Assystem - 2018 Register document

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BUSINESS REVIEW AND FINANCIAL STATEMENTS

PARENT COMPANY FINANCIAL STATEMENTS

Risk factors

it to €150 million and extending its maturity to September 2023, and (ii) set up a medium-term loan of €30 million maturing in September 2022. The RCF and the medium-term loan are subject to a financial covenant, under which Assystem’s consolidated net debt/EBITDA ratio must not exceed 3.75 at 31 December and 3.95 at 30 June each year. This covenant was respected at 31 December 2018. Changes in share capital and issue premiums At 31 December 2018, the Company’s share capital amounted to €15,668,216. ASG DISPUTE ASG was previously 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. This dispute has now been settled by way of an agreement signed between the parties on 1 April 2019. The amount of the settlement is wholly covered by Assystem’s professional liability insurance policy, except for a €0.1 million deductible for which a provision had previously been recognised. TAX AUDIT A tax audit is currently in progress in relation to Assystem SA for the years 2016 and 2017. Significant events after the reporting date

TAX AUDIT 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 (which is now an Expleo Group subsidiary) 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 2015 Assystem France set aside a provision covering 50% of the risk relating to this dispute. The overall risk was transferred by Assystem France to Assystem SA at end-2016, with Assystem France paying Assystem SA €7.3 million in compensation. As a result, Assystem recognised a provision in its 2016 financial statements representing the amount of the compensation paid by Assystem France. At 31 December 2017, Assystem SA increased the provision to cover the full reassessed amount and potential late payment penalties, following its receipt in November 2017 of the payment notice for the reassessed amount. Consequently, €8.8 million was added to the provision in 2017, corresponding to €6.7 million for the reassessed amount and €2.1 million for the late payment penalties potentially due at 31 December 2017. In view of the €7.3 million already set aside when the risk was transferred from Assystem France to Assystem SA, the total provision came to €16.1 million at 31 December 2017. At 31 December 2018, the provision was further increased to factor in an additional €0.3 million in potential late payment penalties for the year then ended, bringing the total amount set aside for this tax audit to €16.4 million.

BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2

Interest on borrowings specifically used to finance property, plant and equipment is not included in production cost. Depreciation and amortisation are determined on a straight-line basis over the estimated useful lives of the assets concerned as follows:

Assystem’s parent company financial statements for the year ended 31 December 2018 have been prepared in accordance with French generally accepted accounting principles including the principle of segregation of accounting periods. They are presented on a going concern basis and accounting policies have been applied consistently from one year to the next. Accounting entries are based on the historical cost convention. Fixed assets Intangible assets are carried at cost, excluding financial expenses, which are not capitalised. Property, plant and equipment are stated at cost, corresponding to either purchase cost (including incidental expenses but excluding transaction costs), or production cost.

software patents

1 to 5 years

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4 years

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fixtures and fittings

5 to 10 years 3 to 5 years 3 to 5 years 5 to 10 years

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vehicles

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office equipment office furniture

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buildings

20 years

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ASSYSTEM

REGISTRATION DOCUMENT 2018