment is a top priority for Fives.

• PeopleAs an engineering group working at the cutting edge of technology, the continued growth of Fives depends on its human capital and the expertise, motivation and exemplary behavior of its people. Fives operates in nearly 30 countries, and in many of them faces challenges in providing social benefits and in attracting talented young people to join the mechanical engineering industry.The work carried out in the industrial facilities of Fives and on the sites operated by its clients implies many and varied safety issues which differ from project to project. Similarly, the export-driven nature of the Group’s business interests makes foreign travel-related security a key concern.

• GovernanceThe Group’s subsidiaries are diverse in terms of their history, geographical zone and culture. This means that the sharing of best practice and the development of synergies between them are key factors to the Group’s efficient long-term operational success.

The CSR commitments of Fives cover four main areas:

To address these issues, Fives is committed to:

• Minimizing its direct environmental footprint and indirect impacts resulting from the industrial capital goods supplied by the Group;• acting responsibly and fairly in its markets, and promoting social responsibility to its stakeholders;• Respecting individuals and providing its employees with safe working conditions, fair conditions of employment and opportunities to

develop their skills and careers.

These commitments were translated into seven CSR priorities in the form of an action program introduced in 2009 and comprising:- directives imposed on Group companies (fight against corruption, employee appraisals, health and safety measures, etc.);- initiatives offered as an option to Group companies, which are then free to implement them or not;- local initiatives, which may then be proposed to other Group companies.

As the following table shows, at the end of 2010 there were three initiatives approaching their target deployment level, three that had received significant input in 2010 and will continue to do so 2011 and 2012, and two launched or implemented in a single country.

12

CSR, a central challenge for Fives

Through its status as a supplier of capital goods and turnkey industrial

plants, Fives is close to the energy and environmental challenges facing

manufacturing industry. The Group must also address the social and community

issues raised by its operating locations, its history and its multicultural teams

ofemployees.Tomeetthesechallenges,FiveshasimplementedaCorporate

SocialResponsibility(CSR)programwhosepriorityinitiativeswereidentified

with the Executive committee.

Estelle FontenayGroup CSR Manager

0 - 25% 75 - 100%25 - 50% 50 - 75%

CSR PRiORitY DEPLOYMEnt BY LEVEL

MARKET AND ENVIRONMENT

• Systematically aim for energy efficiency in the Group's developments and minimize the environmental footprint of the processes and technologies provided by Fives

• Maintain a high level of ethical standards in internal and external relationships

• Balance purchasing performance and sustainable supplier relationships

PEOPLE AND ENVIRONMENT

• Implement a group-wide standardized and effective system to manage Health, Safety and the Environment

• Promote diversity and harmonize the level of social protection across geographical areas

• Incorporate planning into the management of jobs and skills

GOVERNANCE

• Promote governance practices that facilitate internal control and intra-group synergies

Fives Corporate Social Responsibility 2010 Overview

Given the diversity of the issues involved and the environments in which our people work, embedding HSE within the Group’s

subsidiaries and encouraging individuals to take responsibility for it are the cornerstones for improving our HSE record.

Pascal Mercier, Group HSE Coordinator

14

The Group has set out three types of HSE priority.

• The management of its own facilities, and especially its manufacturing sites (in terms of safety organization, compliance with official environmental and safety standards, waste management, equipment and installation maintenance, personnel training and accreditations, management of service providers and temporary staff, etc.);

• The safety of employees when traveling internationally where political, security and health risks can change very quickly;

• Involvement on client premises. Group companies very often operate on client premises (plants and/or construction sites) when involved in assembly work, the supervision of assembly work, equipment commissioning and/or equipment maintenance. Such involvement may last any length of time from a few days to several years, and may involve one supervisor or several thousand sub-contractor operators. Depending on the circumstances, responsibility for the work involved may lie entirely with the Fives subsidiary company concerned, or with the client or with other service providers.

Faced with these HSE challenges, the Group CSR Department continued in 2010 to deploy a number of initiatives first introduced in 2009.

improving subsidiaries’ knowledge of HSE issues and developing an HSE cultureThe international Fives reference document of job profile guides and HSE best practices was presented and made available to subsidiary companies. In addition to ensuring consistency of practices and the continual upgrading of content in Group documentation, such as risk prevention plans, this database provides subsidiary companies with the opportunity to expand their knowledge and develop their own HSE culture.

improving subsidiaries’ HSE practicesIn 2010 a campaign of fifteen audits in the Group’s major plants worldwide was conducted. The aim of the audits was to provide a clearer understanding and appreciation of the HSE issues faced by subsidiary companies. They also sought to identify strengths, best practices and areas for improvement, and build a joint progress plan laying down a prioritized structure for the initiatives required. These cross-referenced audits are always conducted by internal HSE auditors: the Group HSE Coordinator and one of the eight

Health, Safety and Environment: a Group priority

FivesfacesmanyHealth,SafetyandEnvironment(HSE)challenges,both

in its own facilities and when supporting its teams at work on client

projectsandsites.SincetheappointmentofaGroupHSECoordinatorin

2009, Fives has implemented a number of Group-wide practical initiatives.

subsidiary HSE Coordinators appointed as Group auditors. The subsidiary companies involved see these Group audits as a valuable resource for improving their own HSE practices.

Building a network for dialogue and experience sharingFour seminars were held during the year for subsidiary company HSE Coordinators from different regions (French-speaking Europe, English-speaking Europe, China and the USA/Canada). These events enabled the creation of a Group HSE Coordinator Network, which is proving invaluable as a forum for sharing and swapping experience and best practices.

Supporting subsidiariesThe Group CSR Department also provided on-demand support for subsidiary companies in the form of special training programs or presentations to management committees on issues such as the adoption of HSE challenges, organizational change and encouragement of staff to take greater responsibility for HSE.

In 2011, the CSR Department will focus its HSE audit program on construction and installation sites, using an expanded team of Group auditors. They will provide close monitoring of subsidiary company action plans, and will continue to implement initiatives within the HSE Coordinator Network, encouraging the exchange of good practices and assisting subsidiary companies to improve HSE skills.

A good safety record in 2010

Although individual subsidiary results were varied, the safety record for the Group as a whole improved during the year, Group accident frequency fell from 11.54 to 8.61; and the corresponding severity rate from 0.318 to 0.208. Fives Nordon particularly contributed to this improvement, with the implementation of an ambitious action plan focused principally on encouraging involvement and the acceptance of responsibility throughout the line management structure:• management involvement in revising the risk evaluation

procedures for plants and construction sites, as well as in monitoring the associated initiatives;

• theinvolvementofindividualmanagersthroughHSEinspectionsand informal discussions;

• increased frequency of communications campaigns and theintroduction of a safety challenge for all personnel;

• formationofaFivesNordonsafetycommitteetobringtogetherall the company’s plant and on-site safety coordinators and provide a forum for sharing HSE problems and swappingexperiences;

• increasedtrainingopportunitiesforstaffandmanagement.

Throughout 2011, all of the Group’s companies will continue the action plans already underway, with the aim of delivering further improvements in the company’s safety performance.

In 2010, the Group had

22 industrial sites*

and 26 combined sites**,

regional facilities and test centers

spread throughout the world

*sites with a significant and permanent industrial activity**sites combining an office environment and an industrial or test-oriented activity

Fives Human Resources 2010 Overview

Paule ViallonHead of the Group Human Resources Department

16

throughout the world,

teams contributing

to the success of the Group As in 2009, the Group’s companies in 2010

had to adapt to the context of the global recession, then plan for the recovery. One of the

fundamental roles of human resources during this period was to support change.

In order to retain the positive outcomes of the very substantial efforts made to recruit

employees in previous years, maintain motivation levels, ensure the loyalty of valued employees

and meet our social responsibility commitments, the Group examined every possible alternative

before considering labor force reductions. The trust-based relationship between the Group

and its people was supported through a variety of measures: training initiatives, part-time working,

shorter working hours, the spreading of working time over multiple years and, most importantly,

the many occasions on which personnel from one company were seconded to another.

These all enabled our business to remain operational and fully prepared to rise

to the new challenges of the market.

Giving managers the shared human resources management tools they needAs part of building a shared management culture and practices, the Group’s human resources approach has for a number of years focused on deploying identical policies in all Fives’ operating countries. These policies provide the channels through which diversity, dialog, gender equality and other important issues can be promoted, and their deployment provides the perfect opportunity to raise awareness of issues addressed in detail in management training courses, such as discrimination and stress.

In an international and multicultural group like Fives,

one of the most important roles of the human resources

function is to create a management culture common

toallsubsidiariesandyetobservantoflocalspecificities.It

is also to lay down major fundamental principles shared by

all, such as respect for employees, openness, objectivity

and evaluation, promotion of workplace diversity and non-

discrimination.

These managerial processes are designed to help managers ensure that they have the right people, skills and organizational structure in place to ensure the best possible operation of the company. It also enables them to identify high potential, and, more proactively, to prepare for the future by anticipating foreseeable changes and their impact on the way their business unit will evolve.

Following the career of each employee Because, regardless of the country they work in, their nationality or their culture, the 5,600 staff members are above all part of a Group, the Human Resources Department ensures that they benefit from the same entitlements in terms of evaluation, career progression and development. To this end, the size of the Fives Group is a distinct advantage, since it enables career-long individual monitoring, with personal interviews and meetings at different stages:

• In the first few months after joining the company: the starter meeting. This is a face-to-face interview held with all new employees to ensure their successful induction and assess their satisfaction with their job. It also provides the first opportunity to discuss career development openly and freely, as this meeting is entirely confidential.

In France, more than 215 people have been seconded by one Group company to another since the system was introduced at the end of 2008

Fives Human Resources 2010 Overview

18

• Every year and throughout the employee’s career: the annual appraisal interview and career management committees. The annual appraisal interview provides each employee with feedback on the value of their contribution, and allows for the definition of targets and for further discussion about individual career prospects. The results of these appraisal interviews are used as a base for the career management committees at which employee contributions are analyzed (in 2010, these commit-tees covered 40% of Group employees). Dedicated to measuring the quality of the Group’s employees, their performance as individuals and as a group, these committees also provide the opportunity to decide on promotions and job moves as well as ensuring that succession plans are in place, but also to identify ways to support employees and their development (training, coaching, etc.).

• As often as necessary: “career booster” meetings.Initiated either by the Group Human Resources Department or by individual employees themselves, “career booster” meetings allow individuals to express their ambitions for career progression directly to the Group. Since the career booster procedure was introduced in 2009, the Human Resources Department has met with more than 160 employees. These meetings have led to career moves within an employee’s existing company, but also to many transfers between Group companies, including those in other countries. They have also helped Fives to retain some of its most promising people, and offer them opportunities that they may not necessarily have had in their own business unit. These transfers contribute to building bridges and bonds between subisidiaries, creating opportunities for mutual understanding, making the Group a reality and developing a strong feeling of belonging.

In2010,theFivesgrouphadaworkforceof

5,639 people of more than 50nationalities

Stepping up training in 2010

In both 2009 and 2010, the commitment of the Group to invest in its people and enable them to develop their skills was illustrated through the high level of training carried out. During the year, 59% of employees were able to benefit from at least one training initiative, a substantially higher proportion than in 2008 and previous years. Subsidiaries are able to use external training institutes but are also increasingly using their own employees to provide in-house training, who through their contribution bring their colleagues the benefit of their expertise and share their best practices with them. By building on the skills and know-how already in place within the Group’s teams, this process helped to ensure that this massive investment remains within the allotted training budgets.

All these measures, in combination with the systematic publication both internally and on the Fives website of all vacancies within the Group, help to ensure that every employee who wishes to progress has their intentions and ambitions taken fully into account.

Engineers and managers Technicians, designers and supervisors

Staff Operators

Breakdown by category

22%

38%

26%

14%

59% of group employees attended a training course in 2010

84% are male

16% are female

28% of women employees are engineers or managers

Fives Innovation 2010 Overview

Joaquim Correia Group Intellectual Property Manager

20

innovation, a key factor in Fives’ growth

Encouraging the emergence of new ideasFives has chosen to open up its innovation process both by increasing the number of joint programs with its clients and suppliers and by offering its employees the chance to become involved through Innovation Awards introduced in many group subsidiaries. This has led to the emergence of many recent innovations, including the Eolios pitch fume treatment technology developed by Fives Solios in the aluminium sector, and the ultra-fast Wet Flash Cooling® technology developed by Fives Stein in the steel sector.

Renowned worldwide for its technological prowess,

Fives has put innovation at the heart of its strategy.

Inordertoremainatthehighestlevel,Fivesapplies

an open policy of highlighting the creativity of its teams

whilst anticipating future market demand.

Making the right choices Choosing between R&D programs is a delicate task, so Fives works with each of its business lines to define a clear differentiation strategy, maintaining constant contact with the market in order to ensure the appropriate, dynamic and smooth management of development priorities.

targeting excellenceEvery year, a number of partnership agreements are signed with public and private research organizations in France and internationally. These agreements enable Fives to benefit from the latest advances in pure research and to maintain a high level of scientific expertise. Such agreements have enabled Fives Stein and INSA (the French National Institute of Applied Sciences) to work together on a project to study rapid-cycle techniques in the manufacture of high elastic limit steels. Cooperation programs are also in place with the German Fraunhofer-ISE institute and the Dutch research organization TNO for the development of photovoltaic glass production technologies.

Combining theoretical and experimental researchIn addition to the many digital simulation software packages implemented in its subsidiary R&D departments, Fives has also developed a number of source codes and simulation systems specific to its own business lines in order to reduce development program costs and lead times. In many instances, and particularly in combustion technologies, the final phase of development involves laboratory testing. Fives consequently operates nine testing centers dedicated solely to research, as well as seven combined research and development testing centers, in order to be able to conduct its own experimental research programs.

Nearly €20 million was spent on Research & Development in 2010

The Innovation Awards initiatives organized by the Group’s subsidiaries act as great catalysts

in encouraging the emergence of new ideas. These awards offer every employee the

opportunity to contribute to the process of development by putting forward ideas to improve

what already exists or to introduce a radical step change. By stimulating the spirit of competition

between employees, they also increase the chances of arriving at original ideas which

would probably not have been considered without the special structure and context

provided by an innovation competition. In 2012, the Group-wide “Grand Prix Fives”will reward the

winners of innovation competitions organized in subsidiaries during 2011.

Breakdown of R&D expenditure by type

Cost of patents and trademarks Standard design and formalization of know-how Continuous improvement of products and processes Development of new products and processes Research and radical innovation activities

Fives constantly strives to balance its portfolio of R&D projects, which revolves around both the improvement of its existing equipment and research on long-term topics such as carbon capture and storage.

9%

14%

39%

27%

11%

Fives Innovation 2010 Overview

HEX-800 - Collaboration between Hydro, the norwegian university of Science and technology (ntnu) in trondheim and Fives Solios for the development of a heat exchanger for cooling aluminium electrolytic cells exhaust gasThis program, for a total cost exceeding €2.5 million, aims to test heat exchanger technology for the heat recovery of gas aluminium electrolytic cells, using an invention belonging to NTNU and the aluminium producer Hydro. Prototypes installed in Hydro’s aluminium smelters in Norway will verify and optimize heat exchanger design and validate their performance in real industrial conditions. The cooling of the cells' exhaust gas and the heat recovery will significantly reduce the power consumption of the fume treatment plant.

EcotransFluxtM - transverse flux induction high-speed strip heating technologyThe transverse flux high-speed heating technology developed over the past ten years by Fives Celes opens up many new opportunities for the annealing of stainless steels (reducing energy consumption and removing the need for the pickling stages) and for the production of new high-strength carbon steels (allowing for the reduction in the weight of road vehicles).To finalize development of its EcoTransFluxTM technology and demonstrate its performance in terms of consistent heating spread and reliability, Fives Celes has installed an industrial-scale demonstrator in its testing center. This demonstration model is capable of simulating the annealing process on steel strip 1,500 mm wide. This investment was supported by the European LIFE+ program and ADEME, the French Environment and Energy Management Agency.

22

using demonstrators to convince the marketThe final phase of an industrial equipment development program often involves the production of an industrial-scale or semi-industrial-scale demonstrator. These installations are used to verify that the level of performance calculated from digital models or extrapolated from small-scale models will be effectively achieved under real-life industrial operating conditions.In 2010, Fives installed two major demonstrators, one on a client site and the other in its own facilities:

MOREFinD Out

www.ecotransflux.com

“Engineered Sustainability”, the label of excellence

In 2010, Fives introduced an eco-labeling policy for its products and services. When Fives clients choose an item of equipment carrying the “EngineeredSustainability”label,theycanbecertainthattheyarebuying a technology that delivers the best-possible level of performance in terms of safety, energy efficiency and environmental performance through deliverables such as reduced polluting discharges, greenhouse gas emissions and water consumption. The specifications of equipment applying to receive this label are subjected to specific analyses, their operating efficiency is optimized in the greatest detail, and the best technologies are used in their design and development. Operator training, operational support systems and many other measures have also been introduced to help operators reduce their environmental footprint by using their equipment optimally at all times. The “Engineered Sustainability” program will be progressivelyintroduced throughout the Group, with the aim that the vast majority of equipment produced will carry the label by 2014.

34 innovations patented in 2010 including 18 in energy and environmental performance

336 patent families in force at Dec.31, 2010

1,476 patents in force at Dec.31, 2010

Fives’ strategy in terms of innovation is all about encouraging the emergence of new ideas, adopting the best of them and converting them into innovative solutions that will meet the needs of our clients. Thierry Valot, Head of Group Innovation

Fives operates 11testcenters*inEurope,

4intheUSAand1 in Japan *centers dedicated solely to R&D or incorporating installations dedicated solely to R&D

24

InternationalFives Overview 2010

Fives International Development 2010 Overview

26

Fives, a global presence

an international network present on high potential markets A well organized network of commercial offices in Asia (China, India, Japan, Thailand and Vietnam) as well as in Russia, Brazil, Mexico and Turkey complement the sales operations of each of the Group’s subsidiaries. Through them, Fives reinforces its local commercial expertise and the Group is able to pool each individual subsidiary’s experience in a given region.2011 should see the opening of two new commercial offices, one in the Middle East and the other in Africa, to promote Fives products and services in these high-potential markets.

With over 70 locations in nearly 30 countries,

Fives has a truly global reach.Constantly

seeking to reinforce its international market

positions, key to its growth, the Group made a point last

year to increase its resources in strategic markets.

Fives’ operational presence in China and india: a powerful lever for performance and competitivenessThe operating companies created in recent years in Shanghai and Chennai provide all Group companies with the crucial capacity to deliver the local portions of contracts. The aim is to draw on local manufacturing and procurement skills whilst protecting the proprietary technologies of the Group and ensuring the level of quality and performance expected by the clients. These entities also act as competitive purchasing platforms for international projects, for both equipment and engineering.In 2010, Fives Engineering Shanghai expanded its range once again by creating a division in China to supply low-voltage electrical and control panels. These materials will be produced entirely by the company, from design and manufacture in a dedicated facility right through to commissioning. The performance of this type of service has been tested in many projects conducted by Group companies in China and elsewhere and it has proven to be an appropriate and profitable model of local integration. The Fives India platform set up in Chennai also success-fully delivered on its contractual commitments for the Balco and Hindalco projects. The experience gained has enabled the company to position itself as a strategic partner of Fives Solios to support its development in India and the Middle East, and as a partner for other Group companies from 2011 onwards.

In 2010, the Fives Group once again proved its international credentials:

its ability to stay in close contactwith markets and to position itself successfully

at an early stage in project development,its ability to respond and compete

successfully in the countries that requirea strong local presence, and its ability to

integrate newly acquired companies from Japan or North America. Fives is in a position to offer its

clients the full benefit of the Group experience and history on their territory.

Jean-Marie CaroffHead of the international Development Department

Fives International Development 2010 Overview

28

More than 70 offices

across nearly 30 countriesEuropeFrance: Paris

(Headquarters), Bar-le-

Duc, Évry, Givors, Golbey,

Grigny, Héricourt,

Lautenbach, Le Bignon,

Marseille, Montévrain,

Nancy, Saint-Germain-en-

Laye, Saint-Laurent-les-

Tours, Seclin, Vaulx-en-

Velin, Villeneuve-d’Ascq

Belgium: Brussels, Falisolle

Germany: Taunusstein

italy: Milan, Turin

the netherlands:

Rijsenhout

Romania: Arges

Russia: Moscow

Slovakia: Trnava

Spain: Bilbao, Madrid,

Valladolid

Switzerland: Allschwil

turkey: Istanbul

united Kingdom: Bedford,

Derby, Didcot, Keighley,

Kingswinford, Southend-

on-Sea, Wombourne

asia, Oceaniaaustralia: Sydney

india: Kolkata, Chennai

Japan: Kobe, Tokyo,

Yokohama

PR of China: Beijing, Shanghai,

Suzhou, Tianjin

South Korea: Seoul

thailand: Bangkok

Vietnam: Ho Chi Minh City

the americasBrazil: São Paulo,

Sertãozinho

Canada: Montreal, Ontario

Mexico: Mexico City, Saltillo

united States: Birmingham (AL),

Canonsburg (PA), Chardon(OH),

Cleveland (OH), Farmington

Hills (MI), Hagerstown (MD),

Louisville (KY),

North Canton (OH),

Pittsburgh (PA), South Beloit (IL)

africa, the Middle EastBahrain: Manama

qatar: Doha

Morocco: Tangier

Saudi arabia : Al Khobar

South africa: Bruma

Fives, the power of an international network

The substantial international presence of Fives in countries whose economies came out of the 2009 recession fastest and in the best condition, was one of the most important factors in the strong uptake in orders registered in 2010. The network of Fives commercial offices made a major contribution to this success, with the following notable examples.

• In China, where the market was the quickest to upturn, the commercial presence of the Group enabled it to record close to €200 million of order intake in 2010. Several significant orders were taken by Fives DMS and Fives Stein in the steelmaking sector.

• In Russia, after several years of promotional groundwork, Fives Cinetic achieved an historic breakthrough in the automotive industry, both from traditional clients (PSA Peugeot Citroën in Kaluga) and from joint ventures (Renault Avtovaz in Togliatti). Elsewhere, Fives Pillard won contracts to supply Russian cement producers with their first Novaflam® burners.

• In Turkey, Cinetic Sorting Spa secured a contract to supply the first sorting center to use cross belt technology, thereby setting a valuable benchmark in this high-potential market. The Group’s permanent presence alongside Turkish industrial companies should also enable it to ride the upturn in new capital investment, especially in the steelmaking sector.

These non-exhaustive examples illustrate the strength of the Fives international network and its effectiveness in conquering markets worldwide.

Markets

•Aluminium

•Steel

•Glass

•Automotive & Logistics

•Cement

•Energy

30

Fives Overview 2010

Site safety, emissions reduction and the ongoing pursuit of maximum energy efficiency from our equipment are central to our strategy. Daniel Brunelli-Brondex, Executive committee member, Head of the Aluminium division

FIVES’ OFFERING

• Electrolysis Gas treatment centers on electrolysis pots and bath processing units.

• CarbonGreen anode plants, fume treatment centers, firing equipment and process control systems for anode baking furnaces and carbon butts recycling units.

• CasthouseHolding and melting furnaces, heat treatment furnaces, and casthouse water cooling systems.

In the primary aluminium sector, the recovery in end

markets was confirmed, as the world economy returned

to growth. The market evolution also confirmed the

trend of a gradual shift of investments from the main

productionareasofWesternEuropeandtheUnitedStates,

to regions where energy is cheaper and access to raw

materialseasier.Againstthisbackdrop,theGrouprecorded

its best-ever level of orders in 2010 with, in particular,

majorcontractsinSaudiArabiaandIndia.

32

system and a liquid pitch marine terminal with two tanks of 6,000 tonnes each. Fives Solios also received orders for four gas treatment centers or two series of three hundred and sixty electrolysis pots, and fifteen melting and holding furnaces to be used for the production of aluminium billets, slabs and ingots. This project also involves other Fives Group companies: Fives Cinetic for the supply of the anode conveyors, Fives Industries for the manufacture of four vibrocompactors which form anodes as well as a roll crusher to equip the carbon butts recycling units, and Fives India which will be in charge of the supervision of the manufacture of proprietary equipment.

Fives Solios continues to open up the indian market Fives Solios was awarded orders by Hindalco and Vedanta to supply turnkey firing and control systems for the former’s Mahan and Aditya plants, and the latter’s Balco plant in Korba. These projects will be undertaken within a consortium with Fives India, which will be responsible for the manufacturing of the majority of the equipment. These new orders follow on from the contracts awarded in 2009 by Vedanta for the supply of four potline gas treatment centers, and by Hindalco for the supply of two green anode plants on the same sites; and they reflect the strong position now occupied by Fives Solios in the Indian market.

Fives Solios sets the benchmark in the Middle East 2010 saw completion of the commissioning phase for a range of plants and equipment supplied by Fives Solios in Qatar and the United Arab Emirates.Following production of the first anode at the Qatalum site in February 2010, the green anode plant gradually increased production to 60 tonnes per hour, the highest rate ever achieved by a single production line. The anode baking furnace firing and control systems were accepted, as were the eleven melting and holding furnaces and casthouse water cooling system. Lastly, the Qatalum operations teams took over operational control of the four electrolysis potline gas treatment centers and associated seawater scrubbers, as well as the anode baking furnace fume treatment center.Also during the year, Fives Solios completed commissioning of the bath processing unit at EMAL (Emirates Aluminium) in the United Arab Emirates, which uses the company’s proprietary Celsios hot bath cooling and grinding process.

As part of increasing the amperage of its electrolysis pots, Sohar Aluminium intends to boost the processing capacity of the two gas treatment centers supplied by Fives Solios in 2008, and awarded the company a turnkey contract covering the installation of a new type of potline cooling system that injects water into the suction ducts.

the year was marked by the large-scale involvement of Fives Solios in the construction of the world’s largest integrated aluminium production facility in Saudi arabia In mid-2010, Ma’aden Aluminium Company, the joint venture formed by the state-owned Saudi Arabian Mining Co. and Alcoa, began construction work on an industrial complex whose first phase includes an aluminium smelter and rolling mill, to be followed by a second phase comprising a bauxite mine and an alumina refinery. Once completed, this facility will be the largest integrated aluminium production facility in the world, with an expected capacity of 740,000 tonnes per year. As part of this project, Ma’aden awarded Fives Solios several orders. The first one is a turnkey contract relating to the carbon sector which includes two green anode plants (each with a capacity of 40 tonnes per hour) integrating Rhodax® and IMC® (Intensive Mixing Cascade) technologies, the Xelios new generation vibrocompactor, the coke and pitch truck unloading and storage units, the carbon butts recycling unit, as well as a pitch vapor treatment

Fives Aluminium 2010 Overview

Genios, the latest technology for electromagnetic stirring for the aluminium casthouse

FivesSoliosentered intoa jointdevelopmentagreementwithaEuropean secondaryaluminiumproducer for the installationofGeniosontooneof their furnaces.TheGenios is Solios’s latesttechnology for electromagnetic metal movement.This innovative solution allows for the aluminium to be stirred or transferred from the furnace to a casting machine from a single wall mounted unit.With Genios, aluminium producers can expect to save money, energy and obtain homogeneity of the alloy while reducing cycle time, equipment maintenance and environmental impact. The current model is designed to homogenize the metal temperature to within 5°C after stirring, and improve control of the metal to the casting machine, which can reach 20 tonnes per hour. After several years of in-house development, the partnering arrangement with a secondary producer was identified as the ideal means to further develop this product.The aluminium plant produces 100,000 tonnes per year of alloys. The client wants to improve metallurgical quality, cycle time and reduce costs. The intention is for Genios to replace an existing mechanical pump at the completion of this project.Theprojectstarted in2010andwillallowFivesSoliostodemon-strate all the capabilities of this new system in the course of 2011.

• Hindalco (India)

2009-2010: 2 green anode

plants and a control and

firing system for anode

baking furnaces.

• Vedanta (India)

2009-2010: 4 gas

treatment centers and a

firing and process control

system for anode baking

furnaces.

• EMAL (U.A.E.)

2008-2009: turnkey

supply of a hot bath

processing unit.

• Qatalum (Qatar)

2007-2010: turnkey

supply of a green anode

plant, 4 pot gas treatment

centers, a fume treatment

center for the anode baking

furnaces, the holding and

melting furnaces for the

casthouse with a water

cooling system, the firing

equipment and process

control system for the

anode baking furnaces and

the liquid pitch marine

terminal.

• Sohar Aluminium

(Sultanate of Oman)

2006-2008: turnkey

supply of a green anode

plant, 2 potline gas

treatment centers, the

fume treatment center for

the anode baking furnace,

holding and melting

furnaces for the casthouse

with a water cooling

system and a liquid pitch

marine terminal.

• Alcoa Fjardaal (Iceland)

2005-2007: supply of the

bath processing unit,

2 gas treatment centers

and 4 holding furnaces

for the casthouse.

KEY REFEREnCES

This will be the first time that Fives Solios will have supplied this system, which offers an alternative method of cooling gases at the center inlet, and responds to the demand from plants keen to boost the current rating of their electrolysis pots, and particularly that of high-amperage plants around the Gulf, where ambient temperatures are very high.

World-acclaimed innovative technologiesFives Solios received an order to supply a Xelios vibrocompacting machine for the new Chalco Liancheng aluminium plant in China. This plant will produce 380,000 tonnes of aluminium per year on a site close to the existing plant constructed in 2002, for which Fives Solios supplied the fine grinding line. The Xelios twin-table vibro-compacting machine developed by Fives Solios for anode forming is the first new-generation machine of its kind to be sold in China, and will enable production of the larger anodes required by this client.Rio Tinto Alcan also placed a design order with Fives Solios for the supply of a new electrolysis pot gas treatment center (GTC) for its pilot plant at Jonquières in Quebec (Canada) based on the company’s completely new AP60 electrolysis pot technology. The order became effective in January 2011. The project involves the design, supply, installation and commissioning of the GTC, fitted with five Ozeos filters which use the very latest innovative technology developed by Fives Solios for dry treatment of gases in modern high-amperage plants. The system is particularly efficient in terms of its gas treatment performance and footprint.Innovative solutions like these enable Fives Solios to help its customers achieve their operating cost reduction and energy performance targets.

34

Fives Aluminium 2010 Overview

FIVES’ OFFERING

• Stainless steel- Digit@l Furnace®, reheating furnaces- Reversible cold rolling mills- Skin-Pass rolling mills- Annealing and pickling lines

(hot and cold)- Bright annealing lines- I-BAL (bright annealing line with

EcoTransFlux® inductive heating and Flash Cooling®)

• Silicon steel- Digit@l Furnace®, reheating furnaces- Reversible cold rolling mills- Annealing and pickling lines- Decarburizing and coating lines- Annealing and coating lines

• Carbon steel- Digit@l Furnace®, reheating furnaces

(long and flat products)- Tunnel furnaces and heat treatment furnaces- Welded tube lines- Continuous annealing lines (carbon

sheet and tin-plate) - Continuous galvanizing lines

(horizontal and vertical)- Organic coating lines

(convection and induction)- Combined and compact lines

• Steel and non-ferrous metals - Finishing equipment and

mechanical processing for bars, tubes and pipes

Fives confirms its status as the preferred supplier of Baosteel in China Baosteel, China’s leading steelmaker, is a large owner and operator of Fives equipment and installations, and it reiterated its confidence in the Group in 2010 with an order with Fives Stein for two horizontal furnaces to equip new grain-oriented silicon steel annealing lines. Also during the year, Fives DMS was contracted to supply a second bright annealing line for the Baoxin site at Ningbo Beilun. This new production line will be capable of producing 80,000 tonnes of austenitic and ferritic stainless steel strip per year in widths up to 1,350 mm. Fives Engineering Shanghai, the Group’s Chinese production facility, will manufacture all the mechanical components locally. This contract follows on from the first line of this type, which was delivered to the client in 2003.In 2010, the Group also commissioned two continu-ous annealing lines and one automotive galvanizing line for Baosteel Stainless Steel Branch (BSSB). The first coil was successfully manufactured in August, and the client also completed acceptance of

the ZR21 stainless steel rolling mill, which represents the techno-logical ultimate in 20-roll Sendzimir rolling mills. High-speed performance testing of this equipment has delivered strip speeds of 1,000 meters per minute.

Digit@l Furnace®, unrivalled energy and environmental performance In 2010, the widely-recognized quality of Digit@l Furnace® technology and its energy and environmental performance were largely responsible for a number of major orders for the Group.The latest generation of these furnaces is equipped with Advantek®, a new range of burners developed by Fives Stein and run by an expert combustion control system which ensures quality and stability of production.The beginning of the year saw the startup of a major order from Usiminas, one of Brazil’s leading steelmakers, for the supply of a new Digit@l Furnace® slab reheating furnace and the upgrading of two existing furnaces at its Ipatinga plant in Brazil. Fives Stein also signed a contract for the complete supply of two slab reheating furnaces, each with a production capacity of 250 tonnes per hour for use on the hot rolling line of the Allegheny Ludlum Corp. plant at Brackenridge, USA. As the world-leading

producer of a broad range of carbon steels, stainless steels and high value-added special steels, this client has embraced Digital technology for its ability to reheat a broad range of steel grades at consistently high levels of quality and flexibility. Furthermore, Handan Steel, a subsidiary of China’s leading steelmaking Corporation Hebei Steel and long-standing client of Fives in the country, placed an order during the year for a fourth slab reheating furnace, following the successful commissioning of the third furnace of this type on the same site.

Fives, recognized expertise in steel processing linesTisco (Taiyuan Iron & Steel Co., Ltd.), which operates a stainless steel bright annealing line upgraded by Fives DMS, chose to invest in a new high-capacity line for its facility in Shanxi province 500 miles from Beijing. This flagship client once again showed its faith in the Group with the award of a contract to provide a production line capable of producing 150,000 tonnes per year of bright annealed products: the highest capacity in the world for this kind of line. This project follows the commissioning a few years ago of the world’s largest hot annealing and pickling line: the so-called “Jumbo Line”.

After the 2009 recession, 2010 heralded a

significant recovery in global steel production

(+15%),reversingthedeclinesseenintheprevious

two years and resulting in a record production total of

1.4 billion tonnes. Market growth was driven principally

bycapacityinvestmentinemergingeconomies. Inthese

favorable market conditions, Fives was awarded major

ordersbyChina’slargeststeelmakersandwasabletotake

advantage of a number of opportunities in industrialized

countries,inparticulartheUnitedStatesofAmerica.

36

We continue to pursue our objective of helping our steel producing customers use less energy, by improving the energy efficiency of our equipment. Jean-Luc Rondreux, CEO of Fives Stein

Fives Steel 2010 Overview

Eastern Special Steel, another Chinese steelmaker and newcomer to stainless steel production, also awarded the Group a contract to supply its first combined annealing and pickling line, which will include a wet-type oxide breakdown system entirely designed by Fives DMS.

China’s largest steelmakers vote for Fives DMS rolling millsTisco placed an order with Fives DMS to supply a new cold rolling mill dedicated to the production of “bright” strip. With a production capacity of up to 133,000 tonnes of steel per year and a rolling speed of 1,200 meters per minute, this new mill will break all records. It will also incorporate a series of special features designed specifically for this client, and will enable production of high-quality thin steel products down to just 0.2 mm. The performance profiles for this rolling mill were determined on the basis of the ZR21 rolling mill previously supplied to Tisco, which has delivered total satisfaction in terms of production, reliability and quality. Also during the year, Jisco (Jiuquan Iron & Steel Co. Ltd.), China’s third-largest producer of stainless steels, contracted Fives DMS to supply four 20-roll cold rolling mills for phase two of its plant expansion project. Finally, the Group received acceptance of the final ZR rolling mill supplied to Angang (Anshan Iron & Steel) to produce grain-non oriented, grain-oriented and - at a future time - high permeability grain-oriented silicon steels, which are the most difficult silicon steels to manufacture.

EcoTransFluxTM, the new flux induction high-speed strip heating technology

By quadrupling the steel strip heating gradient achieved by conventional technologies, the transverse flux heating technology developed by Fives opens the way to entirely new steelmakingprocesses.In stainless steel production, the speed increase delivered by induction heating enables the annealing cycle to be conducted in a protective atmosphere, thereby completely removing the need forthehighly-pollutingacidpicklingstage.In carbon steel production, the combination of induction heating and Flash Cooling® technologies enables the production of a finer grain,makingitpossibletoproducenewgradesofsteelwithveryhigh elastic limits that can be used to reduce the weight of automobiles. This modern, compact, low-temperature technology has also attracted theattentionof steelmakerson the basisof its lowermaintenance requirement and the ease with which it can be integrated into existing production lines.

38

Fives Steel 2010 Overview

• Baosteel (China) 2004-

2010: supply of 2 galvanizing

lines for automotive, 2 tinplate

high-speed annealing lines

(800m/min), 4 vertical

furnaces for continuous

annealing and galvanizing

(automotive) lines for carbon

steel, and 2 horizontal

furnaces for silicon steel and

one rolling mill for stainless

steel.

• Posco (Korea) 2007-2011:

supply of a rapid wet Flash

Cooling® system, 2 vertical

furnaces for galvanizing

(automotive) lines equipped

with the Flash Cooling®

technology, 2 rolling mills and

one slab reheating furnace for

the ZPSS site in China.

• Anshan Iron & Steel

(angang) 2010: supply of 2

ZR type rolling mills for silicon

steel.

• Shougang Jingtang (China)

2008-2010: 4 vertical

furnaces for galvanization and

continuous annealing lines,

including one continuous

annealing with a capacity of

1,000,000 tpy, equipped with

Flash Cooling®.

• Outokumpu (Finland)

2009: mechanical equipment

of a stainless steel annealing

and pickling line.

• Tisco (China) 1997-2012:

supply of the world’s largest

stainless steel annealing and

pickling line with a capacity of

1,150,000 tpy, the “Jumbo

Line”, 8 ZR type rolling mills

and one refurbishing of

rolling mill.

• ThyssenKrupp (USA)

2007-2011: supply of 3 rolling

mills and one Skin-Pass for its

new Alabama plant.

• Allegheny Ludlum Corp.

(uSa), arcelorMittal CSt

(Brazil), Celsa (Spain),

Çolakoğlu (turkey), Essar

(india), OMK (Russia),

Severstal (Russia), usiminas

(Brazil), Welspun and Jindal

Steel & Power Ltd. (india)

2007-2013: supply of Digit@l

Furnace®, selected for their

heating quality and their

unmatched energy and

environmental performance.

KEY REFEREnCES

On the commissioning front, Fives Stein achieved a successful start-up of the first float glass production line for its customer Düzce Cam, a subsidiary of the Turkish regional glassmaker Okan Cam. This line has been designed to produce 600 tonnes per day of premium-quality float glass (2-12 mm thick) for the automotive and construction industries. The group also commissioned the complete 550 tonnes per day float glass production line supplied to Sejal Architectural Glass in India.

Globally recognized expertise in hollow glass, fiber glass and special glassesThe year saw a large number of new orders: in China for the production of reinforcement fiber glass, in Italy and Portugal for packaging glass conditioning channels, and in Belgium for the reconstruction of a furnace for the production of soft glass for use as building insulating material.The Aktis glassmaking group will also be using Fives Stein technology in the heat conditioning section of its new packaging glass plant in the Russian province of Rostov, as will the Turkish group Sisecam, which has placed an order for two packaging glass and table glass treatment lines.

SunBath®: a new technology for photovoltaic glass production

In2010,FivesStein receivedanorder froma leadingAmericanglass manufacturer to produce the industrial prototype of a new productiontechnologyforphotovoltaicglass.SunBath®,whichiscovered by three patents and enables the application of precision films to a continuous ribbon of glass during the production process to deliver the properties required by photovoltaic panel manufacturers. This initial contract rewards all the Research & Development commitment put into the development of this process,andplacesFivesStein ina strongposition inthis fast-growingmarket.

Fives technologies continue to set the benchmark for high-precision flat glass and float glass Fives Stein received a series of orders in the flat glass forming sector, confirming its leading position in high-precision glass applications.The Korean group LG awarded the company a contract to supply equipment for its first production line of extra-thin glass for flat screen applications.Xinyi Glass, a Chinese glassmaker, also choose the Group’s expertise for the record supply of twelve flat glass lehrs, including eight complete lehrs for photovoltaic glass production lines. Also in 2010, Taiwan Glass placed an order with the Group for the supply of annealing lehrs for the world’s two largest float glass production lines. The new installation will be capable of annealing up to 1,200 tonnes of glass per day.

2010 saw a recovery in investment in the European

and Russian hollow glass sectors, a recovery from

which the Group was able to benefit as a result of

itstraditionalactivityinconditioningchannels.Intheflat

glass sector,business remainedbuoyant inChinawhere

productioncapacitycontinuedtogrow.Inastill-difficult

trading environment, the Group successfully established

its position in growing sectors requiring special expertise,

suchasglassforflatscreensandphotovoltaicapplications.

40

• Obeikan Glass Co.

(Saudi arabia) 2008-

2010: complete* float

glass production line of

800 tpd.

• Okan Cam (Turkey)

2008-2010: float glass

production line of 600 tpd.

• Sejal Architectural Glass

(india) 2007-2010:

complete* float glass

production line of 550 tpd.

• YugRosProdukt (Russia)

2007-2009: complete*

float glass production line,

cutting line and nitrogen

and hydrogen production

stations.

• China Southern Glass

(Guangzhou, China)

2003-2005: 2 complete

hot ends for float glass

lines of 550 tpd and

700 tpd.

• Fuyao Group (China)

2003-2005: float glass

production line of 600 tpd

for automotive production.

• Goa Glass Fibre Ltd.

(india) 2009: re-design

and enlargement of the

furnace system and supply

of patented oxy-gas

burners onto fiber glass

lines.

*(i.e melting furnace, tin bath, lehr and air pollution control)

KEY REFEREnCES

FIVES’ OFFERING

Thermal equipment and production lines:- for float glass (melting furnaces, tin

baths, annealing lehrs and air pollution control systems),

- for flat glass (melting furnaces, rollers and annealing lehrs),

- for hollow glass and special glasses (melting furnaces, conditioning equipment and ancillary equipment).

Fives Glass 2010 Overview

Fives Automotive & Logistics 2010 Overview

FIVES’ OFFERING

• Automotive and manufacturing industries Automated systems with high production rates for:- machining,- foundry,- automation,- assembly,- and integration of industrial

processes.

• Logistics- design and installation of

customized logistics solutions (automated handling and high-speed sorting systems),

- computerized solutions for order picking and exit of production lines,

- maintenance of automated systems.

Fives Cinetic maintains its high profile in machining and mechanizationFives Cinetic was selected by Detroit Diesel to supply the cylinder head washing/deburring system for its HDE engine program. The Fives Cinetic solution offers the only effective response to the cleanliness specifications (particulate size and number) applied by Detroit Diesel to meet the new emissions standards applied to diesel engines in the North American market.A year after its No.1 machining line was commissioned in July 2009, Brazilian engine parts manufacturer WHB placed a new order with Fives Cinetic for the mechanization of a second crankshaft machining line.

This new automated line will produce up to 400,000 parts per year, mainly for Volkswagen, and includes seven ETFA T150 gantries, plus associated electrical cabinets and conveyors. At the same time, Fives Cinetic was awarded the contract to supply four new-generation Landis LT2 grinding machines for the same line.This installation will eventually provide WHB with the highest crankshaft machining capacity in Brazil.

Fives Cinetic joins the new EB engine project of PSa Peugeot Citroën in France As part of PSA Peugeot Citroën’s project for a 3-cylinder gasoline engine, Fives Cinetic won several sizeable orders. On the Tremery site, where two identical machining semi-lines will allow the production of 600,000 engines per year, Fives Cinetic will be responsible for the automation of the crankshaft machining lines, and of the cylinder block and cylinder-head washing machines (supply of six NC Centrispray FM washing centers) as well as crankshaft grinding (ten Landis grinders). On the Mulhouse site, PSA Peugeot Citroën entrusted Fives Cinetic with part of the T9 and T10 cylinder block molding project which comprise the die-casting. The projects will enable production to be started up in 2011.

acclaimed expertise in assembly lines As part of the ongoing powertrain programs underway in the US, Fives Cinetic was awarded an order by Chrysler for the conversion of one of its GEMA engine assembly lines to produce the twin overhead cam Multi Air Tigershark engine developed by Fiat. The project includes converting the engine assembly line, cylinder head machining line (with assembly and testing) and cylinder block machining line, as well as adapting the cylinder head and crankshaft

washing machines and intermediate automated storage systems.Also during the year, PSA Peugeot Citroën awarded Fives Cinetic a significant part of the contract to supply its new final assembly plant at Kaluga in Russia, on the production site it shares with Mitsubishi Motors Corporation (MMC). With an installed capacity of 160,000 vehicles per year, this assembly plant will be equipped with the innovative CFCFrixLine overhead friction conveyor developed by Fives Cinetic. The Group will supply all the flow handling systems and will provide technical support during the production acceleration phase.Lastly, Renault appointed Fives Cinetic to supply part of its new plant at Tangier in Morocco. The contract covers all the handling equipment for the pressed steel and final assembly shops of the new plant, which will have an installed capacity of 175,000 vehicles per year across three different models. This order follows acceptance of the conversion work on the Nissan final assembly plant in Barcelona: a project completed in record time. All these projects further confirm the widespread recognition of Fives Cinetic expertise by the world’s largest automobile manufacturers.

Fives Cinetic pioneers the fast-growing market for new refrigerant filling systems Current European legislation aims reduce the potential global warming effect of the refrigerants used in automotive air conditioning systems. Fives Cinetic is pioneering the market in filling systems for new fluids such as HFO, which reduces global warming potential to a level three hundred times lower than that of current fluorinated fluids. This first-mover status has enabled the company to secure contracts from a number of major manufacturers, including General Motors (Oshawa, Canada and Lordstown, USA),

The recovery that began at the end of 2009 in the

automotive industry continued in 2010 with

regional variations. Emerging economies such as

China, IndiaandBrazil continuedtobuildnewcapacity,

while in industrialized countries, the policies aiming at

rationalizing and consolidating production capacity which

started inpreviousyearscontinuedtoweigh in2010.At

the same time, the accelerating pace of sustainability

initiatives enabled the Group to secure major orders in new

engine and automatic gearbox development programs,

andtheswitchtoanewairconditioningrefrigerant(HFO).

In logistics, Canadian, European and Japanese courier

companies continued to automate their sorting centers,

generating a series of major orders for the Group.

42

Our constant aim is to optimize the design of our systems with regard to both the consumption of energy and fluids and the production of waste and scrap. Jean-Camille Uring, Head of the Automotive division

Audi (Ingolstadt, Germany) and Honda (Swindon, UK). The introduction of HFO also opens up other opportunities brought about by the application of ATEX regulations to automobile air conditioning system test benches. Thus, Fives Cinetic was awarded a retrofit contract by the leading Japanese equipment manufacturer Sanden to ensure compliance of twenty-eight such test benches over three years.

automated logistics handling and sorting systems: an international reputation for reliable, economical technologies Yamato Transport Co. Ltd., one of Japan’s leading courier operators, appointed Fives Cinetic to design and supply a fully-automated sorting center as part of its plans to build a new 170,000 m2, 6-level logistics terminal adjoining Haneda International Airport in Tokyo. The system will be able to handle 66,000 items per hour using a range of different sorting systems and a highly adaptable operating mode designed to cope with peak flows and volumes in order to minimize distribution times for items routed to more than 200 destinations.Fukuyama Transporting, one of Japan’s leading transporters, awarded Fives Cinetic the contract to supply a sorting system incorporating a cross-belt sorter capable of handling 11,000 items per hour routed to 73 destinations. The system will be installed in the company’s new logistics terminal.In the courier industry, the Group was awarded a contract by MNG Kargo, one of Turkey’s leading express courier companies, to automate seven sorting centers and meet the very highest processing standards. These orders underline the substantial success achieved by the cross-belt technology developed and marketed by Fives Cinetic, which is particularly effective in high-speed sorting applications.

Maintenance: Fives Cinetic enters new markets In a year when La Poste - the French national mail company - renewed its contract with Cinetic Service - the Fives Cinetic service division - to maintain seven sorting centers in France, the country’s national rail operator SNCF also awarded the company a major 3-year contract to maintain the tools and equipment in four of its rolling stock maintenance technical centers.

ECOFLEXTM, the grinding machine combining flexibility and low carbon footprint

Toposition itself inapromisingmarketniche,CineticLandishasfocused its research on the underserved segment of the machine grinding of large revolving parts between 1.5 to 4 meters long and 400 millimeters in diameter, with an option up to 750 mm.ThenewrangeofECOFLEXTM high-precision cylindrical grinders is characterized by its flexibility. Its modular platform allows it to be fitted with either conventional or superabrasive grinding wheels. Its singleattachmentsystemallowsformultipletasksandcontributestoobtainabettergeometricaccuracy.ThenewECOFLEXTM also incorporates a linear motor with anti-friction bearing cross slides thateliminatefrictional“stick-slip”positioningconstraints.Thehighrotational accuracy and stiffness of the grinder’s hydrostatic wheel spindle enable higher feed rates, improved finishes and provide consistent, maintenance-free accuracy. From an environmental perspective, the machine was designed to minimize unproductive energy losses (through friction and in the circuit fluid), including an innovation focused on the cooling system, and also to minimize consumption in standby mode.With all these innovations, Fives Cinetic offers a range of highly flexible and configurable grinders, which can be easily adapted to other lengths, diameters and types of components.

• Ford (India and South

africa) 2010: crankshaft

grinders.

• Jinan Diesel (China)

2010: crankshaft grinders.

• General Motors (USA)

2010: "Family 0" engine

assembly line, camshaft

grinders. / (india, thailand,

uzbekistan) 2009-2010:

10 crankshaft grinders.

• Audi (Germany) 2010:

air conditioning refrigerant

(HFO) filling system.

• Canada Post

Corporation (Canada)

2010: high-speed

automated sorting systems

at the parcel distribution

center in Winnipeg

(6,000 pph).

• Yamato (Japan) 2010:

high-speed automated

sorting systems, one for

Kanagawa (6,000 pph) and

another one for Wakayama

(10,000 pph).

• Russian Post (Russia)

2010: a sorting system for

small parcels installed in

Moscow in the Russian

Post’s first automated

sorting center

(28,000 pph).

• DHL (Italy) 2010:

high-speed automated

sorting systems with a rate

of 3,000 pph.

• Pixmania (France) 2010:

extension of the picking

solution of the leading

online supplier of

high-tech products.

• Orium (France) 2010:

picking solution for the

e-commerce specialized

logistics provider.

• Laboratoire Cerba

(France) 2010: automated

processing system of

biological tests.

KEY REFEREnCES

44

Fives Automotive & Logistics 2010 Overview

Fives Cement 2010 Overview

FIVES’ OFFERING

• Complete turnkey cement plants.

• Grinding plants and process equipment for the cement industry and mineral grinding (kilns, ball mills, Horomill®, Rhodax®, Zero-NOx precalciner, TSVTM classifiers, etc.).

• Clean combustion engineering and systems for rotary kilns for calcination and drying (Novaflam®, Rotaflam®, etc).

• Dust collection equipment for kilns, coolers and grinders.

an unblemished record in meeting deadline and safety imperatives of major international projectsFollowing commencement of production on the new 4,000 tonne per day production line for Beni Suef Cement Co. in November 2009, commissioning of this Egyptian cement plant was completed at the beginning of 2010, having met all contractual performance thresholds (lead times, production testing and performance testing) and exceeded even the customer’s own clinker and cement production targets for the year. In addition to the overall success of this project, it is important to note one particularly exceptional achievement: after 6.5 million man hours worked on site under optimum safety conditions, the installation assembly and commissioning phase was completed with not a single day lost due to workplace accidents. This exceptional result had been actively

targeted through the development of effective procedures, safety training and awareness programs for sub-contractors and the implementation of a dedicated safety team. The success of the project was acclaimed by a world leader in industrial safety and accident prevention, the American company DuPont, who awarded the prestigious DuPont Safety Award to the Beni Suef site.Fives FCB has therefore once again demonstrated its total control over safety-related risks when delivering its projects, having achieved identical results in a project in Tula, Mexico, several years ago.Fives FCB also received provisional acceptance for the complete Thai Nguyên cement plant of Vinaincon in Vietnam, which also has a production capacity of 4,000 tonnes per day. The company also signed the final acceptance certificate with the Qatar National Cement Company for the 5,000 tonne per day Umm Bab 4 line in Qatar. Fives FCB also started the commissioning of the new 3,500 tonne per day cement plant of Holcim Apasco at Hermosillo in Mexico. This production line integrates the latest cement production technologies developed by the Group: a raw grinding plant with ball mill and TSVTM classifier, an extremely high-efficiency burning line equipped with a 6-stage preheater and a Zero-NOx precalciner, a tire preparation and incineration unit, a Horomill® cement grinding plant and TSVTM classifier. These technologies allow the customer to produce very high quality cement whilst at the same time

reducing electricity, fuel and water consumption to the minimum as well as minimizing carbon and NOx emissions.All these projects demonstrate once more the high degree of control exercised by the company over delivering its major international contracts.

Fives FCB is appointed by Saudi arabia on the basis of its expertise in the white cement sectorAt the end of 2010, the Group received an order from Saudi White Cement Co. for the revamping and the increasing of capacity from 700 to 1,000 tonnes per day of its white cement production line no.1 on the Muzahmiyah site, in Saudi Arabia. This contract, which came into force at the beginning of 2011, regards the addition of a kaolin and gypsum crushing plant, the increase in capacity of the raw and cement grinding plants, which will each be equipped with a ball mill alongside the existing grinding mills, as well as a TSVTM classifier. It also includes the modification of the preheater tower including a new precalciner, the replacement of the downstream seal of the kiln, the modification of the clinker cooler and the installation of a 10,000 tonne silo for cement storage. The timeline for carrying out modifications on the existing equipment will be very short, as the shutdown period which will start in March 2012 will not exceed three months.

In 2010, the market for new cement production capacity,

notincludingChina,wasunchangedcomparedto2009,

but remained a long way short of the record levels

observed between 2006 and 2008. Low demand for

cement - largely as a result of the sluggish real estate

and construction sectors - did nothing to encourage major

producers to resume investment in projects that had been

put on hold in 2009. Nevertheless, the end of the year saw

aslightrecoveryinglobalproductionlevels,drivenbyAsia,

AfricaandtheMiddleEast.Inthismarketenvironment,the

orders received by the Group focused primarily on supplying

grinding plants and combustion systems.

46

Site safety is a priority for us. We have introduced a dedicated safety team, which works in partnership with the project team to monitor compliance with safety procedures and provide training and awareness for our sub-contractors. Alain Cordonnier, CEO of Fives FCB

Worldwide acclaim for Fives FCB grinding equipmentWhen Elpion, the South Korean subsidiary of the OCI Group, decided to produce silicon powder, it asked Fives FCB to conduct laboratory grinding tests on a range of different materials. On completion of a conclusive testing program, Elpion awarded the Group a contract for the design, fabrication and supply of a Rhodax® 600HP grinder, a TSVTM 800 separator and all associated ancillary equipment.Also during the year, Fives FCB signed a contract with Lalitha Cement to supply two Horomill® 3800 raw grinding mills - each with a capacity of 225 tonnes per hour - for its site in Andhra Pradesh, India.Fives FCB also began work on its first steel slag grinding installation in China, which will be equipped with a Twin Horomill® and TSVTM system. In addition to grinding this waste product finely enough for it to be recycled as a cementing material, the installation also enables continuous recovery of the metallic iron content of the slag.Lastly, the Group obtained provisional acceptance of the phosphate processing grinding plant constructed at Somiphos in Algeria.

the novaflam® burner, the high-performance rotary kiln combustion solution from Fives PillardThe success of the new burner nozzle for rotary kilns was confirmed in 2010 with commissioning of the three most powerful Novaflam® burners yet delivered, which were fitted to three 10,000 tonne per day clinker kilns at TPI Polene in Thailand. With a power rating of 160 MW, each burner accepts a flow rate of 27 tonnes of pulverized coal per hour, and can burn up to 18 tonnes per hour of solid alternative fuel.Fives Pillard also achieved its first commercial successes in India, of which the most notable include the sale of four Novaflam® burners to Ambuja Cement, Zuari Cement and JK Cement.Lastly, the Group targeted growth outside its historic cement industry market, and secured a number of orders for rotary kiln combustion systems in the ferronickel, lime and papermaking industries, as well as in other calcination processes, such as lithium, with the signature of a major contract with Galaxy Lithium in China, and the supply of three rotary kiln burners for Elementis Chromium in the USA, one of which was commissioned at the end of the year.All these projects further confirm the international success and recognition achieved by Fives Pillard combustion solutions.

D-NOx precalciner: an innovative approach to reducing nitrogen oxide emissions

Latestregulationsrequireproducersto limitNOxemissionstoalevel lower than 200 mg/m3(n) at their new plants. Until now, complying with such limits forced producers to install a secondary airpollutioncontroldevice,calledSCR,whichisbothcostlyand,under certain conditions, energy consuming.Fives FCB developed an innovative proprietary solution based on a global approach to the NOx issue, with the objective of considerably reducing the investment and operating costs of denitrification.After using computer-assisted modelling, the company perfected the operation of the Zero-NOx precalciner and modified its design to integrate andoptimize Fives Pillard’s SNCR (SelectiveNonCatalytic Reduction) denitrification solution, whose cost is seven timeslowerthantraditionalSCRsolutions.Soastominimizethe reactiveconsumptionoftheSNCR,NOxemissions must be reduced prior to injecting the ammoniac solution. The Fives FCB Research Centre defined optimal air distribution conditions which would enable this objective to be met: deep air staging with the addition of post-combustion air representing around 20% of tertiary air.The lengtheningofthegooseneckduct increasesthe residencetime in the precalciner which allows for complete combustion of difficultfuels,whileensuringtheefficiencyofFivesPillard’sSNCRsolution. Therefore, the targets fixed by the new legislation may be met and even exceeded, all with limited reactive consumption.ComparedwithtraditionalSCRsolutions,theFivesFCBtechnologyallows for a return on investment of 3 million euros for a 3,000 tonne per day production line.

• Qatar National Cement

Company (qatar)

1995-2010: turnkey supply

of Umm Bab 2 (2,000 tpd),

3 (4,000 tpd) and

4 (5,000 tpd) production

lines.

• Holcim/Apasco

(Mexico) 2007-2010 and

Holcim (Costa Rica)

2002-2004: supply of two

production lines of

3,500 tpd and 3,000 tpd,

using Horomill®

technology.

• Titan / Beni Suef

Cement Company (Egypt)

2007-2010: turnkey supply

of a cement plant with a

capacity of 4,000 tpd,

comprising a 170 tpd

cement grinding unit.

• Vinaincon (Vietnam)

2005-2010: supply of a

complete cement plant of

4,000 tpd using Horomill®

technology.

• Lafarge (Mexico)

2004-2006: turnkey

supply of a 1,500 tpd

cement plant in Tula.

• Cemex (Panama) 2006:

turnkey supply of a cement

grinding plant equipped

with a Horomill® 3800.

• Cementos Moctezuma

(Mexico): 13 Horomill®

grinding mills, of which the

oldest were commissioned

14 years ago.

• Holcim (Merone, Italy):

conversion of the existing

Rotaflam® burner into a

Low NOx Rotaflam®.

• Holcim (Lumbres and

Dannes, France / Benelux

- Obourg, Belgium):

supply of Novaflam®

burners.

• TPI Polene (Thailand)

2010: supply of 3

Novaflam® burners of

160 MW each.

• Cemex (Texas, USA),

Graymont (Utah,

Pennsylvania, uSa) and

Polysius (California,

uSa): several TGT filters

for clinker furnaces and

lime kilns.

KEY REFEREnCES

48

Fives Cement 2010 Overview

Fives Energy 2010 Overview

FIVES’ OFFERING

• Industrial equipment primarily used in energy production

- engineering, supply, manufacture and assembly of high pressure piping (new construction or refurbishing);

- brazed aluminium: plate-fin heat exchangers (for air separation units, ethylene production or natural gas liquefaction);

- cryogenic pumps.

• Combustion systems designed for electric and thermal energy production and for industrial processes.

• Equipment and complete plants primarily used in sugar and bioethanol production.

Fives nordon, setting the benchmark in the nuclear power industry As part of its contribution to the construction of EPR reactors, Fives Nordon received a number of new orders during the year, including one from Areva for procurements, prefabrication and erection of IRWST sump suction lines and boxes at the Flamanville EPR. Fives Nordon was also appointed to design, supply and prefabricate surge lines for the Taishan 1 and 2 EPR in China, as well as the prefabrication of primary branch for the Taishan and Flamanville EPR. Fives Nordon will also supply CGNPC in China with surge lines for ten nuclear reactors now in the installation phase.Group activity in nuclear maintenance also remained at a sustained level during the year, with the signature of a framework agreement with EDF CIPN for the P’4 reactors of its French nuclear power plant. Over a five-year period, Fives Nordon will carry out work to modify the nuclear island, as well as standards compliance and performance uprating conversion works for the 12 units concerned.

Fives Cryogenie, recognized expertise in atmospheric gas separation and hydrocarbon processingAs part of expanding the annual ethylene production capacity of its Chinese petrochemical facility to 1.2 million tonnes, Daqing Petrochemical Company contracted Fives Cryogenie to supply seventeen heat exchangers, two cold boxes and eight separation drums. The Group will supply initial design, detailed design and

project management services, as well as manufacturing the aluminium heat exchangers for assembly and fitting in its Chinese facilities at Suzhou. Also during the year, GS E&C appointed Fives Cryogenie to produce the cold boxes required to boost the capacity of the Ruwais refinery in the United Arab Emirates for its client TAKREER, which specializes in petrochemical derivatives.Air Liquide, a major client of the company, contracted Fives Cryogenie to design and manufacture heat exchangers and cold boxes for its oxygen production facilities in India, Russia and China. The same client also confirmed its order for the exchange line for the world’s largest helium purification and liquefaction plant at Ras Lafan in Qatar. Lastly, the Group secured a number of cryogenic pump installation contracts in China. In hydrocarbons, these include four high-pressure VSMPs (Sealed Motor Cryogenic Pumps for installation in explosive atmospheres) for Air Products’ Chengdu project and the Caojing II project run by Air Liquide. In atmospheric gas extraction, Kaifeng Air Separation Group Co., Ltd. appointed Fives Cryogenie to supply eight high-pressure cryogenic pumps.

Fives Pillard and Fives north american, undisputed market leaders in high-performance combustion systemsThanks to the high-quality combustion system technologies it offers for a broad range of industrial applications, combined with the significant recovery seen in capacity-related capital expenditure

Driven by increasing demand for energy in the

world’semergingeconomiesandby increasingly

stringent requirements in terms of energy

efficiency, the market continued to trend upwards during

2010.Thefollowingfactorswereparticularlyinfluentialin

the markets serviced by Fives:

- The construction of new nuclear power plants in France

and China, combined with increasingly intensive

maintenance programs for existing power plants.

-Increased consumption of industrial gases, driven by

industrialgrowthinAsiaandtherobustnessofthenatural

gas market.

-Companies’requirementstorenewindustrialcombustion

systems in order to reduce the amount of energy consumed

by industrial processes and their environmental footprint.

- The cooperation of the sugar-refining and energy industries

to serve the biofuel market.

50

The combustion technology developed by Fives Pillard and Fives North American allows our clients to significantly reduce their installations’ emissions, and meets the most stringent environmental standards. Martin Duverne, Executive Board member, in charge of the Energy division

and the upgrading of existing facilities to meet new environmental requirements, the Group received a number of significant orders in 2010. Fives North American was entrusted by Keystone Steel & Wire Co. with a contract to design and installation of the replacement charge and preheat zone sections for a rod mill reheat furnace, in United States, and by Outotec GmbH, an order for dual fuel combustion system for a new iron ore pelletizing plant in Orissa, India. The Group’s skills in the retrofit market were also acknowledged through an order received from Aleris Aluminium Koblenz GmbH for the upgrading of a melting furnace rated at forty tonnes per hour which will enable the client to improve its energy efficiency and to supply products of higher quality. Lastly, the market success of the Reburnflam® duct burner developed by Fives Pillard was reiterated during the year with a series of orders, including one from Hyundai Heavy Industries in South Korea to equip seven combined-cycle lines for the Riyadh conventional power plant in Saudi Arabia.

Fives Cail, internationally recognized technologies for sugar-refining and bioenergy2010 saw further confirmation of the move observed in recent years towards convergence between the sugar-refining and power generation industries, with the formation of partnerships between major players, such as Tereos Internacional with Petrobras and Cosan with Shell, in order to develop biofuels and generate carbon neutral electricity. Fives Cail supports this trend by offering complete extraction plants that deliver high energy performance, as well as high-pressure membrane-wall boilers in India.The Group was also appointed to supply seven cane shredders for Venezuelan distilleries, and by Agro Industrial Pucalá in Peru to supply an In Line shredder and two MillMax® extraction mills as part of its program to boost capacity and optimize energy consumption. These proprietary technologies reduce energy consumption and even make it possible to inject excess electricity back into the power grid.

THOR, the new generation of cryogenic piston pumps

Themarkettrend forcryogenicpumps istowardsan increase inflow rates and pressures. In response to this development, Fives Cryomec AG has developed its THOR new-generation high-pressure cryogenic pump for use with natural gas. The design of this pump, which delivers net thrust of twenty-five tonnes, resulted in the filing of two new patents. The use of piston pumps is usually limited to low flow rates and pressures of several hundred bar, but the exceptional performance ofTHOR in terms of flow, efficiency and reliability opens upmarketsandapplicationspreviouslyavailableonlytocentrifugalpumps.Whatmakesthesepumpsdifferent istheirabilityto runcontinually at high flow rates.ConductedincollaborationwithMitsubishiHeavyIndustries,thepilot application for the new pump forms part of the development ofanewprocessintendedforuseinLNGtankers.FivesCryomecAGhasnowembarkedonthequalificationphaseinpreparationfortheclientapprovalrequiredbeforemakinganynecessaryadjustmentsto the design of the pump for its future mass production.

• Air Liquide: supply of exchangers and pumps everywhere in the world.

• Hamworthy KSE (South Korea) 2005-2008: supply of 31 cold boxes and 26 cryogenic pumps for the reliquefaction of liquid natural gas vapours during transport.

• EPR Flamanville 3 (France) alstom, 2007-2013: prefabrication and erection of steam and feedwater piping in the turbine hall. / areva nP, 2008-2013: design, prefabrication and erection of secondary and NSSS auxiliary piping systems.

• Framatome Olkiluoto (Finland) 2006-2010: prefabrication of primary coolant piping systems and pressurizer surge line for the EPR reactor.

• China Nuclear Energy industry Corp. (China) 2009: supply of pressurizer surge lines for 6 units for the Changjiang, Fangjiashan and Fuqing plants.

• Alstom Power Baden (Switzerland) 2008: supply of 60 postcombustion dual fuel burners for the Fujairah 2 plant in the United Arab Emirates.

• Total (Lacq, France) 2009: revamping of two industrial boilers with low NOx gas burners.

• Outotec GmbH (Germany) 2010-2012: design and supply of a dual fuel combustion system for the Bhushan Steel Power and Light's plant.

• Elwood Texas Forge (USA) 2010: design and supply of 6 regenerative forge furnaces.

• Vale S/A (Brazil) 2009-2012: design and supply of 46 special self-inspirating high efficiency gas burners and their associated systems.

• In partnership with Sutech (thailand) 2010: supply of 30 centrifugals for Bangladesh, Cambodia and Thailand.

• Agro Industrial Pucalá (Peru) 2010: supply of an In Line shredder and 2 MillMax® extraction mills.

• Petróleos de Venezuela (Venezuela) 2010: supply of 4 shredders.

KEY REFEREnCES

52

Fives Energy 2010 Overview


Financial Report 2010

www.fivesgroup.com 3

Financial report

Group activity 04

Non-financial indicators 18

Corporate governance 24

Financial and legal information 28

2010 Consolidated financial statements 31

Consolidated balance sheet 32

Consolidated income statement 34

Consolidated cash flow statement 35

Notes to the consolidated financial statements 36

Statutory Auditors' Report 64

Group activity

1. GROUP OPERATIONS IN 2010After the turbulence of 2009, and against a background of unprecedented contraction in industrial investment worldwide, Group order intake recovered strongly in 2010, rising from €727 million to €1,224 million, enabling the Group to end the year with an order book of €1,117 million, more than 34% higher than that reported at December 31, 2009 (+26% on a constant scope basis). All Group business lines (with the exception of the cement division, where the business climate remained difficult) contributed to this excellent commercial performance, more particularly the metals and automotive divisions, where order intake more than doubled in 2010, compared with 2009.

In industrialized countries, the market for industrial capital goods improved significantly, driven by the gradual recovery in ongoing maintenance expenditures (spare parts, service and replacement of small equipment items) and the noticeable improvement in trading conditions seen in sectors such as the automotive and logistics industries.

The emerging economies continued to drive Group growth, with many capacity investment projects, particularly in China, the Middle East and India. With a strong presence in all these markets, the Group achieved significant commercial successes there during the year, which together generated more than half of its total order intake.

The efforts made since the end of 2008 to adapt and optimize structural costs - while as increasing Research & Development (R&D) investments considerably - enabled the Group to report a slightly higher level of operating profit (+5%) compared with 2009, despite a level of sales 18% lower (as an automatic effect of the contraction seen in the opening order book compared with the previous year).

Its cohesion, reactivity, financial stability and technological lead in the majority of its business lines have all helped Fives to perform remarkably well throughout the turbulence caused by the global crisis over the past two years, and to emerge today very well positioned to benefit from the economic recovery.

The 2011 financial year has got off to a very promising start: commercial prospects are very well oriented and order intake should continue to increase in almost all Group business lines..

1.1 Business overview

MetalsAfter the recession of 2009, the 2010 financial year saw a significant recovery in worldwide steel production (+15%), which reversed the decline of the two previous years and set a new record of 1.4 billion tonnes (+5% compared with the previous record year of 2007). Growth in this market is being driven by emerging economies as they increase capacity for their national production resources. This trend is particularly true of China, where the national recovery plan has provided its industry with new, modern capacity for the production not only of carbon steels, but also of niche steels, such as stainless steel and silicon steel. The improved economic climate, combined with environmental and energy constraints, has also encouraged some steelmakers to upgrade their existing production capacity in the industrialized world, particularly in the United States of America (USA) and Europe. Against this background, sales in 2010 were driven mainly by the Chinese market, where a series of major orders were received from leading national steelmakers. The high quality of its technologies also enabled the Group to secure major orders in the USA and India during the year.

In the primary aluminium sector, the recovery in end markets was confirmed in 2010, as the world economy returned to growth. Demand forecasts and the steadiness seen in aluminium prices also encouraged the majority of producers to restart production, although in different ways in different parts of the world. Growth proved modest in North America and Europe, where old and less profitable facilities remained closed, with slim prospects of these facilities returning to production. Rather than upgrade their installations in these regions, the major manufacturers, led by Alcoa, have focused on investing on a massive scale in those regions where energy is cheaper and access to raw materials easier. Production therefore continues to relocate to China, India and the Middle East, where many national producers are also investing significantly. The Group has

Extract of the Report of the Executive Board to the Ordinary General Meeting on June 28, 2011

4 Fives - 2010 Financial report


consolidated its excellent position in the aluminium sector, and secured a major order from Saudi Arabia in 2010, as well as the signature of a number of large contracts with Indian producers.

Automotive & Logistics The recovery that began at the end of 2009 in the automotive industry was confirmed in 2010, albeit with regional variations. Sales grew impressively in China (which is now the world's leading market), as well as in the world's other emerging economies, particularly India and Brazil. Although still far behind its pre-crisis level, the North American market continues to rally. On the other hand, the trading environment remains less dynamic in Western Europe and Japan, where markets are coming to terms with the withdrawal of most of the governmental stimulus plans introduced in 2009. These conditions have encouraged car manufacturers to accelerate their pace of investment in emerging economies (especially China), whilst programs to upgrade remaining production sites have been launched in North America. At the same time, the approaching deadline for the next stage of European emission reduction regulations (EURO VI) has triggered new engine development programs (with the focus on hybridization), automatic gearbox development programs (double-clutch robotized transmissions) and moves to introduce a new air conditioning refrigerant (HFO). As in other industry sectors (such as aerospace, transportation and energy), market growth is therefore being driven by the pace of development in emerging economies and the accelerating introduction of sustainable development initiatives. After two years of intense crisis, the Group has therefore returned to a more favorable trading environment since the end of spring 2010. It is in this context that order intake grew significantly in 2010, compared with the level seen in 2009 (especially in grinding technology, where Fives offers a very high-quality range of products and services), even exceeding the achievement of 2008.

In logistics, North American, European and Japanese courier companies continued to automate their sorting centers. Opportunities are also emerging in the airport market, driven by midsize airports' need for automation, and the increasing needs for security system integration. Lastly, improvements in the wider economy are creating new opportunities in distribution, which has begun to recover after having been very badly affected by the crisis. In this context, Group order intake in logistics rose to a record level in 2010 as a result of securing a number of major orders - particularly in Japan - for high-speed sorting systems, where the benefits delivered by its technology are particularly impressive.

EnergyUnderlying trends in the energy industry remain positive as a result of increasing energy demands from emerging markets, the need for high levels of energy efficiency under these circumstances of long-term leveling out of gas and oil production and the need to reduce environmental footprints. Having suffered from the downturn in the economic cycle

SALES

(€ millions) 2008 2009 2010

Sales 1,352.3 1,282.6 1,049.3

ORDER INTAKE AND CLOSING ORDER BOOK

(€ millions) 2008 2009 2010

Order intake 1,289.6 727.1 1,224.0

Order book at Dec. 31 1,358.8 834.3 1,116.6

during 2009, the cryogenic equipment sector improved very significantly in 2010. In a trend driven by Asian industry and commitment to oil and gas processing projects, the return to industrial gas consumption levels higher than those seen before the crisis generated a sustained level of order intake for the Group. The industrial combustion systems segment saw a significant recovery in sales, as a result of an upturn in end-user markets (especially the USA, where the Group has a strong presence) and the need to upgrade existing capacity to meet more demanding environmental standards and address the rising cost of energy. The Group's high-quality technologies which promote energy efficiency in industrial installations contributed to the strong growth in order intake from this sector. Lastly, the high-performance piping systems segment remained buoyant as a result of nuclear industry demand driven by the construction of new power plants (in France and China) and growth in the maintenance market in a context of working life extension for existing French nuclear power plants.

CementThe economic environment remained difficult in the cement sector. After record years of new capacity investment in 2006, 2007 and 2008 (with an annual average increase of between 120 and 150 million tonnes of cement, excluding China), conditions nosedived at the end of 2008, and remain very depressed in most industrialized countries, with extremely lackluster demand, largely as a result of the sluggish real estate and construction industries. Although the end of 2010 saw a slight recovery in global production driven by Asia (especially China, India and Indonesia), Africa and the Middle East, levels remained far below those of 2008, and have not encouraged major producers to proceed with the investment projects they stopped in 2009. As a result, the market for new cement plant capacity (excluding China) is approximately 50 million tonnes, only slightly higher than the 45 million tonnes seen in 2009. Given these conditions, competition between equipment suppliers remains fierce. In the cement division, 2010 was therefore marked by an historically-low level of order intake, although the first signs of improvement in the trading environment started to appear at the end of the financial year.

1.2 Highlights

Continued international developmentAt the end of November 2010, Fives acquired Bronx International Inc. and its British subsidiary Bronx/Taylor-Wilson Ltd., a world engineering leader in the design and supply of finishing equipment and mechanical processing for pipes and tubes. The direct clients of Bronx (renamed Fives Bronx since its acquisition) manufacture steel and non-ferrous metal bars, tubes and pipes, and include major steelmakers. The end-customers of Fives Bronx operate in very diverse areas of industry, including oil, gas, high-speed rail and power transmission. Headquartered in North Canton, Ohio (United

Group activity

ORDER INTAKE BY END MARKET

(€ millions) 2008 2009 2010

Automotive/LogisticsCementEnergyMetals (aluminium and steel)Intercompany transactions

343.6262.1274.3410.4(0.8)

194.687.6

229.3216.6(1.0)

401.469.7

287.2469.2

(3.5)

TOTAL 1,289.6 727.1 1,224.0

ORDER INTAKE BY GEOGRAPHICAL AREA

(€ millions) 2008 2009 2010

Asia and OceaniaFranceThe AmericasThe Middle East and AfricaEurope (excluding France)

227.2257.5

396.3215.4193.2

213.4162.3135.6117.898.0

392.4234.8232.7243.3120.8

TOTAL 1,289.6 727.1 1,224.0

SALES BY END MARKET

(€ millions) 2008 2009 2010


355.4259.0260.8478.4

(1.3)

259.5284.2263.5475.4

0

277.0125.1285.3365.7(3.8)

TOTAL 1,352.3 1,282.6 1,049.3



States), Fives Bronx has wide-ranging sales coverage and a large installed base of equipment worldwide. Fives Bronx employs approximately 70 people, and reported annual sales of approximately $80 million in 2010. Its most dynamic markets are Brazil, Russia and Asia. This acquisition strengthens Fives Group's presence in the metals sector by expanding its product range.

An ambitious innovation policyInnovation is at the heart of Fives' strategy. In 2010, the Group once again stepped up its Research and Development efforts with a record allocation of €19.8 million, a figure that represents an increase of 8% on 2009 and nearly 30% on 2008.Current programs focus on ecodesign, process optimization and improved energy efficiency. The technologies developed by Fives reconcile high levels of energy efficiency with environmental responsibility, operational flexibility and cost effectiveness to meet the increased expectations of clients in the post-crisis environment. As in 2009, the Group patented 34 innovations in 2010, 18 of which relate to energy and environmental performance.For instance, 2010 was marked by significant advances at Fives Celes (metals division) in its R&D program to develop rapid heating of steel strip by transverse flux induction, with the commissioning of a full-scale dynamic test facility, the launch of a test program partly funded by the European Commission (as part of the Life+ project) and ADEME (the French Environment and Energy Management Agency), and the registration of the EcoTransfluxTM brand to convey the ecological and economic advantages of a technology that is also known to contribute to improving the properties of carbon and stainless steels.

Outstanding commercial successes In JanuaryFives Cinetic was awarded a contract by Renault to supply all the handling equipment for the sheet-metal and final assembly shops of its greenfield project in Tangier, Morocco. This new plant will produce 175,000 vehicles per year across a range of three models. This order follows the completion of a project for Nissan in Barcelona involving conversion work on the existing assembly line prior to the launch of the new Nissan NV 200.

Fives Nordon was selected by Areva to design and supply the pressurizer surge lines for the Taishan 1 and 2 EPR reactors in China.

In FebruaryFives Solios was awarded a new contract by Vedanta to supply turnkey firing and process control systems for four anode baking furnaces at the Balco aluminium plant in Korba. This latest commercial success positions Fives Solios as a major player in the Indian market, and demonstrates the competitiveness of its offer as a result of its partnership with local subsidiary company Fives India Engineering & Projects Pvt. Ltd.

SALES BY GEOGRAPHICAL AREA

(€ millions) 2008 2009 2010


260.9264.7236.8355.7234.2

262.2208.8303.7366.9141.0

306.3205.4218.8193.2125.6

TOTAL 1,352.3 1,282.6 1,049.3

ORDER BOOK BY END MARKET

(€ millions) Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010


170.5321.0261.9606.5

(1.1)

108.8123.7228.6377.0(3.8)

242.469.5

234.8571.6(1.7)

TOTAL 1,358.8 834.3 1,116.6

ORDER BOOK BY GEOGRAPHICAL AREA

(€ millions) Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010


295.0186.7305.3419.1152.7

277.3140.0135.0170.5111.5

402.7169.5186.4236.4121.6

TOTAL 1,358.8 834.3 1,116.6

In MarchBaosteel, China's leading steelmaker and largest Fives Stein client, once again demonstrated its trust in the Group with an order for two horizontal furnaces to equip new grain-oriented silicon steel annealing lines.

In AprilNine years after commissioning the first bright annealing line at its Baoxin plant in Ningbo, Baosteel awarded Fives DMS the contract to supply a second bright annealing line which will produce 80,000 tonnes of austenitic and ferritic stainless steel strips per year.

Following on an order placed for a slab reheating furnace at the beginning of 2010, Handan Steel ordered two more billet reheating furnaces from Fives Stein's local subsidiary, confirming the superiority of Digit@l Furnace® technology over competitive technologies in China.

Fives Stein was also awarded a record contract for twelve flat glass lehrs by Chinese glassmaker Xinyi Glass. This order includes eight complete lehrs for photovoltaic glass production lines.

In MayJISCO (Jiuquan Iron & Steel Co.), China's third-largest producer of stainless steel, signed a major contract with Fives DMS for the supply of four 20-roll cold rolling mills for the second phase of its plant expansion project.

PSA Peugeot Citroën appointed Fives Cinetic to construct the assembly workshop for the Kaluga (Russia) production facility it shares with Mitsubishi Motors Company. With the capacity to produce 160,000 vehicles per year, this assembly shop will be equipped with the innovative CFCFrixLine overhead friction conveyor developed and patented by Fives Cinetic.

Fives Cinetic was also awarded a contract to automate seven sorting centers by MNG Kargo, one of Turkey's leading express courier companies, which also provides national delivery services for FedEx Express. These centers are located in the most densely populated and industrialized areas of the country. MNG Kargo has chosen to adopt Fives Cinetic's cross belt sorting technology to provide automated sorting of packages weighing up to 80 kg and measuring up to 1.5 meters in length at a rate of 10,000 packages per hour in its largest sorting centers, and 4,000 packages per hour in its smaller facilities.

In JuneHaving been appointed by TISCO (Taiyuan Iron & Steel Co.) to produce the world's largest hot annealing and pickling line (the so-called ‘jumbo line’ commissioned in 2008), Fives DMS was once again selected by this client to supply a stainless steel bright annealing line that will have the highest production capacity in the world (150,000 tonnes per year).

Already the world's leading producer of stainless steel, TISCO will, as result of this new facility, become a world leader in ‘bright annealed’ products.

At the same time, Fives DMS was also contracted by TISCO to supply a cold rolling mill dedicated to the production of ‘bright’ strip. Performance profiles were determined on the basis of a rolling mill previously supplied by Fives DMS, which has delivered total satisfaction in terms of production, reliability and quality. The new rolling mill breaks all records, and will be the world's largest in terms of production capacity at 133,000 tonnes per year, and in terms of rolling speed at 1,200 meters per minute.

Fives Nordon signed a framework agreement with EDF CIPN for the P’4 series of nuclear power plant reactors, in France. For a five-year period, Fives Nordon will carry out the nuclear island standards compliance and performance upgrading conversion works for the 12 units concerned.

Fives Cryogenie was awarded a contract by Daqing Petrochemical Company to supply seventeen heat exchangers, two cold boxes and eight separation drums for its Daqing site in China. As part of the key projects set out in the Eleventh Five-Year Plan of Heilongjiang Province and its own development plans, Daqing Petrochemical Company has made the decision to boost the ethylene production capacity of this site to 1.2 million tonnes per year. Its presence in China positions Fives Cryogenie as the only local supplier with European expertise.

In August Fives Cinetic was awarded an order by Chrysler in the USA for the conversion of an engine assembly line, crankshaft, cylinder head and cylinder block machining lines and automated storage and retrieval systems (AS/RS).

In OctoberThe heating quality and energy and environmental performances delivered by its Digit@l Furnace® technology enabled Fives Stein to win the order for two slab reheating furnaces in the USA for Allegheny Ludlum Corp., the world-leading producer of a broad range of carbon steel, stainless steel and high value-added special steel.

In NovemberYamato Transport appointed Fives Cinetic to design and supply a fully-automated sorting center as part of its project to construct a new logistics terminal adjoining Haneda International Airport in Tokyo. The system will incorporate three cross belt sorters and six ‘slide’ sorters to provide the capacity to handle 66,000 items per hour, using a highly adaptable operating mode to cope with peak flows and volumes in order to minimize distribution times for items routing to over 200 destinations.

Group activity



Fukuyama Transporting, one of Japan’s leading transportation operators, awarded Fives Cinetic a contract to supply a sorting system incorporating a cross belt sorter capable of handling 11,000 items per hour for 73 destina-tions. The system will be installed in the company’s new logistics terminal.

In DecemberIn mid-2010, Ma’aden Aluminium Company, the joint-venture formed by the state-owned Saudi Arabian Mining Co. and Alcoa, began construction work on an industrial complex whose first phase includes an aluminium smelter and rolling mill, to be followed by a second phase comprising a bauxite mine and an alumina refinery. Once completed, this facility will be the largest integrated aluminium production facility in the world. As part of this project, Ma’aden awarded Fives Solios a turnkey contract in 2010 to supply two green anode plants (each with a capacity of 40 tonnes per hour) and a liquid pitch unloading and storage terminal. Fives Solios also received orders, scheduled to be included in the order book during the first half of 2011, for the four gas treatment centers and fifteen melting and holding furnaces to be used for the production of aluminium billets, slabs and ingots. The plant will produce 740,000 tonnes of aluminium per year using two lines of 360 electrolysis pots. This major success consolidates the leading position of Fives Solios in the three key sectors of the primary aluminium industry: carbon, electrolysis and casthouse.

As part of its contribution to the construction of the Flamanville EPR reactor, Fives Nordon received an additional order from Areva for the Inconel buttering of sump suction lines.

Main deliveries in 2010In the steel sector, 2010 was punctuated by the commissioning of a large number of new lines and equipment items for leading clients.

In the process lines segment, one galvanization line and two annealing lines were commissioned for China's leading steelmaker Baosteel. The same client also accepted delivery of a ZR 21 stainless steel rolling mill for its stainless steel division (BSSB) on successful completion of high-speed performance tests (1,000 meters per minute). Also in China, the Group achieved acceptance of the final ZR stainless steel rolling mill used by its client Angang (Anshan Iron & Steel Co.) to produce grain-non oriented (GNO), grain-oriented (GO) and - in the future - high permeability (HiB) grain-oriented silicon steel. Already established as a leading player in GNO silicon steels, Angang’s new capacity for GO and HiB steels (the most difficult silicon steels to manufacture) positions the company as the number three in this segment of the Chinese market behind WISCO (Wuhan Iron & Steel Co.) and Baosteel. Three horizontal galvanizing lines were also delivered in Russia, Taiwan and Indonesia.

The ability of the Group to deliver high-performance implementation of these lines within very short lead times demonstrates not only the quality of its thermal and mechanical technologies, but also its ability to monitor and execute large contracts.

In the reheating segment, a number of slab reheating furnaces were commissioned during the year, including those for Isdemir and Çolakoğlu in Turkey (walking beam furnaces of 400 and 450 tonnes per hour respectively), for Essar in India (two furnaces of 250 tonnes per hour) and for CST in Brazil (a 400 tonne per hour furnace).

In the glass sector, 2010 saw the commissioning of a float glass production line rated at 600 tonnes per day in Turkey, as well as a complete float glass production line (air pollution control, melting furnace, tin bath and annealing lehr) with a capacity of 550 tonnes per day in India.

In the aluminium sector, 2010 saw the completion of commissioning work on the various plants and equipment supplied to the new Qatalum aluminium production plant in Qatar, with the acceptance of the three potline gas treatment centers, a fume treatment center for the anode baking furnaces and eleven melting and holding furnaces in the casthouse. Fives Solios also completed the process of commissioning an electrolysis bath treatment and cooling facility for Emal in the United Arab Emirates.

In the cement sector, Fives FCB commissioned the new 4,000 tonne per day line for the Titan cement plant in Beni Suef, Egypt. The remarkable achievements of this project were rewarded by DuPont, one of the world leaders in industrial safety and accident prevention, through its prestigious DuPont Safety Award. Fives FCB also received provisional acceptance for the entire Thai Nguyên cement plant in Vietnam, which also has a production capacity of 4,000 tonnes per day . This totally new plant is equipped with the latest technologies developed by the Group to enable the production of high-quality cement, whilst dramatically reducing water and energy consumption as well as polluting emissions.

1.3 Trends and outlook

A positive trading outlook at the start of 2011The Group began 2011 with an order book of €1,117 million, which is 34% higher than last year and offers excellent visibility of workload levels in most business lines (with the exception of the cement division which reported a lower order book at December 31, 2010, although the prospects for order intake are much better going forward).

The order book reported for the end of the 2010 financial year includes the major commercial successes of the year (especially in China, Saudi Arabia and India), the uncompleted portion of major contracts in Qatar and

Mexico, as well as a large number of smaller contracts spread across all regions and business lines. The Group therefore holds a diversified order book still low in the cement division, but very strong in the metals, automotive and energy divisions.

The 2011 financial year therefore starts from an excellent position. The trading outlook appears positive in almost all business lines, driven largely by capacity investment projects in emerging economies in general, and China, India and the Middle East in particular. Although take-up of industrial capacity is rising overall, demand for industrial plants remains focused chiefly in the emerging economies that represent the main drivers of growth for the Group. Opportunities for upgrading existing installations are also emerging in the industrialized countries, where the energy efficiency and environmental performance of equipment manufactured by the Group put it in a strong position. After the vigorous recovery seen in 2010, order intake could increase significantly in 2011.

The economic crisis has triggered far-reaching changesNevertheless, uncertainties remain in a macro-economic environment which, despite the significant improvement seen since the beginning of 2010, continues to be characterized by multiple risks and imbalances, including the very high level of government debt in OECD countries (and more particularly the fragility of certain European economies), rising raw materials costs and high volatility in currency exchange rates. The social tensions and geopolitical changes now confronting some emerging economies add a further level of uncertainty.

The economic crisis has also triggered far-reaching changes, with weaker market players revealing underlying fragility, whilst more adaptable companies with robust finances, global coverage and the strongest technologies are gaining an undeniable advantage as the market reconfigures itself. With market shares showing overall growth, Fives is well prepared to benefit substantially from these new trends which favor size, financial robustness and technical expertise.

Since the economic crisis struck, large clients have been extremely cautious and selective about embarking on major capital expenditure projects. Decision lead times are longer, and significant projects are examined in detail to justify their profitability, largely as a result of the significant construction cost increases seen in fast-growing countries. In a context of high volatility in the wider economic environment of an increasingly interdependent world in which events like sovereign debt crises and shifts in national monetary policies are likely to have repercussions on a global scale, decision-making processes are beset by increasing uncertainty right up to the point when the order has been confirmed.

Excellent long-term prospectsThe medium- and long-term prospects for the Group are solid. The demographic growth, urbanization, infrastructure needs and improving levels of education seen in emerging economies are powerful underlying positive factors. Mature national markets are showing considerable potential in terms of upgrading existing installations, as demand rises for increased energy efficiency and reduced environmental footprints.

In order to achieve levels of business consistent with its ambitions and potential, the Group is more committed than ever to the two key strategic actions that will characterize its growth in future years:

Continuing and intensifying the commitment to innovation and R&DIts distinctive technological strengths are central to the success of the Group. The very strong competitive positions now occupied by Fives in the majority of its business lines are directly related to the development of innovative solutions that offer clients a real competitive edge. The R&D budget has doubled over the past five years, and will increase again significantly in 2011 as part of improving the performance of existing facilities and developing tomorrow 's solutions. Strengthening the Group’s commercial and operational structure in the world’s leading emerging economies With their strong economic growth and considerable need for industrial equipment, the emerging markets have become the key growth driver for the Group, which generates more than half of its sales in these markets and is committed to further strengthening its local presence (notably in the BRIC nations but also in Africa) in order to extract maximum benefit from the potential they offer.

Key challenges for 2011Under the current circumstances, the key challenges for the coming year are:

in terms of strategy, to intensify the Group’s innovation policy with the goal of reducing time-to-market for distinctive and breakthrough technologies, and ensuring that its range of products and services continually adapts to meet the needs of markets as they reconfigure themselves in the post-crisis world;

in terms of commercial activity, to put in place the right conditions for replenishing and increasing the order book (especially in the cement sector, where the order book at the end of the 2010 financial year remained substantially below that of other business lines) by capitalizing on the excellent competitive positions occupied by the Group;

in terms of operations, to ensure the best-possible fulfillment of existing contracts against a background of volatile foreign exchange rates and rising raw materials costs.

Group activity



2. FINANCIAL PERFORMANCE

2.1 Accounting principles and consolidation scope

Three companies that continue the business activities of their parent companies were consolidated as of January 1, 2010: Fives Pillard (Tianjin) International Trading Co., Ltd. (in the cement sector in China), Fives India Engineering & Projects Private Limited (in the aluminium sector in India) and Fives Stein Inc. (in the metals sector in the USA). PSA 2000 Saudi Arabia Ltd., which was formed at the end of the year in the context of the Saudi Arabian projects, has also joined the Group consolidation scope. Lastly, Cinetic Decker Filling K.K. (acquired on December 15, 2009), Fives Bronx, Inc. and Fives Bronx Ltd. (acquired on November 30, 2010) joined the consolidation scope on January 1, 2010 and December 1, 2010 respectively.Like-for-like analyses exclude those companies that were consol-idated as a result of external growth.

2.2 Summary of results

SalesGroup consolidated sales for 2010 were €1,049 million. On a like-for-like basis, the total is €1,029 million, reflecting a 20% decline from the figure for 2009. This trend is directly attributable to the lower opening order book (-39% compared with the previous year), which was only partly offset by the year’s order intake (which was especially strong in terms of small and medium-sized orders, showing an increase of 34%). Group sales also benefited from a favorable exchange rate effect of €20 million in 2010 compared with 2009.

Operating profitOperating profit for the year was €59.2 million (€58.7 million on a like-for-like basis), reflecting an increase of 5.4% on the 2009 figure (4.5% on a like-for-like basis), despite lower sales. The main reason for this trend was the particular balance between small and medium-sized orders and major contracts (which although significant in sales terms, deliver lower margins). As a result of the global economic crisis, the 2009 financial year saw a significant contraction in the volume of small and medium-sized orders, thereby increasing the contribution made by major contracts to overall Group business volumes. In 2010, the recovery in small and medium-sized orders, combined with a very low opening order book (as few major contracts had been taken in 2009), resulted in the rebalancing of business activities, thus improving the Group's margin rate. After the atypical year experienced in 2009, operating profitability therefore returned to its 2008 level. The Group also benefited from a favorable exchange rate effect of €1.3 million in 2010 compared with 2009.

SUMMARY OF CONSOLIDATED FIGURES

(€ millions) 2008 2009 2010

Sales 1,352.3 1,282.6 1,049.3Operating profit before depreciation and amortization (EBITDA) 88.7 71.2 75.9Operating profit 74.6 56.1 59.2Profit before exceptionalitems and income tax 86.6 51.5 62.0Net exceptional income (expense) 3.0 (8.4) (4.2)Profit before income tax 89.5 43.0 57.8Profit of consolidated companies beforegoodwill amortization 61.3 27.1 40.2Profit for the year 35.2 21.2 34.0Net profit, Group share 33.8 20.2 33.5Shareholders’ equity including net profit, Group share 182.2 181.3 222.8

The metals and cement divisions remained the largest contributors to Group performance in 2010. The energy and automotive divisions, whose contribution was significantly reduced in 2009, both strongly progressed during the year.

At €24.8 million, operating profit for the metals division was higher than that reported for 2009 (€20.4 million). Against a background of slower business activity - especially in the first half of the year – the Group benefited from the successful commissioning of several installations in the steel industry (particularly in China), in the aluminium industry (in Qatar and the United Arab Emirates) and in the glass industry (in Turkey and India). Operating profit for this division also reflects the favorable effect of withdrawing from a defined benefits pension scheme in the United Kingdom and the resolution of a long-standing commercial dispute. The contribution of Fives Bronx (consolidated with effect from December 1, 2010) to divisional earnings is not significant due to purchase price allocation effects.

The €16.4 million operating profit reported by the cement division was 20% lower than the figure for the previous year (€21.4 million). The Group suffered the consequences of the low level of orders received since mid-2008 in what has been a particularly difficult economic environment. Nevertheless, the division's business level held up well, over the year, as a result of completing the final phases of three major contracts in Mexico, Egypt and Vietnam, and sustained demand from the Chinese market for burners and calcination systems.

Operating profit for the energy division was €13.7 million, reflecting an increase of over 50% compared to 2009 (€9.1 million). However, this trend was not consistent across all divisional business sectors. The performance of this division was driven by strong growth in sales of industrial combustion systems (the contribution of which rose by almost 95%) and, to a lesser degree, sugar refining equipment, but remained affected during the year by the contribution made by the nuclear piping systems segment, which suffered as a result of difficulties encountered on certain construction sites.

The automotive/logistics division's operating profit was €13.0 million, reflecting growth of nearly 90% over the previous year (€6.9 million). After a very difficult year in 2009 (against a background of depressed economic activity), the Group has benefited from the strong business recovery seen in 2010, particularly in the world’s industrialized nations. Furthermore, the measures undertaken since the crisis began have led to optimize cost structures and to reduce the division’s break-even point. Lastly, Cinetic Decker Filling K.K. (acquired at the end of 2009 and consolidated with effect from January 1, 2010) performed in line with expectations.

Net financial income Net financial income was €2.8 million, and increased significantly compared with the previous financial year (-€4.7 million). This variation

essentially reflects the recognition in 2010 of an exchange rate gain of €5.6 million (including €4.2 million of unrealized gain) stemming from the way in which the acquisitions of Fives North American in 2008 and Fives Bronx in 2010 were structured, whereas a loss of €1.8 million was recognized in 2009. Since these acquisitions were financed by dollar loans issued by Fives to its American subsidiaries, the Group's financial income is automatically impacted by the euro/dollar parity over the life of these loans. The cumulative exchange rate gain on these transactions recognized at the end of 2010 was €14.0 million (including an unrealized gain of €10.3 million).

Net exceptional income (loss)

(€ millions) 2008 2009 2010

Net restructuring costs (2.2) (7.9) (3.8)Net impact of disposals of property, plant and equipment, intangible and financial assets 6.0 (0.3) 0.7Profit (loss) of newly-consolidated companies 0.4 0.2Other (0.8) (0.7) (1.3)

TOTAL 3.0 (8.4) (4.2)

Net exceptional income for 2010 represented a loss of €4.2 million. It however stood at a higher level than the 2009 figure (-€8.4 million), which included the effects of restructuring measures undertaken by the Group, the majority of which focused on the automotive division.

Net profitThe total income tax expense (current and deferred) for the financial year was €17.6 million, and therefore higher than the figure for 2009 (€15.9 million). It includes €13.9 million of current tax (with €6.9 million relating to the French tax group, and the remaining €7.0 million attributable to both French companies not included in that tax group and foreign companies), and a negative change in deferred taxes of €3.7 million.After goodwill amortization totaling €6.2 million (compared with €5.9 million in 2009), the net profit attributable to the Group was €33.5 million. This figure represents a significant increase (+66%) over that for 2009 (€20.2 million).

Group activity



2.3 Contribution of each division to Group results

METALS (ALUMINIUM AND STEEL)

(€ millions) 2008 2009 2010

Order intakeOrder book at Dec. 31SalesOperating profitEmployees at Dec. 31

410.4606.5478.422.1

1,344

216.6377.0475.4

20.41,342

469.2571.6365.7

24.81,377

The activity: the metals division supplies key processes and equipment, mainly for aluminium and steel production. For aluminium, the equipment covers key manufacturing processes in the carbon, electrolysis and casthouse sectors. All this equipment is marketed under the Fives Solios brand name.In steel, the Group has both mechanical and thermal expertise and supplies rolling mills, large capacity reheat furnaces, surface treatment lines as well as finishing equipment and mechanical processing for pipes and tubes. The division also serves the glass industry where its thermal technology has found new applications. This division’s activities are carried out under the Fives DMS, Fives Stein, Fives Celes and Fives Bronx brand names in steel and under the Fives Stein brand name in the glass sector.

In the aluminium sector, the Group benefited from the strong recovery in end-user markets and the increase in investments. The post-crisis configuration of the aluminium market also confirmed the underlying trend of the world's leading production centers gradually migrating away from Western Europe and the USA to those regions of the world where energy is cheaper and raw materials are easier to obtain. Against this background, Group sales in 2010 were chiefly realized on large-scale orders in the Middle East and India. Fives Solios was awarded a series of major contracts by Ma’aden (the joint venture operated by the state-owned Saudi Arabian Mining Co. and Alcoa) for the supply of two green anode production plants, a liquid pitch terminal, four gas treatment centers and fifteen melting furnaces as part of an industrial complex construction project in Saudi Arabia. The orders for the green anode plants and liquid pitch terminal were booked at the end of 2010, with the remaining contracts scheduled to be booked during the first half of 2011. In India, major orders were also received from Vedanta (for the supply of turnkey firing and process control systems for four anode baking furnaces) and Hindalco (for the supply of a green anode plant and firing systems).

In the steel sector, although 2010 was marked by a significant recovery in global production, market growth remained driven by capacity investments in emerging economies, and especially China. As a major player in this market, Fives was therefore able to secure large-scale orders from a number of leading national steelmakers, most notably JISCO (four stainless steel rolling mills), TISCO (a bright annealing line and rolling mill), Baosteel (two furnaces for silicon steel annealing lines and a bright annealing line) and Handan Steel (two Digit@l Furnace® reheating furnaces), confirming its market-leading position in the cold rolling of stainless steel, vertical furnaces for galvanizing lines and continuous annealing of carbon steels. The Group also benefited from a number of opportunities in industrialized countries, and particularly in the USA with the award of a large-scale order from Allegheny Ludlum Corp. to supply two Digit@l Furnace® reheating furnaces. Lastly, the acquisition of Fives Bronx strengthens the Group’s presence in the metals sector by expanding its product range.

In the glass sector, business remained buoyant in the flat glass segment, especially in China where production capacity continued to grow. In other segments, demand began to rise only at the end of the year. In a still difficult trading environment, the Group successfully established its position in growing sectors requiring special expertise, such as glass for flat screens and photovoltaic applications, and was able to secure a major order to supply twelve lehrs for one Chinese glassmaker, eight of which will be used to produce glass for photovoltaic panels.

In the context of sustained commercial activity, order intake for the division more than doubled in 2010, and even exceeded the record level reported for 2008 (+14%). Conversely, sales fell significantly compared with 2009 (-23%). This trend is directly attributable to the lower opening order book (-38%), which was only partly offset by order intake for 2010. Nevertheless, the year saw the successful commissioning of a large number of lines and installations in the steel industry (in China, Turkey and Russia), in the aluminium industry (in Qatar and the United Arab Emirates) and in the glass industry (in Turkey and India).

At €24.8 million, the good level of operating profit generated by this division also reflects the favorable effect of withdrawing from a defined benefit pension scheme in the United Kingdom and the resolution of a long-standing commercial dispute. Excluding these effects, and despite lower business levels, the division was able to maintain a level of operating profitability consistent with previous years.

The good commercial performance achieved in 2010 enabled the Group to refurbish its order book after the sudden stop experienced in 2009. In the aluminium segment, this factor, combined with the order intake already confirmed for 2011 (the Ma’aden orders for gas treatment centers and melting furnaces referred to above), and the presence of the Group in those

regions where the aluminium market is performing best (Middle East and India), gives Fives Solios a very high level of visibility in terms of business activity and workload for 2011. In steel, against a background of expected recovery in consumption, the most active markets for the Group remain those of emerging economies, and particularly China, where its presence and competitive position are widely recognized. The commercial successes achieved in 2010 in the fast-growing high value added steel segment (mainly stainless and silicon steels) and the performance of equipment manufactured by the Group to address increasingly strict environmental and energy consumption constraints could open the way for further attractive opportunities in 2011.

AUTOMOTIVE/LOGISTICS

(€ millions) 2008 2009 2010


343.6170.5355.4

24.71,907

194.6108.8 259.5

6.91,694

401.4242.4277.013.0

1,710

The activity: the automotive division designs, manufactures and installs equipment, integrated tooling systems and automated production systems for the automotive industry. In logistics, the Group offers an extensive range of automated sorting systems. All these items of equipment and systems are marketed under the Fives Cinetic brand.

In the automotive sector, the market emerged profoundly changed from the 2009 crisis. Growth strongly resumed in the emerging economies which have continued to lead the way by building new production capacity, led by China, and to a lesser degree, India and Brazil. In industrialized countries, the policies aiming at rationalizing and consolidating production capacity started in previous years continued in 2010, alongside the emergence of new projects to develop technologies that are more eco-friendly, with the emphasis on automotive engines: hybrid engines and new types of internal combustion engine.

In tooling systems, business volumes recovered vigorously, not only in the emerging economies (driven by local and international automotive manufacturers), but also in the United States, as the industrial reorganization plans introduced by General Motors and Chrysler in 2009 continued, and in Europe, with the development of new resources to produce more fuel-efficient engines, especially at Volkswagen and PSA Peugeot Citroën. This sector was also supported by the energy sector (power generators). However, business was less dynamic in transmissions.

In automated production systems, the Group’s subsidiaries saw business levels increase in national markets thanks to ongoing powertrain replacement programs in the United States (orders for assembly lines at General Motors and Chrysler) and the development of new engines in Europe (order for crankshaft machining line mechanization and prismatic component washing systems for PSA Peugeot Citroën’s EB engine). Manufacturing industry activity has resumed with the securing of a number of orders for collaborative robotic units (Trusafe). The recovery has also benefited the automated handling segment, which, after two particularly thin years, managed to secure orders for complete conveyor systems for final assembly shops at Renault (the Tangier plant in Morocco) and PSA Peugeot Citroën (the Kaluga plant in Russia).

In fluid filling and sealing systems, the recovery began to make itself felt rather later in the year. The market was driven essentially by midsize systems in China and India prior to the appearance in the fall of the first projects for HFO fillers (HFO is the new refrigerant introduced to replace the current fluoridated refrigerant), with orders coming from Honda and Audi. The integration of Cinetic Decker Filling K.K. (acquired at the end of 2009) also helped the Group – as intended – to strengthen its position with Japanese car makers in Asia.

In automated sorting systems (logistics), North American and European courier companies continued the process of automating their sorting centers. As a result, the Group received large-scale orders from the Swedish post office and a leading express courier services provider in Turkey. Market prospects have improved significantly in Japan, where the Group boasts a dominant position and was awarded two major projects to supply high-speed sorting centers for Yamato Transport (as part of its logistics terminal adjoining Haneda International Airport in Tokyo) and Fukuyama Transporting. These orders underline the substantial success achieved in this market by the cross belt technology developed and marketed by Fives Cinetic, which is particularly effective in high-speed sorting applications.

It was in this context that annual order intake more than doubled year-on-year to exceed €400 million: not only did the division achieve a level of business higher than that for 2009, but it was also able to rebuild its order book, which had been particularly low at the start of the year. After a difficult year in 2009, the measures put in place since the onset of the crisis to optimize the division’s cost structures and lower its break-even point are now paying off. Thus, even though it has yet to return to its pre-crisis level, operating profit for the division almost doubled in one year, and its operating profitability improved significantly compared with the previous financial year.

Its substantial order book, good commercial visibility in most of the division’s markets, and ongoing efforts to further improve its operating profitability bode very well for the Group in the year ahead.

Group activity



CEMENT

(€ millions) 2008 2009 2010


262.1 321.0259.0

17.9505

87.6123.7284.2

21.4510

69.769.5

125.1 16.4509

The activity: the cement division’s offer ranges from supplying isolated equipment such as burners (marketed under the Fives Pillard brand name), grinders and materials separators, to complete grinding shops and turnkey cement plants (under the Fives FCB brand name).

The economic environment remained difficult in the cement sector. Although the end of 2010 saw a slight recovery in global production driven by Asia (especially China, India and Indonesia), Africa and the Middle East, levels were still far below those of 2008, since the market for new cement plant capacity (excluding China) remained on a par with that of 2009. As in the previous year, this recessionary trading environment held back Group commercial activity, with an almost-total absence of major projects (for entire cement plants) and much lower levels of after-sales business (spare parts and services) and individual equipment sales, reflecting the low level of use being made of production plants. This environment also affected sales of burners and ore calcination and drying systems. Fives Pillard, which offers particularly high-performance technology in this area, nevertheless succeeded in generating order intake consistent with the level seen in 2009, thanks to a number of commercial successes in the Chinese market. Against this background, 2010 was marked by an historically low level of cement-related orders for the Group.

In operational terms, divisional sales fell substantially in 2010 under the combined effect of a low opening order book and an equally low level of order intake during the year. However, business levels were supported by the completion of the final phases of three major contracts: two 4,000 tonne per day cement plants, one for Titan in Egypt and another one for Thai Nguyên in Vietnam (for which Fives FCB obtained acceptance in 2010), as well as a 3,500 tonne per day cement plant for Holcim Apasco in Mexico (where commissioning began at the end of 2010 and will continue through the first quarter of 2011) featuring the very latest technologies developed by the Group for the cement industry. Operating profit showed a less marked decline than sales, as a result of the Group’s ability to manage and execute contracts and the quality of the technologies it delivers.

The market for additional cement production capacity should grow in the medium term, but seems likely to remain far below the record levels seen between 2006 and 2008. Contraction of the market is inevitably accompanied by increased competition, with the result that the Group is coming head-to-head not only with its traditional European competitors, but also with Chinese competitors that have a more aggressive pricing policy. The Group therefore enters 2011 against the background of a still uncertain market combined with an historically low opening order book. Nevertheless, the first signs of recovery are visible and hold out the hope of a possible improvement in commercial prospects. In fact, Fives FCB was awarded a contract in December 2010, which came into force at the begining of 2011, to expand the capacity of a white cement plant in Saudi Arabia. Other major plant project opportunities may emerge during the year in fast-growing markets, such as India, Brazil, Africa and the Middle East.

ENERGY

(€ millions) 2008 2009 2010


274.3261.9260.8

18.01,857

229.3228.6263.5

9.11,867

287.2234.8285.3

13.71,953

The activity: the division designs and supplies a variety of industrial equipment for the energy sector (in particular nuclear piping, cryogenic equipment for hydrocarbon processing and air separation, high-performance combustion systems and bioenergy equipment), which is marketed under the Fives Nordon, Fives Cryogenie, Fives North American and Fives Cail brands.

Underlying trends in the energy industry remain very positive as a result of increasing energy demand from emerging economies, the need for high levels of energy efficiency against the background of long-term leveling out of gas and oil production and the need to reduce environmental footprints.

In the area of high value-added industrial pipes, the market remains promising, driven particularly by new construction and maintenance demand from the nuclear industry. In this context, Fives Nordon has been awarded new orders for the EPR reactors of Flamanville (by Areva and Alstom) and Taishan 1 and 2 (by Areva), as well as major maintenance contracts, including one multi-year agreement covering five nuclear power plants operated by the French power generator EDF. However, current construction work on new power plants is proving challenging and having a negative effect on Group performance, as a result of

the re-launching of an industry that has largely been dormant worldwide in recent decades.

In the area of cryogenic equipment, 2010 was marked by the recovery of high-growth sectors for the Group, especially oxygen (for steelmakers and synthesis gases) and ethylene production. As a result, order intake was double that reported for 2009. In the steelmaking and synthesis gas sector, Air Liquide contracted Fives Cryogenie to design and manufacture heat exchangers and cold boxes for a range of projects in China, India and Russia. In the ethylene sector, contracts to expand existing capacity were won in China (with Daqing Petrochemical Company) and the Middle East. Air Liquide also confirmed its order for the exchange line intended for the world’s largest helium purification and liquefaction plant in Qatar.

In the area of industrial combustion systems, the return to confidence as the crisis gradually receded in 2010 led to a significant rise in capital expenditure in the majority of industrial markets. Against this background, order intake rose by almost 50% as a result of Fives North American’s leading position in the market and its ability to offer very high-quality technology that is particularly well suited to the especially demanding markets of industrialized countries, where high-performance combustion solutions for use in their large industrial complexes are needed. The orders secured in 2010 included those where investment is focused on upgrading existing capacity with the aim of improving energy and environmental efficiency, as well as those where investment is focused on new capacity (site extensions, greater energy generation, etc.).

In the area of sugar refining equipment and bioenergy, sugar prices trended erratically in 2010, falling as far as breakeven for major producers in May, but recovering to a level close to their 30-year high by the end of the year. In this context, Group order intake improved in most markets other than India, where sales were particularly high in 2009. 2010 was also marked by the announcement of partnerships between major players in the sugar refining and energy sectors, including Shell with Cosan, and Petrobras with Tereos. Fives Cail supports this market transition by offering complete extraction plants with high energy performance, as well as high-pressure bagasse boilers.

On the whole, energy-related order intake for 2010 was up significantly on the figures for 2009 (+25%) and 2008. The division also had a good year in terms of sales, which rose by 8% compared with 2009. Despite a low opening order book, the Group benefited from the significant recovery in industrial combustion systems (the effect of which had already started to be felt in 2010 as a result of shorter business cycles), whilst business levels remained high in the nuclear and sugar sectors as work continued on fulfilling existing contracts. Operating profitability was also ahead of 2009, driven by the performances delivered by combustion systems, but was still significantly impacted by difficulties

encountered in major nuclear projects and remained a long way short of the level seen in 2008.

The outlook for the division in 2011 is encouraging. In addition to the generally positive direction of the energy market as demand increases for energy-efficient and environmentally-friendly solutions, the Group should benefit from its very good positioning in the cryogenics and industrial combustion sectors, where the sharp recovery seen in 2010 seems set to continue in 2011, offering new opportunities for business growth, both in industrialized countries and emerging markets.

Group activity


Non-financial indicators

As an industrial engineering group, Fives is at the heart of many of the sustainable development challenges facing industry. The Group is involved in technological developments that will lead to more sustainable production processes in the future, and in addressing key social issues.

The Corporate Social Responsibility (CSR) Department created in 2008 structures, coordinates and standardizes Fives’ CSR approach in compliance with United Nations Global Compact guidelines. This department works closely with the other departments of Fives and with Group subsidiaries.

The missions of the CSR Department are:

at the strategic level, to identify and highlight those challenges that are likely to impact Group activities in the short, medium or long terms; at the operational level, to structure and develop the CSR program which is defined and re-assessed annually by the Group, while providing variants of it to all its subsidiaries, to coordinate the actions carried out and to ensure that they are effective and monitored.

Fives takes full account of the impact of its activities on stakeholders, and is committed to:

minimizing its direct environmental footprint and indirect impacts resulting from the industrial capital goods supplied by the Group; acting responsibly and fairly in its markets, and promoting social responsibility to its stakeholders; respecting individuals and providing its employees with safe working conditions, fair conditions of employment and opportunities to develop their skills and careers.

These principles are interpreted in the form of the seven key directions identified by the Executive committee in 2008.

Fives has incorporated these principles into its governance and includes them in its Group Directives and cross-functional action programs. It also encourages its subsidiaries to develop their own CSR initiatives. In 2010, the Group's non-financial reporting system was extended to include all subsidiaries. These principles are included in the Fives code of conduct distributed to all Group employees.

The following tables contain the performance indicators monitored by the Group for each topic.

1. INNOVATION INDICATORS

2008 2009 2010

R&D expenditure in millions of euros 15.2 18.4 19.8

PATENTS AND TRADE NAMES

Number of patents in forceNumber of patent families in forceNumber of first patents registeredOf which percentage of patents relating to energy and environmental performanceNumber of ‘product’ trade names registered

1,42528125

NDND

1,343308

3453%

70

1,476336

34 53%

86

For companies included in the Group consolidation scope.



The level of commitment to R&D as a proportion of sales remains high: despite the business strains imposed on the Group during 2009 and 2010 and its overarching policy of cost control, R&D expenditure continues to grow, and significant levels of investment have been devoted to the development of large-scale prototypes. Following rationalization of the patent portfolio in 2009, the increase reported for 2010 reflects the high level of creativity at work in the Group’s R&D processes.

2. PURCHASING INDICATORS

2008 2009 2010

BREAKDOWN OF PURCHASING VOLUMES BY TYPE

Functional purchases and industrial equipmentIndustrial supplies and componentsManufacturing subcontractingServicesConsortium partnersGeneral services

15%25%26%22%

9%3%

15%29%26%24%

0%6%

22%23%22%20%

3%10%

Breakdown based on purchases of major group companies.

The purchasing processes are closely related to the Group’s design, layout and production activities:

Functional purchases and industrial equipment purchases contribute to the overall technical performance of the assemblies supplied by Fives. They are designed by the supplier on the basis of technical specifications prepared by Fives teams

Manufacturing subcontracting relates to equipment designed by Fives and produced under its supervision on the basis of its own drawings and specifications: the core expertise of Fives is represented by this category

Services refer essentially to on-site assembly services and design services Consortium partners refer to those projects in which Fives acts as the lead partner and ensures that the other partners are paid for their services

Industrial supplies and components, on the other hand, refer more to purchases of ‘standard’ manufactured items (from workshop consumables to controllers). The monitoring of purchases made further progress in 2010, with the introduction of a subsidiary reporting system designed to provide clearer identification of Group purchases. In 2008 and 2009, only those purchases ordered via the ERP system were taken into account.


3. EMPLOYMENT INDICATORS

For companies included in the Group consolidation scope.

* The “starter” meeting is a personal interview held with all new employees to ensure successful induction and assess how satisfied they are in their individual jobs. In 2008, 2009 and 2010, engineers, managers and employees with equivalent functions participated in ‘starter’ interviews.

** The “career booster” interview may be initiated either by the Group Human Resources Department or individual employees in order to explore their career potential within the Group.

The human resources processes implemented by the Group in recent years continued to progress in all regions during the year, with particular emphasis on annual appraisal interviews and the ‘Cèdre’ careers management program. The updating of the Group Directives Manual in 2010 provided an opportunity to remind subsidiaries of the content and purpose of the business processes contained in the Manual via presentation meetings held in each of the major world regions where Fives is located.Following on 2009, when major efforts were made to minimize the effects of the global crisis by applying a policy of active internal mobility and intensifying the focus on training, 2010 was a year of consolidating employee numbers, whilst maintaining the training impetus.

2008 2009 2010

EMPLOYEES 5,679 5,514 5,639

Men WomenPercentage of the female population who are engineers and managers

83%17%25%

85%15%28%

84%16%28%

BY CATEGORY

Engineers and managersTechnicians, designers and supervisorsStaffOperators

31%

45%

24%

37%26%15%22%

38%26%14%22%

BY REGION

The AmericasFranceEurope (excluding France)Asia and Oceania

19%61%15%5%

16%62%15%

7%

17%59%15%

9%

SKILLS AND MOBILITY MANAGEMENT

Percentage of employees reviewed by the ‘Cèdre’ career management committeePercentage of employees receiving annual appraisal interviewNumber of people having attended ‘starter’*meetingsNumber of people having attended ‘career booster’** interviewsPercentage of employees having attended at least one training course

30%45%263NDND

30%50%130

7257%

40%63%10688

59%



Introduction to site-specific data and safety/environment statisticsIn 2009, the Group introduced a more systematic monitoring process to gather data on its Health, Safety and Environment (HSE) initiatives and indicators.

The HSE reporting scope covers more than 95% of Group employees.

2009 2010The

AmericasFrance

Europe excl. Fr.

Asia et Oceania

BREAKDOWN OF SITES BY TYPE

Total number of sites Industrial sites*OfficesCombined sites**, regional facilities and test centers

68 222125

69222126

9612

37119

17

13445

10172

* Sites with significant and permanent industrial activity.** Sites combining an office environment and an industrial or test-oriented activitiy.

4. MANAGEMENT SYSTEM

2009 2010The

AmericasFrance

Europe excl. Fr.

Asia et Oceania

Quality Certification (ISO 9001)Number of certified sitesNumber of sites engaged in certification

453

471

50

290

100

31

For many years now, Group subsidiaries have been committed to quality management systems that are regularly updated and compliant with Group Directives. These Directives were reviewed and updated in 2010, resulting in the publication of Version 4 of the Directives and Recommendations Manual.

5. SAFETY INDICATORS

2009 2010

Frequency rate (Number of lost-time accidents (>1 day) x 1,000,000 / Total number of hours worked)Severity rate (Number of days lost following accidents (>1 day) x 1,000 / Number of hours worked)

Safety Certification (OHSAS 18001 / MASE)Number of certified sites Number of sites engaged in certification

11.54

0.318

143

8.61

0.208

166

The very marked improvement seen in Group accident frequency and severity indicators during 2010 reflects the major efforts made by Group subsidiaries in this area, and particularly by Fives Nordon, which employs more than 900 people. Nevertheless, individual performances vary, and isolated instances of deterioration were seen during 2010 against a background of rapid business upturn during the year.

of which


The program introduced by the Group in 2009 started by focusing on the priority action areas identified by a series of initial audits. Fives is now taking more detailed action in the form of adoption initiatives and awareness-raising campaigns in all its subsidiaries (seminars, training sessions and support for the implementation of safety management systems). Several subsidiaries have taken steps to obtain OHSAS 18001 certification.

6. ENVIRONMENTAL INDICATORS

2009 2010The

AmericasFrance

Europe excl. Fr.

Asia et Oceania

ENERGY CONSUMPTION

Electricity in k€Electricity in MwhFossil fuels (k€)

ISO 14001 CertificationNumber of certified sitesPercentage of industrial sites certifiedNumber of sites engaged in certification

NDNDND

1236%

4

3,32846,2252,293

1441%

5

87216,809

398

333%

1

1,59820,7101,505

636%

4

5315,416295

375%

0

3273,291

94

20%0

2010 was the first year in which environmental data was gathered for the entire consolidation scope. This data focuses on energy consumption, water consumption, waste management and the environmental management system.The move towards ISO 14001 certification reflects the growing environmental awareness present in the Group’s subsidiaries.

of which


Corporate governance

THE EXECUTIVE BOARDThe Executive Board manages the company under the supervision of the Supervisory Board. The number of Executive Board members is fixed by the Supervisory Board at a minimum of two and a maximum of five. The Executive Board currently has three members and is responsible for the company’s management. It has the broadest powers to act in all circumstances in the company’s name within the limits of its corporate purpose and the powers expressly attributed to the Supervisory Board and to General Meetings of shareholders.

With regard to the Supervisory Board, the Executive Board:

Presents a quarterly report on the Group’s performance, together with a revised budget for the current year and, at each year end, an initial budget for the following year;

Within the three months following the financial year end, closes the annual company and consolidated financial statements and provides the same to the Supervisory Board;

Provides the Supervisory Board with the Executive Board report that will be presented to the Annual Ordinary General Meeting ;

Reports on specific issues that could be of major importance for the Group.

The Executive Board meets as often as the company’s interests require. In 2010, the Executive Board met on: March 29, June 25, September 22, September 28, November 29 and December 15.

Executive Board members are appointed and remunerated as provided for by law. Their term of office can be terminated by the General Meeting of shareholders or directly by the Supervisory Board. The Executive Board is appointed for a term of six years. Each Executive Board member shall cease his/her functions on the date of his/her 65th birthday.

Composition of the Executive Board

Frédéric Sanchez 51 years old, Chairman of the Executive Board.Appointed on October 3, 2002, his term of office was renewed by the Supervisory Board on September 30, 2008 and will expire on September 29, 2014Main positions held:Various positions in companies affiliated to the Fives group.Member of the Board of Directors of Compagnie des Gaz de Pétrole Primagaz.Chairman of the Supervisory Board of Cameron France Holding SAS.

Martin Duverne 54 years old, member of the Executive Board, in charge of the Energy and Logistics divisions.Appointed on October 3, 2002, his term of office was renewed by the Supervisory Board on September 30, 2008 and will expire on September 29, 2014.Main positions held:Various positions in companies affiliated to the Fives group.

Lucile Ribot 44 years old, member of the Executive Board.Appointed on October 3, 2002, her term of office was renewed by the Supervisory Board on September 30, 2008 and will expire on September 29, 2014.Main positions held:Various positions in companies affiliated to the Fives group.

THE SUPERVISORY BOARDThe Supervisory Board is composed of at least three and at most eighteen members, except in the case of a merger, in accordance with applicable law.

Composed of seven members as of the December 31, 2010, the Supervisory Board exercises permanent control over the Executive Board’s management of the company. It meets at least four times a year to review the quarterly report presented to it by the Executive Board. It checks and controls the company and consolidated financial statements presented to it by the Executive Board within the three months following the financial year end.

Throughout the year, it performs the checks and controls it considers appropriate and may request any documents it deems useful in the accomplishment of its role.

In 2010, the Supervisory Board met on: March 29, June 25, September 30 and December 15.

The members of the Supervisory Board are appointed and removed from office in the conditions provided for by law. Supervisory Board members are appointed for a term of six years expiring at the end of the Ordinary General Meeting of shareholders called to approve the financial statements for the year ended and held in the year in which the term of office expires.

The General Meeting shall determine the remuneration, if any, paid to Supervisory Board members. The number of Supervisory Board members aged 70 or over may not exceed one third of the number of Board members.



Composition of the Supervisory Board

Jacques Lefèvre 73 years old, Chairman of the Supervisory Board.Appointed on September 14, 2001, his term of office was renewed by the Supervisory Board on March 30, 2007 and will expire at the end of the General Meeting called to approve the 2012 financial statements.Main positions held:Member of the Board of Director of Société Nationale d’Investissement.

Guillaume Jacqueau 44 years old, Vice-Chairman of the Supervisory Board.Appointed on August 18, 2004, his term of office was renewed by the Supervisory Board on March 25, 2009 and will expire at the end of the General Meeting called to approve the 2014 financial statements.Main positions held:Managing Director of Barclays Private Equity France SAS.Various positions in companies affiliated to Barclays Private Equity France SAS.

James Arnell 41 years old, member of the Supervisory Board.Appointed on July 27, 2006, his term of office will expire at the end of the General Meeting called to approve the 2011 financial statements.Main positions held:Member of the Board of Directors of Charterhouse Capital Limited.Various positions in companies affiliated to Charterhouse Capital Partners LLP.

Stéphane Etroy 39 years old, member of the Supervisory Board.Appointed on July 27, 2006, his term of office will expire at the end of the General Meeting called to approve the 2011 financial statements.Main positions held:Various positions in companies affiliated to Charterhouse Capital Partners LLP.

Fabrice Georget 38 years old, member of the Supervisory Board.Appointed on July 27, 2006, his term of office will expire at the end of the General Meeting called to approve the 2011 financial statements.Main positions held:Various positions in companies affiliated to Charterhouse Capital Partners LLP.

Arnaud Leenhardt 82 years old, member of the Supervisory Board.Appointed on August 18, 2004, his term of office will expire at the end of the General Meeting called to approve the 2010 financial statements, and, at his request, it will not be renewed. Main positions held:Honorary Chairman of Vallourec and of UIMM.Member of the Board of Directors of Fenie-Brossette.

Vincent Pautet 36 years old, member of the Supervisory Board.Appointed on July 27, 2006, his term of office will expire at the end of the General Meeting called to approve the 2011 financial statements.Main positions held:Various positions in companies affiliated to Charterhouse Capital Partners LLP.

Fives’ governing bodies are assisted in their decision making by various committees, as follows:

THE EXECUTIVE COMMITTEE The Executive Board has instituted an Executive committee made up of the members of the Executive Board and the Group’s main operating managers to assist the Executive Board in its decisions.

As a body for reviewing and exchanging information, the Executive committee meets to examine specific issues and assist the Executive Board to reach decisions concerning matters falling within its powers. In particular, the Executive committee deliberates on matters of common interest and on questions of coordination between the Group’s various entities.

The Executive committee meets at least six times a year.

In 2010, the Executive committee met on the following dates: April 2, April 13, May 25, June 18, September 24 and December 10 and examined the following subjects:

Establishment of consolidated results; Human resources; Development of the Group’s international sales force; Internal Group communication; Research & Development policy; Internal control, review of the Directives and Recommendations Manual;

Social Corporate Responsibility (CSR) actions follow-up; Special financial crisis measures; 2010/2015 strategic plan.

Corporate governance

Composition of the Executive committee

Jean-Marie Caroff, 49 years old.Head of the International Development Department.

Alain Cordonnier, 50 years old.CEO of Fives FCB (cement division).

Michel Dancette, 57 years old.Head of the Corporate Social Responsability Department.

Daniel Brunelli-Brondex, 50 years old.Head of the Aluminium division (Fives Solios).

Jean-Paul Sauteraud, 59 years old.Head of the Group Legal Department.

Michelle XY Shan, 45 years old.Vice President Business Development China.

Jean-Camille Uring, 60 years old.Head of the the Automotive division (Fives Cinetic).

Paule Viallon, 45 years old.Head of the Group Human Resources Department.

THE ACCOUNTS COMMITTEEThe role of the Accounts committee is to provide information to the Supervisory Board. It is composed of the following Supervisory Board members:

Jacques Lefèvre, Chairman of the Accounts committee.James Arnell, member of the Accounts committee.Fabrice Georget, member of the Accounts committee.

The Chairman of the Executive Board, the Chief Financial Officer, the Director of Consolidation and Corporate Accounting, the Financial Control Director and the company’s Statutory Auditors also attend Accounts committee meetings.

Its role is primarily to:

examine and assess the financial documents issued by Fives in connection with the preparation of the annual and interim company and consolidated financial statements;

advise the Supervisory Board on any changes in accounting principles and policies applied;

examine the manner in which internal and external controls are performed in respect of the company’s consolidated financial statements.

The Accounts committee meets at least twice a year. In 2010, it met on March 29, on September 30 and on December 6.

THE APPOINTMENTS AND REMUNERATION COMMITTEEThe Appointments and Remuneration committee is responsible for making proposals to the Supervisory Board concerning appointments to the Executive Board and the renewal of Executive Board members’ terms of office together with the amount of their remuneration.

It is composed of the following Supervisory Board members:

James Arnell, Chairman of the Appointments and Remuneration committee;Jacques Lefèvre, member of the Appointments and Remuneration committee.

In 2010, the appointments and remuneration committee met on March 29 and October 21.



INTERNAL CONTROL The internal control procedures applied within the Group are intended:

to ensure that management actions and the conduct of transactions, as well as the conduct of the Group employees, comply with applicable laws and regulations, the guidelines issued by the Group’s governing bodies and its values, standards and internal rules, and

to ensure that the accounting, financial and management information provided to the Group’s governing bodies gives a fair and accurate picture of the Group’s activities and position.

With the prevention and management of the risks deriving from the Group’s activities and the conduct of its staff, the Group’s organization is based on:

the quality, personal involvement and accountability of management teams at each Group company;

coordination by business division; the implementation, as part of concerted action by all Group companies, of the “Directives and Guidelines Policy Book” (which was completely revised in 2010). This manual is a major risk management tool and provides the basis for the internal limitations set by the Boards of Directors of Group companies on the powers of their Chief Executive Officers and Deputy Chief Executive Officers (or equivalent position).

Every material binding offer is subjected to an in-depth review intended to avoid exposure to risks that could have a significant adverse effect on the financial outcome of the proposed contract or an adverse impact on the business or reputation of the company in a given business sector or geographic region.

Similarly, each material contract in progress is reviewed in detail at least once each quarter by the main managers of each Group company so as to make a detailed assessment of contract progress, review the technical, financial and contractual issues involved, and make any relevant decisions.

With regard to the preparation and processing of accounting and financial information, internal control is based on:

implementing professional accounting and financial procedures throughout the Fives group by building on the experience of its staff;

uniform guidelines, accounting methods and consolidation rules; a common integrated consolidation and management application, thus ensuring the consistency of accounting data and management information.

EXTERNAL CONTROLThe Company’s Independent Auditors are:

Ernst & Young Audit, represented by Marc Stoessel. Statutory Auditor, whose term of office was renewed on June 16, 2006.

Deloitte & Associés, represented by Pascal Colin. Statutory Auditor, whose term of office was renewed on June 16, 2006.

Auditex. Substitute Statutory Auditor, appointed on June 16, 2006. Beas. Substitute Statutory Auditor, whose term of office was renewed on June 16, 2006.

Their terms of office will expire after the General Meeting of shareholders which will approve the 2011 financial statements.

In the context of their legal assignment, the Statutory Auditors carry out a limited review of the consolidated interim financial statements and a detailed audit of the annual company and consolidated financial statements. The company and consolidated financial statements have, to date, been approved without qualifications.

Financial and legal information

FINANCIAL INFORMATIONShare capital

At December 31, 2010, Fives had a share capital of €24,041,732, composed of 2,185,612 fully paid-up shares with a par value of €11 each.

The shares are registered shares.

There are no other securities giving access to the capital.

Changes in the share capital

The amount of the share capital was not modified in 2010.

Share ownership

Fives’ main shareholder at December 31, 2010 was FL Investco, which held 99.99% of the share capital.

Stock options

The company had not set in place any stock option plan at December 31, 2010.

Dividends / Distribution of reserves

The Ordinary and Extraordinary General Meeting of June 19, 2008, resolved to distribute a total dividend of €12,996,648 to shareholders, corresponding to €6.00 per share.

The Ordinary and Extraordinary General Meeting of June 23, 2009, resolved to distribute a total dividend of €19,998,349.80 to shareholders, corresponding to €9.15 per share.

No dividends were paid in 2010.

LEGAL INFORMATIONCompany name and registered office

Fives - 27-29 rue de Provence, 75009 Paris - France

Legal form

A French limited company (Société anonyme) with an Executive Board and Supervisory Board since September 13, 2001.

Term

The term of the company is set at January 1, 2039, unless the company is wound-up early or the term is extended.

Trade and companies registry

542 023 841 RCS Paris

Financial year

January 1 to December 31.

Purpose (summary of Article 3 of the Memorandum and Articles of Association)

The Company’s object is, directly or indirectly, in France and abroad, all engineering activities in the areas of the production and use of energy, the liquefaction of gas, the production of aluminium, cement, glass, steel and sugar, the automotive industry and logistics and, in this context, all activities relating to the design, development of and completion of projects of all kinds in the form of the providing of services, design offices and engineering advice as well as the design, development and acquisition of all property rights, processes and all industrial manufacturing resources, entering into all licensing agreements or any agreements relating to these assets.



Distribution of profits (summary of Article 23 of the Articles of Association)

The General Meeting of shareholders shall have the power to grant each shareholder the option of receiving all or part of the dividend in cash or in shares in accordance with the applicable statutory and regulatory provisions.

Dividends or interim dividends shall be paid under the conditions provided for by law.

Conditions for the holding of General Meetings (summary of Articles 18, 19 and 21 of the Memorandum and Articles of Association)

General Meetings shall be convened under the conditions laid down by law and chaired by the Chairman of the Supervisory Board or, if unavailable, by whichever member has been designated by the Board.

The agenda shall be prepared as provided for by law.

General Meetings shall deliberate and decide in the conditions of quorum and majority provided for by law.

Voting rights shall be exercised by usufructuaries at Ordinary General Meetings and by bare owners at Extraordinary General Meetings.Shareholders may appoint proxies under the conditions provided for by law.

Decisions made by General Meetings, in accordance with the Memorandum and Articles of Association, shall be binding on all shareholders without exception. They shall be recorded in the minutes signed by the officers of the meeting and kept in a special register initialed and signed as provided for by law, held at the registered office.

Legal documents

All legal documents relating to the company and notably the Memorandum and Articles of Association, minutes of General Meetings and Statutory Auditors’ reports may be consulted by the shareholders at the company’s registered office.


2010 consolidated financial statements

Consolidated balance sheet 32

Consolidated income statement 34

Consolidated cash flow statement 35

Notes to the consolidated financial statements 36

Statutory Auditors' Report 64

Consolidated balance sheet

AssetsIn thousands of euros Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

NON-CURRENT ASSETS

Intangible assets (note 4.1) 17,260 15,809 37,546Goodwill (note 4.2) 93,860 87,528 105,617Property, plant and equipment (note 4.3) 102,131 104,099 105,239Investments (note 4.4) 9,248 13,118 8,539

222,499 220,554 256,941

CURRENT ASSETS

Inventories and work in progress (note 4.5) 131,433 98,1 7 1 102,480Trade and related receivables (note 4.6) 417,524 324,244 267,003Other receivables (note 4.7) 47,591 50,774 49,859Cash and cash equivalents (note 4.8) 237,080 230,093 215,132Prepaid expenses (note 4.14) 10,862 10,577 10,116

844,490 713,859 644,590

TOTAL 1,066,989 934,413 901,531




Shareholders’ equity and liabilitiesIn thousands of euros Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

SHAREHOLDERS' EQUITY (note 4.9)

Share capital 24,042 24,042 24,042Share premium 1,001 1,001 1,001Reserves 123,311 135,999 164,209Profit for the year 33,830 20,221 33,544

182,184 181,263 222,796

NON-CONTROLLING INTERESTS (note 4.9) 3,198 2,917 2,307

NEGATIVE GOODWILL (note 4.2) 2,076 1,815 1,554

CONTINGENCY AND EXPENSE PROVISIONS (note 4.10) 111,514 124,212 123,903

LIABILITIES

Loans and borrowings (note 4.11) 131,329 121,173 106,330Trade and related payables 304,643 246,112 171,707Progress payments received above sales (note 4.12) 216,013 160,635 168,636Other payables (note 4.13) 109,146 91,844 100,188Prepaid income (note 4.14) 6,886 4,442 4,110

768,017 624,206 550,971

TOTAL 1,066,989 934,413 901,531

Consolidated income statementIn thousands of euros 2008 2009 2010

SALES (note 4.15) 1,352,302 1,282,580 1,049,257

Cost of sales (1,096,682) (1,041,992) (805,628)

GROSS PROFIT 255,620 240,588 243,629

Selling expenses (61,924) (59,701) (63,702)Administrative expenses (101,271) (101,167) (103,647)Research and development expenses* (note 4.16) (15,226) (15,640) (17,994)

TOTAL OVERHEADS (178,421) (176,508) (185,343)

Other operating items 6,067 (1,500) 6,388Employee profit sharing and bonus schemes (6,968) (5,072) (3,337)

Operating profit before amortization and impairment of intangible assets related to acquisitions 76,298 57,508 61,337

Amortization and impairment of intangible assets related to acquisitions (note 4.17) (1,654) (1,380) (2,182)

OPERATING PROFIT 74,644 56,128 59,155

Net financial income (expense) (note 4.18) 11,909 (4,653) 2,826

PROFIT BEFORE EXCEPTIONAL ITEMS AND INCOME TAX 86,553 51,475 61,981

Net exceptional income (expense) (note 4.19) 2,980 (8,447) (4,182)Income tax expense (note 4.20) (28,280) (15,936) (17,556)

PROFIT OF CONSOLIDATED COMPANIES BEFORE GOODWILL AMORTIZATION 61,253 27,092 40,243

Goodwill amortization (26,101) (5,907) (6,200)

PROFIT FOR THE YEAR 35,152 21,185 34,043

Attributable to non-controlling interests 1,322 964 499Attributable to owners of the Group 33,830 20,221 33,544

EARNINGS PER SHARE (IN EUROS) (note 4.22) 15.48 9.25 15.35

* Since financial year 2009, research and development expenses have been shown net of research tax credits. Gross research and development expenses totaled €19,751 thousand in 2010 and €18,389 thousand in 2009.




Consolidated cash flow statement

In thousands of euros 2008 2009 2010

CASH AND CASH EQUIVALENTS AT JANUARY 1 253,005 235,407 229,813

OPERATING ACTIVITIES

Profit for the year 35,152 21,185 34,043Adjustments for: - amortization and depreciation 40,121 20,947 23,312-change in provisions for retirement obligations and long-service awards (7,620) (285) (7,666)- net gain on disposals of assets (6,237) (29) (650)- other items 4,016 (694) 3,237Changes in cash and cash equivalents from operating activities (12,595) (1,237) (18,647)

NET CASH PROVIDED BY OPERATING ACTIVITIES 52,837 39,887 33,629

INVESTING ACTIVITIES

Acquisitions of property, plant and equipment and intangible assets (27,685) (16,826) (11,656)Disposals of property, plant and equipment and intangible assets 8,843 207 89Net (increase) decrease in financial assets 2,254 (570) (57)Acquisitions of investments (84,843) (1,646) (11,628)Proceeds from sale of investments 31 521

NET CASH USED IN INVESTING ACTIVITIES (101,400) (18,314) (23,252)

FINANCING ACTIVITIES

Dividends paid (13,818) (21,244) (1,116)Net increase (decrease) in borrowings 54,662 (8,275) (25,922)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 40,844 (29,519) (27,038)

Effect of foreign currency translation adjustment (9,879) 2,352 879

CASH AND CASH EQUIVALENTS AT DECEMBER 31 235,407 229,813 214,031

NET DECREASE IN CASH AND CASH EQUIVALENTS (17,598) (5,594) (15,782)

Details of the main cash flow statement aggregates are provided in note 4.26.

1. ACCOUNTING PRINCIPLESThe consolidated financial statements of the Fives group (hereinafter “Fives” or “the Group”) have been prepared in accordance with French Law 85-11 of January 3, 1985, the enabling decree of February 17, 1986 and Regulation 99-02 of the French accounting standards board (CRC).

1.1 Changes in accounting principles and presentation

No changes to the accounting principles were made in 2008.

Since financial year 2009, research tax credits, previously recognized as a reduction in income tax, have been accounted for as grants and shown as a reduction in research and development expenses.

No changes to the accounting principles were made in 2010.

1.2 Consolidation methods

The companies in which Fives directly or indirectly holds the majority of voting rights are fully consolidated.

Companies that are jointly controlled directly or indirectly by Fives are proportionately consolidated.

Investments in associates that meet these criteria but which are not material to the consolidated financial statements are not consolidated.

Companies are consolidated on the basis of their separate financial statements at December 31, restated to comply with Group accounting principles. All inter-company transactions are eliminated upon consolidation.

1.3 Foreign currency transactions

Assets and liabilities denominated in foreign currencies are translated at the exchange rate effective at the reporting date, unless they are hedged

by currency forwards. Foreign currency translation differences are recognized in the income statement.

1.4 Translation of financial statements of foreign operations

The balance sheet items of foreign companies are converted into euros using the exchange rate effective at the reporting date. Income statement items are converted using the average exchange rate for the financial year. The resulting translation differences are recognized directly in shareholders’ equity.

1.5 Goodwill

Goodwill corresponds to the unallocated difference between the cost of the investment acquired plus the after-tax directly attributable transaction costs, and the proportionate share at fair value of the identifiable assets acquired and liabilities assumed.

Identifiable assets and liabilities are measured at the date the acquired company is consolidated. If new information calls for their revaluation within the financial year following their consolidation, they are adjusted and the carrying amount of goodwill is changed accordingly.

Goodwill is amortized through the income statement on a straight-line basis for a maximum period of 20 years. An impairment test is carried out if there is an indication of impairment. The present value of the business represented by goodwill is measured using the discounted cash flow method, based on the following year’s forecasts and subsequent cash flow projections. If the present value of the business reflected in goodwill is lower than the carrying amount, goodwill is written down and an impairment loss is recognized.

1.6 Intangible assets

Separately acquired intangible assets are recognized at their acquisition cost.

Notes to the consolidated financial statements




Intangible assets, with the exception of brands and goodwill, are amortized on a straight-line basis over their useful lives, including, when applicable, any period of protection provided by law or regulations.

The value of amortizable intangible assets is tested whenever there is an indication of impairment. The value of non-amortizable intangible assets (such as brands) is tested at least once a year at the reporting date and whenever there is an indication of impairment.

Expenses for amortization and impairment of intangible assets acquired as part of a business combination are shown as a separate line item in the consolidated income statement.

Research and development expenses, together with the in-house costs of producing and filing patents, are expensed in the period in which they are incurred.

Research tax credits are accounted for as grants and deducted from research and development expenses.

Software and IT licenses are amortized on a straight-line basis over their expected useful lives.

1.7 Property, plant and equipment

Property, plant and equipment are measured at acquisition cost. A depreciation schedule is established for each depreciable asset at the rate at which economic benefits will be derived, given the asset’s expected useful life. In the case of buildings and certain heavy equipment, if several significant components of these assets bring the company economic benefits at different rates, then each component is recognized separately and given its own depreciation schedule. Most depreciation is straight-line.

Analysis of buildings led the Group to distinguish between the main structure (the primary construction), which is depreciated over 30 to 50 years depending on the type of construction, and three components:

Façade, roofing and secondary construction - depreciated over 20 to 30 years;

Technical and general improvements - depreciated over 15 to 20 years; Fixtures and fittings - depreciated over 10 to 15 years.

The main structure of heavy industrial equipment is depreciated over 15 to 25 years depending on the type of machinery. The other components, as well as light industrial equipment, machinery and tools, are depreciated over 5 to 15 years.

If the amounts of property held under finance leases are material, the associated assets and liabilities are restated on the consolidated balance sheet.

1.8 Investments

Unconsolidated equity investments (associates) are measured at their acquisition cost. If their fair value falls below their carrying amount, an impairment loss is recognized. Fair value is measured based on the Group’s share of net assets and the business outlook. Any impairment is charged first to the investment and then, where appropriate, to receivables. If necessary, a contingency provision may be recognized.

1.9 Measurement and presentation of long-term contracts

Long-term contracts are defined as those having the following characteristics:

Generally a long performance period, ranging over at least two financial years;

They are specifically negotiated for a single project; They are complex and/or require a high degree of coordination, usually involving engineering and research work;

Revenue is recognized when performance obligations are satisfied, within stated contract milestones.

Profit on completion of long-term contracts is estimated based on analyses of costs and revenue on completion, which are revised periodically and regularly over the life of the contract.

Revenue and profit are recognized on a percentage-of-completion basis, as the contract is performed. The stage of completion of each contract is determined by measuring the costs incurred to date over estimated costs to complete.

Long-term contract work in progress is measured by adding the direct production costs incurred to the recognized profits to date and is presented as part of trade and related receivables, net of any payments received that are less than production costs plus recognized profit (calculated on a contract basis).

For long-term contracts in progress, when payments received exceed the cost of production plus recognized profit, the excess is recognized as a liability in the balance sheet as progress payments received above sales.

Probable losses on completion are fully recognized as soon as they are foreseen. The portion of loss on completion that exceeds the loss generated to date is recognized in the balance sheet as a contingency provision.

Completion is recognized upon provisional acceptance (or equivalent event) for contracts involving integrated systems subject to overall performance obligations. A provision is recognized for any remaining expenses that may be incurred to secure full acceptance. A contingency provision is recognized for future warranty costs.

1.10 Inventories and work in progress (excluding long-term contracts)

Sales of goods such as single pieces of equipment or machinery are not defined as long-term contracts. The associated revenue and profit are recognized when the goods are delivered.

Inventories and work in progress (excluding long-term contracts) are measured using the weighted average cost method, at the lower of acquisition or production cost and net realizable value. An impairment loss is recognized when appropriate.

1.11 Marketable securities

Marketable securities are carried on the balance sheet at their historical acquisition cost plus accrued interest at the reporting date, less any impairment expense.

1.12 Retirement benefits

The Group companies pay retirement and supplementary retirement benefits as is customary and legally required.

The net liability reflecting these obligations is recognized at the reporting date, based on actuarial computations, after allowing for the market value of plan assets.

The actuarial valuations are based on a number of long-range assumptions, reviewed yearly, such as the salary increase rate, the expected return on plan assets and the discount rate.

The portion of actuarial gains and losses exceeding 10% of the obligation or fair value of plan assets, arising from changes in actuarial assumptions regarding the obligations and plan assets, is amortized over employees’ remaining working lives, estimated at the reporting date.

1.13 Provisions for long-service awards

Provisions for long-service awards are calculated by combining all award levels, in accordance with IAS 19. The provision is measured for all current employees at the reporting date, based on actuarial assumptions with regard to such factors as seniority, life expectancy and employee turnover. The effects of changes in actuarial assumptions are recognized in the income statement.

1.14 Income tax

The Group calculates deferred taxes using the liability method, based on temporary differences between the tax base and carrying amount of assets and liabilities reported in the consolidated financial statements. The amount of deferred taxes recognized at the reporting date is determined using the tax rates that will apply for the coming year.

Deferred tax assets are not recognized unless it is sufficiently likely that the deductible amount can be used to offset future liabilities.

1.15 Earnings per share

Basic earnings per share are calculated by dividing profit for the year by the weighted average number of shares outstanding during the year. The weighted average number of shares is not adjusted for any treasury shares recognized under marketable securities.

2. SIGNIFICANT EVENTS OF THE YEAR

Financial year 2008 was marked by the severe economic downturn in the fourth quarter. The economic crisis continued through 2009, with order intake down 44% from 2008 levels.

The net upturn of order intake in 2010 (€1,224 million), up by 67% on a like-for-like basis from 2009 limited the fall in revenue (down 20% on a like-for-like basis compared with 2009) and should allow the Group to quickly regain a level of business in line with the years preceding the economic crisis (note 4.21).

The unfavorable economic environment was factored into the accounting valuations used to prepare the 2008 and 2009 financial statements. At December 31, 2010 the impairment testing did not lead to further write-downs.




On November 30, 2010 Fives acquired Bronx International Inc. (becoming Fives Bronx Inc.), together with its British subsidiary Bronx/Taylor Wilson Ltd. (BTW) (becoming Fives Bronx Ltd.), a world engineering leader in the design and supply of finishing equipment and mechanical processing for pipes and tubes. These companies were consolidated at December 1, 2010.This acquisition was financed by the Group’s own cash for $44.5 million and by a vendor loan for $12 million.Fives Bronx generated sales of approximately $80 million in 2010.

3. CONSOLIDATION SCOPEThe list of companies included in the consolidation scope is provided in note 4.28.

3.1 Changes in consolidation scope in 2010Newly-consolidated companies

Cinetic Decker Filling K.K.; Fives Bronx, Inc. and Fives Bronx Ltd. (at December 1, 2010); Fives India Engineering & Projects Pvt. Ltd.; Fives Pillard (Tianjin, China) International Trading Co. Ltd.; Fives Stein Manufacturing; Fives Stein Inc.; PSA 2000, PSA 2000 Saudi Arabia Ltd. and FI 2006.

The contribution of the newly-consolidated companies acquired (Cinetic Decker Filling K.K at January 1, 2010 and Fives Bronx, Inc. and Fives Bronx Ltd. at December 1, 2010) to the main consolidated balance sheet items at December 31, 2010 and main consolidated income statement aggregates for financial year 2010 are as follows:

CONTRIBUTIONS TO THE CONSOLIDATED BALANCE SHEET

In thousands of euros Dec. 31, 2010

Goodwill 18,672Intangible assets 21,553Property, plant and equipment 157Investments 94Inventories 14,233Trade and related receivables 13,145Other receivables 26Cash and cash equivalents 13,345

Contingency and expense provisions 1,159Loans and borrowings 9,035Trade and related payables 12,687Progress payments received above sales 20,076Other payables 2,224

CONTRIBUTIONS TO THE CONSOLIDATED INCOME STATEMENT

In thousands of euros 2010

Sales 20,557Operating profit before amortization and impairmentof intangible assets related to acquisitions 1,301Amortization of intangible assets related to acquisitions (802)Operating profit 499Goodwill amortization (282)

3.2 Changes in consolidation scope in 2009Newly-consolidated companies

Fives Stein India Projects Pvt. Ltd.; Penelectro Limited.

Mergers SCI Nordon Frères, merged into Fives on June 23, 2009; North American Combustion Europe Ltd., merged into Fives North American Combustion, Inc. on September 25, 2009.

Deconsolidated companies Cinetic Service UK Ltd., after discontinuing operations.

4. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (in thousands of euros)

4.1 Intangible assets

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Business goodwill 2,474 2,480 2,513Technologies, research and development acquired 8,831 8,540 20,824Brands acquired 3,880 3,766 5,632Customer relationships and other intangibles acquired 7,185Order books acquired 5,165Concessions, patents and licenses 13,887 14,577 13,339Other intangible assets 2,940 3,401 3,112

GROSS CARRYING AMOUNT 32,012 32,764 57,770

Business goodwill (1,848) (1,848) (1,848)Technologies, research and development acquired (446) (1,463) (3,642)Brands acquired (1) (1)Customer relationships and other intangibles acquired Order book acquired (1,508)Concessions, patents and licenses (10,055) (11,012) (10,467)Other intangible assets (2,403) (2,631) (2,758)

ACCUMULATED AMORTIZATION AND IMPAIRMENT (14,752) (16,955) (20,224)

NET CARRYING AMOUNT 17,260 15,809 37,546

The acquisition of Fives Bronx on November 30, 2010 led to the recognition of intangible assets relating primarily to the technologies, brands, customer relationships and order book acquired. The net carrying amount of these intangible assets totaled €21,541 thousand at December 31, 2010.




4.2 Goodwill and negative goodwill

Amortization Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010Goodwill period Net Net Gross Amortization and Net impairment

Fives North American 20 56,548 51,991 60,344 (7,603) 52,741Cinetic Landis 20 26,631 25,220 33,337 (8,374) 24,963Fives Bronx 20 16,693 (48) 16,645Cinetic Automation Corp. 20 3,790 3,328 8,791 (5,561) 3,230Cinetic Filling 20 3,638 3,395 12,143 (8,991) 3,152Cinetic Decker Filling K. K. 10 2,252 (225) 2,027Fives Fletcher Ltd. 20 1,382 1,221 3,212 (2,150) 1,062Solios Carbone 6 1,871 1,403 2,807 (1,872) 935Fives Stein India Projects Pvt. Ltd. 10 970 1,078 (216) 862

TOTAL 93,860 87,528 140,657 (35,040) 105,617

The consolidation in 2010 of Cinetic Decker Filling K.K., acquired at year end 2009, generated goodwill of €2.3 million, amortized over a period of ten years. The acquisition of Fives Bronx at the end of November 2010, generated goodwill of €16.7 million, amortized over a period of twenty years. The appreciation of the dollar and pound sterling in 2010 led to a €5.6 million increase in the net carrying amount of goodwill. Amortization expense for the year totaled €6.5 million.

Negative goodwill Amortization period Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Nordon 20 1,715 1,560 1,405Fives Stein (Shanghai) Industrial Furnace Co., Ltd. 5 361 255 149

TOTAL 2,076 1,815 1,554

Reversals for the year totaled €0.3 million.

4.3 Property, plant and equipment Reclassification Dec. 31, 2008 Dec. 31, 2009 Acquisitions Disposals and other Dec. 31, 2010

Land and developments 11,391 11,510 33 (17) 411 11,937Leasehold land 1,260 1,260 1,260Buildings 70,134 78,516 925 (26) 2,511 81,926Leasehold buildings 9,777 9,647 9,647Plant, equipment and machinery 92,025 100,711 5,042 (2,851) 4,942 107,844Leasehold plant, equipment and machinery 668 668 668Other assets 30,723 32,250 2,329 (1,582) 1,341 34,338Assets under construction 8,715 2,207 2,493 (723) 3,977Advances on fixed assets 881 874 187 (822) 239

GROSS CARRYING AMOUNT 225,574 237,643 11,009 (4,476) 7,660 251,836

Reclassification Dec. 31, 2008 Dec. 31, 2009 Allowances Reversals and other Dec. 31, 2010

Land and developments (129) (160) (197) (4) (361)Buildings (36,717) (39,193) (2,908) 22 (687) (42,766)Leasehold buildings (1,558) (1,949) (409) (2,358)Plant, equipment and machinery (62,332) (67,528) (7,408) 2,657 (2,115) (74,394)Leasehold plant, equipment and machinery (146) (245) (75) (320)Other assets (22,505) (24,413) (2,682) 1,526 (773) (26,342)Assets under construction (56) (56) (56)

ACCUMULATED DEPRECIATION AND IMPAIRMENT (123,443) (133,544) (13,679) 4,205 (3,579) (146,597)


The increase in the gross amount of property, plant and equipment between December 31, 2009 and December 31, 2010 was mainly attributable to the investments by Fives Celes, Fives Nordon, Fives Cryo (Suzhou) Co., Ltd. and Cinetic Landis Ltd. and, to a lesser extent, to the newly-consolidated companies.




4.4 Investments

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Investments in associates 5,990 8,250 1,407Related loans, advances and other investments 11,560 12,132 9,746


Investments in associates (3,540) (1,760) (740)Related loans, advances and other investments (4,762) (5,504) (1,874)

ACCUMULATED IMPAIRMENT (8,302) (7,264) (2,614)


The breakdown of investments in associates is as follows:

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010 Net Net Brut Provision Net

Cinetic Decker Filling K.K.* 5,244 Fives Stein India Projects Pvt. Ltd.** 1,051 Fives India Engineering & Projects Pvt. Ltd.* 286 286 Fives Engineering (Shanghai) Co., Ltd. 239 239 239 239Procédair Benelux*** 168 168 Fives Pillard (Tianjin) International Trading Co., Ltd.* 167 167 Other 539 386 1,168 (740) 428

TOTAL 2,450 6,490 1,407 (740) 667

* Company consolidated since January 1, 2010.** Company consolidated since January 1, 2009. *** Dormant company liquidated in December 2010.

Shareholders’ equity and profit of non-consolidated investments for financial year 2010 were as follows:

At December 31, 2010 % Ownership Equity* 2010 Profit

Fives Engineering (Shanghai) Co., Ltd. 100.00 652 177

* 100% shareholders’ equity at December 31, 2010 including profit for the year.

Related loans, advances and other investments includes loans to non-consolidated investments, loans extended in connection with government home ownership incentive schemes, guarantees and deposits and marketable securities of which Fives is the bare owner.

4.5 Inventories and work in progress

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Raw materials and consumables 52,000 42,787 42,256Work in progress under completed-contract method 70,423 48,133 55,331Semi-finished and finished goods 22,786 22,022 20,707


Raw materials and consumables (8,561) (8,606) (8,583)Work in progress under completed-contract method (1,530) (2,189) (2,493)Semi-finished and finished goods (3,685) (3,976) (4,738)

ACCUMULATED IMPAIRMENT (13,776) (14,771) (15,814)





4.6 Trade and related receivables

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Receivables for work-in-progress to be invoiced 206,464 175,562 115,222Receivables for completed work 182,817 140,868 148,364Advances and downpayments 36,949 15,285 14,780


Impairment of receivables for completed work (8,706) (7,471) (11,363)


4.7 Other receivables

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Income tax receivables 4,892 9,002 8,373Deferred tax assets 15,766 16,525 14,179VAT and related receivables 18,222 9,990 13,299Other receivables 10,351 16,430 14,010


Impairment of VAT and related receivables (29) (12) Impairment of other receivables (1,611) (1,161) (2)

ACCUMULATED IMPAIRMENT (1,640) (1,173) (2)


Income tax receivablesIncome tax receivables mainly consist of excess amounts paid on account over the tax due for the financial year.

Deferred tax assetsDeferred tax assets mainly correspond to temporary differences relating notably to retirement obligation provisions (see notes 4.10 and 4.20).

4.8 Cash and cash equivalents

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010 Value Value Value Carrying amount Market Carrying amount Market Carrying amount Market

Money market funds and other listed securities 140,128 140,118 132,998 132,988 116,962 116,952Treasury shares 343 Impairment (10) (10) (10)

CASH EQUIVALENTS 140,461 132,988 116,952

CASH 96,619 97,105 98,180

TOTAL 237,080 230,093 215,132

4.9 Change in shareholders’ equity and non-controlling interests

CHANGE IN SHAREHOLDERS’ EQUITY

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Shareholders' equity at January 1 159,113 182,184 181,263Foreign currency translation reserve 2,238 (1,144) 7,989Profit for the year 33,830 20,221 33,544Dividends paid (12,997) (19,998)

TOTAL 182,184 181,263 222,796

Share capitalThe share capital of Fives amounted to €24,041,732 at December 31, 2007 and has not changed since. It is divided into 2,185,612 fully-paid, registered shares with a par value of €11. There are no other outstanding equity securities.

Shareholding structureThe majority shareholder of Fives is FL Investco, which held 99.99% of Fives’ share capital at December 31, 2010. FL Investco is controlled by funds managed by Charterhouse General Partners (VIII) Limited.

Dividend paymentsFives did not pay any dividends in 2010.

At their Ordinary and Extraordinary Meeting on June 23, 2009, the shareholders authorized a dividend payment of €19,998 thousand, and at their Ordinary and Extraordinary Meeting on June 19, 2008, they authorized a dividend payment of €12,997 thousand.




CHANGE IN NON-CONTROLLING INTERESTS

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Non-controlling interests at January 1 2,704 3,198 2,917Foreign currency translation adjustment 4 1 7Profit attributable to non-controlling interests 1,322 964 499Dividends paid to non-controlling interests (823) (1,246) (1,116)Change in consolidation scope (9) -

TOTAL 3,198 2,917 2,307

4.10 Contingency and expense provisions

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

CONTINGENCY PROVISIONS

Guarantees 34,892 46,773 48,162Litigation and claims 17,064 12,565 15,063Future losses on contracts 1,925 3,301 1,978Other contingency provisions 5,224 4,592 7,720

EXPENSE PROVISIONS

Completed contracts 17,070 19,020 23,248Restructuring 916 2,847 645Long-service awards 471 468 545Retirement benefits 30,643 31,480 25,164Other expense provisions 3,041 2,721 1,378Deferred tax liabilities* 268 445

TOTAL 111,514 124,212 123,903

* Since financial year 2010, deferred tax liabilities have been classified as other liabilities (note 4.13).

Contingency provisionsProvisions for guarantees cover the estimated future costs to be incurred over contract warranty periods, after provisional acceptance (or equivalent).

Known litigation and claims that could affect the Group’s companies were examined at the time the accounts were prepared and, on the advice of legal counsel, the provisions judged necessary were recognized to protect against known risks.

Anticipated future losses on contract work in progress are recognized whenever they are identified through a provision recognized as a liability in the balance sheet, corresponding to the excess of completion loss over project progress.

Retirement benefitsThe provision for retirement obligations and other employee benefits reflects the Group’s defined benefit plans currently in place, which include:

French retirement benefits; Italian contractual retirement benefits (TFR); British, German, Japanese, Indian and French supplementary retirement plans; the British (except for Cinetic Landis Ltd.), German and French pension funds have been closed to further accrual and the vested rights thereunder were frozen as of the respective closure dates.

Retirement obligations are calculated based on actuarial assumptions that are reviewed annually. The discount rates and expected return on plan assets at December 31, 2010 and 2009 were as follows:

At December 31, 2010 Euro Zone United Kingdom Japan India

Discount rate 4.5% 5.50% 2% 8.20% Expected return on plan assets 4.1% 6.55% - 7.44% 2.5% 9%

At December 31, 2009 Euro Zone United Kingdom Japan India

Discount rate 4.5% 5.60% - 5.75% 0.8% - 2.0% 7.30% Expected return on plan assets 4.2% 5.88% - 7.60% 3.0% 6.15%




The salary increase rates used to calculate the obligations are as follows:

At December 31, 2010 Retirement and supplementary retirement benefits Euro Zone Japan India

Salary increase rate 2.0% - 2.5% 3% 5%

At December 31, 2009 Retirement and supplementary retirement benefits Euro Zone Japan India

Salary increase rate 2.0% - 2.5% 3% 5%

The present value of defined benefit obligations totaled €78,126 thousand at December 31, 2010. The obligation relating to French retirement benefits increased by €3,103 thousand pursuant to the collective bargaining agreement rider signed on June 21, 2010, providing for an increase in the benefits scale. Given the fair value of all plan assets, the net obligation at December 31, 2010 totaled €40,360 thousand, compared with €51,348 thousand at December 31, 2009.

The provision recognized in the consolidated financial statements at December 31, 2010 amounted to €25,164 thousand, which is €15,196 thousand lower than the net obligation due to unrecognized actuarial losses under the corridor method and unrecognized past service costs.

The portion of actuarial gains and losses exceeding 10% of the obligation or fair value of plan assets is amortized over employees’ remaining working lives, as estimated at the reporting date. Past service costs are amortized over the remaining vesting period.

Income or expense recognized for the period reflects the current service cost and interest cost, less the expected return on plan assets, recognized net actuarial gains or losses and past service costs, and gains on retirement plan curtailments or settlements. In total, the expenses and changes in provisions for retirement benefit obligations resulted in net income of €41 thousand, comprising €1,262 thousand recognized under operating income, and €1,221 thousand recognized in financial expense. The net income resulted from the closure of a retirement plan in the United Kingdom.

Retirement benefits Supplementary retirement obligations

France Italy United Kingdom Euro Zone Japan India TOTAL

CHANGE IN PRESENT VALUE OF OBLIGATION

Present value of obligation at January 1 14,126 2,829 79,933 3,264 4,760 182 105,094Current service cost 859 - 1,669 75 338 39 2,980Interest cost 619 99 2,569 145 99 12 3,543Employee contributions paid - - 565 - - - 565Plan amendments 3,103 - - - - - 3,103Plan curtailments / settlements - - (38,308) - - - (38,308)Newly consolidated - - - - 440 - 440Benefits paid (1,537) (260) (1,162) (313) (562) (130) (3,964)Actuarial (gain) loss (292) - 1,462 (165) (107) 29 927Foreign exchange gains and losses - - 2,635 - 1,089 22 3 746

Present value of obligation at December 31, 2010 16,878 2,668 49,363 3,006 6,057 154 78,126

CHANGE IN FAIR VALUE OF PLAN ASSETS

Fair value of plan assets at January 1 166 - 51,185 75 2,225 95 53,746Return on plan assets - - 4,595 5 (27) 6 4,579Employer contributions paid - - 5,333 - 333 19 5,685Employee contributions paid - - 565 - - - 565Plan curtailments / settlements - - (26,944) - - - (26,944)Benefits paid (166) - (1,162) (80) (562) (54) (2,024)Foreign exchange gains and losses - - 1,677 - 484 (2) 2,159 Fair value of plan assets at December 31, 2010 - - 35,249 - 2,453 64 37,766

COMPONENTS OF AMOUNTS RECOGNIZED IN THE FINANCIAL STATEMENTS

Net obligation 16,878 2,668 14,114 3,006 3,604 90 40,360Unrecognized past service costs (3,027) - - - - - (3,027)Unrecognized actuarial gains (losses), net (6,167) - (4,762) 186 (1,426) - (12,169)

Net provision recognized in the balance sheet at December 31, 2010 7,684 2,668 9,352 3,192 2,178 90 25,164

COMPONENTS OF NET EXPENSE (INCOME) RECOGNIZED FOR FINANCIAL YEAR 2010

Current service cost 859 - 1,669 75 338 39 2,980Interest cost 619 99 2,569 145 99 12 3,543Expected return on plan assets - - (2,234) (3) (77) (8) (2,322)Amortization of past service costs 76 - - - - - 76Amortization of actuarial gains and losses 270 - 125 (142) 56 32 341(Gains) losses related to plan curtailments / settlements - - (4,659) - - - (4,659)

Net expense (income) recognized in the income statement for financial year 2010 1,824 99 (2,530) 75 416 75 (41)

CHANGE IN PROVISIONS FOR RETIREMENT AND OTHER BENEFITS

Provisions at January 1 7,231 2,829 16,664 3,350 1,319 87 31,480Employer contributions paid - - (5,333) - (333) (19) (5,685)Net (income) expense recognized 1,824 99 (2,530) 75 416 75 (41)Benefits paid directly by the employer (1,371) (260) - (233) - (76) (1,940)Newly consolidated - - - - 440 - 440Foreign exchange gains and losses - - 551 - 336 23 910

Provisions recognized in the balance sheet at December 31, 2010 7,684 2,668 9,352 3,192 2,178 90 25,164




4.11 Loans and borrowings

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Bank loans 98,569 91,249 79,672Finance obligations 9,452 8,611 7,901Other loans and borrowings 21,978 21,033 17,656Bank overdrafts 1,330 280 1,101

TOTAL 131,329 121,173 106,330

Amounts due: in less than one year 22,863 22,027 36,850 between 1 and 2 years 17,708 26,702 28,335 between 2 and 3 years 23,569 24,882 21,409 between 3 and 4 years 23,481 18,392 13,321 between 4 and 5 years 27,041 24,077 1,125 in more than 5 years 16,667 5,093 5,290

Secured by collateral: mortgages pledges 97,195 87,412 77,882

Bank loansBank loans consist largely of the loan for the acquisition of the North American sub-group in 2008 (€49.0 million at December, 31 2010) and loans to Fives Cinetic (€13 million, $15.2 million and £3.9 million at December 31, 2010), from the bank syndicate led by the Royal Bank of Scotland (RBS). The early repayment clauses of these bank loans did not apply at December 31, 2010.

Bank borrowings from RBS were contracted at variable interest rates. The interest rate risk of euro-denominated debt is hedged until January 31, 2011 by fixed-for-floating interest rate swaps.

In addition, the Group can, at each due date, opt for one, three or six month interest periods. When market conditions allow, the Group sets up basis swap transactions (floating for floating interest rate swaps), in order to benefit from banks’ arbitrage on the short-term yield curve. Interest payment periods are then selected in order to perfectly match the basis swap features (one month for the basis swap transaction at December 31, 2010).

At December 31, 2010, obligations arising from debt hedging derivative instruments were the following:

Pay Receive Notional amount Start date Maturity date € thousands

Fixed rate swap 1.5650 % 6-month Euribor 43,556 31.07.09 31.01.11Fixed rate swap 1.5930 % 6-month Euribor 12,996 31.07.09 31.01.11Basis swap 6-month Euribor 1-month Euribor 49,000 31.07.10 31.01.11 + spread

Finance leasesFinance leases mainly reflect the leases financing the head offices of Cinetic Assembly and Cinetic Filling.

Other financial liabilitiesAt December 31, 2010, other financial liabilities included a loan of $12 million (€9 million) granted by the vendors in connection with the Fives Bronx acquisition, as well as the outstanding amount due (€3.8 million) on the loan granted by FL Investco to Fives for the acquisition of the Fives North American sub-group in 2008.They also included liabilities relating to employee profit sharing, and grants and deposits received.The decrease in other financial liabilities between December 31, 2009 and December 31, 2010 is mainly attributable to the repayment by Fives of loans granted by FL Investco.

4.12 Advances and progress payments on contract work in progress

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Advances and payments received - completed-contract method 47,849 33,703 56,681Progress payments received above sales 168,164 126,932 111,955

TOTAL 216,013 160,635 168,636

4.13 Other liabilities

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Income tax liabilities 8,027 4,779 5,560Deferred tax liabilities* 793Accrued tax and social security payables 82,134 72,445 71,212Amounts due on acquisitions of fixed assets 2,595 1,647 5,051Other payables 16,390 12,973 17,572

TOTAL 109,146 91,844 100,188

* Before financial year 2010, deferred tax liabilities were classified as “contingency and expense provisions” (note 4.10).

4.14 Prepaid expenses and income

Prepaid expenses and income recognized in the balance sheet mature in less than one year.




4.15 Sales by geographic region

2008 2009 2010

France 264,740 208,831 205,367Europe (excluding France) 234,195 141,039 125,569Africa and Middle East 355,698 366,859 193,151North America 209,327 288,629 189,186Central and South America 27,474 15,044 29,659ASEAN 32,870 20,615 25,532India 42,989 56,238 71,756China 145,574 148,401 149,974Rest of Asia and Oceania 39,435 36,924 59,063

TOTAL 1,352,302 1,282,580 1,049,257

4.16 Research and development expenses

2008 Pro forma 2009 2010

Research and development expenses, gross (15,226) (18,389) (19,751)Research tax credits and grants received 620 2,749 1,757

TOTAL (14,606) (15,640) (17,994)

Since financial year 2009, research and development expenses have been shown net of the tax credits received by the Group for its research and development programs. In 2010, these tax credits mainly related to the Group’s French companies. The 2008 pro forma column shows research and development expenses including tax credits, which were recognized under income tax in the income statement in 2008.

4.17 Amortization, depreciation and impairment included in operating profit

Operating profit includes amortization, depreciation and impairment allowances for property, plant and equipment and intangible assets under the following line items:

2008 2009 2010

Included in cost of sales (7,001) (8,073) (8,996)Included in overheads and other operating items (5,365) (5,587) (5,544)Amortization and impairment of intangible assets related to acquisitions (1,654) (1,380) (2,182)

TOTAL (14,020) (15,040) (16,722)


4.18 Net financial income (expense)

2008 2009 2010

Interest expense (5,851) (4,711) (3,324)Interest income 5,204 1,289 1,185Net gain on disposals of marketable securities 3,545 1,287 684

Cost of net financial debt 2,898 (2,135) (1,455)Income from non-consolidated associates 61 48 513Foreign exchange gains (losses) 8,854 (2,490) 5,227Net change in provisions on investments and related receivables 5 (117) (57)Other 91 41 (1,402)

TOTAL 11,909 (4,653) (2,826)

The change in foreign exchange gains and losses in 2008, 2009 and 2010 was mainly due to the variation of the net unrealized gain on financing granted to American subsidiaries in dollars for the acquisition in 2008 of the North American sub-group and in 2010 of the Bronx sub-group.

4.19 Net exceptional income (expense)

2008 2009 2010

Net restructuring costs (2,230) (7,862) (3,814)Net impact of disposals of property, plant and equipment, intangible and financial assets 6,041 (314) 720Profit (loss) of newly-consolidated companies (5) 382 192Other (826) (653) (1,280)

TOTAL 2,980 (8,447) (4,182)

Net restructuring costs in 2008 and in 2009 arose mainly from accrued expenses and indemnities paid by certain French subsidiaries in the automobile division.

Proceeds from asset disposals in 2008 mainly reflect gains on the sale of land at Fives’ historical site in Lille, France.

The previous-period profit (loss) of newly-consolidated companies represents the unconsolidated earnings of companies consolidated for the first time during the year, net of any provisions recognized by their parent companies.



4.20 Income tax expense

2008 2009 2010

French companies included in the tax group* (15,547) (11,261) (6,860)French companies not included in the tax group (1,767) (1,881) (540)Foreign companies (6,796) (3,899) (6,437)

Sub-total current tax (24,110) (17,041) (13,837)Change in deferred tax (4,170) 1,105 (3,719)

TOTAL (28,280) (15,936) (17,556)

* Including foreign tax of €789 thousand in 2008, €479 thousand in 2009 and €287 thousand in 2010 paid by permanent establishments.

French current taxFives and its French subsidiaries that are directly or indirectly more than 95%-owned, are included in the tax group established in 2007 by FL Investco, shown in note 4.28. The tax savings resulting from offsetting the taxable losses of loss-making companies with the taxable income of profit-making companies are recognized in FL Investco’s financial statements.

Deferred taxDeferred taxes recognized in the consolidated balance sheet at December 31, 2010 comprise €14,179 thousand of deferred tax assets compared with €16,525 thousand at December 31, 2009, and €793 thousand of deferred tax liabilities compared with €445 thousand at December 31, 2009.

They primarily reflect temporary differences between the tax base of an asset or liability and its carrying amount in the balance sheet. No deferred tax assets were recognized on the tax losses of French or foreign companies.

Reconciliation of income tax expense

2008 2009 2010 CONSOLIDATED PROFIT BEFORE TAX 63,432 37,121 51,599

Theoretical tax expense (at 33.33%) (21,144) (12,374) (17,200)Permanent differences (7,127) 80 (1,062)Utilization of previously unrecognized tax losses 2,228 1,047 4,868Unutilized tax losses (3,307) (5,998) (5,405)Change in unrecognized temporary differences (709) (1,044) 141Effect of tax rate differences 1,056 1, 740 2,270Other items 723 613 (1,168)

CURRENT AND DEFERRED TAX EXPENSE (28,280) (15,936) (17,556)


4.21 Market segment information

The Fives group designs and supplies process equipment, turnkey production lines and plants for the world’s leading industrial players. The Group is uniquely positioned due to its command of cross-disciplinary technologies and its expertise in engineering and complex project management. These skills allow the Group to develop strong synergy between its various companies.

In order to assess the market’s major trends, the Group monitors consolidated data for sub-groups of subsidiaries in the following markets:

Automotive/Logistics: comprises Fives Cinetic and its subsidiaries (detailed in note 4.28), whose main activity is in the automotive and logistics industries;

Cement: comprises Fives FCB and Fives Pillard and their subsidiaries (detailed in note 4.28), whose activity mainly targets the cement industry; Energy / Sugar: comprises Fives Cail, Fives Cryo, Fives Nordon, Fives North American (since July 31, 2008) and their subsidiaries (detailed list in note 4.28), whose activity mainly addresses all classes in the energy production industry (nuclear, fossil and renewable);

Metals: comprises the sub-groups formed by Fives Stein, F.L. Métal, Fives Bronx (since December 1, 2010), Solios Environnement and their subsidiaries (detailed list in note 4.28), whose main activity serves the steel and aluminum industries.

The following figures were calculated based on consolidations at division level. Other (including intercompany eliminations) corresponds to Fives’ contribution and the elimination of transactions between the four divisions defined above.

2008 2009 2010

ORDER INTAKE

Automotive/Logistics 343,641 194,638 401,432Cement 262,054 87,569 69,734Energy/Sugar 274,255 229,253 287,207Metals 410,407 216,612 469,168Other (including inter-company eliminations) (767) (933) (3,540)

TOTAL 1,289,590 727,139 1,224,001

SALES

Automotive/Logistics 355,377 259,506 276,976Cement 259,011 284,2 1 1 125,115Energy/Sugar 260,793 263,454 285,336Metals 478,438 475,400 365,653Other (including inter-company eliminations) (1,317) 9 (3,823)

TOTAL 1,352,302 1,282,580 1,049,257



4.22 Earnings per share

2008 2009 2010

Net profit attributable to owners of the company 33,830 20,221 33,544Weighted average number of shares 2,185,612 2,185,612 2,185,612Earnings per share (in euros) 15.48 9.25 15.35

Fives did not issue any dilutive instruments.

4.23 Off-balance sheet commitments

Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

COMMITMENTS GIVEN

Bank guarantees and other sureties 399,976 275,318 260,082Obligations under finance leases 37 19 31

COMMITMENTS RECEIVED

Bank guarantees and other sureties 89,865 62,214 54,734

Guarantees and sureties refer to commitments given or received to finance contracts in progress and performance bonds.

Currency hedging In order to hedge the foreign exchange risk linked to their contracts, the Group’s operating subsidiaries may use financial instruments, primarily currency forwards.

Interest rate hedgingThe Group uses derivative instruments for hedging purposes, as part of its risk management policy. The instruments outstanding at the reporting date are presented in note 4.11.

Pledges To secure the bank loan taken out on July 27, 2006, Fives Cinetic pledged the equity securities it holds in certain subsidiaries. Fives agreed to act as joint guarantor for all amounts owed by Fives Cinetic and pledged the shares it owns in Fives Cinetic to the bank syndicate as security.

To secure the bank loan taken out in July 2008 (amounting to €49.3 million, including accrued interest, at December 31, 2010) to acquire the North American businesses, Fives also pledged the note receivable it holds against Fives North American Combustion, Inc.


4.24 Personnel expenses and headcount at December 31

2008 2009 2010

Personnel expenses 296,758 302,092 310,134

Headcount at December 31

By category Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Engineers and management 1,733 2,030 2,123Supervisory and office staff 2,551 2,244 2,264Other employees 1,395 1,240 1,252

TOTAL 5,679 5,514 5,639

By type of contract Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2010

Permanent contract 5,320 5,079 5,178Short-term contract 260 333 348Apprenticeships and internships 99 102 113

TOTAL 5,679 5,514 5,639

4.25 Remuneration of management bodies

In 2010, the aggregate direct and indirect remuneration paid by Fives and its subsidiaries to the thirteen members of the Group’s Executive Committee amounted to €3,510 thousand.



4.26 Consolidated cash flow statement

Details of the main cash flow statement aggregates are as follows:

Cash and cash equivalents Cash and cash equivalents includes money market funds and other similar listed securities and cash (see note 4.8) less treasury shares (€343 thousand at December 31, 2008) and bank overdrafts (see note 4.11).

Operating activitiesAdjustments to reconcile profit for the year with net cash from operating activities included the elimination of the following non-cash items:

amortization and depreciation of €23,312 thousand in 2010, €20,947 thousand in 2009 and €40,121 thousand in 2008, including €6,200 thousand, €5,907 thousand and €26,101 thousand respectively of goodwill amortization and impairment. The increase in 2008 was due to the goodwill impairment loss recognized by Fives relating to Fives Cinetic;

changes in provisions for retirement obligations and long-service awards; net gains on the disposal of assets. For 2010, 2009 and 2008 these amounted to €650 thousand, €29 thousand and €6,237 thousand respectively, and were mainly due to the disposal of real estate assets.

other non-cash items, particularly the change in deferred income tax and provisions for equity investments and loans to subsidiaries, accrued interest and previous-period profit (loss) of newly-consolidated companies.

Changes in cash flows from operating activities include changes in net working capital, changes in contingency and expense provisions (excluding retirement obligations and long-service awards) and changes in income tax payable. In 2010, this line item showed a cash requirement of €18,647 thousand.

Investing activitiesAcquisitions of property, plant and equipment and intangible assets amounted to €11,656 thousand (compared with €16,826 thousand in 2009 and €27,685 thousand in 2008).

Proceeds from disposals of property, plant and equipment and intangible assets totaled €89 thousand in 2010 and €207 thousand in 2009. In 2008, proceeds from disposals of property, plant and equipment and intangible assets amounted to €8,843 and primarily resulted from the sale of Fives’ historic site in Lille, France.

The change in financial assets does not include changes in equity investments. In 2010, the charge in financial assets was negative by €57 thousand and by €570 thousand in 2009. In 2008, the charge in financial assets was positive by €2,254 and primarily reflected the repayment in 2008 of a loan made in 2007 to an unconsolidated subsidiary.


Acquisitions and sales of investmentsAcquisitions of investments in 2010 mainly reflect the opening cash balances of newly-consolidated companies less the amounts paid to acquire Fives Bronx, Inc. and Fives Bronx Ltd. In 2009, this line item mainly represented the opening cash balances of newly-consolidated companies and the acquisition cost of Cinetic Decker Filling K.K. In 2008, this line item reflected the acquisition of the North American businesses.

Financing activitiesDividends paidIn 2010, Fives did not pay any dividends. The amount of €1,116 thousand relates to the dividends paid by Fives Pillard and its subsidiaries to non-controlling interests.

In 2009 and 2008, Fives paid shareholders dividends of €19,998 thousand and €12,997 thousand, respectively. In addition, non-controlling interests of the Fives Pillard businesses received dividends totaling €1,246 thousand in 2009 and €821 thousand in 2008.

Net (decrease) increase in borrowingsIn 2010, borrowings decreased by €25,922 thousand. This was mainly due to the repayment of RBS loans by Fives Cinetic and the repayment of the FL Investco loan by Fives.

In 2009, borrowings decreased by €8,275 thousand mainly due to the repayment of RBS loans by Fives Cinetic.

In 2008, the Group raised additional funding of €54,662 thousand, primarily to finance the purchase of the North American businesses. This net increase included the following items:

a loan of €49,000 thousand from RBS; two loans from FL Investco for an aggregate €14,940 thousand, including €10,000 thousand to finance the purchase of the North American businesses;

repayment to RBS of €8,436 thousand for the Fives Cinetic loans.

Effect of translation differencesTranslation differences arise when foreign subsidiaries present their consolidation package in a currency other than the euro and represent the difference between the foreign exchange rates applied to the opening and closing balances of cash and cash equivalents, as well as the difference between the average exchange rate and rate at the reporting date, applied to cash flows for the year. They also include the effect of changes in the euro-dollar parity applied to the dollar loans granted to the American subsidiaries.



4.27 Auditors’ fees

Total fees charged by the statutory auditors of Fives and its subsidiaries for financial years 2009 and 2010, as presented in the consolidated financial statements, amounted to:

2009 2010

Statutory audit Other work TOTAL Statutory audit Other work TOTAL

Deloitte 534 92 626 444 139 583Ernst & Young 485 37 522 597 209 806Grant Thornton 197 80 277 174 66 240

TOTAL 1,216 209 1,425 1,215 414 1,629

4.28 Consolidated companies at December 31, 2010

Consolidated Companies Location Consolidation Percentage Method Voting Rights Ownership

Fives* Paris, France Parent Company

AUTOMOTIVE/LOGISTICS

Fives Cinetic* Paris, France FC 99.99 99.99Cinetic Assembly* Montévrain, France FC 99.99 99.99Cinetic Automation* Héricourt, France FC 99.96 99.96Cinetic Automation Corp. United States FC 100.00 99.99Cinetic Decker Filling K.K. Japan FC 100.00 99.99Cinetic DyAG Corp. United States FC 100.00 99.99Cinetic Filling* Le Bignon, France FC 99.99 99.99Cinetic Giustina S.r.l. Italy FC 100.00 99.99Cinetic Landis Corp. United States FC 100.00 99.99Cinetic Landis Ltd. United Kingdom FC 100.00 99.99Cinetic Machining* Saint-Laurent-les-Tours, France FC 99.99 99.99Cinetic Service* Montévrain, France FC 100.00 99.99Cinetic Service Slovakia s.r.o. Slovakia FC 100.00 99.99Cinetic Sorting Corp. United States FC 100.00 99.99Cinetic Sorting K.K. Japan FC 100.00 99.99Cinetic Sorting S.p.a. Italy FC 100.00 99.99Cinetic Transitique* Grigny, France FC 99.98 99.98Fives Cinetic S.r.l. Italy FC 100.00 99.99Fives Inc. United States FC 100.00 99.99

CEMENT

Fives FCB* Villeneuve-d’Ascq, France FC 99.99 99.99Cementos Plantas Construcciones SA de CV Mexico FC 99.90 99.90Cement Process Technologies Egypt Egypt FC 99.00 99.00 Fives Pillard Marseille, France FC 85.18 85.18Fives Pillard España S.A. Spain FC 67.00 57.07Fives Pillard (Tianjin) International Trading Co., Ltd. China FC 100.00 85.18Pillard Feuerungen GmbH Germany FC 47.50 40.46

ENERGY / SUGAR

Fives Cail* Villeneuve-d’Ascq, France FC 99.99 99.99Fives Cail KCP Ltd. India PC 50.00 40.00Fives Fletcher Ltd. United Kingdom FC 100.00 99.99Fives Lille do Brasil Ltda. Brazil FC 100.00 99.99Fletcher Smith Inc. United States FC 100.00 99.99Fives Énergie* Paris, France FC 100.00 100.00Fives North American Combustion France, SAS* Marseille, France FC 100.00 100.00Fives North American Combustion Netherlands B.V. Netherlands FC 100.00 100.00Fives North American Combustion UK, Ltd. United Kingdom FC 100.00 100.00North American Combustion Holdings, Ltd. United Kingdom FC 100.00 100.00Fives North American Combustion, Inc. United States FC 100.00 99.99Fives North American Combustion Canada Inc. Canada FC 100.00 99.99North American Construction Services, Ltd. United States FC 100.00 99.99




Consolidated Companies Location Consolidation Percentage Method Voting Rights Ownership

ENERGY / SUGAR

Nordon* Paris, France FC 100.00 100.00Fives Cryo* Golbey, France FC 99.80 99.80Fives Cryo (Suzhou) Co., Ltd. China FC 100.00 99.80Fives Cryomec A.G. Switzerland FC 100.00 99.80Fives Nordon* Nancy, France FC 99.99 99.99METALS

F.L. Métal* Seclin, France FC 99.99 99.99Fives DMS* Seclin, France FC 99.99 99.99Fives Industries* Seclin, France FC 99.99 99.99F.L. Industries, Inc. United States FC 100.00 99.99Fives Bronx, Inc. United States FC 100.00 99.99Fives Bronx Ltd. United Kingdom FC 100.00 99.99Fives Stein* Ris-Orangis, France FC 99.99 99.99Fives Celes* Lautenbach, France FC 99.99 99.99Fives Stein Belgium Belgium FC 100.00 99.99Fives Stein Bilbao S.A. Spain FC 100.00 99.99Fives Stein Inc. United States FC 100.00 100.00Fives Stein India Projects Private Ltd. India FC 100.00 99.99Fives Stein (Shanghai) Industrial Furnace Co., Ltd. China FC 100.00 99.99Fives Stein Ltd. United Kingdom FC 100.00 99.99Fives Stein Manufacturing* Bar-le-Duc, France FC 100.00 99.99Penelectro Limited United Kingdom FC 100.00 99.99Stein Heurtey Australia PTY Ltd. Australia FC 100.00 99.99Solios Environnement* Saint-Germain-en-Laye, France FC 99.99 99.99FI 2006* Paris, France FC 100.00 100.00Fives India Engineering & Pojects Pvt. Ltd. India FC 100.00 100.00PSA 2000* Saint-Germain-en-Laye, France FC 100.00 99.99PSA 2000 Saudi Arabia Ltd. Saudi Arabia FC 100.00 99.99Solios Carbone* Givors, France FC 99.99 99.99Solios Environment Corp. United States FC 100.00 99.99Solios Environnement Inc. Canada FC 100.00 99.99Solios Services Southern Africa Proprietary Ltd. South Africa FC 100.00 99.99Solios Thermal Ltd. United Kingdom FC 100.00 75.10

* Companies consolidated in the FL Investco tax group.

FC: Fully consolidatedPC: Proportionately consolidated

Fives and its subsidiaries have been consolidated in the FL Investco group since 2007.

Gouvernement d’entreprise2010 consolidated financial statements

To the shareholders,

In accordance with our appointment as statutory auditor assigned 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 Fives,- the justification of our assessments,- and the specific procedures and disclosures required by law.The consolidated financial statements were approved by the Executive Board. Our role is to express an opinion on these financial statements, based on our audit.

I. Opinion on the consolidated financial statementsWe conducted our audit in accordance with professional standards applicable in France. Those standards require that we perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. An audit includes examining, using sample testing techniques or other selection methods, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made, as well as evaluating the overall financial statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.In our opinion, the consolidated financial statements give a true and fair view of the financial position and the assets and liabilities of the Group as at December 31, 2010 and the results of its operations for the year then ended, in accordance with French accounting regulations.

II. Justification of our assessments

In accordance with the requirements of Article L. 823-9 of the French Company Law (Code du Commerce) relating to the justification of our assessments, we hereby report the following matters:- As mentioned in Note 1.5 to the consolidated financial statements, in the

event an impairment loss is indicated, goodwill is tested based on the profit projections of the companies concerned.

We assessed the reasonableness of the assumptions used and checked calculations made in those tests.

- As explained in Notes 1.14 and 4.20 to the consolidated financial statements, deferred tax assets are recognised for the entities which are expected to be profit making. We ascertained that this approach was consistent with the budget estimates.

- As mentioned in Notes 1.9 to the consolidated financial statements, income or losses on long-term contracts are recognised according to the percentage of completion method, depending on the estimated costs on completion. These estimates are made by the project managers under the supervision of the companies’ general management. Based on the work performed by the auditors of the subsidiaries, we assessed the reasonableness of those estimates.

These assessments were performed as part of our audit approach for the consolidated financial statements taken as a whole and contributed to the expression of our opinion in the first part of this report.

III. Specific procedures and disclosures

We have also verified the information on the Group given in the management report, as required by French law and in accordance with French professional standards.We have no matters to report regarding the fair presentation and consistency with the consolidated financial statements of this information.

Paris - La Défense and Neuilly-sur-Seine, March 30, 2011

Statutory Auditors’ Report - Consolidated financial statements Year Ended December 31, 2010

ERNST & YOUNG AUDIT11 allée de l’Arche

92037 Paris-La Défense Cedex

DELOITTE & ASSOCIÉS185 avenue Charles-de-Gaulle92524 Neuilly-sur-Seine Cedex

The Statutory auditorsERNST & YOUNG AUDITMarc Stoessel

DELOITTE & ASSOCIÉSPascal Colin


This document is printed on condat silk, certified

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Inks used are plant-based, with an alcohol-free

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Fives

French limited company (Société Anonyme)

with Executive Board and Supervisory Board

Share capital €24,041,732

Registered ofice: 27-29 rue de Provence, 75009 Paris (France)

Tel: +33 (0)1 45 23 75 75 - Fax: +33 (0)1 45 23 75 71

E-mail: [email protected]

www.fivesgroup.com

542 023 841 R.C.S. PARIS – APE 7010Z

Edited by the Communication Department of Fives

Copyright © 2011 - Fives - All rights reserved

Profile 01

Foreword from the Chairman 02

Key figures 04

Highlights 06

At the heart of Fives 08

Corporate governance 10 Corporate Social Responsibility 12 Human Resources 16 Innovation 20

International 24

Markets 30

Aluminium 32 Steel 36 Glass 40 Automotive & Logistics 42 Cement 46 Energy 50


Fives - 27 / 29 rue de Provence - 75009 Paris - www.fivesgroup.com

Table of contents

2010 Annual Report

The concept…This year, we have decided against publishing factually representative photographs of our equipment and installations in favor of introducing a little art and imagination into the world of industry. We have also looked in a new way at the physical aspect of industry and used it as the basis for a graphic recomposition that illustrates our commitment: ‘‘Designing today, the plants of the future’’.


Fives_Annual_Report_2010.pdf

Documents

Transcript of Fives_Annual_Report_2010.pdf