ASSYSTEM_Registration_Document_2017

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RISK FACTORS

INDUSTRIAL AND ENVIRONMENTAL RISKS

ASG LEGAL DISPUTE ASG is involved in a legal dispute with Acergy (since renamed Subsea 7) and Iska Marine concerning a fire that occurred in January 2010 on board a ship – the Acergy Falcon – which was dry-docked in Brest for maintenance at the time. The only noteworthy events during the year relating to this case were of a procedural nature as, following an application by ASG, the Brest Commercial Court issued an order on 21 July 2017 requiring Subsea 7 and the plaintiff’s insurers to disclose all of the documents exchanged in the UK litigation between Subsea 7 and Sobrena (including the settlement agreement signed between Subsea 7 and Sobrena and their respective insurers). This order contained an enforcement clause providing for the payment of a fine in the event of non-compliance. Subsea 7 and its insurers partially complied with the order by disclosing a certain number of documents. At the procedural hearing on 24 November 2017, the Brest Commercial Court adjourned the rest of the arguments and the exchange of pleadings until 2 March 2018. As in prior periods, Assystem still considers that there is no evidence that ASG was at fault or that it will necessarily be held fully or partially liable. In addition, as in previous periods, the Group confirms that in the event ASG is held liable, this claim would be covered under the Group's third-party liability insurance policies.

TAX AUDIT France

In late 2014 Assystem SA received notification of a €13.5 million tax reassessment relating to research tax credits recognised by its subsidiary Assystem France for 2010, 2011 and 2012. Assystem considers that this reassessment is based on a general position taken by the French tax authorities which is applicable, with no real grounds, to all of the French companies concerned and which Assystem is disputing in full. However, in view of the changes in case law in 2015, and based on the opinions of external legal experts, the Group set aside a €7.3 million provision in its 2015 financial statements (covering 50% of the amount of the reassessments and €0.5 million in potential legal fees). At 31 December 2016 Assystem had not yet received a payment notice from the tax authorities for the reassessed amount and the valuation of the related risk was unchanged compared with 31 December 2015. At 31 December 2017, the Group decided to increase the provision to cover the full amount of the risk and the potential late payment penalties following its receipt in November 2017 of the payment notice for the reassessed amount and in view of the fact that the risk relates to the former GPS division, whose control has now been transferred outside the Group. Consequently, €6.8 million was added to the provision recognised at 31 December 2015 along with €2.1 million for potential late payment penalties, bringing the total provision to €16.1 million at 31 December 2017. The amount recognised for potential late payment penalties was recorded in “Other financial income and expenses” (see Note 8.5 to the consolidated financial statements, “Financial income and expenses”).

At the date this Registration Document was filed, the Company was not aware of any other governmental, legal or arbitration proceedings (including any pending or potential proceedings), that could have, or have had in the last 12 months, a significant impact on the financial situation or profitability of the Company or the Group.

5.7 INDUSTRIAL AND ENVIRONMENTAL RISKS

Due to the nature of its activities, the Group has no significant direct impact on the environment. In the nuclear sector, the Group provides only knowledge-based services and is not authorised to operate any

nuclear facilities as defined in the applicable regulations. The Group's environmental policy and measures are described in Chapter 4 of this Registration Document on Corporate Social Responsibility (CSR).

5.8 RISKS RELATED TO ACQUISITIONS

Impact

Risk reduction measures

Type

Risk that acquired companies may not generate operating profit in line with the Group's objectives and expectations.

Dilutive effect on gross margins and operating profit. Group profitability/ performance objectives not met.

A post-acquisition support plan is drawn up for companies that are newly acquired by the Group. One of Assystem's priorities after acquiring a company is to implement the Group's reporting systems so that it can rapidly monitor changes in results and generation of cash flow and take any appropriate corrective measures.

The Group has not identified any other significant risks to date.

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ASSYSTEM

REGISTRATION DOCUMENT 2017