Assystem - 2018 Register document

BUSINESS REVIEW AND FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

RECOGNITION OF THE REVENUE FROM FIXED PRICE CONTRACTS Notes to the financial statements 1, 5.1 and 9

Risk

Our response

Total revenue of the Assystem Group for the year ended 31 December 2018 amounted to 444.1 million of euros; net amount of trade receivables amounted to 150.8 million of euros as of the year end date. As part of its operations, a certain portion of the Group’s revenue and results derives from long-term service agreements. These “fixed price contracts” represent agreements through which the Group commits itself to an obligation of results and whose sale price is either originally fixed for the whole project or defined, within a master agreement, for each type of services being ordered. These contracts give rise to the recognition of revenue in accordance with the percentage-of-completion method. The criteria for determining the percentage of completion may include, at a given date, the examination of the work already carried out, the analysis of the services already rendered compared to the total amount of services to be provided, or the analysis of the costs already incurred compared to the total estimated costs at completion. The decision about the criteria to be used lies with the manager of the operational unit who will retain the most appropriate criteria for monitoring the project. Once a loss at completion is considered as likely, it is recorded by setting up a provision whose amount will be reduced by the amount of losses previously recognised. The determination of the percentage of completion and of the revenue to be recognised is dependent on numerous estimates relying on contract costs monitoring and the experience of the management. Updating assumptions and estimates at completion may be made throughout the life of the contract and may significantly impact future results. We considered the recognition of revenue from fixed price contracts as a key audit matter as this process relies on judgements and estimates made by management as to the determination of the percentage of completion, the result at completion and the financial risks anticipated on these contracts.

We updated our knowledge of the internal control processes put in place by the Group for the purpose of contracting, project monitoring, billing and accounting for contracts and tested them. The other audit procedures which we carried out in connection with the evaluation of the revenue to be recognised on fixed price contracts consisted of selecting, according to a multi-criteria sampling approach (volume of activity or level of work- in-progress on specific contracts, complexity of the projects, unusual variations noted between two periods or in comparison to the rules adopted by the Group, new contracts for the period), certain contracts for which we have: • assessed the compliance of the accounting treatment applied with the contractual documentation; • challenged the justification of the estimated results at completion and the calculation of the estimated stages of completion with our understanding of these contracts as gained through the meetings we held with business unit management controllers and project managers, and in comparison with past performance obtained on similar contracts; • corroborated the financial position of these contracts with the relevant pieces of documentation (contracts, orders, customer acceptance reports, time sheets); • implemented analytical procedures on the evaluation of revenue and income recorded over the financial year; • assessed the compliance of the revenue recognition method applied with IFRS 15 in the context of the first implementation of the standard; • performed control procedures over the correct implementation of IFRS 15 based on a representative sample of fixed price contracts. Finally, we have checked that the notes to the financial statements (notably the Notes 1 – Reporting entity and basis of preparation, 5.1 – Revenue and working capital requirement and 9 – Provisions) provided an appropriate information.

Specific verifications As required by French laws and regulations, we have also verified in accordance with professional standards applicable in France the information pertaining to the Group presented in the management report of the Board of Directors. We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements. We attest that the consolidated declaration of extra-financial performance, required under Article L. 225-102-1 of the French Commercial Code, is included in the information relating to the Group provided in the management report, being specified that, in accordance with the provisions of Article L. 823-10 of this Code, we have not verified the fair presentation and the consistency with the consolidated financial statements of the information provided in this declaration and this information must be reported by an independent third party.

5

Report on other legal and regulatory requirements

APPOINTMENT OF THE STATUTORY AUDITORS We were appointed as Statutory Auditors of Assystem SA by the Annual General Meeting held on 26 August 1999 for Deloitte & Associés and on 30 April 2009 for KPMG. As at 31 December 2018, Deloitte & Associés and KPMG were in the twentieth year and the tenth year of total uninterrupted engagement respectively.

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ASSYSTEM

REGISTRATION DOCUMENT 2018