2024 URD - Universal Registration Document

2024 URD

Universal Registration

Document

MERSEN

Universal Registration Document

page

This is a translation into English for convenience purposes only of the (universal) registration document of the Company issued in French and it is available on Mersen website www.mersen.com

TRENDS AND OPPORTUNITIES

TRENDS

AND OPPORTUNITIES

The energy transition is one of the greatest challenges of the 21st century, as the world faces the depletion of natural resources, a growing need for energy supply, and climate change.

The way forward is a structural transformation to reduce energy consumption and give green energy a greater share of our energy mix.

Mersen sees these underlying trends as opportunities to further support economic development and the global energy transition, delivering tailor-made solutions and key products to customers to help them rise to these new technological challenges.

Supporting the development of renewable energies

At the end of 2023, renewable energies accounted for 30% of global electricity production, of which 14% from hydroelectric power, 8% from wind power and 5% from solar power. In 2024, the combined capacities of solar and wind power overtook hydroelectric power. Annual solar panel installations climbed from 228 GW in 2022 to 440 GW in 2023, and then to more than 550  GW in 2024. Installed on-shore and off -shore wind power capacity was estimated at around 1,150  GW worldwide at the end of 2024 (1,020  GW worldwide at the end of 2023) .

 Renewable energies are expected to account for 46% of global energy production in 2030 (source: IEA Renewables 2024), with particularly strong growth in solar power.

China is set to consolidate its leading position in the rollout of additional capacity, accounting for 60% of global capacity expansion by 2030. Since 2020, China's cumulative photovoltaic solar power capacity has almost quadrupled and its wind power capacity has doubled, thanks to competitive costs and support policies.

(1) Source: International Energy Agency (IEA).

Mersen is contributing to the boom in renewable energies: solar, wind and hydroelectric.

Thanks to its off ering of solutions and products that help make these major energy sources possible, Mersen benefi ts from the short- and medium-term potential of these markets. Its global presence at the heart of its markets is also a major advantage.

Helping convert and transmit electricity

The development of high-performance storage and transmission solutions is crucial if renewable energies are to continue to rise.

Due to its intermittent nature, renewable power has to be converted so that it can be transmitted and stored.

Energy storage systems help balance electricity supply and demand on power grids and mitigate the intermittent output of renewables. Excess energy produced at certain times can be stored and then fed back into the grid when demand is higher. These systems also meet the needs of remote, off -grid areas.

In most cases, electrical energy cannot be stored or transmitted directly, so it is converted into the form required for its intended use – from direct current to alternating current, for example.

Thanks to power conversion, electricity from renewable sources can be transformed into an energy form that is subsequently fed into power grids, or stored and transformed back when it needs to be used.

Power conversion is a key area of development for Mersen.

The Group off ers passive components for power management, as well as a wide range for optimizing the operation of power conversion and storage systems to make sure they are safe and reliable.

Improving power conversion effi  ciency with silicon carbide semiconductors

Silicon carbide (SiC) semiconductors, which perform better and consume less energy than their silicon (Si) counterparts, are increasingly becoming the go-to choice in the transition toward greater effi  ciency. They are used in the conversion systems of electric vehicles, energy storage, wind power and solar energy.

They are particularly essential in accelerating the adoption of electric vehicles, as they improve range and reduce battery charging times.

The power components market was estimated at USD 2.7 billion in 2023, 70% of which was used in electric vehicles. Other end markets include manufacturing (speed drives for motors) and renewable energies (power conversion). Despite the current temporary slowdown in the electric vehicle market, with an estimated delay of about three years compared to the 2023 estimate, strong growth is still expected: the market is set to climb to around USD 10 billion by 2029⁽¹⁾ ,

i.e., a growth rate of around 25% per year.

(1)   Source: Yole: Power SiC – Markets and Applications 2024.

(2)   Plug-in Hybrid Electric Vehicle.

Mersen is a key player in the rise of SiC semiconductors.

The Group’s expertise in supplying the components needed to manufacture power semiconductors is virtually unique. Mersen’s isostatic graphite and insulators ensure perfect control of the reaction at 2,400°C, to form very high-quality silicon carbide.

Participating in the development of electric vehicles

The electric vehicle (BEV, HEV or PHEV⁽²⁾ ) market is thriving, with both the passenger vehicle, and industrial and commercial heavy vehicle segments enjoying robust growth.

More than 14 million new electric cars were sold in 2023, representing over 16% of total car sales, compared with around 4% in 2020 (source: JD Power).

Growth in the passenger vehicle market has been driven by China, early adopters and European regulatory requirements. In 2024,  China accounted for more than 60 % of all electric vehicles sold, and is expected to continue to represent a signifi cant share of the market in the medium term. In Europe and North America, electric vehicles are being adopted more slowly than initially anticipated due to vehicle purchase costs and automakers and charging infrastructures running behind schedule. T he global market is estimated to be delayed by about three years compared to the 2023 estimate.

Mersen is contributing to the powerful momentum of the electric vehicle market.

Thanks to its expertise in cutting-edge technologies and its long experience in sectors that share the same need for electrical protection and energy management, the Group has been developing and adapting its products (particularly fuses and bus bars) for several years to meet the requirements for battery protection and connection and for the range of electric vehicles.

Electrical Power segment

The Electrical Power segment off ers a range of solutions and products designed to perform the following principal functions across the entire electrical chain:

Equipment and people protection

This function prevents the destruction of industrial and commercial electrical equipment, ensures an uninterrupted power supply and helps stabilize the electrical network. It is provided by overcurrent protection devices (such as industrial fuses) and by surge protection devices (to protect against damage from power surges).

The Group stands out for its ability to off er a wide and thorough range of products that meet various regional standards (e.g., UL, IEC, BS and DIN) and are aligned with the needs of the majority of its distributor and OEM customers.

WORLD NO. 2⁽²⁾ in industrial fuses

Main competitors (in alphabetical order)

€554M

IN SALES 45%

OF TOTAL SALES

 Power conversion

This function changes the nature, voltage, intensity or frequency of the current to meet very diverse applications, such as motor speed variation, solar and wind energy conversion, electric vehicle propulsion and the management of battery-based systems (electric vehicle or stationary storage).

To provide this, Mersen is the only group with an off ering for power electronics industry players that includes high-speed fuses, cooling devices, laminated bus bars, and capacitors that are integrated around power electronics components or in the architecture of battery packs. In 2024, the Group strengthened its expertise in cooling devices with the acquisition of KTK Thermal Technologies.

For the electric vehicle market, some Group sites are certifi ed to International Automotive Task Force (IATF) standards.

WORLD NO. 1⁽¹⁾⁽²⁾ supplier of components for the power electronics market.

•                      Boyd Corp (USA) – cooling devices        •  Method (USA) – bus bars                    •  Wabtec (USA) – current collector

•                      Dehn (Germany) – surge protection devices•  Phoenix Contact (USA) – surge protection devices ^{and earth current return units} for rail transportation

(1)   Some businesses are covered by the regulations on the control of exports of dual-use items and technology.

(2)   I nternal source: the Group operates in niche markets. It draws on its in-depth sector expertise and the fi nancial and technical documentation published by its competitors to establish its market position.

  OUR SOLUTIONS BY MARKET

OUR SOLUTIONS BY MARKET

Mersen provides solutions for all sectors in manufacturing, as well as all companies seeking effi  ciency and reliability.

Solutions and products for principal energy sources, and renewable energies in particular.

Solar power

•  G raphite and carbon fi ber components for silicon ingot pulling which are needed to guarantee the purity of solar cells and to control the temperature of hot zones during crystallization.

•  I sostatic graphite components for the deposition of blue anti-refl ective coating on the surface of solar panels (PECVD process).

•  A  full range of solutions for the protection of photovoltaic panel installations (circuit breakers, fuses and surge protection devices).

•  H igh-speed fuses, capacitors, laminated bus bars and cooling devices used for power conversion, which can be used in an integrated architecture.

Wind power

•  C arbon brushes and brush holders and slip ring assemblies for current collection for generators.

•  S ignal transmission systems, brushes and brush holders for yaw motors and grounding systems.

•  F ull range of fuses, fusegears, fuseholders and surge protection devices.

•  H igh-speed fuses, capacitors, laminated bus bars and cooling devices used for wind power conversion.

•  M aintenance services: technical diagnostics, equipment verifi cation, installation and replacement of components.

Energy storage

•  D irect current surge protection solutions with fuse-based devices and laminated bus bars to connect battery cells.

•  H igh-speed fuses, capacitors, laminated bus bars and cooling devices used in power conversion.

Conventional energies

•  P ower transfer solutions (brushes, slip ring assemblies, brush holders, and monitoring solutions).

•  P ower management: fuses and fusegears, cooling devices and laminated bus bars.

      21                                                                                                             230     200

R&D CENTERS                                       EXPERTS AND SPECIALISTS                                 EMPLOYEES WORKING IN R&D AND

                                                                                                                                                                                                        INNOVATION

Innovative answers to customer challenges

R&D organization

Mersen’s R&D organization is built around a lean central structure headed by the Group’s Chief Technical Offi  cer (CTO), who also manages its 21 R&D centers.

This structure oversees the long-term vision and manages priorities in line with the company’s strategy. Each activity splits its eff orts between “everyday” innovations and very ambitious projects, in terms of both the challenges to be solved and the value of the developments in question for Mersen.

The Group devotes around 3% of its sales to research and development for products, materials and processes, and to technical sales eff orts so as to constantly adapt its solutions or services to each customer’s specifi c requirements. Most of this expenditure is fi nanced internally.

The Group off ers certain employees the option of professional careers focused primarily on the development of critical technical expertise for Mersen. The role of these 230 experts and specialists is to ensure that the Group’s internal scientifi c culture and know-how are leveraged and passed on.

A source of synergies between Mersen's diff erent activities

One of the Group's defi ning characteristics is the wide range of expertise required for its various activities to succeed, refl ected by the highly decentralized rollout of R&D projects.

As such, Mersen ensures that central resources are in place and available to each of its activities, in particular powerful computing resources and the specialists needed to operate them, making possible to multiply and streamline our digital simulations. As well as accelerating the development of all parties involved, these resources also make it easier to share relevant expertise between activities.

Partnerships to strengthen R&D

The Group relies on a network of partnerships and collaborations with external players such as universities and large national research centers, which play a key role in helping the company to develop core knowledge, without which the Group would be less effi  cient in delivering solutions to the increasingly complex problems which its customers need to solve. It is also involved in standardization and standards committees.

The Innovation Challenge

The Innovation Challenge is designed to encourage and reward individual or collective initiatives that can contribute to the Group’s growth or improve its performance. It is an annual event and culminates in two prizes:

•  t he “Growth +” prize rewards a team for putting forward a successful growth project whose execution is already contributing signifi cantly to Mersen’s sales growth;

•  t he “Best Creative” prize rewards the best innovative idea whose future implementation could make a lasting contribution to the growth or improvement of the Group’s net income.

Eco-design

Since 2021, Mersen has been stepping up its eco-design approach in order to reduce the overall ecological impact of certain products. For example, when developing new products in the Electrical Power segment, the challenge is to design products that have a lesser impact than existing product lines.

To achieve this, Mersen integrates environmental criteria into its design process, such as carbon weight (kg CO₂eq.) and water acidifi cation and consumption.

The process begins with a life cycle assessment of the existing product to calculate its current impact, identify areas for improvement and defi ne impact reduction targets. This assessment covers the product's entire life cycle, from the extraction of materials to production, transportation, use and end-of-life recycling. The results of this assessment are then used to optimize the various stages in the product's life cycle. For example, the use of recycled materials may be increased to optimize the materials extraction stage, certain production sites may be selected to limit emissions of pollutants, and identical materials may be used for diff erent components of the same product to make it more easily recyclable.

AMBITIONS  MEDIUM-TERM STRATEGIC PLAN

MEDIUM-TERM

STRATEGIC PLAN

OPERATIONAL

AND FINANCIAL

In 2023, Mersen presented its 2027 strategic plan

The plan draws on the stability of Mersen's traditional markets as well as strong momentum from some buoyant energy transition markets:

•  silicon carbide semiconductors: Mersen supplies materials that are essential for manufacturing these power components, which are necessary for high-performance electric vehicles.

•  silicon semiconductors: the Group has a strong position in the most sophisticated stages of the manufacturing process.

•  electric vehicles, with a dedicated off ering for battery connection and protection, including a wide range of fuses.

•  renewable energies, with:

-  photovoltaic solar power, for which the Group is a major supplier across the entire value chain, ranging from materials for the solar cell production process to protection for panels and conversion of the energy produced,

-  wind power, with solutions that contribute to the functioning of wind turbines, spanning from protection and electricity production through to power transfer and cooling. Alongside this strategic plan, the Group also drew up a plan for the capital expenditure necessary to support its growth, earmarking approximately €300 million for 2023-2025 – above its usual level of expenditure – as well as around €100 million for bolt-on acquisitions.

Updating the roadmap

In the second half of 2024, a number of indicators from our customers confi rmed a slowdown in the electric vehicle market, and consequently in the related SiC semiconductor market.

Mersen estimates that these markets will be delayed by three years. The Group's other markets continue to grow, and the Group can leverage its extensive expertise, global leadership position, international footprint and longstanding relationships with leading players to continue its development.

Investments made as part of the Group’s growth plan will be adjusted to this new context. They are now expected to total between €280 million and €290 million over the 2023-2025 period, a reduction of between €30 million and €40 million, excluding the impact of infl ation, on the amount initially planned in 2023.

Medium-term objectives unchanged but postponed

Mersen confi rms the targets it announced in 2023 but is pushing them back by two years, to 2029.

Accordingly, by 2029, the Group is aiming for:

•  s ales of around €1.7 billion;

•  o perating margin before non-recurring items of 12% of sales. This margin may vary by +/-50 basis points;

•  E BITDA margin before non-recurring items of 19% of sales. This margin may vary by +/-50 basis points;

•  R OCE of 13%, which may vary by +/-50 basis points.

These objectives include bolt-on acquisitions, of which three were completed in 2024.

Being responsible partners

Ensuring responsible purchasing

•  M aintain a minimum of 85% of external purchases with local suppliers

•  L ess than 5% of suppliers with a CSR score of less than 25

Limiting our environmental footprint

Limiting greenhouse gas emissions

•  R educe GHG emission intensity (scopes 1 and 2) by 35% (compared with 2022)

•  I ncrease the share of renewable electricity to 80%

Recycling waste

•  I ncrease the share of waste recycled to 80%

Limiting water consumption

•  R educe water consumption by 15% (compared with 2022)

•  D raw up a formal water conservation plan for all sites exposed to water stress

Developing human capital

Promoting equal opportunity and diversity

• E ncourage gender balance and diversity in the workplace:

-  %  of senior management positions held

by women: 27%

-  % women engineers and managers: ≥29%

-  Improve inclusion of people with disabilities:

up 25% (compared with 2022)

Promoting a social responsibility policy for all: 100% employee benefi ciaries

•  P rovide social protection with a universal indemnity in the event of death in service

•  S tandardize profi t-sharing schemes

•  A dopt a minimum amount of paid leave in all countries

Promoting well-being, health and safety at work

•  K eep LTIR ≤1.8 and ISR ≤60

•  I ncrease the number of management safety visits per employee by 30% (compared with 2022)

Cultivating an ethics and regulatory compliance culture

Ethics training

•  C ompulsory for new hires

•  C ompulsory refresher training every two years

(individual or theme-based training by site)

Cybersecurity training

•  C ompulsory for employees with a personal

computer

GOVERNANCE

GOVERNANCE

BOARD OF DIRECTORS

The Board of Directors determines the Company’s overall strategy, overseen by its Chairman in close collaboration with Executive Management. As part of this role, it examines and approves the Company’s strategic plans and activities.

It is assisted by two committees: the Audit and Accounts Committee and the Governance, Appointments and Remuneration Committee.

Two directors play a coordinating role in strategic issues and CSR.

Remuneration

Committee

Board members (at the date of publication of the URD)

* Independent director

EXECUTIVE COMMITTEE

The Executive Committee is responsible for managing the Mersen group’s operational aff airs and meets every month to review the Group’s fi nancial and non-fi nancial performance and decide on action plans in various areas (including human resources, IT, procurement, legal aff airs and development) in line with its strategic priorities. The Executive Committee ensures that the Group’s organization runs smoothly. To this end, it is closely involved in forecasting the human resources required for the continued development of its business activities. It defi nes the Group’s sustainable development roadmap and ensures that it is applied at all levels of the company.

Luc Themelin                            Thomas Baumgartner           Gilles Boisseau                       Christophe Bommier             Thomas Farkas

Chief Executive Offi  cer                          Chief Financial Offi  cer                         Executive Vice President,                   Group Vice President,                          Group Vice President,

                                                                                           Electrical Power                                      Technology, Research,                               Strategy & Development

Innovation and Business

Support

SHARE OWNERSHIP & TRADING

SHARE OWNERSHIP

& TRADING

Treasury shares

Number of shares: 24,418,312

SHARE PRICE in 2024

Jan.

Share price on December 31, 2024: € 20.6 0 Average daily transactions in 2024:  118,390 shares

DIVIDEND PER SHARE _{in €*} € 0.90

* S ubject to shareholder approval at the Annual General Meeting

1. ADMINISTRATIVE AND MANAGEMENT BODIES

1.1. The Board of Directors

The Company has been governed by a Board of Directors and an Executive Management team since the Annual General Meeting of May 11, 2016. It was previously governed by a two-tier structure with a Supervisory Board and a Management Board.

1.1.1. T he Internal Rules of the Board of Directors

The Internal Rules represent the governance charter for the Board of Directors and also govern the relationships between Board members and the Company’s Chief Executive Offi cer, in a spirit of cooperation notably intended to ensure fl uid exchanges between the corporate bodies in the interest of shareholders.

It is intended to give the Board the means to implement best practices in corporate governance in line with the recommendations of the AFEP-MEDEF Code.

The Internal Rules were amended in 2024 on several points and in particular:

■ The roles and duties of the Board of Directors and the Audit and Accounts Committee were expanded to include sustainability matters, in accordance with the provisions of French government order no. 2023-1142 of December 6, 2023 and the French decree of December 30, 2023, which transposed the European Corporate Sustainability Reporting Directive (“CSRD”) into French law;

■ The procedures for the assessment of the Board of Directors were defi ned;

■ Directors’ compensation was adjusted ;

■ The prohibition on the use of videoconference or other means of telecommunication to attend Board meetings called to approve the annual fi nancial statements was removed (this prohibition has no longer been mandatory since the entry into force of French law no. 2024-537 of June 13, 2024 aimed at making the Paris fi nancial market more attractive).

The Internal Rules have seven articles and one annex:

■ Article 1 defi nes the composition of the Board of Directors in accordance with its diversity policy applied to its members, training of its members, and the concept of “independent” members;

■ Article 2 relates to the role and duties of the Board of Directors and indicates the lists of decisions made by the Chief Executive Offi cer subject to the Board of Directors’ authorization or prior opinion;

■ Article 3 relates to the holding and the procedures of meetings of the Board of Directors (notices of meetings, participation, majority rules, minutes, and Board secretary);

■ Article 4 covers the compensation and benefits paid to members of the Board of Directors (directors’ compensation, compensation and benefits paid to the Chairman, and exceptional compensation and benefi ts);

■ Article 5 covers the obligations applicable to members of the Board of Directors;

■ Article 6 covers the assessment rules for the Board of Directors and its Committees;

■ Article 7 governs the operating rules for the Committees set up by the Board of Directors.

Annex 1 refers to the selection procedure for independent directors (see section 1.1.5 below).

The Internal Rules of the Board of Directors can be downloaded from the Company’s website at www.mersen.com.

1.1.2. A ssignments and duties of the Board of Directors

The Board of Directors determines the Company’s overall strategy, overseen by its Chairman in close collaboration with Executive Management. As part of this role, it examines and approves the Company’s strategic plans and activities.

Under the Articles of Association, the Chairman of the Board of Directors is a natural person, appointed by the Board from among its members. The Chairman is responsible for convening the Board and directing its proceedings. The Chairman exercises their functions for the duration of their term of offi ce as a director and may be re-elected. The Chairman is subject to the same age limit as the members of the Board of Directors and may, at any time, be dismissed by the Board of Directors. The vote of the Chairman does not act as the casting vote in the event of a tied vote.

The Chairman may delegate to another member of the Board their powers for organizing the Board’s work, preparing Board meetings in advance and leading the discussions during Board meetings. Until May 16, 2024, Michel Crochon, an independent director, was responsible for leading discussions on strategic issues. He was replaced on that date by Emmanuelle Picard.

The Chairman and the director responsible for leading discussions on strategic issues may:

■ receive from the Company any documents that they deem useful for carrying out their duties;

■ hold meetings with the Chief Executive Offi cer (if the Chairman does not also hold the position of Chief Executive Offi cer) and any Deputy Chief Executive Offi cers, as well as with any other person they may consider it useful to meet with;

■ request that any third parties of their choosing (specialists, advisers or statutory auditors) attend Board meetings;

■ commission, at the Company’s expense and subject to the budgets approved by the Board of Directors, any internal or external specialist studies or research that may help the Board in its discussions.

The Board’s main duties are:

■ review of the fi nancial position, cash position and commitments of the Company and its subsidiaries; the Board also receives a monthly report on the Group’s net sales and net income, and on the Group’s fi nancial position;

■ annual review and approval of the budget;

■ approval of the management report (including the sustainability information) and the corporate governance report;

■ review and approval of the parent company and consolidated fi nancial statements;

■ review of related-party agreements and annual assessment of routine agreements entered into on arm’s length terms;

■ prior authorization of related-party agreements and their annual review in order to ensure that they are in the Company’s interests;

■ appointment and removal of the Chief Executive Offi cer and setting of their compensation in accordance with the regulations;

■ defi nition of the compensation policy for corporate offi cers;

■ review and approval of the succession plan for executive corporate offi cers;

■ co-optation of members of the Board of Directors;

■ allocation of compensation among the members of the Board of Directors, setting of the Chairman’s compensation in accordance with the conditions provided for by the regulations;

■ prior consultation on the content of the interim financial information released to the market;

■ authorizations relating to guarantees and endorsements;

■ convening of the Annual General Meeting and approval of proposed resolutions;

■ set-up of stock option and free share plans.

The Chief Executive Offi cer may not make decisions, unless previously authorized to do so by the Board, in the following areas:

■ issues of securities conferring rights directly or indirectly to the Company’s share capital;

■ funding operations likely to substantially alter the Company’s fi nancing structure;

■ approval and/or modifi cation of the Group’s business plan;

■ capital expenditure for organic growth exceeding the Group’s annual budget or business plan by an aggregate amount of over €20 million;

■ acquisitions in any form (acquisitions of assets or equity interests), the price of which, including all liabilities and less any cash, exceeds €5 million;

■ asset or equity interest disposals in an amount of over €10 million per transaction, if not provided for in the annual budget;

■ authorizations to grant sureties, endorsements and guarantees, in accordance with the legal provisions in force;

■ strategic partnership agreements that are likely to have a substantial impact on the Company’s business activities or fi nancial results;

■ major internal restructuring operations;

■ major transactions that do not fall within the scope of the Company’s announced strategy.

1.1.3. P romoting long-term value creation and committing to corporate social responsibility

(CSR) issues

In accordance with Article L.225-35 of the French Commercial Code and with the AFEP-MEDEF Code, the Board of Directors determines the priorities of the Company’s businesses and ensures that these priorities are implemented in line with the general interest of the Company, while taking into consideration the social and environmental challenges of the Company’s businesses. For corporate social responsibility, the Board determines multiyear strategic objectives, on the recommendation of Executive Management, which reports annually on implementation and results achieved. More specifi cally with regard to climate issues, the Board sets precise objectives to be achieved at various intervals. It reviews the results obtained each year, adapts the objectives if necessary and presents the strategy to the Annual General Meeting in the event of any signifi cant change, and at least every three years.

To this end, on December 17, 2021, the Board decided to appoint a director to oversee CSR issues. As part of this role, the director coordinates work ahead of Board meetings. The director makes sure that CSR issues are assigned the proper level of priority and, in particular, reviews the CSR roadmap defi ned by the Group’s Executive Management and oversees its implementation (see chapter 4 of this Universal Registration Document). The director also ensures that the CSR challenges of the issues submitted to the Board for approval are included in the reports provided beforehand.

This role has been carried out by Emmanuel Blot since January 5, 2024 (see section 1.1.8.2 ).

The Audit and Accounts Committee, of which Emmanuel Blot is a member, and the Governance, Appointments and Remuneration Committee are also fully engaged on the various aspects of CSR (see section 1.1.9.2).

With the entry into force of the new CSRD-related legal provisions in January 2024, the duties of the Board and the Audit and Accounts Committee were expanded to include sustainability information (see sections 1.1.1, 1.1.2 and 1.1.9).

Progress reports on the implementation of the CSR roadmap are the subject of regular presentations and discussions at meetings of the Board of Directors and Board Committees. For example, in October 2024, several members of the Executive Committee presented to the Board the progress of the Group’s objectives in terms of gender balance, safety and the reduction of CO₂ emissions.

This year, compliance with the new requirements under the CSRD gave rise to several progress reports and discussions within the Audit and Accounts Committee and the Board:

■ proposal to appoint the sustainability auditor (Grant Thornton) at the Annual General Meeting of May 16, 2024;

■  presentation of material matters and validation of the double materiality matrix;

■ drafting of the sustainability report and coordination of the associated audit program.

Detailed information on the governance and implementation of the Group’s CSR policy is presented in chapter 4 of this Universal Registration Document.

1.1.4. P romoting diversity in the Board of Directors and policy to increase the proportion of women in senior management positions

The Board of Directors pays close attention to diversity, particularly in terms of gender and expertise. It works to achieve balance in its composition and that of the Committees it establishes from among its members, by ensuring that its tasks and those of its Committees are carried out with the necessary independence and objectivity. In particular, it ensures that the composition of the Board allows for the balanced representation of men and women, different nationalities, ages, qualifi cations, professional experience and expertise.

Promoting diversity in the Board

Criterion           Objectives

Measures implemented and results obtained in 2024

Policy to increase the proportion of women in senior management positions

The Board supports and encourages management in its diversity policy. It notes the Group’s exemplary position in terms of international diversity, as 96 % of site managers are local, and endorses the Group’s policy of increasing the percentage of women engineers and managers (see chapter 4 of this Universal Registration Document).

At its meeting of March 10, 2021, the Board of Directors adopted an ambitious policy aimed at increasing the proportion of women in senior management positions, in accordance with the recommendations of the AFEP-MEDEF Code. The Group has accordingly set the target of gradually raising this fi gure. The target is to have women represent 27% of senior management positions by 2027.

In its annual Corporate Governance Report, the Board of Directors reports on the progress made during the past year, including, where applicable, the reasons why targets were not met and the corrective measures taken.

This procedure was followed when Carolle Foissaud was replaced by Jocelyne Vassoille, whose appointment was approved by the Combined General Meeting of May 16, 2024. It was followed again in 2024 to replace Olivier Legrain, Chairman of the Board of Directors, whose term of offi ce expires at the Combined General Meeting of May 16, 2025 (see section 1.1.8.4): for each of these replacements, the Governance, Appointments and Remuneration Committee established a detailed profile for the purpose of identifying suitable candidates, with the support of a specialized consultant. Interviews were then conducted with each of the pre-selected candidates.

1.1.6. T raining of the members of the Board of Directors

In accordance with the recommendations of the AFEP-MEDEF Code, directors who deem it necessary may benefi t from additional training in the Company’s specific characteristics, business segments, business sector and corporate social responsibility issues, with a focus on climate issues. This training is particularly intended for new Directors and

may take the form of visits to the Group’s sites. In 2024, for example, during work undertaken at the Gennevilliers site (France) as part of the p-SiC project, a visit was organized for certain members of the Board of Directors.

Upon their appointment, Audit and Accounts Committee members are given information about the Company’s specifi c accounting, fi nancial and operational requirements.

In addition, directors representing employees receive training on their role on the Board and must be given the necessary time to devote to their directorships.

Lastly, the Company offers each director the chance to enroll with an organization tasked with supporting, informing and training members of boards of directors. Accordingly, all directors can use this organization’s services.

1.1.7. A ssessment of the Board of Directors’ practices and procedures

The Board of Directors assesses its ability to fulfi ll its duties by periodically assessing its composition, organization and operation. The assessment has three objectives:

■ reviewing the operating procedures of the Board and its Committees;

■ ensuring that important issues within its remit are properly prepared and debated;

■ evaluating the effective contribution of each director to the work of the Board and its Committees.

The assessment is conducted as follows:

■ once a year, the Board of Directors devotes an item on its agenda to a discussion of its practices and procedures, based on an assessment conducted by a director, under the guidance of the Governance, Appointments and Remuneration Committee;

■ at least every three years, an assessment by an independent external consultant selected by the Governance, Appointments and Compensation Committee is conducted;

■ the assessment includes a report that is presented to the Board of Directors;

■ each year, shareholders are informed in the corporate governance report of the results of the assessment and of any suggested improvements.

For 2024, the assessment was conducted by Pierre Creusy, director representing employees and member of the CGNR, under the supervision of this committee, by means of a questionnaire and individual interviews with all directors. The results of this assessment were reviewed by the CGNR and then presented and discussed at the Board of Directors’ meeting of March 5, 2025.

This gave rise to the following conclusions:

■ Board member satisfaction is very high;

■ The Board’s operations are appropriate, despite its small size (8 people);

■ Most of the areas for improvement identifi ed in previous years have been implemented.

The main areas for improvement identifi ed are as follows:

■ Rebalance the number of members between the 2 committees, with the Audit and Accounts Committee comprising only

3 members;

■ Intensify presentations of CSR topics, particularly safety;

■ Improve monitoring of HR issues (more frequent updates, and indicators to be implemented);

■ More systematically include an update on the share price situation (with benchmark elements) in the monthly reports sent by General Management on trends in sales, earnings and the Group’s fi nancial situation;

■ Present post-mortem analyses of acquisitions made in recent years;

■ Reinforce presentations on Capex monitoring;

■ Share additional information on cybersecurity, regulatory compliance and anti-corruption.

1.1.8. C omposition of the Board of Directors

1.1.8.1. C urrent Articles of Association and proposed changes

According to the Articles of Association, the Board of Directors comprises at least three members and at most 18 members, who are elected by the Annual General Meeting of shareholders on the recommendation of the Board of Directors. The Board of Directors elects a Chairman from among its members, a natural person, who is responsible for convening the Board and directing its proceedings. The Chairman exercises their functions for the duration of their term of offi ce as a director and may be re-elected. One or two employee directors are also appointed in accordance with legal provisions. Pursuant to the Articles of Association, when the number of directors, calculated in accordance with Article L.225-27-1 II of the French Commercial Code, is less than or equal to eight (not including any directors representing employees), the Group Committee shall appoint a director representing employees. When this number is greater than eight, then a second director representing employees shall be appointed by the European Works Council. The directors representing employees are appointed for a period of four years ending on the date of the fi rst meeting of the Group Committee or, where appropriate, of the European Works Council, following the date of the fourth anniversary of their appointment. The term of the director representing the employees may be renewed once.

The age limit applicable to the duties performed by any individual Board member and any permanent representative of a legal entity is set at 72 years; members who have reached this age during their term are deemed to have resigned at the close of the Ordinary General Meeting held after the date of the seventysecond birthday.

Furthermore, no individual person having passed the age of 70 years may be elected as a member of the Board of Directors if their election results in over one-third of the members of the Board of Directors having exceeded that age.

Board members are elected for a renewable term in offi ce of four years, with the possibility of providing for a period of two or three years to be able to implement or maintain a staggered board or to take into account the abovementioned rules relating to the age limit.

For smoother management of the process of replacing directors, the Combined General Meeting of May 16, 2025 will be asked to approve the following amendments to the Articles of Association: ■ raise the age limit from 72 to 75;

■ provide for the possibility of appointing a director for a oneyear term under the staggering clause or to take account of age limit rules.

 If approved, these amendments will allow for more flexible management of future successions (see section 1.1.8.5).

1.1.8.2. C hanges in the composition of the Board of Directors in 2024 The following changes took place in January 2024:

■ Magali Joëssel, permanent representative of Bpifrance Investissement, asked to be relieved of these duties in order to focus on an investment fund she manages. To replace her, Bpifrance Investissement appointed Carolle Foissaud, an independent director, who has since resigned from her position.

■ To replace Carolle Foissaud for the remainder of her term of offi ce, the Board of Directors appointed Jocelyne Vassoille, currently Vice-President, Human Resources and member of the Executive Committee of Vinci. Jocelyne Vassoille brings to the Board her extensive experience in human resources management for major international groups, as well as in governance and CSR issues.

■ Magali Joëssel was also responsible for CSR issues on the Board of Directors and was a member of the Audit and Accounts Committee. She has been replaced in these roles by Emmanuel Blot, permanent representative of Bpifrance Participations. Emmanuel Blot brings to these CSR issues the expertise in multi-criteria environmental and socio-economic analysis he has developed working on investment projects. The extensive fi nancial expertise acquired in her role at Bpi is also an asset for the Audit and Accounts Committee.

■ Carolle Foissaud was also Chair of the Governance, Appointments and Remuneration Committee and a member of the Audit and Accounts Committee. Jocelyne Vassoille has been appointed to replace her as Chair of the Governance, Appointments and Remuneration Committee. Carolle Foissaud remains a member of this Committee, replacing Emmanuel Blot. Emmanuelle Picard has replaced Carolle Foissaud on the Audit and Accounts Committee.

The changes described above took effect on January 5, 2024.

The Annual General Meeting of May 16, 2024 ratified the co-optation and renewed the term of offi ce of Jocelyne Vassoille as a director for a period of four years. It also decided not to renew nor replace Michel Crochon, whose term of offi ce was due to expire and who could not stand for re-election due to the age limit for directors.

Summary of changes in the composition of the Board of Directors and the Committees in 2024

Election             Re-election Departure         (term of office)      (term of office)

 Thus, at the date of this Universal Registration Document, the Board of Directors was composed of eight members, including one director representing employees:

■Chair.

* Number of shares held by Carolle Foissaud in a personal capacity.

1.1.8.3. Profi le, experience and expertise of directors

The Board of Directors and the Governance, Appointments and Remuneration Committee regularly assess the composition of the Board and its Committees, as well as the skills and experience that each director brings to the Board. They also identify how to achieve the best possible balance of directors’ profi les, taking into account both international expertise and diversity – in terms of nationality, gender and experience.

The following table summarizes the main areas of expertise and experience of Board members.

General expertise

1.1.8.4. D etailed presentation of the members of the Board of Directors at the date of this Universal Registration Document

Jocelyne Vassoille

Born 06/29/1965

French nationality

Term ends: 2028 Shares held: 800 Business address:

1973, boulevard de La Défense

92000 Nanterre, France Independent member Member of Mersen’s Board of Directors – Chair of the Governance, Appointments and Remuneration Committee

Biography – Professional experience

Jocelyne Vassoille began her career in aeronautics and HR consulting before joining the Danone group, where she held HR positions both in and outside France. She then joined LVMH as Director of Human Resources in charge of Group Talent and Acquisition, as well as the Selective

Distribution, Perfumes and Cosmetics divisions, before being appointed Director of Human

Resources at Parfums Christian Dior. She was then appointed Director of Human Resources,

CSR and Communications at Vivarte. She was Director of Human Resources of L’Oréal’s Research & Innovation division before being appointed Vice-President, Human Resources and a member of the Executive Committee of the Vinci group.

Main activities exercised outside the Company

Vice-President, Human Resources and member of the Executive Committee of the Vinci group

Current directorships:

Directorships in listed companies other than Mersen: Member of the Supervisory Board of the Laurent-Perrier group Directorships in non-listed companies:

Chair of Vinci Management SA

Director of La Fabrique de la Cité

Chief Executive Officer of Vie SAS

Directorships that have expired in the past five years: N/A

To the Company’s knowledge, at the date of this Universal Registration Document, there were no benefi ts granted under any service agreements between corporate offi cers and the issuer or any of its subsidiaries.

Other members of the Board of Directors in 2024

■ Michel Crochon was a member of the Board of Directors and responsible for coordinating discussions on strategic issues until the Annual General Meeting of May 16, 2024:

Michel Crochon                                   Member of Mersen’s Board of Directors – Responsible for leading discussions on strategic issues – Member of the Audit and Accounts Committee

Biography – Professional experience

Michel Crochon has spent his entire career at Schneider Electric, where he accumulated years of experience in many different roles. In addition to managing departments and production plants, he has also worked in sales and marketing, held cross-functional roles and managed large units. He was a member of the Executive Committee for 12 consecutive years. During that time, he was

Head of the Customers and Markets Division, and later Head of the Industry Business and the

Energy and Infrastructure Business, before becoming Head of the Group’s Corporate Strategy

                                                        and Technology. Michel Crochon has experience in working abroad and facing cross-cultural

Directorships at May 16, 2024:

Directorships in listed companies other than Mersen:

N/A

Directorships in non-listed companies:

Director of Sphéréa,

Director of Opéra Energie

Directorships that have expired in the past five years: N/A

■ Magali Joëssel was a representative of Bpifrance Investissement, a member of the Governance, Appointments and Remuneration Committee and was in charge of CSR issues until January 5, 2024:

Biography – Professional experience

Magali Joëssel began her career with the Inspectorate General of Finance at the French Ministry of Economic and Financial Affairs, before being named General Interest Investment Manager at Caisse des Dépôts et Consignations, where she was responsible for the deployment of investments and the development of new offers in the fields of renewable energy and energy efficiency. She joined Bpifrance when it was created in mid-2013 as Strategy Manager. Since 2015, Magali Joëssel has been heading an investment division dedicated to the development of new industrial activities in territories that work directly or indirectly in favor of the energy transition.

Investment projects are subject to a multi-criteria environmental analysis and a socio-economic

Born 10/24/1973

analysis.

French nationality

Main activities exercised outside the Company

Since September 2014, Magali Joëssel has been in charge of the Industrial Project Companies (SPI) fund, which invests in the development of innovative industrial activities and projects.

Directorships at January 5, 2024:

Directorships in listed companies other than Mersen: Metabolic Explorer Other directorships:

Director of Yposkesi, Aledlia and Iten; non-voting director of Expliseat

Directorships that have expired in the past five years: Director of Naval Energies and RATP

1.1.8.5. U pcoming changes in the composition of the Board of Directors in 2025 

Two directorships are due to expire at the Combined General Meeting of May 16, 2025:

■ Olivier Legrain. As his successor has not yet been identifi ed, his re-election for an additional one-year term will be subject to approval by the Combined General Meeting of May 16, 2025 and to approval of the two amendments to the Articles of Association set out in section 1.1.8.1;

■ Luc Themelin, Chief Executive Offi cer. His re-election for an additional four-year term will be subject to approval by the Combined General Meeting of May 16, 2025.

1.1.8.6. Independence of Directors

To verify whether or not each member is independent, after being informed of the recommendations of the Governance, Appointments and Remuneration Committee, the Board reviews all the criteria recommended by the AFEP-MEDEF Code and set out in the Board’s Internal Rules, which state that an independent member may not:

■ be an employee or executive corporate offi cer of the Company or the Group, an employee, executive corporate offi cer or director of a company that the Company consolidates, of the parent company of the Company or of a company consolidated by that parent company for the previous fi ve years;

■ be an executive corporate offi cer of another company in which the Company holds, directly or indirectly, a directorship, or in which an employee appointed as such or an executive corporate offi cer of the Company (currently in offi ce or having been in offi ce within the past fi ve years) is a director;

■ be (or be directly or indirectly linked to) a customer, supplier, commercial banker, fi nancial banker or adviser that is material to the Company or its Group, or for which the Company or its Group accounts for a signifi cant part of its business;

■ have close family ties to a corporate offi cer of the Company or its Group;

■ be, or have been in the past fi ve years, a statutory auditor for the Group’s fi nancial statements or for the fi nancial statements of a Group company;

■ have been a corporate offi cer of the Company for more than 12 years.

A non-executive corporate officer may not be regarded as independent if they receive variable compensation in cash or in shares or any other compensation related to the performance of the Company or the Group.

Directors representing major shareholders of the Company or its parent company may be considered independent if those shareholders do not control the Company within the meaning of Article L.233-3 of the French Commercial Code. However, where the shareholder owns more than 10% of the capital or voting rights, the Board will systematically review the director’s independence based on a report by the Governance, Appointments and Remuneration Committee, taking into account the Company’s ownership structure and any potential confl ict of interest.

A member who meets all the above criteria may nevertheless be deemed not independent by the Board of Directors due to their individual circumstances or the Company’s circumstances regarding its shareholders or for any other reason. Conversely, the Board may consider that a member who does not meet all of the above criteria is nevertheless independent. The Board must be able to justify such cases based on the Company’s specifi c circumstances and the individual circumstances of the Board member in question.

Based on the recommendations of the Governance, Appointments and Remuneration Committee, the Board of Directors reviewed the situation of each director in light of the independence criteria. It ruled that the representatives of Bpifrance could not be regarded as independent due to the level of Bpifrance’s holding in the Company’s capital. The director representing employees and the Chief Executive Offi cer cannot be regarded as independent either.

X = no; O = yes * Employee representative.

None of the independent directors have a business relationship with the Company.

At the date of this Universal Registration Document, the proportion of independent directors was 57%. In accordance with the recommendations of the AFEP-MEDEF Code, the director representing employees is not included in the calculation of this percentage. The proportion of independent directors is higher than that recommended by the AFEP-MEDEF Code, according to which independent directors should account for half the members of the Board in widely-held corporations without controlling shareholders.

1.1.8.7. N o convictions or confl icts of interest, and other disclosures concerning members of the Board of Directors and Executive Management

To the Company’s knowledge, at the date of this Universal Registration Document, the following was true of the members of the Board of Directors and Executive Management:

■ there are no family ties between them;

■ none of them has been convicted of fraud for at least the past fi ve years;

■ none of them has been involved in bankruptcy, receivership or liquidation proceedings or the placing of companies under administration as a result of having served as a member of an administrative, management or supervisory body for at least the past fi ve years;

■ no offi cial complaint and/or public sanction has been issued by a statutory or regulatory authority (including designated professional bodies) against any of them for at least fi ve years;

■ no members have been prevented by a court from acting as a member of an administrative, management or supervisory body or from participating in a company’s management or business operations for at least the past fi ve years;

■ no confl icts of interest have been identifi ed between their private interests and/or other duties with respect to the Company;

■ there are no arrangements or agreements between the main shareholders and customers, suppliers or other parties under which any one of them has been appointed as a member of the Board of Directors;

■ there is no restriction to which one of them agreed concerning the sale of their interest in the Company’s share capital, within a given timeframe, provided that:

•  each member of the Board of Directors (with the exception of the director representing employees) holds at least 800 shares of the Company, fully paid up and held in registered form,

•  stock options or free shares granted to the Chief Executive Offi cer are subject to minimum holding periods (see section 2.3).

As regards the prevention and management of confl icts of interest, Article 5 of the Internal Rules states that the directors “shall inform the Board of Directors of any actual or potential confl ict of interest to which they may be exposed in particular when they are directly or indirectly involved in a regulated agreement submitted to the Board of Directors for authorization or assessment. Where this is the case, they shall abstain from taking part in any deliberations and any decisions relating to the matters concerned.” No confl ict of interest or potential confl ict of interest was brought to the attention of the Board of Directors in 2024.

1.1.8.8. C ompliance with the rules on multiple directorships

According to the Board of Directors’ Internal Rules, the members of the Board of Directors undertake to devote the necessary time and attention to their duties. In this respect, in accordance with the recommendations of the AFEP-MEDEF Code, a director should not hold more than four other directorships in listed companies, including foreign corporations, outside the Group. In addition, the French Commercial Code provides that no natural person may simultaneously hold more than fi ve directorships in French joint stock corporations (sociétés anonymes) having their registered offi ce in France. On the basis of the information provided by the directors, all the directors comply with the rules on multiple directorships.

1.1.9. W ork of the Board of Directors and its Committees in 2024

1.1.9.1. W ork of the Board

The Board of Directors met nine times, including two extraordinary meetings not scheduled in the initial timetable, with an average attendance rate of 98%. In addition, as every year, an informal meeting was held without any executive corporate offi cers being present. As this meeting was informal, no minutes were drawn up.

During these meetings, the Board reviewed and/or made decisions concerning the following issues:

■ Group strategy and development

•  approval of strategic plans, business plan and budget;

•  discussions about strategic topics, in particular M&A projects, progress made in the electric vehicle market, developments on the SiC market, particularly in China, investments at the Columbia (Tennessee, United States) plant, and the graphite production strategy;

•  approval of the revised medium-term roadmap to 2029.

■ CSR policy

•  On the recommendation of the Audit and Accounts Committee, proposal to the Annual General Meeting to appoint Grant Thornton as sustainable auditors;

•  CSR governance and update on the implementation of the sustainability report;

•  HR roadmap and challenges of the growth plan to 2027.

■ Group results

•  regular reviews of the Group’s business;

•  approval of interim and annual financial statements, management forecasts and draft press releases on results and guidance.

■ Governance

•  review of directors’ independence;

•  re-election of Luc Themelin as Chief Executive Offi cer;

•  succession planning;

•  approval of amendments to the Board’s Internal Rules;

•  assessment of routine agreements entered into on arm’s length terms;

•  update on the assessment of the Board;

•  update on the Board’s composition.

■ Compensation

•  approval of the Chief Executive Officer’s compensation (including setting targets for the current year and validating achievement levels for the previous year);

•  approval of the compensation policy for the Chairman and members of the Board of Directors;

•  approval of long-term incentive (LTI) plans.

■ Preparation of the Annual General Meeting

•  approval of resolutions to be put to the Annual General Meeting.

■ Other

•  setting of the annual amount for the authorization of guarantees and deposits issued by Mersen;

•  analysis of the minutes of Board Committee meetings;

•  authorization of fi nancing (€100 million Schuldschein German private placement; approximately USD 200 million US private placement).

1.1.9.2. W ork performed by the Board of Directors’ Committees

In its Internal Rules, the Board of Directors has defi ned the roles, responsibilities, and resources of its two Committees: the Audit and Accounts Committee and the Governance, Appointments and Remuneration Committee. As far as possible and depending on the applicable circumstances, all Board decisions that fall within the remit of a Committee must not be taken without prior discussion with the relevant Committee and may be made only after that Committee has issued its recommendations and proposals.

When performing its duties, each of the Committees may:

■ receive from the Company any documents that it deems useful for carrying out its duties;

■ hold meetings with the Chief Executive Offi cer (if the Chairman does not also hold the position of Chief Executive Offi cer) and any Deputy Chief Executive Offi cer(s), as well as with any other person it may consider it useful to meet with;

■ request that any third parties of its choosing (specialists, advisers or statutory auditors) attend Committee meetings;

■ commission, at the Company’s expense and subject to the budgets approved by the Board of Directors, any internal or external specialist studies or research that may help the Board in its discussions.

The consultation of the Committees as described above may not serve to delegate the powers conferred upon the Board of Directors by law or in the Articles of Association or have the effect of reducing or restricting the Chief Executive Offi cer’s powers. Each Committee meeting is reported to the next Board of Directors.

 Audit and Accounts Committee

The Internal Rules of the Board of Directors state that the Audit and Accounts Committee must comprise at least three and at most six members. In accordance with the recommendations of the AFEP-MEDEF Code, it also stipulates that (i) at least two-thirds of the members of the Committee must be independent; (ii) no executive corporate offi cer may be a member; (iii) members are selected on account of their accounting or statutory audit expertise; and (iv) the appointment or reappointment of the Chair of the Audit and Accounts Committee, as proposed by the Governance, Appointments and Remuneration Committee, must be subject to a specifi c review by the Board.

At the date of this Universal Registration Document, the composition of the Audit and Accounts Committee was as follows:

■ Chairman: Denis Thiery;

■ Members: Bpifrance Participations (represented by Emmanuel Blot)  and Emmanuelle Picard.

Given their training and professional experience (see section 1.1.8.4), the Committee members satisfy the aforementioned criteria. In addition,  two-thirds of the members are independent and the executive corporate offi cer, Luc Themelin, is not a member of the Committee.

The Audit and Accounts Committee meets at least three times per year and whenever it deems necessary, and prior to meetings of the Board of Directors for which the agenda includes a review of an issue related to its area of expertise. The Committee meets approximately one week before the Board of Directors to review the annual fi nancial statements. The Group’s Chief Financial Offi cer is responsible for making the presentations. He reports at least once a year on the Group’s risk exposure, including social and environmental risk. The Director of Risk and Compliance and the Director of Internal Audit attend these meetings at least once a year, as do the Director of Management Control and the Director of Treasury and Financing.

In 2024, the remit of the Audit and Accounts Committee was expanded to include sustainability information, in line with new regulations resulting from the transposition of the CSRD.

The role of the Audit and Accounts Committee is now to:

■ monitor the financial and sustainability reporting process and, where applicable, make recommendations to ensure its integrity;

■ monitor the effectiveness of internal control, risk management and, where applicable, internal audit systems, regarding procedures for preparing and processing fi nancial accounting and sustainability information;

■ review the fi nancial statements and sustainability information and ensure the appropriateness and ongoing consistency of the accounting methods used to prepare the Company’s consolidated and parent company financial statements, and review the statutory audit of the parent company and consolidated fi nancial statements by the Statutory Auditors and the certification of sustainability information by the Statutory Auditor(s) and/or, where applicable, the independent third party(ies) (hereinafter referred to as the “Sustainability Auditor(s)”);

■ ensure compliance with the conditions for the independence of the Statutory Auditors and the Sustainability Auditor(s);

■ make a recommendation on the Statutory Auditors and the Sustainability Auditor(s) nominated for appointment at the Annual General Meeting in accordance with Article L.821-67 of the French Commercial Code. The Committee’s recommendations and preferences are brought to the attention of the Annual General Meeting asked to vote on the appointment of the Statutory Auditors and the Sustainability Auditor(s);

■ approve the provision of non-audit and sustainability reporting services, provided they are permitted by the regulations. The Committee’s decision is based on an analysis of the risks to the independence of the Statutory Auditors and the Sustainability Auditor(s) involved in the certifi cation of the fi nancial statements and the sustainability information, and the safeguards applied by the Committee.

The Committee met six times in 2024, with an attendance rate of 100%.

During these meetings, the Committee reviewed and/or made decisions concerning the following issues:

■ review and validation of the Group’s annual and interim results;

■ review of the Universal Registration Document;

■ changes to accounting standards;

■ review of compliance work, notably in relation to France’s “Sapin II” law and the GDPR;

■ review of the progress of the Buzit plan (upgrade of the Group’s

IT systems);

■ review of risk mapping;

■ approval of new German private placement financing (Schuldschein) for €100 million;

■ authorization of new US private placement (USPP) fi nancing for USD 100 million + €90 million;

■ review of cybersecurity risks and the Group’s cybersecurity policy;

■ review of environmental risks;

■ review of the aggregate investments at the Columbia plant (United States);

■ review of internal control and audits in 2024, and review and approval of the 2025 audit program;

■ review of the independence of the Statutory Auditors and of the Sustainability Auditor(s); review of Statutory Auditors’ fees for nonaudit services; review of the charter applicable to non-audit services;

■ review of routine agreements between Mersen and its non-wholly owned subsidiaries;

■ discussions on increasing the auditors’ fees in view of infl ationary pressures;

■ Recommendation concerning the appointment of the

Sustainability Auditor (Grant Thornton) for the remainder of the term of offi ce (fi nancial year 2027);

■  proposed governance of CSRD matters at Group level;

■ update on CSRD-related work, including approval of the double materiality matrix and a progress report on audit work with the Sustainability Auditor in attendance;

■ other matters, such as pensions, taxation and cash fl ow.

The Committee also met twice with the Statutory Auditors without management being present.

 Governance, Appointments and Remuneration Committee

The Internal Rules of the Board of Directors state that the Governance, Appointments and Remuneration Committee must comprise at least three and at most six members, with a majority of independent members and meet at least twice a year and, no matter the circumstances, prior to the Board of Directors’ meetings for which the agenda includes the review of an issue related to its area of expertise. In accordance with the recommendations of the A FEP-MEDEF Code, it also provides that the Committee (i) is chaired by an independent director; (ii) comprises a majority of independent members and a director representing employees; and (iii) does not include any executive corporate offi cer among its members.

At the date of this Universal Registration Document, the composition of the Governance, Appointments and Remuneration Committee was as follows:

■ Chair: Jocelyne Vassoille

■ Members: Olivier Legrain, Pierre Creusy, Denis Thiery and Bpifrance Investissement (represented by Carolle Foissaud).

The composition of the Governance, Appointments and Remuneration Committee complies with the Internal Rules and the recommendations of the AFEP-MEDEF Code, since a majority of the Committee’s members are independent (three out of four) as the director representing employees is not taken into account in the calculation of the percentage of independent directors in line with Articles 18.1 and 19.1 of the AFEPMEDEF Code.

The role of the Governance, Appointments and Remuneration Committee is as follows:

■ Governance and appointments

•  make proposals on the appointment, removal and re-appointment of the Chief Executive Offi cer, Chairman of the Board, Committee members and Presidents and any Deputy Chief Executive Offi cer(s);

•  give an opinion on proposed candidates for the above offices in terms of expertise, availability, suitability and complementarity with other members of the Board, taking into account the Board’s diversity policy;

•  conduct the selection process for new independent directors, following the procedure described in the table above, and propose any changes to that procedure;

•  prepare a succession plan for the executive corporate offi cers and make sure a succession plan is in place for members of the Executive Committee;

•  be informed in advance about Executive Management’s proposals to appoint or remove members of the Executive Committee;

•  determine which Board members can be regarded as independent;

•  review and assess the Company’s corporate governance practices and, in particular, review and inform the Board about changes in the corporate governance rules to which the Company refers;

•  review the draft corporate governance report prepared by Executive Management;

•  periodically review the structure, composition, procedures and practices of the Board of Directors and make recommendations on potential changes;

•  prepare the assessment of the Board of Directors provided for in its Internal Rules and make recommendations to the Board of Directors on its procedures and practices based on the outcome of the assessment;

•  examine the proposals made by General Management with a view to determining the objectives for gender diversity within the management bodies.

■ Compensation

•  propose the compensation of the Chairman and, where applicable, the Vice-Chairman of the Board of Directors and put forward to the Board of Directors recommended changes to the aggregate amount of compensation to be paid to the Board members and/or the allocation of such compensation, in order for the Board to then submit the proposed changes for shareholder approval at the Annual General Meeting;

•  make recommendations to the Board about (i) the annual and multi-annual compensation of the Chief Executive Offi cer and any Deputy Chief Executive Offi cer(s); (ii) the rules for determining their variable compensation; and (iii) other items of compensation such as supplementary pension plans and benefi ts in kind;

•  make recommendations on the compensation and benefi ts envisaged in the event of the removal from offi ce or the termination of the term of office of the Chairman of the Board of Directors, the Chief Executive Offi cer and, where applicable, the Deputy Chief Executive Offi cers;

•  be informed of the termination benefi ts proposed by the Chief Executive Offi cer upon the termination of the employment contract of a member of the Executive Committee, and give an opinion thereon to the Chairman of the Board of Directors;

•  give advice on the policy for allocating stock options, performance shares or any other type of securities implemented by the Board of Directors for all categories of benefi ciary and more particularly for the Chief Executive Officer and the members of the Company’s Executive Committee, and make recommendations on the frequency and terms of allocation;

•  be informed in advance about conditions and changes in the compensation of Executive Committee members.

In 2024, the Governance, Appointments and Remuneration Committee met four times during the year, with an attendance rate of 100%.

During these meetings, the Committee reviewed and/or made decisions concerning the following issues:

■ Compensation

•  2023 results and 2024 proposals for the fi xed and variable compensation (annual and multi-year variable) of the Chief Executive Offi cer;

•  proposal relating to the 2024 bonus share plans and consideration of changes to certain points relating to 2025 bonus share plans.

■ Governance and appointments

•  assessment of the Board of Directors’ practices and procedures;

•  review of directors’ expertise;

•  review of the attendance rate at Board and Committee meetings;

•  review of the information published in the Universal Registration Document, in particular ex-post and ex-ante votes and pay ratios;

•  preparation of the Annual General Meeting: review of governance information;

•  assessment of the implementation of the policy to increase the proportion of women in senior management positions;

•  assessment of the directors’ independence;

•  review of the Internal Rules of the Board of Directors;

•  succession planning for the Chairman of the Board of Directors;

•  succession planning for the Chief Executive Offi cer. As it does each year, the Committee reviewed the succession plan drawn up by Executive Management and the Human Resources Department. An external specialized fi rm prepares a report on the support they provided to members of the Executive Committee team. The Committee also approved the specialized fi rm that will assist the Group in identifying the external talent pool.

1.2. Executive Management

1.2.1. Chief Executive Offi cer

The Company is administered by a Chief Executive Offi cer, who performs their duties under the oversight of the Board of Directors. The Chief Executive Offi cer is eligible for reappointment. They may not be more than 65 years of age. When they reach the age limit, they are deemed to have resigned at the end of the Ordinary General Meeting called to vote on the fi nancial statements for the year in which the age limit is reached. The Chief Executive Offi cer may be removed by the Board of Directors.

The Chief Executive Offi cer has the broadest powers to act in all circumstances in the name of the Company, within the limits of the corporate purpose and subject to the powers granted by law to the Board of Directors and to shareholders’ meetings and subject to the limitations on powers described in section 1.1.2.

In dealings with third parties, the Company is bound even by acts of the Chief Executive Offi cer not falling within the corporate purpose, unless it can prove that the third party knew that the act fell outside the scope of the corporate purpose or that it could not fail to know this in view of the circumstances, with mere publication of the Articles of Association not counting as evidence thereof.

The Chief Executive Officer represents the Company in its dealings with third parties. Upon the recommendation of the Chief Executive Offi cer, the Board of Directors may appoint one or more individuals – who need not be Board members – to assist the Chief Executive Offi cer. Those individuals then have the title of Deputy Chief Executive Offi cer.

Luc Themelin was appointed Chief Executive Offi cer on May 11, 2016. His four-year term of offi ce was to expire on the date of the Board of Directors meeting held immediately after the Annual General Meeting called to vote on the fi nancial statements for the year ended December 31, 2023. On March 12, 2024, the Board of Directors decided to renew Luc Themelin’s term of offi ce for an additional three years. His term of offi ce as Chief Executive Offi cer will therefore expire in 2027, at the Board meeting following the Annual General Meeting called to approve the fi nancial statements for the year ending December 31, 2026.

For a detailed presentation, see section 1.1.8.4 of this chapter.

The AFEP-MEDEF Code recommends that executive corporate officers not hold more than two other directorships in listed companies, including foreign companies, outside their group. Luc Themelin has no other directorship in another French or foreign listed company.

No Deputy Chief Executive Offi cer was appointed by the Board of Directors in 2024.

1.2.2. Executive Committee

An Executive Committee was established by the Management Board on October 14, 2011 and maintained following the change in governance on May 11, 2016. It is responsible for managing the Mersen group’s operational affairs and meets every month to review the Group’s fi nancial and non-fi nancial performance and decide on action plans in various areas (including human resources, IT, procurement, legal affairs and development) in line with its strategic priorities. The Executive Committee ensures that the Group’s organization runs smoothly. To this end, it is closely involved in forecasting the human resources required for the continued development of its business activities. It defi nes the Group’s CSR roadmap and ensures that it is applied at all levels of the Company.

The Executive Committee has ten members.

At the date of this Universal Registration Document, the members of the Executive Committee were as follows:

Date of joining

2. C OMPENSATION AND BENEFITS OF CORPORATE OFFICERS

2.1. Compensation policy for corporate offi cers

This compensation policy for corporate offi cers was drawn up by the Board of Directors in accordance with Article L.22-10-8 of the French Commercial Code (Code de commerce). It is subject to approval by the Combined General Meeting of May 16, 2025.

At its meetings of March 11 and March 27, 2025, the Board of Directors decided not to make any changes to the compensation policy for corporate offi cers. It therefore remains unchanged from the policy approved by the Combined General Meeting of May 16, 2024, subject to updated performance criteria for the annual variable compensation of the Chief Executive Offi cer and a review of the criteria for long-term variable compensation.

2.1.1. G eneral principles for determining the compensation policy for corporate offi cers

The compensation policy for corporate offi cers is determined by the Board of Directors on the recommendation of the Governance, Appointments and Remuneration Committee, taking into account the principles set out in the AFEP-MEDEF Code, which are as follows:

■ comprehensiveness: the compensation determined through this process must be comprehensive. All the components of the compensation must be taken into account when determining the overall compensation level;

■ balance between the compensation components: each component of the compensation must be clearly substantiated and correspond to the general interest of the company;

■ comparability: the compensation must be assessed within the context of a business sector and the reference market. If the market is taken as a reference, it must not be the only one since the compensation of a corporate offi cer depends on the responsibilities assumed, the results achieved and the work performed. It may also depend on the nature of the tasks entrusted to the corporate offi cer or the specifi c situations;

■ consistency: a corporate officer’s compensation must be determined in a manner consistent with that of the other offi cers

and employees of the company;

■ understandability of the rules: the rules should be simple, stable and transparent. The performance criteria used must correspond to the company’s objectives, and be demanding, explicit, and, to the greatest extent possible, long-lasting;

■ proportionality: the determination of the compensation components must be well balanced and simultaneously take account of the company’s general interest, market practices, the performance of the senior managers, and the other stakeholders in the company.

The Board of Directors ensures that the compensation policy is in line with market practices for comparable companies, is adapted to the company’s strategy and context, and is intended to promote its medium- and long-term performance and competitiveness.

2.1.2. C ompensation policy for the Chairman of the Board of Directors

The compensation policy for the Chairman of the Board of Directors remains unchanged from the policy approved by the Combined General Meeting of May 16, 2024 (ninth resolution) by a 99.84% majority.

The compensation of the Chairman of the Board of Directors comprises fi xed annual compensation for his duties as Chairman, for a gross amount of €120,000, as well as compensation for his duties as a director, the payment of which is mostly conditional on attendance (see section 2.1.3).

The Chairman of the Board does not receive any cash-based or share-based variable compensation or any compensation related to the performance of either the Company or the Group.

2.1.3. Compensation policy for directors

The compensation policy for directors remains unchanged from the policy approved by the Combined General Meeting of May 16, 2024 (eleventh resolution) by a 99.48% majority.

It takes into account a maximum amount of €330,000 to be allocated to the Board of Directors for the 2025 fi nancial year and is determined as follows:

■  rules for allocating compensation in accordance with the recommendations of the AFEP-MEDEF Code in this area, with a predominant portion contingent on attendance. The annual compensation paid to each director comprises a fi xed portion of €13,000. On top of this basic amount, directors receive additional compensation as follows:

■ each director also receives a variable portion of compensation based on their actual attendance at Board and Committee meetings, corresponding to €2,000 per meeting.

If the aggregate amount of compensation calculated by applying the above rules is higher than the compensation package of €330,000 (i.e., if more meetings are held than usual), then the compensation of each director will be reduced proportionately.

2.1.4. C ompensation policy for the Chief Executive Offi cer and/of for any other executive corporate offi cer

The current compensation policy for the Chief Executive Offi cer remains unchanged from the policy approved by the Combined General Meeting of May 16, 2024 (tenth resolution) by a 96.66% majority, with the exception of (i) a change in the respective weightings of the financial criteria (recurring EBITDA and recurring operating margin) for annual variable remuneration, and (ii) a change in the rule governing the retention of the benefi t of long-term share-based remuneration plans in certain cases where the Chief Executive Offi cer leaves before the plans expire. This modifi cation, approved by the Board of Directors on March 27, 2025 on the recommendation of the CGNR, is in line with the recommendations of the AFEP-MEDEF Code.

2.1.4.1. Principles

The Board of Directors is responsible for setting and adjusting the compensation of the Chief Executive Officer based on recommendations made by the Governance, Appointments and Remuneration Committee. When carrying out its analyses and drawing up proposals for the Board, the Committee pays particular attention to respecting the recommendations in the AFEP-MEDEF Code. The Chief Executive Offi cer is not present during discussions on these matters.

The compensation policy for the Chief Executive Offi cer is in line with the Group’s objective of growing its business responsibly and sustainably in order to ensure its longevity and profi table growth and futureproof the resources it needs for its expansion. The Board set this policy taking into account the Group’s strategy as described in chapter 1 of this Universal Registration Document.

All of the components of the Chief Executive Officer’s compensation and benefi ts are analyzed exhaustively every year on a componentbycomponent basis followed by an overall consistency review in order to achieve the best balance between fi xed and variable, individual and collective, and short- and longterm compensation.

Benchmarking surveys are regularly carried out with the help of specialist consultants to position the Chief Executive Offi cer’s compensation in relation to a panel of comparable companies, in light of Mersen’s specifi c characteristics. The criteria used for selecting the panel members are based on business sector, sales, headcount, nationality and listing on a fi nancial market. The companies of the panel are also all companies with a production activity and generate at least 30% of their sales outside France.

The Board of Directors has decided that the Chief Executive Offi cer’s fi xed compensation may only be revised at relatively long intervals, in accordance with the recommendations of the AFEP-MEDEF Code. However, it may be revised on an exceptional basis if there is a major change in his duties and responsibilities or if there is a signifi cant gap between his compensation and the market benchmark. Any changes made to his fi xed compensation as a result of these specifi c cases would be publicly disclosed along with the reasons for the changes.

Additionally, the Board of Directors reserves the right to exercise its discretionary power when setting the Chief Executive Officer’s compensation, in compliance with the principles of the compensation policy approved in accordance with Article L.22-10-8 of the French Commercial Code, if specifi c circumstances arise that represent reasonable grounds for exceptionally adjusting (either upwards or downwards) one or more of the criteria underlying his compensation components in order to ensure that the application of those criteria (as defi ned below) refl ects the individual performance of the Chief Executive Offi cer and the performance of the Group as a whole. Any such adjustments would be made to the Chief Executive Offi cer’s annual variable compensation by the Board of Directors, acting on the recommendation of the Governance, Appointments and Remuneration Committee, after the Board has duly justifi ed its decision and provided the shareholders with a clear and precise explanation of its choice, it being specifi ed that the adjusted amounts may not exceed the maximum amount originally approved for the Chief Executive Officer’s annual variable compensation provided for in this policy.

If there is a major change in circumstances affecting how the Group’s fi nancial data is calculated (particularly a change in accounting standards), the Board may set the components of the Chief Executive Offi cer’s compensation package excluding any such exceptional external factors.

2.1.4.2. O verall structure of the compensation package

The compensation of the Chief Executive Officer comprises fi xed compensation, annual variable compensation, multi-year share-based compensation subject to performance conditions, and benefi ts. In accordance with the law, the payment of annual variable compensation awarded for a given year is contingent on the approval by the Ordinary General Meeting of the components of compensation paid or awarded to the Chief Executive Offi cer for that year (individual ex-post vote).

A severance payment upon the termination of his term of offi ce, based on length of service and performance conditions, may also be agreed subject to the legal provisions and recommendations of the AFEP-MEDEF Code.

Fixed compensation

Fixed compensation may only be reviewed on a multi-annual basis.

The Chief Executive Offi cer’s gross annual fi xed compensation for 2025 amounts to €500,000, unchanged from 2024.

Annual variable compensation

The Chief Executive Offi cer’s annual variable compensation is contingent on performance conditions aligned with the Group’s strategy. There is no minimum guaranteed amount.

The Board defi nes the specifi c fi nancial criteria and individual criteria for setting the annual variable compensation.

The fi nancial criteria represent 70% of the total. Under the principle of removing caps, these criteria can represent up to 120% of fi xed compensation if objectives are exceeded (see table below).

They are based on the main fi nancial indicators used by the Board to assess the Group’s fi nancial performance, in particular those reported in the Universal Registration Document, such as operating margin before non-recurring items, EBITDA before non-recurring items (in value) and net cash generated by operating activities (operating cash fl ow), as defi ned in the statement of cash fl ows.

If there is a major change in circumstances affecting how the Group’s fi nancial data is calculated (particularly a change in accounting standards), the Board may set the components of the Chief Executive Offi cer’s compensation package excluding any such exceptional external factors.

The individual criteria are defi ned by the Board of Directors in line with the Group’s strategy. They are reviewed independently. At least one criterion must be based on a CSR objective.

At its meeting of March 11, 2025, the Board of Directors set the following criteria for 2025 (weighting of each criterion is indicated in brackets):

■ Safety (25%): the objective is based on three criteria, each with equal weighting:

•  the lost time injury rate (LTIR) must be less than or equal to 1.6 to reach 100% achievement (0% if more than or equal to 1.8),

•  the severity injury rate (SIR) must be less than or equal to 60 to reach 100% achievement (0% if more than  70),

•  the number of management safety visits (MSV) must be 0.98 per employee to reach 100% achievement.

■ Environment (25%) (see chapter 4, ESRS 2 GOV-3): the objective is based on four criteria, each with equal weighting:

•  the waste recycling rate must be greater than or equal to 75% to reach 100% achievement (0% if less than or equal to 72%),

•  the Scope 3 greenhouse gas emissions targets must be validated for publication,

•  Scope 1 and 2 GHG emissions intensity must be less than or equal to 85 tCO₂ per million euros of sales for 100% achievement (0 if greater than or equal to 87 tCO₂ per million euros of sales),

•  water consumption intensity must be less than 624 cu.m per million euros of sales for 100% achievement (0 if greater than or equal to 645 cu.m per million euros of sales).

■ Succession planning (25%): the objective is to continue to roll out the succession plan for the Chief Executive Offi cer.

■ Business (25%): the objective is to successfully track and manage the Group’s capital expenditure plan and to achieve the target return and costs for the p-SiC project.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

The limits (target and maximum) are defi ned by the Board of Directors in line with the budget objectives. Achievement beyond the target rewards financial outperformance. At its meeting on March 11 , 2025, the Board of Directors decided to modify the weightings of the operating margin and EBITDA before non-recurring items targets to take account of the context and the time lag in the medium-term growth plan, leading to a signifi cant increase in depreciation and amortization without the expected growth.

In addition, the Board of Directors reserves the right to exercise its discretionary power if specifi c circumstances arise as mentioned in the principles set out in section 2.1.4.1.

The payment of annual variable compensation awarded in respect of the previous year is contingent on the approval by the Ordinary General Meeting of the components of compensation and benefi ts in kind paid during the previous year or awarded for that year (individual ex-post vote).

Long-term share-based compensation

As part of an overall strategy to motivate and retain the Chief Executive Offi cer over the long term, the Chief Executive Offi cer may be awarded long-term share-based compensation contingent on meeting objectives related to the Group’s medium- to long-term strategy.

Such compensation packages will take the form of free shares and/ or stock options whose value (measured on an IFRS basis as at the date of the Board meeting that decides on the allocation) may not exceed 30% of the Chief Executive Offi cer’s entire compensation for the previous calendar year (fi xed, maximum annual variable and long-term share-based compensation measured based on the method used for the consolidated fi nancial statements).

In addition, the Chief Executive Offi cer may not receive more than 10% of all stock options and free shares allocated each year, measured on an IFRS basis. These percentages are set by the Board of Directors based on market practices. Free shares and/or stock options are subject to the achievement of performance objectives over a minimum period of three years.

One of the criteria must be relative to the performance of other comparable companies (SBF 120 or other relevant, documented benchmarks).

Benefi ts in kind

The Chief Executive Offi cer may receive benefi ts in kind, mainly contributions paid to an external organization in respect of executive unemployment insurance, as well as use of a company car and the payment of an annual medical examination.

Incentive plans

The Chief Executive Offi cer is eligible for the staff incentive plans set up at company and/or Group level.

Exceptional compensation

No exceptional compensation may be paid.

Signing bonus

In order to facilitate the recruitment of an executive corporate offi cer from outside the Group, the Board of Directors may, on the recommendation of the Governance, Appointments and Remuneration Committee, grant a signing bonus. The amount of this bonus may not exceed the amount of the executive offi cer’s compensation package in their previous job.

2.1.4.3. C ompensation and benefi ts in the event of the termination of the Chief Executive Offi cer’s term of offi ce

Pension plan

Luc Themelin benefi ts from the “Mersen group defi ned benefi t pension plan”. The purpose of this plan, adopted in 1999, then amended in 2005, 2007 and 2013, is to enable Mersen to reward its Chief Executive Offi cer for his loyalty.

The rules state that:

■ the benefi ciary must effectively end their professional career with the member company at the age of 65 or from the age of 60;

■ the benefi ciary must fi rst claim their state old-age pension;

■ the benefi ciary must have at least ten years of continuous service at the Mersen group;

■ the benefi ciary must have been a member of the Group’s

Executive Committee for at least three years during their career;

■ the 2013 amendment confi rms that the benefi ciary will have to be classifi ed at a rank equal to or higher than coeffi cient 880 of the classifi cation of the collective bargaining agreement for the French chemicals industry.

Pension entitlements and the method for calculating the pension are based on the following rules:

■ the reference base for the calculation of the pension is the end of career salary (ending salary – ES), made up of (i) the average annual gross salaries for the last three years of activity preceding retirement, and (ii) 50% of the maximum bonus;

■ the calculation of the pension: R is the annual amount of the pension to which the benefi ciary is entitled. It is based on service determined in accordance with the rules mentioned above, bearing in mind that the entitlements are full and fi nal with 20 years of service:

Calculation of the annual

To date, taking into account his service with the Péchiney Group, to which Mersen belonged, Luc Themelin has 36 years of service with the Mersen group, including 25 years as an employee. The potential future pension rights of Luc Themelin have therefore been capped for more than ten years and can no longer be increased.

Given his length of service with the Group, Luc Themelin shall receive a supplementary pension corresponding to 20% of the amount of his reference compensation.

This plan is an important tool in securing the loyalty of the Chief Executive Offi cer in that it entitles him to a pension at a similar rate to that of the rest of the company’s employees. It does not represent an undue fi nancial burden on the company. At December 31, 2024, the estimated amount of the annuity under the supplementary pension scheme paid to Luc Themelin was €175,000, before tax and social security contributions:

Data in euros                         Ending salary Annual pension

Basic salary (average of 3 years)      500,000               100,000

Maximum bonus (50% of 1.5

fixed)       375,000 75,000 Base            875,000 175,000

In December 2021, with the approval of the Board of Directors and after a favorable review by the Audit and Accounts Committee and the Governance, Appointments and Remuneration Committee, the Company paid an amount of €2.5 million (excluding taxes and charges) into the collective insurance fund intended to fi nance the Company’s defi ned benefi t pension obligations in respect of the Chief Executive Offi cer. The early payment of a portion of the pension obligations to the Chief Executive Offi cer enables the Company to spread over time the disbursements related to these obligations. In the event of the Chief Executive Offi cer’s early retirement resulting in the loss of these entitlements, the funds (after taxes) would be returned to the Company.

Non-compete and non-solicitation clause

Should his term of offi ce as Chief Executive Offi cer end, and in return for signing a non-compete and non-solicitation undertaking for one year from the date on which his duties cease, Luc Themelin will receive a monthly payment equivalent to 50% of the gross fi xed monthly compensation that he received immediately prior to the termination of his term of offi ce, paid over the period.

The Company may decide to forgo this non-compete and non-solicitation clause and thus free itself from its obligation of making this monthly payment, by informing Luc Themelin of its decision within a notice period of two months of the termination of his term of offi ce.

The non-compete undertaking referred to above will cover all of the Group’s business activities and will be applicable in all of the countries in which Mersen is active (whether it has a physical presence there or whether it operates from a base in another country). At the Company’s discretion, the non-compete and non-solicitation undertaking will be laid down and structured as a non-compete agreement, if necessary.

No payment will be made once the Chief Executive Offi cer has claimed his pension benefi ts. In any event, no payment will be made after he reaches the age of 65.

Severance payment

Should the Mersen group terminate, in any manner and for whatever reason (barring gross or willful misconduct, retirement, enforced retirement, resignation or change of function within the Group), Luc Themelin’s term of offi ce as Chief Executive Offi cer (notably by dismissal, non-renewal of the term of office for whatever reason or elimination of offi ce following the conversion or merger of the Company, except for a change in corporate governance leading to his appointment as Chairman of the Management Board of a limited company with a Supervisory Board and a Management Board), a lump sum payment will be made to Luc Themelin, calculated as stated below in the applicable performance conditions (the “Severance Payment”), when his departure is forced. The Severance Payment will exclude the payment of any other indemnity of any kind, including damages, except for the non-compete and non-solicitation indemnity.

Should the responsibilities and/or compensation of Luc Themelin be modifi ed substantially following a take-over of the Company, and if as a result, he decides to leave the Company, he would be entitled to the same Severance Payment.

The amount of the Severance Payment is calculated as follows: I = 0.5 x R x C where

■ I is the amount of the Severance Payment;

■ R is the gross total compensation (fi xed compensation and annual variable compensation, excluding benefi ts in kind and incentives) paid to Luc Themelin for the 3 calendar years prior to termination, whether this compensation and benefi ts have been paid to him in respect of his duties as Chief Executive Offi cer or as an employee; and

■ C is Luc Themelin’s performance condition as measured in accordance with the criteria defi ned below.

Payment of the Severance Payment will be subject to the achievement of the performance condition under the following conditions:

■ Performance rate (P):

P = the average percentage of Luc Themelin’s annual variable compensation in the four calendar years preceding his departure (as Chief Executive Offi cer).

The percentage of annual variable compensation may vary from 0 to 112% of annual fi xed compensation. The average performance rate P will be observed by the Board of Directors.

■ Performance condition (C):

If P ≥ 100%, C = 100%

If P ≥ 90% and < 100%, C = 90%

If P ≥ 80% and < 90%, C = 80% If P ≥ 60% and < 80%, C = 60% If P ≥ 50% and < 60%, C = 50%

If P < 50%, no payment will be made.

The amount of any Severance Payment (I) that may be due upon termination of his term of offi ce may not exceed 18 months of total gross compensation (fi xed and annual variable). In addition to this Severance Payment, a non-compete indemnity may also be due and may not exceed six months of total gross compensation (fi xed and annual variable), making a total of 24 months of total gross compensation (fi xed and annual variable) for both payments.

Unemployment benefi ts

Luc Themelin is also eligible for basic corporate officers’ unemployment benefi ts (Garantie Sociale des Chefs d’Entreprises, GSC) for up to 24 months. The annual cost of this benefi t depends on the previous year’s net taxable income of the party concerned and the length of the period over which the benefi t is paid. The Company pays 40% of the contribution and Luc Themelin pays 60%. This arrangement includes a waiting period of 30 days of continuous unemployment.

Stock options – Performance shares

Should Luc Themelin’s term of offi ce as Chief Executive Offi cer be terminated in any manner and for any reason whatsoever (barring termination following the acquisition of control of the Company, retirement or enforced retirement), he will automatically lose his entitlement to all the stock options allocated to him prior to the end date of his term of offi ce where the conditions of allocation (condition related to continued presence and performance conditions) have not been satisfi ed by the end date of his term of offi ce. He will also automatically lose his entitlement to all the free shares allocated to him in accordance with the provisions of Articles L.225-197-1 to L.225-197-5, L.22-10-59 and L.22-10-60 of the French Commercial Code, prior to the end date of his term of offi ce, where shares allocated have not vested by the end date of his term of offi ce.

However, the Board of Directors reserves the right to decide, where appropriate, to maintain the benefi t of the stock options and performance shares, reduced on a pro rata basis, and subject to achievement of the corresponding performance conditions. The Board is required to give reasons for its decision.

In the event that the responsibilities and/or remuneration of Mr. Luc Themelin should be substantially modifi ed following a takeover of the Company, and where, as a result, he should decide to leave the Company, as well as in the event of dismissal following a takeover of the Company, retirement or being forced into retirement, the benefi t of the share subscription options and free shares in question will be maintained, after reduction of their number pro rata temporis  and subject to the fulfi llment of the corresponding performance conditions. However, the Board reserves the right, by reasoned decision, not to proceed with all or part of the aforementioned reduction.

2.1.4.4. C hanges in the organization of Executive Management

If the Board of Directors decides to appoint one or more Deputy

Chief Executive Offi cers, the policy relating to the Chief Executive Offi cer’s compensation package will also apply to the Deputy Chief Executive Offi cer(s), adapted as required. If the Board of Directors decides to combine the roles of Chairman and Chief Executive Officer, the policy relating to the Chief Executive Offi cer’s compensation package will apply to the Chairman and Chief Executive Offi cer, adapted as required.

The compensation for directors for 2024 was awarded in accordance with the compensation policy described in 2023 URD and was paid in a single installment at the beginning of 2025. It should be noted that, in accordance with the Internal Rules of the Board of Directors, the director representing employees and the Chief Executive Offi cer do not receive any compensation for their duties as directors. In addition, Emmanuel Blot, who since January 5, 2024 has been responsible for monitoring matters related to CSR, stated that he did not wish to receive any compensation in this capacity (see section 1.1.3 of this chapter).

The amounts indicated above include the compensation and benefi ts in kind received by the directors from the Company and from its controlled companies within the meaning of Article L.233-16 of the French Commercial Code. In accordance with Article L.225-45 of the French Commercial Code, this only concerns compensation for their duties as directors.

2.2.2. C ompensation of the Chairman of the Board of Directors (Olivier Legrain) for 2024

The compensation of the Chairman of the Board of Directors for 2024 was granted in accordance with the compensation policy described in the 2023 URD.

* The compensation granted in respect of a given fiscal year is paid in the subsequent year.

The amounts indicated above include the compensation and benefi ts in kind received by the Chairman of the Board of Directors from the Company and, where applicable, from its controlled companies within the meaning of Article L. 233-16 of the French Commercial Code.

2.2.3. Compensation of the Chief Executive Offi cer (Luc Themelin) for 2024

The compensation of the Chief Executive Offi cer for 2024 was granted in accordance with the compensation policy described in the 2023 URD.

Summary of the compensation and benefi ts, options and shares granted to the Chief Executive Offi cer

* Benefits in kind primarily correspond to contributions for executive unemployment benefits.

The amounts indicated above include the compensation and benefi ts in kind received by the Chief Executive Offi cer from the Company and, where applicable, from its controlled companies within the meaning of Article L.233-16 of the French Commercial Code. The Chief Executive Officer does not receive any compensation from these companies.

Annual fi xed compensation

Luc Themelin’s fi xed compensation for 2024 was €500,000, gross.

Annual variable compensation

At its meeting of March 11, 2025, the Board of Directors carried out a performance assessment of Luc Themelin and set the overall performance at 71.8%, representing annual variable compensation granted of €359,050 for 2024, payable in 2025 contingent on the approval by the Combined General Meeting of May 16, 2025 of the compensation components paid to Luc Themelin in the previous year or granted in respect of that year (individual ex-post vote).

Financial criteria:

The 2024 fi nancial objectives were based on the Group’s annual budget:

■ Operating margin before non-recurring items: the maximum target was 11.4% of sales, higher than the 2023 target of 11.3%. The Board of Directors set an ambitious maximum target in the context of the Group’s growth plan, which requires high levels of capital expenditure and therefore higher depreciation and amortization. The result achieved was 10.5%, or an achievement rate of 53.7%. During the year, the short- to medium-term outlook for the electric vehicle market – and therefore for SiC semiconductors – shifted, leading to lower volumes for the Group and therefore a lower margin than initially expected.

■ Operating cash fl ow: the target was set at €148.6 million in 2024. The maximum target (€162.6 million) was set below the level for 2023 (€179 million), which had been a record year, in particular owing to advances received on SiC contracts. However, the targets and maximum targets are well above the levels for 2022 (€105.5 million) and 2021 (€116.8 million). Achievement was well above target, mainly due to the swift results from the initial inventory reduction plan at the end of the year, leading to an achievement rate of 150%.

■ EBITDA before non-recurring items: the target for this objective was €216 million and the maximum was €225 million, representing a 10% increase compared with 2023. Based on EBITDA before non-recurring items of €206 million, achievement of this objective stands at 38.5%.

Non-fi nancial criteria:

For 2024, the non-fi nancial objectives were based on the following criteria:

■ Safety (25%): this criterion is based on three indicators:

•  The lost time injury rate (LTIR) must be less than or equal to

1.4 to reach 100% achievement (0% if more than or equal to 1.6). For 2024, the rate was 2.1, i.e., 0% achievement. This rate is lower than that for 2023 (2.78), demonstrating the Group’s efforts to limit the lost time injury rate.

•  The severity injury rate (SIR) must be less than or equal to 60 to reach 100% achievement (0% if more than or equal to 70). For 2024, the rate was 70, i.e., 0% achievement. This rate is close to that of 2023 (68).

•  The number of management safety visits (MSV) must be greater than 1.2 per employee. For 2024, the number of MSVs was 0.95 per employee, an improvement of 15% on 2023, but still not enough to meet the target set. The achievement rate is therefore 0%.

The Board of Directors is aware that the safety targets set for 2024 were very diffi cult to achieve, particularly in view of the deployment of the Group’s growth plan. It considers that the 0% achievement rate does not call into question the robustness of the Group’s safety policy or the prevention initiatives deployed.

■ Environment (25%): this criterion is based on four indicators:

•  The waste recycling rate must be greater than or equal to 75% to reach 100% achievement (0% if less than or equal to 70%). For 2024, the rate was 71.3%, i.e., 26% achievement.

•  The target for Scope 3 greenhouse gas emissions was to have the methodology validated for publication. The methodology was validated and tested but not published. The target was therefore 80% achieved.

•  The target for Scope 1 and 2 GHG emissions intensity was for the intensity to be less than or equal to 87 tCO₂ per million euros to reach 100% achievement, lower than the level in 2023 (0 if greater than or equal to 92 tCO₂ per million euros); the actual result was 77 tCO₂ per million euros, representing an achievement rate of 100%.

•  The last target for the environmental objective was for the Group’s water consumption intensity to be less than 645 cu.m per million euros of sales to reach 100% achievement, with a low of 653 cu.m per million euros of sales, lower than the intensity achieved in 2023. In 2024, the actual fi gure was 692 cu.m per million euros of sales, representing a 0% achievement rate. Benefits from the Group’s ongoing review of its most water-intensive sites should fi lter through in 2025.

Taking these factors into account, the overall achievement rate for the safety objective was 52%, i.e., a 3.9% contribution to the nonfi nancial objectives out of a maximum 7.5%.

■ Succession plan (15%): this plan is necessary to ensure an effective transition for certain roles in the Executive Committee over the medium term. The Board of Directors considers that the objective was 100% achieved, particularly with the appointment of Caroline Levy as successor to Christophe Bommier, Chief Technology Offi cer. Signifi cant progress has been made on other succession plans. This represents a 4.5% contribution to total annual variable compensation.

■ Business (20%): in 2024, the objective was to track and manage the Group’s capital expenditure plan, and specifi cally the p-SiC project. The objective was 85% achieved, i.e., 5.1% of total compensation, the Board judging that progress on the p-SiC project was signifi cant but not wholly in line with initial expectations for the year.

■ External growth (15%): the objective was to complete the various acquisitions planned for 2024. With regard to acquisitions completed, namely GMI, KTK and Bar-Lo, the objective was 100% achieved, representing 4.5% of all objectives.

The Board of Directors considers that the 60% overall achievement rate for non-fi nancial objectives illustrates the complexity and ambitious nature of the targets set, particularly with regard to safety and the environment.

Long-term compensation

Under the 2024 plan, the Board of Directors allocated 17,321 free shares to the Chief Executive Offi cer, subject to the continued presence and performance conditions set out in section 2.3.4, representing 6.3% of the total number of shares allocated under the three plans authorized by the Combined General Meeting of May 16, 2024.

It should be noted that the Board of Directors’ meeting of May 16, 2024 had initially decided to allocate 17,640 shares to the Chief Executive Offi cer, it being specifi ed, however, that in accordance with the Chief Executive Offi cer’s compensation policy, this number could be capped in the event that the value of these shares as calculated under IFRS standards exceeded 30% of his total compensation for 2023. On the basis of the IFRS valuation report submitted by an independent consultant in June 2024, the number of shares granted to Luc Themelin was reduced by 319 shares to remain within the above-mentioned limit.

Under the 2021 plan, Luc Themelin received 11,857 shares which  vest in 2024 . The extent to which performance conditions have been achieved is presented in section 2.3.1.

Incentives

In 2024, the Chief Executive Offi cer was a member of the incentive plan set up within the Company.

2.2.5. Pay ratio

In accordance with the provisions of Article L.22-10-9 of the French Commercial Code and the recommendations of the AFEP-MEDEF Code, the Company discloses a pay ratio showing the difference between the compensation of executive corporate officers (Chairman and Chief Executive Offi cer) and the average and median salary of all employees of the French entities (excluding executive corporate offi cers) of the Company and its controlled companies within the meaning of Article L.233-16 of the French Commercial Code having their registered offi ce in France. The scope includes 1,066 employees (46 employees for the Group’s head offi ce). It corresponds to all the French companies that formed part of the Group at end-2024.

In accordance with the AFEP-MEDEF guidelines on compensation multiples, only employees “continuously present” during a given year are included, i.e., the fi gures exclude the effects of hires and departures during that year.

The components of compensation taken into account, described below, are the gross components before social security contributions paid during the year:

■ basic salary, regular or special bonuses, overtime and any other components of gross salary paid in year Y;

■ variable compensation paid in year Y; ■ accounting valuation of the LTI allocated in year Y;

■ incentives and profi t-sharing paid in year Y;

■ benefits in kind (contributions paid into the executive unemployment insurance scheme and use of a company car);

■ directors’ compensation (for the Chairman of the Board) for year Y.

This defi nition differs from the one presented in section 2.2.3.

Annual changes are calculated on the basis of samples that change from one year to the next. While only those employees who were present throughout the year in question are used to calculate the ratio, the sample used in a given year is liable to change in subsequent years.

** The significant increase in the Chief Executive Officer’s compensation for 2024 compared with 2023 is explained by (i) the signifi cant variable portion paid in 2024 in respect of 2023 to refl ect the Group’s particularly strong performance in that year and (ii) the value of the LTIs awarded in 2024 at a higher share price than that used for the valuation in 2023.

Information on trends in median employee compensation: this is lower in 2024 than in 2023 for both scopes due to the arrival of new junior employees during 2023 with lower-than-average salaries.

The three free share plans for executives that have not yet reached the end of the vesting period are those awarded by the Board of Directors under the authorizations granted by the Annual General Meeting in 2022, 2023 and 2024. Shares vested for benefi ciaries under the 2021 plan in 2024. The characteristics of each plan are detailed below and summarized in the table in section 2.3.5.

Specifi c rules applicable to free shares granted to the Chief Executive Offi cer

In accordance with the recommendations of the AFEP-MEDEF Code, free share grants to the Chief Executive Offi cer are subject to the following rules:

■ No hedging: the Chief Executive Offi cer has formally undertaken not to engage in hedging. To the best of the Company’s knowledge, no hedging instruments have been put in place.

■ Holding requirements: the Board of Directors has decided that the Chief Executive Offi cer is required to retain 30% of the shares vested under each plan until he holds an amount of Company shares at least equivalent to one years’ fi xed salary (gross).

Terms and conditions common to the 2021, 2022, 2023 and 2024 executive free share plans

■ The benefi ciaries of these plans are the Chief Executive Offi cer and the other members of the Executive Committee, as well as a limited number of Vice-Presidents of the Group’s business lines.

■ The objective of these plans is to incentivize the senior executives by giving them a long-term stake in (i) the growth of the share price, (ii) an increase in the Group’s profi tability and (iii) an improvement in non-fi nancial indicators, in line with the Group’s CSR roadmap.

■ Term of plans (vesting period): 3 years. Shares vest at the end of this period, subject to continued presence and performance conditions.

■ In accordance with the compensation policy for the Chief Executive Offi cer (see section 2.1.4.3):

•  The number of free shares granted to the Chief Executive Offi cer under a given plan may not exceed 10% of the total number of free shares granted under all plans approved in the same year.

•  The value of the shares granted to the Chief Executive Offi cer (measured on an IFRS basis as at the date of the Board meeting that decides on the allocation) may not exceed 30% of the Chief Executive Offi cer’s entire compensation for the previous calendar year (fi xed, maximum annual variable and long-term share-based compensation measured based on the method used for the consolidated fi nancial statements).

•  In certain cases of termination of his term of offi ce, and subject to fulfillment of the performance conditions, Luc Themelin may be entitled to free shares on a pro rata basis.

2.3.1. 2021 executives plan

On May 20, 2021, upon authorization of the Annual General Meeting on that date (twenty-first resolution), the Board of Directors adopted a free share plan for the members of the Executive Committee, including the Chief Executive Offi cer and the Vice-Presidents of the Group’s fi ve business lines, i.e., a total of 14 people.

Number of free shares and portion allocated to the Chief Executive Offi cer

■ Maximum number of shares that may be allocated: 84,000.

■ Total number of shares allocated: 84,000.

■ Total number of shares allocated to the Chief Executive Offi cer: 12,600, representing 6.5% of the total number of free shares allocated under the three plans authorized by the Annual General Meeting of May 20, 2021.

Performance conditions

On the recommendation of the Governance and Remuneration Committee, the Board of Directors selected fi ve performance criteria, detailed below. Each criterion is independent.

■ Stock market criterion (33%)

Growth in the Mersen share price (“G”) will be compared to that of the STOXX Europe 600 index (Industrial goods and services) or to the SBF 120 index if the STOXX Europe 600 index is no longer available (“the Index”). Growth in the share price will be compared over three years, starting from the fi rst working day of the month of the 2021 Annual General Meeting, i.e., from May 2, 2021 to April 30, 2024.

The percentage achievement will be calculated as follows:

                                                                                Achievement

G < index growth                                                                     0%

G = index growth                                                                   50%

G ≥ 10 percentage points above index growth                 100%

The achievement rate between the lower and upper limits has been calculated on a straight-line basis.

■ Profi tability criterion (34%)

Profi tability has been measured based on operating income before non-recurring items per share and return on capital employed (ROCE – calculated as the ratio of operating income before non-recurring items to average weighted capital employed, excluding right-of-use assets). These two criteria have been measured over the average of 2021, 2022 and 2023. Each indicator counts independently for 17% (the outperformance or underperformance of one of the indicators will have no effect on the other fi nancial criterion). The lower limit is equal to the Group’s 2020 performance. The upper limit was disclosed on an ex-post

basis (see results below).

Operating income before non-recurring items per share                Achievement

■ Three CSR criteria (33%), each with the same weighting (11%)

• Human capital development: Percentage of women engineers and managers in the Group in December 2023

The indicator has been measured based on employees on sites included in the Group’s HRIS at December 31, 2020 (approximately 99% of Group employees). Acquisitions made after December 2020 have been excluded from the calculation of this criterion.

Percentage of women engineers and managers Achievement

< 24%                                                                                       0%

= 27%                                                                                     70%

≥ 30%                                                                                   100%

The achievement rate between the lower and upper limits has been calculated on a straight-line basis.

•  Environmental footprint of our sites: Percentage of waste recycled in comparison with the total amount of waste generated by the Group’s operations

This criterion was measured in 2023 based on the environmental reporting scope.

The achievement rate between the lower and upper limits has been calculated on a straight-line basis.

•  Reduction in greenhouse gas emissions intensity of our production sites

This criterion was measured in 2023 based on the environmental reporting scope, which includes all the sites.

Reduction in CO₂ emissions                              Achievement

< 5% reduction in emissions intensity                                    0%

≥ 5% reduction in emissions intensity                                  30%

≥ 10% reduction in emissions intensity                              100%

The achievement rate between the lower and upper limits has been calculated on a straight-line basis.

Results

Actual performance and achievement rates were as follows:

Actual Achievement

                                                         performance                rate

 As a result, the overall achievement rate is 94.1%. A total of 79,041 free shares were allocated to 14 benefi ciaries, including 11,857 to the Chief Executive Offi cer.

2.3.2. 2022 executives plan

On May 19, 2022, upon authorization of the Annual General Meeting on that date (thirty-fi rst resolution), the Board of Directors adopted a free share plan for the members of the Executive Committee, including the Chief Executive Officer and the Vice-Presidents of the Group’s fi ve business lines, i.e., a total of 14 people.

Number of free shares and portion allocated to the Chief Executive Offi cer

■ Maximum number of shares that may be allocated: 84,000.

■ Total number of shares allocated: 84,000.

■ Total number of shares allocated to the Chief Executive Offi cer: 12,600, representing 6.4% of the total number of shares allocated under the three plans authorized by the Annual General Meeting of May 19, 2022.

In April 2023, Mersen carried out a capital increase. In order to neutralize the dilutive effect of this increase on the free shares initially granted in May 2022, the Board of Directors used the authorization given by the Company’s shareholders in the thirtyfi rst resolution of the Annual General Meeting of May 19, 2022 in order to increase the total number of shares granted by 5% (88,200 shares). The number of shares granted to the Chief Executive Offi cer therefore now totals 13,230.

Performance conditions

On the recommendation of the Governance and Remuneration Committee, the Board of Directors selected six performance criteria, detailed below. Each criterion is independent:

■ Stock market criterion (33%)

Growth in the Mersen share price (“G”) will be compared to that of the STOXX Europe 600 index (Industrial goods and services) or to the SBF 120 index if the STOXX Europe 600 index is no longer available (“the Index”). Growth in the share price will be compared over three years, starting from the fi rst working day of the month of the 2022 Annual General Meeting, i.e., from May 2, 2022 to April 30, 2025.

The percentage achievement will be calculated as follows:

                                                                                Achievement

G < index growth                                                                     0%

G = index growth                                                                   50%

G ≥ 7 percentage points above index growth                    100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

■ Profi tability criterion (34%)

Profi tability will be measured based on operating income before non-recurring items per share and return on capital employed (ROCE – calculated as the ratio of operating income before non-recurring items to average weighted capital employed, excluding right-of-use assets). These two criteria will be measured over the average of 2022, 2023 and 2024. Each indicator will count independently for 17% (the outperformance or underperformance of one of the indicators will have no effect on the other fi nancial criterion).

 Operating income before non-recurring

 Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

ROCE                                                                     Achievement

ROCE < 10.4%                                                                        0%

ROCE = 10.4%                                                                      30%

ROCE ≥ 11.2%                                                                    100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

■ Four CSR criteria (33%), each with the same weighting (8.25%)

• Human capital development: Percentage of women engineers and managers in the Group in December 2024

The indicator will be measured based on employees on sites included in the Group’s HRIS at December 31, 2021 (approximately 99% of Group employees). Acquisitions made after December 2021 will be excluded from the calculation of this criterion.

Percentage of women engineers and managers Achievement

< 24.4%                                                                                    0%

= 26%                                                                                     80%

≥ 28%                                                                                   100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

•  Environmental footprint of our sites: Percentage of waste recycled in comparison with the total amount of waste generated by the Group’s operations

This criterion will be measured in 2024 based on the environmental reporting scope.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

•  Reduction in greenhouse gas emissions intensity of our production sites

This criterion will be measured in 2024 based on the environmental reporting scope, which includes all the sites.

Reduction in CO₂ emissions                              Achievement

< 13% reduction in emissions intensity 0% ≥ 15% reduction in emissions intensity          80%

≥ 17% reduction in emissions intensity                              100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

• Reduction in water consumption at our production sites

This criterion will be measured in 2024 based on the 2021 environmental reporting scope, which includes all the sites.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

Results

The performance achievement rates will not be known until 2025. (calculation of stock market criterion)

2.3.3. 2023 executives plan

On May 16, 2023, upon authorization of the Annual General Meeting on that date (nineteenth resolution), the Board of Directors approved a plan covering the members of the Executive

Committee, including the Chief Executive Officer and the Vice-Presidents of the Group’s fi ve business lines, i.e., a total of 14 people.

Number of free shares and portion allocated to the Chief Executive Offi cer

■ Maximum number of shares that may be allocated: 86,100.

■ Total number of shares allocated: 86,100.

■ Maximum number of shares allocated to the Chief Executive Offi cer: 12,600, representing 6.3% of the total number of shares granted under the three plans authorized by the Annual General Meeting of May 16, 2023.

Performance conditions

On the recommendation of the Governance and Remuneration Committee, the Board of Directors selected six performance criteria, detailed below. Each criterion is independent:

■ Stock market criterion (33%)

Growth in the Mersen share price (G) will be compared to that of the SBF 120 index. Growth in the share price will be compared over three years, starting from the fi rst working day of the month of the 2023 Annual General Meeting, i.e., from May 2, 2023 to April 30, 2026.

The percentage achievement will be calculated as follows:

                                                                                Achievement

G < index growth                                                                     0%

G = index growth                                                                   50%

G ≥ 7 percentage points above index growth                   100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis and capped at 100%.

■ Profi tability criterion (34%)

Profi tability will be measured based on operating income before non-recurring items per share and return on capital employed (ROCE – calculated as the ratio of operating income before non-recurring items to average weighted capital employed, excluding right-of-use assets). These two criteria will be measured over the average of 2023, 2024 and 2025. Each indicator will count independently for 17% (the outperformance or underperformance of one of the indicators will have no effect on the other fi nancial criterion).

 Operating income before non-recurring

Achievement rates between the lower and upper limits will be calculated on a straight-line basis. The upper limit will be disclosed ex-post.

The lower limit of operating income before non-recurring items per share (€5.02) was adjusted by the number of shares created during the May 2023 capital increase.

ROCE                                                                     Achievement

ROCE < 10.0%                                                                        0%

ROCE = 10.0%                                                                      30%

ROCE ≥ xxx                                                                         100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis. The upper limit will be disclosed ex-post.

■ Three CSR criteria (33%), each with the same weighting (11%)

• Human capital development: Percentage of women engineers and managers in the Group in December 2025

The indicator will be measured based on employees on sites included in the Group’s HRIS at December 31, 2022 (100% of Group employees). Acquisitions made after December 2022 will be excluded from the calculation of this criterion.

Percentage of women engineers and managers Achievement

< 25.3%                                                                                    0%

= 27%                                                                                     80%

≥ 28.3%                                                                                100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

•  Environmental footprint of our sites: Percentage of waste recycled in comparison with the total amount of waste generated by the Group’s operations

This criterion will be measured in 2025 based on the environmental reporting scope.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

•  Reduction in Scope 1 and 2 greenhouse gas emissions intensity of our production sites

This criterion will be measured in 2024 based on the environmental reporting scope, calculated on the basis of sales at constant exchange rates.

Scope 1 and 2 GHG emissions intensity         Achievement

> 157 tCO₂ emitted per million euros of sales                       0%

= 157 tCO₂ emitted per million euros of sales                     30%

= 130 tCO₂ emitted per million euros of sales                     50%

= 123 tCO₂ emitted per million euros of sales                     80%

≤ 120 tCO₂ emitted per million euros of sales                   100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

Results

The performance achievement rates will not be known until 2026.

2.3.4. 2024 executives plan

On May 16, 2024, upon authorization of the Annual General Meeting on that date (twenty-eighth resolution), the Board of Directors adopted a plan for the members of the Executive Committee, including the Chief Executive Officer and the Vice-Presidents of the Group’s four business lines, i.e., a total of 14 people.

Number of free shares and portion allocated to the Chief Executive Offi cer

■ Maximum number of shares that may be allocated: 120,540.

■ Total number of shares allocated: 120,221.

■ Total number of shares allocated to the Chief Executive Offi cer: 17,321, representing 6.5% of the total number of shares allocated under the three plans authorized by the Annual General Meeting of May 16, 2024.

Performance conditions

On the recommendation of the Governance and Remuneration Committee, the Board of Directors selected seven performance criteria, detailed below. Each criterion is independent:

■ Stock market criterion (25%)

Growth in the Mersen share price (“G”) will be compared to that of the SBF 120 index over three years, starting from the fi rst working day of the month of the 2024 Annual General Meeting, i.e., from May 2, 2024 to April 30, 2027. To limit the impacts of volatility, the average closing price for the 20 trading days preceding May 2, 2024 will be used for the beginning of the period and the average closing price for the 20 trading days prior to April 30, 2027 will be used for the end of the period.

The lower limit (0%) corresponds to share price growth below that for the index. The upper limit (100%) corresponds to share price growth 5 percentage points or more higher than growth for the index. Achievement rates between the lower and upper limits will be calculated on a straight-line basis and capped at 100%.

Actual data will be disclosed ex-post.

■ Sales criterion (15%)

This criterion will be measured on the basis of the compound average growth rate (CAGR) of Group sales over the three years 2023 to 2026, including bolt-on acquisitions and disposals (in line with the Group’s roadmap), calculated at constant USD and CNY exchange rates.

The upper limit is higher than the average growth expected between 2023 and 2027 (8.8%) in the Group’s medium-term business plan announced in March 2023 (€1.7 billion in 2027). The lower limit (0% achievement) corresponds to an expected growth rate well above world GDP growth.

Actual data will be disclosed ex-post.

■ Criterion based on ROCE (15%)

This criterion will be measured based on the return on capital employed (ROCE). It will take into account average Group ROCE for 2024, 2025 and 2026, calculated using the same methodology used to calculate Group ROCE for 2023. The lower (0%) and upper (100%) limits were determined based on the business plan used to set the Group’s 2027 targets, and will be disclosed ex-post.

■ Criterion based on EBITDA (15%)

This criterion will be measured based on EBITDA margin before non-recurring items and will take into account the Group’s average EBITDA margin before non-recurring items for 2024, 2025 and 2026. The limits have been determined based on the Group’s business plan and will be disclosed ex-post.

■ Three CSR criteria (30%) each with the same weighting (10%) 

•  Human capital development: Percentage of women engineers and managers in the Group in December 2026

The Group has set itself the objective of increasing the percentage of women engineers and managers in 2027 versus 2022 by

4 points.

In the proposed plan, the lower limit (0%) corresponds to the percentage of women engineers and managers at end-2023, i.e., 26.1%.

The upper limit (100%) is set at 28.5%, in line with the roadmap (4-point increase between 2022 and 2027, i.e., an average 0.75-point increase per year).

The indicator will be measured based on employees on sites included in the Group’s HRIS at December 31, 2023. Acquisitions made after this date will be excluded from the calculation of this criterion.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis and capped at 100%. The calculation method may be modifi ed by the Board of Directors in the event of a change in defi nition, notably in connection with the application of the European Corporate Sustainability Reporting Directive (CSRD).

• Reduction of greenhouse gas emissions (Scopes 1 and 2) from our production sites, calculated in tonnes of CO₂ per million euros of sales (tCO₂/€m).

The Group set a target to reduce CO₂ emissions intensity (Scopes 1 and 2) by 35% by 2027 compared with 2022.

In 2023, the Group reduced its emissions intensity to 90 tCO₂ per million euros of sales, compared with 121 tCO₂ per million euros of sales in 2022.

In the proposed plan, the lower limit (0%) is set at 100 tCO₂ per million euros of sales, i.e., a 17% improvement on the 2022 performance (121 tCO₂ per million euros of sales). The upper limit (100%) is set at 82 tCO₂ per million euros of sales, a 32% reduction on 2022, in line with the roadmap.

This criterion will be measured in 2026 based on the 2023 environmental reporting scope and on sales at constant exchange rates in order to cancel out the impacts of currency fl uctuations on the ratio. The limits may be adjusted by the Board of Directors in the event of a change in the calculation method.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

• Water consumption intensity

The Group set a target to reduce its water consumption intensity by 15% between 2022 and 2027. In 2022, the Group’s water consumption intensity was 686 cu.m per million euros of sales.

In the proposed plan, the lower limit (0%) corresponds to the results obtained at end-2022. The upper limit (100%) is set at 603 cu.m per million euros of sales, i.e., a reduction of 12% compared with 2022, in line with the roadmap.

This criterion will be measured based on consumption in cubic meters per million euros of Group sales (cu.m/€m).

Achievement rates between the lower and upper limits will be calculated on a straight-line basis. This criterion will be measured in 2026 based on the 2023 like-for-like environmental reporting scope and on sales at constant exchange rates (2023-2026). In particular, consumption related to the p-SiC project will not be included as it was still being determined at the date of this document.

Results

The performance achievement rates will not be known until 2027.

2.3.5. Free shares for executives: previous allocations

*  In April 2023, Mersen carried out a capital increase. In order to neutralize the dilutive effect of this increase on the shares initially granted in May 2022, the Board used the authorization given in the thirty-first resolution of the Annual General Meeting of May 19, 2022 in order to increase the total number of shares granted by 5%.

2.4. Free shares (non-executives programs)

The free share plans for non-executives that have not yet reached the end of the vesting period are those awarded under the authorizations granted by the Annual General Meeting in 2022, 2023 and 2024. Shares allocated under the plans awarded in 2021 vested fully for their benefi ciaries in 2024.

Terms and conditions common to the free share plans awarded to non-executives

■ Each year, the Annual General Meeting authorizes two free share plans for non-executives, one of which is subject to performance conditions. These plans are reserved for certain employees identifi ed as high-potential managers or managers with expertise in strategic sectors.

■ The Board of Directors determines the identity and categories of the benefi ciaries of the share allocation, as well as any allocation conditions.

■ Neither the Chief Executive Offi cer nor any member of the Executive Committee was a benefi ciary of this plan.

■ The plans have a three-year vesting period.

2.4.1. 2021 plans

On May 20, 2021, upon authorization of the Annual General Meeting on that date (twentieth and twenty-second resolutions), the Board of Directors adopted two free share plans for Group managers other than those covered by the executive plan.

2.4.1.1. Performance-based plan

 Number of shares and benefi ciaries

■ Maximum number of shares to be allocated: 100,800 shares, representing around 0.5% of the share capital at the date of the Annual General Meeting.

■ Number of shares allocated: 100,800 shares.

■ Number of benefi ciaries: 194 Mersen Group managers.

Performance conditions

Free shares may only be allocated to the benefi ciary at the end of the vesting period (May 20, 2024) if the benefi ciary is still an

employee of the Group and if the performance conditions defi ned below are met.

Therefore, the percentage of free shares allocated to each of the benefi ciaries will be determined based on the two criteria below; each criterion is independent (any outperformance in relation to a criterion cannot offset the result of another criterion) and counts as part of the overall achievement, expressed as a percentage as set out below:

■ A fi nancial criterion (67%)

• This criterion is made up of two independent sub-criteria with the same weighting:

–  Criterion 1a: average organic growth in sales over 2021/2022/2023

–  Criterion 1b: average of the EBITDA margin before non-recurring items between 2021 and 2023

• or (the most favorable criterion is used)

– Criterion 2: growth in the EBITDA margin before non-recurring items between 2020 and the 2021-2023 average compared to the average growth in the EBITDA margin of a panel of companies determined when the plan is set up.

These criteria will be disclosed ex-post.

■ CSR objectives (33%) made up of three independent criteria with the same weighting (11% each)

• Human capital development: Percentage of women engineers and managers in the Group in December 2023

The indicator will be measured based on employees on sites included in the Group’s HRIS at December 31, 2020 (approximately 99% of Group employees). Acquisitions made after December 2020 will be excluded from the calculation of this criterion.

Percentage of women engineers and managers Achievement

< 24%                                                                                       0%

= 27%                                                                                     70%

≥ 30%                                                                                   100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

•  Environmental footprint of our sites: Percentage of waste recycled in comparison with the total amount of waste generated by the Group’s operations

This criterion will be measured in 2023 based on the environmental reporting scope.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

•  Reduction in greenhouse gas emissions intensity of our production sites

This criterion will be measured in 2023 based on the environmental reporting scope.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

Results

The achievement rates for the applicable performance criteria are as follows:

Actual Achievement

                                                         performance                rate

In view of these results, 94.4% of the shares were allocated on May 20, 2024, representing a total of 89,925 free shares allocated to 182 benefi ciaries.

2.4.1.2. Plan without performance conditions

Number of shares and benefi ciaries

■ Maximum number of shares to be allocated: 12,000 shares, representing less than 0.1% of the share capital at the date of the Annual General Meeting.

■ Number of shares allocated: 11,350 shares.

■ Number of benefi ciaries: 40 Group employees.

Allocation conditions:

Free shares may only be allocated to the benefi ciary at the end of the vesting period (May 20, 2024) if the benefi ciary continues to be employed by the Group at that date.

On May 20, 2024, after verifi cation of the continued presence condition, 9,6 50 vested free shares were allocated to

32 benefi ciaries.

2.4.2. 2022 plans

On May 19, 2022, upon authorization of the Annual General Meeting on that date (thirtieth and thirty-second resolutions), the Board of Directors adopted two free share plans for Group managers other than those covered by the executives plan.

2.4.2.1. Performance-based plan

Number of shares and benefi ciaries

■ Maximum number of shares to be allocated: 100,800 shares, representing around 0.5% of the share capital at the date of the Annual General Meeting.

■ Number of shares allocated: 98,600 shares.

■ Number of benefi ciaries: 202 Mersen Group managers.

In April 2023, Mersen carried out a capital increase. In order to neutralize the dilutive effect of this increase on the shares initially granted in May 2022, the Board of Directors used the authorization given in the thirty-fi rst resolution of the Annual General Meeting of May 19, 2022 in order to increase the total number of shares granted by 5%,raising the maximum number of shares that may vest to 105,840.

Allocation conditions

Free shares may only be allocated to the benefi ciary at the end of the vesting period (May 19, 2025) if the benefi ciary is still an employee of the Group and if the performance conditions defi ned below are met.

Performance conditions:

The percentage of free shares allocated to each of the benefi ciaries will be determined based on the two criteria below; each criterion is independent (any outperformance in relation to a criterion cannot offset the result of another criterion) and counts as part of the overall achievement, expressed as a percentage as set out below:

■ A fi nancial criterion (67%)

■ This criterion is made up of two independent sub-criteria with the same weighting:

•  Criterion 1a: average organic growth in sales over 2022/2023/2024

•  Criterion 1b: average of the EBITDA margin before non-recurring items between 2022 and 2024

■ or (the most favorable criterion is used)

•  Criterion 2: growth in the EBITDA margin before non-recurring items between 2021 and the 2022-2024 average compared to the average growth in the EBITDA margin of a panel of companies determined when the plan is set up.

These criteria will be disclosed ex-post.

■ CSR objectives (33%) made up of four independent criteria with the same weighting (8.25% each)

• Human capital development: Percentage of women engineers and managers in the Group in December 2024

The indicator will be measured based on employees on sites included in the Group’s HRIS at December 31, 2021 (approximately 99% of Group employees). Acquisitions made after December 2021 will be excluded from the calculation of this criterion.

Percentage of women engineers and managers Achievement

< 24.4%                                                                                    0%

= 28%                                                                                     80%

≥ 28%                                                                                   100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

•  Environmental footprint of our sites: Percentage of waste recycled in comparison with the total amount of waste generated by the Group’s operations

This criterion will be measured in 2024 based on the environmental reporting scope.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

•  Reduction in greenhouse gas emissions intensity of our production sites

This criterion will be measured in 2024 based on the environmental reporting scope.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

•  Reduction in water consumption at our production sites

This criterion will be measured in 2024 based on the 2021 environmental reporting scope, which includes all the sites.

Reduction in water consumption                      Achievement

> 672,000 cu.m                                                                        0%

< 672,000 cu.m                                                                      30%

≤ 637,000 cu.m                                                                    100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

2.4.2.2. Plan without performance conditions

Number of shares and benefi ciaries

■ Maximum number of shares to be allocated: 12,000 shares, representing less than 0.1% of the share capital at the date of the Annual General Meeting.

■ Number of shares allocated: 12,000 shares.

■ Number of benefi ciaries: 46 Group employees.

In April 2023, Mersen carried out a capital increase. In order

to neutralize the dilutive effect of this increase on the shares initially granted in May 2022, the Board used the authorization given in the thirty-fi rst resolution of the Annual General Meeting of May 19, 2022 in order to increase the total number of shares granted by 5%.

This corresponds to 12,600 shares allocated.

Allocation conditions:

Free shares may only be allocated to the benefi ciary at the end of the vesting period (May 19, 2025) if the benefi ciary continues to be employed by the Group at that date.

2.4.3. 2023 plans

On May 16, 2023, upon authorization of the Annual General Meeting on that date (eighteenth and twentieth resolutions), the Board of Directors adopted two free share plans for Group managers other than those covered by the executives plan.

2.4.3.1. Performance-based plan

Number of shares and benefi ciaries

■ Maximum number of shares to be allocated: 100,800 shares, representing around 0.4% of the share capital at the date of the Annual General Meeting.

■ Number of shares allocated: 99,800 shares.

■ Number of benefi ciaries: 196 Mersen Group managers.

Allocation conditions

Free shares may only be allocated to the benefi ciary at the end of the vesting period (May 19, 2025) if the benefi ciary is still an employee of the Group and if the performance conditions defi ned below are met.

Performance conditions

The percentage of free shares allocated to each of the benefi ciaries will be determined based on the two criteria below; each criterion is independent (any outperformance in relation to a criterion cannot offset the result of another criterion) and counts as part of the overall achievement, expressed as a percentage as set out below:

■ A fi nancial criterion (67%)

■ This criterion is made up of two independent sub-criteria with the same weighting:

•  Criterion 1a: average organic growth in sales over 2023/2024/2025

•  Criterion 1b: average of the EBITDA margin before non-recurring items between 2023 and 2025

■ or (the most favorable criterion is used)

•  Criterion 2: growth in the EBITDA margin before non-recurring items between 2022 and the 2023-2025 average compared to the average growth in the EBITDA margin of a panel of companies determined when the plan is set up.

These criteria will be disclosed ex-post.

■ CSR objectives (33%) made up of three independent criteria with the same weighting (11% each)

• Human capital development: Percentage of women engineers and managers in the Group

The indicator will exclude acquisitions made after December 2022.

Percentage of women engineers and managers Achievement

< 25.3%                                                                                    0%

= 27%                                                                                     80%

≥ 28.3%                                                                                100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

•  Environmental footprint of our sites: Percentage of waste recycled in comparison with the total amount of waste generated by the Group’s operations

This criterion will be measured in 2025 based on the environmental reporting scope.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

•  Reduction in greenhouse gas emissions intensity of our production sites

This criterion will be measured in 2025 based on the environmental reporting scope, calculated on the basis of sales at constant exchange rates.

Scope 1 and 2 GHG emissions intensity         Achievement

> 157 tCO₂ emitted per million euros of sales         0% = 157 tCO₂ emitted per million euros of sales               30%

= 130 tCO₂ emitted per million euros of sales                     50%

= 123 tCO₂ emitted per million euros of sales                     80%

≤ 120 tCO₂ emitted per million euros of sales                   100%

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

2.4.3.2. Plan without performance conditions

Number of shares and benefi ciaries

■ Maximum number of shares to be allocated: 12,000 shares, representing less than 0.1% of the share capital at the date of the Annual General Meeting.

■ Number of shares allocated: 10,650 shares.

■ Number of benefi ciaries: 40 Group employees.

Allocation conditions

Free shares may only be allocated to the benefi ciary at the end of the vesting period (May 19, 2025) if the benefi ciary continues to be employed by the Group at that date.

2.4.4. 2024 plans for non-executives

On May 16, 2024, upon authorization of the Annual General Meeting on that date (twenty-seventh and twenty-ninth resolutions), the Board of Directors adopted two free share plans for Group managers other than those covered by the executives plan.

2.4.4.1. Performance-based plan

Number of shares and benefi ciaries

■ Maximum number of shares to be allocated: 128,340 shares, representing around 0.5% of the share capital at the date of the Annual General Meeting.

■ Number of shares allocated: 122,250 shares.

■ Number of benefi ciaries: 217 Mersen Group managers.

Allocation conditions

Free shares may only be allocated to the benefi ciary at the end of the vesting period (May 16, 2027) if the benefi ciary is still an employee of the Group and if the performance conditions defi ned below are met.

Performance conditions

■ Share price performance (10%)

Growth in the Mersen share price will be compared to that of the SBF 120 index over three years, starting from the fi rst working day of the month of the 2024 Annual General Meeting, i.e., from May 2, 2024 to April 30, 2027. To limit the impacts of volatility, the average closing price for the 20 trading days preceding May 2, 2024 will be used for the beginning of the period and the average closing price for the 20 trading days prior to April 30, 2027 will be used for the end of the period.

The lower limit (0%) corresponds to share price growth below that for the index. The upper limit (100%) corresponds to share price growth 5 percentage points or more higher than growth for the index. Achievement rates between the lower and upper limits will be calculated on a straight-line basis and capped at 100%.

Actual data will be disclosed ex-post.

■ Average sales growth (22.5%)

This criterion will be measured on the basis of the compound average growth rate (CAGR) of Group sales over the three years 2023 to 2026, including bolt-on acquisitions and disposals (in line with the Group’s roadmap), calculated at constant USD and CNY exchange rates.

The upper limit is higher than the average growth expected between 2023 and 2027 (8.8%) under the Group’s mediumterm business plan (€1.7 billion in 2027). The lower limit (0% achievement) corresponds to an expected growth rate well above world GDP growth.

Actual data will be disclosed ex-post.

■ ROCE (15%)

This criterion will be measured based on the return on capital employed (ROCE). It will take into account average Group ROCE for 2024, 2025 and 2026, calculated using the same methodology used to calculate Group ROCE for 2023. The lower (0%) and upper (100%) limits were determined based on the business plan used to set the Group’s 2027 targets, and will be disclosed ex-post.

■ EBITDA (22.5%)

 This criterion will be measured based on EBITDA margin before non-recurring items and will take into account the Group’s average EBITDA margin before non-recurring items for 2024, 2025 and 2026. The limits have been determined based on the Group’s business plan, and will be disclosed ex-post.

■ Three independent CSR criteria (30%)

A. H uman capital development: Percentage of women engineers and managers in the Group in December 2026

The Group set itself the objective of increasing the percentage of women engineers and managers in 2027 versus 2022 by 4 points.

In the proposed plan, the lower limit (0%) corresponds to the percentage of women engineers and managers at end-2023, i.e., 26.1%.

The upper limit (100%) is set at 28.5%, in line with the roadmap (4-point increase between 2022 and 2027, i.e., an average 0.75-point increase per year).

The indicator will be measured based on employees on sites included in the Group’s HRIS at December 31, 2023. Acquisitions made after this date will be excluded from the calculation of this criterion.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis and capped at 100%. The calculation method may be modifi ed by the Board of Directors in the event of a change in defi nition, notably in connection with the application of the European Corporate Sustainability Reporting Directive (CSRD).

B. R eduction of greenhouse gas emissions (Scopes 1 and 2) from our production sites, calculated in tonnes of CO₂ per million euros of sales (tCO₂/€m)

The Group set a target to reduce CO₂ emissions intensity (Scopes 1 and 2) by 35% by 2027 compared with 2022.

In 2023, the Group reduced its emissions intensity to 90 tCO₂ per million euros of sales, compared with 121 tCO₂ per million euros of sales in 2022.

In the proposed plan, the lower limit (0%) is set at 100 tCO₂ per million euros of sales, i.e., a 17% improvement on the 2022 performance (121 tCO₂ per million euros of sales). The upper limit (100%) is set at 82 tCO₂ per million euros of sales, a 32% reduction on 2022, in line with the roadmap.

This criterion will be measured in 2026 based on the 2023 environmental reporting scope and on sales at constant exchange rates in order to cancel out the impacts of currency fl uctuations on the ratio. The limits may be adjusted by the Board of Directors in the event of a change in the calculation method.

Achievement rates between the lower and upper limits will be calculated on a straight-line basis.

C. Water consumption intensity

The Group set a target to reduce its water consumption intensity by 15% between 2022 and 2027. In 2022, the Group’s water consumption intensity was 686 cu.m per million euros of sales.

In the proposed plan, the lower limit (0%) corresponds to the results obtained at end-2022. The upper limit (100%) is set at 603 cu.m per million euros of sales, representing a reduction of 12% compared with 2022, in line with the roadmap.

Measurement will be based on consumption in cubic meters per million euros of Group sales (cu.m/€m).

Achievement rates between the lower and upper limits will be calculated on a straight-line basis. This criterion will be measured in 2026 based on the 2023 like-for-like environmental reporting scope and on sales at constant exchange rates (2023-2026). In particular, consumption related to the p-SiC project will not be included as it was still being determined at the date of this document.

2.4.4.2. Plan without performance conditions

Number of shares and benefi ciaries

■ Maximum number of shares to be allocated: 16,800 shares, representing less than 0.1% of the share capital at the date of the Annual General Meeting.

■ Number of shares allocated: 14,220 shares.

■ Number of benefi ciaries: 47 Group employees.

Allocation conditions

Free shares may only be allocated to the benefi ciary at the end of the vesting period (May 16, 2027) if the benefi ciary continues to be employed by the Group at that date.

2.4.5. Free shares for non-executives: previous allocations

                                                        2021 plan 2021 plan 2022 plan 2022 plan 2023 plan 2023 plan 2024 plan 2024 plan       Total

                                                                                   High                           High                           High                           High

 Managers potentials Managers potentials Managers potentials Managers potentials

Performance conditions                        Yes             No           Yes             No           Yes            No           Yes             No

2.5. F ree share authorization to be put to the shareholders’ vote at the next Annual General Meeting on May 16, 2025

As has been the case in previous years, the shareholders will be invited to approve three authorizations for the allocation of free shares (for executives, managers, and experts and talent). The plans will have a similar structure to those set up before, i.e.:

■ A three-year presence condition.

■ For the executives and managers plans, ambitious and quantified performance conditions, both financial and non-fi nancial, set in line with the Group’s roadmap. These performance conditions will be described in detail in the notice of meeting for the Annual General Meeting.

■ A maximum number of free shares in line with the 2024 plan.

2.6. C omponents of compensation paid or granted to Luc Themelin

(Chief Executive Offi cer) in respect of the fi scal year ended December 31, 2024 submitted to a vote by the Combined General Meeting of May 16, 2025

Amount granted in

Amount granted in

Amount 2024 paid in          (or fair value

                                                        2024        of shares) Observations

2.7. C omponents of compensation paid or granted to Olivier Legrain

(Chairman of the Board) in respect of the fi scal year ended December 31, 2024 submitted to a vote by the Combined General Meeting of May 16, 2025

OTHER DISCLOSURES

3. OTHER DISCLOSURES

3.1. Items likely to have an impact in the event of a public offer

Pursuant to Article L.22-10-11 of the French Commercial Code, we hereby inform you of the following points which are likely to have an impact in the event of a public offer:

■ the capital structure as well as any direct or indirect shareholdings of which the company is aware and all related information are described in chapter 5 of this Universal Registration Document;

■ the Articles of Association do not provide for any restrictions to the exercise of voting rights, except for the request to strip shares of voting rights that may be made by one or more shareholders holding at least 1% of the share capital or voting rights if a shareholder fails to declare having crossed the threshold of 1% (Article 11 ter of the Articles of Association) (see chapter 5, section 1.8);

■ no agreement provisions have been brought to the Company’s attention pursuant to Article L.233-11 of the French Commercial Code;

■ in regard to special control rights that may be attached to shares, it is specifi ed that double voting rights are attached to fully paid-up shares that have been held in registered form for at least two years (see chapter 5, section 2.6);

■ there are no restrictions on the transfer of shares;

■ as far as the company is aware, no agreements or other commitments have been signed between shareholders;

■ voting rights attached to Mersen shares held by employees via the Mersen FCPE (corporate mutual fund) shall be exercised by a representative appointed by the FCPE’s supervisory board to represent the employees at the Annual General Meeting;

■ the rules for appointing and removing members of the Board of Directors shall be those provided for by the law and by the Articles of Association. The director representing employees shall be appointed by the Group Committee (Article 17 of the Articles of Association);

■ as regards the powers of the Board of Directors, current delegations and authorizations are described in chapter 5 of the Universal Registration Document (share buyback program and table summarizing delegations and authorizations regarding increases to share capital), it being understood that the authorization to buy back shares and the various fi nancial authorizations and delegations are suspended during a public offer for the Company’s shares;

■ amendments to the company’s Articles of Association shall be made in accordance with legal and regulatory provisions;

■ financial contracts entered into by the company may be amended or terminated in the event of a change of control of the company. Certain business contracts may also be affected;

■ certain Group activities are subject to export controls governing dual-use items and technologies as well as to the US International Traffi c in Arms Regulations (ITAR);

■ certain Group activities are subject to controls governing sensitive technologies in France (Security and Defense);

■ the agreements providing for compensation in the event of termination of the Chief Executive Officer’s duties are described in section 2.1.4.3 of this chapter. There are no special agreements in place that provide for compensation for members of the Board or employees in the event of their resignation or dismissal without fair cause or if their term of employment is ended due to a public tender or exchange offer. “Related-party agreements” are the agreements entered into directly or through an intermediary between the Company and a corporate offi cer, a shareholder holding over 10% of the voting rights, or another company if one of the Company’s corporate offi cers is the sole proprietor, unlimited partner, legal manager, director or, generally, an executive offi cer of such company.

They are subject to the prior authorization of the Board of Directors and the approval of the Annual General Meeting, with the exception of agreements between Mersen and Group companies that are directly or indirectly wholly owned by Mersen, and routine agreements entered into on arm’s length terms. Pursuant to Article L.225-39 of the French Commercial Code, these two categories of agreements are expressly exempt from the specifi c related-party agreements procedure (prior authorization of the Board of Directors, statement in the Statutory Auditors’ special report and approval by the Annual General Meeting).

3.2.1. P rocedure for identifying related-party agreements and reviewing routine agreements entered into on arm’s length terms

Pursuant to Article L.22-10-12 of the French Commercial Code, the Board of Directors approved an internal procedure for identifying relatedparty agreements and reviewing routine agreements entered into on arm’s length terms. This procedure is applied before any agreement that could qualify as a relatedparty agreement is signed, as well as prior to any amendments, renewals or terminations of such agreements. It is used to assess whether an agreement relates to routine operations and has been entered into on arm’s length terms, in which case it is not a relatedparty agreement under French law. This procedure also makes it possible to regularly review whether agreements relating to routine operations entered into on arm’s length terms meet those conditions.

This procedure was defined by the Board of Directors on December 19, 2019. It is available on the Company’s website.

3.2.2. I mplementation of the procedure in 2024

In accordance with the procedure described in the previous section, the Company’s Finance and Legal Departments conduct a review of draft agreements to determine whether they are subject to the abovementioned authorization procedure, and then, every year, they review routine agreement entered into on arm’s length terms to ensure that they meet these conditions.

In 2024, based on this review, no new related-party agreements or routine agreements entered into on arm’s length terms came to light that no longer met these conditions.

An assessment of routine agreements entered into on arm’s length terms by the Company with its non-wholly owned subsidiaries was provided to the Audit and Accounts Committee. At its meeting of March 11, 2025, the Audit and Accounts Committee confi rmed the relevance of the criteria used to assess these agreements.

At its meeting on March 11, 2025, the Board of Directors noted these fi ndings and the fact that there were no routine agreements entered into on arm’s length terms that no longer met these conditions.

The Board of Directors also noted that a regulated related-party agreement entered into in 2023 and approved by the Annual General Meeting of May 16, 2024 continued into 2024. The details of this agreement are set out below:

■ Purpose: waiver of receivables between Mersen SA and Italthai Mersen Co Ltd, Thailand, a company in the process of liquidation, in the amount of 3.7 million baht (96,000 euros).

■ Person concerned: Luc Themelin is a director of both Mersen and Italthai Mersen Co Ltd.

■ Context: Italthai Mersen Co Ltd is a company owned 49% by Mersen and 49% by a local company. The two partners decided to mothball and then liquidate the company, and in order to facilitate the liquidation process each agreed to waive part of their claims for the same amount. As the receivable had already been 100% written down, this waiver had no impact on the fi nancial statements for the year ended December 31, 2023.

This partial waiver of receivables had been granted in return for repayment of the balance of the receivable by the Company (1.3M Bhats, i.e. 34k€). This repayment was made in September 2024. The agreement has now been fully executed.

3.2.3. A greements entered into between (i) a corporate offi cer or a shareholder with more than 10% of the voting rights and (ii) a controlled company within the meaning of Article L.233-3 of the French Commercial Code

In 2024, Mersen France Angers, a wholly owned subsidiary of Mersen, received a grant from Bpifrance.

To the Shareholders of Mersen,

In our capacity as Statutory Auditors of Mersen, we hereby report to you on related-party agreements.

It is our responsibility to report to shareholders, based on the information provided to us, on the main terms and conditions of agreements that have been disclosed to us or that we may have identified as part of our engagement, as well as the reasons given as to why they are benefi cial for the Company, without commenting on their relevance or substance or identifying any undisclosed agreements. Under the provisions of Article R.225-31 of the French Commercial Code (Code de commerce), it is the responsibility of the shareholders to determine whether the agreements are appropriate and should be approved.

Where applicable, it is also our responsibility to provide shareholders with the information required by Article R.225-31 of the French Commercial Code in relation to the implementation during the year of agreements already approved by the Annual General Meeting.

We performed the procedures that we deemed necessary in accordance with professional standards applicable in France to such engagements. These procedures consisted in verifying that the information we received is consistent with the underlying documents.

Agreements to be submitted for the approval of the annual general meeting

We were not informed of any agreement authorized and entered into during the year to be submitted for the approval of the Annual General Meeting pursuant to the provisions of Article L.225-38 of the French Commercial Code.

Agreements already approved by the annual general meeting

 In accordance with Article R.225-30 of the French Commercial Code, we were informed of the following agreements, approved by the Annual General Meeting in previous years, which were implemented during the year.

Debt waiver to Italthai Mersen Co., Ltd.

■ Agreement authorized by the Board of Directors on

January 24, 2024, it being specifi ed that, due to the liquidation process ongoing in 2023, the authorization procedure was not followed.

■ Person concerned: Luc Themelin, director of both Mersen and Italthai Mersen Co., Ltd.

■ Nature and purpose: on May 15, 2023, Mersen entered into a partial debt waiver agreement with Italthai Mersen Co., Ltd, a 49%-owned company in liquidation.

■ Terms and conditions: the amount of the partial waiver was 3.7 million Thai baht (€96,000) granted by Mersen and subject to repayment of the balance of the receivable for 1.3 million Thai baht. In September 2024, the company repaid Mersen, defi nitively terminating the agreement entered into in 2023. The receivable had been fully provisioned in Mersen’s fi nancial statements. For 2024, the fi nancial impact was income linked to the reversal of the provision in an amount of €34 thousand.

Paris-La Défense, March 28, 2025

The Statutory Auditors

              KPMG SA                                                                              ERNST & YOUNG Audit

Alexandra SAASTAMOINEN                                                                     Pierre BOURGEOIS

                 Partner                                                                                               Partner

INTRODUCTION

1. INTRODUCTION

In recent years, Mersen has taken on a new dimension and acquired a more comprehensive, dynamic, profi table and resilient profi le thanks to its unique expertise in its two segments – electrical power and advanced materials – its international presence and its position as world leader. It also plays a key role in the value chain with a diversifi ed base of major customers in markets and applications linked to the energy transition, such as renewable energies, electricity transmission and power conversion, green transportation and energy effi ciency.

Following on from the presentation of an ambitious medium-term growth plan and the completion of a capital increase in 2023, the Group saw record sales in 2024 of €1,244 million.

This year, Mersen successfully completed a number of external growth transactions in the United States, which now accounts for over 36% of Group sales. These acquisitions in a highly dynamic region have expanded the Group’s customer base and consolidated its industrial resources (GMI and Bar-Lo) and expertise (KTK).

However, the Group’s organic sales growth of 2.6% in 2024 is below initial expectations, due to a sharp downturn in deliveries to the solar cell market in China in the second half of the year and slower growth in SiC semiconductors due to turbulence in the electric vehicle market. These factors have also led the Group to push back its medium-term objectives by two years, from 2027 to 2029.

The Group achieved an EBITDA margin of 16.5%, virtually unchanged from last year. The increase in development costs for electric vehicles and the p-SiC substrate development project was offset by the ramping up of measures to improve the profi tability of certain sites and product lines, with effects already visible at the end of 2024.

The operating margin before non-recurring items, at 10.5% of sales, was 80 basis points lower than in 2023, due to the increase in depreciation and amortization linked to the signifi cant investments made in 2023 and 2024.

This year, the Group generated a higher level of net cash before capital expenditure than last year, thanks to an increase in prepayments on contracts in the SiC semiconductor market and the initial effects of a plan to reduce inventories announced in October.

Net debt (€370 million) rose signifi cantly year on year due to record capital expenditure (€204 million) and the fi nancing of acquisitions (€66 million outlay in 2024). However, the Group’s fi nancial structure remains very solid, with a leverage ratio (net debt/EBITDA) of 1.8x, in line with Group policy. The Group has also strengthened its cash position with the issue of a €100 million German private placement “Schuldschein”) in March 2024, together with a US private placement of almost USD 195 million signed in February 2025.

Lastly, the Group has complied with the European Corporate Sustainability Reporting Directive (CSRD) and published its fi rst sustainability report this year. In the future, the CSR double materiality assessment will help align the Group’s strategy even more closely with its sustainability objectives.

On the stock market, the Group saw its market capitalization decrease by 41% over the year. Over the summer, news of possible delays in electric vehicle launches had an adverse impact on securities in the electric vehicle and SiC semiconductor segments, leading to a fall in Mersen’s share price. More generally, a lack of confi dence in French mid-caps  weighed on share prices.

CONSOLIDATED SALES

of the Chinese renminbi, the Japanese yen and the South Korean

 2.1. By segment

Advanced Materials sales totaled €690 million, up 2.6% on an organic basis over the year. As expected, sales in the solar and silicon semiconductor markets were dampened due to customers’ high  inventory levels. Growth was particularly robust in the transportation market (aeronautics and rail). Sales for the SiC semiconductors market increased by around 10%. Lastly, growth in the chemicals and process industries markets was higher than the Group average.

Electrical Power sales came to €554 million for the year, representing organic year-on-year growth of 2.6%. Sales to the electrical distribution market in the United States remained strong, albeit slightly down on last year. Sales for electric vehicles remained buoyant, as did other transportation markets (rail and aeronautics). However, sales were stable in power electronics.

2 .2. By geographic area

Europe reported moderate growth, driven by an improvement in the transportation (rail, aeronautics and electric vehicles) and SiC semiconductor markets, offset by a decline in renewable energies and electrical distribution. Business remained fi rm in both France and Italy, while Germany saw a decline, due to the local economic climate.

In Asia, Group sales dipped 1.2% compared with last year, mainly as a result of a sharp slowdown in the production of solar cells in China toward the end of the year. India and South Korea, on the other hand, enjoyed strong growth, driven respectively by the rail and energy storage markets.

North America posted growth in both segments, with particularly good performances in the aeronautics and chemicals markets. As expected, electrical distribution contracted from the very high level of activity in 2023, while the other process industries remained buoyant. SiC semiconductors saw slight growth in sales, but this did not offset the decline in Si semiconductors.

Group EBITDA before non-recurring items was 1.4% higher year on year, at €205.5 million. The EBITDA margin before non-recurring items was close to that for 2023, at 16.5% versus 16.7%.

The EBITDA margin before non-recurring items for the Advanced Materials segment was 21.4%, down compared to 2023 (22.4%). While price increases and productivity gains offset infl ation in raw material, energy and labor costs, the mix effect was negative. Net income also included higher development costs for the p-SiC project than in 2023.

The EBITDA margin before non-recurring items for the Electrical Power segment grew by  60 basis points to 14.0% (13.4% in 2023). Volume/ mix effect was positive and offset the costs linked to the electric vehicle team. In addition, price increases and productivity gains largely offset the impact of higher raw material and labor costs.

Operating income before non-recurring items stood at €131.1 million, down slightly compared to 2023 (€137.3 million). The operating margin before non-recurring items was 10.5%, compared with 11.3% in 2023, mainly due to higher depreciation and amortization linked to investments under the growth plan, and development costs associated with the p-SiC and electric vehicle projects. The volume/mix effect was slightly negative. Price increases and productivity gains, linked in part to the acceleration of the adaptation plan, more than offset the infl ation in raw material, energy and labor costs.

Gross margin was 31.0%, down from 31.8% in 2023, due to higher depreciation and amortization and a negative volume/mix effect.

Selling, marketing and other operating expenses were up 2.0%, but down slightly on a like-for-like basis. The decline was seen in the second half, as the Group decided towards the end of the year to ramp up cost adaptation measures due to the delay in the electric vehicle and SiC semiconductor markets.

Administrative and research expenses were up by 2.9%, or 2.5% on a like-for-like basis.

Overall, payroll expenses amounted to €419 million, a year-onyear increase of 8% on a like-for-like basis. This includes an increase of more than 5% in average wages to take account of infl ation in many countries.

Non-recurring items represented a net expense of €23.5 million in 2024, including nearly €17 million in expenses and provisions related to the adaptation plan and €3 million in expenses related to disposals and acquisitions. The remaining costs of the adaptation plan, estimated at €6 million, should be recognized in 2025. In 2023, the €5.9 million net expense mainly comprised provisions for disputes and other expenses relating to acquisition projects, and impairment losses on underused assets.

The net fi nancial expense of €24 million, an increase on 2023, was due to higher average gross debt (€392 million in 2024 vs. €314 million in 2023) and higher interest rates on the variable portion of debt.

Income tax expense was €22.0 million, representing an effective tax rate of 26.4%, an increase compared to the 2023 rate (23.4%), due to restructuring costs which did not give rise to tax savings. Excluding this factor, the effective tax rate would be around 24%.

Income from non-controlling interests essentially included Mersen Yantai (China) and Mersen Galaxy (China), in which Mersen holds a 60% stake. This was down due to the decline in the solar cell manufacturing market in China, one of the main markets for these companies.

The Group generated very strong cash flow from operating activities of €194 million, up more than 8% compared to last year.

At the end of October, the Group decided to launch a specifi c inventory reduction plan, which reaped rewards in the fourth quarter of 2024. Inventory was reduced by 5% compared with the end of 2023 (down €14 million), excluding the effect of exchange rates and changes in the scope of consolidation linked to the consolidation of assets and liabilities from acquisitions made in the year. In addition, prepayments on contracts in the SiC semiconductor market increased by more than €10 million. These favorable effects were partially offset by substantial bonus payments in respect of 2023.

There was accordingly a positive change in working capital requirement of €5.9 million. The WCR ratio remained below 20%, at 19.7%, versus 19.1% in 2023.

Taxes paid amounted to €12.9 million, down sharply on the previous year, mainly due to a decrease in earnings linked to non-recurring expenses and the use of tax receivables.

In 2024, the Group fi nalized three acquisitions in the United States for cash consideration of €66 million, plus earn-out payments estimated at €8 million, depending in part on the results of the companies acquired.

In 2024, capital expenditure reached a high point for the Group at €204.3 million. It includes €110 million for the Group’s growth plan, over €40 million for other growth projects, €40 million for the maintenance, upkeep and modernization of plants and equipment, and €10 million for safety and environment .

Regarding the Group’s growth plan, more than 88% of this expenditure is related to the capacity required for the semiconductor market, including a proportion that can also be used for other markets. The remainder relates to the electric vehicle market.

Investments in France (33% of the total) mainly concern t he development of p-SiC in partnership with Soitec (Gennevilliers) and the setting up of a dedicated workshop to manufacture laminated bus bars for ACC (St Bonnet de Mure).

Investments in intangible assets (€12.3 million) related to the plan to digitize and modernize information systems which began in 2020 and to the capitalization of certain R&D expenses on the p-SiC project.

The Mersen group’s capital expenditure amounted to €176.3 million in 2023, 81% of which was linked to investments outside France. Almost 54% of this amount (€95 million) related to the growth plan presented by the Group in March 2023, corresponding to investments to increase graphite and insulation felt production capacity, the expansion of graphite finishing plants and the extension of plants serving the electric vehicle market.

According to the Group’s internal procedure, authorization from the Board of Directors is required for any organic growth investment exceeding the annual budget or the Group’s business plan by an aggregate amount of over €20 million and for any acquisition of more than €5 million.

STATEMENT OF FINANCIAL POSITION

5. STATEMENT OF FINANCIAL POSITION

5.1. Financing policy

The Group is in compliance with all its fi nancial covenants.

SUBSEQUENT EVENTS

5.3. ROCE

The Group recorded return on capital employed (ROCE) of 10.8% in 2024 (13.0% in 2023). This increase refl ects the Group’s major investment cycle, which is expected to pay off in 2028/2029.

6. SUBSEQUENT EVENTS

As part of its growth plan and in order to refi nance its 2025-2026 loan maturities, on February 4, 2025 Mersen took out a second US private placement for USD 100 million, maturing in 2035, and €90 million, maturing in 2032, redeemable at maturity, with a pool of North American investors. The funds will become available in April 2025.

Signifi cant events occurring between the end of the 2024 fi nancial year and the date on which this Universal Registration Document was fi led are described in Note 28 to the consolidated fi nancial statements for the year ended December 31, 2024 and concern events occurring before March 12, 2025, the date on which the fi nancial statements will be adopted by the Board of Directors.

As of the date of this Universal Registration Document, the Company is not aware of any other signifi cant change in the Group’s fi nancial performance or fi nancial position that occurred between December 31, 2024 and the date of this Universal Registration Document.

2025 GUIDANCE

7. 2025 GUIDANCE

Mersen believes that 2025 will be a year of transition due to a temporary slowdown in the electric vehicle and SiC semiconductor markets, which has led it to push back its medium-term targets communicated in March 2023 by two years, from 2027 to 2029.

 For 2025, the Group has the following expectations of its medium-term growth markets:

■ a temporary slowdown in the solar market at the beginning of the year, following on from the trend at the end of 2024;

■ a signifi cant drop in the silicon carbide (SiC) semiconductors market, impacted by a three-year lag in demand. Mersen is renegotiating contracts with its customers with the aim of adjusting its production rate over the next three years;

■ dynamic growth in the silicon semiconductor market after a sluggish 2024;

■ moderate growth in the electric vehicle market.

In its other markets, the Group expects to see:

■ growth in the rail market;

■ continued brisk business growth in aeronautics;

■ lower sales in chemicals after a record year in 2024;

■ growth depending on macro-economic trends for process industries.

To adapt to this year of transition, the Group will continue to implement its cost and inventory adaptation plan.

 Consequently, in 2025, the Group is aiming for:

■ reported sales to remain stable or increase compared with

2024, based on EUR/USD exchange rates of 1.05 and EUR/ RMB exchange rates of 7.65, representing organic growth of between -5% and 0; ■ EBITDA margin before non-recurring items of between 16% and 16.5% of sales;

■ operating margin before non-recurring items of between 9 and 9.5% of sales, refl ecting a signifi cant increase in depreciation and amortization;

■ capital expenditure of between €160 million and €170 million, including €15 million pushed back from the end of 2024.

 8. DIVIDEND

At the Annual General Meeting to be held on May 16, 2025, the Board of Directors will recommend the payment of a €0.90  cash dividend per share. This would represent a total payout of around €22 million. The dividend would correspond to 37 % of net income attributable to owners of the parent, or 30% of net result restated for restructuring costs, in line with Group policy.

With a manufacturing base spanning more than 30 countries on fi ve continents, the Mersen group monitors the effectiveness of its internal control framework by means of the following:

9.2.1. B oard of Directors and Audit and Accounts Committee

From a corporate governance perspective, Mersen has opted for an organization guaranteeing separation and balance between powers. The executive and management powers exercised by the Chief Executive Offi cer, supported by the Executive Committee, are kept clearly separate from the control duties exercised by the Board of Directors.

As part of its control duties, Mersen’s Board of Directors has set up an Audit and Accounts Committee, the composition, number of meetings and main duties of which are described in the “Corporate governance” section of this document. It supervises internal control and is notably responsible for:

■ monitoring the process used to prepare financial and non-financial information by assessing the financial and non-fi nancial documents (Sustainability Report) published by the Company and ensuring that a suffi ciently well organized process is in place for the preparation of this information;

■ reviewing the financial statements and ensuring the appropriateness and ongoing consistency of the accounting methods used to prepare the fi nancial statements;

■ ensuring the effi ciency of the internal control and fi nancial and non-fi nancial risk management systems by:

•  validating the annual internal audit program and ensuring that the effi ciency of internal control systems is monitored and that the recommendations made by the Statutory Auditors and internal audit teams are implemented,

•  monitoring progress on work in the management of fi nancial, legal, operational, social and environmental risk and the related measures taken;

■ overseeing the audit of the annual and consolidated fi nancial statements by the Statutory Auditors;

■ ensuring that the Statutory Auditors and the Sustainability Auditor are independent.

Internal audit work is presented to the Audit and Accounts Committee once a year.

9.2.2. Executive Committee

Mersen’s Executive Committee oversees the Group’s internal control. The composition, operation, powers and responsibilities of the Executive Committee are described in chapter 2 of this document.

INTERNAL CONTROL

9.2.3. I nternal Control and Audit Department

Responsibilities

The Group’s Internal Control and Audit Department is responsible for leading the Group’s internal control program and overseeing the proper implementation of the internal control handbook. It also coordinates the networks and organization of corporate and cross audits across the Group.

Its main responsibilities are:

■ analyzing the effectiveness of internal control and verifying the proper application of the action plans implemented following the audits conducted at certain sites in previous years;

■ ensuring the effective implementation of action plans at the sites that were audited in the previous year and at which internal control was not deemed to be satisfactory;

■ disseminating a culture of internal control across the Group’s various sites through awareness-raising and training initiatives.

Governance

The Internal Control and Audit Department always uses a specialized external fi rm to ensure the quality and independence of the audit program and to facilitate continuous improvement. In some cases, a consulting fi rm may also be appointed to perform audits requiring specifi c expertise.

The Internal Control and Audit Department reports to the Risk, Audit and Compliance Department and presents its work to the Audit and Accounts Committee and the Statutory Auditors. The Executive Committee also receives regular updates on the Group’s internal control activities.

Prior to an audit by the Internal Control and Audit Department, sites perform a self-assessment of their internal control system. These assessments are reviewed by the internal audit team to help correct certain differences in judgment and to enhance the culture of internal control within the units.

Internal control handbook

Mersen has circulated an internal control handbook to all of its subsidiaries. The document, which was updated in 2023, is available online on Mersen’s intranet site. It encompasses all the internal control procedures applicable to every Group unit and covers the following points:

■ a description of the background, objectives and resources used in internal control; a description of the internal control organization and reference to the internal control framework adopted by the Group;

■ a list of all the fundamental internal controls to be implemented to ensure the effi cient operation of the main business processes, including:

•  sales/customers,

•  purchases/suppliers,

•  inventories,

•  human resources management,

•  investments/fi xed assets,

•  quality,

•  information systems,

•  customs and other indirect taxes,

•  direct taxes, • legal affairs;

■ the fundamental internal controls to be implemented to ensure the reliability of the accounting and reporting systems and fi nancial statements with regard to the following objectives:

•  safeguarding assets,

•  compiling an exhaustive record of accounting transactions,

•  making sure transactions are accurately refl ected,

•  complying with the dates on which transactions are recorded,

•  correctly valuing assets and liabilities,

•  confi dentiality;

■ controls to ensure that the ethics and compliance policy is effectively implemented and respected, with particular emphasis on the following points:

•  compliance with embargoes,

•  export controls and compliance with OFAC regulations,

•  gifts, invitations and donations, • ethics and anti-corruption training,

•  confl icts of interest.

■ An update of the internal control handbook is scheduled in 2025 to include controls regarding compliance with the CSR policy and the proper application of the non-fi nancial indicators required by the CSRD.

Cross audits

Aside from the corporate audits conducted by the Internal Control and Audit Department, the Group has conducted cross audits for many years in order to strengthen the internal control systems and culture. After adequate training, these audits are performed by the Group’s operational and functional staff, or guest auditors, from each major geographical area (Asia, Europe and the Americas).

The cross audit program is determined by the Group’s Internal Control and Audit Department. These audits help to check on internal control fundamentals every year, as well as to ensure that action plans drawn up during previous audits have actually been implemented. They also make it possible to more easily integrate some of the acquired companies and gradually bring them to the required level of internal control.

This program provides for an exchange of best practices and helps to instill the internal control culture as widely as possible.

Aside from the action plans and tools described in this report, each year the Group requires that all plant managers and fi nancial offi cers provide a formal written statement affi rming that the main points of internal control are applied properly at their plant.

Within the Group’s subsidiaries, each site manager is responsible for implementing the internal control policy defi ned by the Group.

9.2.4. Support functions

9.2.4.1. Information Systems Department

The Information Systems Department is responsible for overseeing information systems security, specifi cally:

■ ensuring the security of the IT systems and protecting data confi dentiality;

■ ensuring the security of IT infrastructure and applications to ensure business continuity.

In addition, the Group is currently deploying the BuZIT project, which aims to centralize most infrastructure and use a Group Core Model in the subsidiaries. This new Core Model uses unifi ed tools, data, directories and processes to enable better monitoring of information systems and rapid software updates.

An Information Systems Security Manager reports on a dottedline basis to the Risk, Audit and Compliance Department. Their role is to:

■ verify that the information systems security policy is implemented properly; ■ lead the information systems’ network of correspondents on all aspects of security;

■ propose analysis and improvement tools for optimum control of the existing systems;

■ develop an information systems security culture.

The Information Systems Security Department audited 22 sites in 2024.

The Information Systems Security Manager regularly meets with the Head of the Risk and Compliance Department, the Chief Financial Offi cer and the Group Chief Information Offi cer to review the security of the Group’s information systems. In addition, an update on cybersecurity is presented once a year to the Audit and Accounts Committee.

9.2.4.2. M anagement control and strategic planning

A Strategic Plan determining the priorities for coming years, a quantifi ed business plan and the challenges, particularly industrial and human are prepared every year and presented to the Board of Directors.

The budgeting process is carried out once a year. The budget is submitted to the Executive Committee for approval and then ratifi ed by the Board of Directors.

Forecasts for the Group’s activity and its main fi nancial aggregates for the current year are defi ned every quarter. This process allows adjustments to be made for trend reversals and helps to speed up the decision-making process for any remedial measures required.

INTERNAL CONTROL

9.2.4.3. Human Resources Department

Internal control of human resources management is structured around the following aspects:

■ management reviews providing a regular update on all the Group’s managers to enhance their career opportunities and identify the Group’s key men and women;

■ annual individual reviews that enable unit managers to assess the performance of their employees and set targets for the following year together with them;

■ forward planning of human resources, notably succession planning for senior managers;

■ monthly updates presented by the Human Resources Department to the Executive Committee.

Lastly, individual and/or collective performance-related bonuses are calculated using clearly defi ned rules.

9.2.4.4. Operational Excellence Department

The Operational Excellence Department is tasked with improving the Group’s operational performance by introducing tools for analysis and continuous improvement at the Group’s sites. It also seeks to develop a “lean” culture within all of the Group’s units.

It relies on certain operational indicators, such as service level, non-quality level, safety and inventory turnover, which are monitored at all Group sites. It implements and verifi es the implementation of the plan in place at all sites for improving competitiveness. These projects, which are included in the budget, are reviewed at regular intervals and their fi nancial contribution is assessed monthly.

9.2.4.5. Risk and Compliance Department

The Risk and Compliance Department is tasked with (i) identifying and assessing any risks of non-compliance with laws or regulations that would damage the image, culture or fi nancial stability of the Group; (ii) implementing appropriate procedures and processes to minimize such risks; (iii) informing and raising the awareness of Group employees of the main risks.

It reports on a dotted-line basis to the Chief Executive Offi cer and the Ethics and Compliance Committee.

In addition, compliance controls have been formally set out in the Group’s internal control handbook to strengthen them and ensure that they are systematically applied during internal audits.

Other specifi c committees have also been set up, covering, for example, insider information (the MAR Committee) and health, safety and the environment (the HSE Committee).

9.3.1. General organization

The Group’s Finance and Administration Department is responsible for accounting and fi nancial internal control. Its role is to produce and ensure the quality of the fi nancial statements and management accounts, with the support of each business’ Finance Department, which in turn liaise with the Finance Department of each site. This organization allows targets to be set and accounting and fi nancial information to be collected and analyzed at different levels of the organization.

9.3.2. P reparation of accounting and fi nancial information

The Finance and Administration Department has prepared and distributed a handbook of accounting and consolidation principles to all subsidiaries. This handbook contains the accounting principles applicable to every Group unit, as well as a description of the process for closing the accounts. It also contains the timetable for the various accounting closes, as well as a list of the information to be reported as part of the consolidation procedure. It lays down the rules that need to be followed by the consolidated sub-groups. This document is available on Mersen’s intranet site.

The handbook is updated in line with external changes in accounting standards in collaboration with the Statutory Auditors, who validate the changes made with the Group’s Finance and Administration Department.

Each Group entity produces monthly accounts and a standardized consolidation package by the deadline set by the Group. When this data is reported using Group-wide consolidation software, consistency checks are applied at each stage of the data gathering and processing process. The purpose of these checks is to:

■ ensure the Group’s standards are correctly applied;

■ ensure that intra-group transactions are correctly validated and eliminated;

■ ensure that consolidation adjustments are made.

9.3.3. Treasury and fi nancing

The Treasury and Financing Department manages the Group’s treasury on a centralized basis. To control risks, the Group has procedures in place specifically to manage exchange rate, commodity and customer risks, the issuance of guarantees, and the management of cash pooling and netting processes.

The Group has pursued a major drive to develop its cash management culture, mainly at manager level.

During years in which the department is not audited by an external fi rm, it must use a Group tool to carry out a self-assessment of its various procedures. This self-assessment is controlled by the Group’s Internal Audit Department.

The Internal Control and Audit Department carried out 22 audits worldwide in 2024.

The results of the audits were good overall and the level of internal control was stable, with satisfactory or very satisfactory levels at the audited units, with the exception of one site in Europe, which will undergo a control audit in 2025.

In addition, at the request of the Executive Committee, the Internal Control and Audit Department carried out three cross-functional audits to assess whether Group policies had been complied with and rolled out in accordance with the procedures set by the Group’s support functions. These cross-functional audits covered:

■ contractual agreements and payments to business intermediaries (agents, distributors);

■ the maturity of the GDPR procedures at French sites;

■ the implementation of back-up solutions in Finance to ensure business continuity for periodic fi nancial reporting in the event of force majeure.

Lastly, an audit was carried out on the implementation of internal controls on the new IT Core Model.

For 2025, the Internal Control and Audit Department has set itself the following objectives (beyond corporate and cross-functional audits):

■ Update the internal control handbook to include controls relating to the CSRD;

■ Improve Internal Audit’s non-financial auditing skills. For this purpose, several auditors will take part in CSRD audits conducted by the Sustainability Auditor.

10. RISK FACTORS

10.1. Governance and risk reporting

Since 2001, Mersen has mapped the Group’s risks, summarizing them in relation to their materiality, the probability of their occurrence and the related risk management measures. The risk mapping is updated each year, approved by the Group’s Executive Committee and presented to the Audit and Accounts Committee, which draws up a summary for the Board of Directors. Every three years, the Group reviews this mapping in greater depth based on interviews with Group managers and directors, and with assistance from an outside fi rm. Each risk is monitored by a member of the Executive Committee. This organization illustrates the Group’s close involvement in risk management. The Risk and Compliance Department presents an interim review of all action plans to the Executive Committee.

The three-yearly update to the risk map was carried out in 2024. A review was carried out to ensure the map was consistent with the Corporate Sustainability Reporting Directive (CSRD) double materiality matrix.

In accordance with Regulation (EU) No. 2017/1129 of the European Parliament and of the Council of June 14, 2017, known as “Prospectus 3”, and the ESMA Guidelines published in October

2019, the risks within each category are managed in order of

10.2. Risk map

priority. They are ranked in descending order of importance, as of the date of this document, according to their negative impact and the probability of their occurrence, after taking into account the risk management measures implemented by the Company. The risk factors that the Company deems to be most material at the reporting date are indicated by an asterisk (*). Some themes have been grouped together to be able to clearly visualize the issues involved. For each risk, the description below includes the measures implemented to limit the probability of its occurrence and/or to mitigate its impact.

The risks presented below are, as of the date of this Universal Registration Document, those which the Group believes could have a material adverse effect on its business, results, prospects or reputation. The list of these risks is not exhaustive, however, and other risks, unknown or deemed to have a minor impact as at the date of this document, could arise and have an adverse effect on the Group’s business.

The Mersen group deploys preventive measures adapted to each type of risk and has taken out a number of insurance policies to limit its risk exposure (see the section on insurance below).

 Risks related    Legal and             Industrial and to operations regulatory risks               environmental risks

PRIORITIZATION OF RISKS AND CHANGES VERSUS 2023

Trend vs. 2023 Probability Impact

Risks related to operations Geopolitical and macroeconomic instability*                                                                              ++          +

* Risks considered to be the most significant

+: increase in risk

-: decrease in risk

MAIN CHANGES IN THE RISK MAP VERSUS 2023

Increasing risks (in terms of impact and/or probability)

■ Geopolitical and macroeconomic instability: the probability of occurrence and impact have increased due to the rise in geopolitical tensions between the United States and China and regional tensions in Europe and the Middle East which could have an impact on the Group’s business and/or that of its customers and suppliers.

■ Risks related to our strategy to penetrate the electric vehicle market: the probability of this risk is higher than in 2023, due to (i) the slowdown of the global electric vehicle market, (ii) the signifi cant market share won by Chinese carmakers that is not accessible to Mersen, and (iii) the lasting viability of battery manufacturers in Europe still not having been proven, primarily ACC, which represents a signifi cant contract for Mersen. The Group pushed its sales targets in this market back by three years in December 2024, but recovery may take longer than this.

■ Product Quality, Safety and Regulation: this risk has been revised upwards, as safety, quality and regulatory constraints impacting the Group’s products (REACH, RoHS, WEEE) are becoming increasingly complex. They could have a negative impact on the Group’s business if they are not taken into account in the technical advancement of its products, both in traditional and new markets.

■ Risks related to our expansion in the SiC market: the slowdown of the electric vehicle market is having an unfavorable impact on the SiC semiconductor market, with slower growth and a build-up of inventories in the value chain. The Group pushed its sales targets in this market back by three years in December 2024, but recovery may take longer than this.

■ Competitive pressure and lower profi tability in certain product lines: a number of markets slowed down in 2024, including the North American electrical distribution market and the solar market in China, despite the Group’s high margins in these markets. A prolonged slowdown could weigh on the Group’s profi tability.

■ Delayed rollout of environmental and climate policy: the impact of this risk has been revised upwards. The Group is not yet in a position to calculate all of its greenhouse gas emissions, in particular those linked to product use and end-of-life.

Decreasing risks (in terms of impact and/or probability)

■ Dependence on certain production sites and/or certain suppliers: this risk has been reassessed downwards, mainly because of ongoing qualifi cation plans to identify alternative sources of strategic materials.

■  Risks related to ineffective management of technological development: the impact of this risk has been revised downwards, due to technical advances in various different fi elds, in particular improved yields for the p-SiC project.

■ Difficulty attracting and retaining experts: the Group has improved its recruitment practices by increasing the number of recruiters, launching a new training module for recruiters and rolling out its employer brand. In addition, tension on the job market is lower than in the last two years.

The 2024 risk map includes a new risk, “Reduction in the Group’s fi nancial fl exibility”. This new risk is linked to slower growth in the electric vehicle and SiC markets, despite the Group’s major investments and the three acquisitions completed in 2024.

10.3. Risks related to operations

The risk factors that the Company deems to be most material at the reporting date are indicated by an asterisk (*).

10.3.1. G eopolitical and macroeconomic instability*

Description of risk

Mersen is present in more than 30 countries worldwide and serves many different end-markets. The international scope of the Group’s business exposes it to the direct and indirect consequences of geopolitical or macroeconomic developments or crises such as trade confl icts, embargoes, changing customs regulations, armed confl icts, health crises and epidemics or pandemics.

The Group is exposed to the geopolitical situation of certain countries and regions, in Mexico and Tunisia, for instance, where it has large plants for the Electrical Power segment, and in Asia, where it has nine manufacturing sites in China and generates around 24% of its total sales.

The Group is also exposed to industrial GDP growth rates, particularly for process industries (which account for roughly 33% of its total sales) and/or in some countries, including the United States, China, Germany and France, which together account for 64% of its total sales.

The Group is also sensitive to infl ation, especially wage infl ation (salaries represent approximately 30% of Group sales) and infl ation on some raw materials and components. Although energy costs represent only about 5% of Group sales, they may impact the profi tability and competitiveness of certain businesses in the Advanced Materials segment in Europe if an increase such as that observed in 2022-2023 were to reoccur.

In addition, if tensions between China and the United States continue to deteriorate, this could have a negative impact on our operations in China, particularly solar cell manufacturing.

Most of the Group’s borrowings are borne by the parent company. In addition, the Group borrows some of its fi nancial resources (cash) from its Chinese subsidiaries. Restrictions on borrowing and/or lending (including tax) between the parent company and its subsidiaries could reduce available cash in certain regions.

Lastly, although most sites have a local production model, some produce semi-products or components used by plants located in other countries. These intra-group transactions are sensitive to trade barriers in view of today’s increasingly protectionist geopolitical context. The Group’s fuses produced in Mexico for the North American market could therefore be subject to customs duties. However, its main competitors in this market, who also have production sites in Mexico, would be in the same situation.

The potential negative impacts for the Group are:

■ a sales decline stemming from a global recession, or at least a stoppage of certain capital expenditure projects, which could signifi cantly impact profi tability as several Group activities are sensitive to volume effects;

■ in the event of a threat of international sanctions against a country, it may become diffi cult to continue operating some businesses with high technological content in countries such as China. This would have an unfavorable effect on Group sales, profi tability and share price;

■ a sharp drop in Mersen’s share price, as the Group is still perceived as cyclical and dependent on the economic environment;

■ in the event of persistent infl ation, margins may be eroded if the Group is unable to pass on this infl ation in its selling prices. Wage infl ation may also lead to labor unrest that could impact business if the Group is unable to grant the wage increases expected by employees;

■ major restructuring costs or impairment losses in the event of a prolonged economic downturn;

■ lower profi tability due to higher customs duties if the economic environment prevents increases in these duties from being passed on at least partially in selling prices;

■ possible restriction of available cash, particularly from China.

Risk management

The Group operates in forward-looking growth markets, particularly in sustainable development markets, which account for around 55% of consolidated sales (see the sustainability chapter of this document). This is helping it to reduce its dependence on process industries, which are more sensitive to changes in the economic environment.

The Group has put procedures in place to regularly assess the need for price increases and their impact on the profi tability of its various businesses. Mersen’s high market share, the technological component of its products and its close customer relationships are factors that make it easier to pass on infl ation in selling prices. The average price increase in 2024 was over 2%.

The gradual rollout of benefi t policies throughout the Group (e.g., profi t sharing, minimum vacation entitlement, top-up pensions and supplementary healthcare programs, or guaranteed minimum death benefi ts) may help mitigate infl ation-related labor unrest.

The diversity of the Group’s markets as well as its geographical presence gave have enabled it in the past to show good resilience to both the health crisis and the international crisis related to the Russia-Ukraine confl ict thanks to its diverse markets and geographic footprint.

Since 2021, the Group has been treading carefully in sensitive geographies such as China, limiting both its capital investment and new acquisitions in this country. However, although the Group factors geopolitical tensions into its investment decisions, it does not rule out capital investments or acquisitions in risky geographies on a case-by-case basis if the investments were particularly relevant to its strategy.

10.3.2. R isks related to our strategy to penetrate the electric vehicle market*

Description of risk

For Mersen, the electric vehicle market represents an important growth driver in an automotive sector that is complex and demanding in terms of both risks and opportunities. This is a new and highly demanding market for the Group, both in terms of product quality and reliability and supply chain responsiveness.

The Group has been pursuing technical and commercial developments in this fi eld for several years. A large number of people with extensive experience in the automotive sector have reinforced the Group’s skillset. Mersen is now entering a key production phase and entered into a contract with ACC in 2023 that required capital expenditure and additional recruitment.

In 2024, the Group achieved sales of €30 million in this market. Between 2023 and 2029, the Group forecasts average annual growth of around 30% thanks to its two product lines, fuses and bus bars. It has invested in an automated workshop for the manufacture of bus bars in France.

The Group cannot guarantee that it will be able to meet the demands of this market, particularly in terms of price or quality and/or expected product technical specifi cations. Its technical positioning (e.g., in fuses or bus bars), production facilities or supply chain may not meet the expectations of sector-based players (especially in terms of fl exibility and responsiveness).

As part of the CSRD double materiality assessment, a material risk was identifi ed for the end-users of our products: the risk related to safety or security defects in our products. This risk specifi cally concerns our fuses for the electric vehicle market.

In addition, the update of Mersen’s roadmap in December 2024 showed that penetrating this market may require more of the Group’s resources and time than initially anticipated.

In addition to the slowdown in growth prospects, the electric vehicle market is experiencing major upheavals whose evolution and impact are diffi cult to measure, such as overcapacity and strong competition from Chinese carmakers on the European market (leading to reduced accessibility for Mersen’s products) and political fi gures (Europe, the United States) and certain players in the automotive sector advocating for a loosening of pollution regulations for non-electric vehicles.

Finally, the lasting viability of battery manufacturers in Europe (such as ACC) has still not yet been demonstrated, as these new plants are still in the start-up phase with complex manufacturing processes that need to be fi ne-tuned.

The potential negative impacts for the Group are:

■ restriction of the Group’s development potential in this market compared to its forecasts, with a highly unfavorable impact on Group sales and profi t margins;

■ a significant reduction in ACC’s bus bar orders, reducing the profi tability of investments made or earmarked for this customer;

■ more intense price pressure in this market, which could squeeze the Group’s profi t margins over the long term;

■ heightened risks of customer disputes (non-compliance, delivery delays, product recalls, etc.);

■ damage to the Group’s image in the event of a major product defect.

Risk management

The Group has set up a dedicated internal “Electric Vehicles Committee” chaired by the Group CEO and tasked with (i) tracking developments in this market and Mersen’s technical and commercial positioning, (ii) identifying the risks associated with this market and drawing up appropriate action plans, and (iii) drawing up and monitoring the implementation of a formal strategy for the market. A product line with a dedicated organization has been set up to better structure the activity, improve reactivity and boost the Group’s visibility in this area.

The Group has continued to strengthen its teams dedicated to the electric vehicle market in order to enhance automotive culture throughout the Group. It has also obtained IATF certifi cation for a second site located in Angers, France. The Group has decided to consolidate its fuse production at the Songjiang site in China in order to benefi t from economies of scale.

With the exception of the fi rst automatic prototype lines, the Group can make investments in some of the equipment as and when required by customers.

The establishment of partnerships with specialists in the automotive sector helps to reduce risk and enables the Group to make faster progress in acquiring an automotive culture. The agreement with ACC is an opportunity for the Group to showcase a quality benchmark in the bus bars for battery market.

The Group’s positioning in the electric vehicle market is regularly presented to the Board of Directors.

10.3.3. P roduct quality, safety and regulation*

Description of risk

Mersen is a recognized expert and leader in two main areas: advanced materials and electrical specialties. It mainly develops innovative customized solutions of a quality that its customers have come to expect. Certain products may fail to meet customer specifi cations or deadlines.

One of the technical challenges is to keep pace with constantly changing regulatory constraints, in an increasingly complex international context. This is particularly true of the WEEE, RoHS and REACH regulations to which some of the Group’s product lines are subject.

Failure to comply with regulatory requirements could result in customer claims, penalties, fi nes and an impact on the Group’s liability.

The potential negative impacts on the Group are:

■ dissatisfi ed customers and loss of markets;

■ possibility of major legal disputes (product recall, delayed deliveries that could result in stoppages at our customers’ sites, late penalty fees);

■ damage to the Group’s image;

■ potentially signifi cant fi nancial consequences;

■ convicted legal entities, legal representatives and delegated persons.

The material risk related to safety or security defects in our products for electric vehicles has been assessed in accordance with the CSRD (see section 10.3.2).

Risk management

Several years ago, the Group put in place an Operational Excellence Department that has in turn devised a continuous improvement program based around five objectives: safety, quality, logistics, cost and team commitment. This is rounded out by quality management and dispute prevention tools. In addition, the management of safety, quality and regulatory requirements impacting our products (REACH, RoHS, WEEE) in both traditional and new markets (electric vehicles and SiC) is being strengthened to comply with these sector-specifi c standards and requirements.

The Group has also strengthened its teams with specialists in the automotive fi eld, particularly in terms of quality expertise.

10.3.4. R isks related to our expansion in the SiC market*

Description of risk

A new type of “SiC semiconductor” is being adopted in certain markets such as the electric vehicle market. Growth in this market is therefore mainly linked to developments in electric vehicles over the next few years.

Manufacturing technology for these semiconductors is complex, constantly changing and requires high quality materials, notably insulating felt and graphite produced by Mersen, with technical features that can also change very quickly.

In 2024, the Group generated around €100 million in sales in this market and continued to invest in order to meet the demand expressed by its customers in early 2023. In March 2023, it announced that it had signed a major contract with Wolfspeed that will lead to capital expenditure of USD 120 million.

It has also entered into a partnership with Soitec to develop an alternative technology (known as p-SiC) which requires signifi cant investments. It could take longer than Mersen initially expected to develop this new technology and the process could generate signifi cant development costs.

In particular, the Group is likely to encounter administrative and operational diffi culties in implementing this technology, which could result in additional costs.

All of these investments (some of which have been made or earmarked), whether for the expansion of existing plants or the acquisition of new equipment, could exceed €200 million by 2026.

The expected average annual growth in sales in 2023-2029 would be more than 15%. However, the Group may fail to position its products (in terms of technical features or costs) to meet customer expectations and/or its contractual obligations within a suffi ciently short timeframe, thereby limiting its ability to benefi t from market growth or resulting in slack capacity.

In this nascent market, balancing supply and demand may prove complex. On the demand side, forecast customer activity, which is already delayed compared to initial expectations, may turn out to be behind schedule or lower than expected as it is contingent on the take-up rate of SiC semiconductors in electric vehicles and on the growth in electric vehicle sales. Consequently, the Group may not achieve its objectives or expected success in this market.

Lastly, the rapid development of cost-competitive Chinese players in the SiC market could have a negative impact on our customers’ activities.

The potential negative impacts for the Group are:

■ unfavorable impact on Group sales, return on investment and profitability in the event of poor product positioning,  failure to produce within the required timeframe, or contract renegociation;

■ too much capital investment in relation to current and/or future demand, dragging down margins and return on Group investments for a number of years;

■ operational losses due to insuffi cient yields and/or the cost of developing p-SiC to meet expected technical specifi cations and prices;

■ partial impairment of assets on the p-SiC project due to dedicated investments in this technology;

■ no Group presence with a major – or emerging – player in the

SiC market, limiting the Group’s development in this market;

■ significant penalties for failure to comply with contractual agreements or deterioration of commercial relations (see legal and regulatory risks);

■ unfavorable impact on share price if the Group does not achieve its objectives in this market.

Risk management

The Group has strong technical expertise in the materials used in the SiC semiconductor market and maintains this edge through its sustained technology watch.

The Group has also negotiated contracts with binding clauses with a number of players in the semiconductor market. This allows Mersen to potentially renegotiate these contracts under good conditions, should market conditions make this necessary.

The SiC semiconductor market together with related commercial and technical developments are tracked on a month-by-month basis by the Chief Executive Offi cer and monitored regularly by the Board of Directors.

10.3.5. R eduction in the Group’s fi nancial fl exibility*

Description of risk

The Group’s debt increased in 2024 due to major investments and the acquisition of three companies in North America. Its debt could rise further over the next few years as a result of the investment plan undertaken against a backdrop of deteriorating growth, particularly in the electric vehicle and SiC markets, compared with the estimates initially made when these investments were planned.

The Group’s fi nancial structure was in line with its leverage policy

(net debt to EBITDA before non-recurring items) at the end of December 2024, with a ratio of 1.8. This ratio could deteriorate and remain at a high level if the Group were faced with an economic slowdown, potentially for a period of several years, which would limit the Group’s fi nancial fl exibility.

At December 31, 2024, the Group’s net debt stood at

€369 million. As part of its fi nancing agreements, however, the Group is required to meet certain deadlines in order to maintain suffi ciently large available lines of credit to fi nance its 2029 growth plan and maintain its fi nancial fl exibility. At December 31, 2024, undrawn committed credit lines amounted to €265 million and the cash position was positive, at €50 million.

The Group’s ability to raise additional funding in the longer term will depend on fi nancial, economic and business conditions, as well as other factors over which it has no or only limited control as they are dependent on external factors.

The potential impacts of a lack of timely fi nancing or of fi nancing on less favorable terms for the Group are:

■ non-completion of projects (acquisitions, investments, etc.) that are important for the Group’s development;

■ increased cost of debt for several years;

■ negative stakeholder perceptions of the Group’s financial structure (investors, lenders, customers, etc.); ■ a decline in available cash.

Risk management

At the end of the year, the Group accelerated its cost adjustment measures, which involved closing down certain unprofitable production lines and closing and transferring certain activities. The measures were accompanied by a plan to reduce inventories and thereby improve its working capital requirement.

In February 2025, the Group paid back in advance a Schuldschein private placement arranged in 2019 for €115 million maturing in April 2026 by taking out a US private placement with leading North American investors, comprising a USD 100 million tranche with a ten-year term, and a €90 million tranche with a seven-year term. The funds will become available in April 2025 and will be repayable in full at maturity.

In addition, the Group aims to achieve the following fi nancial objectives by 2029, which should allow it to maintain its fi nancial fl exibility and deal with its debt:

■ sales of around €1.7 billion;

■ operating margin before non-recurring items of 12% of sales, which may vary by +/-50 basis points; ■ EBITDA margin before non-recurring items of 19% of sales, which may vary by +/-50 basis points;

■ ROCE of 13%, which may vary by +/-50 basis points.

Lastly, the Group has decided to keep its investments in 2024 and 2025 lower than the amount initially planned in 2023.

10.3.6. D ependence on certain production sites and/or certain suppliers*

Description of risk

When the Advanced Materials segment manufactures graphite products, it first prepares the raw material and then makes graphite blocks, which are subsequently processed and machined. The manufacture of these blocks, and some of the processing operations involved, require heavy and/or complex machines that cannot be easily installed in more than a certain number of sites. The production sites for these blocks are based in China and the United States. Complex transformation sites are also located in those countries, as well as in South Korea, Germany and France. In addition, there are unique production sites in France and the United Kingdom.

Some products manufactured by the Electrical Power segment require a large amount of labor to produce high volumes at a reasonable cost. The segment’s facilities for making those products are therefore concentrated in a small number of plants in China, Hungary and Mexico. This means that the Group is highly dependent on those plants for the manufacture of certain products. There may also be unique production sites and skills centers in the United States, France or Germany.

Any event that impacts a key production site or distribution center, resulting in a one-off or longer shutdown of one of these sites, could have a signifi cant adverse effect on Group business.

On a general note, intra-group transactions account for approximately 27% of total billing.

There are some suppliers on which the Group may be dependent. In such a case, any signifi cant delays in deliveries of components or raw materials could cause temporary stoppages or delays in production, which could lead to customer dissatisfaction and/or late delivery penalties. Although no single supplier represents more than 2 % of the Group’s total purchases (excluding capital expenditure), one supplier may be signifi cantly important for a major Group plant.

For almost all strategic suppliers of raw materials and components there is at least a second source. However, if the main supplier has a signifi cant shortage, the second source may not always be able to make up the difference quickly and at a similar cost.

The Group further diversifi ed its sources of supply in 2024 and was able to pass on raw material infl ation in selling prices.

The global economic and political environment may jeopardize this supply dependence even further. The increased scarcity of materials and energy could also potentially impact certain product lines.

The potential negative impacts for the Group are:

■ direct and indirect losses of volume (production stoppages at other Group sites) with consequent losses in sales and profi tability in the event of a major plant shutdown over a long period;

■ several days of stoppages at certain plants or distribution centers in the Electrical Power segment could lead to a loss of customers;

■ for some sites, manufacturing delays could lead to substantial late delivery penalties;

■ high costs if certain facilities and/or equipment have to be rebuilt or restarted following an accident or other incident at a production site;

■ unfavorable impact on Group margins due to a signifi cant increase in the cost of certain components or raw materials for which the Group is unable to fi nd alternative suppliers.

Risk management

Business continuity plans have been drawn up for some sites.

Alternative production solutions were also tested during the Covid19 crisis. In addition, the Risk and Compliance Department will be stepping up its rollout of Business Continuity Plans.

Action plans are being deployed that limit the Group’s dependence on certain component suppliers (for the Electrical Power segment) or materials suppliers (for the Advanced Materials segment) by growing the number of suppliers, securing long-term contracts and strategic partnerships, and bringing certain production processes in-house. For example, the decision to buy the Columbia plant in July 2019 was partly motivated by a desire to take extruded graphite production back in-house.

Other external solutions may also be used in some cases, such as outsourcing certain processes or purchasing parts from other companies.

10.3.7. C ompetitive pressure and lower profi tability in certain product lines

Description of risk

The Group’s profi tability is dependent on certain product ranges. For example, in the Electrical Power segment, profi tability for the fuses range is much higher in North America than in other regions. And in the Advanced Materials segment, Graphite Specialties has a much higher profitability level than the Group’s other activities, but at the same time is dependent on the use of graphite production capacity, particularly due to its capital intensive nature. Generally speaking, Group profi tability is higher in North America and Asia (including China).

Competitive pressure – especially from Chinese fi rms – in certain developing markets could also eventually erode Mersen’s position in these markets. Moreover, a mismatch between supply and demand in graphite applications and/or a signifi cant decline in sales in the Electrical Power segment in North America could have an unfavorable impact on the Group’s business and profi tability.

The potential negative impacts on the Group are:

■ loss of market share and adverse effect on Group sales;

■ erosion of the Group’s overall profi tability;

■ a drop in share price;

■ having to adapt the cost structure to lower profi tability levels, which could lead to signifi cant restructuring costs;

■ having to recognize impairment losses on certain under-used assets, especially if there is a persistent imbalance between supply and demand.

Risk management

In the past, the Group has put in place measures that would enable it to swiftly and effectively adapt its cost structure to market changes. At the end of October 2024, following weakerthan-expected growth in sales, Mersen decided to ramp up profi t optimization measures.

The Group has developed an in-house Sales Excellence program to enhance its commercial effi ciency and gain market share in the most profi table segments. This is primarily based on a selective policy of increasing sales prices to offset infl ationary increases in wages, materials and components impacting direct costs. For example, price increases amounted to approximately 2% of sales in 2024.

Mersen is positioned in a large number of markets which are not all equally cyclical, which makes it possible to offset certain cyclical effects. Moreover, certain types of equipment are used for several markets (process industries, aeronautics, etc.).

10.3.8.  Risks related to ineffective management of technological development

Description of risk

Mersen designs bespoke products tailored to its customers’ specifi c technical requirements, in terms of both use and performance. In a number of its strategic markets, such as electronics, solar power and electric vehicles, customer requirements change quickly and often. The Group therefore has to constantly monitor changes in technology so it can anticipate new market trends and more effectively meet its customers’ future needs.

It cannot be ruled out that alternative technologies will emerge, for instance in relation to manufacturing procedures for solar panels or silicon carbide semiconductors, whose production requires a large quantity of graphite. The partnership with Soitec on p-SiC is a good illustration of this.

The Group may be unable to develop or improve products in line with the latest technological developments within a timeframe and on terms that are satisfactory to its customers.

Technological developments in more traditional products and markets may be more or less favorable for Mersen. For example, the use of brushless motors could increase to the detriment of brushed motors, or a change in electrical standards could impact the market for the Electrical Power segment.

Lastly, Mersen operates in markets where product offerings are becoming increasingly comprehensive and integrated and distribution methods are becoming more varied (particularly thanks to e-commerce). Mersen has to factor in these trends and adapt its offerings accordingly, mainly in its Electrical Power segment.

The potential negative impacts for the Group are:

■ a possible prolonged decrease in sales if the Group is unable to respond to technological developments in a market or standard, or if a new technology emerges in which Mersen does not have the required expertise;

■ loss of market share in strategic sectors, which could impact the Group’s future growth rate;

■ signifi cant capital expenditure to adapt to market requirements and/or specifi c customer needs.

Risk management

A technology watch has been set up to help the Group anticipate new market trends. Synergies between R&D and sales teams have been optimized by the corporate R&D Department. Capital expenditure and/or R&D budgets have been increased for markets and/or applications with high technological content and/or fastpaced change.

The Group’s R&D Department has strengthened its simulation tools, developed partnerships with universities and worked with the businesses to signifi cantly improve the digitization of the customer offer.

Specialized committees have been set up for the SiC and electric vehicle markets to track technological developments, the players involved and market dynamics. The strategy adopted for certain product ranges has been reviewed in order to propose a broader and more comprehensive offering, notably by developing connected products.

Furthermore, the Group may pursue its acquisition policy with a focus on gaining key expertise, to further help prevent this risk. It is closely monitoring competitors’ reorganization projects in order to study potential opportunities for consolidation.

10.3.9. D iffi culty attracting and retaining experts

Description of risk

Mersen operates in highly technical and complex markets. Managing the expertise required for these markets, which can be very specifi c and specialized, is crucial if Mersen is to remain a global leader in its fi eld. The Group’s business model therefore draws on this expertise as well as Mersen’s century-long experience. Mersen also needs to be able to manage and develop the new expertise brought into the Group through acquisitions.

To remain competitive, continue to grow over the long term and rise to future challenges, Mersen has to attract a wide range of talent, including experts. Its ability to attract these experts is key to its success. Its expertise could wane over time if it does not have a proper talent management strategy.

The Group is complex in terms of its size, and the diversity of its products, markets and geographic footprint. To effectively manage this complexity, it needs talented people with a varied range of expert skills and in-depth knowledge of the Group, its customers and its manufacturing facilities. Knowledge transfer and the replacement of experts about to reach the end of their careers are vital for Mersen’s future. In particular, the Group must ensure it replaces certain managers and members of the Executive Committee and business management committees whose retirement is scheduled in the short to medium term. It must also ensure the succession of the Chief Executive Offi cer, whose term of offi ce expires in 2026. As of December 31, 2024, Group employees over 55 years of age represented 18.7% of total Group headcount.

Retaining and attracting talent and experts could become more challenging, although the tension on the labor market experienced since early 2022 has gone down.

The potential negative impacts on the Group of the loss of experts are as follows:

■ loss of key expertise that could affect the Group’s ability to meet customers’ requirements, which would limit its growth potential and/or existing sales;

■ less control over manufacturing processes, which could lead to (i) additional costs, which would reduce the Group’s competitiveness for some products, (ii) product quality problems that could affect relations with major customers, and (iii) safety or environmental problems arising from complex processes;

■ poor strategic decisions due to insuffi cient knowledge of the Group’s expertise and processes, its culture or its markets.

Risk management

The Group has created a dedicated organizational structure to manage this risk, including:

■ setting up an expert community, with a specific policy for succession planning, retaining and sharing expertise, and enhancing talent retention measures;

■ creating an expert committee to pool knowledge and motivate the Group’s experts;

■ systematically putting in place succession plans for major sites and management committees (including the Group Executive Committee);

■ reviewing Executive Committee succession plans by the Governance, Appointments and Remuneration Committee;

■ putting in place a career management policy, particularly for experts and young talent;

■ rolling out specific communication and “employer brand” measures to develop and promote the Group’s reputation among job candidates and therefore attract new talent;

■ broadening long-term incentive plans to include experts and high-potential employees.

10.3.10.  IT syste ms failure and cyberattacks

Description of risk

All of the Group’s management, planning and invoicing systems are dependent on IT. The reliability and availability of the Group’s IT systems are determining factors for meeting customer deadlines, and are indispensable for certain activities such as electricity distribution and electric vehicles.

In addition, some equipment that is essential for the Group’s business and/or is potentially risky is controlled via software.

Lastly, certain confi dential data, notably relating to plans (both the Group’s and its customers’), product offers and personal data are stored on servers.

The potential impacts for the Group in the event of failure are:

■ a stoppage of important equipment, which could temporarily affect production and therefore make it impossible for the Group to deliver one or possibly many order(s), which in turn could impact its profi tability and potentially its future relations with some customers;

■ theft and/or sharing of confi dential data, which could lead to penalties and/or legal disputes and could harm the Group’s image;

■ an accident due to the loss of control of dangerous equipment.

Risk management

The Group has an IT security policy, which is regularly presented to the Audit and Accounts Committee. This policy is updated regularly to ensure the IT system remains resilient and synchronized Groupwide, with redundancy systems in place: the most business-critical systems are redundant, and the DRP (Disaster Recovery Plan) is regularly tested.

A specifi c cybersecurity risk map has been in place for several years and internal audits are performed to verify that the relevant rules and procedures are respected. Mandatory training and awareness-raising sessions are also organized to enhance the Group’s cyber-risk culture. Moreover, Mersen uses external service providers to assess the robustness of its IT system. IT governance projects have been redefi ned and the IT teams have been strengthened in order to manage IT risks more effectively, especially cybersecurity risks.

The deployment of centralized tools provides more effective control over updates and compliance with security guidelines.

10.3.11.  Ineffective integration of newly acquired companies

Description of risk

The Group has carried out numerous acquisitions in the past. In 2024, Mersen made three acquisitions in the United States in order to consolidate existing Group products/technologies.

Most acquired companies are small, family-owned businesses with strong local expertise. The success of these acquisitions hinges largely on effective integration, from a technical, commercial and, above all, human resources perspective. The Group may pursue this acquisition policy to consolidate its position in certain businesses or geographies.

However, the Group may encounter the following diffi culties that impact forecast synergies and performance:

■ issues not identified during due diligence may result in substantial unexpected costs, delays or other fi nancial and operational diffi culties, as well as unforeseen legal problems such as larger-than-expected liabilities;

■ difficulties integrating acquired entities or businesses (particularly HR problems) or poorly managed transfers of activities or plants;

■ diffi culties recruiting or retaining the expertise required for the transition;

■ breach of non-compete clauses or disputes with the acquired companies;

■ the technologies acquired may prove to be less effective than initially expected or process engineering conducted by the Group may prove to be more complex and/or longer and costlier than anticipated.

The potential negative impacts on the Group if one or several major projects were to fail are:

■ a reduction in sales volume and/or expected profi tability;

■ the need for additional fi nancial investments or costs in order to bring acquired companies or assets up to the required standards;

■ the expected benefi ts of future acquisitions may not be achieved within the expected timeframe or at the expected levels.

Risk management

Due diligence procedures (covering operational, IT, legal, environmental, fi nancial and compliance issues) are performed for all acquisitions and a tailored integration plan is drawn up and regularly monitored by the members of the Executive Committee. The procedures must be approved by or communicated to by the Board of Directors, depending on their scope.

A process of monitoring key people during the acquisition process is fully operational.

Post-acquisition reviews are regularly conducted to measure any variances and the integration plan is adjusted if necessary, with the reviews presented to the Board of Directors.

10.3.12.  Human capital shortages for the growth plan

Description of risk

The Group’s international scope as well as the diversity of its products, markets and applications require signifi cant resources and means that the Group cannot always provide as it is smaller than other major multinational corporations.

The Group has made and will continue to make many capital expenditure outlays, industrial reorganizations and acquisitions. This high level of activity can lead to temporary shortfalls in human capital or additional human capital requirements that cannot always be satisfi ed at competitive rates, particularly in the context of the 2029 growth plan.

The Group and its subsidiaries also need to deal with the increasing complexity of labor, environmental and tax regulations. The increasingly demanding requirements for documentation and formal processes for compliance purposes have created large volumes of additional work, especially for support functions such as fi nance, HR and IT. Some smaller sites may fi nd it diffi cult to have effective regulatory watch processes in their particular country.

The potential negative impacts for the Group are:

■ loss of competitive position and market share if the Group is unable to adapt quickly enough to specifi c changes in its

markets or customers;

■ sanctions and liability in the event of (involuntary) noncompliance with regulations could be prejudicial for the Group; ■ slowdown of ongoing projects.

Risk management

In order to ensure the success of its growth plan, the Group has maintained or undertaken the following actions:

■ Expansion and consolidation of its existing network of regional liaison offi cers (for HR, fi nance and audits) who provide support to local sites.

■ Development of the employer brand to enhance the Group’s attractiveness.

■ Process of provisional management of jobs and resources.

■ Certain support functions (compliance, legal affairs, environmental affairs, etc.) have been strengthened over the past few years to deal with the growth in regulations.

■ Regular follow-up with the Board of Directors.

10.4.1. D elayed rollout of environmental and climate policy

Description of risk

The manufacturing processes of the Advanced Materials segment use energy, which leads to indirect CO2 emissions (see chapter 4 in this document). Given the Group’s expected strong growth between now and 2029, it is likely to generate an increase in greenhouse gas emissions in absolute terms across its entire value chain. The Group has set itself ambitious short-term targets for reducing CO2 emissions intensity. These objectives are partly linked to the use of electricity from renewable sources.

In addition, Mersen is facing increasingly demanding requests from its external and internal stakeholders (customers, shareholders, employees, etc.) regarding its climate pathway. The Group may not be able to respond within the required timeframe.

As part of its non-fi nancial double materiality analysis, the Group identifi ed “Reducing the carbon footprint” and “Climate change adaptation” as material issues (see chapter 4).

The potential negative impacts on the Group are:

■ failure to reduce the Group’s GHG emissions or respect its carbon trajectory, which could have a negative environmental impact;

■ reputational and fi nancial risks, leading to a fall in the share price;

■ a reduction in sales and fi nancial results;

■ additional costs incurred for researching less energy-hungry production processes, especially if certain regulations change;

■ additional costs linked to the use of renewable electricity;

■ non-renewal or suspension of an operating license, which could lead to a partial or total production stoppage at a major plant while awaiting an alternative solution;

■ costs related to cleaning up land at a former site and/or to third-party claims or disputes, or to compliance measures for facilities.

Risk management

The Group is well positioned in energy transition markets, and its medium-term strategy is based on the development of these markets. In addition, most of Mersen’s products enable customers to consume less energy. This helps to reduce reputational risk.

In addition, the Group has implemented an ambitious environmental policy with numerous measures to mitigate the risks described above. In particular, it:

■ regularly monitors the Group’s actions and policies on climate issues;

■ adopts and disseminates formal Group environmental objectives and integrates them into the annual bonuses for some members of the Executive Committee and into bonus share plans for the Executive Committee and managers;

■ carries out emission calculations, particularly with regard to product use and end-of-life;

■ has put in place the centralized monitoring of operating permits;

■ has put in place a procedure whereby the Executive Committee regularly monitors changes in the main standards that apply to the Group in order to effectively anticipate any required capital expenditure;

■ strengthens environmental and climate resources;

■ has set up a system for regularly monitoring waste, with measures implemented to ensure better recycling at all of its manufacturing sites;

■ systematically carries out environmental due diligence reviews for acquisitions of manufacturing sites.

In addition, the Group has implemented a solid governance structure for these issues, through the CSR Committee and the HSE Committee, which bring together the departments involved as well as several members of the Executive Committee. A

10.5.1. M ajor disputes and non-compliance issues

Description of risk

Mersen operates in complex and technically demanding markets. The products that the Group delivers are key components for the operation and/or safety of our customers’ products and services. Claims may potentially be made against the Group for alleged quality problems and/or for failing to meet delivery deadlines (such claims are frequent in the chemicals and automotive industries). These risks are generally on the rise due to the growing number of signifi cant long-term contracts, the more litigious nature of relations with certain key customers and the Group’s expansion in new businesses and international markets with differing legal systems. This international positioning, combined with the fact that Mersen sells products that can be used for both civil and military purposes, exposes it to sanctions by or disputes with government agencies, especially tax and customs authorities.

The potential impacts for the Group are:

■ administrative sanctions imposed by a government, which could potentially restrict or prohibit the Group’s access to certain markets and harm its reputation;

■ potentially signifi cant costs, especially in the event of product recalls, serial defects on products or major delivery delays under certain contracts;

■ a deterioration in commercial relations with certain customers, with an ensuing loss of sales (although the Group’s largest customer only represents approximately 3.2% of its total sales).

Risk management

■ Prevention of customer disputes

Since the end of the 1990s, the Group has had a quality program in place to ensure the quality of its products meets its customers’ requirements. It also has an Operational Excellence Department, set up in 2015, to improve the monitoring and quality of its products.

The Group’s Legal Department draws up contractual policy and assists the sales and technical teams in negotiating contracts and managing claims, thus ensuring better prevention of disputes with customers. The Group has also taken out a civil liability insurance policy to limit the fi nancial consequences of such disputes (see paragraph on Insurance below). 

■ Prevention of regulatory breaches

The Group is committed to raising awareness and training its employees in regulatory compliance to prevent the risk of breaches. Mandatory training is provided to all employees on the Group’s Code of Ethics, which includes a section on regulatory compliance. Employees who are particularly exposed must also undergo specifi c training on anti-corruption rules and competition law. In terms of export controls and embargoes, procedures have been implemented within the Group and awareness-raising sessions are regularly provided to the staff concerned.

Disputes are periodically assessed and the Group makes provisions in accordance with applicable accounting principles to cover risks that it is able to reliably assess (see Note 13 to the consolidated fi nancial statements).

INSURANCE

11. INSURANCE

The Mersen group has negotiated international insurance policies applicable in certain countries via local policies to cover its main risks. These insurance policies are underwritten by leading insurance companies.

To safeguard the Group’s future, the levels of coverage are regularly reassessed to take into account the risks incurred by the Group. Coverage, limits and deductibles are adapted to the needs of the Group and all of its subsidiaries. They are reviewed each year, taking into account the Group’s activities and projects. They are also subject to change depending on the terms available in the insurance market.

The Mersen group does not have any captive policies.

Its main policies are as follows:

11.1. C ivil liability insurance

The professional third party liability insurance program (operations, pre- and post-delivery) covers in particular – subject to the usual deductibles, exclusions and limits on coverage – bodily harm, physical and economic loss, disassembly/reassembly costs, collection costs, damage to goods in third party storage and decontamination costs. The international program comprises a main policy in France and local policies in certain countries.

11.2. E nvironmental liability insurance

The purpose of the environmental liability insurance policy is to cover, subject to the usual deductibles, exclusions and limits on coverage, the fi nancial consequences for the Group resulting from bodily injury, property damage and consequential loss suffered by third parties in the event of pollution or environmental damage caused by the activities of the Group and its subsidiaries.

11.3. P roperty/Business interruption insurance

The Group’s property/business interruption insurance program notably covers – subject to the usual deductibles, exclusions and limits on coverage – bodily injury and physical damage, as well as losses caused by the interruption of business at the Group’s main plants as a result of any sudden and accidental events (such as fi re, storm, explosion, electrical damage, theft, etc.). The program comprises a master policy and local policies in certain countries. It provides an overall contractual restriction per event (property/business interruption combined) with sub-restrictions for certain events, such as storms, natural disasters or certain specifi c guarantees, such as machine failures and IT and electrical risks.

11.4. Transportation insurance

Under the Group’s transportation insurance program, Mersen and its subsidiaries are protected by a worldwide policy that covers all of the Group’s goods shipments, irrespective of the means of transportation used.

Mersen is a holding company that manages its investments in subsidiaries and affi liates and the Group’s fi nancing activities, and charges subsidiaries for services related to the intangible assets and property, plant and equipment that it owns.

The Group’s Executive Committee runs its operational affairs. The members of the Executive Committee sometimes act as corporate offi cers or directors at the companies linked to their activity.

The parent company, Mersen SA, generated sales and other income of €40.5 million in 2024. These revenues are derived from Mersen SA’s activities as a holding company, namely the management of investments in subsidiaries and affi liates, Group fi nancing and invoicing for various services, plus fees for the use of the trademark and other associated intangibles.

The parent company recorded a net operating loss of €4.6 million, compared with net income of €4.9 million in 2023. This reduction is mainly due to increased expenditure by Mersen SA for the development of its “Mersen” brand. All else being equal, this increase in expenditure should lead to an improvement in the brand’s profi tability over the next few years.

Net fi nancial income came to €19.6 million, compared with net income of €26.1 million in 2023, mainly comprising €38.6 million in dividends from subsidiaries, compared with €32.9 million in 2023, and impairment of equity interests in the amount of €24.0 million, compared with €13.0 million in 2023.

Net income before tax and non-recurring items came to

€14.9 million.

Non-recurring items amounted to a net loss of €0.4 million, compared with net income of €3.8 million in 2023 which mainly refl ected the reversal of a provision for disputes for €1.1 million and net income from the capital reduction of a subsidiary for €2.3 million. In 2024, the inc rease in non-recurring expenses was mainly due to the cost of acquiring free shares for Mersen group employees, largely offset by income from rebillings corresponding to the share of employees benefi ting from the plan in other Group companies.

The €2.3 million income tax benefi t chiefl y refl ects the benefi t from the consolidation of Mersen and its French subsidiaries for tax purposes of €2.9 million and a tax expense at the global minimum tax rate (GloBE/Pillar Two) of €0.6 million.

After taking these items into account, net income came to €16.8 million versus €36.4 million in 2023.

PARENT COMPANY RESULTS

13.2.  Information about payment terms for the parent company’s suppliers

Invoices received and issued at fi scal year-end (table from part I of Article D. 441-4 of the French Commercial Code)

(A) Late payment tranches