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5. Valeo S.A. Business Report FY ended 2014

Factors
1) Sales
-Sales in 2014 increased by 9.1% year-on-year to EUR 12,725 million. Changes in exchange rates had a negative impact, while changes in Group structure had a positive impact. Changes in Group structure chiefly reflect the Company's acquisition (effective January 1, 2014) of Osram's 50% stake in the Sylvania joint venture, which is now fully consolidated (100%) in the Company's financial statements.

New Mid-Term Plan (Presented on March 16, 2015)

Financial objectives by 2020
-Sales of more than EUR 20 billion
-Operating margin (as a percentage of sales) between 8% and 9%
-Free cash flow to EBITDA ratio greater than 30%

Growth strategies
1) Products
-Focus on innovative technologies for CO2 emissions reduction and improved vehicle performance as well as intuitive driving
-Major products

• Stop-Start systems
• Electric superchargers, which will be available on the market in 2016
• Thermal management systems, including water cooled charge air cooler system
• 100% LED lighting systems
• Driving assistance systems, including detection of obstacles and other vehicles, fully-automated parking, and systems that provide an aerial view around the vehicle

2) Geographic areas
-Focus on Asia and emerging countries
-In 2014, Asia accounted for 28% of original equipment sales, with China accounting for 15%. By 2020, Asia should account for one-third of the Company's original equipment sales, with China accounting for over 20%.

Acquisitions

Valeo Sylvania
-The Company confirms the closing of the acquisition of Osram's 50% stake in Valeo Sylvania as of January 21, 2014. Valeo Sylvania is now fully owned by the Company. (From a press release on January 22, 2014)

Ichikoh Industries
-Ichikoh Industries, Ltd. is poised to increase supply to U.S. and European automakers' facilities in Asia. Ichikoh's Thai plant recently received an order through the Company, Ichiko's partner, to supply automotive lighting to Ford Motor Company's facility in the country. Delivery of the products has already started. For Ichikoh Industries, this is the first order from Ford. By further strengthening its partnership with the Company, Ichikoh aims to win more orders from U.S. and European automakers in Asia. (From an article in the Nikkan Jidosha Shimbun on March 12, 2014)

Subsidiary in India

-U-Shin Ltd. announced that it has decided to cancel acquiring stakes in India-based Minda Value Security Systems Private Limited (MVI) from the Company. The planned transaction was part of an agreement to acquire the Company's Access Mechanism Business, which was signed in May 2013. Under this agreement, U-Shin was supposed to obtain from the Company a 50% share in MIV, a 50-50 joint venture between the Company and Minda Capital Limited. U-Shin, however, has cancelled this, considering it would be difficult to conclude the deal given MIV's hostile attitude towards the transaction. In line with this cancellation, U-Shin will pay a settlement of EUR 9 million (approximately JPY 1.26 billion) to the Company. The payment will be recorded as an extraordinary loss. (From an article in the Nikkan Jidosha Shimbun on January 31, 2014)

Major Contracts

Awards

R&D Facilities

-As of Dec. 31, 2014, the Group has 16 research centers and 34 development centers. 10,400 employees were engaged.
-Breakdown of 50 R&D centers by region: Europe/Africa 27, Asia 15, North America 5, South America 3
-The Company's Tuam site in Ireland designs and manufactures a wide range of onboard cameras, including high-definition cameras and smart cameras capable of communicating with infrastructure. In 2014, the Company released its 360Vue 3D camera system, produced by the Tuam site, which further improves the view of the vehicle's environment, a world first in three-dimensional car vision. The intelligent rear-view camera produced by the site is also part of the Company's Back-Over Protection System, which won a PACE Award in 2014.

Joint Development

-The Company announced the signing of a cooperation, development and licensing agreement with LeddarTech, a manufacturer of advanced detection and ranging solutions, based on infrared LED technology using time-of-flight measurements. The agreement will enable the Company to develop a new infrared sensor for volume produced vehicles and cross a new threshold in the development of road obstacle detection and tracking functions. The agreement will allow the Company to offer its carmaker customers new active safety solutions, especially in the area of emergency braking in urban environments. (From a press release on February 10, 2014)

Product Development

-The Company showcased the following innovative technologies at Auto China 2014 held in Beijing:

• Full LED headlamps: Consumes only one fifth of energy used in halogen lamps. Offers greater design flexibility.
• eSkin 2 Console: Intuitive car connectivity solutions that provide drivers access to smartphone services and applications via the controls of center consoles.
• New air conditioner filters: Designed to meet stricter Chinese environmental standard that will become effective in 2016. Filter outs microparticles and superfine particles from the cabin.
• i-StARS starter-alternator: The Stop-Start system integrated with an alternator provides significant fuel savings. It reduces CO2 emissions by 6% in standard mixed cycle use, and up to 15% in city driving.

(From a press release on April 26, 2014)

-At the 2015 Consumer Electronics Show (CES) in Las Vegas, the Company presented its automated driving prototype Cruise4U. When the system is active, the driver decides whether to drive the vehicle him or herself or to allow Cruise4U to take control. Equipped with its laser scanner, it can detect static or moving obstacles and therefore anticipate events and avoid collisions.

Investments Outside France

<China>
-On May 30, 2014, Shanghai Valeo Automotive Electrical Systems Co., Ltd., which is a subsidiary of the Company, completed a new plant on a 80,000-square-meter-plot. The plant will become one of the largest production bases of automotive electric components in China, with its annual capacity reaching 10 million sets per year. It will also become the Company's largest plant in the global market. (From news releases issued by multiple sources on June 3, 2014)