2019
UNIVERSAL
REGISTRATION
DOCUMENT
including the annual financial report
PERFORMANCE PARTNER
to unleash your future
Contents
1
THE GROUP
1.1. Activities, strategy and markets
1.2. History of the Group
1.3. Group organization
1.4. Selected Financial Information
1.5. Major investments during
the past three financial years
2
REPORT ON CORPORATE
GOVERNANCE
2.1. Governance Code
2.2. Functioning of the general management
2.3. Board of Directors
2.4. Compensation paid to the Directors
and the management
2.5. Additional information in respect
of corporate governance
2.6. Statutory Auditors’ report on regulated
agreements and commitments
RISKS AND RISK MANAGEMENT
3.1. Risk factors and opportunities
3.2. Internal control and
risk management procedures
STATEMENT ON EXTRA-FINANCIAL
PERFORMANCE
4.1. ESI – The product Performance
LifecycleTM company
4.2. ESI – A committed Group
4.3. Being a committed employer
4.4. Being an outstanding partner
4.5. Being an ethical and committed Company
4.6. Being an environmentally friendly player
4.7. Reporting
3
4
13
14
20
21
23
25
27
28
29
31
41
56
60
61
62
65
69
70
71
76
82
84
87
91
This Universal Registration Document was filed on April 23, 2020 with
the Autorité des Marchés Financiers (AMF), as competent authority
under Regulation (EU) 2017/1129, without prior approval pursuant to
Article 9 of said regulation.
The Universal Registration Document may be used for the purposes
of an offer to the public of securities or admission of securities to
trading on a regulated market if completed by a securities note
and, if applicable, a summary and any amendments to the Universal
Registration Document. The whole is approved by the AMF in
accordance with Regulation (EU) 2017/1129.
This document is a non-binding “free” translation from French into
English and has no legal value other than an informative one. Should
there be any difference between the French and the English version,
only the text in French language shall be deemed authentic and
considered as expressing the exact information published by ESI Group.
5
6
7
8
9
MANAGEMENT REPORT
5.1. Business activities during
the 2019 financial year
5.2. Outlook
5.3. Table summarizing the results
of past five financial years
FINANCIAL STATEMENTS
6.1. Consolidated financial statements
6.2. ESI Group annual financial statements
RESOLUTIONS SUBMITTED
TO THE GENERAL MEETING
7.1. Decisions falling within the competence
of the Ordinary General Meeting
7.2. Decisions falling within the competence
of the Extraordinary General Meeting
7.3. Joint decisions
INFORMATION ON THE COMPANY
AND SHARE CAPITAL
8.1. Information on the Company
8.2. Information on the Company’s capital
8.3. ESI shares – market
ADDITIONAL INFORMATION
9.1. Persons responsible
for the Universal Registration Document
9.2. Statutory Auditors
9.3. Documents available to the public
CROSS-REFERENCE TABLES
95
96
101
102
103
104
143
171
173
177
180
181
182
184
189
191
192
192
193
194
KEYWORDS OF THE 2019 UNIVERSAL
REGISTRATION DOCUMENT
200
French and English copies of the Universal Registration Document
are available free of charge from ESI Group (the “Company” or the
“Group”) – 100/102, avenue de Suffren, 75015 Paris, France – as well
as on ESI Group’s website (www.esi-group.com) and on the AMF’s
website (www.amf-france.org).
2019
UNIVERSAL
REGISTRATION
DOCUMENT
INVESTOR’S
NOTEBOOK
1
ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT CONTENTS
CRISTEL DE ROUVRAY’S MESSAGE, CEO
ESI GROUP, EMPOWERING
INDUSTRY PLAYERS
TO COMMIT TO OUTCOMES
All industries are facing increased
These secular changes, combined
of experience, bringing
complexity, as manufacturers are
with the exponential rate of
technological empowerment
challenged to meet the evolving
technological progress, have led
to innovate efficiently and
needs of consumers in terms
the industry leaders to embrace
with confidence. Leveraging the
of quality, reliability, safety, and
innovation and engage
physics of materials, we support
on-time delivery. Furthermore,
on a multi-decade steady
industries to validate the design,
industrial actors are increasingly
methodological “digital
manufacturing, and behavior
held to an “outcome”: the service
transformation” of their practices,
of the product in different
that their product offers, such as
gradually replacing the real tests
environments, early and
mobility, hours of flight or number
required for design evaluation
throughout the whole product life,
of landing events. This entails being
by “realistic” numerical simulations.
while minimizing their costs
able to understand the way their
product operates in numerous and
uncertain use-conditions, a difficult
challenge! Overall success is now
measured by performance rather
than the product itself.
Several years ago, ESI embarked
on its own transformation to
anticipate and be ready for these
deep changes among our
customers. The Group offers
solutions, built from 45 years
and time to market, without
sacrificing safety and quality.
To reach these objectives,
ESI accompanies its customers
in a journey towards Zero Tests,
Zero Prototypes and Zero Downtime.
The Group offers solutions,
built from 45 years of experience,
bringing technological empowerment
to innovate efficiently and
with confidence.
2
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group ESI GROUP, EMPOWERING
INDUSTRY PLAYERS
TO COMMIT TO OUTCOMES
CONTENTS
MINI-INTERVIEW WITH...
Olfa Zorgati,
Chief Financial Officer
In 2019, we implemented our plan
for sales focus and operational
excellence, resulting in growth,
in both Services and Licenses.
Throughout the year, global
industry leaders solicited us to
equip them with outcome solutions
to anticipate and manage virtually
the performance of products or
assets as used in-service, much
beyond the traditional PLM,
opening the new era of the
Product Performance LifecycleTM.
ESI has the credibility to act
at this transformational level, as
evidenced by the growing scientific
and industrial accolades and
customer testimonials welcoming
our new Hybrid TwinTM approach.
We are actively leveraging
their influence to grow and attract
the next wave of top accounts,
and we expect our performance
to keep increasing steadily.
Thanks to the expertise and energy of the teams,
we are setting up “Best-in-class” tools and methodologies
that are essential for mastering the key elements
of our business model.
ESI Group announced solid
results in 2019. Any thoughts
about this?
The year 2019 was marked by
a dynamic business
environment illustrating
the continuous trust
of the world’s industrial
leaders as well as our strategic
partners. These are the first
concrete results of
our operational excellence
and commercial focus plan,
representing a global
approach focused on industrial
productivity and product
performance. Confident
Being at the heart of the
Group’s strategic change,
how are the Finance &
Administration (F&A) teams
navigating through this
transformation journey?
Our transformation is above
all an evolution in the way
we collaborate, as a Group
and not as a local entity.
The new implemented
practices, systems and tools,
particularly financial ones,
enabled our teams to carry out
their mission as “business
partners” and to facilitate
performance management.
in the robustness of its
Cristel’s impetus has positioned
business model, the Group
F&A as a genuine agent
We thank you for your confidence
remains positive about its
of change. Thanks to this and
and support, as we are all
committed to make it right.
Cristel de Rouvray,
Chief Executive Officer
ambition for sustainable
to the expertise and energy
growth over the
of the teams, we are setting up
medium-to-long term.
“Best-in-class” tools and
methodologies that are
essential for mastering the key
elements of our business model.
€146.2 M
Revenues*
€12.3 M
EBITDA* (before IFRS 16)
* 12-month proforma (January 1, 2019 – December 31, 2019).
ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT
3
CONTENTS
KEY FIGURES
ESI GROUP
IN FIGURES
A GLOBAL
COMPANY
PRÉSENT DANS PLUS DE
Covering more than
40 PAYS
+40
COUNTRIES
A unique expertise
+1,200
EMPLOYEES
mainly engineers
& scientists, many
with PhDs
15.3%
AMERICAS
UNE EXPERTISE UNIQUE
+ de 1 200
PRINCIPALEMENT
INGÉNIEURS & DOCTEURS
48.5%
EUROPE,
MIDDLE EAST
& AFRICA
36.2%
ASIA-PACIFIC
€22.3 M(1)
+5.8%
+0.9% cer
€71.0 M(1)
+8.7%
+8.6% cer
€53.0 M(1)
+7.4%
+3.5% cer
€146.2 M
REVENUE (1)
+7.8%
REVENUES
GROWTH
€12.3 M
EBITDA (1)(2)
€8.3 M
EBIT (1)(2)
(1) 12-month proforma (January 1, 2019 – December 31, 2019).
(2) Before IFRS 16.
4
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
AN INNOVATIVE AND
MULTISECTORAL OFFER
Industrial diversification (% of booking orders)
59%
GROUND
TRANSPORTATION
& AUTOMOTIVE
12%
AERONAUTICS
& AEROSPACE
11%
HEAVY
INDUSTRY
6%
ENERGY
12%
OTHERS
INNOVATION
IN THE THICK OF THE ESI GROUP STRATEGY
ÉNERGIE
31.4%
R&D Investments/
Licenses revenues
59 %
8%
Group’s headcount
dedicated to R&D
TRANSPORTS TERRESTRES / AUTOMOBILE
90
19
Scientific
publications
R&D
centers
R&D
INVESTMENTS
€31.7 M (1)
12 %
Scientific innovation is at the heart of ESI’s DNA. With the emergence
of new technologies, we rely on the hybrid model-data paradigm,
materialized in the Hybrid Twin™ concept.
AÉRONAUTIQUE ET AÉROSPATIALE
12 %
AUTRES
Pr. Francisco Chinesta
Director of ESI Group’s Scientific department
INDUSTRIES MANUFACTURIÈRES
& President of its Scientific Committee
11 %
13 %
6 %
ÉNERGIE
(1) 12-month proforma (January 1, 2019 – December 31, 2019).
5
ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT
CONTENTS
VALUE CREATION
A PERFORMANCE-ORIENTED
VISION
VS.
Coupled with the latest generation technologies,
ESI Group’s solutions, addressing a complete industrial
product development and manufacturing process,
are radically transforming the traditional Product Lifecycle
Management (PLM) market by anchoring in the wider
Design and manufacture
the product itself
Predict the performance
of the product design,
manufacture and ageing
concept of the Product Performance Lifecycle™,
which addresses the operational performance of
Product Lifecycle Management
Product Performance Lifecycle ™
a product during its entire lifecycle, from launch to disposal.
A GUARANTEED PERFORMANCE
THROUGHOUT THE ENTIRE PRODUCT LIFECYCLE
Product Performance Lifecycle ™
Unleash & Secure INNOVATION
Sustain PRODUCTIVITY
Next generation
asset
Real results,
virtually
Design
Manufacturing
Production
Operation
Real life performance
ZERO REAL TESTS
ZERO REAL PROTOTYPES
ZERO DOWNTIME
EMPOWERING MANUFACTURERS,
WITH POWERFUL & RESULT-ORIENTED SOLUTIONS
In order to adapt to the various industrial challenges and to better respond to the increased demands
of its customers, ESI Group has organized its value proposition around 4 specific outcomes
for customers, reflecting the value brought to its main markets:
Ground
Transportation &
Automotive
Aeronautics &
Aerospace
PRE-CERTIFICATION
SMART MANUFACTURING
Improving performance
and productivity through predictive
models and process automation
Establishing the right manufacturing
processes to meet performance
indicators for industrial products
and processes
Energy
HUMAN CENTRIC
PRE-EXPERIENCE
Heavy Industry
Implementing an operator-centric
approach to ensure efficient
assembly and maintenance
operations
Enabling customers to “experience”
a product, component, subsystem
or system under numerous
use conditions
6
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
RISKS AND OPPORTUNITIES
RISKS
AND RISK MANAGEMENT
RISK FACTORS
The Group has reviewed the major risks and opportunities that could have a significant effect on its business,
financial position or results. The data presented below represent the main strategic and operational risks for the Group.
These risks are presented in descending order of importance:
Risks
Impact
Competition
(competitive edge)
A strong consolidation of the sector (Virtual Prototyping)
or a reduction in the Group's scientific leadership could lead
to a loss of market share.
HIGH
IMPACT
Management
of key personnel
Intellectual property
The non-access or disappearance of certain internal knowledge
on specific areas may represent a challenge to maintain
the necessary pace of innovation demanded by the market.
The loss of intellectual property of software and solutions would
result in an automatic loss of turnover and the impossibility
to guarantee and meet financial obligations towards stakeholders.
International economic
and political environment
The global economic, commercial, and social as well as geo-political context
may impact the Group's growth and even slow down the deployment
of the Company's solutions. However, the Group has historically demonstrated
great resilience when it comes to the various global crises it had faced.
IMPORTANT
IMPACT
Dependence on a single
client or sector
Most of the group's subsidiaries are confronted with the reality of managing
a "major customer" with a significant weight in terms of sales and growth.
Information security
Failure to comply with client requirements concerning the confidentiality,
integrity and availability of information entrusted to the Group, may have
negative consequences on long-term relationships
with customers and on ESI’s reputation.
In addition to these strategic and operational risks, the Group has identified some financial and market-related risks
with a high level of exposure, including: country risk, foreign exchange risk, interest rate risk, liquidity risk and equity risk.
RISK CONTROL
Several approaches have been put in place by the Group to control all its strategic, operational and financial risks.
For more information, please refer to the 2019 Universal Registration Document, available on ESI Group’s website:
www.esi-group.com.
RISK CONTROL
RISK MANAGEMENT
Technological
developments and
ability to respond
rapidly to customer
needs
Acquisitions of
businesses and/or
companies and the
creation of new joint
ventures
or partnerships
Strategic
investments
in research and
development
of new
technologies
Continuous reinforcement
of ISO 9001 certification
(since 2000), representing
an additional asset
to strengthen process-based
management and facilitate
the implementation
of risk management
Insurance and risk coverage:
existence of an insurance
policy covering specific risks
(e.g. property damage,
civil liability of managers,
etc.).
7
ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT CONTENTS
GOVERNANCE
A WELL-BALANCED
CORPORATE GOVERNANCE
A BOARD OF DIRECTION
MADE UP OF
8 MEMBERS
including: 3 WOMEN
and 5 INDEPENDENT
MEMBERS
GROUP EXECUTIVE
COMMITTEE (GEC)
Independent
Non-independent
5
SPECIALIZED COMMITTEES
1 Scientific Committee
2 Audit Committee
3 Nomination
and Governance Committee
4 Compensation Committee
5 Technology
and Marketing Committee
From left to right: Christopher ST JOHN, Corinne ROMEFORT-RÉGNIER, Mike SALARI, Cristel de ROUVRAY,
Vincent CHAILLOU, Olfa ZORGATI, Dominique LEFEBVRE.
8
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
KEY EVENTS
2019 IN REVIEW – A DYNAMIC YEAR
FULL OF ACHIEVEMENTS
› JUNE 11, 2019
École Polytechnique,
Palaiseau – ESI wins two
“L’Usine Digitale” Awards
for the Hybrid TwinTM
At the 2019 edition of the
“L’Usine Digitale” Simulation
and Digital Technologies
Trophies, ESI won
the Innovation Award and
the “Grand Prix du Public”
for its Hybrid TwinTM concept.
› NOVEMBER 21, 2019
Paris – Pr. Francisco Chinesta
Receives CNRS Silver Medal
Pr. Francisco Chinesta,
professor-researcher
at Arts et Métiers (ENSAM)
and Director of the Scientific
Department and Chairman
of the Scientific Committee
of ESI Group, was awarded
the silver medal of
the National Center for
Scientific Research (CNRS).
› JUNE 17-23, 2019
Paris – ESI at the 53rd
International Paris Air Show
ESI presented, through
demonstrators, to its
customers and partners, the
essential role of simulation in
helping to aeronautics and
aerospace players in their
quest for performance,
productivity and
sustainability.
› NOVEMBER 6-7, 2019
Berlin – ESI Forum –
The Group Celebrated
its 40th Anniversary
in Germany with Customers
This edition of the Group’s
German Forum marked ESI’s
40th year of presence in
Germany, the Group’s second
market and the cradle of
many industries that benefit
from Virtual Prototyping.
› NOVEMBER 2019
Renault Relies on ESI’s
Virtual Prototyping
Technologies for
the design of its Clio 5
Thanks to close collaboration
with ESI and a pool of
partners, the Renault group
obtained 5-star certification
(maximum score) in Euro
NCAP safety tests
for its new Clio 5, without
any intermediate physical
test and prototype.
› DECEMBER 2-13, 2019
Madrid – ESI Group,
a Strategic Partner
of French start-ups
Gazelle Tech, a manufacturer
of sustainable vehicles
made entirely of composite
materials, wins the
Sustainable Innovation Prize
awarded by “Climate Action”
at COP 25, validating,
thanks to virtual prototyping,
its business model.
› JANUARY 8-11, 2019
Las Vegas – ESI Group
Participation at the CES 2019
At the CES, ESI presented
how Virtual Prototyping helps
industrialists to design and
industrialize breakthrough
innovations and to accelerate
developments in mobility,
reducing or eliminating
physical prototypes.
› FEBRUARY 1, 2019
Cristel de Rouvray
appointed Group CEO
The Group has announced the
nomination of Cristel de Rouvray
as Chief Executive Officer,
as of February 1, 2019, by
succeeding Alain de Rouvray,
founder of the company,
who remains Chairman.
› FEBRUARY 6-8, 2019
Tokyo – ESI Group
at the Manufacturing
World Japan 2019
ESI presented its Virtual
Reality solution, used to validate
assembly and maintenance
processes upstream of
production, thus minimizing
design errors, reduce risk
and increase productivity.
9
ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT CONTENTS
CSR
ESI,
A COMMITTED GROUP
Aware of its responsibility in each of the pillars of sustainable development, ESI Group has gradually
devised a CSR policy that contributes to shared economic and social development
and the preservation of human equilibrium.
Divided into 4 axes and cascaded in 11 commitments, ESI’s CSR strategy aims at providing sustainable solutions
for CUSTOMERS, while being committed to its EMPLOYEES, acting ethically and responsibly
with CIVIL SOCIETY and limiting its environmental footprint and the one of its customers on the PLANET.
The Group’s CSR challenges and
commitments are linked to
10 Sustainable Development Goals
of the UN Global Compact.
ESI GROUP’S
MATERIALITY MATRIX
ESI Group has developed its first materiality matrix in 2019: a key tool in the execution of the company’s CSR strategy,
making it possible to define its priorities according to their importance for the Group’s stakeholders, as well
as their impact on ESI’s performance.
S
R
E
D
L
O
H
E
K
A
T
S
L
A
N
R
E
T
X
E
N
O
T
C
A
P
M
I
4
3
2
1
0
4
3
S
R
E
D
L
O
H
E
K
A
T
S
L
A
N
R
E
T
X
E
N
O
T
C
A
P
M
2
I
1
0
EMPLOYEES
EMPLOYEES
CUSTOMERS
CUSTOMERS
CIVIL SOCIETY
CIVIL SOCIETY
PLANET
PLANET
10
CRITICAL
IMPACT
Customer
satisfaction
CRITICAL
IMPACT
Develop solutions
that reduce the customer’s
environmental footprint
Develop solutions
that reduce the customer’s
environmental footprint
Develop high
value-added
solutions
Customer
satisfaction
Develop talents
and encourage
leadership
Develop talents
and encourage
leadership
Ensure long-lasting
relations
Ensure long-lasting
relations
Develop high
value-added
solutions
Ethics
and compliance
Ethics
and compliance
IMPORTANT
IMPACT
Quality
IMPORTANT
of work life
IMPACT
Corporate
Quality
governance
of work life
Corporate
governance
Promote
diversity
Reduce the environmental
impact of the Group
Promote
diversity
Reduce the environmental
impact of the Group
Interact with civil
sociéty (give-back)
Interact with civil
sociéty (give-back)
MODERATE
IMPACT
1
2
IMPACT ON ESI’S PERFORMANCE
MODERATE
IMPACT
3
1
2
IMPACT ON ESI’S PERFORMANCE
4
3
4
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
PERFORMANCE 2019
EMPLOYEES
BEING A COMMITTED
EMPLOYER
CUSTOMERS
BEING AN OUTSTANDING
PARTNER
CIVIL SOCIETY
BEING AN ETHICAL AND
COMMITTED COMPANY
> Develop talents and
encourage leadership and
collaborative management
> Provide innovative solutions
that meet customers’
requirements
> Promote diversity and
multicultural exchanges
> Contribute to the
well-being of employees
> Ensure customer satisfaction
and meet quality and safety
requirements
> Maintain long term,
trust-based relationships with
stakeholders and ecosystem
> Guarantee solid and
diversified governance
> Act ethically
and responsibly
> Set up initiatives to interact
with civil society
(give-back)
PLANET
BEING AN
ENVIRONMENTALLY
FRIENDLY PLAYER
> Develop sustainable
solutions
> Reduce the environmental
impact of the Group
+1,200 EMPLOYEES,
SERVING OUR CUSTOMERS
WORLDWIDE
WE ARE CURRENTLY
WORKING ON 20 R&D
PROJECTS
WE HAVE ORGANIZED
+250 EVENTS
FOR OUR CUSTOMERS
WE’RE INSTALLING
ECO-RESPONSIBLE
EQUIPMENT TO LIMIT
OUR ENERGY CONSUMPTION
3 “WELCOME DAYS”
ORGANIZED AROUND
THE WORLD TO INTEGRATE
NEW EMPLOYEES
WE HAVE DEDICATED
31.4% OF OUR LICENSES
REVENUE TO OUR
RESEARCH EFFORTS
WE HAVE CONDUCTED
5 ANALYSES FOLLOWING
CUSTOMERS’ COMPLAINTS
LOCAL AND ON-DEMAND
DOCUMENTS PRINTING
ENABLED US TO AVOID
DELIVERY DISTANCES
OF 1,954,376 KM (1)
WE DEVOTED
8,125 HOURS
TO PROFESSIONAL
TRAININGS
WE RELY ON 2 LOCAL
SCIENTIFIC COMMITTEES
AND 1 SCIENTIFIC COMMITTEE
AT GROUP LEVEL
WE MANAGED 1 INCIDENT
RELATED TO OUR DATA
SECURITY
PAPER CONSUMPTION
PER EMPLOYEE DECREASED
BY 15% (2)
WE HAVE SUCCESSFULLY
MANAGED 1 ALERT LINKED
TO DISCRIMINATORY
PRACTICES
1 ALERT HAS BEEN
HANDED TO OUR ETHICS
COMMITTEE
(1) Since the adoption of the Gelato printing solution in May 2018.
(2) 2019 internal data, including all the countries of the environmental study’s scope, representing 99% of the Group’s total workforce.
ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT
11
CONTENTS
STOCK MARKET INFORMATION
SELECTED
FINANCIAL INFORMATION
EVOLUTION OF THE SHARE PRICE
From February 2017 to March 2020 (basis 100)
SHARE CAPITAL BREAKDOWN
(in %)
150
125
100
4,794.58
75
11,880.7
€47.5
50
25
0
march-17
may-17
july-17
aug.-17
nov.-17
jan.-18
march-18
may-18
july-18
aug.-18
nov.-18
jan.-19
march-19
may-19
july-19
aug.-19
nov.-19
jan.-20
march-20
ESI Group
CAC 40
CAC Mid & Small
DATA AS OF MARCH 31, 2019
€28.20
Stock
price
€167.93 M
Market
capitalization
NEXT EVENTS
Q1 REVENUES FY20
May 12, 2020
GENERAL MEETING
June 25, 2020
H1 RESULTS FY20
September 10, 2020
Q3 REVENUES FY20
October 27, 2020
CONTACT US
(Basis 100)
4,396.12
9,485.83
€28.2
56.6%
Public
6.3%
Treasury
stock
37.1%
Founders
and Board
OUR ANALYSTS
• Berenberg
• CIC Market Solutions
• IDMidCaps
• Invest Securities
• Louis Capital Market
• LPE Research
IDENTITY INFORMATION
Listed on Euronext Paris
Compartment B
Sector: Software
ISIN: FR0004110310
Bloomberg: ESI FP
INVESTOR RELATIONS
Corinne ROMEFORT-RÉGNIER
+33 1 41 73 58 44
Florence BARRÉ
+33 1 49 78 28 28
ESI Group Headquarters
100 – 102 avenue de Suffren
75015 Paris, France
+33 1 53 65 14 14
investors@esi-group.com
FOLLOW US
ON SOCIAL MEDIA
facebook.com/ESIGroup
@ESIGroup
youtube.com/user/ESIGroup
linkedin.com/company/ESI-Group
Visit our website
www.esi-group.com
“Investors” section
12
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
1
THE GROUP
1.1. ACTIVITIES, STRATEGY AND MARKETS
1.1.1. Main activities
1.1.2. Strategic vision
1.1.3. Main markets
1.1.4. Ecosystem
1.2. HISTORY OF THE GROUP
1.3. GROUP ORGANIZATION
1.3.1. Operational flowchart
1.3.2. Legal flowchart
1.4. SELECTED FINANCIAL INFORMATION
1.4.1. Revenue
1.4.2. Strategic business alignment
1.4.3. Breakdown of revenue by geographic area
1.4.4. Profitability
1.5. MAJOR INVESTMENTS DURING
THE PAST THREE FINANCIAL YEARS
1.5.1. The Group’s current investments
1.5.2. The Group’s non-current investments
1.5.3. Future investments
14
14
15
16
19
20
21
21
22
23
23
23
23
24
25
25
25
25
In accordance with the resolution of the General Meeting of July 18, 2019, the Group now closes its financial
statements at 31 December of each fiscal year.
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT 1
THE Group
Activities, strategy and markets
CONTENTS
In this Universal Registration Document, ESI Group is hereinafter referred to as “ESI Group”, the “Company” or the “Parent Company”.
The Company and all its affiliated companies are hereinafter referred to as the “Group”, “ESI Group” or “ESI”.
ESI Group is one of the world’s leading innovator companies in
Virtual Prototyping software and services.
Specialist in physics of materials, ESI has developed a unique
proficiency in helping industrial manufacturers replace physical
tests and prototypes by virtual replicas. Coupled with the latest
technologies, Virtual Prototyping is now anchored in the wider
concept of the Product Performance LifecycleTM, which addresses
the operational performance of a product during its entire lifecycle,
from creation to its market withdrawal. The creation of Hybrid
TwinTM, leveraging simulation, physics and data analysis, enables
manufacturers and operators to deliver and pre-certify smarter
and connected products, to predict product performance and to
anticipate maintenance needs.
In 2019, the Group changed its annual closing date from the end
of January to the end of December. In the following pages, when a
figure is mentioned in reference to 2019, it implies the new closing
period of January to December.
1.1. ACTIVITIES, STrATEGY AND MArKETS
1.1.1. MAIN ACTIVITIES
ESI Group has developed a suite of coherent industry-oriented
applications to realistically simulate a product’s behavior, fine-tune
fabrication and assembly processes in view of desired product
performance, and evaluate the impact of the environment on the
use of these products.
These applications enable the gradual elimination of tests and
physical components and subassembly prototypes during the
product conception and manufacturing phases. The virtual
prototype of the industrial product thus designed accelerates
its certification and allows the monitoring and control of its
operational performance, helping industry players to achieve their
performance and productivity objectives.
Innovative visualization technologies such as ESI IC.IDO and the
availability of the Virtual Prototyping chain in Cloud/SaaS mode
considerably enhance the collaborative potential of ESI Group
solutions while drastically reducing acquisition and ownership
costs for companies.
Most importantly, the use of technologies such as Big Data, System
Modeling, Machine Learning, and the Internet of Things (IoT) adds
to ESI Group’s solutions an interactive space and enables real-time
decision-making in an immersive virtual environment.
This enhanced offer provides complete control over the lifecycle of
an industrial product, from product commissioning to its operational
withdrawal including modeling of potential evolutions during
its useful life: accounting for flaws, wear and tear, maintenance
procedures, and running in of assisted operation. The Hybrid
TwinTM concept is the representation of this enhanced offer. It is
about being able to follow the evolution of your product from the
conception to the end-of-life in a digital interface that facilitates
informed decision making for both maintenance and improvement
of future versions of the product.
The virtual prototype can now become agile and intelligent to
support industrial manufacturers in the age of smart factories
and smart digital products.
The Group has two main activities: the edition and distribution
of software, and the delivery of consulting services related to its
software solutions.
1.1.1.1. Software Editor/Distributor
(Licensing activity)
Licenses Edition/Distribution is the Group’s main activity, accounting
for 79% of revenue in 2019. Software is marketed in the form of
proprietary user licenses based for the most part on an annual
leasing system that, by nature, generates highly recurring revenue.
The significant added value provided by ESI Group’s solutions
requires major research and development work by highly qualified
research engineers.
Software solutions are distributed worldwide. In 2019, distribution
subsidiaries directly managed 91.8% of license sales, the rest being
entrusted to a network of third-party distributors and agents. The
two distribution networks – direct and indirect – are complementary.
The Licensing activity may be broken down in two ways:
◗ By contract type:
• Rental license – user license contract renewable annually
and including maintenance services this type of contract is
predominant;
• Paid-up license – long term license contract (paid-up licenses
for the duration of legal protection) including maintenance
services for renewable one-year periods (also named Perpetual);
• Maintenance contract – maintenance includes updates and
technical support applicable as of the second year of a
perpetual license contract. As of the second year, maintenance
revenue is recognized as software (maintenance) revenue.
◗ Or, according to criteria concerning new client purchases:
• “Repeat Business” includes contracts renewed by customers
with no modification from one year to the next, as well as
additional features purchased for software already installed
in the system of an existing client;
• “New Business” comprises new customers and new products
purchased by existing clients.
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
THE Group
Activities, strategy and markets
Licenses
Repeat Business
New Business
Renewal products
Add-on
New customers
New products
1.1.1.2. Consulting services
(Services activity)
In addition to its main business activity of software publishing
and distribution, the Group also provides consulting services
directly related to Virtual Prototyping. The Services activity,
which accounted for 21% of 2019 revenue, includes Consulting
and other services.
Consulting covers the following four fields:
◗ Engineering studies: joint industrial projects carried out in
partnership with major industrial corporations with the aim
of promoting large-scale deployment of new applications
with high economic potential that have already been proven
technologically viable, such as the specialized products described
below. The Group customizes its specialized software and the
industry partner performs the prototype trials necessary to
validate specialized simulation models. The Group invoices its
partners for the cost of its services, but funds its own software
development work. As a result, it retains the intellectual property
rights to the software products developed or modified;
◗ Field Services: support services in conjunction with Licenses
activity (on- and off-site training and technical assistance);
◗ Contracting: specific studies, in particular application tests
(design verification and virtual performance testing of industrial
products). These services are generally invoiced based on
the time worked (lump sum or actual time spent) except for
online support services which may be provided as part of the
support services included with the annual license for the use
of software packages;
◗ Special Projects: R&D initiatives pertaining to the creation of
pre-industrial digital simulation models for new applications.
These cutting-edge, high-risk R&D projects can last from
two to three years and are carried out in collaboration with
university labs and/ or corporate R&D departments. The
Group treats these projects as research and development or
technology intelligence activities. In some cases, they lead to
government-type co-financing arrangements in Europe and
the United States. They allow the Group to become involved
at a very early stage, as a scientific partner in a wide variety
of innovative high-tech projects.
Rental licenses
Licenses
Paid-up licenses
REVENUES
Services
Maintenance
Consulting
Others
Engineering studies
Field services
Contracting
Special projects
1.1.2. STrATEGIC VISIoN
1.1.2.1. Performance-oriented vision
for industrial products
The industrial market is deeply changing while new challenges
appear for its players. Draconian regulations, disruptive technologies
(Artificial Intelligence, Big Data, Internet of Things…), competition,
shorten time to market, constrain industrial players to be more
demanding in terms of quality, reliability, safety and production
deadlines. This constitutes the very essence of the “Outcome
Economy” concept – referring to a results-based economy that
focuses on the final benefit for a customer or an operator, the KPIs
more difficult to achieve, as success is measured by performance
rather than by the product itself.
Well-aware of these challenges, ESI’s commitment is to provide
and help industrials to implement technological solutions that
empower them to innovate efficiently and with confidence. As
a specialist in physics of materials, the Group has developed a
unique expertise, enabling global industrials to digitally experience
and validate the fabrication, assembly and behavior of their
products in different environments – early and throughout the
whole product lifecycle.
The Group’s vision is simple yet powerful: toward real tests, zero real
prototypes and zero downtime. The benefits are palpable: faster
time to market, increased product performance, and reduced costs,
while enabling customers to commit to outcome. The advantages
of this approach are concrete: shorter time-to-market, improved
product performance including during use and reduced costs.
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT1 1
THE Group
Activities, strategy and markets
CONTENTS
1.1.2.2. Guaranteed performance –
early and throughout
the whole product lifecycle
Coupled with latest-generation technologies, ESI Group’s end-to-end
solution, which currently offers a comprehensive development and
manufacturing process for industrial products, is revolutionizing
the traditional Product Lifecycle Management (PLM) market. In
fact, Virtual Prototyping is part of an overarching and targeted
approach known as Product Performance LifecycleTM (PPL),
which addresses products’ operating performance throughout
their complete lifecycle, from launch to withdrawal.
Nowadays, the ever-growing number of possibilities offered by
Big Data and the Internet of Things make it possible to monitor
the life of products after launch, creating a new outlook for
hybrid virtual representations, i.e. representations that allow for
updating of Virtual Prototypes using data measured in real-time
and enhanced by Artificial Intelligence. The creation of Hybrid
TwinTM incorporating simulation, physics, and data analytics makes
it possible to create smart products, particularly using connected
objects, as well as to predict their performance and anticipate
their maintenance requirements. This Hybrid TwinTM provide an
essential response to the fundamental economic issues of the
Industry of the Future.
This unique value proposition, incorporating numerous disruptive
innovations, is the fruit of the Group’s longstanding technological
differentiation strategy based on multiple international partnerships
and highly innovative industrial co-creation projects, implemented
with an eye to defining the Group’s positioning throughout the
product’s manufacturing cycle and life in-service.
1.1.2.3. Powerful and outcome
solutions for industrials
As part of its strategic transformation plan, and to adapt to the
various industrial challenges and to better respond to the increased
demands of its customers, ESI has organized its value proposition
around 4 specific outcomes for customers, based on the same
technological platform, and related to its main industrial markets
(Ground Transportation/Automotive, Aeronautics/Aerospace,
Heavy Industry and Energy):
◗ Pre-Certification: enables gains in performance and productivity.
Thanks to predictive models and process automation industrialists
can meet certification requirements and other validation needs
without relying on physical tests.
◗ Smart Manufacturing: establishes the right manufacturing
processes to meet performance indicators for both industrial
products (for instance reducing weight) and for associated
processes (for example controlling distortions or reducing waste).
◗ Human Centric: allows customers to implement an operator-
centric approach to ensure the efficiency of assembly and
maintenance operations, while facilitating the early identification
of human safety or related problems and ways to improve
production processes.
◗ Pre-Experience: this is the most advanced solution to support
industrial leaders who are the most mature in their transformation
towards the Outcome Economy. ESI enables them, as well as
their future customers and asset operators, to experience a
product, component, subsystem or system as it ages as part
of an operational in-service solution and under numerous use
conditions.
1.1.3. MAIN MArKETS
1.1.3.1. The Virtual Prototyping market
/ Market characteristics
ESI Group’s business model seeks to take advantage of major
industry trends moving toward 100% digital and comprehensive
computerized Product Lifecycle Management (PLM). In this market,
ESI Group’s solutions bring a considerable and fundamental
improvement in the decision-making process by allowing the
physical properties and behavior of the materials to be realistically
taken into account in the digital model. Going beyond the design
and development phases of the classic PLM model, ESI Group’s
solutions allow for complete control over the lifecycle of products
and product performance, by offering a disruptive approach to
virtual performance modeling of connected or unconnected
products in operation, as well as predictive maintenance right up
to the end of the product’s life in-service (Product Performance
LifecycleTM).
The highly specialized nature of ESI Group’s operations and its
unique role in the field of Virtual Prototyping make it difficult to
delineate ESI’s market with any precision. The Group thus has little
information that would shed light on the specific characteristics
or short-term outlook of this market, especially since the very
definition of the market varies greatly among the players in the
industry.
Nonetheless, US market research firm CIMData published a study
on PLM (estimated at $47.8 billion) in June 2019, which included
Virtual Prototyping under the category of “Simulation & Analysis
Suppliers” (activity estimated at $6.46 billion in 2019). Most of the
companies listed in this category are active in the field of analysis,
however, within this panel, few companies reach the physical
realism of the Virtual Prototyping solutions offered by ESI Group.
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
THE Group
Activities, strategy and markets
Given the high barriers that protect the Group’s business, a new
competitor would not be successful except in the event of an
industry-wide trend toward consolidation. It would also be difficult
for a new industry player to make the acquisitions necessary to
quickly build up a physical simulation product line as rich as the one
offered by ESI Group, and one that features the same prediction
capabilities valued by the Group’s major clients.
In this constantly changing competitive context, ESI stands out
for its practical know-how, driven by its service activity. This
industrial expertise ensures that ESI Group’s customers can
rapidly implement and reap the expected benefits of digitization,
securing the loyalty of a growing number of world leaders to the
ESI-led ecosystem.
/ The need for a methodology disruption
Although the solutions developed by ESI Group are typically
used by major clients in highly specialized, mature markets – like
the automotive industry – its products can be adapted to a wide
range of industries.
However, large-scale adoption of these solutions would require
a radical change in how things are done that breaks away from
the traditional “trial and error” methods still widely used in many
industrial fields.
The use of technologies such as massive data (Big Data), system
modeling, machine learning or the interconnection of objects
(Internet of Things – IoT), pushes for the acceleration of the
implementation of the methodological change that is driving the
massive growth of Virtual Prototyping, especially in industries
such as aeronautics, energy or heavy industry. This adds to the
ESI Group’s solutions an interactive decision-making space, in an
immersive and real-time virtual environment.
The Product Performance LifecycleTM approach, which enables
manufacturers to develop a Hybrid TwinTM of the physical version
of their product on day to day basis, brings ESI to target the
wider market of professional users such as maintenance workers
and certified technicians who interact with both the products
and consumers.
/ High barriers to entry
The complexity of the problems addressed by the Group, its
longstanding experience working closely with major industrial
corporations, its significant investment in research and development,
and the wide range of solutions it offers make it difficult for any
newcomers to enter its market and compete with ESI Group.
In particular, the specialized fields in which ESI Group works
require an understanding not only of structured geometric data
(digital modeling) provided by CFAO/CIAO, but also of the
physical phenomena involved in simulation testing in order to
make virtual models “realistic”.
ESI Group’s technologies draw on:
◗ longstanding partnerships with major industry players that both
use (manufacturing industries) and supply (software platforms)
technical computing systems;
◗ highly skilled teams of researchers, whose specialized expertise
and reputation in the field of physical simulation are known;
◗ licensing agreements signed in a wide range of complex or
highly specialized fields.
All these partnerships are the result of the exceptional expertise
gained since ESI’s founding in 1973. The Group has a solid reputation
as a complex problem-solver for major corporations worldwide
in a variety of disciplines and industrial sectors (i.e. automotive,
defense, aerospace, aeronautic, nuclear power, transportation,
energy, electronics, consumer goods, biomedical, etc.).
Nowadays, we cannot rule out the possibility that new and larger
competitors with greater resources could emerge in ESI Group’s
field of activity. However, especially regarding key CFAO players,
major automakers seem neither to anticipate nor to want such a
development, preferring to do business with companies specialized
in the area of physics-based simulation, distinct from their other
technology vendors.
Nevertheless, it should be mentioned that Dassault Systèmes’ CATIA
V5/V6 software suite did bring a certain degree of standardization
to the industry and was well-received by automakers as a way
of facilitating the sharing of computational data within the CAD/
CAM world and ensuring compatibility with resource management
systems. It is also worth noting the presence of Siemens/UGS
in the technical data management field with its Team Center
solutions, the de facto standard in the automotive market. In 2012,
Siemens complemented its Simulation offering by acquiring the
Belgian company LMS, followed by CD Adapco, a leader in digital
and mechanical fluid simulation, in January 2016. In April 2017,
MSC Software, a software publisher specializing in design tools
(CAE) was taken over by Hexagon AB. In September 2017,
Dassault Systèmes announced the acquisition of EXA, a fluid
flow simulation specialized company. In January 2019, Hexagon
announced the acquisition of Etalon in order to strengthen its
solutions and offers to address the issues of the Industry 4.0
of their customers. In September 2019, Ansys announced the
acquisition of Livermore Software Technology Corporation (LSTC),
a provider of finite element analysis technology, known by its
LS-DYNA software package, for a price equivalent to more than
12 times the company’s turnover.
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT1 1
THE Group
Activities, strategy and markets
CONTENTS
1.1.3.2. Geographic areas
Markets are segmented both by geographic area and industry.
Geographic areas are based on the economic breakdown of the
Company:
◗ Americas = United States and Brazil;
◗ Asia-Pacific = China, South Korea, India, Japan, Malaysia and
Vietnam;
◗ Europe, Middle East and Africa = Czech Republic, England,
France, Germany, Italy, Netherlands, Russia, Spain, Sweden,
Switzerland and Tunisia.
Revenues
Europe, Middle East
and Africa
Asia-Pacific
Americas
TOTAL
2019, 12-month proforma
(Jan. 1 – Dec. 31)
2018
(Feb. 1 – Jan. 31)
2017
(Feb. 1 – Jan. 31)
(in € thousands) (in % of the total)
(in € thousands) (in % of the total)
(in € thousands) (in % of the total)
70,957
52,264
22,302
146,223
48.5%
36.2%
15.3%
100%
68,837
49,768
20,802
139,407
49%
36%
15%
100%
63,821
49,941
21,511
47%
37%
16%
135,274
100%
As in previous years, the Group maintained a strong international presence, with 86% of revenue generated outside France.
1.1.3.3. Industrial sectors
/ Energy offering
ESI offers various solutions to the energy industry, aiming to
guarantee the skills and expertise required for a safe and competitive
nuclear industry; to structure the supply chain and the innovation
process within the sector; and to define the nuclear reactor of
tomorrow and the tools of the future. ESI also offers solutions in
the field of renewable energy.
Main customers: EDF, Farasis, Framatome, GDF, General Electric,
Japan Atomic Energy Agency, Samsung, Siemens.
ESI is also present in other industrial sectors, such as the
“Government and Defense” sector (main customers: CEA, CEE,
U.S. Department of Energy, etc.) and the “Electronics” offering
(main customers: CEA, CEE, U.S. Department of Energy, etc.).
In 2019, orders in the main industrial sectors represented 88% of
total revenues, and broke down as follows:
59%
Ground
Transportation
& Automotive
12%
Aeronautics
& Aerospace
11%
Heavy
Industry
6%
Energy
12%
Others
ESI Group’s product and service offering is organized by product
lines and industrial solutions according to four main industrial
sectors:
/ Ground Transportation & Automotive offering
ESI Group offers a wide variety of industry-leading Virtual
Prototyping solutions for components and sub-assemblies used
in the transportation industry.
Main customers: Alstom Transport, Daimler, FAW Group
Corporation, Fiat Chrysler Automobiles, Ford Motor Company,
General Motors, Gestamp Group, Honda, Hyundai, Mercedes-Benz,
Renault-Nissan, Shanghai Automotive Industry Corporation,
Toyota, TRW Automotive, Volkswagen Group.
/ Aeronautics and Aerospace offering
For this sector, ESI Group offers tailor-made solutions that allow:
to reduce lead times and costs; to increase productivity and
performance in manufacturing processes while increasing the
production rate and enabling the implementation of innovative
methods and materials needed to comply with new regulations,
particularly environmental regulations; to validate the design
and assembly of processes and products at the earliest stage
through a human-centric approach; to evaluate and predict the
behavior and in-service performance of products; and to test
and prototype new concepts to accelerate the development of
a new aerospace industry.
Main customers: Airbus Group, Alcoa, AVIC, Boeing, Bombardier,
Embraer, Honeywell, General Electric, Honda, Lockheed Martin,
NASA, PCC Corporate, Rolls-Royce, Safran, Sikorsky, UTC
Aerospace Systems.
/ Heavy Industry offering
ESI Group’s solutions are also designed for companies working
in Heavy Industry and raw materials processing.
Main customers: Alcoa, Arcelor Mittal, AVIC, Caterpillar, General
Electric, Hitachi, John Deere, Joyson Safety Systems, Mahindra,
Whirlpool.
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
THE Group
Activities, strategy and markets
1.1.4. ECoSYSTEM
ESI Group is particularly aware of the richness and development
of its ecosystem, which is considered as the cornerstone of its
success.
From year to year, the Group strives to strengthen its ecosystem,
determining how to best target the very extensive and fast-growing
community of professionals involved in product manufacturing
and industrial processes. Always expanding, the ESI network,
composed of partners, customers, suppliers and all the Group’s
other stakeholders, makes it possible to accelerate and spread
innovation and to support the sale of software and services.
1.1.4.1. Distribution network
and local expertise
/ Distribution network
In 2019, some 488 employees actively supported ESI Group’s
sales cycle: Software sales, Services production and Customer
support. The Group’s proprietary distribution network accounted
for 91.8% of sales. Remaining sales were carried out indirectly via
a network of third-party distributors and agents, complementing
and enhancing our direct network.
/ Expertise
The wide range of software and services ESI Group offers meets
the increasingly demanding needs of industry at every step of
product and process development. The Group brings this global
expertise to each customer, anywhere in the world.
1.1.4.2. Partnerships
The Group values its partnerships with hardware suppliers, software
solution providers, leading industrial companies, and technological
and academic institutes alike. These alliances are deeply rooted
in its corporate strategy to develop and facilitate the adoption
of Virtual Prototyping and the emergence of the Hybrid TwinTM.
/ Corporate partnerships
ESI Group has always aimed to establish mutually beneficial strategic
corporate partnerships with international companies, working
together to promote innovation. For instance, since July 2018, ESI
Group and Diota, a leading publisher of 4.0 solutions integrating
advanced augmented reality and control technologies, have
joined forces to develop automated solutions for the embedded
systems that bring together product engineering processes and
of previously disparate maintenance.
/ Strategic “partner-customers”
The success of ESI Group’s solutions is also the fruit of remarkable
collaborations and a co-creation approach with world leaders
such as Renault-Nissan, Volkswagen, or Honda in the Automotive,
or Boeing or Safran for the Aeronautics. The Group’s approach
is based on building close and long-lasting relationships which
meet the specific needs of customers looking to successfully
incorporate Virtual Prototyping into various industrial sectors.
/ Strategic and academic partnerships
To ensure constant innovation, ESI Group enters into partnerships
with many first-rate universities, technological institutes and leading
colleges, in the many countries where the Group does business.
The purpose of these collaborations is to share experiences and
explore new technologies, encouraging young people to work in
the industrial sector, training the finest employees of tomorrow,
and foster innovation in education.
In 2019, Professor Francisco Chinesta, Professor and Researcher
at les Arts et Métiers (ENSAM) and Director of the Scientific
Department and Chairman of the Scientific Committee of ESI
Group, received the Silver Medal of the French National Centre
for Scientific Research (CNRS) for his contribution to the Centre’s
outreach and the advancement of research.
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT1 1
THE Group
History of the Group
CONTENTS
1.2. HISTorY oF THE Group
1973 to 1990
■ In 1973, Alain de Rouvray, along with three other engineering colleagues and partners, Jacques Dubois,
Iraj Farhoomand and Eberhard Haug, created ESI (Engineering System International). The Company
initially operated as a consulting company for European defense, aerospace, and nuclear industries. In 1979,
the Company opened a subsidiary in Germany.
In 1985, ESI carried out the first successful digital crash test simulation for a German consortium led
by Volkswagen. This marked the start of development of its flagship software package, PAM-CRASH.
■ In 1991, ESI became ESI Group and raised venture capital to enter the field of software edition. The Company
set up subsidiaries in the United States, Japan, and South Korea. In 1997, it took over Framasoft (digital and
mechanical simulation for the nuclear industry), followed by Dynamic Software (stamping simulation) in 1999.
■ In July 2000, ESI Group launched an IPO, raising some €30 million.
1991 to 1999
2000 to 2010
From 2000 to 2008, ESI Group pursued a concerted external growth strategy, successively acquiring
Mecas, strengthening its distribution network in Eastern Europe, STRACO (Vibro-Acoustic market), VASci
(Vibro-Acoustic Sciences for noise and acoustic comfort simulation), ProCAST and Calcom (foundry and
metallurgy simulation), the Product Division of CFD Research Corporation (fluid dynamics), the Service
business of IPS International (virtual human models), ATE Technology International Ltd. (sector diversification
in China), the Vdot software platform (product development process management), and finally Mindware
Engineering Inc. (fluid dynamics sector).
Meanwhile, ESI Group strengthened its international presence by opening subsidiaries in Argentina, India,
China, Italy, Brazil, and Tunisia.
2011 to 2018
■ In 2011, ESI Group acquired the company IC.IDO, or “I see, I do” (immersive virtual reality solutions), followed
by Efield AB (virtual simulation of electromagnetic phenomena). The following year, ESI Group took over
OpenCFD Ltd (leader in open-source fluid dynamics software) from SGI, thereby taking ownership of the
OpenFOAM® brand.
In 2013, ESI Group signed a joint venture agreement with AVIC-BIAM to collectively operate the new company
“AVIC-ESI (Beijing) Technology Co. Ltd” (effective as of February 1, 2014), and subsequently acquired
CyDesign Labs Inc. (system modeling).
In 2015, ESI Group carried out the following acquisitions: CIVITEC (virtual simulation of automated driver
assistance – ADAS), the business assets of PicViz Labs (Big Data-based predictive analysis), the technology
assets of Ciespace (Cloud/SaaS offering), and the Presto software platform (electronics cooling market).
In 2016, ESI Group continued to extend its strategic positioning by acquiring ITI GmbH (realistic simulation of
mechatronic and multi-domain systems) and Mineset Inc. (Big Data visual analytics and machine learning).
In late 2016, ESI Group signed a strategic, long term partnership agreement with PARC, a Xerox Group
company, with the goal of expanding and industrializing the advanced research project on Fault-Augmented
Model Extension (FAME).
In early 2017, ESI Group took over Scilab Enterprises, publisher of the Scilab open source analytical calculation
software, with the goal of making immersive virtual engineering more accessible for a worldwide community
of engineers and scientists.
These numerous acquisitions have allowed ESI Group both to extend its sales positioning with an eye to
ensuring optimal service to its customers, and to develop its solution portfolio, putting forth a comprehensive
offering suited to the needs of industrial companies working in the Industry 4.0.
In the course of the year 2017, ESI Group strengthened its presence with the opening of new offices
in Toulouse (France) and San Jose, California (United-States).
2019
■ The Group has been through a major change in its governance on February 1, 2019 with the nomination of
Cristel de Rouvray as Chief Executive Officer of the Group. Alain de Rouvray, founder, remains Chairman
of the Board of Directors.
ESI Group continues its transformation journey with, in particular, its commercial focus and resource alloca-
tion plan, announced in April 2019, aiming to develop specific industrial strategies by close cooperation
with customers.
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Group organization
1.3. Group orGANIZATIoN
1.3.1. opErATIoNAL FLoWCHArT
By December 31, 2019, the Group’s operational flowchart was as follows:
ESI Group
CEO
Strategy
Industry
Solutions
Innovation,
Discovery
& Services
Outcome
and Product
Operations
Regional
Sales
F&A,
Operations
Human
Resources
Corporate
Governance
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Group organization
CONTENTS
1.3.2. LEGAL FLoWCHArT
By December 31, 2019, the Group’s legal flowchart was as follows:
ESI GROUP SA
AMERICAS
EMEA
ASIA-PACIFIC
ESI North America, Inc.
United States
(100%)
100%
Engineering System
International SAS
France
(99.95%)
99.95 %
100%
ESI Software
Germany GmbH
Germany
(100%)
ESI Japan, Ltd.
Japan
(97%)
97 % 100%
ESI Group
Beijing Co., Ltd.
China
(100%)
9.5%
ESI US Holdings, Inc.
United States
(100%)
100%
ESI Services
Tunisia SARL
Tunisia
(95%)
85.5%
Engineering System
International GmbH
Germany
(100%)
51%
ESI US R&D, Inc.
United States
(100%)
Mineset, Inc.
United States
(100%)
ESI South America
Comercio E Servicos
De Informatica Ltda
Brazil
(95%)
49%
100%
95%
STRACO SA
France
(98%)
98%
100%
ESI ITI GmbH
Germany
(100%)
CIVITEC SARL
France
(80%)
80%
ITI Southern
Europe SARL
France
(100%)
Scilab Enterprises SAS
France
(100%)
100%
95%
Mecas ESI s.r.o.
Czech Republic
(95%)
ESI Group Hispania s.l.
Spain
(100%)
100%
99%
Calcom ESI SA
Switzerland
(99%)
ESI Italia s.r.l.
Italy
(100%)
100%
100%
ESI Nordics AB
Sweden
(100%)
100%
100%
ESI UK Ltd.
United Kingdom
(100%)
OpenCFD Ltd.
United Kingdom
(100%)
100%
100%
Hankook ESI Co., Ltd.
South Korea
(98.8%)
98.8%
45%
AECC-ESI (Beijing)
Technology Co., Ltd.
China
(45%)
ESI Services
Vietnam Co., Ltd.
Vietnam
(100%)
100%
100%
ESI Software (India)
Private Ltd.
India
(100%)
100% 100%
Hong Kong
ESI CO., Ltd.
Hong Kong
(100%)
ESI-ATE
Holdings Ltd.
Hong Kong
(100%)
100%
ESI-ATE Technology
(China), Ltd.
China
(100%)
% of holding
( )
% of control
Note: the percentages of equity and voting rights are identical.
For more information, see note F.8 “Table of controlled entities and affiliates” (at December 31, 2019) in the notes to the consolidated financial statements.
22
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
THE Group
Selected Financial Information
1.4. SELECTED FINANCIAL INForMATIoN
This information are extracted from the consolidated financial
statements.
ESI Group releases its results for the financial year starting on
February 1, 2019 and ending on December 31, 2019 (11 months),
approved by the Board of Directors on March 19, 2020. In compli-
ance with the decision of the General Meeting of July 18, 2019, the
Group now closes the fiscal year on December 31 of each year, and
therefore also presents its new twelve months proforma results.
1.4.1. rEVENuE
ESI Group demonstrated a solid growth in 2019, in a context of
continuing operational and commercial transformation. Over a
12-month proforma period, ESI generated sales of €146.2 million,
up +7.8% vs. €135.7 million (January-December 2018). Excluding
an exchange rate impact of €3 million, resulting mainly from
fluctuations in the Dollar and the Japanese Yen, sales increased
by +5.6%. Proforma full-year growth was driven by the Licenses
business (€115.9 million, +8.4%, +6.0% cer), which is the main pillar
of the Group’s business model (79% of sales, compared with 79%
in the previous year). total). This progress illustrates the continued
confidence of global industrial leaders.
In fact, the world’s top 10 largest clients account for 35% of total
order intake (+14% vs. 2018). Among them, we find strategic
partners and key industry leaders who are advanced in the digital
transformation of their business model.
Revenue evolution
(in € millions)
135.7
28.8
146.2
30.3
+7.8%
106.9
115.9
2018 (1)
2019 (2)
Licenses
Services
(1) 12-month proforma (January 1, 2018 - December 31, 2018).
(2) 12-month proforma (January 1, 2019 – December 31, 2019).
1.4.2. STrATEGIC BuSINESS ALIGNMENT
Proforma full-year (12 months) growth was driven by the Licenses
business:
◗ 16% of sales were from New business (new customers or new
solutions for existing customers), up 10.6% (€18.1 million).
◗ 84% of sales were driven by Repeat business (renewal and
additional volume), +7.9% (€97.8 million), which, by nature,
generates strong commercial recurrence (91.4%);
Services grew year on year (€30.3 million, +5.4%, +3.8% cer) to
represent 21% of total revenues.
1.4.3. BrEAKDoWN oF rEVENuE BY GEoGrApHIC ArEA
Geographical breakdown
48.5%
(vs. 49.4%)
Europe,
Middle East
and Africa
15.3%
(vs. 14.9%)
Americas
36.2%
(vs. 35.7%)
Asia-Pacific
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT1 1
THE Group
Selected Financial Information
CONTENTS
1.4.4. proFITABILITY
The Group’s profitability is presented through the evolution of
gross margin and EBITDA, before and after taking into account
the impact of IFRS 16. These aggregates used for financial
communication, which are common to the Group’s business sector,
provide specific information to facilitate understanding of the
real value created by the Group for its customers and partners.
EBITDA is an Alternative Performance Indicator (API) corresponding
to Operating Income before net depreciation, amortization and
provisions and including the net impact of the capitalization of
development costs (see note 6.1.2 to the consolidated financial
statements in Chapter 6.1) and net depreciation of account
receivables.
As IFRS 16 standard is applicable starting 2019 with significant
impact on EBITDA, we present this aggregate before IFRS 16
impact to ensure comparability with 2018 EBITDA.
In addition, following the change of closing date, 2019 financial
year ran for 11 months. In order to ensure comparability, proforma
financial statements for January-December 2019 and 2018 have
been prepared, in accordance with the methodology described
in note 2 to the consolidated financial statements (Chapter 6.1).
The aggregates presented below are thus proforma data.
Improved profitability
EBITDA (before IFRS 16) increased to €12.3 million (vs. €8.1 million),
now 8.4% of total sales (vs. 6.0%). EBIT (before IFRS 16) rose to
€8.3 million (vs. €3.6 million), now 5.7% of total sales.
Lower growth in other operational costs
(excluding gross margin)
The Group maintained its efforts to control other operational
expenses (+5.6%, +€5.2 million) to support overall revenue
increase and long-term development. Note that €1.5 million of the
€5.2 million cost increase is linked to exchange rate (4.0% cer).
Gross margin
EBIT (before IFRS 16)
EBITDA (before IFRS 16)
(in € millions and % of revenue)
(in € millions and % of revenue)
(in € millions and % of revenue)
107.4
97.5
71.9%
73.4%
+10.1%
8.3
12.3
3.6
5.7%
2.7%
+126.6%
8.1
6%
8.4%
+52.2%
2018
(Jan.-Dec.)
2019
(Jan.-Dec.)
2018
(Jan.-Dec.)
2019
(Jan.-Dec.)
2018
(Jan.-Dec.)
2019
(Jan.-Dec.)
24
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
THE Group
Major investments during the past three financial years
1.5. MAJor INVESTMENTS DurING
THE pAST THrEE FINANCIAL YEArS
1.5.1. THE Group’S CurrENT INVESTMENTS
The Group’s current capital expenditures represent approximately
2% of its revenue. Over the past three financial years, these invest-
ments amounted to €3.6 million in 2017, and €4.2 million in 2018
and €2.6 million in 2019 (proforma 12-month). These investments
pertain mainly to the computer equipment required to grow the
Group’s business as well as the work required to outfit and equip
various facilities of the Group. Investments are primarily financed
using the Group’s equity.
Development costs
ESI Group capitalizes the development costs that meet the six
criteria set forth under IAS 38. Information on research and
development costs is presented in note 6.1.2. to the consolidated
financial statements.
The net carrying amount of capitalized development costs
stood at €45.4 million at December 31, 2019 and corresponds to
approximately 14.9 months of research and development.
1.5.2. THE Group’S NoN-CurrENT INVESTMENTS
a) Acquisition of intangibles
Since 1994, the Group has been acquiring both companies and
specific branches of companies in order to supplement its offering
and expand its market opportunities.
Intangible assets, which are not amortized but reviewed through
an impairment test, include goodwill and intangible assets with
an indefinite useful life. These intangible assets are subject to an
impairment test such as described in note 3.1 to the consolidated
financial statements.
The change in the net carrying amount of these intangible assets
between January 31, 2019 and December 31, 2019 is presented
in the table below. See notes 3.2.1 and 6.1.1 to the consolidated
financial statements for further information.
(in € millions)
Goodwill
Intangible assets with an indefinite useful life
TOTAL
b) Financial investments
January 31,
2019
41.0
12.0
53.4
Decrease
(0.1)
Foreign
exchange
gain/(loss)
December 31,
2019
0.1
0.1
41.4
12.0
53.4
The Group does not engage in any type of financial investments and uses strictly conventional investments to earn interest on its
available liquid assets.
1.5.3. FuTurE INVESTMENTS
The Group is willing to continue investing in order to update and
improve its production capacities and efficiency. The Group seeks
out new opportunities that would allow it to increase its market
share or to improve the services provided to its customers.
In order to evaluate any investment opportunities that could
potentially improve its solutions, the Group has set up a special
committee (Venture Board) that helps the Group Executive
Committee (GEC) to make investment decisions based on market
priorities and expected outcomes.
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT1 CONTENTS
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
2
REPORT
ON CORPORATE
GOVERNANCE
2.1. GOVERNANCE CODE
2.2. FUNCTIONING OF THE GENERAL MANAGEMENT
2.2.1. Dissociation of the functions of Chairman
of the Board of Directors and Chief Executive Officer
as from February 1, 2019
2.2.2. Chief Operating Officers
2.2.3. Limits on the powers of the Chief Executive Officer
and Chief Operating Officers
2.2.4. Group Executive Committee (“GEC”)
2.3. BOARD OF DIRECTORS
2.3.1. Composition of the Board of Directors
2.3.2. Offices of directors
2.3.3. Operation of the Board of Directors
2.3.4. Specialized committees
2.3.5. Relationships with shareholders
2.4. COMPENSATION PAID TO THE DIRECTORS
AND THE MANAGEMENT
2.4.1. Compensation of the Board of Directors
2.4.2. Compensation to the Executive corporate officers
2.5. ADDITIONAL INFORMATION IN RESPECT
OF CORPORATE GOVERNANCE
2.5.1. Regulated agreements and commitments
and related party transactions
2.5.2. Delegations of authority
2.5.3. Provisions of the articles of association concerning
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31
31
34
36
39
40
41
41
43
56
56
56
the participation of shareholders in General Meetings
58
2.5.4. Factors that may have an impact
in the event of a public offering
2.6. STATUTORY AUDITORS’ REPORT ON REGULATED
AGREEMENTS AND COMMITMENTS
59
60
In accordance with the resolution of the General Meeting of July 18, 2019, the Group now closes its financial
statements at 31 December of each fiscal year.
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT
27
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT 2
REPORT ON CORPORATE gOvERNANCE
Governance Code
CONTENTS
This section constitutes the report of the Board of Directors on
corporate governance pursuant to Article L. 225-37 of the French
Commercial Code. This report notably sets out the conditions of
preparation and organization of the work of the Board of Directors
and its Committees, the powers of the corporate officers, the
principles and rules adopted to define their remuneration and
benefits of any kind granted to them, as well as other information
to be included under Articles L. 225-37 et seq. of the French
Commercial Code.
This report has been prepared on the basis of work carried out
by various departments of the Company, in particular, the Legal
Department and Finance and Administration Department.
This report was approved by the Board of Directors on March 19,
2020, after review by the Board Committees of the sections
under their respective responsibilities and sent to the Statutory
Auditors. It will be presented to the Combined General Meeting
of June 25, 2020.
2.1. gOvERNANCE CODE
The Company is a limited company (société anonyme) with a
Board of Directors. The Directors, the Chairman of the Board, the
Chief Executive Officer (“CEO”) and the Chief Operating Officers
are referred to collectively in this Universal Registration Document
by the term “corporate officers”.
granted to them, apart from the regulated agreements as set
out under section 2.6 of this Universal Registration Document.
In addition, to the Company’s knowledge on the date of this
Universal Registration Document, no corporate officers has been
in the last five years:
On the date of publication of this Universal Registration Document
and to the Company’s knowledge, there are:
◗ no family ties among the Company’s corporate officers, with the
exception of parentage between Alain de Rouvray, Chairman
of the Board of Directors and Cristel de Rouvray, Director and
CEO since February 1, 2019;
◗ no conflicts of interest between the private interests of each
corporate officers and their duties with regard to the Company;
◗ no arrangement or agreement concluded with the principal
shareholders or with clients, suppliers or others, as a result of
which any of the corporate officers would have been appointed
in such position;
◗ no restriction on the sale by corporate officers of their
shareholdings in the Company’s capital except the shareholders’
agreement as described under section 8.2.4 of this Universal
Registration Document;
◗ no service agreement binding the corporate officers to the
Company or any of its subsidiaries that provides benefits to be
◗ convicted of fraudulent offences;
◗ associated with any bankruptcies, receiverships or liquidations;
◗ subject to any official public incrimination and/or sanctions by
statutory or regulatory authorities;
◗ disqualified by a court from acting as a member of the administrative,
management or supervisory bodies of an issuer or from acting in
the management or conduct of the affairs of any issuer.
During its meeting of February 12, 2020, the Company confirmed
it voluntarily referred to the Middlenext Code, which is available on
the website www.middlenext.com as revised in September 2016.
As every year, the Board of Directors reviewed its compliance
with the recommendations, in particular the points of vigilance of
the Code. As part of the “Comply or Explain” rule provided for in
Article L. 225-37-4 of the French Commercial Code, the Company
considers that its practices comply with recommendations of the
Code with the exception of the following recommendations for
the reasons given below:
Exceptions to the Middlenext Code
Explanations
R.10: Presence condition for directors’
remuneration
R.18: Stock-options: absence of performance
condition
This criterion is applied to independent directors but is not relevant for non-independent
directors, who are almost always present because of their executive role within
the Company (Chief Executive Officer and Chief Operating Officer) or because
of the reinforced role performed by the Chairman of the Board of Directors.
The Company has generally always conditioned its stock option grants on
performance conditions. This was particularly the case for the allocation dated
February 1, 2019 for the benefit of the CEO, Cristel de Rouvray. However, in the
midst of the Company's transformation, relevant performance criteria could not
be defined during the allocation of stock options made on December 18, 2019.
Consequently, the Company only proceeded to the allocation of the portion of
shares usually subject to the exclusive presence condition, and did not proceed
to the allocation of the usually larger portion of shares, linked to performance
conditions.
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
REPORT ON CORPORATE gOvERNANCE
Functioning of the general management
2.2. FUNCTIONINg OF THE gENERAL MANAgEMENT
In accordance with the legal provisions and articles of association,
the Board of Directors entrusts the general management either to
the Chairman of the Board of Directors or to another individual,
whether Director or not, bearing the title of Chief Executive
Officer (“CEO”).
The choice between these two methods of exercise of the general
management is made by the Board of Directors by decision of
the majority of the Directors present or represented. The choice
of the Board is brought to the attention of Shareholders and third
parties in accordance with the regulations in force.
No one can be appointed CEO if he is over 80 years old. If the
current CEO exceeds this age, he is deemed to have resigned
from office.
The CEO is vested with the broadest powers to act in all circumstances
on behalf of the Company. The powers of the CEO are however
limited by the Board of Directors (see section 2.2.3.1 below).
2.2.1. DISSOCIATION OF THE FUNCTIONS OF CHAIRMAN OF THE BOARD OF
DIRECTORS AND CHIEF EXECUTIvE OFFICER AS FROM FEBRUARY 1, 2019
At its meeting of September 18, 2018, the Board of Directors
decided to modify the monist corporate governance structure of
the Company and to adopt a dissociated structure, in order to fully
integrate into the Company’s transformation context. Thus, as of
February 1, 2019, the Board of Directors decided to separate the
functions of Chairman of the Board of Directors and CEO, while
maintaining Alain de Rouvray as Chairman of the Board of Directors
and secondly to appoint Cristel de Rouvray as Chief Executive
Officer for the remaining term of their respective directorships.
In accordance with Article L. 225-54-1 of the French Commercial
Code, Cristel de Rouvray does not hold any other position as Chief
Executive Officer in a public limited company with its registered
office in France.
With due regard for the separation of the functions of the
Chairman of the Board of Directors and CEO, the Chairman is
given extended powers so that he remains involved full-time
in the Company’s business life, without assuming executive
responsibility. The objective is to ensure a peaceful and gradual
transition phase estimated at two years. For more details, please
refer to the internal regulations of the Board of Directors (https://
www.esi-group.com/company/investors/corporate-governance/
governance-documents).
2.2.2. CHIEF OPERATINg OFFICERS
At the CEO’s proposal, the Board of Directors may appoint one
or more individuals as Chief Operating Officer to assist the CEO.
In accordance with Article 14 of the articles of association, the
number of Chief Operating Officers may not exceed five.
The Board of Directors determines the scope and duration of
the powers granted to the Chief Operating Officer, with the
CEO’s agreement and sets their compensation. With respect to
third parties, the Chief Operating Officer has the same powers
as the CEO.
If the CEO resigns or is no longer able to carry out his duties,
the Chief Operating Officers will retain their responsibilities and
duties until the appointment of a new CEO unless the Board of
Directors decides otherwise.
Chief Operating Officers may be dismissed at any time upon
proposal of the CEO and by decision of the Board of Directors.
If Chief Operating Officers are dismissed without just cause, such
dismissal may be grounds for compensation.
At its December 19, 2018 meeting, the Board of Directors decided
to reappoint Vincent Chaillou and Christopher St John as Chief
Operating Officers for a term of four years, expiring in 2021, in
alignment with Cristel de Rouvray’s mandate.
2.2.3. LIMITS ON THE POWERS OF THE CHIEF EXECUTIvE OFFICER
AND CHIEF OPERATINg OFFICERS
2.2.3.1. Limits to the CEO’s powers
The CEO represents the Company in its dealings with third parties.
He is vested with the broadest powers to act in all circumstances
on behalf of the Company, provided that the act he performs
is part of the corporate object and is not expressly reserved to
Shareholders’ Meetings or to the Board of Directors.
Without prejudice to the legal provisions relating to authorizations
to be granted by the Board of Directors (regulated agreements,
sureties, endorsements and guarantees, transfers of participations
or real estate, etc.), the Chief Executive Officer must obtain the
prior authorization of the Board of Directors for the following
operations that are outside the scope of day-to-day management,
in accordance with its internal rules:
◗ Purchase or acquire, sell or dispose of, or mortgage any real
estate, pledge any movable property and claim, where the
transaction exceeds the amount of €100,000;
◗ Operations intended to consent to or contract any loans, credits
or advances, where these exceed an amount of €2,000,000;
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT2 2
REPORT ON CORPORATE gOvERNANCE
Functioning of the general management
CONTENTS
◗ Direct operations or equity investments that may affect the
Group’s strategy and substantially modify its financial structure
or scope of business;
◗ Settle any dispute and take legal action, with the exception of
debt recovery actions or any day to day operations and urgent
actions such as provisional or conservatory measures;
◗ The issue of pledges, guarantees, endorsements or sureties
where these exceed an annual amount of €100,000;
◗ The issue of securities, whatever their nature, which may lead
to a change in the share capital, regardless of the amount.
2.2.3.2. Limits to the Chief Operating
Officers’ powers
The powers of the Chief Operating Officers to act as legal
representatives of the Company have been delegated by the
Board of Directors.
The following powers have thus been delegated to the Chief
Operating Officers:
1. To represent the Company, in general, in all ongoing business
affairs of ESI Group with respect to third parties and in
compliance with the Group procedures;
2. To enter into commercial contracts or agreements on behalf
of the Company within its commercial territory and authority;
3. To hire or terminate any employee, executive, consultant, sales
representative, distributor or agent and to determine the scope
of their powers and their title (with the exception of managers
and directors) and to establish or increase any compensation,
commission or pension for all such individuals or legal entities.
Annual compensation shall not exceed €100,000.
In all cases, the Chief Operating Officers require the Company’s
prior written consent to carry out solely the following transactions
on behalf of the Company:
◗ To hire managers and directors and determine or modify their
annual compensation;
◗ To purchase or acquire, sell or dispose of, lease or rent, or
mortgage any real estate property;
◗ To pledge any movable property or receivable;
◗ To enter into credit arrangements;
◗ To take out loans on behalf of the Company (with the exception
of the use of bank overdrafts granted to the Company);
◗ To create or acquire stakes in other companies, to perform
any other type of similar undertaking, to accept management
positions in other companies, to establish or dissolve subsidiaries
and to divest ownership interest;
◗ To propose mergers;
◗ To grant loans;
◗ To bind the Company as a guarantor or in any other debt-related
situation with respect to third parties;
◗ To settle any disputes and to take legal action, with the exception
of debt recovery actions that form part of the Company’s
ongoing operations and urgent actions such as provisional
or conservatory measures that cannot be postponed in the
interests of the Company;
◗ To set up retirement plans for the employees of the Company;
◗ To sell or dispose of, purchase or acquire, or transfer or mortgage
any assets belonging to the Company worth more than €50,000;
◗ To enter into commercial contracts or transactions exceeding
€250,000, with the exception of intra-Group contracts issued
by the Company, which the Chief Operating Officers may sign
without any limitation as to amount;
◗ In general, to take any action related to the Company involving
an amount greater than €50,000;
◗ In general, to enter into any agreement or transaction involving
other Group companies, clients or partners falling outside the
Company’s commercial territory or authority.
2.2.4. gROUP EXECUTIvE COMMITTEE (“gEC”)
The CEO is assisted by the GEC for the Company’s daily management
pertaining to growth strategy in the following areas:
◗ Research;
◗ Innovation;
◗ Service activity;
◗ Production of products and solutions;
◗ Sales and marketing;
◗ Regional directions;
◗ Human resources;
◗ Quality;
◗ IT;
◗ Finance et administration;
◗ Legal and Governance;
◗ Communication.
The GEC meets at least once a month and as often as the interest
of the Company requires, to report on the activities of the Company
to the CEO. The GEC prepares, with the support of the specialized
committees, all matters submitted to the prior authorization of
the Board of Directors for the execution and/or implementation
of strategic operations.
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
REPORT ON CORPORATE gOvERNANCE
Board of Directors
As at the date of this Universal Registration Document, the GEC comprises the following members:
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4
5
6
7
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9
From the left to the right:
Corinne Romefort-Régnier
Corporate governance
director
Cristel de Rouvray
Chief Executive Officer
and Board Member
Olfa Zorgati
Chief Financial Officer
Christopher St John
Chief Operating Officer –
Asia-Pacific Regional
Director
Mike Salari
Executive Vice President
Innovation, Value Discovery
and Services – Regional
Director, The Americas
Vincent Chaillou
Chief Operating Officer
and Board Member–
Group Strategy and EMEA
Regional Director
Dominique Lefebvre
Executive Vice President
Products Operations
2.3. BOARD OF DIRECTORS
2.3.1. COMPOSITION OF THE BOARD OF DIRECTORS
In accordance with Article 10 of the articles of association, the
Company is administered by a Board of Directors composed of
at least three members and at most the maximum number of
members permitted by law, unless a decision is made to increase
this maximum in the event of a merger.
Directors are appointed by the annual Ordinary General Meeting,
on proposal of the Board of Directors, for a term of four years, in
accordance with the recommendations of the Middlenext Code
(R.9). Directors may be re-elected. They may be dismissed at any
time by the Ordinary General Meeting.
The age limit to serve on the Board of Directors is 80. If a member of
the Board of Directors exceeds this limit, he will automatically be
deemed to have resigned. He will nonetheless retain his seat until
the first Board meeting following the date at which the Director
in question exceeded the age limit.
In accordance with the Group’s policy to promote diversity (see
section 4.3.2 of this Universal Registration Document for more
details), the Board of Directors, based on the recommendations
of the Nomination and Governance Committee, seeks to promote
diversity in its composition with regard to criteria such as age,
gender or qualifications and professional experience.
The renewal in 2018 of the terms of office of Véronique Jacq and
Rajani Ramanathan, bringing their respective skills in terms of
financing or technologies, are an illustration of this. In the event of
a change in the composition of the Board, these diversity criteria
will be decisive in the choice of candidates for appointment.
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REPORT ON CORPORATE gOvERNANCE
Board of Directors
CONTENTS
Overview of the Board of Directors as at the date of this Universal Registration Document
Members of
the Board of
Directors
Age Gender Nationality
Strategic
Committee
Audit
Committee
Compensation
Committee
Nomination
and
Governance
Committee
Technology
and
Marketing
Commitee
Start of
first term
Start of
current
term
End of
current
Term
Expertise,
experiences
Members considered non-independent by the Board of Directors (see section 2.3.1.2)
76
M
French
•*
•*
•
1991
2015
SM 2023
Members considered independent by the Board of Directors (see section 2.3.1.2)
70
M
French
•
2004
2016 SM 2020(1)
Alain de
Rouvray
Vincent
Chaillou
•
•
Cristel de
Rouvray
43
F
French,
American
Charles-Helen
des Isnards
Éric
d’Hotelans
74
M
French
69
M
French
Véronique
Jacq
52
F
French
Rajani
Ramanathan
53
F American,
Indian
Yves de
Balmann
73
M
French,
American
•*
•
•
•
•
•
•
•
Industries,
Technologies,
Commerce,
Leadership,
M&A
Industries,
Technologies,
Commerce,
Leadership,
M&A
•
•*
•
•
•
1999
2017
SM 2021 Technologies,
Leadership,
CSR
2008
2017
SM 2021
Finance,
M&A, Listed
company
2008
2015
SM 2023 Technologies,
Finance,
Leadership,
Listed
company
•
2014
2018
SM 2022
Finance,
M&A, Listed
company
•
•
•*
2014
2018
SM 2022 Technologies,
Commerce,
Leadership,
CSR
2016
2016 SM 2020(1)
Finance,
Leadership,
M&A, Listed
company
SM: Shareholders’ Meeting
* Chairman
• Member
(1) Mandates proposed to be renewed at the Shareholders’ Meeting of June 25, 2020.
2.3.1.1. Changes in the composition
Changes in the composition of the Board of Directors in 2019
and until the date of this Universal Registration Document
Date of effect
July 18, 2019
July 18, 2019
Departure
Appointment
Renewal
-
-
-
-
Alain de Rouvray
Éric d’Hotelans
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Board of Directors
Changes in the composition of the Committees in 2019
and until the date of this Universal Registration Document
Date of effect
Departure
Appointment
Renewal
Strategic Committee
Audit Committee
-
-
-
-
Compensation Committee (1)
January 31, 2019
Cristel de Rouvray
-
-
-
February 1, 2019
-
Éric d’Hotelans( 2)
Nomination and Governance Committee (1)
January 31, 2019
Cristel de Rouvray
-
Technology and Marketing Committee
February 1, 2019
-
-
-
Alain de Rouvray (2)
-
-
-
-
-
-
-
-
(1) The Compensation Committee and the Nomination and Governance Committee were dissociated by decision of the Board of Directors on
December 19, 2018 with effect from February 1, 2019.
(2) Appointment as Chairman.
2.3.1.2. Independence
In accordance with the recommendations of the Middlenext Code (R.3), following the opinion of the Nomination and Governance
Committee, the Board of Directors analyzed and determined at a meeting of February 12, 2020, the proportion of independent directors
within the Board. In particular, it examined each of the directors’ situations in light of the five criteria presuming independence defined
by the Code, namely:
Criterion 1
Criterion 2
Not to be and not to have been during the course of the previous five years, an employee or corporate officer of
the Company or an entity of the Group
Not to have been during the course of the previous two years and not to be in a significant business relationship
with the Company or its Group (customer, supplier, competitor, service provider, creditor, banker)
Criterion 3
Not to be majority shareholder or not holding a significant percentage of the Company’s voting right
Criterion 4
Not being related by close family ties to a corporate officer or a majority shareholder
Criterion 5
Not having been an Auditor of the Company during the course of the previous six years
The table below shows each director’s situation in light of the independence criteria as stated above, and the classification chosen by
the Board of Directors. The Board identified five independent director out of eight, representing 62.5% of independence, largely above
the one-third of independence recommended by the Middlenext Code for a controlled company.
Director
Criterion 1
Criterion 2
Criterion 3
Criterion 4
Criterion 5
Alain de Rouvray
Vincent Chaillou
Cristel de Rouvray
Charles-Helen des Isnards
Éric d’Hotelans
Véronique Jacq
Rajani Ramanathan
Yves de Balmann
X : Not compliant.
✓ : Compliant.
X
X
X
✓
✓
✓
✓
✓
✓
✓
X
✓
✓
✓
✓
✓
✓
✓
X
✓
✓
✓
✓
✓
X
X
X
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Classification chosen by
the Board of Directors
Non-independent
Non-independent
Non-independent
Independent
Independent
Independent
Independent
Independent
2.3.1.3. Balanced gender representation on the Board
At the date of this Universal Registration Document, the Board of Directors is composed of three women and five men. In accordance
with Article L. 225-18-1 of the French Commercial Code, the difference between the two genders is not greater than two and consequently
the Board of Directors has a balanced representation.
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5
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REPORT ON CORPORATE gOvERNANCE
Board of Directors
2.3.2. OFFICES OF DIRECTORS
The number of directorships held by directors is in accordance with the limits set forth in Article L. 225-21 of the French Commercial
Code. This is an important guarantee of their commitment and availability to the Group.
Alain de Rouvray
Chairman of the Board of Directors
Date of birth: 10/08/1943
French
Vincent Chaillou
Board member and Chief Operating Officer
Date of birth: 03/24/1950
French
Founder of ESI Group, Alain de Rouvray is the Chairman of the
Board of Directors since February 1, 2019, as from the date of
dissociation of governance functions. He had been Chairman and
Chief Executive officer since the Company’s creation in 1991 and
until January 31, 2019. He holds an engineering degree from École
centrale de Paris (1967), a degree from the Sorbonne in Economic
sciences (1967), and a Ph.D. in civil engineering from the University
of Berkeley (1971). Alain started his career as Research Engineer
at École polytechnique (Solid Mechanics Laboratory) in 1972. He
then became Director of the Advanced Mechanics Department for
the international software subsidiary of CISI Group from 1972 to
1976. In 1973, he founded ESI SA and was the CEO and Commercial
Director from 1973 to 1990.
Current offices held outside the group:
None
Expired offices held over the past five years:
None
Business address:
ESI Group – 100-102, avenue de Suffren, 75015 Paris
Vincent Chaillou is Chief Operating Officer–Group Strategy and
EMEA Regional Director. Vincent Chaillou holds an engineering
degree from École polytechnique (1971) and a PhD in civil engineering
from the École des Ponts et Chaussées (1973). Before joining ESI
Group in 1994, he served as General Manager of the AEC Business
Unit, a department of ComputerVision (which has now merged
with PTC). During his 16 years at ComputerVision, he held several
management positions in sales, marketing and general management,
specifically in the Asia-Pacific region. From 1994 to 1998, he was
Regional Vice President for the American territory within ESI Group
and CEO of ESI Software.
Current offices held outside the group:
Member of the Board of Directors of the association
“Alliance Industrie du Futur”
Member of the Board of the association ASTech
and Vice-President International Relations
Chairman of the association ID4CAR
Member of the Board of the Railenium Technological
Research Institute
Member of the Board of Nuclear Valley
Member of the Board of the French Mechanics association
Member of the Excelcar collaborative innovation platform
Expired offices held over the past five years:
Member of the Board of the association TECH’IN France
Member of the Board of the company CADEMCE SAS
Business address:
ESI Group – 100-102, avenue de Suffren, 75015 Paris, France
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Board of Directors
Cristel de Rouvray
Board member and Chief Executive Officer
Date of birth: 10/15/1976
French, American
Charles-Helen des Isnards
Independent Board member
Date of birth: 01/01/1945
French
Cristel de Rouvray is Chief Executive Officer since February 1, 2019.
Cristel de Rouvray was Chairman of the Compensation, Nomination
and Governance Committee from 2007 to 2019 and Board Leader
from 2015 she is graduated from Stanford University and the London
School of Economics, where she obtained a Ph.D. in economics.
She has 14 years of experience as a Director at College Track, a US
non-profit organization.
Charles-Helen des Isnards is a graduate of the Paris Institute of
Political Studies and holds a degree in law. After an international
career within BUE, UBAF and CIC Group in France and in Italy,
Charles-Helen des Isnards contributed to the creation of CIC Finance
as member of the Board. He served as Deputy Chief Executive
Officer of CM-CIC Corporate Advisory until September 2012.
Current offices held outside the group:
Director of Open Foam Foundation
Expired offices held over the past five years:
None
Business address:
ESI Group – 100-102, avenue de Suffren, 75015 Paris, France
Current offices held outside the group:
Member of the Board of the Day-Solvay Foundation
Expired offices held over the past five years:
Member of the Board of the association Les Arts Florissants
Member of the Supervisory Board of the company Nature
& Découvertes
Autres fonctions en cours :
Senior Advisor of CAP M – New York, independent
consulting firm on strategy and M&A
Business address:
ESI Group – 100-102, avenue de Suffren, 75015 Paris, France
Éric d’Hotelans
Independent Board member
Date of birth: 07/03/1950
French
Véronique Jacq
Independent Board member
Date of birth: 01/02/1968
French
Éric d’Hotelans held positions in the information technology sector,
first at Tandem (US computer manufacturer, taken over by HP),
where he headed the Europe/Finance Business Unit. In 1997, he
joined CMG, one of the oldest European IT services companies, as
a member of the Executive Committee. In this capacity, he created
CMG France (1,200 employees), the Group’s French subsidiary, of
which he became Chairman and CEO. He left CMG group in 2003,
following its acquisition by UK group Logica. He then participated
in the development of an investment fund based in Riyadh, Saudi
Arabia, specializing in research and analysis of IT-related activities.
In 2003, he joined the Board of Directors of M6 Group as Deputy
Chairman in charge of management activities. President of the
Group’s online sales since 2009, he retired in July 2017.
Current offices held outside the group:
Chair of the M6 Group Corporate Foundation
Expired offices held over the past five years:
President of the company Home Shopping Services SA
President of the company T-Commerce SAS
Member of the Board of the company Société Nouvelle
de Distribution SA
Member of the Board of the company Métropole Production SA
Managing Director of the company Home Shopping Services SA
Member of the Board of the M6 Group Corporate Foundation
Member of the Board of the company M6 Films
Member of the Board of the company M6 Diffusion SA
Business address:
M6 – 89, avenue Charles-de-Gaulle –
92575 Neuilly-sur-Seine Cedex, France
A Civil Engineer and graduate of the École des Mines de Paris (French
engineering school), Véronique Jacq began her career in the Nuclear
Safety Authority (1994-2000). In 1997, she was appointed Deputy
Director in charge of monitoring the safety of EDF nuclear power
plants. In 2000, she joined Anvar (now BPI France) as Director of
Business Development. In 2003, she joined the 2nd Chamber of the
French Court of Auditors, where she was responsible for auditing
financial statements and management reports of companies and
government agencies as well as international organizations. In 2007,
she joined CDC Entreprises, a CDC subsidiary company specializing
in private equity, and in 2010 became Deputy General Manager in
charge of Business Development. In 2012, she took responsibility for
the investment activity in digital startups first at CDC Entreprises
and then at Bpifrance as of 2013. The Digital Venture activity she
is piloting in Bpifrance covers seed and venture capital operations
(€650 million under management).
Current offices held outside the group:
Member of the Board of the company Evaneos
Member of the Board of the company OpenClassrooms
Member of the Board of the company Scality
Member of Board of the company Klaxoon
Member of Board of the company Famoco
Expired offices held over the past five years:
Member of the Board of the company Netatmo
Censor of the company DelfMEMS
Censor of the company Bonitasoft
Censor of the company Teads
Business address:
Bpifrance – 6-8, boulevard Haussmann, 75009 Paris, France
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT2 2
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Board of Directors
CONTENTS
Rajani Ramanathan
Independent Board member
Date of birth: 03/25/1967
American, Indian
Yves de Balmann
Independent Board member
Date of birth: 05/28/1946
French, American
Rajani Ramanathan has held a variety of positions, from running
her own companies to scaling a multi-billion company from a
startup to a fully operational business. Currently she serves as
an independent Board member at CloudCherry and serves as
either a Board member/advisor/investor in several technology
startups including Vayu Technology corp., Invicara, Fitbliss, Boon
VR, Feathercap and has previously advised companies such as
Medium, Pipefy, Growbot, Lifograph, Traction Labs, Relatas, Realine
TechnologyWizcal, SaferMobility and Trendbrew to name a few. She
joined Salesforce.com in 2000, when it was a very small startup,
and she helped built it into a high growth Fortune 500 company
during her tenure of 14 years. In her most recent role as COO
(EVP) of Technology & Products, her responsibilities spanned from
delivering highly innovative products, while ensuring every employee
can do the best work in their careers. In 2014, she was awarded
the YWCA TWIN (Tribute to Women and Industry) Award, which
has long been considered one of Silicon Valley’s most prestigious
awards honoring women who exemplify leadership excellence in
executive-level positions.
Current offices held outside the group:
Member of the Board of the company CloudCherry
Member of the Board of the company Vavu
Expired offices held over the past five years:
None
Business address:
ESI Group – 100-102, avenue de Suffren, 75015 Paris, France
A graduate of Stanford University in the United States and École
Polytechnique in France, Yves de Balmann began his career at
Citibank where he served as North American Executive Director
for the Rates and Currency Derivatives Division, as well as his own
Trading Department. He joined Bankers Trust in 1988. After the
1999 merger of this company with Deutsche Bank, de Balmann
became Co-Head of the Global Investment Bank (GIB) Department
of Deutsche Bank and Vice Chairman and CEO of Deutsche Bank
Alex. Brown, the US division of the German bank, which brings
together investment banking and intermediation activities. He held
these positions until 2001. He also served on the Board of the Global
Corporates and Institutions Division (GCI). In 2002, he created the
company Bregal Investments, a first-rate international player in the
field of private equity, which he co-managed until 2012.
Current offices held outside the group:
Member of the Board of the company Exelon Corporation
Member of the Board of the company Finalsite
Member of the Board of the non-profit organization Sweetwater
Spectrum
Expired offices held over the past five years:
Member of the Board and non-executive Chairman of the
company IP Management
Member of the Board of the company Laureate Education
Business address:
ESI Group – 100-102, avenue de Suffren, 75015 Paris, France
2.3.3. OPERATION OF THE BOARD OF DIRECTORS
2.3.3.1. Internal rules of the Board
of Directors
The Board of Directors adopted internal rules which set out the
operational procedures of the Board and its Committees, as well
as the rules of professional ethics applicable to all Directors.
These internal rules were reviewed by the Board of Directors on
March 19, 2020 and were not subject to any amendment. They
can be consulted on the Company’s website (www.esi-group.
com). Each member receives a copy of these internal rules upon
being appointed.
In accordance with recommendations of the Middlenext Code
(R.7), these internal rules specify in particular the following points:
◗ the role of the Board and, as the case may be, operations subject
to the prior authorization of the Board;
◗ composition of the Board / independence criteria of the members;
◗ definition of the missions of any specialized committees set up;
◗ duties of the members (deontology: loyalty, non-competition,
disclosure of conflicts of interest and duty of abstention, ethics,
confidentiality, etc.);
◗ operation of the Board (frequency, convening, information of
the members, self-assessment, use of videoconferencing and
telecommunication facilities...);
◗ protection of corporate officers: liability insurance for corporate
officers;
◗ rules for determining the remuneration of directors;
◗ the question of succession plan of the management and key
people.
2.3.3.2. Professional ethics of Board
members and prevention
of conflicts of interest
Regarding professional ethics, the Board members refer to the
Director Charter set forth by the French Institute of Corporate
Directors (IFA) and appended to the internal rules of the Board
of Directors.
Concerning prevention and management of conflicts of interest,
the internal rules recommend that each Director strive to avoid
any potential conflict between his moral and material interests
and those of the Company. Each Director is bound to inform the
Board of any potential conflict of interest. Should the Director
be unable to avoid a conflict of interest, he must abstain from
taking part in the debates as well as any decision on the subjects
concerned.
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Board of Directors
In addition to comply with the procedure of regulated agreements
which are subject to prior authorization by the Board of Directors
in accordance with Article L 225-38 of the French Commercial
Code, the Board examines each year in accordance with Article
L 225-40-1 of the French Commercial Code, the regulated
agreements concluded and authorized during previous financial
years. During this annual review, the management informs the
Board, if necessary, of any significant new agreements between
the Company and a subsidiary relating to current operations
concluded under normal conditions, thus allowing the Board to
assess if these conditions are actually met. It is specified that the
persons directly or indirectly interested in one of these agreements
do not participate in this assessment.
To the Company’s knowledge and as at the date of this Universal
Registration Document, there is no conflict of interest between
the duties of the individual Board members with respect to the
Company and their private interest and other duties.
2.3.3.3. Duties and powers
of the Board of Directors
The Board of Directors is and must remain a collegial body
that collectively represents all shareholders. It must act in the
Company’s corporate interests under any and all circumstances.
The Board of Directors determines the guidelines for the Company’s
operations and oversees their implementation. Subject to the
powers expressly given, under the law, to General Meetings, the
Chairman and Chief Executive Officer and the Chief Operating
Officers and within the limit of the corporate object, the Board
of Directors may handle any matter relevant to the Company’s
operations and decides on all matters within its responsibility.
The Board of Directors is entrusted with the following responsibilities
in accordance with the law:
◗ preparing for and convening Annual General Meetings;
◗ preparing the resolutions to be voted on by the shareholders;
◗ deciding on the executive management structure of the
Company by opting to appoint as Chief Executive Officer either
the Chairman of the Board of Directors or another individual;
◗ determining the powers that may be delegated to a subsidiary’s
General Manager and setting monetary limits on these powers;
◗ preparing parent company and consolidated annual financial
statements and interim financial statements, the annual
management report and the interim financial report, as well
as approval of these documents;
◗ approving the report of the Board of Directors on corporate
governance;
◗ approving the agreements referred to in Article L. 225-38 of
the French Commercial Code;
◗ authorizing guarantees and similar undertakings;
◗ appointing or dismissing the Chairman, the Chief Executive
Officer and the Chief Operating Officers, and supervising their
management of the Company;
◗ allocating Directors’ compensation;
◗ creating committees within the Board of Directors, defining
their responsibilities and operational procedures, appointing
and determining the compensation of the members of these
committees;
◗ establishing and updating the internal rules of the Board of
Directors.
Certain transactions considered to be outside the scope of
day-to-day management of business are subject to the prior
authorization of the Board of Directors, as defined by the internal
rules (section 2.2.3.1 of this Universal Registration Document).
2.3.3.4. Organization of the Board
of Directors’ work
In accordance with the internal rules, the Directors shall each
receive, within a reasonable time before each meeting of the Board,
a file containing the agenda of the meeting, the draft minutes of
the previous meeting and any relevant documentation relating
to each of the items on the agenda. The Chairman answers to
requests from Directors for additional information. The Directors
consider as at this date, that they receive a complete and sufficient
information to fulfill their mission.
In addition, each issue raised during the session is thoroughly
discussed and debated among members before being put to
the vote at the end of the discussion. Lastly, the Directors are
regularly informed between meetings whenever the Company’s
situation requires, in accordance with Recommendation R.4 of
the Middlenext Code.
The Board meets as often as required for the interests of the
Company. The frequency and length of the Board of Directors’
meetings must be such as to allow members to conduct an in-depth
review and discussion of the topics falling under its responsibility.
The same principle applies to meetings of Board Committees.
In accordance with Middlenext Code Recommendation R.5, the
internal rules state that the Board of Directors meets at least
four times per year.
The Board systematically meets to:
◗ draw up the annual financial statements and prepare for the Annual
General Meeting called to approve said financial statements;
◗ report on half-year results;
◗ discuss the financial position, the cash position, the Company’s
obligations and the share buyback program.
The Board of Directors must also meet, when convened by the
Chairman, in the event of major operations such as the following:
◗ business acquisitions or sale;
◗ significant operations outside the Group’s established strategy;
◗ organic growth or restructuring operations.
The draft minutes of each Board of Directors meeting are formally
approved and signed by the Board members during the subsequent
meeting. The minutes set out the discussions, specify the decisions
made and mention the questions and reservations raised.
Furthermore, during each meeting any major facts or events
pertaining to the Company’s operations or its general situation
arising since the previous meeting are brought to the Board
members’ attention.
Board of Directors’ meetings are not valid unless at least half of
its members are in attendance. The Board’s decisions are made
by majority vote among the members present or represented. In
the event of a tie, the Chairman of the meeting has a casting vote.
In accordance with the provisions of the articles of association,
Board members who attend the Board meeting via videoconference
or teleconference are considered present as for the quorum.
This provision does not apply to decisions for which the French
Commercial Code expressly excludes the use of this process.
An attendance sheet is drawn up and signed by the Board members
attending the Board of Directors’ meeting.
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2.3.3.5. Works of the Board of Directors in 2019
In 2019, the Board of Directors held eight meetings including the Board retreat. The attendance rate was 91%.
Attendance of Directors at Board meetings in 2019
02/01/2019 03/06/2019
Board retreat
07/25 &
26/2019 04/12/2019 07/18/2019 09/18/2019 12/06/2019 12/18/2019
Dates of Board
of Directors’
meetings
Alain de Rouvray
Vincent Chaillou
Cristel de Rouvray
Charles-Helen des
Isnards
Éric d’Hotelans
Véronique Jacq
Rajani Ramanathan
Yves de Balmann
OVERALL
ATTENDANCE
% of
attendance
(Board
retreat
excluded)
% of
overall
attendance
86
100
100
100
100
57
86
86
89
88
100
100
100
100
63
88
88
91
Strategic
Committee
Audit
Committee
Nomination and
Governance
Committee
Compensation
Committee
Technology
and Marketing
Committee
Attendance
rate
Number of
meetings
Attendance
rate
Number of
meetings
Attendance
rate
Number of
meetings
Attendance
rate
Number of
meetings
Attendance
rate
Number of
meetings
100%
100%
100%
100%
50%
100%
100%
50%
2/2
2/2
2/2
2/2
1/2
2/2
2/2
1/2
-
-
-
100%
100%
60%
-
-
88%
-
87%
-
-
-
5/5
5/5
3/5
-
-
-
100%
3/3
-
-
100%
100%
-
100%
-
100%
-
-
3/3
3/3
-
3/3
-
-
-
-
-
100%
100%
-
-
-
3/3
3/3
100%
3/3
-
100%
-
-
100%
100%
100%
-
-
50%
100%
-
90%
4/4
4/4
4/4
-
-
2/4
4/4
-
-
Director
Alain de Rouvray
Vincent Chaillou
Cristel de Rouvray
Charles-Helen
des Isnards
Éric d’Hotelans
Véronique Jacq
Rajani Ramanathan
Yves de Balmann
OVERALL
ATTENDANCE RATE
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
REPORT ON CORPORATE gOvERNANCE
Board of Directors
In 2019, the Board of Directors deliberated on the following items:
Meeting date
Agenda
02/01/2019
03/06/2019
04/12/2019
◆ Compensation of corporate officers
◆ Capital increase following exercise of options during financial year ended on January 31, 2019
◆ Transition Update
◆ Budget approval for financial year 2018
◆ Closing of accounts for financial year ended on January 31, 2019
◆ Review of regulated agreements
◆ Situation of the Directors (reports of the Nomination and Governance Committee and the Compensation
Committee)
◆ Update of the Board of Directors' internal rules
◆ Update on delegations
◆ Convening of the Combined Shareholders’ Meeting
◆ Strategic orientations
07/18/2019
◆ Implementation of the share buyback program authorized by the Combined Shareholders’ Meeting
of July 18, 2019
◆ Allocation of free shares
◆ Composition of committees following the renewal of directors voted by the combined general meeting
of July 18, 2019
◆ Compensation of corporate officers
Board Retreat
07/25 & 26/2019
◆ Review of committees’ objectives
◆ Review of governance, succession plan and financing
09/18/2019
12/06/2019
12/18/2019
◆ Review and approval of 2019 first-half year results
◆ Update on activity and the budget process
◆ Report on Board Retreat and 2019/2020 planning for the Committees
◆ Stock Option Plan
◆ Evolution of the Joint Venture in China
◆ Approval of 2020 budget
◆ Stock option and free share plan
◆ Corporate Policy on Equal Employment Opportunity and Equal Salary
2.3.3.6. Board assessment
In accordance with Middlenext Code Recommendation R.11
the Board of Directors carried out during 2019 financial year, a
yearly internal self-assessment of its composition, organization
and mode of operation. This assessment was performed using
a questionnaire addressed to each Director. The results of the
self-assessment were shared during the Board Retreat. During
the ensuing debate, reflections were raised on the development
of governance and the implementation of performance indicators
linked to the new monitoring tools.
2.3.4. SPECIALIZED COMMITTEES
The Board of Directors may decide on the creation within its
Board of committees of which it determines the composition
(see section 2.3.1 above) and defines the missions in the internal
rules. The Committees carry out their activities under the Board’s
sole responsibility. The Board of Directors remains the decision-
making body. The purpose of the committees is to optimize the
discussions of the Board of Directors and to ensure it is prepared
to make its decisions. The Committees thus draw up proposals,
recommendations and opinions relative to their respective areas at
each of their meetings. In accordance with current legislation and
Middlenext Code Recommendation R.6, the following Committees
have been established within the Company:
◗ the Strategic Committee;
◗ the Audit Committee;
◗ the Compensation Committee;
◗ the Nomination and Governance Committee;
◗ the Technology and Marketing Committee.
The attendance of the Directors at the committees’ meetings
during financial year ended on December 31, 2019 is presented
under section 2.3.3.5 above.
2.3.4.1. Strategic Committee
The Strategic Committee is in charge of preparing the deliberations
of the Board of Directors on the major strategic challenges of
the Group, especially development orientations and financing as
well as examining the evolution of the Group’s business portfolio.
2.3.4.2. Audit Committee
In accordance with regulations in force, Board members having
executive roles within the Company are not allowed to serve as
members of the Audit Committee, and all members are independent.
In addition, the majority of its members have expertise in the
area of finance or accounting. The CEO, the Chief Operating
Officers and the Chief Financial Officer of the Company attend
the meetings of the Audit Committee as guests.
According to the regulation in force, the Audit Committee monitors
issues relating to the preparation and control of accounting and
financial information.
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Board of Directors
CONTENTS
Without prejudice to the powers of the bodies responsible for
administration, management and supervision, the Audit Committee
is responsible, in particular, for the following tasks:
◗ the Company’s policy on equal pay and equal wages for all
employees and between women and men (Article L. 225-37-1
of the French Commercial Code).
◗ monitoring the process of drawing up financial documents and,
if necessary, making recommendations to ensure their integrity;
◗ monitoring the effectiveness of internal control and risk manage-
ment systems as well as internal audit systems, if necessary,
in terms of the preparation and processing of financial and
accounting information, when such initiatives are compatible
with the Committee’s independence;
◗ issuing a recommendation regarding appointment of Auditors
by the General Meeting, as well as regarding the potential
reappointment of Auditors;
◗ monitoring Auditors as they fulfill their duties;
◗ ensuring Auditors’ independence;
◗ regularly reporting to the Board of Directors regarding on its
activities and the results of certification of financial statements,
how said certification has contributed to the integrity of financial
information, and the role that the Committee played in the
process. The Committee immediately reports any problems
that may arise.
2.3.4.3. Compensation Committee
The mission of the Compensation Committee is to prepare the
decisions of the Board of Directors concerning:
◗ the compensation policy of the Group, in particular for key
directors and corporate officers, based on information provided
by the Finance and Human Resources Departments;
◗ the general policy to grant options to subscribe or purchase
shares or free shares, reported in the annual report and the
special report dedicated to the shareholders at the General
Meeting, and the frequency of allocations;
◗ the allocation of stock options or purchase of shares in favor of
employees and/or corporate officers, as well as any pattern of
ownership of Employees (profit sharing...), to issue an opinion
on the legal and financial conditions of these plans, and the
list of beneficiaries related to strategic goals;
2.3.4.4. Nomination and
Governance Committee
The mission of the Nomination and Governance Committee is
to prepare the decisions of the Board of Directors concerning:
◗ the composition of the Board in view of the composition
and evolution of the shareholding of the Company, research
and evaluation of potential candidates, the opportunity of
reappointments;
◗ the procedure for selecting future independent Directors;
◗ the succession plan for corporate officers in case of unexpected
vacancy, hiring, nomination or dismissal of officers;
◗ the criteria of independence of Directors and assessment of
independence;
◗ the assessment procedures of the functioning of the Board
and its Committees;
◗ the recruitment of executives for key activities and functions
of the Company including members of the GEC;
◗ the implementation of a new organization of the Group’s
activities that may have an impact on the responsibilities of
the members of the GEC.
2.3.4.5. Technology and
Marketing Committee
The Technology and Marketing Committee is in charge of advising
the Board on aspects of product strategy, organizing the publishing
company (in particular, the methodologies of product management
and R&D), and evaluating potential partnerships or acquisitions
related to technology and marketing. The Committee also advises
the Board of Directors on all aspects of commercializing solutions.
2.3.5. RELATIONSHIPS WITH SHAREHOLDERS
The Board of Directors ensures that dialogue with the Company’s
shareholders can always take place under the best possible
conditions. In particular, Directors are invited to attend the General
Meeting and analyze the results of the vote on each resolution.
They pay special attention to negative votes so as to draw the
appropriate conclusions before the following General Meeting.
Moreover, in addition to the General Meeting, the Chief Executive
Officer, Chief Operating Officers and Chief Financial Officer regularly
meet with shareholders and investors at individual meetings and
during roadshows and conferences, provided that such events
do not take place during blackout periods.
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REPORT ON CORPORATE gOvERNANCE
Compensation paid to the Directors and the management
2.4. COMPENSATION PAID TO THE DIRECTORS
AND THE MANAgEMENT
2.4.1. COMPENSATION OF THE BOARD OF DIRECTORS
2.4.1.1. Compensation due to Directors for financial year ended on December 31, 2019
/ Summary table of compensation and other components
of compensation due to Directors (Table 3 of AMF nomenclature)
Compensation
Executive corporate officers
Cristel de Rouvray(1)
◆ Compensation as director
◆ Other compensation
Vincent Chaillou
◆ Compensation as director
◆ Other compensation
Non-executive corporate officers
Alain de Rouvray(5)
◆ Compensation as director
◆ Other compensation
Charles-Helen des Isnards
◆ Compensation as director
◆ Other compensation
Éric d’Hotelans
◆ Compensation as director
◆ Other compensation
Véronique Jacq
◆ Compensation as director
◆ Other compensation
Rajani Ramanathan
◆ Compensation as director
◆ Other compensation
Yves de Balmann
◆ Compensation as director
◆ Other compensation
TOTAL
◆ Compensation as director
◆ Other compensation
2019 financial year
(11 months)
2018 financial year
10,000
349,410(2)
6,000
266,496(4)
100,000
433,600(6)
42,000
N/A
30,000
N/A
12,325
N/A
31,650
N/A
16,650
N/A
248,625
1,049,506
28,000
114 ,894(3)
6,000
269,391(4)
10,000
529,544(6)
42,000
N/A
26,471
N/A
16,471
N/A
30,200
N/A
19,000
N/A
178,142
913,829
(1) Cristel de Rouvray was appointed CEO from February 1, 2019 and she also holds an office as Director.
(2) The other compensation due to Cristel de Rouvray for 2019 financial year for the other mandates exercised within the Group are presented
in detail under section 2.4.2 of this Universal Registration Document.
(3) Other compensation of Cristel de Rouvray was paid under the related party agreements as presented under sections 2.5.1 and 2.6 of the 2018
Registration Document. It is specified as necessary that at the General Meeting of July 18, 2018, Cristel de Rouvray did not take part in the vote
in the fourth resolution on the approval of the regulated agreement of which she is a party.
(4) Other compensation due to Vincent Chaillou for 2018 and 2019 financial year for the other mandates exercised within the Group
are presented in detail under section 2.4.2 of this Universal Registration Document.
(5) Following the dissociation of the functions of Chairman of the Board of Directors and CEO, Alain de Rouvray acts exclusively as Chairman
of the Board of Directors as from February 1, 2019 (see section 2.2.1 of the Universal Registration Document).
(6) Other compensation due to Alain de Rouvray for 2018 and 2019 financial year for the other mandates exercised within the Group
are presented in detail under section 2.4.2 of this Universal Registration Document.
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Compensation paid to the Directors and the management
CONTENTS
2.4.1.2. Compensation policy applicable
to Directors for 2020 financial year
As part of their mandate, the independent Directors receive
compensation, the total amount of which is set by the General
Meeting. Their distribution is made, on proposal of the Compensation
Committee to the Board of Directors, according to the following
criteria:
◗ frequency of meetings and participation;
◗ chairmanship of specialized Committees;
◗ special missions or strategic meetings (Board Retreat).
Non-independent Directors, including the Chairman of the Board
of Directors, receive fixed compensation without being subject
to presence condition.
The debates on the commercial strategy take place in particular
during the annual meeting of the Board called Board Retreat,
which gives rise to a specific compensation. On this occasion,
some directors are entrusted with specific missions which are
part of the commercial strategy of the Company or contribute to
the sustainability of the Company (for example on governance or
financing of the company). For these specific assignments, the
Directors receive additional compensation.
Concerning in particular the remuneration policy for the Chairman
of the Board of Directors, it is made up of a fixed remuneration
reflecting the reinforced role he plays in the context of the
transformation of the Company and the Group and changes
in governance (see section 2.2.1 of this Universal Registration
Document). His fixed remuneration includes the compensation
received for the mandate as Chairman of the Board of Directors
of the Company as well as for other mandates exercised within
the Group.
The draft resolutions (No. 7 and 8) approving the remuneration
policy attributable to the members and to the Chairman of the
Board of Directors and submitted to the General Meeting of June
25, 2020, are presented under section 2.4.2.3 below.
Below is a summary of the compensation policy attributable to the Directors and the Chairman of the Board of Directors for the 2020
financial year.
Allocation of compensation for directors (per year, in €) (1)
Strategic
Committee,
Audit
Committee,
Technology
and Marketing
Committee(3)
Compensation
Committee,
Nomination and
Governance
Committee(3)
Board of
Directors
Board
Retreat
Committee
chairmanship(3)
Specific
mission(4)
Independent director(2)
2,500
2,500
4,000
2,000
5,000
Director – Chief
Operating Officer(5)
Director – CEO(5)
Chairman of the Board
of Directors(5)
6,000
N/A
10,000
100,000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
On a case by
case basis,
depending on
the nature and
importance of
the mission
N/A
N/A
N/A
TOTAL COMPENSATION APPROVED BY THE SHAREHOLDERS’ MEETING OF JULY 19, 2019: €280,000(6)
(1) It should be noted that the table above presents exclusively the compensation attributable to the mandates as directors. It does not include
any compensation that may be awarded for other mandates exercised within the Group.
(2) Payment subject to an annual presence at 100%, failing which the amount is calculated in proportion to the annual presence.
(3) For each committee.
(4) For each mission.
(5) Fixed payment not subject to presence condition.
(6) It will be proposed to the General Meeting of June 25, 2020 in its 15th resolution to increase the total amount of attendance fees attributable
to the Directors for the 2020 financial year from €280,000 to €350,000.
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
REPORT ON CORPORATE gOvERNANCE
Compensation paid to the Directors and the management
2.4.2. COMPENSATION TO THE EXECUTIvE CORPORATE OFFICERS
2.4.2.1. Compensations paid to the Chairman of the Board, the Chief Executive Officer
and Chief Operating Officers for financial year ended on December 31, 2019
The following tables are prepared in accordance with the recommendation No. 2009-16 of the French Stock Market Authority (Autorité
des Marchés Financiers – AMF). They detail the amounts of remuneration and benefits paid, as well as the amounts due for the financial
year ended December 31, 2019.
/ 2.4.2.1.1. Summary table of compensation and stock options granted to each executive corporate
officer (Table 1 of AMF nomenclature)
(in €)
Alain de Rouvray
Chairman of the Board of Directors since February 1, 2019(3)
FY 2019(1)
(Feb.-Dec.)
FY 2018(2)
(Feb.-Jan.)
Compensation due for the year (detailed in 2.4.2.1.2 below)
533,600
539,544
Value of multi-year variable compensation granted during the year
Value of stock options granted during the year
Value of free shares granted during the year
Value of provisions for post-employment benefits
Cristel de Rouvray
CEO since February 1, 2019
Compensation due for the year (detailed in 2.4.2.1.2 below)
Value of multi-year variable compensation granted during the year
Value of stock options granted during the year
Value of free shares granted during the year
Value of provisions for post-employment benefits
Vincent Chaillou
Chief Operating Officer
Compensation due for the year (detailed in 2.4.2.1.2 below)
Value of multi-year variable compensation granted during the year
Value of stock options granted during the year
Value of free shares granted during the year
Value of provisions for post-employment benefits
Christopher St John
Chief Operating Officer
None
None
None
None
359,410
None
41,975
None
None
272,496
None
None
15,606
74,456
None
None
None
None
None
None
None
None
None
269,391
None
None
81,260
74,456
Compensation due for the year (detailed in 2.4.2.1.2 below)
234,292
243,064
Value of multi-year variable compensation granted during the year
Value of stock options granted during the year
Value of free shares granted during the year
Value of provisions for post-employment benefits
None
None
15,606
22,206
None
None
81,260
22,206
(1) February 1, 2019 - December 31, 2019.
(2) February 1, 2018 - Janvier 31, 2019.
(3) Following the dissociation of the functions of Chairman of the Board of Directors and CEO, Alain de Rouvray acts exclusively as Chairman of
the Board of Directors as from February 1, 2019 (see section 2.2.1 of the Universal Registration Document).
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CONTENTS
/ 2.4.2.1.2. Summary table of compensation to each executive corporate officer
(Table 2 of AMF nomenclature)
Alain de Rouvray
Chairman of the Board of Directors
since February 1, 2019*
(in €)
Fixed compensation
Annual variable compensation
Multi-annual variable compensation
Exceptional compensation
Compensation as Director
Benefits in kind
TOTAL
2019(1) (Feb.-Dec.)
2018(2) (Feb.-Jan.)
Amount due
Amount paid
Amount due
Amount paid
433,600
433,600
None
None
None
100,000
None
533,600
None
None
None
91,663
None
525,263
340,444
49,996
None
None
10,000
148,093
548,533
340,444
49,996
None
None
10,000
148,093
539,544
(1) Following the dissociation of the functions of Chairman of the Board of Directors and CEO, Alain de Rouvray acts exclusively as Chairman of
the Board of Directors as from February 1, 2019 (see section 2.2.1 of the Universal Registration Document).
Cristel de Rouvray
CEO since February 1, 2019
(in €)
Fixed compensation
Annual variable compensation
Multi-annual variable compensation
Exceptional compensation
Compensation as Director
Benefits in kind
TOTAL
Vincent Chaillou
Chief Operating Officer
(in €)
Fixed compensation
Annual variable compensation
Multi-annual variable compensation
Exceptional compensation
Compensation as Director
Benefits in kind
TOTAL
Christopher St John
Chief Operating Officer
(in €)
Fixed compensation
Annual variable compensation
Multi-annual variable compensation
Exceptional compensation
Compensation as Director
Benefits in kind
TOTAL
(1) February 1, 2019 - Decembre 31, 2019.
(2) February 1, 2018 - January 31, 2019.
44
2019(1) (Feb.-Dec.)
2018(2) (Feb.-Jan.)
Amount due
Amount paid
Amount due
Amount paid
290,210
49,357
-
-
10,000
9,843
290,210
0
-
-
0
9,843
359,410
300,053
None
None
None
None
28,000
None
28,000
None
None
None
None
28,000
None
28,000
2019(1) (Feb.-Dec.)
2018(2) (Feb.-Jan.)
Amount due
Amount paid
Amount due
Amount paid
182,004
37,800
None
40,000
6,000
6,692
272,496
182,004
0
None
0
0
6,692
188,696
198,550
16,983
None
40,000
6,000
7,858
198,550
16,983
None
None
6,000
7,858
269,391
229,391
2019(1) (Feb.-Dec.)
2018(2) (Feb.-Jan.)
Amount due
Amount paid
Amount due
Amount paid
162,846
34,650
None
33,616
None
3,180
162,846
0
None
0
None
3,180
177,650
27,460
None
33,616
None
4,338
177,650
27,460
None
33,616
None
4,338
234,292
166,026
243,064
243,064
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
REPORT ON CORPORATE gOvERNANCE
Compensation paid to the Directors and the management
/ 2.4.2.1.3. Summary table of compensation and other components of compensation
due to Directors (Table 3 of AMF nomenclature)
Please refer to section 2.4.1.1 above of the Universal Registration Document.
/ 2.4.2.1.4. Share subscription or purchase options granted to each executive corporate officer
by the Company and any Group company during financial year
ended on January 31, 2019 (Table 4 of AMF nomenclature)
Share subscription or purchase options granted during the year to each executive corporate officer
by the Company and any Group company
Value of
options on
the method
used for the
consolidated
financial
statements
Number of
options
granted
during the
year
Exercise
price
(in €)
Exercise
period
Plan No.
and date
Type of options
(purchase or
subscription)
None
19 bis
Subscription
41,975
20,000
27.04
February 1, 2022 –
February 1, 2027
None
None
Name of the executive
corporate officer
Alain de Rouvray
Chairman of the Board
of Directors since
February 1, 2019(1)
Cristel de Rouvray
CEO since February 1, 2019
Vincent Chaillou
Chief Operating Officer
Christopher St John
Chief Operating Officer
TOTAL
(1) Following the dissociation of the functions of Chairman of the Board of Directors and CEO, Alain de Rouvray acts exclusively as Chairman of
the Board of Directors as from February 1, 2019 (see section 2.2.1 of the Universal Registration Document).
/ 2.4.2.1.5. Share subscription or purchase options exercised to each executive corporate officer
by the Company and any Group company during financial year
ended on December 31, 2019 (Table 5 of AMF nomenclature)
Share subscription or purchase options exercised during the year to each executive corporate officer
by the Company and any Group company
Name of the executive corporate officer
Alain de Rouvray
Chairman of the Board of Directors since February 1, 2019(1)
Cristel de Rouvray
CEO since February 1, 2019
Vincent Chaillou
Chief Operating Officer
Christopher St John
Chief Operating Officer
TOTAL
Number
of options
exercised
during
the year
Plan No.
and date
Exercise
price
None
(1) Following the dissociation of the functions of Chairman of the Board of Directors and CEO, Alain de Rouvray acts exclusively as Chairman of
the Board of Directors as from February 1, 2019 (see section 2.2.1 of the Universal Registration Document).
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5
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7
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Compensation paid to the Directors and the management
CONTENTS
/ 2.4.2.1.6. Free shares allocated to each executive corporate officer during financial year
ended on December 31, 2019 (Table 6 of AMF nomenclature)
Free shares allocated by
the Shareholders’ Meeting
during the year to each
executive corporate officer
by the Company and
any Group company
Alain de Rouvray
Chairman of the Board of
Directors since February 1, 2019(1)
Cristel de Rouvray
CEO since February 1, 2019
Vincent Chaillou
Chief Operating Officer
Christopher St John
Chief Operating Officer
TOTAL
Free shares allocated to each executive corporate officer
Number of
shares
allocated
during
the year
Value of shares
on the method
used for the
consolidated
financial
statements
Plan No.
and date
Acquisition
date
Availability
date
Performance
conditions
None
None
None
None
None
None
None
None
None
None
None
None
No. 9
quinquies & 9
sexies
12/18/2019
No. 9
quinquies & 9
sexies
12/18/2019
500
10
500
10
1,020
31
31
31
31
12/18/2022
12/18/2021
12/18/2022
12/18/2021
2022
2023
2022
2023
No
No
No
No
(1) Following the dissociation of the functions of Chairman of the Board of Directors and CEO, Alain de Rouvray acts exclusively as Chairman of
the Board of Directors as from February 1, 2019 (see section 2.2.1 of the Universal Registration Document).
At the meeting of December 18, 2019, the Board of Directors
proceeded, on the proposal of the Compensation Committee, to
the free allocation of a maximum total number of 8,858 common
shares of the Company at a nominal value of €3 each, for the
benefit of beneficiaries, managers of the Company and its related
companies, of which 6,712 free shares under Plan 9 quinquies,
2,521 free shares under Plan 9 sexies.
In accordance with the terms of Plan 9 quinquies, the allocation
of bonus shares to the beneficiaries will become final at the
end of a 36-month vesting period. The definitive allocation of
free shares to the beneficiaries is subject to compliance with
conditions of presence by them, throughout the vesting period.
The Board will have the option to opt for the delivery of existing
shares or to be issued.
In accordance with the terms of Plan 9 sexies, the allocation of
free shares to the beneficiaries will become final after a vesting
period of 24 months. The definitive allocation of the free shares
to the beneficiaries is subject to compliance with conditions of
presence by them, throughout the vesting period. The Board will
have the option to opt for the delivery of existing shares or to be
issued. As of the definitive allocation, the beneficiaries will have
to keep these shares, without being able to sell them, during a
retention period of 24 months.
/ 2.4.2.1.7. Free shares vested to each executive corporate officer during financial year ended
on December 31, 2019 (Table 7 of AMF nomenclature)
Free shares allocated vested to each executive corporate officers
Alain de Rouvray
Chairman of the Board of Directors since February 1, 2019(1)
Plan No.
and date
Number of shares vested
available during the year
Acquisition
conditions
Cristel de Rouvray
CEO since February 1, 2019
Vincent Chaillou
Chief Operating Officer
Christopher St John
Chief Operating Officer
TOTAL
None
(1) Following the dissociation of the functions of Chairman of the Board of Directors and CEO, Alain de Rouvray acts exclusively as Chairman of
the Board of Directors as from February 1, 2019 (see section 2.2.1 of the Universal Registration Document).
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CONTENTS
REPORT ON CORPORATE gOvERNANCE
Compensation paid to the Directors and the management
/ 2.4.2.1.8. History of share subscription or purchase option allocations
(Table 8 of AMF nomenclature)
Date of Shareholders’ Meeting
Date of the Board of Directors’ meeting(s)
Number of options allocated
Of which:
◆ Alain de Rouvray, Chairman of the Board of Directors(1)
◆ Cristel de Rouvray, CEO
◆ Vincent Chaillou, Chief Operating Officer
◆ Christopher St John, Chief Operating Officer
Start date of exercise period
Expiration date
Exercise price (in €)
Type of option
Option exercised
Subscription or purchase options cancelled or exercised
Subscription or purchase options as at end of financial year
Plan No. 10:
06/26/2012
Plan No. 17:
07/24/2014
Plan No. 19:
06/29/2017 (2)
12/19/2012
02/07/2014
03/26/2015
07/22/2015
07/22/2015
03/11/2016
05/05/2017
07/18/2018
02/01/2019
12/18/2019
180,000
37,400
88,610
N/A
N/A
3,500
2,975
N/A
N/A
0
0
N/A
20,000
0
0
2016 to 2019
2017 to 2021
2021 to 2022
2020 to 2025
2023 to 2026
2026 to 2027
27.82; 24.42;
21.66; 27.17
27.17; 23.35;
50.92
42.97; 27.04;
29.12
Subscription
Subscription
Subscription
29,500
109,325
41,175
2,000
14,200
21,200
0
5,850
82,760
(1) Following the dissociation of the functions of Chairman of the Board of Directors and CEO, Alain de Rouvray acts exclusively as Chairman of
the Board of Directors as from February 1, 2019 (see section 2.2.1 of the Universal Registration Document).
(2) All plans, with the exception of Plan 19 ter, are subject to performance conditions (see also the table under section 2.1 of this Universal
Registration Document for further explanations on this exception).
Allocation of share subscription options
At the meeting of February 1, 2019, the Board of Directors
proceeded, pursuant to the authorization granted by the Combined
General Meeting of June 29, 2017, and on the proposal of the
Compensation Committee, to the allocation of a maximum of
20,000 share subscription options to the benefit of Cristel de
Rouvray, CEO, under Plan 19 bis.
The vesting of options granted under Plan 19 bis is subject to
two conditions:
◗ 25% of the options granted will vest subject to the condition
of continuous and effective presence of the beneficiaries as
employees of the Group since the grant date;
◗ 75% of the options granted will vest subject to the achievement
of Group performance conditions.
The options may be exercised from February 1, 2022 and for a
period of five years until February 1, 2027.
The maximum potential capital increase will be an overall nominal
amount of €60,000, corresponding to 20,000 new shares with
a par value of €3 each.
At the meeting of December 18, 2019, the Board of Directors
proceeded, pursuant to the authorization granted by the Combined
General Meeting of June 29, 2017, and on the proposal of the
Compensation Committee, to the allocation of 24,660 share
subscription options in total, under Plan 19 ter to be confirmed
depending on the choice given to beneficiaries to transform this
allowance into free shares.
The vesting of options granted under Plan 19 ter is subject to
one condition:
◗ 100% based on continuous and effective presence of the
beneficiaries as employees of the Group since the grant date.
The options may be exercised from December 18, 2022 and for
a period of five years December 18, 2027.
The maximum potential capital increase will be an overall nominal
amount of €73,980, corresponding to 24,660 new shares with a
par value of €3 each.
Exercise of share subscription options
The Board of Directors has noted that the number of new shares
issued as a result of the exercise of options during 2019 financial year
amounted to 600 shares with a nominal value of €3 representing
an increase in the share capital of the Company of an amount of
€1,800, which increased from €18,053,676 to €18,055,476.
Allocation of share purchase options
No grant of share purchase options was made during 2019
financial year.
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REPORT ON CORPORATE gOvERNANCE
Compensation paid to the Directors and the management
CONTENTS
Summary table of share subscription and purchase option plans to employees and corporate officers
Options to be
granted(1) as at
December 31,
2019
In share
capital
(%)
Options
granted(2) as at
December 31,
2019
Exercise
price
(in €)
In share
capital
(%)
Options
exercised as at
December 31,
2019
In share
capital
(%)
Subscription and
purchase option plans
No. 9 (SM 06/29/2006)
No. 10 (SM 06/26/2012)
No. 15 (SM 07/23/2013)
No. 17 (SM 07/24/2014)
142,600
No. 18 (SM 07/21/2017)
No. 19 (SM 07/18/2018)
TOTAL
297,753
91,390
531,743
0
0
0
0
0
0
2.37
4.95
1.52
8.84
0
38,700
375
2,100
Total: 41,175
0
4,900
0
16,300
Total: 21,200
0
82,760
145,135
N/A
27.82
24.42
27.17
N/A
27.17
23.35
50.92
N/A
42.97
-
0
0.64
0.01
0.03
0
0.08
0.27
0
1.37
2.4
0
18,750
750
10,000
0
0.31
0.01
0.17
0
0
2,000
0.03
0
0
31,500
0
0.52
SM: Shareholders’ Meeting.
(1) Options to be granted represent the difference between the number of stock-options authorized by the Shareholders’ Meeting and the
number of stock-options granted by the Board of Directors as at December 31, 2019.
(2) Options expired or cancelled resulting from an employee’s departure are deducted from the options granted as at December 31, 2019.
/ 2.4.2.1.9. Share subscription or purchase options granted to the top 10 non-corporate officers
beneficiary employees and options exercised by them during financial year ended on
December 31, 2019 (Table 9 of AMF nomenclature)
Share subscription or purchase options granted to the top 10 non-corporate
officers beneficiary employees and options exercised by them
Options granted during the year to the ten employees of the Company
and its Group which represent the largest number of options allocated
Options held and exercised during the year by the ten employees
of the Company and its Group which represent the largest number of options
purchased or subscribed
Total number of
options granted:
shares subscribed
or purchased
Weighted
average
price
(in €)
Plan
No.
9,260
29.12
19Ter
600
27.82
10
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
REPORT ON CORPORATE gOvERNANCE
Compensation paid to the Directors and the management
/ 2.4.2.1.10. History of free shares allocations (Table 10 of AMF nomenclature)
Date of Shareholders’ Meeting
Plan No. 6:
07/21/2016
Plan No. 7:
07/21/2016
Plan No. 8:
07/21/2016
Date of the Board of Directors’ meeting
07/21/2016
12/23/2016
08/01/2017
Number of shares allocated
25,000
2,275
9,000
Of which
◆ Alain de Rouvray, Chairman of the Board
of Directors since February 1, 2019(1)
◆ Cristel de Rouvray, CEO
◆ Vincent Chaillou, Chief Operating Officer
◆ Christopher St John, Chief Operating Officer
Date of delivery
Term of vesting period
Number of shares delivered
Number of shares cancelled or expired
Remaining shares as at January 31, 2019
N/A
N/A
5,000
5,000
From
07/21/2018
From
07/21/2020
20,836
0
4,164
N/A
N/A
0
0
12/23/2018
12/23/2020
1,962
313
0
N/A
N/A
0
0
From
08/01/2019
From
08/01/2021
6,499
0
2,501
Plans No. 9,
9 bis, 9 ter, 9 qua,
9 quin, 9 sexies:
07/18/2018
07/18/2018
07/18/2019
12/18/2019
54,043
N/A
N/A
2,520
2,520
From
07/18/2020
From
07/19/2022
0
507
53,534
(1) Following the dissociation of the functions of Chairman of the Board of Directors and CEO, Alain de Rouvray acts exclusively as Chairman of
the Board of Directors as from February 1, 2019 (see section 2.2.1 of the Universal Registration Document).
/ 2.4.2.1.11. Summary table of benefits or advantages to executive corporate officers
(Table 11 of AMF nomenclature)
Executive
corporate officers
Alain de Rouvray
Chairman of the Board
of Directors
Cristel de Rouvray
CEO
Vincent Chaillou
Chief Operating Officer
Christopher St John
Chief Operating Officer
Employment
contract
Supplemental
pension plan
Compensation or benefits due
or likely to be due following
termination or position change
Yes
No
Yes
No
Yes
No
X
X
Suspended
Suspended
X
X
X
X
X
X
X
X
49
1
2
3
4
5
6
7
8
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT2 2
REPORT ON CORPORATE gOvERNANCE
Compensation paid to the Directors and the management
CONTENTS
/ 2.4.2.1.12. Equity Ratio between the level of compensation of corporate officers
and the average and median compensation of employees of the Company
(Article L. 225-37-3 (6) and (7) of the French Commercial Code)
Alain de Rouvray,
Chairman and CEO until January 31, 2019
Compensation ratio compared
to average compensation of employees
Compensation ratio compared
to the median compensation of employees
Cristel de Rouvray,
CEO since February 1, 2019
Compensation ratio compared
to average compensation of employees
Compensation ratio compared
to the median compensation of employees
Vincent Chaillou,
Chief Operating Officer
Compensation ratio compared
to average compensation of employees
Compensation ratio compared to the median
compensation of employees
Christopher St John,
Chief Operating Officer
Compensation ratio compared
to average compensation of employees
Compensation ratio compared
to the median compensation of employees
Evolution of sales (€M)
2019(1)
2018(2)
2017(2)
2016(2)
2015(3)
9.59
9.06
9.04
11.1
10.66
10.33
6.47
7.49
4.85
5.61
N/A
N/A
3.79
4.46
4.18
4.02
4.83
146.2*
4.72
139.4
N/A
N/A
3.97
4.53
3.99
4.56
135.3
9.92
11.72
N/A
N/A
4.31
5.1
4.37
5.16
140.6
6.48
7.89
N/A
N/A
3.56
4.33
3.09
3.76
124.7
(1) For 2019, calculation based on total fixed compensation and benefits in kind – due to the 11-month fiscal year, reconstitution of a prorata
temporis over 12 months to maintain the comparability of the ratios presented.
(2) For 2016 to 2018, calculation based on total fixed compensation and benefits in kind.
(3) For 2015, calculation based on fixed compensation.
The average and median compensation of employees was determined on the basis of the workforce of French entities.
* 2019 sales proforma 12 months (January to December) to ensure data comparability.
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Compensation paid to the Directors and the management
/ 2.4.2.1.13. Summary table of compensation to executive corporate officers
The General Meeting to be held on June 25, 20120 will be called upon to approve the fixed, variable and exceptional components
constituting the total compensation and benefits of all kinds paid or granted with respect to the financial year ended on December 31,
2019 to the corporate officers of ESI Group pursuant to Article L. 225-100 of the French Commercial Code.
Compensation payable or granted for 2019 financial year to Alain de Rouvray, Chairman of the Board of Directors
Components
of the compensation
Fixed compensation as for the mandate
as director and Chairman of the Board
of Directors
Amount
or accounting
valuation
submitted
for approval
(in €)
100,000
Other fixed compensation
433,600
Variable annual compensation
Long term or deferred compensation
Exceptional compensation
N/A
N/A
N/A
Stock-options and performance shares
N/A
Benefits in kind
Severance pay
Retirement compensation
Non-compete compensation
Supplementary retirement plan
0
N/A
N/A
N/A
N/A
Description
Alain de Rouvray was paid €100,000 for his mandate as director
and Chairman of the Board of Directors (vs. €10,000 in 2018). This
increase was presented in the compensation policy approved by the
general meeting of July 18, 2019 in accordance with the description
under section 2.4.1.2 of the Company's 2018 registration document.
This increase is explained by the reinforced role which contributes
to the transformation of the Company
and the evolution of governance.
Alain de Rouvray’s fixed compensation due for his other mandates
within the Group for 2019 financial year was 433,600 euros.
No variable annual compensation payable to Alain de Rouvray
for his mandate as Chairman of the Board of Directors
and his other mandates exercised within the Group.
No long term of deferred compensation was granted
by the Board of Directors.
No exceptional compensation was granted by the Board
of Directors.
No stock-options nor performance shares were granted
by the Board of Directors.
Alain de Rouvray does not receive an allowance for a company
vehicle or accommodation.
Alain de Rouvray is not a beneficiary of any severance pay.
Alain de Rouvray is not a beneficiary of any retirement
compensation.
Alain de Rouvray is not a beneficiary any non-compete
compensation.
Alain de Rouvray is not a beneficiary of any supplementary
retirement plan.
1
2
3
4
5
6
7
8
9
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT2 2
REPORT ON CORPORATE gOvERNANCE
Compensation paid to the Directors and the management
CONTENTS
Compensation payable or granted for 2019 financial year to Cristel de Rouvray, Chief Executive Officer
Components
of the compensation
Fixed compensation
Amount
or accounting
valuation
submitted
for approval
(in €)
290,210
Variable annual compensation
49,357
Description
The fixed compensation payable to Cristel de Rouvray as Chief
Executive Officer and for her other mandates exercised within
the Group in respect of 2019 financial year amounts to €290,210.
The amount of the variable annual compensation payable
to Cristel de Rouvray is limited to 50% of his fixed compensation.
It is subject to an assessment based exclusively on quantitative
criteria related to the profitability of the Group. These objectives
are set at the beginning of the year by the Board of Directors
on the recommendation of the Compensation Committee.
The variable compensation is assessed by the Board of Directors
following the recommendation of the Compensation Committee
at the end of the year.
The variable compensation payable to Cristel de Rouvray as Chief
Executive Officer with respect to 2019 financial year amounts
to €49,367 which equals 31.5% of the maximum compensation.
Long term or deferred compensation
Exceptional compensation
N/A
N/A
No long term of differed compensation was granted
by the Board of Directors.
No exceptional compensation was granted
by the Board of Directors.
Compensation for director’s mandate
10,000
Stock-options and performance shares
20,000
The compensation for her director’s mandate amounts
to €10,000 for 2019 financial year. It amounted to €28,000
for 2018 financial year.
At the meeting of February 1, 2019, the Board of Directors
decided to allocate a maximum of 20,000 share subscription
options subject to presence and performance conditions.
Benefits in kind
Severance pay
Retirement compensation
Non-compete compensation
Supplementary retirement plan
9,843
The benefits in kind include an allowance for vehicle of €9,843.
N/A
N/A
N/A
N/A
Cristel de Rouvray is not a beneficiary of any severance pay.
Cristel de Rouvray is not a beneficiary of any retirement
compensation.
Cristel de Rouvray is not a beneficiary any non-compete
compensation.
Cristel de Rouvray is not a beneficiary of any supplementary
retirement plan.
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REPORT ON CORPORATE gOvERNANCE
Compensation paid to the Directors and the management
Compensation payable or granted for 2019 financial year to Vincent Chaillou, Chief Operating Officer
Components
of the compensation
Fixed compensation
Amount
or accounting
valuation
submitted
for approval
(in €)
182,004
Variable annual compensation
37,800
Long term or deferred compensation
N/A
Exceptional compensation
40,000
Compensation for director’s mandate
6,000
Stock-options and performance shares
510
Description
The fixed compensation payable to Vincent Chaillou
as Chief Operating Officer in respect of 2019 financial year amounts
to €182,004 (unchanged compared to 2018).
The amount of the variable annual compensation payable
to Vincent Chaillou is limited to 60% of his fixed compensation.
It is subject to an assessment based exclusively on quantitative
criteria related to the profitability of the Group. These objectives
are set at the beginning of the year by the Board of Directors
on the recommendation of the Compensation Committee.
The variable compensation is assessed by the Board of Directors
following the recommendation of the Compensation Committee
at the end of the year.
The variable compensation payable to Vincent Chaillou as Chief
Operating Officer with respect to 2019 financial year amounts
to €37,800 which equals 31.5% of the maximum compensation.
No long term of differed compensation was granted
by the Board of Directors.
At the meeting of March 19, 2020, the Board of Directors decided
to allocate an exceptional compensation of €40,000 for 2019
financial year. At the meeting of July 18, 2019, the Board of Directors
decided to allocate an exceptional compensation
of €40,000 for 2018 financial year.
The compensation for his director’s mandate amounts to €6,000,
this amount is unchanged compared to the 2018 financial year.
At the meeting of December 18, 2019, the Board of Directors
decided to allocate 510 free shares, subject exceptionally
to a presence condition only.
Benefits in kind
Severance pay
Retirement compensation
Non-compete compensation
Supplementary retirement plan
6,692
The benefits in kind include an allowance for vehicle of €6,692.
N/A
N/A
N/A
N/A
Vincent Chaillou is not a beneficiary of any severance pay.
Vincent Chaillou is not a beneficiary of any retirement
compensation.
Vincent Chaillou is not a beneficiary any non-compete
compensation.
Vincent Chaillou is not a beneficiary of any supplementary
retirement plan
.
1
2
3
4
5
6
7
8
9
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT2 2
REPORT ON CORPORATE gOvERNANCE
Compensation paid to the Directors and the management
CONTENTS
Compensation payable or granted for 2019 financial year to Christopher St John, Chief Operating Officer
Components
of the compensation
Fixed compensation
Amount
or accounting
valuation
submitted
for approval
(in €)
162,846
Variable annual compensation
34,650
Long term or deferred compensation
N/A
Exceptional compensation
Compensation for director’s mandate
Stock-options and performance shares
Benefits in kind
Severance pay
Retirement plan
Non-compete compensation
Supplementary retirement plan
33,616
N/A
510
3,180
N/A
N/A
N/A
N/A
Description
The fixed compensation payable to Christopher St John as Chief
Operating Officer in respect of 2019 financial year amounts to
€162,846 (unchanged compared to 2018).
The amount of the variable annual compensation payable
to Christopher St John is limited to 60% of his fixed compensation.
It is subject to an assessment based exclusively on quantitative
criteria related to the profitability of the Group. These objectives
are set at the beginning of the year by the Board of Directors
on the recommendation of the Compensation Committee.
The variable compensation is assessed by the Board of Directors
following the recommendation of the Compensation Committee
at the end of the year.
The variable compensation payable to Christopher St John as Chief
Operating Officer with respect to 2019 financial year amounts
to €34,650 which equals 31.5% of the maximum compensation.
No long term of differed compensation was granted
by the Board of Directors.
An exceptional compensation was granted by the Board
of Directors on March 19, 2020.
Christopher St John is not a member of the Board of Directors.
At the meeting of December 18, 2019, the Board of Directors
decided to allocate 510 free shares, subject exceptionally
to a presence condition only.
The benefits in kind include a housing allowance of €3,180.
Christopher St John is not a beneficiary of any severance pay.
Christopher St John is not a beneficiary of any retirement
compensation.
Christopher St John is not a beneficiary any non-compete
compensation.
Christopher St John is not a beneficiary of any supplementary
retirement plan.
2.4.2.2. Chief Executive Officer and Chief
Operating Officers’ remuneration
policy applicable in 2020
financial year
In accordance with Article L. 225-37-2 of the French Commercial
Code, the principles and criteria of definition and allocation of the
fixed, variable, exceptional components of the total remuneration
as well as benefits in kind payable to the Chief Executive Officer
and the Chief Operating Officers (the “executive corporate
officer(s)” ) for 2020 financial year are presented below and will
be subject to the approval of the Shareholders’ Meeting to be
held on June 25, 2020 (see section 2.4.2.3 below for the draft
resolutions). The remuneration policy applicable to the Chairman
of the Board of Directors is presented under section 2.4.1.2 above.
/ Principles of remuneration policy
The principles and criteria governing the remuneration policy of
the executive corporate officers and amounts were determined
by the Board of Directors upon the recommendation of the
Compensation Committee during its meeting dated March 18, 2020.
This remuneration policy has been established in accordance with
the principles of completeness, balance between the elements of
remuneration, benchmark, consistency, readability of the rules,
measurement and transparency (R.13) such as defined in the
Middlenext Code.
Lastly, this remuneration policy must remain consistent with the
Company’s performance, while ensuring that the objectives of the
executives are aligned with the Company’s medium-term strategy
and take into account the interests of Shareholders.
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
REPORT ON CORPORATE gOvERNANCE
Compensation paid to the Directors and the management
/ Remuneration structure
The Chief Executive Officer’s remuneration is structured as follows:
◗ a fixed annual part determined based on the level and complexity
of responsibilities, experience in the position and length of
service in the Group, as well as practices observed in groups
or companies of similar size;
◗ a variable annual part representing a target ratio of 50% of
the fixed remuneration: it is subject to an assessment based
exclusively on quantitative criteria related to the profitability
of the Group. These objectives are set at the beginning of the
year by the Board of Directors on the recommendation of the
Compensation Committee. The variable compensation is assessed
by the Board of Directors following the recommendation of the
Compensation Committee at the end of the year. In accordance
with Article L. 225-100 of the French Commercial Code, the
payment of variable or exceptional remuneration is subject to
the prior approval of this remuneration by the Shareholders’
Meeting.
The compensation structure for the Chief Operating Officers
consists of:
◗ a fixed annual part determined by taking into account the level
and difficulty of responsibilities, experience in the function,
seniority in the Group, and practices in groups or companies
of comparable size;
◗ a variable annual part representing a target ratio of 60% of
the fixed remuneration: it is subject to an evaluation based
exclusively on quantitative criteria related to the profitability
of the Group. These objectives are set at the beginning of the
year by the Board of Directors on the recommendation of the
Compensation Committee. The variable compensation is assessed
by the Board of Directors following the recommendation of the
Compensation Committee at the end of the year. In accordance
with Article L. 225-100 of the French Commercial Code, the
payment of variable or exceptional remuneration is subject to
the prior approval of this remuneration by the Shareholders’
Meeting.
Long term share-based compensation
The Group has defined its long-term compensation policy in
a global competitive strategy of loyalty and motivation of its
managers and employees with regard to market practices. Each
long-term compensation plan is subject to the decision of the
Board of Directors acting in accordance with the authorization
of the Shareholders’ Meeting.
Executive corporate officers can benefit from stock option plans
and free share plans offered as part of the Group’s loyalty and
motivation policy. The conditions for acquiring and holding
these plans apply in the same way to all beneficiaries, whether
corporate officers or not.
For stock option plans and free shares for the benefit of the Chief
Operating Officers, please refer to the tables in section 2.4.2.1.4
onwards.
Benefits in kind
Benefits in kind include a Company car or equivalent allowance.
Exceptional compensation
Very specific circumstances (for example because of their
importance for the Company, the involvement they require and
the difficulties they represent) could give rise to exceptional
remuneration granted to executive corporate officers. The award of
such remuneration would be exceptional, motivated and justified
by the Board. Its payment would be subject to the approval of
the Shareholders’ Meeting.
Other components of the executive corporate officers’
compensation
Severance pay
No executive corporate officer of the Company receives severance
pay.
Non-compete clause
No executive corporate officer has a non-compete clause in his
corporate office.
Supplementary pension plan
No executive corporate officer has a supplementary pension plan
other than mandatory pension plans.
Health benefits and reimbursement scheme
The executive corporate officers of the Company benefit from the
pension plan and reimbursement of health expenses applicable
to all employees.
Non-combination of employment contract
and corporate office
At the time of appointment to the position of executive corporate
officer, it is decided to suspend any existing employment contract
with the Company for the duration of the office.
As of the date of this Universal Registration Document, there is
no employment contract between the Chief Executive Officer
and the Company and the employment contracts of the Chief
Operating Officers with the Company have been suspended for
the duration of their terms of office.
2.4.2.3. Draft resolutions of the Board
of Directors pursuant to
Article L. 225-37-2 of the French
Commercial Code submitted
to the approval of the Combined
Shareholders’ Meeting
of June 25, 2020
Pursuant to Article L. 225-37-2 of the French Commercial Code,
the Board of Directors submits for the approval of the Combined
General Meeting of June 25, 2020, the principles and criteria for
the determination, distribution and allocation of the fixed, variable
and exceptional components of total compensation and benefits
of any kind attributable to executive corporate officers, see below
draft resolutions No. 7, 8, 9 and 10:
/ Resolution No. 7
The General Meeting, pursuant to Article L. 225-37-2 of the French
Commercial Code (paragraph 1), approves the remuneration
policy, attributable to members of the Board of Directors for
2020 financial year, as presented in the corporate governance
report of the Board of Directors referred to in Article L. 225-37
of the French Commercial Code and set out in section 2.4.1.2 of
the 2019 Universal Registration Document.
1
2
3
4
5
6
7
8
9
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT2 2
REPORT ON CORPORATE gOvERNANCE
Additional information in respect of corporate governance
CONTENTS
/ Resolution No. 8
/ Resolution No. 10
The General Meeting, pursuant to Article L. 225-37-2 of the French
Commercial Code (paragraph 1), approves the remuneration policy,
attributable to the Chairman of the Board of Directors for 2020
financial year, as presented in the corporate governance report
of the Board of Directors referred to in Article L. 225-37 of the
French Commercial Code and set out in section 2.4.1.2 of the 2019
Universal Registration Document.
The General Meeting, pursuant to Article L. 225-37-2 of the French
Commercial Code (paragraph 1), approves the remuneration
policy, attributable to the Chief Operating Officers for 2020
financial year, as presented in the corporate governance report
of the Board of Directors referred to in Article L. 225-37 of the
French Commercial Code and set out in section 2.4.2.2 of the
2019 Universal Registration Document.
/ Resolution No. 9
The General Meeting, pursuant to Article L. 225-37-2 of the French
Commercial Code (paragraph 1), approves the remuneration
policy, attributable to the Chief Executive Officer for 2020
financial year, as presented in the corporate governance report
of the Board of Directors referred to in Article L. 225-37 of the
French Commercial Code and set out in section 2.4.2.2 of the
2019 Universal Registration Document.
2.5. ADDITIONAL INFORMATION IN RESPECT
OF CORPORATE gOvERNANCE
2.5.1. REgULATED AgREEMENTS AND COMMITMENTS AND RELATED PARTY
TRANSACTIONS
2.5.1.1. Regulated agreements
and commitments
The Statutory Auditors’ special report on the regulated agreements
and commitments referred to in Articles L. 225-38 et seq. of the
French Commercial Code for 2019 financial year is set out under
section 2.6 below. To the best of the Company’s knowledge, there
are no other agreements and regulated commitments.
2.5.2. DELEgATIONS OF AUTHORITY
At the date of this Universal Registration Document, the Company’s
share capital amounted to €18,055,476. It was divided into
6,018,492 shares with a nominal value of €3 each, all of the same
class, fully paid up.
2.5.1.2. Transactions with related parties
Details of transactions with related parties can be found in note 11
to the consolidated financial statements in Chapter 6 of this
Universal Registration Document.
Apart from the share subscription or purchase option plans and
the allocation of bonus shares described in section 2.4.2.1.8, there
is no financial instrument to access the Company’s share capital.
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
REPORT ON CORPORATE gOvERNANCE
Additional information in respect of corporate governance
Table summarizing currently valid delegations granted to the Board of Directors and use of such
delegations during 2019 financial year
Resolution
number
Purpose
Term
Expiration
date
Maximum
Combined General Meeting of June 29, 2017
Resolution 10
Grant of stock
subscription options(1)
38
months
August
2020
Resolution 11
Grant of stock
purchase options(1)
38
months
August
2020
Not to exceed 3%
of the Company’s share
capital at the date of
the Combined General
Meeting, i.e. 180,000 shares
Not to exceed 5%
of the Company’s share
capital at the date of
the Combined General
Meeting, i.e. 299,600 shares
Used in 2019 and
available as at
December 31, 2019
Options granted
at the date of this
Universal Registration
Document: 88,610
Options remaining:
91,390
Options granted
at the date of this
Universal Registration
Document: 0
Options remaining:
299,600
Combined General Meeting of July 18, 2018
Resolution 13
Resolution 14
Share capital reduction
by canceling shares
purchased by the Company
under Article L. 225-209
of the French
Commercial Code(1)
Grant of free shares to
eligible employees and
executive corporate
officers of the Company
and affiliated companies(1)
26
months
September
2020
Not to exceed 10%
of the Company’s share
capital per 24-month
period
None
38
months
September
2021
Not to exceed 60,000
shares representing 1%
of the share capital
as of the date of the
Combined General Meeting
Free shares granted
during the year 2019:
54,043
Free shares to be
allocated: 5,957
Combined General Meeting of July 18, 2019
Resolution 14
Company’s purchase
of its own shares(1)
18 months January
2021
Resolution 15
Resolution 16
Resolution 17
Increase of the share
capital via the issue
of shares of common
stock or any securities
convertible into equity
with maintenance of the
shareholders’ preferential
subscription rights
Increase of the share
capital via the issue of
shares of common stock
or of any securities
convertible into equity
through public offerings
with cancellation of the
shareholders’ preferential
subscription rights
Increase of the issue
amount in the event
of over-demand
26
months
September
2021
26
months
September
2021
None
None
None
Not to exceed 10%
of the Company’s
share capital
Global amount of capital
increases: less than
€20,000,000
Nominal amount
of the debt securities:
less than €300,000,000
Global amount of capital
increases: less than
€20,000,000
Nominal amount
of the debt securities:
less than €300,000,000
26
months
September
2021
Not to exceed 15% of the
value of the original issue
(referred to in resolutions
15 and 16), and the total
ceiling of €20,000,000
None
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT2 2
REPORT ON CORPORATE gOvERNANCE
Additional information in respect of corporate governance
CONTENTS
Resolution
number
Resolution 18
Purpose
Increase of the share
capital by the capitalization
of premiums, reserves,
profits and other amounts
Term
26
months
Expiration
date
September
2021
Used in 2019 and
available as at
December 31, 2019
None
None
Maximum
Not to exceed the total
amount of reserves,
premiums and profits
existing at the time of
the capital increase or a
ceiling of €100,000 (that
might be reduced to the
amount of capital increases
undertaken pursuant to
resolutions 15 to 20)
Not to exceed 10% of the
Company’s share capital,
and the total ceiling of
€20,000,000
26
months
September
2021
Resolution 19
Resolution 20
Resolution 21
Issue of shares without
preferential subscription
rights as compensation
for contributions of shares
equivalents granted
to the Company as part
of a contribution in kind
Increase of the share
capital without preferential
subscription rights through
private placement
Increase of the share
capital by issuing shares
reserved for employees
enrolled in the employee
savings plan
26
months
September
2021
Not to exceed 20% of the
Company’s share capital,
and the total ceiling of
€20,000,000
None
26
months
September
2021
Not to exceed 2% of the
Company’s share capital
None
(1) Renewal of the delegation submitted to the vote of the Shareholders’ Meeting on June 25, 2020.
2.5.3. PROvISIONS OF THE ARTICLES OF ASSOCIATION CONCERNINg
THE PARTICIPATION OF SHAREHOLDERS IN gENERAL MEETINgS
General Meetings (Article 18
of the articles of association)
In accordance with Article 18 of the articles of association and
legislation in force, decisions are made collectively by shareholders in
General Meetings classified as either Ordinary or Extraordinary
General Meetings.
The procedures for convening and holding General Meetings are
governed by French law. Meetings are held at the head office or
at any other location indicated in the Meeting notice.
Ordinary General Meetings are convened to make all decisions
that do not require amendments to the articles of association.
They occur at least once a year, within six months from the end
of the previous financial year.
Only Extraordinary General Meetings have the power to amend
any provision set forth in the articles of association. However,
such Meetings may not increase the obligations of shareholders,
except in the event of transactions stemming from any valid
consolidation of shares.
If there are multiple categories of shares, the rights attached to
the shares of a certain category may not be changed without
the approval of an Extraordinary General Meeting open to all
shareholders and, in addition, without further approval from a
Special Meeting open only to those shareholders holding shares
belonging to the category in question.
All shareholders are entitled, upon presentation of proof of their
identify, to take part in Meetings by attending them in person,
by video conference or by other means of electronic telecom-
munication or transmission, or by returning the mail-in ballot or
designating a proxy.
The right to attend or be represented at the General Meeting is
subject to shares being recorded for accounting purposes in the
name of the shareholder or the intermediary registered on behalf
of the latter, by 12:00 am Paris time, two working days prior to
the General Meeting:
◗ either in the registered share account kept by the Company;
◗ or in bearer share accounts kept by the authorized intermediary.
A participation certificate must be established by the authorized
intermediary on the basis of this registration and attached to the
mail-in ballot/proxy form or the access card application submitted
in the name of the shareholder.
In accordance with the conditions set forth above, the legal
representatives of shareholders deemed legally incompetent
and individuals representing legal persons that hold shares in
the Company may take part in General Meetings, regardless of
whether or not they are shareholders themselves.
Proxy forms and mail-in ballots must be prepared and sent out
in accordance with legislation in force.
An attendance sheet is filled out for each Meeting. This attendance
sheet must be duly signed by the shareholders present and by
the proxies and must be certified as accurate by the officers of
the Meeting.
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REPORT ON CORPORATE gOvERNANCE
Additional information in respect of corporate governance
General Meetings are chaired by the Chairman of the Board of
Directors and, in the absence thereof, by the Board member appointed
to replace him or her.
The two shareholders present at the Meeting who represent the
largest number of shares, either on their own behalf or as proxies,
are appointed to serve as scrutineers, provided that they accept the
responsibility.
The officers of the Meeting, thus designated, are responsible for
appointing a secretary who need not be a shareholder.
Quorum and majority
(Article 19 of the articles of association)
The Ordinary General Meeting cannot validly conduct business
when first convened unless the shareholders present or represented
account for at least one-fifth of shares with voting rights.
When convened a second time, no quorum is required.
The Meeting issues decisions by a majority vote of the shareholders
present or represented.
The Extraordinary General Meeting cannot validly conduct business
unless the shareholders present or represented account for at
least one-fourth of shares with voting rights when first convened,
and one-fifth when convened a second time. If this quorum is not
attained, the second General Meeting may be postponed for a
maximum of two months from the date at which it was initially
convened.
The Extraordinary General Meeting issues decisions by a two-thirds
majority vote of the shareholders present or represented.
Special General Meetings cannot validly conduct business unless
the shareholders present or represented account for at least half
of shares with voting rights when first convened, and one-fourth
when convened a second time. If this quorum is not attained, the
second General Meeting may be postponed for a maximum of
two months from the date at which it was initially convened, the
one-fourth quorum remaining necessary.
Special General Meetings issue decisions by a two-thirds majority
vote of the shareholders present or represented.
2.5.4. FACTORS THAT MAY HAvE AN IMPACT IN THE EvENT
OF A PUBLIC OFFERINg
Pursuant to Article L. 225-37-5 of the French Commercial Code, the
following points are likely to have an impact on the public offering:
◗ voting rights attached to ESI shares with regard to the employee
savings plan are exercised by the ESI FCPE;
◗ the structure of the share capital as well as direct or indirect
investments of which the Company is aware and all such informa-
tion is included in section 8.2.4 of this Universal Registration
Document under the heading “Change in the breakdown of the
Company’s share capital over the past three financial years”;
◗ there are no statutory restrictions on the exercise of voting
◗ the rules for appointing and removing members of the Board
of Directors are those of common law;
◗ concerning the powers of the Board of Directors, current
authorizations are described in the table summarizing powers
delegated with regard to share redemption and capital increases
in section 2.5.2 of this Universal Registration Document;
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rights and share transfers;
◗ to the Company’s knowledge, there are no agreements or
other commitments signed by the shareholders other than
those mentioned in section 8.2.4 of this Universal Registration
Document under the heading “Shareholders’ agreements”;
◗ there are no securities giving special control rights other than
double voting rights stipulated in Article 9 of the articles of
association and mentioned in section 8.1.2 of this Universal
Registration Document under the heading “Double voting
rights (Article 9 of the articles of association)”;
◗ there are no restrictions in the bylaws on the exercise of voting
rights and the transfer of shares;
◗ any amendments to ESI Group’s articles of association are
made in accordance with legal requirements and regulations;
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◗ there are no agreements entered into by the Company that
are modified or terminated in the event of a change of control
of the Company other than the syndicated loan agreement
presented in Chapter 6, notes 7.1.2 and 7.4 of this Universal
Registration Document;
◗ there are no agreements providing for compensation in the
event of the departure of members of the Board of Directors.
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REPORT ON CORPORATE gOvERNANCE
Statutory Auditors’ report on regulated agreements and commitments
CONTENTS
2.6. STATUTORY AUDITORS’ REPORT ON REgULATED
AgREEMENTS AND COMMITMENTS
This is a free translation into English of the Statutory Auditors’ report on regulated agreements issued in the French language and
is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in
accordance with, French law and professional auditing standards applicable in France.
(Annual General Meeting for the approval of the financial statements for the year ended December 31, 2019)
To the shareholders,
In our capacity as Statutory Auditors of your Company, we hereby present our report on regulated agreements and commitments.
It is our responsibility to communicate to you, based on information provided to us, the characteristics, the principal terms and conditions,
and the grounds of the interest to the Company of those agreements and commitments brought to our attention or which we may
have discovered during the course of our audit, without expressing an opinion on their usefulness and appropriateness or identifying
any other such agreements and commitments. It is your responsibility, pursuant to Article R. 225-31 of the French Commercial Code,
to assess the interest involved in the conclusion of these agreements and commitments for the purpose of approving them.
Our role is also to provide you with the information stipulated in Article R. 225-31 of the French Commercial Code relating to the imple-
mentation during the past fiscal year of any agreements and commitments previously approved by the Shareholders’ General Meeting.
We conducted the procedures we deemed necessary in accordance with the professional guidelines of the French National Institute
of Statutory Auditors (Compagnie nationale des commissaires aux comptes) relating to this engagement. These procedures consisted
in verifying the concordance of the information provided to us with the relevant source documents.
AgREEMENTS AND COMMITMENTS SUBMITTED FOR THE APPROvAL
OF THE SHAREHOLDERS’ MEETINg
Agreements and commitments authorized and agreed during the fiscal year
Pursuant to Article L. 225-28 of the French Commercial Code, we have not been advised of any agreement authorized and concluded
during the fiscal year to submit for approval to the Shareholders’ Meeting.
AgREEMENTS AND COMMITMENTS ALREADY APPROvED
BY THE SHAREHOLDERS’ MEETINg
Agreements and commitments authorized during previous fiscal year
We have been informed of the execution during the fiscal year of the following agreement and commitment, already approved by the
Shareholders’ Meeting of July 18, 2019 pursuant to the special report of the statutory accounts dated May 22, 2019:
/ Pledge agreements among which in particular a pledge of all the shares
that the Company holds or will hold in the share capital of ESI ITI GmbH
Terms and conditions
The Board of Directors in its meeting dated December 19, 2018, authorized the signing by the Company of pledge agreements, among
which in particular the pledge of all the shares that the Company holds or will hold in the share capital of ESI ITI GmbH, to guarantee its
obligations of reimbursement and payment under the syndicated loan agreed on December 20, 2018 under which the Company obtained
(i) a facility of up to a maximum amount of €30,000,000 (ii) a revolving credit facility with a maximum principal amount of €10,000,000,
and (iii) to authorize the establishment of an unconfirmed revolving credit facility of a maximum principal amount of €5,000,000.
Persons concerned
◗ Vincent Chaillou, ESI Group Director and COO and Managing Director of ESI ITI GmbH; and
◗ Christopher St John, ESI Group Director and COO and Managing Director of ESI ITI GmbH, a Company’s subsidiary.
Reason justifying the Company’s interest
These security agreements condition the signing of the syndicated loan agreement as described above and thus allow the Company
to finance itself.
Neuilly-sur-Seine and Paris-La Défense, April 23, 2020
The Statutory Auditors
PricewaterhouseCoopers Audit
Thierry Charron
Ernst & Young Audit
Frédéric Martineau
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3
RISKS AND
RISK MANAGEMENT
3.1. RISK FACTORS AND OPPORTUNITIES
3.1.1. Risk analysis and evaluation method
3.1.2. Strategic and operational risks
3.1.3. Opportunities
3.2. INTERNAL CONTROL
AND RISK MANAGEMENT PROCEDURES
3.2.1. Control environment
3.2.2. Internal control organization
3.2.3. Risk management
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In accordance with the resolution of the General Meeting of July 18, 2019, the Group now closes its financial
statements at 31 December of each fiscal year.
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Risks and Risk management
Risk factors and opportunities
CONTENTS
3.1. Risk FaCtORs and OPPORtUnities
The Group has reviewed the major risks and opportunities that
could have a significant effect on its business, financial position
or results. The data presented below constitute the main strategic
and operational risks for the Group. Non-specific risks are not
detailed in this document.
3.1.1. Risk anaLYsis and eVaLUatiOn metHOd
ESI’s risk management system is organized in 5 stages, according to the methodology described below:
STAGE 1
Context & Risk
Identification
STAGE 5
Risk Monitoring
& lifecycle control
STAGE 2
Risk Analysis
STAGE 4
Risk Mitigation
STAGE 3
Risk Assessment
The risks listed on the following pages have been assessed (Stage
2 and 3) in relation to their occurrence and their impact on ESI’s
activity. The combination of these two criteria makes it possible to
identify what is known as the “exposure level”, which then implies
the implementation of measures to control these risks (Stage 4).
In each category, risk factors are ranked in descending order of
importance, considering the probability of their materialization
and the estimated magnitude of their impact and after taking into
account the mitigation measures already implemented by ESI.
3.1.2. stRategiC and OPeRatiOnaL Risks
3.1.2.1. Competition (competitive edge)
3.1.2.2. Management of key personnel
Recent movements in the Virtual Prototyping market with acquisitions
and concentration of competitors could be perceived as a risk
given the economic and/or technological power of large groups.
Impact: a strong consolidation of the sector or a reduction in the
Group’s scientific leadership could lead to a loss of market share.
Exposure level: high.
Mitigation actions: the specific nature of ESI Group’s business and
its unique positioning in the Virtual Prototyping field make it very
difficult to attempt to precisely define its market. The complexity
of the problems on which the Group focuses, the long experience
it has acquired by working in close partnership with the largest
industrial, its significant investments in research and development,
the wide range of solutions it offers and the many acquisitions it
has made over the years are all barriers for any newcomer who
would like to enter its market.
The capacity for innovation is one of the major pillars of the
ESI Group’s competitiveness, particularly through the launch of
high added-value solutions for customers, based on a special
ecosystem allowing the active participation of all R&D players, in
coordination with the Scientific Department and its Committee.
Also, ESI has implemented steering and governance systems to
take advantage of our sources of innovation (ecosystem) in order
to ensure a better market launch.
The expertise and experience of key personnel are currently
being shared broadly among qualified teams. No employee is the
exclusive owner of a code or piece of knowledge; in other words,
all this information is shared among the teams. The Group’s success
depends in large part on its ability to attract, retain, and motivate
quality employees, with a constant focus on aligning skills with
the Group’s needs and challenges.
The ever-increasing volatility of skills in the technology sector,
particularly due to the changing expectations of the new generation
of candidates, poses a risk of a lack of key skills for the concerned
business areas.
Impact: the non-access or disappearance of certain internal
knowledge on specific areas could represent a challenge to maintain
the necessary pace of innovation demanded by the market.
Exposure level: high.
Mitigation actions: ESI has implemented a retention and loyalty
policy, by setting up employee shareholding plans (stock options
and free shares) and talent development plans. No employee is
the sole owner of a code or know-how that is not shared with its
teams. The ecosystem created by ESI Group enables it to have
access to human resources requirements to ensure the continuity
of the knowledge required to manage future innovations.
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Risks and Risk management
Risk factors and opportunities
3.1.2.3. Intellectual property
Due to the nature of the high added-value activities resulting from
ESI’s ecosystem experience, the company is completely dependent
on its software, which is its main asset to guarantee a source of
income and continuous growth. Despite the implementation of
protection systems (patents, trademarks, copyrights, etc.), the
company may be exposed to risks such as counterfeiting/piracy of
specific products by individuals or companies, claims to intellectual
property rights, fraudulent use of our technologies, etc.
Impact: the loss of intellectual property of software and solutions
would result in an automatic loss of turnover and the impossibility
to guarantee and meet financial obligations towards stakeholders.
Exposure level: high.
Mitigation actions: below are the two main aspects of this risk
category:
/ Counterfeiting of products
marketed by the Group
The passwords used to access the Group’s products are gener-
ated by ESI Group regardless of how the software is distributed
(distributors and agents) and are linked to the FlexNet Publisher
software (formerly known as Flexlm), which represents the world
standard for secure computer codes. In the event that a way
around the FlexNet Publisher password is found, ESI Group also
uses, for several products, a counterfeit detection tool together
with a legal assistance service to prosecute counterfeiters.
/ Risk related to claims by third parties as to
the ownership of codes published by the Group
With regard to the risk of third-party claims, the Group’s software
products are, broadly speaking, either developed within the Group
or acquired through mergers or acquisitions. In rare cases, they
are the result of development contracts signed with third parties.
As for the codes developed in-house, the Group’s subsidiaries
retain ownership of the intellectual property under the employment
contracts and supplementary provisions in accordance with
labor law. Where necessary, development agreements are signed
between ESI Group and its subsidiaries in charge of development
in order to ensure that ESI Group is considered the owner of the
intellectual property.
For software code acquired through an external growth operation,
an intellectual property audit is conducted beforehand starting
with the analysis of local intellectual property laws. Furthermore,
acquisition agreements always include warranties of title. This
particularly allows the Company to avoid buying an empty shell or
software code with too many strings attached. Likewise, the Group
relies on a systematic review process for software development
contracts made with third parties, such as university partners, in
order to ensure effective, risk-free transfer of intellectual property in
the event that an ESI Group contract ensuring transfer is not used.
3.1.2.4. International economic
and political environment
The global economic, commercial, and social as well as geo-political
context may influence the Group’s results and revenue growth. In
particular, the economic context and limited visibility may have
an impact on customer investments and lead to lengthened
sales cycles.
Impact: global economic tensions, including those between the
USA and China, could impact the Group’s growth. This could lead
to the implementation of protection policies in certain areas that
would slow down the deployment of the Company’s solutions.
Exposure level: important.
Mitigation action: the Group’s presence in many countries protects
it from the adverse effects of unfavorable local economic conditions.
Special point related to the coronavirus (COVID-19) outbreak: In
the short-term, the disastrous coronavirus pandemic is expected
to somewhat impact our 2020 Fiscal year. However, the resilience
of ESI’s business model largely anchored on renewable and mission
critical software licenses will help the Company to manage risks.
3.1.2.5. Dependence on a single client
or sector
Most of ESI subsidiaries are confronted with the reality of managing
a “major customer” with a significant weight in terms of turnover
and growth. These customers are generally part of the Ground
Transportation sector.
Impact: the Ground Transportation sector alone accounts for
59% of order intake.
Exposure level: important.
Mitigation actions: the Group’s intention is to be totally independent,
both geographically and by sector. To this end, the Group has
defined 4 main business sectors to reduce the impact of dependence
on a single industrial sector, which are the subject of a dedicated
strategic plan combined with a business development plan.
3.1.2.6. Information security
ESI Group’s value chain, which includes R&D, Design, Development,
Validation, Services and Delivery of our software and solutions,
relies heavily on an IT infrastructure that is of paramount
importance in the processing, transmission and storage of data
related to internal and external operations. Every day, the company
processes a significant amount of sensitive data transmitted by
our customers for the realization of projects and the improvement
of solutions. Given that “zero risk” does not exist, the company
is aware that it is continuously exposed to computer attacks of
all kinds (viruses, fraudulent e-mails, phishing, financial fraud,
industrial espionage, etc.).
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Risk factors and opportunities
CONTENTS
The General Data Protection Regulation (GDPR) adds to the
landscape of legal requirements in this area.
Impact: failure to comply with client requirements concerning the
confidentiality, integrity and availability of information entrusted
to the group could have negative consequences on long-term
relationships with customers and on ESI’s reputation.
Exposure level: important.
Mitigation action: ESI is committed to implementing the requirements
of the international standard ISO 27001 to set up an Information
Security Management System (ISMS), based on appropriate risk
management of its “assets”, to guarantee the Confidentiality,
Integrity and Availability of information.
In the same approach, and in order to take into account the specific
requirements of the Automotive sector, ESI Group obtained TISAX
(Trusted Information Security Assessment Exchange) certification
in 2019 for ESI MECAS (Czech Republic) and ESI GmbH (Germany)
and will be extended to ESI Hispania (Spain) in 2020. Based on
an Information Security Management System (ISMS) close to ISO
27001, this certification is adapted to the requirements of the
Automotive sector in order to secure the creation and exchanges
between the different stakeholders.
The Global Quality Management System (ISO 9001), which
reached a coverage rate of 95.31% of employees in 2019, takes
into account these requirements (TISAX, ISMS, GDPR) in order
to integrate them into operational processes.
Finally, to reduce this risk, the Company has set up a comprehensive
cyber insurance coverage.
3.1.3. OPPORtUnities
Technological changes and the ability
to respond rapidly to clients’ needs
ESI Group’s business is based on a wide knowledge and customer
proximity that aims to meet clients’ innovation needs in the different
industrial sectors suitable for implementing Virtual Prototyping.
Nevertheless, to protect against the risk of disruptive technological
changes in all the layers of the Group’s products and services,
the following networks have been developed:
◗ the Scientific Committee;
◗ strategic partnerships with customers working in co-creation
with the Group;
Acquisitions and strategic investments
/ Acquisitions of assets and/or companies,
and creations of joint-ventures or partnerships
Since its creation, the Group has acquired companies or assets
to complete its offer and to create business synergies. These
acquisitions and strategic collaborations (joint venture with BIAM,
Beijing Institute of Aeronautical Materials) enable the Group to have
a unique positioning and to be at the cutting edge of technology.
Established partnerships with industrial leaders and the best
universities and technological institutes reinforce this positioning.
◗ academic partnerships providing access to the latest technological
/ Strategic investments
information;
◗ distribution partnerships with key hardware and Cloud companies
that offer advance access to the latest technologies.
In addition, the Group takes part in innovation projects co-financed
by European Union bodies, competitiveness clusters in France,
and American research projects. Brought together, these projects
enable ESI to produce increasingly innovative solutions in a
timely manner.
Research and development investments are the Group’s technological
pillar. These investments are maintained at a high level since several
years (approximately 31.4% of the Licenses revenues in 2019) to
innovate, in particular with the development of new technologies
such as Big Data or Artificial Intelligence.
Also, these investments support the “PPL” (Product Performance
LifecycleTM approach. Founded on the shift from the Virtual
Prototype to the connected Hybrid TwinTM, the new solutions
of the Group enable, for example, the predictive maintenance
as well as the manufacturing and the assisted or autonomous
driving. These solutions meet the challenges of the Industry 4.0
with a complete control of the product lifecycle, from its launch
to its withdrawal, passing through the manufacturing of the new
product and the operational monitoring of the used product
which integrates the in-service damages and potential repairs.
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Risks and Risk management
Internal control and risk management procedures
3.2. inteRnaL COntROL and Risk management PROCedURes
3.2.1. COntROL enViROnment
General organization
Board Retreat
ESI Group is a multinational corporation that includes 31 subsidiaries
(the “subsidiaries”), 26 of which are based outside of France
(December 2019).
To ensure that business operations and management activities run
efficiently, that objectives are met and that the Group’s control
system is effective, executives are determined to harmonize the
operational rules of the subsidiaries. This also applies to internal
control activities and is reflected in the gradual standardization of
information systems and processes throughout the organization.
This is facilitated by the fact that the subsidiaries’ business activities
are similar to those of the parent company, ESI Group, as regards
the distribution of products.
Given current constraints, particularly regarding the size of the
subsidiaries, available human resources and regulations that differ
from country to country, the Group’s structure is based on the
following key factors:
◗ a matrix-based structure organized around business activities
and markets that ensures Group-wide sharing of information;
◗ a centralized organization to manage the Group’s business
activities;
◗ limited hierarchical levels to streamline decision-making processes;
◗ a relatively small size for efficient communication among the
various departments.
The Company considers that internal control processes are
intended to provide reasonable assurance that the following
objectives are met (the principles implemented cannot provide
absolute control of risks):
◗ ensuring that management activities and operations, as well as
employee conduct, are in keeping with the guidelines set out by
the Company’s management and the operational departments
overseeing the various business activities and countries, as well
as any applicable laws and regulations and the Company’s core
values and internal rules;
◗ anticipating and managing risks that stem from the Group’s
business activities and risks of error or fraud, especially in the
areas of accounting and finance;
◗ verifying that the accounting, financial and management
information reported to corporate bodies, shareholders and
third parties accurately reflects the Company’s position and
the business situation.
Internal control bodies
/ Within the Company
the Board of directors
The Board of Directors is responsible for the Company’s risk
assessment policies, implementation of an internal control system
suitable for managing these risks and initiatives to monitor the
effectiveness of this system. This policy features a system of
checks and procedures regarding financial management, as well
as operational and compliance monitoring.
group executive Committee
The Group Executive Committee oversees the internal control
policy. The Committee generally meets once a month.
The Board Retreat takes place once a year to bring together the
members of the Board of Directors, the Group Executive Committee
and employees of the Company or its subsidiaries, depending on
the topics to be discussed. It serves to assess the activities of
the Board of Directors and the specialized committees, review
ongoing strategic matters and define specific objectives to be
achieved during the following year, which are then submitted
to the Board of Directors for approval. The Board Retreat also
analyzes the results of the self-assessment carried out by the
Board of Directors and the specialized committees and reviews the
issue of balance of powers within corporate governance bodies.
The 2019 Board Retreat took place in July, and the 2020 meeting
is also planned in July.
Operational departments
These departments primarily supervise business processes and
manage projects.
Their role is to oversee the implementation of procedures to
guarantee:
◗ effective business processes: identification of business
opportunities, distribution network, partnerships, responsiveness,
assessment of potential economic benefits, negotiation and
signing of contracts, profitability monitoring;
◗ effective project management: evaluation of technical feasibility,
team management and leadership, compliance with specifications,
customer satisfaction tracking and customer service.
Functional departments
The functional departments are responsible for formalizing internal
control procedures in their respective areas and coordinating and
applying these procedures.
a) administration and Finance department
The Administration and Finance Department handles the imple-
mentation of the internal control policy on its financial level by:
◗ establishing the operating procedures for the internal financial
control system;
◗ organizing financial control operations on different group
activities, and their accurate transcription in group accounts,
ensuring regulatory compliance.
The Administration and Finance Department comprises the
following units:
◗ Accounting and Consolidation, in charge of:
• daily recording of transactions,
• establishing periodic financial statements of each entity,
• drawing up the Group’s consolidated financial statements,
• ensuring compliance with legal, tax and labor obligations;
◗ Financial Control, in charge of:
• preparing and monitoring the budget,
• issuing periodic reports,
• internal control on both operational and financial level;
◗ Cash management, in charge of:
• managing cash flows,
• project financing,
• hedging currency and interest rate risks;
◗ Information Systems Department (ISD).
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Risks and Risk management
Internal control and risk management procedures
CONTENTS
b) Legal affairs department
The Legal Affairs Department is divided into two branches:
◗ the Corporate Legal Affairs branch which is responsible for
monitoring and streamlining procedures, as well as corporate
legal intelligence and coordinating the legal aspects of the
operations of Group subsidiaries;
◗ the Intellectual Property branch, which reviews, drafts and
negotiates various contracts with clients and partners in the
industry, government bodies and academic institutions to ensure
that the Group’s intellectual property rights are protected.
Management of confirmed disputes is handled by third-party
experts under the supervision of the Legal Affairs Department.
The department plays an active role in mergers and acquisitions
(e.g. corporate audits, intellectual property audits, participation
in acquisition agreement negotiations).
c) Quality Control department
Under the supervision of Executive Management, the Quality
Control Department is responsible for implementing the quality
control policy and the corresponding system, in keeping with
Group strategy and the following four pillars:
◗ Organization and learning: with the global amplification of
competencies of employees to develop talents, encourage
leadership and collaborative management and with the promotion
of ESI core values to leverage the “OneESI” culture;
◗ Internal processes: with a global Quality management to
facilitate harmonization, develop a global risk management
framework and ensure simplification of processes, that improve
performance and effectiveness;
◗ Clients: meeting the business challenges of customer as they
address the expectations of the Outcome Economy and the
Industry 4.0, focusing on the Product Performance LifecycleTM
through an account management policy and a value selling
approach of our solutions;
◗ Profitability: an internal organization that reinforces the alignment
between departments for continuous improvement in growth,
profitability and sustainability (ROI).
d) Human Resources department
Working closely with Senior Management, the ESI Group Human
Resources Department assists the Company’s strategy by factoring
in employer-employee considerations.
ESI Group’s Human Resources policy has four main components:
◗ personnel management;
◗ performance management;
◗ compensation management;
Performance management entails attracting, integrating, retaining
and developing the highest level of performance for each employee
and ensuring adherence to the Company’s strategy:
◗ recruitment: employment management, anticipating skill needs
both qualitatively and quantitatively;
◗ performance evaluation: employee reviews, personal development
plans, identifying potential, career planning and promotions;
◗ training: identifying needs, preparing a training plan and
implementing in-house and external training courses;
◗ development: possibility of promoting employees internally,
in management positions or in recognition of other skills,
and possible mobility to positions in different departments
or countries.
Compensation management entails coordinating and overseeing
the Group’s compensation policy and:
◗ ensuring the wage revision process in accordance with time
frames, budgets and reporting;
◗ leading the annual process of setting and paying variable
compensation;
◗ overseeing stock option, free share awards and company savings
programs in the Group;
◗ preparing all the items needed by the Company’s governance
bodies (Compensation Committee);
◗ ensuring that employee and employment data are reported by
subsidiaries using HR-IS.
Advising operational staff: fostering independence among Managers
on employment issues by offering them assistance in the field on
a day-to-day basis, and by providing them with services tailored
to their specific needs.
The Group Human Resources Department sets the guidelines for
the Group’s human resources policy, broken down into operational
objectives for regional Directors of Human Resources. Regional
HR Directors coordinate implementation of these objectives in
collaboration with a team of HR operating managers located in
each country, and with support from the central HR Department.
/ Third-parties to the Company
statutory auditors
The Statutory Auditors, who certify the regularity, truthfulness
and the fair presentation of the financial statements provided to
the shareholders at the balance sheet date, may include in their
audit opinions recommendations regarding the internal control
system used to prepare financial information.
◗ an advisory function for operational staff.
Legal counsel
Personnel management includes the following activities and
initiatives:
◗ ensure compliance with all legal and regulatory requirements;
The Company calls on renowned law firms for dispute management,
as well as a tax advisory firm. The Company also calls on specialists
from time to time to review the legal aspects of complex mergers
and acquisitions.
◗ administer payroll and personnel files;
◗ oversee and manage labor relations;
◗ ensure that employment reporting is carried out and produce
performance indicators;
◗ ensure that employees are kept properly informed;
◗ ensure that information is relayed to senior management;
◗ develop Group HR procedures.
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Risks and Risk management
Internal control and risk management procedures
3.2.2. inteRnaL COntROL ORganiZatiOn
The increasingly international nature of the Group’s business
and the cross-organizational character of its projects, involving
international interactions of ever-greater complexity and speed,
have highlighted the need for more rapid and efficient methods
and operational management tools, both centrally and in the
subsidiaries.
In order to achieve this objective, the organization of the
Administration and Finance Department has been structured to
ensure a high-level of quality control and operations monitoring,
meeting the level of requirements to support operational staff in
the development of the activity, and to allow a reactivity adequate
to the changes in the market in which the Group operates. The
organization of the Administration and Finance Department is
based on the following three pillars:
◗ a network of financial controllers located both centrally in group
headquarters and locally in most of the Group’s subsidiaries;
◗ centralized tools and databases;
◗ processes to organize reporting and control of financial
information.
A network of financial controllers
This network covers the monitoring and control of all financial
operations within the Group, according to a dual organization: central
financial controllers are dedicated to the functional monitoring of
activities on a worldwide basis (e.g. monitoring of research and
development activities, monitoring of commercial activities, etc.),
while local financial controllers are dedicated to monitoring the
scope of their subsidiaries and geographic coverage, by providing
statutory financial information and reporting to central teams.
All financial controllers report hierarchically and functionally to the
Group Administration and Financial Department and to the Group
Chief Financial Officer. Each local financial controller also reports
operationally to his/her local manager (local entity manager),
giving him/her access to information as close as possible to the
operations. Interactions between the teams of local and central
controllers enable information to be disseminated to ensure a
good understanding of operations, and analyses to be carried out
at several levels for better anticipation and more efficient piloting.
The size of local financial teams depends on the size of the
concerned entities. In large countries, controlling and accounting
functions are performed by separate teams in charge of monitoring
all subsidiaries in the country. In the case of smaller entities, local
external accounting firms ensure the bookkeeping of transactions
under the supervision of a financial controller dedicated to the
geographic area.
The management information system
Financial control is based on a management IT system consisting
of the following centralized tools and databases:
◗ a single sales database (SalesForce) serves as the backbone
of the organization and internal control system for sales. This
data flows into a single financial database (NCA) to determine
monthly revenues and the backlog;
◗ an HR data management tool called HR-Information System
(HR-IS base) allows for Group-level consolidation of data relating
to salaries and headcount. This tool makes it possible to monitor
the different steps in the hiring process and provide managers
with any information necessary to optimize management of
their teams. HR-IS data is included in the source information
used for financial reporting regarding employees;
◗ a financial planning and analysis tool, Anaplan, that centralizes
data for the entire group from sales ad HR single databases, as
well as from management systems for research, development
and consulting activities, in order to ensure complete reporting
of all activities, and which also is a basis for the budget process;
◗ a financial consolidation tool, Talentia CPM, which enables
the Company to centralize financial flows from the various
accounting systems used in subsidiaries. It should be noted
that subsidiaries account for their operations using their own
accounting systems and ensure proper reporting of data to
the parent company using consolidation packages which are
all centralized and processed using Talentia.
Main accounting and financial
information monitoring processes
The Group prepares consolidated financial statements on a quarterly
basis. Its revenue is published on a quarterly basis, whereas full
financial statements are published twice a year. A Group-wide
budget is established at the beginning of each financial year and
monitored monthly.
/ Consolidation process
The process of preparing the consolidated financial statements
follows procedures to centralize the accounting and financial data
provided by each entity within the Group. These procedures include:
◗ a reporting schedule and calendar of tasks to be carried out
by the persons involved;
◗ use of a specialized consolidation software;
◗ a distinction between preparation of consolidated financial
information, performed by the consolidation team, and control
activities performed by the central financial controllers and the
Chief Financial Officer;
◗ assistance from accounting experts for some technical issues;
◗ a review of the half-year and yearly financial statements by
Statutory Auditors, the Audit Committee and the Board of
Directors.
/ Budget monitoring and reporting process
The yearly budgets are prepared at the start of the financial
year in accordance with the assumptions laid out the preceding
year for the three-year business plan, and the five-year strategic
objectives reviewed annually by senior management. Throughout
the year, a monthly reporting serves to:
◗ monitor the budget to track the amount, nature and allocation
of expenses compared to the current year’s budget;
◗ set out monthly forecasts used to predict results, initially for the
first half year, and subsequently for the second half of the year.
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Risks and Risk management
Internal control and risk management procedures
CONTENTS
Financial Control thus provides key management indicators used
to monitor the Company’s performance. These indicators, reported
to executives, provide the information necessary for the piloting
of the Company. They include, among other indicators:
◗ backlog in the Licensing and Service activities;
◗ production of the Services activity;
◗ evolution of headcount and average personnel costs;
◗ the cash position and cash forecast until the end of the current
year and for next year at year-end.
In conjunction with the budgeting and reporting process, the
Company has implemented a structure based on Performance
Units, each with a manager in charge of overseeing the unit based
on key performance indicators (KPI) in a balanced scorecard
format. These indicators cover four areas: financial, sales, internal
processes, organization and learning.
/ Revenue recognition process
The Finance Department is responsible for recognizing revenues
and ensuring:
◗ downstream, through a periodic follow-up procedure suited to
each client in order to reduce outstanding debt.
Regular monitoring of average payment periods makes it possible
to assess how effectively accounts receivable are managed across
the various subsidiaries.
/ Cash management process
The Chief Financial Officer, with the support of cash management
teams, is responsible for managing cash flows and monitoring:
◗ cash levels necessary to cover the Company’s ongoing business
needs while tracking inflows and outflows;
◗ profitability and the risk level of various cash surplus investments;
◗ foreign exchange risks, to take any necessary preventive action;
◗ implementation of loans necessary for growth of the Company.
The cash position of each entity is centralized, when it is possible
according to local regulations, and a consolidated monthly forecast
is drawn up each month.
◗ the consistency between actual revenues and contractual data
/ Payroll management process
about the Licensing revenue;
◗ the accuracy of billing information;
◗ the completeness of the services invoiced, primarily for the
Services revenue.
/ Client risk management process
The payroll process falls under the responsibility of the Human
Resources Direction and involves:
◗ processing the various items involved in calculating salaries;
◗ entering payroll information in the accounting system;
◗ provisioning for paid vacation to distribute the expense over
the full year;
Client risk is managed at two different levels:
◗ ensuring compliance with labor-related reporting obligations.
◗ upstream, by assessing client risk before processing orders;
3.2.3. Risk management
Process management
and ISO 9001:2015 certification
ESI Group has been ISO 9001-certified since the 2000’s and has
always oriented its Quality approach to develop a worldwide
certification for the entire Group, thereby aiming to align its
business activities under the same operational criteria for all its
subsidiaries. This approach has recently been supplemented by
the transition to the 2015 version, which is an additional asset to
strengthen process management and facilitate the implementation
of risk management, thereby ensuring long term and effective
prevention.
Insurance and risk coverage –
general information
The Company has taken out an insurance policy that covers
the cost of information recovery, additional operating costs and
operating losses (loss of profit resulting from the decrease in
revenues caused by the interruption or decline in the Company’s
business activities) in the event of direct damage to its equipment.
For its foreign subsidiaries, damages that would fall under
operational civil liability coverage, including “employer liability”
and/or “workers’ compensation” policies and automobile-related
risks, are excluded from this policy. The French policy (head office
and subsidiaries) is not a replacement for those taken out outside
of France in accordance with local laws from local insurance
companies licensed to operate in the country in question.
ESI Group has also taken out an insurance policy covering civil
liability of the managers and corporate officers of the Company
and its subsidiaries (D&O), as well as insurance policies covering the
Company’s key protagonists and also a Group-wide international
insurance policy to cover all employees who travel abroad.
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4
STATEMENT ON
EXTRA-FINANCIAL
PERFORMANCE
4.1. ESI – THE PRODUCT PERFORMANCE LIFECYCLETM COMPANY 70
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4.1.1. Value creation
4.1.2. ESI Group Values
4.2. ESI – A COMMITTED GROUP
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4.2.1. Setting priorities: CSR framework
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4.2.2. Evaluating sustainability challenges: materiality assessment 74
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4.2.3. CSR distinctions
4.3. BEING A COMMITTED EMPLOYER
4.3.1. Developing talents and encouraging leadership
and collaborative management
4.3.2. Promoting diversity and reducing inequalities
4.3.3. Contributing to the well-being of employees
and ensuring the quality of working life
4.4. BEING AN OUTSTANDING PARTNER
4.4.1. Provide innovative solutions that meet
our customers’ requirements
4.4.2. Ensure customer satisfaction and meet
quality and safety requirements
4.4.3. Maintain long term, trust-based relationships
with stakeholders and ecosystem
4.5. BEING AN ETHICAL AND COMMITTED COMPANY
4.5.1. Guarantee solid and diversified governance
4.5.2. Act ethically and responsibly – Ethics Charter
4.5.3. Set up initiatives to interact
with civil society (give-back)
4.6. BEING AN ENVIRONMENTALLY FRIENDLY PLAYER
4.6.1. Develop sustainable solutions
4.6.2. Reduce the environmental impact of the Group
4.7. REPORTING
4.7.1. Reporting methodology
4.7.2. Report of the inspecting organization
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In accordance with the resolution of the General Meeting of July 18, 2019, the Group now closes its financial
statements at 31 December of each fiscal year.
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STATEMENT ON EXTRA-FINANCIAL pERFORMANCE
ESI – The Product Performance LifecycleTM Company
CONTENTS
4.1. ESI – THE pRODUCT pERFORMANCE LIFECYCLETM COMpANY
This enriched software offer enables complete control of the
lifecycle of an industrial product from its commissioning to its
operational withdrawal. It also offers the possibility of anticipating
possible developments during the lifecycle of the products while
considering various contingencies such as defects, wear and
tear maintenance operations, running-in of assisted piloting, etc.
Henceforth, agile, smart and autonomous, virtual prototyping
accompanies manufacturers in the era of the factory of the future
and smart digital products.
ESI designs, develops and distributes Virtual Prototyping software
on the one hand, and, on the other hand, offers its customers
access to consulting services associated with this software. The
Group primarily targets customers operating in four sectors:
Ground Transportation & Automotive, Aeronautics & Aerospace,
Heavy Industry and Energy (for more details, see section 1.1.3
“Principal markets” of this document). Thus, the sustainability of
the Group’s business model depends on its ability to understand
the industrial and technical challenges of its customers, to simulate
them thanks to the new possibilities offered by technology and,
to do so, to rely on the talent of its employees and the confidence
of its stakeholders.
4.1.1. VALUE CREATION
The development of certain products requires significant testing
phases to ensure their safety and integrity. Traditionally, companies
have used physical prototypes to test these products and assess
their ability to meet technical requirements. The production of these
prototypes can be time-consuming and can require significant
amounts of materials and energy. Furthermore, it is difficult to
assess the effects of time on a physical prototype, since we cannot
abstract from the physical constraints.
The added value of ESI’s solutions make it possible to meet these
challenges: by dematerializing the innovation process, these
solutions allow customers to accurately assess and evaluate
the performance of their prototypes, virtually. In addition, ESI’s
solutions make it possible to simulate the consequences of time on
their products, while making it possible to estimate the evolution
of their performance during development and throughout their
lifecycle. Hence, by means of ESI’s offer, customers have the
information they need to develop products that meet exacting
standards more quickly, in a more efficient way and with a lower
environmental impact.
4.1.2. ESI GROUp VALUES
ESI's values infuse this recognized organization with a culture
and an ambition that have produced innovation for the benefit
of the Group’s customers and employees for more than 45 years.
These values – Passion, Global, Change, Trust, Social Responsibility
and Energy – anchor the Group’s identity and fit logically together,
as can be seen in the Corporate Social Responsibility actions
defined as follows:
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STATEMENT ON EXTRA-FINANCIAL pERFORMANCE
ESI – A committed Group
4.2. ESI – A COMMITTED GROUp
4.2.1. SETTING pRIORITIES: CSR FRAMEWORK
Aware of its responsibility in each of the three pillars of sustainable
development, ESI Group has gradually developed a Corporate Social
Responsibility (CSR) policy that contributes to shared economic
and social development and the preservation of human balance.
ESI Group’s ambition is to become the leader in Virtual Prototyping,
through a responsible innovation approach towards zero real tests,
zero real prototypes and zero downtime. The Group thus intends
to be its customers’ preferred development partner, capable
of understanding and supporting them in their efforts to bring
innovative, quality, sustainable, ethical and highly resource-efficient
products to market. The Group has carried out a review of major
risks and opportunities, including the main CSR and sustainability
challenges that could have a significant impact on its business,
financial position or results.
In addition, ESI has developed its first materiality matrix to visualize
its various priority challenges and their impact on the Company and
its main stakeholders. For more details, please refer to Chapter 3
“Risks and Risk Management” and the following section of this
chapter. ESI’s CSR strategy, which is divided into four axes and
cascaded into eleven (11) commitments, aims to continue ensuring
harmonious working conditions for its employees, to provide its
customers with innovative solutions enabling them to become
long-term partners, and to limit the environmental footprint of the
Group and its customers while acting ethically and responsibly
within civil society. Through its activities, ESI Group has a very
limited impact on the fight against food waste, food insecurity,
respect for animal welfare, and the promotion of responsible, fair
and sustainable food.
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CONTENTS
ESI GROUp’S CSR AppROACH
Our CSR approach is aligned with our business strategy and contributes to the achievement of our strategic objectives.
It enables us to create social and economic value for our key stakeholders: employees, customers, society and planet.
SUSTAINABILITY
CHALLENGES
The Group’s success is highly
related to its commitment, talents
and the ingenuity of its employees
who design, develop and market
solutions that aim to constantly
meet customers’ needs.
Our customers need to manage
many parameters, efficiently and
more quickly, in order to optimize
the performance of their operations
and products. Facing this growing
complexity, we provide them
with solutions enhancing
their competitive advantage.
The social acceptability
of our operations is essential.
Therefore, the Group ensures
the integrity of its ethics and
the robustness of its corporate
governance. This enables us
to ensure the sustainability
of our business model.
COMMITMENTS
BEING A COMMITTED EMPLOYER
Develop talents and encourage
leadership and collaborative
management
Promote diversity and
multicultural exchanges
Contribute to the well-being
of employees
BEING AN OUTSTANDING PARTNER
Provide innovative solutions that
meet customers’ requirements
Ensure customer satisfaction
and meet quality and safety
requirements
Maintain long term, trust-based
relationships with stakeholders
and ecosystem
BEING AN ETHICAL
AND COMMITTED COMPANY
Guarantee solid and diversified
governance
Act ethically and responsibly
Set up initiatives to interact with civil
society (give-back)
While our business sector has an
impact on the environment, our
services help to reduce the
environmental footprint of our
customers’ business. Therefore, to
increase the positive impact of our
business, we’re committed to
limiting the impact of our
operations as much as possible.
BEING AN ENVIRONMENTALLY
FRIENDLY PLAYER
Develop sustainable solutions
Reduce the environmental impact
of the Group
EMPLOYEES
CUSTOMERS
CIVIL SOCIETY
PLANET
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STATEMENT ON EXTRA-FINANCIAL pERFORMANCE
ESI – A committed Group
2019 PERFORMANCE
+1,200 EMPLOYEES,
SERVING OUR CUSTOMERS
WORLDWIDE
3 “WELCOME DAYS”
ORGANIZED AROUND
THE WORLD TO INTEGRATE
NEW EMPLOYEES
WE DEVOTED
8,125 HOURS
TO PROFESSIONAL
TRAININGS
WE HAVE SUCCESSFULLY
MANAGED 1 ALERT LINKED
TO DISCRIMINATORY
PRACTICES
BEING AN ETHICAL
AND COMMITTED COMPANY
WE ARE CURRENTLY WORKING
ON 20 R&D PROJECTS
WE HAVE DEDICATED 31.4%
OF OUR LICENSES REVENUE
TO OUR RESEARCH
EFFORTS
WE RELY ON 2 LOCAL
SCIENTIFIC COMMITTEES
AND 1 SCIENTIFIC COMMITTEE
AT GROUP LEVEL
WE HAVE ORGANIZED
+250 EVENTS
FOR OUR CUSTOMERS
WE HAVE CONDUCTED
5 ANALYSES FOLLOWING
CUSTOMERS’ COMPLAINTS
WE MANAGED 1 INCIDENT
RELATED TO OUR DATA
SECURITY
1 ALERT HAS BEEN
HANDED TO OUR ETHICS
COMMITTEE
WE’RE INSTALLING
ECO-RESPONSIBLE EQUIPMENT
TO LIMIT OUR ENERGY
CONSUMPTION
LOCAL AND ON-DEMAND
DOCUMENTS PRINTING ENABLED US
TO AVOID DELIVERY DISTANCES
OF 1,954,376 KM (1)
PAPER CONSUMPTION
PER EMPLOYEE DECREASED
BY 15% (2)
(1) Since the adoption of the Gelato printing solution in May 2018.
(2) 2019 internal data, including all the countries of the environmental study’s scope, representing 99% of the Group's total workforce.
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CONTENTS
4.2.2. EVALUATING SUSTAINABILITY CHALLENGES: MATERIALITY ASSESSMENT
In line with ESI’s commitment to ensuring responsible and
sustainable business, while giving priority to issues that have the
greatest impact on the economy, society, planet and governance,
and that most influence stakeholders’ decision-making, a first
version of ESI’s materiality matrix has been developed in 2019.
This matrix represents a key tool in the execution of the corporate
strategy. It enables priorities to be defined according to their
importance for internal and external stakeholders and their impact
on ESI’s performance.
Materiality methodology
/ 1. Identification
The preparation of this matrix first involves the identification and
preliminary assessment of various risk and opportunity factors
for ESI in terms of sustainable development.
In addition to a consultation of existing documentation and a
benchmark of other companies operating in the same sector, the
assessment is essentially based on key parameters of reporting
frameworks (SASB standards, GRI standards, the European
directive on extra-financial reporting), in perspective with the
Sustainable Development Goals (SDGs) defined by the United
Nations Global Compact, to which ESI contributes through its
activities and its CSR approach.
/ 2. Evaluation and prioritization
The objective of this step is to rank and assess the various challenges
identified in the first step according to their potential impact on
the business and their importance to stakeholders.
For the preparation of this first materiality matrix, a workshop
was organized with an internal staff representing the following
departments: Executive Committee (GEC), Finance & Administration,
Human Resources, Corporate Communication, Research &
Innovation, Quality, Sales and IT. The latter are directly and/or
indirectly concerned by the examinated challenges and are in
interaction with all ESI’s stakeholders.
Eleven (11) key issues have been identified and confronted with
the concerns of ESI’s internal and external stakeholders on a scale
of 0 to 4, by answering the following questions:
◗ What is the issue’s potential level of impact on ESI Group
(economic, social and environmental impact)?
◗ What is the level of influence of the issue on the decisions of
external stakeholders?
These challenges were then positioned in a matrix, the axes of
which are represented by the two questions above.
/ 3. Validation
This step aims to verify that the results are well aligned with the
Company’s strategy and values. The matrix is therefore adjusted and
validated by the members of the Company’s general management.
Finally, the matrix followed an internal validation process and was
reviewed by an external consultant.
The Sustainable Development Goals of the United Nations Global Compact,
which are important for ESI and to which the Group contributes
As will be detailed below, the Group’s CSR challenges and commitments are strongly linked to the following Sustainable Development Goals.
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ESI – A committed Group
ESI Group’s materiality matrix
EMPLOYEES
CUSTOMERS
CIVIL SOCIETY
PLANET
S
R
E
D
L
O
H
E
K
A
T
S
L
A
N
R
E
T
X
E
N
O
T
C
A
P
M
I
4
3
2
1
0
CRITICAL
IMPACT
Customer
satisfaction
Develop talents
and encourage
leadership
Ensure long-lasting
relations
Develop solutions
that reduce the customer’s
environmental footprint
Develop high
value-added
solutions
Ethics
and compliance
IMPORTANT
IMPACT
Quality
of work life
Corporate
governance
Promote
diversity
Reduce the environmental
impact of the Group
Interact with civil
sociéty (give-back)
MODERATE
IMPACT
1
2
IMPACT ON ESI’S PERFORMANCE
3
4
Understanding the materiality results
In the materiality matrix above, ESI’s sustainable issues are divided
into three distinct sections/areas, allowing a better understanding
of the impact of each challenge and its importance to ESI’s
stakeholders, both internally and externally.
◗ The “Critical Impact” section contains ESI’s six (6) priority
issues, which are closely linked to the evolution of the
Company’s business model and its positioning regarding its
external stakeholders. Thus, these issues reflect the Company’s
strategic priorities, in particular the development of innovative
and responsible solutions to deal with technological change
and meet customer requirements, while maintaining long-term
and trusted relationships with customers, while relying on
the experience-talent of employees and acting ethically and
responsibly towards civil society.
◗ The “Important Impact” section includes four (4) major issues,
mainly related to the quality of working life, ESI’s corporate
governance and the Group’s environmental impact. In fact, ESI
considers that the well-being of its employees has a significant
impact on their efficiency and on the Company’s performance,
both internally and externally. In addition, being a committed
company also means ensuring solid and diversified governance,
which has a direct impact on the Company’s performance
and internal management. Finally, one of the Group’s main
challenges is related to its commitment to limit its environmental
footprint, which is mainly linked to the impact of its international
implementations.
4.2.3. CSR DISTINCTIONS
Gaïa Index
Between 2016 and 2018, and for three consecutive years, ESI
Group has been awarded first prize of the Gaïa campaign in
the category of mid-cap companies with revenue of less than
€150 million and keeps its place in the index which singles out
the 70 top-rated companies in the CSR domain.
Ranked 4th in 2019, ESI remains in the Gaïa index, which singles
out the 70 top-rated companies in the CSR domain, out of a
panel of 230.
◗ The “Moderate Impact” section contains one (1) issue related to
the Group’s commitment to implement and continue to promote
initiatives and partnerships within civil society. Compared to
other issues, and despite its importance, this commitment has
a limited impact on the Group and its stakeholders.
Above and beyond, it’s important to note that the identified
challenges are interconnected and interdependent. They must
be considered in their entirety. For example, ethics and employee
well-being can have a direct or indirect impact on the performance
of the Company and its relationship with its stakeholders.
Exploiting the materiality results
The materiality matrix is communicated and shared internally as
part of ESI’s commitment to ensuring a responsible and sustainable
activity. These challenges will also be relayed at the level of the
various departments and at the level of the sites on an international
scale for a better implementation of CSR commitments.
This materiality analysis has made it possible to identify the
priority challenges with the greatest impact on the Company and
its environment, in particular their impact on internal and external
stakeholders. These sustainability challenges will be analyzed and
presented in detail in this chapter.
The Gaia Index (www.gaia-index.com) was created in 2009 and is
now the benchmark sustainability index for medium-sized listed
French companies. Developed by EthiFinance (www.ethifinance.
com), the Gaia Index selects small and medium-sized companies
based on their non-financial performance.
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Grands Prix de la Transparence
Global Compact
Since 2008, the “Grands Prix de la Transparence” are evaluating and
awarding SBF120 companies under French law for the quality of the
regulated information provided on their Registration Documents.
The aim of these Grands Prix is to enable companies to measure
their transparency performance each year and to identify best
practices in the sector. Among the outstanding innovations for
the 2019 edition is a Grand Prix for Transparency of Registration
Document for companies outside the SBF 120, of which ESI Group
is a member. In this first edition, the Group was ranked 4th for the
“Transparency” and quality of its 2018 Registration Document,
out of a list of 20 non-SBF120 companies.
For more information, visit: www.grandsprixtransparence.com
Since 2018, ESI Group signed the Global Compact (United
Nations Global Compact) and thus undertakes to align its CSR
strategy on the 10 United Nations principles, relating to human
rights, international labor standards, the environment and the
fight against corruption. The Group also undertakes to yearly
communicate its progress to its stakeholders through the release
of a Communication on Progress (COP).
For more information, visit: www.unglobalcompact.org
4.3. BEING A COMMITTED EMpLOYER
ESI Group aims to be a leading employer among all software
and service providers on the market and plans to stay that way
on a long term.
◗ promote diversity and multicultural exchanges;
◗ contribute to the well-being of employees.
ESI Group’s employees consist primarily of highly trained engineers
and PhDs from prestigious universities and institutes worldwide.
In addition to the close relationship that the Group has always
had with these schools, there are a number of other factors that
exemplify ESI’s commitment to value employees’ experience and
foster highly qualified recruitment and internal development.
These factors include ESI’s positioning in the field of virtual
simulation that takes into account the physics of materials, the
Group’s prominence as a publicly listed company on the Paris
stock exchange, the Group’s continuing education programs, and
its focus on internal promotion at an international level.
ESI Group’s policy is based on the following axes:
◗ develop talents and encourage leadership and collaborative
management;
This policy draws on various tools, including the Human Resources
Information System (HR-IS) to consolidate the HR reporting process
worldwide, and lends greater flexibility to the organization. It also
promotes better use of resources by focusing on skills, to encourage
a more involved, multi-disciplinary managerial culture. The platform
provides an ongoing view of changes in employment indicators
and makes it possible to drive our resource needs more easily.
A selection of HR KPI is provided monthly to the Group Executive
Committee in order to measure the effectiveness of HR policies.
The data from HR-IS are provided on a worldwide scope.
4.3.1. DEVELOpING TALENTS AND ENCOURAGING LEADERSHIp
AND COLLABORATIVE MANAGEMENT
Human resources are the greatest
value of ESI and are part of the two
sustainable development objectives:
“Ensure inclusive and equitable quality
education and promote lifelong
learning opportunities for all” and
“Promote sustained, inclusive and sustainable economic growth,
full and productive employment and decent work for all”. Talents
development is thus a key issue for the Group’s sustainability.
Indeed, in order to respond to the increasingly complex issues
facing manufacturers and remain at the forefront of technological
innovation, the Group must retain its resources and continually
improve their know-how.
Moreover, the Group’s size and distribution across many countries
require a cross-functional management of numerous projects
involving various entities and cultures. Leadership, expertise and
collaborative management are therefore essential qualities for
the success of our missions.
Also, the Group’s transformation and its new solutions oriented
towards the Hybrid Twin™, in line with ESI’s core business, are
an opportunity to develop and enrich the professions and skills
of existing teams, and to recruit new talent directly related to
these new concepts.
/ Policies:
In this way, ESI Group is committed to:
◗ ensure the integration of new talents through “Welcome days”
sessions (2 to 3 days, organized in each region);
◗ to make the annual interviews more dynamic by promoting
one to one interview in order to collect training needs and to
develop competencies and to encourage the construction of
plans of relevant and responsive local and/or global training
to support business and strategy of ESI;
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◗ deploy training programs enabling employees to develop their
expertise in terms of knowledge available in the portfolio of
solutions and to strengthen their professional (technical, sales)
and managerial skills;
◗ develop partnership agreements with universities and engineering
schools in order to participate actively in the training of junior
population;
◗ to promote the dissemination of information to all employees
of the Group.
/ Results:
Recruiting and retaining talents
The Group pays particular attention to the integration of new
talents through a locally managed induction program. In order to
be more standard and global, an Intranet portal has been set up
to guide the arrival of newcomers and guarantee that everyone
has access to a single level of information to support them during
their first days, weeks and months at ESI Group.
Since 2018, a corporate integration program is organized internally,
called “Welcome Days”. The aim of this program is to enable all
new joiners to have a better understanding of ESI, its business
and its strategy. Organized at the regional level, it allows also
to meet the top management and to exchange with colleagues
from different countries.
The Group has also defined an internal mobility system integrated
into the performance assessment tool that allows each employee
to make his or her motivations known and thus highlighting its
skills and know-how by applying to open opportunities within
the Group in connection with the customer needs and projects.
Career development and management
The Group has a process for evaluating the performance and
development of each employee, which aims to organize at least
once a year with his or her direct supervisor an evaluation of
the past year’s performance in relation to previously assigned
objectives and to define the objectives for the coming year.
Since 2017, online annual interviews have been implemented for
the entire Group. During the 2019 feedback campaign, 97% of
employees have formalized their annual interviews on the new
online tool.
This new step in the performance evaluation process is designed
to make annual interviews more dynamic by encouraging the
feedbacks, monitoring and archiving of data, particularly for
international teams. It also provides easier access to data relating
to the performance achieved, the level of employee satisfaction
and the professional and training objectives that will contribute
to proactive and advanced management of competencies.
These assessment interviews are our first source for collecting
the training and development needs of teams and encourage the
construction of local and/or global training plans that are relevant
and meet the needs of the business’ development. They also
provide an opportunity to detect the Company’s high potentials
and thus implement development actions useful for their internal
mobility. In addition, this system makes it possible to support
some employees more specifically through an individual plan to
improve their skills.
Training plan
At the same time, training programs are being rolled out in the
Group’s various subsidiaries. The training plans are aligned with
ESI Group’s strategy and market developments. They enable
employees to develop their expertise in terms of knowledge
of the solutions portfolio and to strengthen their professional
(technical, sales) and managerial skills.
Since 2017, a Virtual Campus has been set up via the Company’s
Intranet: “ESI Campus”. It allows the Group’s employees to access
training in various topics. The objective is to give access to training
to all employees and to support them in getting new skills and
developing the Group’s skills through a common language.
In terms of technical skills, the Group has put in place a partnership
with the e-learning platform Pluralsight, with 200 licenses that
allowed employees to train on several hundred online technical
training courses.
◗ In India, for example, 107 employees have received training
on leadership themes or technical training related to C++ and
Advanced C++, Python, VPS/VCP, GIT and ISTQB.
Actions to promote trainee apprenticeship
Numerous partnership agreements with universities and engineering
schools enable ESI Group to participate actively in the training
of students: in Europe, the École Centrale of Paris, the Technical
University of Dresden (Germany), the University of West Bohemia
(Czech Republic), and the ENIT (National Engineering School of
Tunis) in Tunisia, with which ESI Group benefits from partnership.
The Universities of Alabama, Shanghai, Beijing, as well as the
Indian Institute of Science, among others, work closely with ESI
in the Americas and Asia-Pacific.
Following the successful partnerships with the EC Nantes and
a partner in Japan from 2017, ESI Group is continuing these
international student exchanges, which will strengthen the links
between the academic ecosystem and the Group’s projects.
This type of collaboration, supported by ESI Group’s Scientific
Department, is further illustrated by the establishment of the ESI
Chair at ENSAM in September 2018, and a new five-year contract
signed with the University of Zaragoza on Augmented Reality
and Model Reduction. On these themes, a student post-thesis
of Zaragoza is currently on a mission in Seattle, at the University
of Washington.
Also, in collaboration with ESI’s Scientific Department, the Group
announced in February 2018 the launch of a five-year research
program with the CE Cardenal Herrera University (CEU-UCH) in
Valencia, Spain.
In 2019, the Group has welcomed a total of 29 trainees from
different universities and business school (interns and apprentices).
Internal communication
In order to efficiently communicate internally, ESI Group has set
up several tools to address its messages to teams in more than
20 countries.
A welcome portal has been set up on the Group’s Intranet website.
It allows each new employee to discover the Group, its organization
and its values and to easily access all the information that will be
useful for a smooth integration.
In addition, the Group’s internal social network, Chatter, enables
everyone to group employees to exchange, share, inform or learn
about numerous subjects in different fields. A new focus group was
set up during the first quarter 2019, around environmental issues.
Each employee of the Group can share his/her eco-responsible
actions set up in their professional or personal life.
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Also, multiple communication actions are proposed in order to
strengthen information sharing and cohesion within the Group,
such as global presentations, monthly newsletters, Flash Corporate
News and webinars (corporate or product).
Q&A (Question & Answer) sessions have also been initiated in
2018 to allow a more fluid and transparent exchange between
the Management Team and the employees of the Group. Since
October 2019, the Group has implemented Microsoft "Teams"
tool, which replaces “Skype for Business”, enabling employees to
exchange and plan online meetings easily and more efficiently.
Corporate events are also organized to allow different departments
to exchange and meet on strategic issues. Two management
meetings are organized each year, as well as one Kick Off Meeting
more focused on sales and marketing of products. The Product
Operations team organizes once a year an Engineering Management
Meeting, a one-week seminar where the key managers of the
organization as well as certain experts can meet.
In addition, and as mentioned earlier in this chapter, a new approach
to change management has been put in place in 2020, at the
initiative of the Communication Direction, and in collaboration with
some departments concerned, in order to develop and optimize
the employee experience. This also applies to the development
of ESI's communication and evaluation of their effectiveness.
4.3.2. pROMOTING DIVERSITY AND REDUCING INEQUALITIES
Through its “Global” value, diversity
is one of the six values promoted
by the Group as it enhances the
organization of the company.
The Group's highly innovative solutions
enable ESI to successfully develop its business throughout the
world. As an international company, ESI Group is proud to be
able to have a multicultural and diversified workforce. The Group
has always valued differences and encouraged its employees to
share their ideas across borders in order to create a modern and
efficient work environment, able to better support its international
customers. ESI Group strives to daily develop its know-how and
expertise in recruiting the best talent from around the world. These
challenges are in line with the following Sustainable Development
Goals: “Ensure availability and sustainable management of water
and sanitation for all” and “Reduce inequality within and among
countries”.
/ Policies:
In order to promote diversity and reduce inequalities within the
Group, ESI is committed to:
◗ promote diversity and multicultural exchanges;
◗ increase the proportion of female employees with permanent
contracts;
◗ respect the laws in favor of the accession and retention of
employees regardless of age;
◗ comply with laws and regulations prohibiting any discrimination
based on age, race, sex, ethnic origin, nationality, religion,
health, disability, marital status, sexual orientation, political or
philosophical opinions, union membership or other characteristics
protected by locally applicable law;
◗ not tolerate any form of sexual, physical or moral harassment,
coercion or persecution.
/ Results:
The following tables present the distribution of staff by geographical area and country:
Distribution of staff by geographical area
Europe, Middle East and Africa
Asia-Pacific
Americas
2018 (1) (Jan.-Dec.)
2019 (2) (Jan.-Dec.)
57.1%
33.0%
10.0%
56.7%
33.4%
9.9%
Note: Of the 56.7% of employees located in the Europe, Middle East and Africa zone, 54.9% are located in Europe.
Distribution of staff in the main countries
2018 (1) (Jan.-Dec.)
2019 (2) (Jan.-Dec.)
26.1%
20.1%
15.7%
9.2%
6.2%
22.6%
26.3%
19.9%
15.6%
9.1%
6.9%
22.2%
France
India
Germany
United-Sates
Japan
Others
(1) January 1, 2018 – December 31, 2018.
(2) January 1, 2019 – December 31, 2019.
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Gender distribution and equality
(in %)
78.0
77.9
84.7
73.4
84.5
75.0
78.5
77.5
22.1
22.0
26.6
15.3
25.0
15.5
21.5
22.5
Americas
Europe, Middle East and Africa
Asia-Pacific
TOTAL
Men 2018 (1)
Men 2019 (2)
Women 2018 (1)
Women 2019 (2)
The proportion of female employees with open-ended contracts,
at 22.5%, is relatively low and stable compared to previous years.
This low representativeness can be explained in particular by
the low number of women in engineering schools that are the
main source of recruitment for the Group, as well as by socio-
geographical disparities that sometimes involve a relatively low
female workforce participation rate.
Nonetheless, HR professionals are sensitive to the feminization of
local teams as well as considering female candidates when recruiting
for the Group. Already mentionned in non-discimination policy
Age pyramid (2019)(2)
>60 years old
56 to 60 years
5
8
31
64
51 to 55 years
22
80
46 to 50 years
41 to 45 years
31
36
36 to 40 years
52
31 to 35 years
47
26 to 30 years
61
117
125
132
179
179
21 to 25 years
<21 years
14
51
2
2
80
40
0
40
80
120
160
200
Women
Men
The average age of the Group’s employees is 39.7 years (female
employees: 38 years and male employees: 40.2 years).
ESI Group respects the laws in favor of the accession and retention
of employees, regardless of their age. Thus, 17% of employees are
over 50 years, i.e. 210 employees worldwide.
64.7% of the population aged over 50 is located in Europe,
compared to 19.5% in the Americas and 15.8% in Asia.
In addition, 44% of employees hired on permanent contracts are
under 30 years of age, making a significant contribution to the
employment of young people at the global level.
(1) January 1, 2018 – December 31, 2018.
(2) January 1, 2019 – December 31, 2019.
Breakdown of workforce by seniority (2019)(2)
>26 years
6
35
21 to 25 years
16 to 20 years
19
12
54
97
11 to 15 years
35
6 to 10 years
55
1 to 5 years
115
165
183
341
4
< 1 year
36
85
150
100
50
0
50
100 150 200 250 300 350
Women
Men
The average seniority in the Group is 8.5 years. This seniority is
relatively high in the dynamic technology and IT sector (source:
Society for Human Resource Management study, 2015).
The average length of service is 11.67 years for employees over
35 years.
Non-discrimination policy
In order to have access to more detailed information, in particular
on gender equality and the principles of non-discrimination, the
Group has supplemented its HR social database by introducing
the concept of manager for persons supervising one or more
employees. Thus, we can note a 17.7% increase in the number of
women managers compared to 2018 (15.5%).
The Ethics Committee (composed of two women and one man)
also ensures that none of the above-mentioned discriminations
is used within the Group (see 4.5.2).
The Group is also committed to improve the gender balance of
the Group.
“Gender equality” is an integral part of the Group’s strategy,
aiming to increase both the percentage of women managers and
the percentage of women engineers. In 2019, 45 women joined
the Group, representing 31% of new hires.
Some countries have set regulatory obligations in order to serve
the same purpose. France is one of them. “Equal pay for equal
work” has been a principle of labor law enshrined in law for several
decades. In this sense, the Avenir act aims to eliminate the pay gap
between women and men. In accordance with these regulations,
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ESI Group, in France, has calculated its Gender Equality Index,
the results of which are as follows:
of a chairperson and eight members. Local information sessions
have been organized on the subject.
◗ The gender pay gap: 33/40;
◗ The gap in individual rates of pay increase: 20/20;
◗ The number of employees of the under-represented sex among
the 10 highest paid employees: 5/10;
◗ The rate of employees having benefited from a salary in the
year following their return from maternity leave: 15/15;
In addition, in 2018, the Group raised the awareness of 87 people
on the subject of interculturality. These awareness-raising sessions
took place in small groups in the form of virtual classes. Employees
from different countries of the Group were able to discuss cultural
differences and intercultural communication.
◗ The gap in promotion rates between women and men: 15/15;
Integration of disabled workers
◗ TOTAL: 88/100, i.e. a 5-point improvement compared with the
previous year and 13 points above the legal minimum.
India launched an Anti-Sexual Harassment Charter in July 2019
and established an Anti-Sexual Harassment Committee composed
Since the beginning of 2016, the Group has been collaborating
with Elise for the Lyon and Rungis site in France to ensure selec-
tive sorting. Elise is a company called “adapted” which create
open-ended contracts for the persons with disabilities.
4.3.3. CONTRIBUTING TO THE WELL-BEING OF EMpLOYEES
AND ENSURING THE QUALITY OF WORKING LIFE
Ensuring decent employment
and contributing to the well-being
of employees
Every company is responsible for providing decent
working conditions for all its employees. Promoting
decent work with a decent wage and ensuring the
well-being of employees are major global challenges,
for which ESI Group is focused on. This challenge
contributes to the following Sustainable Development
Goal: “Promote sustained, inclusive and sustainable economic
growth, full and productive employment and decent work for all”.
/ Policies:
As an employer ESI strives to:
◗ control its workforce in connection with the growth of the activity;
◗ offer its employees the benefit of flexible management of their
schedules;
◗ improve working conditions, which has a direct impact on the
well-being, efficiency and motivation of employees;
◗ to create a favorable social climate.
/ Results:
Headcount data is calculated on the basis of the number of
employees present at December 31, 2019.
Total Group headcount includes employees on permanent
and fixed-term contracts, as well as student contracts such as
work-study contracts and interns. They do not include temporary
employees, consultants and networks of external distributions.
At December 31, 2019, ESI Group’s workforce stood at 1,238
employees. 1,232 at January 31, 2019. The average number of
employees in 2018 was 1,222 employees, a very slight increase
compared with the previous year 2017 (1,201).
92.5% of the Group’s workforce is hired on open-ended contracts.
Precarious contracts such as internships, apprenticeship contracts,
etc., are not covered by the Group’s employment contract. and
fixed-term contracts represent 7.5% of the workforce. total,
compared to 7% in 2018. In 2019, ESI continued to pursue its
ambitions to control its workforce in line with business growth.
Employee turnover
Recruitments
Europe, Middle East and Africa
Apprenticeship/internship
Short-term contracts
Open-ended contracts
Americas
Apprenticeship/internship
Open-ended contracts
Asia-Pacific
Apprenticeship/internship
Short-term contracts
Open-ended contracts
TOTAL
(1) January 1, 2017 – December 31, 2017.
(2) January 1, 2018 – December 31, 2018.
(3) January 1, 2019 – December 31, 2019.
80
2017(1) (Jan.-Dec.)
2018(2) (Jan.-Dec.)
2019(3) (Jan.-Dec.)
144
28
24
92
17
6
11
48
12
3
33
209
107
25
25
57
17
6
11
53
13
11
29
177
88
20
22
46
24
15
9
37
8
6
23
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2017(1) (Jan.-Dec.)
2018(2) (Jan.-Dec.)
2019(3) (Jan.-Dec.)
112
30
10
72
22
10
1
11
33
2
6
25
167
101
28
13
60
23
5
0
18
48
3
10
35
172
94
18
8
68
28
10
0
18
28
4
4
20
150
Departures
Europe, Middle East and Africa
Apprenticeship/internship
Short-term contracts
Open-ended contracts
Americas
Apprenticeship/internship
Short-term contracts
Open-ended contracts
Asia-pacific
Apprenticeship/internship
Short-term contracts
Open-ended contracts
TOTAL
(1) January 1, 2017 – December 31, 2017.
(2) January 1, 2018 – December 31, 2018.
(3) January 1, 2019 – December 31, 2019.
In 2019, ESI Group recruited 78 employees on open-ended contracts,
i.e. 52% of total hirings.
The departure rate of employees on open-ended contracts is 9.2%
in 2019. (number of departures under open-ended contracts/total
headcount under open-ended contracts at the beginning of the
period) x 100] compared to 10% in 2018.
The turnover rate on open-ended contracts is 8.1% in 2019
[(Number of open-ended contract departures during year N +
number of open-ended contract arrivals in year N*100/2/staff
at the beginning of the period] against 9.6% for the year 2018.
Working time
Staff representative institutions shall be designated in accordance
with the laws in force in the countries. Thus, we can count six
institutions in France, one in Vietnam and one in Brazil.
These institutions involve 26 employees who have actively
participated in meetings during 2019.
Review of agreements:
◗ review of general agreements: the French subsidiary has signed
various agreements with its social partners, such as the agreement
on the reduction of work, the participation agreement and the
agreement on employee savings;
◗ review of agreements related to health and safety: no company
has signed a specific agreement.
The duration of the working time shall be set in accordance with
the local legislation in force.
Workplace Well-being
In the vast majority of its establishments, ESI Group offers its
employees the benefit of flexible management of their schedules. In
some countries, such as Japan, the timetables are set to meet the
expectations of the business but are limited to eight hours a day.
In France, the organization of working time is based on working
time measured in fixed days or according to a set schedule. An
employee with a fixed daily rate works a defined number of
days in the year and an employee with an hourly rate works the
number of hours defined in the agreements:
◗ Full-time managers working on a fixed number of days per
year work 217 days per year, plus one day for the solidarity day;
◗ For other employees, the average working week is set at 37
hours, with 10 days of reduced working hours per year for
full-time employees.
In 2019, part-time work accounted for 6% of the total workforce;
moreover, most part-time contracts are set up to meet the needs
of employees who request them in order to arrange for parental
leave, retirement or the resumption of their studies.
Social dialogue
The quality of the social climate is a determining factor for the
quality of working life and the Company's productivity. The social
dialogue, over and above strict regulatory compliance, constitutes
a source of progress in this area. The value of social dialogue is
based on the many exchanges between the Group’s management
and employees and their representatives.
In the different countries, various initiatives have been launched
to promote the well-being of employees, under the responsibility
of the Human Resources Departments and in collaboration with
local and representative bodies such as the CSE (Social and
Economic Committee) in France.
Since 2017, sophrology relaxation sessions carried out by employees
were set up on the Rungis site.
In 2019, two other activities have been made available to employees
at Rungis, including pilates classes and seated massage sessions.
The benefits of these practices include better stress management,
improved productivity and the development of positive thinking.
10% of the staff at the Rungis site have already completed a session
in 2019. At the Lyon site, 15 sophrology sessions were organized
in 2019, with an average of 15 participants, representing more
than 14% of the workforce at the site in question.
South Korea, for example, also offers training courses on happiness
and work-life balance.
Most of the projects carried out for our customers are carried
out in-house, our engineers have few needs of developing on
customer’s site, which limits travels and improve work-life balance.
Moreover, in many countries, ESI enables its employees to work
remotely from home. France, for example, is currently working
on the development of a Charter on home office and the right
to disconnect.
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Ensuring employee health and safety
in the workplace and employee benefits
The Group’s approach is also in
line with the implementation of
social measures and benefits for our
employees worldwide, especially, by
ensuring the health of employees on
their daily professional life.
This contributes to the following two Sustainable Development
Goals: “Ensure healthy lives and promote well-being for all at all
ages” and “Promote sustained, inclusive and sustainable economic
growth, full and productive employment and decent work for all”.
/ Policies:
As the health and safety of employees in the workplace and social
benefits are necessary for the smooth running of activities, ESI
has set itself the objective of:
◗ providing a quality social security coverage for all its employees
worldwide;
◗ offering an attractive compensation and social benefits package.
Health, Safety and Benefits
ESI Group has set itself the objective of providing coverage for
to all of its employees worldwide, both in terms of with regard to
health and old age but also the coverage of incapacity, disability
and death.
13 out of 19 countries offer their employees the opportunity to
finance a local health insurance in compliance with regulations
and the well-being of employees. Some countries, such as India,
now offer a free medical check-up to employees once a year, and
Tunisia now offers five days of holidays since February 2017 and
has set up a mutual insurance company that has been offered to
its employees from the beginning of 2020.
Wage policy
To attract and retain the best talents on the market, ESI Group has
set up an attractive compensation package and various benefits
for its employees. This policy is intended to recognize talent by
rewarding both individual and collective performance.
Employee compensation is made up of direct and indirect
remuneration; the latter includes cash or in-kind supplements
deferred from the monthly remuneration (bonuses, commissions,
savings plan, fringe benefits, etc.). All the countries included in
the scope of social reporting offer indirect compensation to their
employees.
In Europe and the Americas, six subsidiaries have set up a system
of indirect compensation for their employees.
Within this framework, an employee shareholding mutual funds
("FCPE") was created in France in 2013 in order to collect future
flows of participation and payments, housed in the Group Savings
Plan. This "FCPE" makes it possible to acquire shares of the
Company and to benefit from a 100% matching contribution,
up to an annual ceiling of €400. Beyond that, ESI subscribes to
up to 20% of the payments within a range of between €401 and
€2,000 maximum. At December 31, 2019, the FCPE held 29,500
shares of the Company, i.e. 0.49% of the capital.
Special point about Coronavirus (COVID-19)
In order to maintain the well-being of the employees during the
period of the COVID-19 epidemic, the Group has put in place
several measures to protect its teams and ensure the continuity
of its activities. The situation is managed globally and adapted
to each local situation. Having a global presence, the Group’s
adaptability and reactivity are of paramount importance for all
its stakeholders.
Among the measures implemented by the Group:
◗ The launch of the Group’s Business Continuity Plan (BCP);
◗ The creation of a special COVID-19 crisis management team;
◗ The adoption of home office for all positions;
◗ The ban on travel at Group level, in a more restrictive way
according to the local situations;
◗ The use of digital tools and the organization of conferences
and 100% digital events;
◗ The development of a communication plan to inform the
employees on the preventive measures to be adopted in
accordance with official recommendations, by email and via
the Company’s internal social network;
◗ The organization of internal activities (stress management
tips, photo contest, drawing contest for children, etc.) and the
creation of an online group for sharing advice, recipes, etc.
during the confinement period.
4.4. BEING AN OUTSTANDING pARTNER
The Group solutions help its customers cope with the challenges of
their digital transformation. These solutions meet the continuously
changing regulations that govern the Group’s businesses, in order to:
◗ ensure customer satisfaction and meet quality and safety
requirements;
◗ maintain long term, trust-based relationships with stakeholders
◗ provide innovative solutions that meet our customers’ requirements;
and ecosystem.
4.4.1. pROVIDE INNOVATIVE SOLUTIONS THAT MEET
OUR CUSTOMERS’ REQUIREMENTS
How can an organization bring innova-
tive products to market while keeping
costs and deadlines reasonable?
How can an organization integrate
new materials and processes safely?
How can an organization reduce the
impact of these new materials, such as composites on product
performance and integrity? What are the best practices for
optimizing the product lifecycle and maintenance costs? What
processes will ensure that recycling requirements are met?
The products developed by ESI Group are used to bring to
market innovative products at a lower cost and with greater
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Being an outstanding partner
reliability and contributes through this section to 2 Sustainable
Development Goals:
◗ Goal 8: “Promote sustained, inclusive and sustainable economic
growth, full and productive employment and decent work for all”;
◗ Goal 9: “Build resilient infrastructure, promote inclusive and
sustainable industrialization and foster innovation”.
/ Policies:
In its approach, ESI strives to:
◗ meet its customers’ demand for ever more innovative products;
◗ engage itself in a process toward zero real tests, zero real
prototypes and zero downtime;
◗ guarantee the quality of its products and services and ensure
client satisfaction;
◗ acquire a full global certification by 2021.
/ Outcomes:
Innovative solutions towards the zero real tests,
zero real prototypes and zero downtime
To meet its customers’ demand for ever more innovative
products, the Group offers Virtual Prototyping solutions that save
manufacturers and their subcontractors significant amounts of
time and money, and therefore support their efforts to innovate.
These are all key advantages that help customers keep up with
international competition. ESI Group gives its customers the
capacity to perform virtual simulations as of the preliminary
design phase, during detailed design phases, and throughout
the product lifecycle, and also to approve the performance of
their complete digital model step by step before producing a
physical prototype. This approach makes it easier to make key
decisions very early in the process. Innovation is made possible
through reliable virtual prototypes and helps customers get their
product right the first time. Virtual Prototyping makes it possible
to prepare physical tests under the best conditions, going as far
as pre-certification or eliminating the need to carry out physical
tests until final validation.
Following the acquisitions of innovative companies in the last
years, in new technologies such as Artificial Intelligence, Big
Data, or Internet of Things, ESI Group is now able to represent
the connected product as used in its operational environment,
meaning after its launch on the market. This Hybrid TwinTM targets
product predictive performance and maintenance, to optimize
repairs, facilitate certification update, and minimize recalls. Once
the brand-new product is “right the first time” thanks to its pre-
certified Virtual Prototype, it must be kept right when in-Service,
and perform right in real life, connected and operationally assisted
in its digital version.
The Group’s success also stems from an approach based on close
collaboration with world leaders in each sector where the Group
is active, including Renault-Nissan, Fiat Chrysler and Volkswagen
in the Automotive industry, Boeing and Airbus in the Aeronautic
industry, as well as EDF and Framatome in the Energy industry. By
building strong relations with large industrial firms, the Group can
perfectly match their Virtual Prototyping needs. These strategic
partnerships help the Group’s customers assess their innovation
requirements and implement them jointly with ESI Group.
For example, using Virtual Prototyping to design airbags or
carrying out an in-depth study of advanced driver assistance
systems (ADAS) increases the safety of vehicles for consumers.
ESI Group solutions give consumers greater safety and comfort.
4.4.2. ENSURE CUSTOMER SATISFACTION AND MEET
QUALITY AND SAFETY REQUIREMENTS
In 2000, ESI Group obtained its first ISO 9001
certification, followed by the independent certification
of its subsidiaries, so as to guarantee the quality of
its products and services and ensure client satisfac-
tion. The benefits of ISO 9001 certification accrue
to external as well as in-company stakeholders.
Outside the Company, certification guarantees that ESI Group
provides products and services that meet the needs of its clients,
while it continues to evaluate and improve its processes. Within
the Company, certification calls on employees to actively engage
in an overall consistent management system.
Since 2010, ESI Group has extended the scope of its certification
using a global system common to all its subsidiaries. Since risk
management and quality management are closely linked, this
worldwide certification is a sign of confidence in the quality of
the solutions that the Group offers its customers and guarantees
that particular attention is paid to excellence and to the alignment
of all the Group’s processes. ESI Group’s objective is to have full
global certification by 2021. The roadmap is updated every year to
identify new entities to bring under the Group, taking account of
their impact on business, new acquisitions and the as-associated
risks and opportunities.
In 2019, the global certification applied to 95.31% of the workforce.
Global certification is now successfully applied in Europe, Asia
and the United States, within the ESI Group parent company
and most of its subsidiaries: ESI US R&D, ESI France, ESI Japan,
Calcom ESI SA in Switzerland, ESI SW India (which now includes
the Pune and Bangalore sites), ESI SW Germany, ESI GmbH, ESI
ITI (in Germany), ESI NA in the United States, ESI Mecas in the
Czech Republic, ESI Service Tunisia, ESI Korea (South Korea), ESI
China, ESI Italia and ESI Hispania, ESI UK (in the United Kingdom),
ESI Open CFD (in the United Kingdom) and ESI Nordics AB (in
Sweden).
In addition, since their creation in 2018, the “Welcome Days” have
included a session on Quality in the agenda in order to understand
the meaning of evolving under a Quality Management System
and the approach to process improvement.
ESI Group is also involved in an ISO 27001 certification project,
and is implementing an information security management
system that, through appropriate risk management, guarantees
the confidentiality, integrity and availability of information. This
project considers specific demands of clients, particularly those
from the automotive sector as of TISAX. The TISAX (Trusted
Information Security Assessment Exchange) certification was
created on the initiative of the VDA (Association of the German
Automotive Industry). This standard is based on the requirements
of ISO 27001 and adapted to the specificities of the automotive
sector to secure exchanges between various players. In 2019,
ESI Group got the TISAX certification for, ESI MECAS (Czech
Republic) and ESI GmbH (Germany) and will be extended to ESI
Hispania (Spain) in 2020.
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4.4.3. MAINTAIN LONG TERM, TRUST-BASED RELATIONSHIpS
WITH STAKEHOLDERS AND ECOSYSTEM
By developing the partnership
ecosystem that respects the Group’s
values its commitments, ESI contributes
to the Sustainable Development Goal
12: “Ensure sustainable consumption
and production patterns”, as well as
goal 17: “Strengthen the means of implementation and revitalize
the global partnership for sustainable development”.
ESI Group has a wide range of internal skills that cover its software
Edition activity on the one hand and its services activities on the
other one. However, when it is necessary to mobilize resources
outside its usual scope of business, or when specific expertise is
recommended, ESI Group may occasionally use external contractors.
/ Policies:
Develop a partnership ecosystem that respects the Group’s values
and commitments.
/ Outcomes:
ESI Group remains fully responsible for all outside subcontractors.
In this regard, the subcontractors are subject to the same rules
and verifications as any other employee of the Group.
To provide its customers with quality products, ESI Group monitors
and regularly evaluates all suppliers influencing quality through a
questionnaire completed in-house to assess the supplier based
on the service provided. A list of approved suppliers is made
available for this purpose on the intranet and updated periodically.
The Company now includes an environmental criterion (energy
consumption for operation, local purchasing, possibility of recycling
the product, etc.) in the purchasing procedure of its suppliers and
subcontractors. Training on responsible purchasing have been
planned for the most important buyers. To date, one person has
completed this training.
ESI Group also takes care not to create a situation of dependence
on suppliers and subcontractors.
4.5. BEING AN ETHICAL AND COMMITTED COMpANY
Partnerships are an integral part of the Group’s strategy to facilitate
and promote Virtual Prototyping while acting sustainably.
To remain at the leading edge of innovation, the Group invested
31.4% of its revenues in R&D in 2019.
The Group considers its main stakeholders to be its employees,
customers, suppliers, and industry and academic partners, but
also its investors and shareholders.
Innovation, which is at the core of ESI Group’s business, is also
a key issue of CSR. Innovation continually improves production
processes and shortens the design period and the time it takes
to develop more efficient and more reliable new products.
Innovation makes it possible to resolve the multiple constraints
and pressures that weigh on all manufacturers – to develop a safer,
more efficient and more environmentally friendly product, faster
and at a lower cost. The innovative Virtual Prototyping solutions
offered by ESI Group allow us to approach these ever-present
economic goals.
ESI Group strongly believes that its ability to innovate and research
is a key factor in its differentiation and hence its competitiveness,
two key drivers for sustainable growth.
4.5.1. GUARANTEE SOLID AND DIVERSIFIED GOVERNANCE
Nowadays, as the world has become more complex
and companies must be able to constantly adapt,
strong and effective governance has become a real
necessity. ESI Group attaches particular importance
to governance issues. It ensures the coherence and
sustainability of the Company’s strategy, ensuring
the best framework to serve the interests of investors.
The Group strives to maintain a mixed governance, represented
by independent and competent directors who are fully involved
in the Company’s projects, while ensuring compliance with the
laws on remuneration and transparency rules.
4.5.2. ACT ETHICALLY AND RESpONSIBLY – ETHICS CHARTER
The Ethics Charter applied across the Group is in
line with the principles of Sustainable Development
Goal 16: “Promote peaceful and inclusive societies for
sustainable development, provide access to justice
for all and build effective, accountable and inclusive
institutions at all levels”.
A three-member Ethics Committee is responsible for creating an
environment where employees can adhere to the Ethics Charter
and ensure that its principles are upheld by everyone, every
day. The Committee listens to and assists employees so that
they can discuss any issue involving the implementation of and
compliance with the Ethics Charter. It also works to make sure that
all Group subsidiaries apply the principles set out in the Charter.
This Committee meets regularly, at least once a year, to discuss
ethics issues and come up with corrective measures, if necessary.
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Being an ethical and committed Company
In 2016, the Group issued its Ethics Charter to promote observance
of its values and confirm its commitment to the main rules of
conduct that the Group wants to see applied internally. This Ethics
Charter reaffirms the legal, regulatory and internal provisions
relating to the respect of fundamental rights at work, professional
integrity, the elimination of discrimination, and the prohibition of
child labor and forced labor. It is based on the observance of the
ethical rules promoted by the conventions of the International
Labor Organization. The Ethics Charter was disseminated to all
employees and is available in six languages on the Group’s internal
and external websites.
A new version of the Charter has been communicated to all
employees in 2018. This version strengthens the Group’s position
on corruption, facilitation payment and other frauds, in the context
of the French law “Sapin II”.
The Ethics Charter contains the policies and procedures inherent
in the following business conduct:
Whistle-blowing policy
Any person employed within ESI, or any client, supplier, partner
or third party who suspects or is informed of a possible breach
of this charter or a violation of the law by the Company, or one
of its employees, has a duty to report it. While it is natural to be
reluctant to report abuse, everyone is strongly encouraged to do
so, as silence can have highly detrimental consequences for the
Company. The use of the whistleblowing procedure described
below is neither mandatory nor exclusive.
The procedure for reporting abuse is as follows:
◗ the first contact is the local/regional HR correspondent or the
direct manager;
◗ in the event of a conflict of interest involving the HR correspondent
or the direct manager, contact the HR Director of the division
or group or the N+2 manager;
◗ otherwise, contact the Ethics Committee directly at the following
◗ Relations with our business partners:
address: ethics@esi-group.com.
• establish transparent and loyal business dealings with clients,
• deal honestly and fairly with all clients no matter the size of
their company,
• provide quality products and services that meet the needs
of its customers;
◗ Actions taken to prevent corruption:
• prohibition of any form of corruption in its relations with its
business and institutional partners and with the administration,
• no financial or in-kind gratuities may be given with a view
to obtaining an advantage, nor may such gratification be
received to benefit a company or person,
• if an employee makes facilitation payments or influence-
peddling in the course of their professional activities, he is
likely to be subject to criminal penalties and its contract of
employment will be terminated,
• prohibition to receive, give, promise or solicitate facilitation
payments or influence-peddling undue benefits with a view
to granting, obtaining or maintaining a contract or any other
advantage;
◗ Fraud and money laundering:
• comply with laws on fraud and money laundering,
• conduct business only with reputable partners,
• be vigilant regarding any payments made, in order to detect
any irregularities, especially concerning partners whose
business conduct may raise suspicion,
• ensure that the accounting and tax declarations sent to
the authorities are complete and reflect the reality of each
subsidiary;
◗ Compliance with antitrust laws:
• prohibition of any exchange of confidential information
and any arrangement – formal or informal – or attempt to
enter into arrangements with competitors which seek to fix
prices or conditions of sale, to share a market or to boycott
a particular market actor,
• prohibition of abusing a dominant position or a monopoly
and also from acquiring or maintaining a dominant power
other than by recognized legitimate means such as patents,
skills, superior know-how or geographical location.
The Company is committed to handling requests, quickly and
genuinely, in a confidential and ethical manner.
This procedure is secure and guarantee the strict confidentiality
of the whistle-blower, the facts that are the subject of the report
and the persons concerned. The use of this procedure in good
faith, even if the facts subsequently turn out to be inaccurate,
shall not expose the author of an alert to sanctions. On the other
hand, any abusive denunciation may lead to disciplinary sanctions
and/or legal proceedings.
General Data Protection Regulation
(GDPR)
Regarding the European Union data protection regulations, which
are supervised in France by the CNIL (Commission nationale
informatique et libertés), ESI Group, as a French company, must
comply with them.
In 2016, ESI Group launched an GDPR project and since then,
several measures have been put in place:
◗ a regularly updated treatment register;
◗ a public privacy policy available on the Group’s digital platforms
(websites, applications, etc.);
◗ internal procedures to respect the rights of individuals and to
manage incidents;
◗ policies to guarantee data security “Implementation of ISO
27001 certification: ongoing”;
◗ a contract to guarantee and control intergroup transfers;
◗ an impact analysis relating to data protection;
◗ employee awareness via an E-Learning platform: https://www.
iitr.de/;
◗ “Candidatus” recruitment platform to control compliance in
the processing of applications. “Implementation in France”.
As part of its continuous improvement approach, at the end of
2019, the Group has been equipped with a “Metacompliance” tool
that allows the following:
◗ E-Learning: to set up training dedicated to cybersecurity;
◗ Phishing: to simulate phishing attacks and raise awareness
among our users;
◗ Privacy: to improve monitoring of GDPR compliance through
a complete, visual and interactive interface.
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4.5.3. SET Up INITIATIVES TO INTERACT WITH CIVIL SOCIETY (GIVE-BACK)
By developing partner-
ships with the various
digital players, ESI
Group is once again
contributing to the
following Sustainable
Development Goals (4, 5 & 17, respectively): “Ensure inclusive
and equitable quality education and promote lifelong learning
opportunities for all”, “Achieve gender equality and empower all
women and girls” as well as “Strengthen the means of implementation
and revitalize the global partnership for sustainable development”.
ESI Group is convinced that it is by investing with various players
in the digital community that the Group will strengthen its position
as a leading player in digital transformation and leader in virtual
engineering.
/ Policies:
In order to facilitate collaboration and encourage industrial
innovation, the Group makes sure to create and maintain quality
relationships with various players in the digital community, at the
industrial, academic and associative levels.
/ Outcomes:
The Company is an active member of TECH IN France (formerly
AFDEL, the French association of software publishers), which
helps promote the software publishing industry and develop digital
simulation, and which currently represents over 400 members. In
so doing, ESI Group is strengthening its position in France as a
leading player in digital transformation and is bringing in its vision
for virtual engineering as well as its economic and social values.
ESI Group participates in several competitiveness clusters,
principally in France. These clusters provide the proximity needed
for collaborative work with major industrial players and research
and development organizations in order to bring highly innovative
products to market. Located all over France, these organizations
are as follows: Aerospace Valley (Toulouse), ASTech Paris Région
(Île-de-France), Nuclear Valley (Burgundy), Mov’eo (Normandy
and Île-de-France), I-Trans (Nord-Pas-de-Calais and Picardy),
iD4CAR (Nouvelle Aquitaine, Bretagne et Pays de la Loire),
Systematic (Île-de-France), Minalogic (Grenoble and Rhône-Alpes),
Pôle SAFE (Provence-Alpes-Côte d’Azur) and Pôle ViaMeca
(Auvergne-Rhône-Alpes).
Since 2013, ESI Group is present on the campus and the Board
of Directors of Ter@tec, Europe’s largest intensive computing
center, based 20 km outside Paris at the Saclay platform in
Île-de-France, alongside the CEA (the atomic and alternative
energy commission), a major player in research, development and
innovation. Today, ESI Group is involved in several collaborative
projects under the leadership of the System X IRT (Institute for
Technological Research).
ESI Group is also a member of the Executive Committee of the
Systematic Paris Region Competitiveness Cluster and of AS
Tech Paris Region, two local competitiveness clusters with a
global influence, which anime the collaborative research in the
Île-de-France ecosystem, respectively in the digital sector and
the aerospace industry.
As a pioneer in innovation in the automotive sector, the ID4CAR
cluster has appointed Vincent Chaillou, Chief Operating Officer
of ESI Group, as the new President of ID4CAR in February 2018,
after a regular attendance to its Board of Directors since 2012.
The aim of this cluster is to increase the competitiveness of the
sustainable vehicles and transportation sector in western France
through innovation. Through this presidency, ESI Group contributed
to the development of the strategic plan for the automotive
industry. These plans are developed at the initiative of the CNI
so that each CSF (strategic committee of the sector) develops
its own transformation plan towards the Industry of the Future
in general and particularly digitalization, by involving the entire
value chain contributing to the sector.
ESI is also one of the founding members of the Excelcar association.
Created in 2014, the aim of this structure is to revitalize and create
jobs around a FabLab technical platform of R&D excellence in
Bretagne (France) dedicated to the automotive industry under
the impetus of PSA. This initiative is supported by The Union
des Industries et des Métiers la Métallurgie of Ille-et-Vilaine and
Morbihan (UIMM 35-56), for the purpose of stimulating the
automotive industry in Brittany around PSA Rennes, which has
announced its strategic plan for the coming years. ESI participates
in the AM2 innovation platform specifically for developing a digital
simulation and Virtual Prototyping channel for new multi-material
and composite architectures, with priority given to the automotive
industry.
Again, in the transportation sector, ESI is an active member of
IRT Railenium whose main mission is to lengthen the lifecycle of
railways infrastructure and capitalize on the rapid international
development of its new products. Involving a broad consortium
of manufacturers and research organizations, in 2011, ESI Group
was selected by the Investissements d’Avenir (Grand Emprunt)
Program.
ESI also assists the mechanical engineering field and promotes
its activities. The Company is a member of the Board of Directors
of the Association Française de Mécanique (AFM), a body for
information, dialogue and discussion for the mechanical engineering
community (industry professionals and technology transfer
organizations, teachers and researchers) and representing French
mechanical engineering to its foreign counterparts.
When it comes to the aeronautics sector, ESI actively participates in
initiatives from the Council for Civil Aeronautics Research (CORAC)
undertaken as part of the Plan d’Investissement d’Avenir. In 2014,
ESI was invited by the seven top French aeronautics companies,
which are members of GIFAS, to join the Usine Aéronautique
du Futur (Aeronautics Factory of the Future) platform as an
associate member. This major initiative was launched to transform
production facilities in the fast-moving aeronautics industry, which
must deal with an unprecedented increase in requirements. As a
result, ESI participated in the development of a plan and is already
contributing to four major projects that aim to spread the use of
Virtual Prototyping and increase development of manufacturing
processes for the future, such as additive manufacturing or
manufacturing of large composite materials. ESI also participates
in other CORAC plans, like those for the DEPACE platforms for the
Composite Aircraft of the Future, the SEFA platform to develop
the Cockpit of the Future, and the plans for the Helicopter of the
Future, in order to strengthen French excellence in these fields. In
this way, ESI helps to make commercial aircraft cockpits safer and
more comfortable, and thus keep cost margins under control for
manufacturing important parts in helicopter transmissions boxes.
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Being an environmentally friendly player
ESI Group is also an active member of the Nuclear Valley cluster,
which helps to restore the competitiveness of the nuclear industry
on the international market by providing its expertise in virtual
reality to facilitate the replacement of existing equipment or its
maintenance.
Since 2013, several initiatives have emerged to design the Usine de
Demain (Factory of the Future) and to use it to drive competitiveness
and attractiveness for the region. ESI Group participates in the
Nouvelle France Industrielle, a national initiative, and contributes,
on this basis, to the work of the "Alliance Industrie du Futur".
Thereby, ESI contributes to several working groups that focus,
in particular, on developing and promoting key technologies of
the Industry 4.0.
ESI Group has coordinated the “Promotion of Existing Technological
Supply” group since its creation. In this regard, the Group is
working with its peers to structure and circulate the French
supply, in particular by jointly creating with the French Chamber of
Commerce and Industry the first national directory of Suppliers
of Solutions for the Industry of the Future (Offreurs de Solutions
Industrie du Futur – OIF). This tool will boost the technological
supply and its deployment within the industry both in France and
internationally. Through its action in this working group, ESI Group
has also contributed to launching the Créative Industrie trademark
in partnership with Business France. ESI’s IC.IDO virtual reality
solution was selected to illustrate the Value Chain Digitalization
Technologies trademark when it was launched by the current
President of the Republic of France, Emmanuel Macron, at the
“Salon de Hanovre” in April 2016.
ESI is also a player of the "Alliance Industrie du Futur" for the
development of key technologies for the industrial transformation.
Thus, ESI is the top-tier partner of the SOFIA program aiming to
develop the additive manufacturing sector in France (Solutions
pour la Fabrication Industrielle Additive Métallique). The additive
manufacturing, a numerical process, gives an essential role to
Virtual Prototyping, which positions naturally ESI as a key player
of this sector.
Regionally, ESI Group is part of the Aerocampus Aquitaine Cluster
which is the first European expert’s network that answers the
training needs of companies in the aeronautic and aerospace
sectors. The Aerocampus training center uses ESI IC.IDO, ESI’s
virtual reality solution, together with the Institute of Aeronautic
Maintenance (IMA).
ESI Group has worked with the Nouvelle-Aquitaine Regional
Council to create the “SMART 4D” simulation community within the
Digital Aquitaine cluster. This group brings together a number of
industrial, academic and institutional players from the region. It has
led to the creation of the first interdisciplinary digital community
dedicated to simulation, HPC, virtual prototyping and immersive
experience to support industries and future applications.
At the international level, ESI Group is involved in promoting French
know-how in the technological field of the Industry of the Future.
4.6. BEING AN ENVIRONMENTALLY FRIENDLY pLAYER
Considering the nature of its activity – distribution of software
and sales of consulting services – the Group believes its impact
on the environment to be very limited. All of its activities are
carried out in offices. However, the Group has still pledged to
work towards limiting its environmental footprint.
The main environmental challenges identified by the Group are:
◗ to reduce energy consumption in its buildings and data centers;
◗ to limit emissions of greenhouse gases associated with travel
by Group employees;
◗ to limit the impact related to waste electrical and electronic
equipment (WEEE).
Scope: France, Germany, Czech Republic, Switzerland, Spain,
United Kingdom, Italy, Tunisia, United States, Brazil, China, India,
Japan and South Korea.
4.6.1. DEVELOp SUSTAINABLE SOLUTIONS
From the outset, by developing innova-
tive Virtual Prototyping products, ESI
Group has sought to measure the impact
of its solutions on society. Indeed,
ESI’s solutions enable reductions in
the number of physical prototypes,
which are costly and require large amounts of energy, raw materials
and time, and bringing more environmentally friendly production
to the market. ESI Group contributes to through this challenge
to the Sustainable Development Goal 9 of the United Nations
“Build resilient infrastructure, promote inclusive and sustainable
industrialization and foster innovation”, as well as goal 12: “Ensure
sustainable consumption and production patterns”.
/ Policies:
ESI is committed through its solutions to helping its customers to:
◗ reduce time-to-market;
◗ reduce total product weight;
◗ reduce waste associated with prototyping and manufacturing;
◗ improve useful life of products;
◗ reduce the environmental footprint of products;
◗ improve the safety of the products.
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/ Outcomes:
Tighter regulations on greenhouse gas emissions and recycling
requirements, higher fuel prices and consumers’ growing
environmental concerns are all boosting demand for more
environmentally friendly products. Reducing one’s environmental
footprint now drives industry innovation. All the sectors where
ESI Group operates are working to improve their environmental
performance by manufacturing more environmentally friendly
products, developing more ecological manufacturing processes,
and reducing or eliminating physical prototypes.
By successfully combining advanced manufacturing processes
with the most innovative materials, such as composites, ESI’s
solutions bring customers the following advantages:
◗ Reduced time-to-market: with ESI ProCAST, Nissin Kogyo,
who develops, manufactures, and sells brake equipment for
two- and four- wheeled, could successfully cast complex shapes
after an analysis using precise finite element technology. All
possible defects were predicted with the highest accuracy. By
introducing ESI ProCAST on a full-scale basis, Nissin Kogyo
reduced their development time and trial production, allowing
them to reach the market faster.
◗ Reduced total product weight: using ESI’s Virtual Seat Solution,
the company Expliseat has developed the lightest seat ever
certified by the European Aviation Safety Agency (EASA). This
titanium seat is 50% lighter than the lightest models currently
available on the market (8 kg to 10 kg). This significant weight
reduction could result in an estimated 3% to 5% reduction in
fuel us-age, saving $300,000 to $500,000 per aircraft per year.
◗ Likewise, the use of Virtual Performance Solution by ESI experts
helps to design lighter vehicles to help vehicle manufacturers
in their weight reduction challenge. This challenge is even
more present today with the acceleration towards the electric
vehicle, whose weight, and particularly the weight of the battery,
becomes a central issue.
◗ Reduced waste associated with prototyping and manufacturing:
Students from the Czech Technical University in Prague (ČVUT),
Czech Republic, were able to avoid physical crash tests of their
race car thanks to ESI Virtual Performance Solution (VPS), using
only virtual tests of the material to validate the model. This
enabled them to move swiftly to the design optimization of the
crash absorber structure. The capability of VPS to complete
multiple simulations on a single core model allowed the team
to thoroughly examine various measurements. The End to End
solution supported the project goals, which were met entirely
within the allotted time and budget.
◗ Improved useful life of products: the creation of a Hybrid TwinTM
based on the virtual prototype to recreate the behavior of a
windmill in operation and in its environment helps to ensure
the maintenance and to reduce its cost (-47%). The predictive
maintenance and the repairs optimization allow an increased
reliability of windmills.
◗ Reduced gas emissions: Thanks to ESI PAM-STAMP solution,
Kirchhoff Automotive was able to integrate ultra-high strength
steel, which caused a spring back issue, into the conception
and forming process of its components more quickly. This new
material offers a lightweight option to traditional steels and can
thereby contribute to reduced CO2 emissions.
As such, ESI Group’s digital prototypes can significantly reduce
consumption of raw materials and energy and help achieve
compliance with environmental standards for new products as
shown in these examples. Furthermore, the new Hybrid TwinTM
concept of the Group targets product predictive performance and
maintenance, to optimize repairs, facilitate certification update,
and minimize re-calls.
4.6.2. REDUCE THE ENVIRONMENTAL IMpACT OF THE GROUp
Reduce greenhouse gas emissions
/ Outcomes:
As ESI Group operates both in France and internation-
ally, and as its activity is within the tertiary sector,
transport is the main source of its greenhouse gas
emissions. ESI Group’s actions meet the Sustainable
Development Goal 13 “Take urgent action to combat
climate change and its impacts”.
/ Policies:
In order to reduce its carbon footprint, ESI Group is committed
to a process of:
◗ limit emissions resulting from business travel by train and by plane;
◗ limit CO2 emissions from company car travel;
◗ develop the use of web conferencing tools.
To limit travels, the Group updated its travel policy. This policy is
global in scope and adapts to local specificities. Employees are
encouraged to travel by train rather than by plane for trips of less
than three hours. In France, a car policy also applies to people with
a company car (as the French vehicle fleet is mainly comprised
of vehicles under three years old). A car policy is also defined in
the German site of Neu-Isenberg. In 2015, ESI Group began to
redraft its “Good Driver Charter” to incorporate limitations on,
among other things, engine power and CO2 emissions. This policy
is initially applicable to French employees but should be extended
to all ESI sites. During the first quarter of 2019, a new tool was
implemented to centralize travel requests and employee expenses
throughout the Group. This tool will facilitate administrative
procedures and, above all, will allow a better monitoring of travel
across the whole ESI Group.
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In 2019, emissions resulting from business travel by French, American
and German employees by train and by air totaled 986 kg per
employee, an increase of 15% compared 2018. It should be noted
that two out of seven members of the Executive Committee are
based outside France. Also, data are provided by the travel agencies
responsible for booking the trips. Any bookings made directly by
employees are not accounted as information are not available.
In 2019, 45 employees in France had a company car, 46 in Germany,
33 in the Czech Republic, five in Spain, five in Italy and two in
Switzerland. In Japan, India and China, only one person had a
company car. There were no company cars in the United States,
in Tunisia or Brazil in 2019. The granting rate of company cars is
higher in Germany due in particular to the higher proportion of
salespeople and to German culture which encourages this type
of compensation.
The estimate of annual CO2 emissions from company car travel
in France was 146,637.7 kg or 3,258.6 kg per company car, with
a 5.4% decrease compared to last year.
Overall, business travel by French employees generated 436.8 tons
of CO2 in 2019, a decrease of 11.5% per employee.
As for company cars in the Czech Republic, the estimated emissions
in 2018 were 98 tons of CO2, with an average of 2,970 kg per car,
a decrease of 7% compared to 2018.
Finally, for Germany, the estimate of emissions related to trains
and airplanes amounts to approximately 165 tons of CO2 (for
the three entities), down 13% compared to 2018 (two entities).
Vehicle-related consumption amounts to 1,766 kg of CO2 per
vehicle, a slight decrease of 5%.
Among the measures taken over the past several years, the
adoption of Gelato, a service allowing subsidiaries to locally order
documents they need, has allowed the Group to save paper thanks
to this print-on-demand plantroom. From the adoption of this
solution in May 2018 and until the beginning of March 2020, Gelato
helped the Company to avoid 1,954,376 km of delivery distances,
representing a decrease of 70% of the distances previously made
to deliver brochures and other documents. This is equivalent to
a saving of 2,625 kg of paper and 11,019 kg of CO2 emissions.
In order to limit the transportation footprint, the Group also
provides employees with web conferencing tools to encourage
digital collaboration between employees in different sites, without
having to travel. Some meeting rooms are also equipped with audio
and/or videoconferencing systems to facilitate remote meetings.
Also, from October 2019, all workstations have been equipped
with the "Teams", a Microsoft software (which replaces "Skype
Enterprise" internally), enabling more efficient online meetings
(audio + video) for up to 250 people.
On average in 2019, around 300 audioconferences via “Teams”
and “Skype Enterprise” were organized per day within the Group
(which is almost doubled from last year), with an average duration
of 115 minutes per call.
Ensure a more sustainable consumption
ESI Group believes that environmental responsibility
should be a priority for all companies and strives to
reduce its environmental impact and to manage its
resources in a more sustainable way and contributes
to the same Sustainable Development Goal as the
previous section (13): “Take urgent action to combat
climate change and its impacts”.
/ Policies:
The main environmental issues in which ESI is involved are:
◗ limiting energy consumption;
◗ limiting paper consumption and transitioning to the use of
recycled paper;
◗ limiting water consumption;
◗ develop a waste recycling process all over the sites;
◗ constantly raise its employees’ awareness of measures taken to
avoid wasting energy, and thereby to reduce its environmental
impact.
/ Outcomes:
Energy consumption
In 2019, electricity consumption at the Rungis site totaled
452,027 kWh, an average of 1,412.6 kWh per employee, a decrease
of 3% Thus, a better energy consumption management can be
possible. On the Ter@tec campus where ESI has been involved
since 2012, the installation of the PoD in 2016 (Point of Delivery – a
high density mobile data center that can house up to 3,500 server
nodes) increased the energy consumption (+24.24% in 2017 and
+10.45% in 2018). For the Lyon site, consumption amounted to
50,678.09 kWh in 2019. For the other French sites, electricity
consumption is not available, as it is either included in the rental
or collective charges.
Average electricity consumption per employee came to 3,247.15 kWh
for the sites in France (Rungis site only), the Czech Republic, Tunisia,
China, South Korea and the UK, representing a slight decrease of
3% compared to 2018. In Germany, electricity consumption came
to 392,234 kWh in 2019 and has doubled compared to last year, in
view of the inclusion of a third German site in the analysis scope.
Moreover, energy consumption in the United States is not
measurable as the facilities are leased. Energy usage is included
in the utility fees, which include factors other than electricity, and
is re-evaluated annually.
Within the 2019 reporting scope, ESI Group uses renewable
energy production at its Swiss site, where hydropower is used
for electricity and thermic energy for heat. The Swiss office
is located in a Minergie-certified building. Minergie is a Swiss
association whose objective is to reduce energy consumption
in buildings by proposing rational energy consumption and the
use of renewable energies.
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To minimize energy consumption, the Group has installed LED
lights at its Rungis, Paris and Ter@tec offices in France and at its
offices in India. In addition, during upgrades of certain workspaces
in France, the Group has given preference to lighting with low
power consumption, removed hot water tanks from restrooms,
and refurbished air conditioning systems. Motion sensors have
been installed for lighting systems in Tunisia, in San Jose in the
USA, and also in ESI Software in Germany. In Japan, the lights
automatically turn off after a while.
Furthermore, an energy audit has been realized in 2017 on the
three German sites of the Group, in Neu-Isenburg, Stuttgart and
Dresden. The result shows that the sites are good energy quality.
It should be also noted that the Spanish office in Madrid is part
of a LEED (Leadership in Energy and Environmental Design)
certification project, led by the owner of the main building.
paper consumption
Everyday use by employees is the main source of paper consumption.
Evolution of annual paper consumption
per employee
(in number of reams of 500 sheets)
1.1
1.4
3.2
1.4
1.9
4.4
-15%
1.05
2.9
2.9
1.4
3.5
3.9
Others
China
South Korea
Switzerland
France
Japan
Average 2018
Average 2019
2 reams
/person
1.7 reams
/person
Paper consumption per employee
(in number of reams of 500 sheets)
4.4
3.9
2.1
1.6
3.5
1.9
1.22
1.0
1.4
1.2
1.4 1.4
0.7
0.4
0.7
0.4
3.2
2.9
2.9
1.9
1.3
1.1 1.0
1.4
0.98 0.85
1.0
0.9
United
States
Japan
Czech
Republic
France Germany Switzer-
land
United
Kingdom
Italy
India
Tunisia
South
Korea
Spain
China
Brazil
2018
2019
All over the study perimeter average paper consumption in
2019 was a relatively low with about 1.7 reams of paper used
per employee, with a decrease of 15% compared to 2018. This
average could have been lower in 2019; it is partially explained
by the inclusion of all French sites in the analysis, unlike last year.
Thus, paper consumption in France went from 1.9 in 2018 (Rungis
only) to 3.5 reams (all French sites).
a Cloud-based service for electronic document archiving and
storage, was installed in 2016.
In early 2017, employee representatives were elected in a fully
electronic voting process, preventing the need to print ballots for
the nine offices in France. Annual evaluations were also performed
electronically in 2018 using the Loopline Systems tool.
Paper consumption is higher in Japan, with a decrease of 11% in
2019. In China, paper consumption increased by 11.2% in 2019, in
view of the large and exceptional number of tenders and local
projects that required paper printing.
However, Japan made 100% of its prints with recycled paper,
followed by Spain on 50% of its prints and China on 35%. More
than 70% of the countries included in the scope have automatically
set up black and white and double-sided printing.
ESI Group also continues its electronic documents program by
implementing IT tools and processes to reduce the use of paper
and energy consumption related to printing. Dematerialization
has been established for many documents, including travel orders,
leave requests and offer reviews. The invoices and purchase order
processing is done via a tool called Yooz. In addition, SharePoint,
ESI also offers its employees in France the possibility to create a
safe on Digiposte to dematerialize HR documents such as pay slips.
In addition, the use of a new local printing and delivery tool, called
Gelato, allows subsidiaries to locally order the necessary quantity
of documents they need. Ultimately, this tool saves paper by
printing on demand, which allows ordering only what is needed
and on a local basis.
Finally, the Group has decided to stop printing its Universal
Registration Document in paper format, reflecting ESI’s desire to
continue reducing paper consumption and avoid unnecessary use
and waste of paper. As indicated in Chapter 9 of this document,
the Universal Registration Document will be available in electronic
version on the Company’s website and will be available for
consultation at headquarters upon request.
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Water consumption
The Company’s business is not very water intensive as it does not
require water for production. ESI Group’s water is therefore solely
for sanitary use and is drawn from urban networks.
It is difficult to perform an accurate assessment of water
consumption. The Group is the lessee of all of its offices, and the
water consumption of each site is included in rental charges and
can therefore not be broken down in detail. However, as for the
sites for which we have information (Rungis site in France, ESI
Mecas in the Czech Republic, the Spanish and Chinese sites), the
average water consumption in 2019 was of 7.46 m3 per employee,
a decrease of 7.23% compared to last year. For the Rungis site in
France, water consumption rose from 132 m3 in 2018 to 1,182 m3 this
year – this increase is mainly due to the move to a new building
in 2019, with different equipment (more toilets, cafeteria, etc.).
Water consumption is not measurable in other sites, as it is
either included in the annual rental or collective charges, where
parameters other than water consumption are taken into account.
Waste disposal and recycling
Due to its activity, ESI Group mainly produces non-hazardous
waste, as well as paper, cardboard and plastic. To the best of its
knowledge, the Group does not generate any hazardous waste,
except waste electrical and electronic equipment (WEEE).
In 2014, recycling bins were introduced on the Lyon site, the
second biggest site in France, as it was done in 2013 on the Rungis
site. Thus almost 100% of the French workforce is aware of this
action in the daily life.
In France, at the Rungis and Lyon sites, ESI is working with Elise,
a waste collection and recycling company that provides stable
employment for people with integration difficulties, particularly due
to disability. In 2019, Elise recovered 868.5 kg of waste, including
653.5 kg of paper. Recycling this waste saved 16,375.5 liters of
water, 4,932.8 kWh of energy and 13.3 trees.
All the German, American, Czech, Japanese, Spanish, Italian and
Swiss sites are also equipped with bins for sorting waste. It is
planned to extend this measure to all European sites in the future.
When it comes to other specific waste, notably waste of electrical
and electronic equipment (WEEE), ESI Group attaches great
importance to the environmental management of its IT equipment,
in terms of both its use and its recycling.
The Group’s IT equipment mainly comprises desktop and laptop
computers, servers, copiers and printers. The Group cannibalizes
computer hardware (uses parts of one machine to repair another)
whenever possible to give a second life to some faulty equipment.
In France and the United States, end-of-life or obsolete hardware is
collected by an authorized provider that manages the processing of
electronic waste. In Germany, the Cleaning and Facilities Management
Department, in coordination with the IT Departments, is tasked
with collecting used electronic equipment. Waste management
is then passed on to the local authority of each city. In Spain, an
instruction explains where obsolete electronic equipment must
be taken in order to be recycled.
Furthermore, on request to our supplier in France, printer cartridges
are collected and recycled via a completely ecological chain.
Lastly, in the entire environmental scope, except Tunisia, ink
cartridges, batteries, defective light bulbs and fluorescent tubes
are recovered by our various suppliers. Containers are available
to staff for this purpose in offices.
Raising employee awareness
During summer 2018, ESI produced a short video clip for all
employees on simple ecofriendly actions to adopt at work (https://
www.youtube.com/watch?v=nUIdRRLDgRk). In 2019, a new online
discussion group has been created on our internal communication
platform “Chatter”, regarding environmental issues. This has
enabled employees to share eco-responsible actions carried out in
their professional and/or personal environment, all over the world.
4.7. REpORTING
4.7.1. REpORTING METHODOLOGY
Data collection and consolidation
Scope
The Company has implemented a differentiated data collection
and consolidation process according to the themes. Social
reporting is covered by an HR officer who works with local HR
representatives. The corporate communication team is responsible
for environmental and societal reporting through local professional
representatives. The Group plans to gradually broaden the scope
until it covers every subsidiary in a reliable manner.
The available data are sorted into three geographic areas
corresponding to the Company’s business divisions:
The Group’s ambition is to gradually expand the scope of coverage
until it achieves full and reliable coverage of its subsidiaries. In line
with its commitments, in 2019, ESI Group continued its actions to
increase the collection and analysis of indicators internationally.
◗ Scope of social reporting:
Since 2012, ESI’s Human Resources Information System has been
upgraded to Sales Force for all countries, with local manage-
ment of all payroll systems in order to take into account local
specificities. Social data thus represents 100% of the workforce.
◗ Americas = Brazil and United States;
◗ Scope of environmental reporting:
◗ Asia-Pacific = China, India, Japan, Malaysia, South Korea,
Thailand and Vietnam;
◗ Europe, Middle East and Africa = Czech Republic, England,
France, Germany, Italy, Netherlands, Russia, Spain, Sweden,
Switzerland and Tunisia.
Since 2018, the Company has integrated Italy and Brazil to
broaden the scope of environmental data reporting. As a result,
environmental data are now provided by France, Germany,
the Czech Republic, Japan, the United States, Tunisia, India,
Switzerland, China, Spain, the United Kingdom, South Korea,
Italy and Brazil, representing 99% of the workforce.
◗ Scope of societal reporting:
Societal information is provided at a global level. Hence, the
reporting scope represents 100% of ESI’s headcount since 2016.
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CONTENTS
4.7.2. REpORT OF THE INSpECTING ORGANIZATION
Period from February 1, 2019 to December 31, 2019
To shareholders,
Following the request received from ESI Group (referred to hereinafter as “the entity”) and in our capacity as an independent third-party
body with an accreditation granted by the COFRAC under registration No. 3-1081 (available on www.cofrac.fr), we hereby present our
report on the consolidated statement on non-financial performance for the period from February 1, 2019 to January 31, 2019 (referred
to hereinafter as the “Statement”), presented in the Group’s management report in accordance with the statutory and regulatory
provisions of Articles L. 225-102-1, R. 225-105 and R. 225-105-1 of the [French] Code of Commerce.
Entity’s duty
The Board of Directors has a duty to draw up a Statement that complies with statutory and regulatory provisions, including a presentation
of the business model, a description of the main non-financial risks, a presentation of the policies applied in view of these risks together
with the results of those policies, including key performance indicators.
The Statement has been drawn up according to the authoritative accounting pronouncements used, (referred to hereinafter as the
“Pronouncements”) by the entity whose significant elements available upon request from the Company’s head office.
Independence and quality control
Our independence is defined in the provisions of L. 822-11-3 of the [French] Code of Commerce and the profession’s Code of Conduct.
Moreover, we have set up a quality control system that includes documented policies and procedures aiming to ensure that rules of
conduct, professional ethics and the applicable statutory and regulatory provisions are complied with.
Duty of the independent third-party body
We have a duty, on the basis of our work, to formulate a reasoned opinion expressing a conclusion of a moderate level of assurance as to:
◗ the Statement’s compliance with the provisions set out in Article R. 225-105 of the [French] Code of Commerce;
◗ the sincerity of the information furnished in application of 3° of I and of II of Article R. 225-105 of the [French] Code of Commerce,
namely the results of the policies, including key performance indicators and actions relating to the main risks, referred to hereinafter
as the “Information”.
However, we have no duty to give an opinion on:
◗ whether the entity has complied with other applicable statutory and regulatory provisions, including, matters relating to the vigilance
plan and the fight against corruption and tax evasion;
◗ compliance of products and services with applicable regulations.
Nature and scope of the work
We carried out the work in accordance with standards that apply in France and that determine the ways in which the independent
third-party body carries out its mission, and with international standard ISAE 3000.
We carried out our work between March 30, 2020 and April 17, 2020 for a period of approximately eight days/person.
We held three interviews with people in charge of the Statement.
We carried out the work enabling us to evaluate the extent to which the Statement complies with the regulatory provisions and the
sincerity of the Information:
◗ we informed ourselves of the activity of all of the companies falling within the scope of the consolidation, of the exposure to the
main corporate and environmental risks linked to this activity, and of its effects on human rights and the fight against corruption
and tax evasion together with the policies that ensue and their results;
◗ we looked into the appropriateness of the Pronouncements with a view to their relevance, exhaustiveness, reliability, neutrality and
comprehensive nature, taking into account, where necessary, the sector’s good practices;
◗ we checked that the Statement covered each category of information provided under III of Article L. 225-102 1 on corporate and
environmental matters and whether human rights were being complied with and the fight against corruption and tax evasion;
◗ we checked that the Statement presents the business model and the main risks linked to the activity of all of the companies falling
within the scope of the consolidation, including, where relevant and proportionate, the risks created by business relations, products
or services as well as policies, actions and results along with key performance indicators;
◗ we checked, where relevant in view of the main risks or policies presented, that the Statement presents information set out in II of
Article R. 225-105;
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◗ we looked into the selection and validation process of the main risks;
◗ we enquired about the existence of internal verification and risk management procedures set up by the entity;
◗ we looked into the coherence of results and of key performance indicators used in view of the main risks and policies presented;
◗ we checked that the Statement covers the consolidated scope, namely all of the companies falling within the scope of consolidation
in accordance with Article L. 233-16 with the limits set out in the paragraph 3.1 The methodology and 3.4.3 Being an environmentally
friendly player;
◗ we studied the information-gathering process set up by the entity aiming to obtain information that is exhaustive and sincere;
◗ with regard to key performance indicators and other quantitative results that we consider to be the most important, we implemented:
• analytical procedures consisting of checks to ensure that the data collected was consolidated correctly and that its evolution was
coherent;
• detailed tests on the basis of surveys, consisting of checks to ensure definition and procedures were applied correctly and of
checks linking data to supporting documentation. This work was carried out with a selection of contributing entities(3) and covered
between 14% and 100% of the consolidated data of the key performance indicators and results selected for these tests(4);
◗ we consulted documentary sources and held interviews to corroborate what we considered to be the most important qualitative
information (actions and results);
◗ we looked into the overall coherence of the Statement with reference to our knowledge of the companies as a whole falling within
in the scope of the consolidation.
We consider that the work carried out and, exercising our professional judgment, enables us to formulate a conclusion of a moderate
level of assurance; a higher level of assurance would have required more extensive verification work.
In view of the fact that sampling techniques were used and that there are other limits inherent to the functioning of any system of
information and internal control, we cannot rule out totally the risk that a significative anomaly in the Statement has not been detected.
Conclusion
On the basis of our work, we did not note any significant anomaly of such a nature as to cast any doubt on the fact that the statement of
non-financial performance complies with the applicable regulatory provisions and that that Information, as a whole, has been presented
with sincerity, in accordance with the Pronouncements.
Lyon, on April 23, 2020
FINEXFI
Isabelle Lhoste
Partner
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(3) Social indicators: ESI Group.
Environmental indicators: ESI site in Lyon, Rungis, Tunisia and Czech Republic.
(4) Developing talent and encouraging leadership and collaborative management, Promoting diversity and reducing inequalities, Contributing to the
well-being of employees and ensuring the quality of life in the workplace, Limiting the impact of the Group’s locations.
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MANAGEMENT
REPORT
Financial year 2019
(ended December 31, 2019)
5
5.1. BUSINESS ACTIVITIES DURING THE 2019 FINANCIAL YEAR 96
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5.1.1. Highlights of the 2019 financial year
5.1.2. Results from the consolidated financial statements
5.1.3. Research and development
5.1.4. ESI Group annual financial statements
and allocation of net result
5.2. OUTLOOK
5.2.1. Launch of a new Piloting Framework
5.2.2. Business trends
5.3. TABLE SUMMARIZING THE RESULTS
OF PAST FIVE FINANCIAL YEARS
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101
101
101
102
In accordance with the resolution of the General Meeting of July 18, 2019, the Group now closes its financial
statements at 31 December of each fiscal year.
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MANAGEMENT rEporT
Business activities during the 2019 financial year
CONTENTS
As a reminder, in accordance with the decision of the General
Meeting held on July 18, 2019 the Group’s fiscal year new closing
date is December 31.
In accordance with Article L. 451-1-2 of the French Monetary and
Financial Code, this Chapter includes the Management Report to the
General Meeting validated by the Board of Directors on March 19,
2020. This report accounts for the Company’s activities during
the 2019 financial year (ended December 31, 2019), including the
result of these activities and the Company’s outlook, and presents
the Company’s accounts and balance sheets for the financial year.
Information on various risk factors is included in Chapter 3 “Risks
and risks management.”
The Extra-Financial Performance Statement is reproduced in full
in Chapter 4 of this document.
Information on the Company’s share capital, stock options and
free shares grant plans, and the transactions on the Company’s
shares are included in Chapter 8 of this document.
5.1. BUSINESS ACTIVITIES DUrING THE 2019 FINANCIAL YEAr
5.1.1. HIGHLIGHTS oF THE 2019 FINANCIAL YEAr
Financial position
As anticipated, ESI Group has strengthened its growth in 2019,
in a context of ongoing business and operational transformation.
Evolution of Group Governance
As announced in September 2018, the Board of Directors nominated
Cristel de Rouvray as Chief Executive Officer starting February 1,
2019, Alain de Rouvray remaining Chairman of the Board of Directors.
The Group set up a new Piloting Framework, aiming to reach
performance in a more efficient way (refer to section 5.2.1).
Set up of an operational excellence and
strategic focus plan
Aware of the potential offered to it but also of the initiatives to be
implemented to achieve its objectives, the Company has launched
an ambitious short- and medium-term action plan based on two
fundamental axes:
1. Operational excellence
◗ optimize operational performance by clarifying the Group’s
organization,
◗ measure, energize and control performance,
◗ improve internal/external readability by implementing “Best-
in-class” management tools;
2. Focus: increase commercial efficiency and maximize the ROI
of innovation
◗ capitalize on acquired technologies (M&A) and their complete
integration into the Group’s solutions,
◗ align commercial/R&D resources with a channel (Engineering,
Manufacturing, In-Service) and industry approach,
◗ develop a differentiated strategy for each of our four key
industries, representing 88% of sales in 2019, and by customer
type (large accounts and others).
5.1.2. rESULTS FroM THE CoNSoLIDATED FINANCIAL STATEMENTS
5.1.2.1. Review of financial performance
Further to General Meeting decision on July 18, 2019, the closing
date of the fiscal year has been shifted from January 31 (Y+1) to
December 31 (Y). As a consequence, 2019 fiscal year ran for 11
months, from February 1, 2019 to December 31, 2019.
To ensure comparability of presented information, proforma
figures have been recalculated on main aggregates of financial
statements, from January to December, for 2019 and also for
2018. Change in proforma results represents evolution of Group
financial performance.
In accordance with AMF Recommendation 2013-08, proforma
information has been produced on 12 months at new closing date.
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Business activities during the 2019 financial year
The consolidated financial information presented below is compliant with IFRS standards.
(in € millions)
Total sales
Licenses
Services
Gross margin
% of sales
EBITDA (before IFRS 16)
% of sales
Operating result (before IFRS 16)
% of sales
IFRS 16 standard impacts
◆ on EBITDA
◆ on operational result
2019 proforma
January to
December
2018 proforma
January to
December
Variation at
actual currency
rate
Variation
at constant
currency rate
7.8%
8.4%
5.4%
10.1%
5.6%
6.0%
3.8%
7.6%
52.2%
39.9%
126.6%
100%
146.2
115.9
30.3
107.4
73.4%
12.3
8.4%
8.3
5.7%
5.4
0.2
135.7
106.9
28.8
97.5
72.3%
8.1
6.0%
3.6
2.7%
N/A
N/A
Improved financial results
Full year sales increased +7.8% to €146.2 million (+5.6% at constant
exchange rate), driven by an 8.4% growth in software license
activity yielding stronger business recurrence. This topline growth
has a positive impact on financial performance as the Group
maintained control of the costs.
Gross margin improvement
Gross margin rose to €107.4 million (up 10.1% improving by +1.5
points to 73.4% vs. 71.9%). This increase was driven by the rise
in licensing gross margin to 86.2% (vs. 84.5% in 2018 proforma)
and the increasing proportion of license sales in the revenue mix.
Lower growth in other operational costs
The Group maintained its efforts to control other operational
expenses (+5.6%, +€5.2 million) to support overall revenue
increase and long-term development. Note that €1.5 million of
the €5.2 million cost increase is linked to exchange rate (+4.0%
at constant exchange rate).
Improved profitability
EBITDA (before IFRS 16) increased to reach €12.3 million (vs.
€8.1 million), now 8.4% of total sales (vs. 6.0%). EBIT (before IFRS 16)
rose to €8.3 million (vs. €3.6 million), now 5.7% of total sales.
Sharpened value proposition on a handful
of priority industries and solutions
2019 was a year of dynamic business development worldwide,
driven by engagements with global industry leaders, whether
long-term customers or accounts that have recently surfaced as
strategic partners.
These industrial actors are increasingly held to a result, an
“outcome”: the service that their machine/car/part etc., offers,
such as mobility, hours of maintenance-free flight or number of
landing events, making them accountable for environmental and
societal impact and for the experience “in service”. This entails
being able to anticipate the way their industrial product or asset
operates in numerous and uncertain use-conditions, thus shifting
the standards of success to performance in use rather than
standard product development efficacy.
ESI’s mission is to enable industrialists to commit to these
outcomes, in a handful of major industries – Automotive & Ground
Transportation, Aeronautics & Aerospace, Energy and Heavy
Industry. The Group has now organized its value proposition
around specific outcomes for our customers:
◗ Pre-certification
◗ Smart Manufacturing
◗ Human Centric
◗ Pre-experience.
5.1.2.2. Financial position –
consolidated balance sheet
As at December 31, 2019, the Group’s cash position was €20.2 million,
compared to €12.4 million at December 31, 2018.
Financial debt amounted to €49.6 million (vs. €51.6 million).
The Group’s net debt stood at €29.4 million (vs. €39.2 million
at end December 2018). Gearing (net debt to equity) improved
to reach 34.4%.
At December 31, 2019, ESI Group held 6.3% of its share capital
in treasury shares.
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CONTENTS
5.1.2.3. Cash flows and financing
Cash position at December 31, 2019 amounted to €20.2 million
compared to €12.4 million at December 31, 2018. The €7.8 million
increase over financial year 2019 can be explained by:
◗ an operating cash-flow of +€5.7 million;
◗ a change in working capital requirements (WCR) of +€4.9 million;
◗ current capital expenditures paid by the Company of -€2.6 million,
which represent a significant decrease compared to the two
previous years (offices location moves);
◗ other financing and investing operations representing a net
outflow of -€0.2 million, mainly corresponding to the yearly
installment of the syndicated loan for -€2 million, to a new
financing facility signed with BPI France for +€2.2 million, and
-€1 million spent to purchase minority interests for several
Group’s subsidiaries.
5.1.3. rESEArCH AND DEVELopMENT
5.1.3.1. Research and development costs
The Products Direction also maintains a technology watch in
support of all products.
Research and development investments are recorded as soon
as they are incurred. These costs amounted to €36.4 million in
2019 proforma accounts, an increase of 1.1% compared to 2018
proforma accounts.
The capitalization of development costs had a +€2.1 million impact
on the 2019 proforma income statement (vs. +€2.4 million in 2018
proforma).
A breakdown of the expenses is provided in the note 6.1.2. to the
consolidated financial statements.
/ Research and development (R&D) policy
Not only the Outcome & Product Operations teams but also
Discovery & Innovation teams in charge of R&D deliver products
in line with the Group’s strategy and market needs and seeking to
maintain the competitive edge of ESI Group’s solutions, focused
on outcomes and industries.
The R&D policy supports:
◗ the business model to adapt the changes in how products
are used and to push boundaries for new computer platforms
(GPU, SaaS, Cloud) or platforms in development with a view
to upgrading the installed base;
◗ product improvements with a view to expand the installed
base or winning over new customers with existing products;
◗ new products with a view to encourage our customers to deploy
new products and processes or to improve their performance
by working jointly with ESI Group.
The teams allot different levels of investment depending on the
maturity of the product:
◗ investments are made in mature products to ensure maintenance,
product improvements, widespread adoption of major innovations,
and the delivery of new, competitive products;
◗ investments are made in emerging products with greater
demand and with the potential to drive growth, to accelerate
adoption of these products in industrial applications;
◗ investments are made in innovative products by increasing
research contracts with leading customers to ensure the
viability of these new tools, and where applicable, to increase
the chance of commercial success.
The teams follow an approach that is both specific and generic
in nature to meet different goals:
◗ ensuring generic products and components to meet multiple
needs in multiple industrial segments and to support develop-
ments of services, customers, or third parties;
◗ ensuring the competitiveness and productivity of our products
by targeting specific, high-potential business applications and
solutions;
◗ maximizing synergies between products to make it easier
to release competitive, affordable versions and minimize
maintenance efforts;
◗ integrating this generic expertise into a comprehensive virtual
prototyping platform that makes it easy to take needs into
account for specific applications or custom services.
The teams continue to partner actively to ensure:
◗ the identification of technologies, acquisition targets, and market
opportunities in collaboration with its Scientific Committee;
◗ an evaluation of financing opportunities to support the levels
of investment;
◗ a discovery process in partnership with the various approaches
to research and development (academic chairs, European
projects, and co-creation projects);
◗ a rapid industrialization for optimal market introduction.
This environment reduces risks and ensures a high rate of
co-financing and research tax credits.
The Outcome & Products Operation division follows a methodology
tailored to the needs of highly innovative customers and always
uses the best tools on the market to avoid redundancies and the
obsolescence of in-house solutions. In addition, nearshoring or
multi-shoring, which is used to strike a balance between human
interests and financial interests, is being expanded to reduce
dependence on exchange rate effects and to reduce related
expenses.
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Business activities during the 2019 financial year
5.1.3.2. Intellectual property
(excluding trademarks)
Most of the Company’s intellectual property consists of software
and databases that are protected by international copyright, by
specific laws concerning database producers within the European
Union, and by competition law outside the EU.
The ownership of all development work ordered and performed
by ESI Group’s subsidiaries is transferred to the Company. ESI
Group products are either owned directly by the Company or
published by the Company under publishing contracts held by its
subsidiaries (which were owners of related intellectual property
rights before being acquired by the Company).
Most of the software products and databases published by the
Company belong to ESI Group.
The Company is the beneficiary of publishing contracts for the few
products that belong to third parties. These products represent
either software integrated within the Company’s offering (for
which replacement solutions could be obtained if the third-party
software is discontinued) or complementary solutions. These
latter solutions are not, however, critical to the operation of the
Company’s software.
Furthermore, the Company owns patents directly or through its
subsidiaries.
5.1.4. ESI GroUp ANNUAL FINANCIAL STATEMENTS
AND ALLoCATIoN oF NET rESULT
5.1.4.1. ESI Group annual financial
statements
ESI Group is the parent company of the Group; therefore, it owns
and/ or controls all of its subsidiaries.
It oversees all of its subsidiaries and centralizes most of software
publishing activities.
ESI Group’s revenue consists mainly of:
1. Royalties paid by subsidiaries, distributors, and agents and
received in return for the right to grant software licenses to
end customers;
2. Amounts billed to direct customers for software licensing and/
or services, in territories not covered by its subsidiaries;
(in € thousands)
Revenue
Inventory
Net impact of capitalization of development costs (capitalization
and amortization)
External expenses
Salaries and social charges
Other change
TOTAL OPERATING PROFIT
(1) February 1, 2019 – December 31, 2019.
(2) February 1, 2018 – January 31, 2019.
3. Management fees billed to subsidiaries as compensation for
ESI Group oversight responsibilities;
4. Self-created assets stemming from research and development
work.
2019 fiscal year ran for 11 months, from February 1 to December 31,
not including January. This month being very significant in terms
of revenue, 11 months results differ considerably from those of a
complete 12 months fiscal year.
The operating result for 2019 is a loss of -€24.7 million, compared
to a loss of -€0.3 million for the previous year. This drop results
from significantly lower revenue, due to the 11 months fiscal year.
2019(1) (Feb.-Dec.)
2018(2) (Feb.-Jan.)
55,296
(553)
476
(56,220)
(23,041)
(651)
(24,694)
86,023
53
1,901
(62,674)
(24,710)
(930)
(337)
Change
(30,727)
(606)
(1,425)
6,454
1,669
279
(24,357)
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CONTENTS
ESI Group financial result is a loss of -€5.2 million compared to a profit of €2.6 million in 2018. The financial result can be broken down
as follows:
(in € thousands)
Realized foreign exchange currency result
Interests on loans
Net provision for depreciation of investments and related receivables
Dividends received from subsidiaries
Other financial income (expenses)
TOTAL
(1) February 1, 2019 – December 31, 2019.
(2) February 1, 2018 – January 31, 2019.
December 31, 2019(1)
January 31, 2019(2)
103
(857)
(4,514)
194
(149)
(5,223)
143
(824)
1,517
1,690
70
2,595
Operational and financial results lead to an income before
tax which is a loss of -€29.9 million, compared to a profit of
€2.3 million in 2018.
The Company has also recorded -€1 million of exceptional losses,
compared to -€2.1 million in 2018.
The Company recognizes a profit on income tax of €3 million,
compared to €2.7 million in 2018, due mainly to French R&D tax
credit.
Net result is a loss of -€27.9 million, compared to a profit of
€2.8 million in 2018.
The Company’s equity stands at €72.7 million, compared to
€100.4 million end January 2019, due to 2019 fiscal year net loss.
Main changes in the balance sheet are the following:
◗ Decrease in account receivables by -€21.6 million, from €61.6 million
to €40 million: this important change is the result of the change
of closing date from end January to end December and of the
seasonality of our activity in January;
◗ Increase of financial debt by +€9.5 million, due mostly to a
higher use of the revolving credit line (€10 million used, which
is a usual level end December each year, compared to €1 million
used end January 2019).
Breakdown of invoices issued and received at December 31, 2019
(Article d. 441-4 of the French Commercial Code)
Reference terms of payment used are contractual terms.
Terms greater than 91 days are debts to Group subsidiaries.
Invoices issued (Customers)
(in € thousands)
Installment payment
Number of related invoices
Total amount of the invoices
(all taxes included)
Percentage based on total of revenue
of the year (all taxes included)
Total amount of invoices excluded
related to doubtful receivables
or not yet issued
Invoices received (Suppliers)
(in € thousands)
Installment payment
Number of related invoices
Total amount of the invoices
(all taxes includes)
Percentage based on total of expenses
of the year (all taxes included)
Total amount of invoices excluded that
are related to bad debts or debts not
invoiced or recorded
0 day
(indicative)
1 to
30 days
31 to
60 days
61 to
90 days
91 days
and more
Total (1 day
and more)
184
15
31
40
907
993
11,245
1,330
1,914
1,407
23,314
25,463
19.79%
2.34%
3.37%
2.48%
36.64%
44.83%
3,324
2,502
2,502
0 day
(indicative)
1 to
30 days
31 to
60 days
61 to
90 days
91 days
and more
Total (1 day
and more)
68
44
24
26
1,089
1,183
3,738
1,562
1,221
3,581
22,266
28,628
5.54%
2.32%
1.81%
5.31%
33.00%
42.43%
13,511
Two branches are integrated within ESI Group’s financial statements; details are shown in note F.3 to the financial statements.
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Outlook
5.1.4.2. Allocation of net result
Situation at December 31, 2019:
◗ Net loss for the year: -€27,851,405.66;
◗ Profit carried forward: €40,907,521.88;
◗ Total to be allocated: -€27,851,405.66.
Allocation:
◗ -€27,851,405.66 to profit carried forward.
Following this allocation, the legal reserve stands at €1,805,367.60.
Profit carried forward stands at €13,056,116.22.
5.2. oUTLooK
5.2.1. LAUNCH oF A NEW pILoTING FrAMEWorK
The Group has announced the implementation of a new Piloting
Framework, reflecting its mission and ambitions, in the aim of
reaching performance in a more efficient way. It also represents
a new mindset and a new way of working together within ESI, as
a shared commitment to execute the Group’s strategy.
As the world is filled with technological disruption and rapid digital
transformation, consumers increasingly value product performance
and ecological footprint over sophisticated features. ESI offers
its customers a highly credible path and partnership in order to
adapt to the “outcome economy”. This new Piloting Framework
ensures that ESI can fulfill this mission: to double down on ESI
DNA while becoming more efficient and more global.
In other words, the Piloting Framework represents a new mindset
and a new way to look at performance and pilot the Company.
It’s also important to point out that this Piloting Framework is
an under continuous-construction project, that aims to provide
a global vision to all ESI’s stakeholders.
5.2.2. BUSINESS TrENDS
During last two years the Group was under perpetual transformation,
resulting in a return to growth. Ongoing transformation plan is
still impacting the profitability level of the Group: this impact is
necessary and has been announced.
Along with shorten industrial development cycles and time-to-market,
regulatory and consumer requirements increase, industrial players
must find trusted partners that will enable them to innovate more
safely and achieve their performance and productivity objectives.
The linearization of the Group’s organization to align with the
value chain per industry: from Research to the marketing of
solutions, via innovation and the Go to Market phase, allows it to
eliminate silos in its organization, thus strengthening collaboration,
complementarities and, de facto, operational efficiency.
By launching at the right time its own in depth technological and
organizational transformation, ESI Group has kept pace with the
evolution of its industrial lead customers (Industry 4.0 and Smart
Factory) and anticipated their future needs. By systematically
integrating cutting-edge technologies (Internet of Things, Big Data,
Artificial Intelligence, additive manufacturing etc.) into solutions
that draw on its unique expertise in physics of materials, ESI Group
has articulated a new global approach centered on industrial
productivity and the performance of products beyond their
initial development to their entire lifecycle (Product Performance
LifecycleTM). The Group’s vision of: “Toward zero real tests, zero real
prototypes, and zero unpredicted downtime”, fully addresses the
short- and medium-term objectives of global industrial leaders.
This approach is gaining traction with the Group’s strategic
customers and is already bearing fruit in the form of tangible
commercial successes. For example:
◗ elimination of the physical prototyping stage in the tender for
supply of equipment for a major European car manufacturer;
◗ achievement of “zero real prototype” prior to the five stars
official certification stage at a major European car manufacturer;
◗ use of immersive virtual reality to accelerate and secure the
manufacturing of a new helicopter for a US aeronautic OEM.
One of the main results of the implementation of this approach:
Renault Group obtained a 5-star certification (maximum score)
in the Euro NCAP safety tests for its new Clio 5 in 2019, using
ESI Group’s Virtual Prototyping technologies for the design of
this model. Since 2001, ESI Group has been supporting Renault
Group in its design and manufacturing methodologies for its
different vehicle ranges.
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Table summarizing the results of past five financial years
CONTENTS
5.3. TABLE SUMMArIZING THE rESULTS
oF pAST FIVE FINANCIAL YEArS
Closing date
Duration of financial year
(number of months)
Capital at balance sheet date
Share capital (in €)
Number of shares
◆ ordinary shares
◆ preference shares
Maximum number of shares
to be created
◆ via convertible bonds
◆ via subscription rights
Operations and results (in €)
12/31/2019
01/31/2019
01/31/2018
01/31/2017
01/31/2016
11
12
12
12
12
18,055,476
18,053,676
18,049,326
17,975,976
17,865,216
6,018,492
6,017,892
6,016,442
5,991,992
5,955,072
205,334
151,448
108,843
175,733
207,080
Revenue (excl. tax)
55,295,671
86,022,988
83,883,977
84,313,214
79,156,886
Earnings before tax, employee
profit-sharing, allowances
for amortization and provisions
(2,973,365)
27,025,120
31,555,313
28,651,433
21,642,463
Income tax
(3,024,257)
(2,698,695)
(2,228,379)
(1,669,380)
(2,205,946)
Employee profit-sharing
Allowances for amortization
and provisions
Net income
Distributed earnings
Earnings per share (in €)
Earnings after tax and employee
profit-sharing, before allowances
for amortization and provisions
Earnings after tax, employee
profit-sharing, allowances
for amortization and provisions
Dividend
Personnel
Average headcount(1)
Payroll (in €)
Amounts paid in benefits (social
security, social welfare, etc.) (in €)
33,849,027
26,903,999
28,762,466
28,688,439
19,916,428
(27,851,406)
2,819,816
5,546,976
1,632,374
3,931,981
15,967
(0.21)
4.94
5.70
5.06
4.00
(4.63)
0.47
0.92
0.27
0.66
258
264
243
234
217
15,027,428
15,880,764
14,766,952
14,159,959
13,203,318
6,969,914
7,466,508
6,971,314
6,711,622
6,295,088
(1) Average headcount in France and in branches outside France, presented starting financial year ending January 2019.
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6
FINANCIAL
STATEMENTS
6.1. CONSOLIDATED FINANCIAL STATEMENTS
6.1.1. Consolidated income statement
6.1.2. Consolidated balance sheet
6.1.3. Consolidated statement of changes in equity
6.1.4. Consolidated statement of cash flows
6.1.5. Notes to the consolidated financial statements
6.1.6. Statutory Auditors’ report
on the consolidated financial statements
6.2. ESI GROUP ANNUAL FINANCIAL STATEMENTS
6.2.1. Income statement
6.2.2. Balance sheet
6.2.3. Notes to ESI Group annual financial statements
6.2.4. Statutory Auditors’ report
on the financial statements
104
104
105
106
107
108
138
143
143
144
145
166
In accordance with the resolution of the General Meeting of July 18, 2019, the Group now closes its financial
statements at 31 December of each fiscal year.
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FINANCIAL STATEMENTS
Consolidated financial statements
CONTENTS
6.1. CONSOLIDATED FINANCIAL STATEMENTS
6.1.1. CONSOLIDATED INCOME STATEMENT
(In € thousands)
Licenses and maintenance
Consulting
Other
Revenue
Cost of sales
Research and development costs
Selling and marketing expenses
General and administrative expenses
Current operating result
Other operating income and expenses
Income from operations
Financial result
Share of profit of associates
Income before income tax expense and minority interests
Provision for income tax
Net income before minority interests
Minority interests
NET INCOME (GROUP SHARE)
Earnings per share (in €)
Diluted earnings per share (in €)
Statement of comprehensive income
(In € thousands)
Net income before minority interests
Other comprehensive income recycled to income
Change in the fair value of hedging instruments
Translation differences
Other comprehensive income (loss) not recycled to income
Actuarial gains and losses
Income and expenses recorded directly in equity
COMPREHENSIVE INCOME
Attributable to Group equity holders
Attributable to minority interests
The notes are an integral part of the consolidated financial statements.
Note
December 31, 2019(1)
(11 months)
January 31, 2019(2)
(12 months)
75,320
25,718
1,159
102,197
(33,873)
(29,832)
(38,841)
(21,476)
(21,825)
1
(21,824)
(2,563)
26
(24,360)
3,446
(20,914)
32
(20,946)
(4.06)
(4.01)
109,836
28,793
784
139,413
(37,907)
(31,718)
(43,042)
(19,970)
6,776
233
7,010
(1,277)
106
5,839
(2,505)
3,334
0
3,334
0.59
0.59
4.1
6.1.2
3.2.2
7.2
8.1
9.3
9.3
December 31, 2019(1)
(11 months)
January 31, 2019(2)
(12 months)
(20,914)
(12)
866
(688)
166
(20,748)
(20,792)
44
3,334
15
(534)
(201)
(720)
2,614
2,599
15
(1) February 1, 2019 - December 31, 2019.
(2) February 1, 2018 - January 31, 2019.
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FINANCIAL STATEMENTS
Consolidated financial statements
6.1.2. CONSOLIDATED BALANCE SHEET
(In € thousands)
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Rights-of-use assets(1)
Investment in associates
Deferred tax assets
Other non-current assets
Cash-flow hedging instruments
Current assets
Trade receivables
Other current receivables
Prepaid expenses
Cash and cash equivalents
TOTAL ASSETS
Liabilities
Equity
Equity (Group share)
Capital
Additional paid-in capital
Reserves and retained earnings
Net income (loss)
Translation differences
Minority interests
Non-current liabilities
Long term share of financial debt
Non-current finance lease obligation(1)
Provision for employee benefits
Deferred tax liabilities
Cash-flow hedging instruments
Other long term debt
Current liabilities
Short-term share of financial debt
Current finance lease obligation(1)
Trade payables
Accrued compensation; taxes and others short-term liabilities
Provisions for contingencies, risks and disputes
Deferred income
TOTAL LIABILITIES
Note December 31, 2019
January 31, 2019
3.2
6.1
6.2
4.7
8.2
10.1.1
7.1.4
4.2
10.1.2
10.1.3
7.1.3
9.1
7.1.2
4.7
5.3
8.2
7.1.4
7.1.2
4.7
10.2.1
10.2.2
4.3
152,176
41,448
62,139
5,633
20,680
1,099
17,204
3,264
6
82,183
44,733
13,720
3,489
20,241
129,389
41,404
61,811
6,101
-
1,083
10,920
8,070
0
101,186
65,131
15,348
2,620
18,087
233,655
230,575
85,983
85,912
18,055
25,833
61,982
(20,946)
987
71
65,941
30,457
20,002
11,016
3,761
28
677
81,731
19,143
631
8,632
24,230
675
28,421
105,633
104,863
18,054
25,818
57,862
3,334
(205)
771
51,370
36,255
-
9,979
3,738
13
1,385
73,572
8,801
-
8,848
30,560
762
24,601
233,655
230,575
(1) ESI Group has applied IFRS 16 standard for the first time as of February 1, 2019. In accordance with the adopted transition method,
the comparative financial information has not been restated.
The notes are an integral part of the consolidated financial statements.
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FINANCIAL STATEMENTS
Consolidated financial statements
CONTENTS
6.1.3. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(In € thousands except
number of shares)
Number of
shares Capital
Additional
paid-in
capital
Net
income,
reserves
and
retained
earnings
Equity
attributable
to parent
company
owners
Translation
differences
Minority
interests
Total
Equity
At January 31, 2018
6,016,442
18,049
25,782
56,460
349
100,638
844
101,483
Change in fair value
of hedging instruments
Translation differences
Actuarial gains and losses
Income and expenses
recognized directly in equity
Net income
Comprehensive income
Proceeds from issue of shares
1,450
4
36
Treasury shares
Share-based payments
Transactions with
non-controlling interests
Other movements
(554)
(554)
(554)
15
(196)
(181)
3,334
3,153
(131)
751
688
276
15
(554)
(196)
(735)
3,334
2,599
40
(131)
751
688
276
15
(534)
(201)
(720)
3,334
2,614
40
(131)
751
599
277
20
(5)
15
0
15
(89)
1
At January 31, 2019
6,017,892
18,053
25,818
61,197
(205)
104,861
771
105,633
Change in fair value
of hedging Instruments
Translation differences
Actuarial gains and losses
Income and expenses
recognized directly in equity
Net income
Comprehensive income
Proceeds from issue of shares
600
2
15
Treasury shares
Share-based payments
Transactions with
non-controlling interests
Other movements
(20,946)
(21,640)
22
690
927
187
(12)
(682)
848
(12)
848
(682)
(694)
848
154
(20,946)
848
(20,792)
44
(20,748)
(12)
866
(688)
166
(20,912)
18
(6)
12
32
17
22
690
177
193
85,983
(750)
6
71
17
22
690
927
187
AT DECEMBER 31, 2019
6,018,492
18,055
25,833
41,383
643
85,912
The notes are an integral part of the consolidated financial statements.
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FINANCIAL STATEMENTS
Consolidated financial statements
6.1.4. CONSOLIDATED STATEMENT OF CASH FLOWS
(In € thousands)
Net income before minority interests
Share of profit of associates
Amortization and provisions(3)
Net impact of capitalization of research & development costs
Income taxes (current and deferred)
Income taxes paid
Unrealized financial gains and losses
Share-based payment transactions
Gains (losses) on sales of assets
Operating cash flow
Trade receivables
Trade payables
Other receivables and other liabilities
Change in working capital requirement
Net cash from operating activities
Purchase of intangible assets
Purchase of property, plant and equipment
Proceeds from the sale of assets
Acquisition of subsidiaries, net of cash acquired
Other investment operations
Net cash used for investing activities
Proceeds from loans
Repayment of borrowings(3)
Proceeds from issue of shares
Purchase and proceeds from disposal of treasury shares
Dividends paid
Net cash used from financing activities
Effect of exchange rate changes on cash and cash equivalents
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Opening cash position
Closing cash position
NET CHANGE IN CASH AND CASH EQUIVALENTS
December 31, 2019(1)
(11 months)
January 31, 2019(2)
(12 months)
(20,946)
(32)
8,882
(1,300)
(3,446)
(1,980)
120
690
114
(17,879)
19,446
(293)
(865)
18,288
409
(591)
(1,390)
-
(795)
(7)
(2,784)
14,422
(10,148)
17
22
-
4,312
216
2,153
18,087
20,241
2,154
3,334
(106)
4,353
(2,679)
2,505
(1,736)
(370)
751
(6)
6,046
(442)
(1,066)
5,582
4,074
10,120
(796)
(3,395)
8
(4)
(2,425)
(6,613)
49,365
(49,869)
40
(131)
(89)
(684)
(456)
2,367
15,720
18,087
2,367
(1) February 1, 2019 – December 31, 2019.
(2) February 1, 2018 – January 31, 2019.
(3) IFRS 16 impact: increase of amortization and provisions and thus improvement of operating cash flow by +€5.2 million, against the repayment
of finance lease obligation in the financing part of the Cash Flow Statement for -€5.2 million.
The notes are an integral part of the consolidated financial statements.
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Consolidated financial statements
CONTENTS
6.1.5. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table of contents of notes to the consolidated financial statements
NOTE 1. Accounting principles
NOTE 2. Significant events of the year
NOTE 3. Scope of consolidation
NOTE 4. Operating data
NOTE 5. Personnel costs and employee benefits
NOTE 6.
Intangible and tangible assets
NOTE 7. Financing and financial instruments
108
109
111
115
118
124
127
NOTE 8.
Income tax
NOTE 9. Equity and earnings per share
NOTE 10. Other balance sheet items
NOTE 11. Related party transactions
NOTE 12. Fees paid to Statutory Auditors
NOTE 13. Subsequent events
132
133
134
136
136
137
NOTE 1. ACCOUNTING PRINCIPLES
NOTE 1.1. GENERAL INFORMATION
ESI Group is a listed French limited company (société anonyme),
registered in France and governed by French law. ESI Group has
its head office at 100-102, avenue de Suffren, Paris (75015), France.
ESI Group SA is the parent company of some 30 subsidiaries
operating throughout the world (see Chapter 1.3.2 of this Universal
Registration Document), together comprising ESI Group.
ESI Group is the world’s foremost creator of Virtual Prototyping
software and services. Specializing in the physics of materials, ESI
Group has developed unique expertise to help industrial players
replace physical prototypes with virtual ones, thus making it
possible to virtually manufacture and test the products of the future,
ensuring pre-certification. Used together with latest-generation
technologies, today Virtual Prototyping is part of an overarching
approach to the Product Performance LifecycleTM (PPL), which
addresses products’ operating performance throughout its useful
NOTE 1.2. ACCOUNTING STANDARDS APPLIED
The consolidated financial statements at December 31, 2019 were
prepared in accordance with the IFRS standards, as approved by
the European Union at this date. These standards are available
on the European Union website.
lifecycle, from rollout to withdrawal. The creation of Hybrid TwinTM
incorporating simulation, physics and data analysis makes it
possible to create smart products, particularly using connected
objects, as well as to predict their performance and anticipate
their maintenance requirements.
2019 fiscal year ran exceptionally for 11 months, from February 1
to December 31, further to the change of closing date decided
by the General Meeting held on July 18, 2019, from January 31
(Y+1) to December 31 (Y). Please refer to note 2 “Significant
events of the year”.
Financial statements are presented in thousands of euros. The
2019 financial statements were approved by the Board of Directors
on March 19, 2020 and will be submitted to the General Meeting
of June 25, 2020 for approval.
Moreover, consolidated financial statements have been prepared in
accordance with the historical cost method, with some exceptions
such as financial assets and liabilities booked at fair value.
NOTE 1.3. NEW IFRS STANDARDS AND INTERPRETATIONS
New standards, amendments and
interpretations effective in the European Union
and mandatory for financial years beginning
on or after February 1, 2019
The group applies the mandatory new standards for financial
years beginning on or after February 1, 2019:
◗ IFRS 16 – Leases;
◗ IFRIC 23 – Uncertainty over income tax treatments.
/ IFRS 16 – Leases
IFRS 16 is a major revision in the accounting of leases. The standard
provides a single lessee accounting model, requiring lessees to
recognize assets and liabilities for all leases. Based on this model,
the amortization of assets is accounted for in operating expense,
and the cost of the debt towards the lessor is accounted for in
financial expense. Under the standard applied on the financial
year ended on January 31, 2019, the rent expense was recorded
within the operating expense.
The Company adopts IFRS 16 for the financial year beginning
February 1, 2019 using the simplified retrospective approach.
Under this approach, the effect of the first-time application of
the standard is recognized as adjustment to the opening balance
of the consolidated equity without restatement of comparative
information.
In accordance with IFRS 16, leases are recognized as property,
plant and equipment under a right-of-use. These contracts are
recognized at the commencement date of the contract for the
discounted value of the minimum lease payments for a liability
corresponding to the lease liabilities due to the lessor. The assets
are amortized on a straight-line basis over the lease term, which
corresponds to the non-cancellable period of each contract,
unless the Group is reasonably certain to exercise the contractual
renewal options.
As of February 1, 2019, the Group has recognized a new right-of-use
assets, mainly related to leased offices and vehicles, and a new
liability related to lease debts for an amount of €23.470 million.
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Consolidated financial statements
The following table summarizes the impacts of adoption IFRS 16 on the Group’s Consolidated Balance Sheet as at February 1, 2019 for
each of line items affected. The line items which were not affected by the new standard are not included.
(In € thousands)
Assets
Non-current assets
Out of which Right-of-use – leased offices
Out of which Right-of-use – leased cars
TOTAL ASSETS
Liabilities
Non-current liabilities
Out of which finance lease obligation
TOTAL LIABILITIES
Commitments under operating leases as disclosed in the consolidated
financial statement as of January 31, 2019
Renewal options and other adjustments non identified in the commitments
FINANCE LEASE OBLIGATION IN LIABILITIES AS OF FEBRUARY 1, 2019
January 31, 2019
IFRS 16
adjustment
February 1, 2019
129,389
230,575
51,370
230,575
22,166
1,304
23,470
23,470
23,470
152,859
22,166
1,304
254,045
74,840
23,470
254,045
22,831
640
23,470
The Group has chosen to use the two exemptions allowed by
IFRS 16 and to keep recognition as operating expense for leases
with a lease term no more than 12 months or leases with underlying
asset of low value.
To determine the lease liabilities, the Group has discounted future
lease payments using weighted average marginal borrowing rate
as of February 1, 2019 of 2.5%.
Details of impact of IFRS 16 on 2019 financial statements are
presented in note 4.7.
/ IFRIC 23 – Uncertainty over income tax treatments
On June 7, 2017, IFRIC IC published IFRIC 23. The application
clarifies the accounting for uncertainties in income taxes. ESI
Group has undertaken an assessment of the potential impacts of
its application starting from February 1, 2019 and has not identified
any significant impact.
NOTE 1.4. USE OF ESTIMATES AND ASSUMPTIONS
The preparation of the consolidated financial statements requires
the consideration of estimates and assumptions established by
Group management that have an impact on the valuation of assets
and liabilities, as well as on the amounts recorded as income and
expenses during the year. The estimates relate in particular, but
not exclusively, to the assumptions used in determining the impact
of stock options and free shares allocated to certain employees,
business combinations, revenue recognition, depreciation of fixed
assets, valuation of deferred tax assets, valuation of derivative
instruments, capitalized development costs, provisions for depreciation
of doubtful receivables, income tax expense, provisions for risks
and litigation and provisions for post-employment commitments.
NOTE 2. SIGNIFICANT EVENTS OF THE YEAR
CHANGE OF CLOSING DATE – PROFORMA INFORMATION
Further to the decision by General Meeting held on July 18, 2019,
closing date of the fiscal year has been shifted from January 31 to
December 31. Accordingly, 2019 fiscal year has run exceptionally
for 11 months, from February 1 to December 31, not including the
month of January.
To ensure good comparability of information and in accordance
with AMF Recommendation 2013-08, the main aggregates of the
financial statements have been recalculated on proforma basis
from January to December for 2019 and 2018. Proforma data
allow to present the Group’ activity over two full financial years.
As January is a significant month in terms of sales (renewal of
almost half of the contracts in the licensing business), the results
for the 11 months 2019 fiscal year differ substantially from those
of a full 12 months year.
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FINANCIAL STATEMENTS
Consolidated financial statements
CONTENTS
(In € millions)
Revenue
Gross margin
Research and development costs
Selling and marketing expenses
General and administrative expenses
Operating result
(In € millions)
Gross financial debt
Cash and cash equivalent
Net financial debt
2019 Proforma
Jan. to Dec.
2018 Proforma
Jan. to Dec.
Variation
146.2
107.4
(31.7)
(44.3)
(23.1)
8.3
135.7
97.5
(31.3)
(42.0)
(20.6)
3.6
10.5
9.8
(0.4)
(2.3)
(2.7)
4.6
Var %
7.8%
10.1%
1.4%
5.5%
12.9%
127%
December 31, 2019 December 31, 2018
49.6
20.2
29.4
51.6
12.4
39.2
(In € millions)
Operating Cash flow
Change in working capital requirement
Acquisitions of intangible and tangible assets
Other investment and financing flows
Total change in cash explained
Opening cash position at January 1, 2019 (proforma)
Closing cash position at December 31, 2019
Change in cash position
2019 Proforma
Jan. to Dec.
5.7
4.9
(2.6)
(0.2)
7.8
12.4
20.2
7.8
Proforma data are presented mainly on the income statement, the cash flow statement and on financial debt. The 12 months proforma
results substantially differ from 11 months results. In terms of accounting method, 2018 and 2019 proforma information have been
prepared without any IFRS 16 impact to ensure comparability.
Proforma information have been established according to the
following methodology:
◗ Additional consolidation closings have been made for ESI Group
and all subsidiaries as of December 31, 2017 and December 31,
2018, enabling to produce income statements from January to
December 2018 and 2019 and balance sheet directly comparable
with the balance sheet as of December 31, 2019.
◗ The process applied for additional consolidation closings was
the same as for a usual year-end closing for all the Group’
subsidiaries.
◗ More specifically, the following methods have been applied:
• licensing revenue is related to two performance obligations:
access to the software (or license itself) and the maintenance
service. Revenue for the access to the license is recognized
at a point in time at the moment when control is transferred
to the client, and the revenue from maintenance service is
recognized on a straight-line basis over the one-year term of
the support agreement – which is the usual method of each
annual closing, in accordance with IFRS 15;
• service revenue consists mainly of consulting fees. The
consulting revenue is recognized according the percentage of
completion method at end December 2018, for all entities with
CHANGE IN SCOPE OF CONSOLIDATION
During the year ended December 31, 2019:
◗ the Group has exercised its option to purchase the minority
interests of ESI ITI GmbH (4%). The ownership of this German
entity as well as its French subsidiary ITI Southern Europe is
at 100% at December 31, 2019;
monthly monitoring. In the absence of monthly monitoring, a
prorata by month for the last quarter of fiscal year 2018 has
been calculated – this approach being acceptable given the
month-to-month linearity of this activity’s sales;
• costs directly linked to revenue (such as royalties paid to third
parties or commissions paid to agents) were calculated on
the basis of monthly revenue;
• staff costs excluding bonuses result from the payroll and
social security charges paid each month, related accruals have
been calculated according to the actual situation existing at
each closing date. Bonus accruals have been adjusted so that
each proforma reflects the costs for a full 12 months year;
• the net impact of the capitalization of development costs
and net charges to amortization, depreciation and provisions
were calculated at each closing date;
• some other external costs may result from prorata temporis
estimates, such as office rental expenses which are invoiced
quarterly.
Finally, the components of the cash flow were determined
through a cash flow statement drawn up according to the usual
consolidation process.
◗ the Group has dissolved the Chinese entity Zhong Guo ESI Co,
Ltd and the American entity ESI US Inc. as of December 31, 2019;
◗ in India, the entity Pacific Mindware Engineering Private Ltd.
was absorbed by the entity ESI Software (India) Private Ltd.
Please refer to notes 3.1 and 3.3.
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Consolidated financial statements
NOTE 3. SCOPE OF CONSOLIDATION
NOTE 3.1. ACCOUNTING POLICIES RELATED TO THE SCOPE OF CONSOLIDATION
Consolidation method
Business combinations
The annual financial statements of the companies controlled by
ESI Group are fully consolidated from the date at which ESI Group
takes control until the date when control is transferred outside the
Group. Associates, defined as companies over which the Group
exercises significant influence, are accounted for using the equity
method. The Group does not own stakes in any entity over which
it exercises joint control.
The Group’s scope of consolidation at December 31, 2019 is detailed
in note 3.4.
Closing date
The change of closing date from January 31 to December 31 has
been applied to all Group’s entities, except for India where the
only annual closing date permitted by local regulations is March 31.
Indian subsidiaries prepare interim statements as of December 31
for consolidation purposes.
Internal transactions
All transactions between consolidated companies, including intra-
Group gains, are eliminated in the consolidated financial statements.
Conversion of the financial statements
of non-French subsidiaries
The Group’s foreign subsidiaries generally use local currency as
their functional currency. ESI Group’s functional and presentation
currency is the euro.
Balance sheet items of foreign subsidiaries are translated to euros at
the closing rate, with the exception of components of the net equity,
which are maintained at the historical rate. Income statements are
translated at the average exchange rate for the period. Translation
differences are recorded in a specific “Translation differences”
account on a different line from Other Comprehensive Income.
Transactions and balances in foreign currencies
At the closing date, monetary assets and liabilities denominated
in a foreign currencies are translated to the functional currency at
the year-end exchange rate. Foreign exchange gains and losses
on transactions in foreign currencies are recorded as such, with
the exception of those arising from transactions that may be
characterized as long term investments, which are recorded in
equity on a separate line in the Other Comprehensive Income
(OCI), under “Translation differences”.
Business combinations are recognized by the acquisition method:
◗ the identifiable assets acquired and liabilities assumed are
measured at fair value as of the acquisition date;
◗ any non-controlling interest in the acquiree (i.e. minority interest)
is measured either at fair value (“full goodwill method”) or at the
non-controlling interest’s proportion of the acquiree’s identifiable
net asset (“partial goodwill method”). This option applies on an
individual transaction basis.
Any contingent consideration related to business combinations
is recognized at its fair value on the acquisition date. After the
acquisition date, contingent consideration is measured at fair value
at the end of each subsequent reporting period. Any changes in
the fair value of contingent consideration arising more than one
year after the acquisition date are recognized in income. Changes
in fair value within one year of the acquisition date are recognized
in income if they clearly result from events after the acquisition
date. Other changes are offset against goodwill.
Where put options have been granted to minority shareholders
of subsidiaries, the amount recognized in liabilities is measured
at the present value of the option exercise price and recorded in
“Other long term debt” or “Other short-term liabilities” according
to its maturity date. The balance is allocated either to Goodwill
(“full goodwill method”) or to Equity (“partial goodwill method”).
Discounting adjustments are recorded in the Financial Result.
Subsequent gains and losses (or changes) in fair value of the
liability are recognized directly in equity.
At the acquisition date, goodwill represents the difference between:
◗ the fair value of the consideration transferred, plus the total
minority interests in the acquiree and, for step acquisitions,
the fair value of the stake previously held at the corresponding
acquisition date, revaluated in the income statement; and
◗ the net fair value of the identifiable assets and liabilities acquired.
The Group has 12 months from the acquisition date to determine
the fair value of the assets and liabilities and declare the amount
of goodwill acquired. If the acquisition price is lower than the fair
value of identified assets, liabilities and contingent liabilities, the
difference is immediately recorded in the income statement.
In accordance with IFRS standards, goodwill is not amortized but
is instead subject to an impairment test. This test is performed at
least once a year and when an impairment indicator is identified.
Goodwill is allocated to cash-generating units (“CGU”) for the
purposes of impairment test.
Costs directly related to acquisitions are recorded as expenses
when incurred, and presented on a separate line of the income
statement, in “other operating income and expenses”.
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CONTENTS
For intangible assets acquired in the context of a business combination,
amortization is recorded in Current Operating Income, split between
“research and development costs” and “selling and marketing
expenses”, depending on the type of asset – codes are amortized
over five years in research and development costs, customer
relationships are amortized in selling and marketing expenses over
a period which vary according to each newly acquired activity.
Impairment test of goodwill and other
intangible assets with an indefinite useful life
ESI Group uses a single CGU for the entire Group. The Group’s
strategy is to focus on growth through innovation stemming from
its R&D efforts and the integration of acquired technologies (source
codes, algorithms, etc.).
As the Group has pursued its development, it has become clear that
certain technologies acquired to resolve a specific issue could be
used to resolve other issues as well. Incorporating this technology
portfolio in the Group’s software packages makes it possible to use
all of these technologies in all of the Group’s projects depending
on the solutions required. The consequence of this ever-increasing
integration is that it is more and more difficult to allocate revenue to
a specific technology and to thus create a CGU for each technology
or software program.
In addition, the revenue earned by a distribution subsidiary is
dependent not only on its own commercial performance but also,
even more so, on the software offering.
The impairment test is based on discounted value of forecast
future cash flows according to business projections, technology
penetration and the competitive situation. Future cash flows are
estimated as follows:
◗ the last financial year for the reference year (Y);
◗ annual budget for the following year, Y+1;
◗ cash flows for the years Y+2 to Y+5 are estimated on the basis
of Y+1 data by applying growth rates which can be based on
past experience.
The cash flows derive from the business plan drawn up by the
Group’s Management.
The discount rate applied as of December 31, 2019 is the Group’s
weighted average cost of capital (WACC) adjusted with a risk
premium. It stands at 9.95% compared to 10.5% at January 31, 2019.
The present value of the CGU is determined by adding:
◗ the present value of forecasted future cash flows over the explicit
period of 5 years, as described above;
◗ the terminal value calculated by capitalizing to perpetuity the
last cash-flow of the explicit period. The long-term growth rate
applied is 3%.
This present value of the CGU either confirms the fair value of the
assets of the CGU, or serves as a basis for calculating potential
impairment.
The impairment test performed on the CGU at December 31, 2019
did not identify any loss in value for these assets. The test was
analyzed for sensitivity to reasonably plausible changes in key
assumptions, based on a 1% increase in the discount rate or a 1%
decrease in the long-term growth rate. No impairment has been
identified. The Group’s Management believe no reasonable change
in key assumptions mentioned above that would have caused the
CGU’s recoverable to be significantly below its carrying amount.
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Consolidated financial statements
NOTE 3.2. IMPACT OF THE CHANGE IN THE SCOPE OF CONSOLIDATION
ON GOODWILL AND NON-CURRENT RESULT
3.2.1. Change in goodwill
(In € thousands)
January 31, 2019
Increase
Decrease
Foreign exchange
gain/loss
December 31, 2019
Gross values
TOTAL NET VALUES
41,404
41,404
No acquisition took place during financial year 2019.
3.2.2. Non-current result
(In € thousands)
Acquisition costs
Other external expenses and income
TOTAL OPERATING INCOME AND EXPENSES
(92)
(92)
137
137
41,448
41,448
December 31, 2019
January 31, 2019
1
1
233
233
As a reminder, until January 31, 2018, the amortization of intangibles assets acquired in business combinations was presented in Other
operating income and expenses. However, due to significant amounts involved and the recurrence of the amortization, it has been
reclassified in the Current operating result effective from January 31, 2019 closing – please refer to note 3.3.
NOTE 3.3. AMORTIZATION OF INTANGIBLES ASSETS ACQUIRED
IN BUSINESS COMBINATIONS
Starting from January 31, 2019, the amortization of intangibles
assets acquired in business combinations is presented in the Current
operating result, allocated between research and development
costs and selling and marketing expenses depending on their type
(respectively for codes and customer relationships).
At December 31, 2019, the amortization of codes amounts to
€561 thousands (€613 thousand as of January 31, 2019), and the
amortization of the customer relationships stands at €373 thousand
(€406 thousand as of January 31, 2018).
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5
6
7
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Consolidated financial statements
CONTENTS
NOTE 3.4. LIST OF ENTITIES IN THE SCOPE OF CONSOLIDATION
The table below presents the dates of creation of head offices of Group subsidiaries and the percentage of capital directly or indirectly held:
Subsidiaries
Fully consolidated subsidiaries
Date of creation
or acquisition
Subsidiary
head office
% of capital held
December 31, 2019 January 31, 2019
Engineering System International
April 1973
Paris, France
Engineering System International GmbH
July 1979
Eschborn, Germany
ESI Japan, Ltd.
ESI North America, Inc.
Hankook ESI Co., Ltd.
ESI Group Hispania s.l.
STRACO SA
Mecas ESI s.r.o.
ESI UK Ltd.
July 1991
Tokyo, Japan
March 1992
Troy, Michigan, USA
September 1995
Seoul, South Korea
February 2001
Madrid, Spain
April 2001
Compiègne, France
May 2001
Plzen, Czech Republic
January 2002
London, England
ESI US Holding, Inc.
August 2002
Dover, Delaware,
United States
ESI US R&D, Inc.
August 2002
San Diego, California,
United States
Calcom ESI SA
December 2002
Lausanne, Switzerland
ESI Software (India) Private Ltd.
February 2004
Bangalore, India
Hong Kong ESI Co., Ltd.
Zhong Guo ESI Co., Ltd.
ESI-ATE Holdings Ltd.
February 2004
Hong Kong, China
February 2004
Guangzhou, China
July 2006
Hong Kong, China
ESI ATE Technology (China), Ltd.
August 2006
Beijing, China
ESI South America Comércio e Serviços
de Informatica, Ltda
June 2008
São Paulo, Brazil
ESI Italia s.r.l.
September 2008
Bologna, Italy
Pacific Mindware Engineering Private Ltd.
December 2008
ESI Services Tunisia
ESI Group Beijing Co., Ltd.
April 2009
October 2010
Pune, India
Tunis, Tunisia
Beijing, China
ESI Software Germany GmbH
August 2011
Stuttgart, Germany
ESI Nordics AB
ESI US, Inc.
OpenCFD Ltd.
CyDesign Ltd.
December 2011
Sollentuna, Sweden
February 2012
Farmington Hills,
Michigan, United States
September 2012
Berkshire, England
October 2013
Oxford, England
ESI Services Vietnam Co., Ltd.
December 2013
Ho Chi Minh City,
Vietnam
CIVITEC SARL
ITI GmbH
March 2015
Versailles, France
January 2016
Dresden, Germany
ITI Southern Europe SARL
January 2016
Rungis, France
Mineset Inc.
Scilab Enterprises
February 2016 Milpitas, United States
February 2017
Paris, France
Subsidiaries accounted for using the equity method
JV AECC-ESI (Beijing) Technology Co., Ltd.
February 2014
Beijing, China
100%
100%
97%
100%
99%
100%
98%
95%
100%
100%
100%
99%
100%
100%
0%
100%
100%
95%
100%
0%
95%
100%
100%
100%
0%
100%
0%
100%
80%
100%
100%
100%
100%
45%
100%
100%
97%
100%
99%
100%
98%
95%
100%
100%
100%
99%
100%
100%
100%
100%
100%
95%
100%
100%
95%
100%
100%
100%
100%
100%
100%
100%
80%
96%
96%
100%
100%
45%
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FINANCIAL STATEMENTS
Consolidated financial statements
NOTE 4. OPERATING DATA
NOTE 4.1. REVENUE
The Group ESI derives revenue from two primary sources:
software licensing and related maintenance activity, and services
activity.
The Company accounts for a contract with a client when there
is a written agreement that creates legally enforceable rights
and obligations, including payment terms, when the contract has
commercial substance and when collection consideration is probable.
A performance obligation is a promise in a contract with a client
to transfer products or services that are distinct from the other
promises of the contract.
Revenue is recognized when, or as, control of a promised product
or service is transferred to a client, in an amount that reflects the
consideration to which the Company expects to be entitled in
exchange for those products or services.
Software licensing and maintenance
Licensing revenue is generated from royalties paid under licensing
agreements granted to end customers and related maintenance
services. Maintenance services include updates and technical support.
Revenue is split between three types of contracts:
◗ lease of annual renewable licenses that include the right to use
the software plus maintenance services for one year;
◗ lease of “paid up licenses” conferring to end clients the right
to use the software for unlimited duration, with one year of
maintenance services – with the possibility of renewal through
a maintenance contract;
◗ maintenance services alone – this contract completes “paid up
licenses” contracts.
In compliance with IFRS 15, ESI’ customer contracts have been
analyzed in five stages in order to identify the component of the
performance obligations and the price of each. Two performance
obligations have been identified: access to the software (the
licensing itself) and the maintenance service – please note that
this distinction has been applied by the Group prior the entry into
force of the standard. For the annual licensing contracts and the
“paid up licenses”, the allocation of the price has been realized
according to the residual approach. As a result, 15% of the price of
annual licensing contracts and 5% of the price of “paid up licenses”
contracts have been allocated to maintenance service. Revenue
for the access to the license is recognized at a point in time at the
moment when control is transferred to the client, and the revenue
from maintenance service is recognized on a straight-line basis
over the one-year term of the support agreement.
Services
Service revenue consists mainly of consulting and training fees.
The consulting revenue is recognized according to the percentage
of completion method. Corresponding costs are recorded as soon
as they are incurred. Contracts with a probable final loss are covered
by a provision for loss on completion, recorded as a liability on the
balance sheet. The loss is fully provisioned as soon as it is known
and reliably estimated, regardless the stage of completion.
Revenue for training is recognized upon completion.
Backlog
The Group’s backlog for licensing activity is composed of all signed
orders received from customers at the closing date, with execution
starting from the first day of next fiscal year.
Despite most of licensing contracts are renewable from a fiscal
year to the next one, only signed orders for next year are included
in the backlog. As purchase order are often signed by customers
just before start of the execution period, this explain the level of
backlog vs. high recurring part of licensing contracts.
For services activity, backlog is composed of work to be done on
contracts being executed, and of contracts signed at closing date
which execution has not started yet.
(In € thousands)
Total licenses and maintenance
Consulting
Other revenue
Total services
CONSOLIDATED REVENUE
O/w total co-financed research and development projects
included in service revenue
(1) February 1, 2019 – December 31, 2019.
(2) February 1, 2018 – January 31, 2019.
December 31, 2019(1)
(Feb. to Dec.)
January 31, 2019(2)
(Feb. to Jan.)
75,320
25,718
1,159
26,877
102,197
4,102
109,836
28,793
784
29,577
139,413
4,567
Backlog as of December 31, 2019 amounts to €23.2 million, out of which €22 million for Licensing and €1.2 million for Services.
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FINANCIAL STATEMENTS
Consolidated financial statements
NOTE 4.2. TRADE RECEIVABLES
Trade receivables are initially recorded at their nominal
value, as the potential impact of discounting is immaterial. They
are then recorded at amortized cost, reduced when applicable by
impairment resulting from non recoverable amounts and estimate
of future losses.
Receivables are depreciated when their net realizable value,
estimated by reference to the risk of non-recovery as determined
by type of receivable, is less than their carrying amount. Depending
on the nature of receivables, the risk associated with bad debts is
appreciated individually or based on statistical methods. Impairment
of trade receivables represents best estimate of the risk related
to the asset.
Contract assets and liabilities
After having delivered its services, the Group records the customers
counterparty either as trade receivables or as contract assets.
A trade receivable is an unconditionnal right to be paid, while a
contract asset is a right to be paid which is conditionned to factors
other than time.
Contract assets are related to amounts to be invoiced on contracts
with milestones or subject to customer’s acceptance.
When invoiced amounts exceed recognised revenue, difference is
recorded as contract liabilities.
Details of trade receivables
(In € thousands)
Trade receivables
Depreciation of trade receivables
TOTAL TRADE RECEIVABLES, NET OF IMPAIRMENT
December 31, 2019
January 31, 2019
46,191
(4,214)
41,977
64,822
(3,810)
61,012
(In € thousands) January 31, 2019
Depreciation
TOTAL
(3,810)
(3,810)
Consolidation
scope entry
Provisions
Reversals
(463)
(463)
53
53
Foreign
exchange
gain/loss
6
6
Other
movements December 31, 2019
(4,214)
(4,214)
The Group’s clientele mainly comprises:
◗ major industrial corporations, especially companies in the
automotive, aerospace and steel industries;
◗ government agencies for governmental and defense projects;
◗ academic bodies.
December 31, 2019 January 31, 2019
Not due
0 to 30 days
30 to 90 days
Higher than 90 days
TOTAL
21,894
5,114
5,266
9,703
41,977
44,390
5,652
4,999
5,971
61,012
52.2%
Not due
The amount of trade receivables due for more than 90 days
includes receivables from Chinese state or parastatal clients for
which collection time is more important.
Contract assets
(In € thousands)
December 31, 2019 January 31, 2019
Contract assets
2,755
4,119
Age of trade receivables
23.1%
Higher than 90 days
12.5%
30 to 90 days
12.2%
0 to 30 days
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FINANCIAL STATEMENTS
Consolidated financial statements
NOTE 4.3. CONTRACT LIABILITIES AND DEFERRED INCOME
(In € thousands)
December 31, 2019
January 31, 2019
Contract liabilities – Maintenance services to be rendered
Other deferred income
DEFERRED INCOME
9,485
18,936
28,421
19,979
4,622
24,601
NOTE 4.4. OPERATING EXPENSES
(In € thousands)
Other purchases and external expenses
Real estate rentals*
Fees
Taxes and duties
Amortization and provisions*
Personnel costs(3)
Other external expenses and income
Total current operating expenses
Other operating income and expenses(4)
TOTAL OPERATING EXPENSES
December 31, 2019(1)
(Feb. to Dec.)
January 31, 2019(2)
(Feb. to Jan.)
(9,339)
(1,818)
(3,990)
(598)
(8,954)
(86,787)
(12,535)
(124,021)
1
(124,020)
(13,088)
(6,764)
(3,164)
(515)
(3,465)
(92,774)
(12,866)
(132,636)
233
(132,403)
(1) February 1, 2019 – December 31, 2019.
(2) February 1, 2018 – January 31, 2019.
(3) Details on personnel costs are presented in note 5.2.
(4) Details on other operating income and expenses are presented in note 3.2.2.
* Significant changes between presented fiscal periods result from IFRS 16 standard application starting 2019.
NOTE 4.5. INFORMATION BY GEOGRAPHIC AREA
The Group develops sells and provides technical support for its
softwares which allow engineers to predict and improve, by virtual
tests, the performance and the expected quality of a product.
Operating segments are the Group’s components which have
isolated financial information available and whose operating
results are regularly reviewed by the Company’s management in
order to evaluate their performance and to decide how resources
are allocated. The Group works in a unique segment, with close
ties between its two-identified business, Licenses and Services.
In accordance with paragraphs 31-34 of IFRS 8, ESI Group presents
revenue from ordinary activities and non-current assets by region
(the three main regions being EMEA (Europe, Middle East, Africa),
Asia-Pacific and the Americas).
Revenue is split between regions where it is actually produced.
(In € thousands)
Year ended December 31, 2019
External clients
Affiliate companies
Net sales
ASSETS ALLOCATED
Year ended January 31, 2019
External clients
Affiliate companies
Net sales
ASSETS ALLOCATED
Europe, Middle
East and Africa
Asia-Pacific
Americas
Eliminations
Consolidated
43,538
48,888
92,425
276,090
68,843
83,328
152,172
301,695
41,076
8,053
49,129
41,735
49,769
9,425
59,193
43,191
17,583
6,478
24,062
14,306
20,802
7,292
28,094
20,188
(63,420)
(63,420)
(98,476)
(100,046)
(100,046)
(134,500)
102,197
102,197
233,655
139,413
139,413
230,575
Intra-Group transactions consist mainly of royalties paid by the Group’s subsidiaries. These royalties are proportional to Licensing revenue
and based on a common practice observed between software publishers and distributors within the industry covered by ESI Group.
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Consolidated financial statements
CONTENTS
NOTE 4.6. OFF-BALANCE SHEET COMMITMENTS RELATED TO OPERATIONAL ACTIVITIES
At December 31, 2019, ESI Group had a rent security deposit with Crédit du Nord in an amount of €82 thousand, established in
November 2012 and expiring November 28, 2021 plus six months.
NOTE 4.7. IMPACT OF IFRS 16 – LEASES
In the assets of the balance sheet, the rights of use of leased assets represent a net value of €20.677 million, of which a gross value of
€25.869 million and the amortization of €5.192 million.
(In € thousands)
February 1, 2019
Increase
Decrease
December 31, 2019
Right-of-use – Gross value
For offices
For cars
Right-of-use – amortization
For offices
For cars
Right-of-use – Net value
For offices
For cars
23,470
22,166
1,304
23,470
22,166
1,304
2,399
1,722
677
(5,192)
(4,453)
(739)
(2,793)
(2,731)
(62)
25,869
23,888
1,981
(5,192)
(4,453)
(739)
20,677
19,435
1,242
In the liabilities of the balance sheet, the lease debts are split between €20.002 million of non-current debts and €631 thousand of
current debts.
Maturity of lease debts as at December 31, 2019:
(In € thousands)
Debts – leased offices
Debts – leased cars
LEASE DEBTS
< 1 year
Between 1
and 2 years
Between 2
and 4 years
369
262
631
9,013
870
9,884
5,698
16
5,714
More than
5 years
4,405
4,405
December 31, 2019
19,484
1,149
20,633
In the income statement, the retreatment of rental expenses amounted to €5.351 million, almost entirely offset by the right-of-use
amortization: the impact on the operational result is +€158 thousand. The impact of IFRS 16 retreatment on financial result is an additional
expense of -€115 thousand. The impact on the result net is +€44 thousand.
In the cash flow statement, IFRS 16’s impact is an increase of amortization and an improvement of cash flow amounted to +€5.236 million,
against a reimbursement of lease debts in the financial part of the cash flow statement for -€5.236 million.
NOTE 5. PERSONNEL COSTS AND EMPLOYEE BENEFITS
NOTE 5.1. HEADCOUNT
Headcount is calculated on a “Full-Time Equivalent” (FTE) basis and distributed as follows:
December 31, 2019(1)
(Feb. to Dec.)
January 31, 2019(2)
(Feb. to Jan.)
326
912
1,238
317
904
1,221
FTE
France
Rest of the world
TOTAL
(1) February 1, 2019 – December 31, 2019.
(2) February 1, 2018 – January 31, 2019.
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FINANCIAL STATEMENTS
Consolidated financial statements
NOTE 5.2. PERSONNEL COSTS
Personnel costs are presented by destination in the income statement. Their break down by nature is as follows:
(In € thousands)
Salaries
Payroll taxes
Share-based payments
Post-employment benefits
TOTAL PERSONNEL COSTS
(1) February 1, 2019 – December 31, 2019.
(2) February 1, 2018 – January 31, 2019.
NOTE 5.3. PROVISION FOR EMPLOYEE BENEFITS
In certain countries, the Group’s employees benefit from different
pension plans, retirement compensation, length-of-service awards
linked to seniority requirements and additional post-employment
benefits. To cover these benefits, the Group has defined-contribution
plans and defined-benefit plans in place.
A defined-contribution plan is a pension plan into which the Group
pays fixed contributions to a third-party entity. The Group does
not have any obligation other than to pay the premiums, and the
corresponding expense is recorded in the income statement for
the financial year.
A defined-benefit plan is a plan that guarantees a certain level of
benefits in the future depending on salary, age and seniority of
the employee. Such is the case for benefits that may be paid when
the employee retires.
For defined-benefit plans, in accordance with IAS 19 R “Employee
Benefits”, obligations are determined using the projected unit credit
5.3.1. Actuarial assumptions
Discount rates
France
Germany
Japan
South Korea
India
December 31, 2019(1)
(Feb. to Dec.)
January 31, 2019(2)
(Feb. to Jan.)
(69,556)
(15,914)
(689)
(627)
(73,626)
(17,834)
(751)
(563)
(86,787)
(92,774)
method. This actuarial method stipulates that each period of service
entitles the employee to one unit of benefit rights and evaluates
each of these units separately to arrive at a final commitment. These
calculations use assumptions in terms of mortality, staff turnover
and future salary increases.
Defined-benefit pension schemes and long-term benefits recognized
in accordance with IAS 19 R are as follows:
◗ for France: retirement benefits, supplementary pension plan
provided by an insurance company;
◗ for South Korea, India and Japan: severance pay owed to
employees upon departure from the company regardless of
reason for departure, calculated on the basis of length of service
within the company;
◗ for Germany: defined-contribution benefits owed to selected
managers.
December 31, 2019
January 31, 2019
0.80%
0.88%
0.27%
1.70%
7.25%
1.45%
1.66%
0.43%
2.10%
7.83%
Discount rates correspond to:
◗ for France: AA-rate corporate bond rates in the Eurozone, adjusted according to the duration of the Group’s commitments;
◗ for other counties: rates reported by the central banks.
Rate of salary increase
December 31, 2019
January 31, 2019
France
Germany
Japan
South Korea
India
2.50%
2.00%
3.00%
4.00%
10%
Turnover rates are calculated per subsidiary and per age group according to the past experience of each subsidiary.
2.50%
2.00%
3.00%
4.00%
10%
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FINANCIAL STATEMENTS
Consolidated financial statements
CONTENTS
5.3.2. Change in commitment and provisions
(In € thousands)
Provision for employee
benefits
TOTAL
January 31,
2019
Change in
equity (OCI) Provisions Reversals
Foreign
exchange
gain/loss
Other
movements
December 31,
2019
9,979
9,979
936
936
1,045
(1,008)
1,045
(1,008)
64
64
-
-
11,016
11,016
Analysis of the variation in the provision recorded in the balance sheet
(In € thousands)
Change in commitments
Commitments at opening
Acquired companies
Costs of services rendered in the period
Interest expenses
Benefits paid
Actuarial gains and losses
Others
Foreign exchange gain/loss
COMMITMENTS AT CLOSING
Change in fair value of assets
Fair value of assets at opening
Acquired companies
Yield on assets
Employer contributions
Benefits paid
Actuarial gains and losses booked in equity
Foreign exchange gains and other
FAIR VALUE OF ASSETS AT CLOSING
Net expense for the year
Costs of services rendered
Finance charges
Interest expenses
Yield on assets
NET EXPENSE FOR THE YEAR
Provision recorded in the balance sheet
Commitments financed
Fair value of assets
Net commitments financed
Commitments not financed
PROVISION AT CLOSING
Change in provision
Provision at opening
Net expense for the year
Actuarial gains and losses
Employer contributions
Benefits paid
Acquired companies
Foreign exchange gain/loss
Others
PROVISION AT CLOSING
120
December 31,
2019
January 31,
2019
(12,034)
(10,666)
-
(869)
(228)
525
(855)
0
(59)
-
(902)
(223)
243
(271)
(5)
(211)
(13,521)
(12,034)
2,086
1,867
52
793
(310)
(82)
(3)
2,536
(869)
(176)
(228)
52
49
175
(21)
2
15
2,086
(901)
(175)
(223)
49
(1,045)
(1,076)
(5,367)
2,591
(2,776)
(8,239)
(11,015)
(9,979)
(1,045)
(936)
793
215
(64)
(4,900)
2,141
(2,759)
(7,686)
(10,445)
(8,798)
(1,076)
(269)
175
221
(198)
(35)
(11,016)
(9,979)
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
FINANCIAL STATEMENTS
Consolidated financial statements
5.3.3. Sensitivity of commitments to fluctuations in the discount rate
(In € thousands)
Commitment -0.5%
Commitment
Commitment +0.5%
(In € thousands)
Experience adjustment
Change in financial assumptions
Yield on assets
Change in demographic assumptions
TOTAL ACTUARIAL GAINS/LOSSES
December 31, 2019
(13,453)
(13,521)
(13,588)
December 31, 2019
(281)
(689)
(6)
39
(936)
NOTE 5.4. SHARE-BASED PAYMENTS
Stock options may be granted to selected Group employees.
They entitle employees to subscribe to new shares or purchase
existing shares of ESI Group four or five years after stock options
are awarded at a fixed exercise price set on the award date.
Criteria for the granting of stock options may include performance
requirements, additionally to continued employment requirement.
In accordance with IFRS 2, options are measured at the fair value
of the benefit granted to the employee, estimated at grant date.
They are recorded as personnel costs in the income statement on
a straight-line basis over the vesting period of the option, offset
against equity. The expense is recorded in the income statement per
destination according to the allocation of each concerned person.
The fair value of the option is determined using the “Black-Scholes”
model, the main parameters of which include: the exercise price of
the options, their expected life period, share price at grant date, the
inherent volatility of the share price and the risk-free interest rate.
Free shares may also be awarded to Group employees. The fair
value of the benefit granted is determined based on the share
price on the day of the award multiplied by the number of shares
awarded. This cost is recorded on a straight-line basis over the
vesting period.
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Consolidated financial statements
CONTENTS
Terms and conditions of stock options and free shares plans
Stock options and free share grants have been authorized by various General Meetings and could potentially dilute ESI Group’s capital.
The table below describes the status of the various plans under which options have been granted but not yet exercised.
Number of
stock
options/
shares
allotted
or to be
allotted
Number of
stock
options/
shares
granted
O/w
performance
shares
Exercise
price
Number of
existing stock
options/shares
at
December 31,
2019
Limit
year for
exercising
options
Plan number (date
of General Meeting)
Plan 10 (GM 2012)
Plan 10 bis (GM 2012)
Plan 10 ter (GM 2012)
Date of
Board of
Directors
02/01/2013
02/07/2014
02/01/2015
Plan 10 quater (GM 2012)
07/22/2015
150,850
62,300
11,000
15,000
3,150
Plan 15 (GM 2013)
02/01/2015
294,538
20,000
Total GM 2012
180,000
180,000
Plan 17 (GM 2014)
Plan 17 bis (GM 2014)
Plan 17 ter (GM 2014)
Total GM 2013
07/22/2015
03/11/2016
05/05/2017
Plan 17 quater (GM 2014)
05/05/2017
7,350
10,000
18,175
1,875
Total GM 2014
180,000
37,400
Plan 19 (GM 2017)
Plan 19 bis (GM 2017)
Plan 1 9 ter (GM 2017)
07/18/2018
02/01/2019
12/18/2019
43,950
20,000
24,660
62,300
20,000
1,875
1,875
32,963
15,000
Authorization given
at the GM of July 2017
Total stock-options
Plan 6 (GM 2016)
Plan 7 (GM 2016)
Plan 8 (GM 2016)
Plan 9 (GM 2018)
Plan 9 bis (GM 2018)
Plan 9 ter (GM 2018)
Plan 9 quater (GM 2018)
Total free shares
TOTAL STOCK-OPTIONS
AND FREE SHARES
Total GM 2017
180,000
88,610
47,963
229,600
1,064,138
326,010
132,138
07/21/2016
12/23/2016
08/01/2017
60,000
07/18/2018
07/18/2018
07/18/2018
07/18/2018
7,964
25,000
2,275
9,000
10,617
2,441
15,500
16,250
6,712
2,521
90,316
7,964
Plan 9 quinquies (GM 2018)
12/18/2019
Plan 9 sexies (GM 2018)
12/18/2019
60,000
27.82
24.42
21.66
27.17
21.66
27.17
23.35
50.92
50.92
42.97
27.04
29.12
38,700
375
2,100
41,175
4,900
16,300
21,200
38,100
20,000
24,660
82,760
145,135
4,164
2,501
10,367
2,184
15,500
16,250
6,712
2,521
53,534
2021
2022
2025
2025
2025
2023
2026
2025
2025
2026
2027
2027
2020
2021
2021
2020
2020
2022
2023
2022
2021
1,184,138
415,876
140,102
205,334
The total expense related to share-based payments for the financial year ended December 31, 2019 stands at €164 thousand. That
related to free shares stands at €526 thousand.
All stock options and free shares include a continued employment requirement.
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FINANCIAL STATEMENTS
Consolidated financial statements
Movements in stock options and free shares plans
2019
2018
Numbers of
stock options
and free shares
Weighted
average
exercise price
Numbers of
options and
free shares
Weighted
average
exercise price
Stock options and shares existing at the opening
Stock options/free shares granted
Stock options expired or canceled
Stock options exercised and free shares delivered
Stock options and shares existing at the closing
OPTIONS THAT MAY BE EXERCISED AT THE CLOSING
151,448
70,143
(4,990)
(11,367)
205,334
0
24.49
17.95
24.92
40.01
23.83
108,843
72,510
(9,823)
(20,080)
151,448
0
20.34
42.97
36.84
41.01
24.49
The main data and assumptions underlying the valuation of stock options and free shares at fair value were as follows:
Share
price at
grant date
Exercise
period of stock
options/free
shares in years
Volatility
Dividend
rate
Interest
rate
Stock-options
Plan 10 (Board of 02/01/2013)
Plan 10 bis (Board of 02/07/2014)
Plan 10 ter (Board of 02/01/2015)
Plan 10 quater (Board of 07/22/2015)
Plan 15 (Board of 02/01/2015)
Plan 17 bis (Board of 07/22/2015)
Plan 17 ter (Board of 03/11/2016)
Plan 17 quater (Board of 05/05/2017)
Plan 17 (Board of 05/05/2017)
Plan 19 (Board of 07/18/2018)
Plan 19 bis (01/02/2019)
Plan 19 ter (12/12/2019)
Free shares
Plan 6 (Board of 07/21/2016)
Plan 7 (Board of 12/23/2016)
Plan 8 (Board of 08/01/2017)
Plan 9 / 9 bis / 9 ter
(Board of 07/18/2018)
Plan 9 quater
Plan 9 quinquies / 9 sexies
26.99
24.50
24.94
28.31
24.94
28.31
24.39
55.56
55.56
42.97
27.04
29.12
30.30
45.73
46.19
42.97
31.4
31.00
4
3
4
4
4
4
1 to 5
2 to 4
2 to 4
2 to 4
3
3
2 to 4
2
2 to 4
2 to 4
2 to 4
2
24.80%
23.73%
22.13%
23.36%
23.36%
22.13%
22.79%
28.16%
28.16%
37.33%
34.56%
26.76%
n.a
n.a
n.a
n.a
n.a
n.a
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1.30%
0.30%
0.36%
0.65%
0.65%
0.36%
0.65%
0.86%
0.86%
0.66%
0.61%
0.65%
1.2%
1.1%
1.1%
0.95%
0.70%
0.65%
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FINANCIAL STATEMENTS
Consolidated financial statements
CONTENTS
NOTE 6.
INTANGIBLE AND TANGIBLE ASSETS
NOTE 6.1. INTANGIBLE ASSETS
6.1.1. Change in the gross value, amortization and net value of intangible assets
(In € thousands)
Gross values
Development costs
Intangible assets with
an indefinite useful life
Other intangible assets
TOTAL
Amortization
Development costs
Intangible assets with
an indefinite useful life
Other intangible assets
TOTAL
Net carrying amounts
Development costs
Intangible assets with
an indefinite useful life
Other intangible assets
TOTAL
January 31, 2019
Increase
Decrease
Foreign
exchange
gain/loss
Other
movements December 31, 2019
63,192
28,323
(21,990)
12,044
21,636
96,872
554
(3)
28,878
(21,993)
(19,041)
(27,024)
21,990
(73)
(15,948)
(35,062)
(1,526)
3
(28,550)
21,993
44,152
1,300
11,971
5,687
61,811
(972)
328
-
-
-
-
(44)
(44)
44
44
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
69,525
12,044
22,143
103,712
(21,990)
(73)
(17,427)
(39,490)
45,452
11,971
4,716
62,139
6.1.2. Capitalized development costs
Research costs borne to gain new scientific or technical
knowledge are recorded as expenses when incurred.
Development costs are capitalized in situations where the six
requirements set forth under IAS 38, “Intangible Assets”, are met:
◗ technical feasibility of completing the development project has
been established;
◗ the Group intends to complete the project;
◗ the Group will be able to use or sell the product arising from the
research and development project;
◗ the product is likely to generate future economic benefits, and
a market exists for this product;
◗ there are appropriate technical, financial and other resources
available to complete the research and development project
and to sell the resulting product;
◗ the Group has the ability to reliably measure the expenses
attributable to the research and development project.
The expenses thus converted into assets include the cost of direct
labor as well as sub-contracting.
Capitalized expenses are amortized on a straight-line basis over
a period of 12 months for development work that leads to the
yearly release of new annual versions of software packages sold
by the Group, and on a straight-line basis over 24 or 36 months for
development work that leads to major improvements to existing
products, depending on the degree of innovation.
Research and development costs that do not meet IAS 38 criteria
are recorded as expenses when incurred.
In certain cases, research and development costs entitle the Group
to a tax credit, recorded during the financial year when expenses
were incurred. These tax credits are deducted from research and
development costs.
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FINANCIAL STATEMENTS
Consolidated financial statements
Net impact of the capitalization of development costs
(In € thousands)
Development costs capitalized during the period
Development costs amortized during the period
NET IMPACT OF THE CAPITALIZATION OF DEVELOPMENT COSTS
December 31, 2019
January 31, 2019
28,323
(27,024)
1,300
29,937
(27,258)
2,679
Releases, which correspond to the commercial launch of new
versions or upgrades to our software, are the result of commercial
and strategic decisions. In some cases, management may decide
to wait until several upgrades have been made before marketing
a new version rather than to release several different versions
with minor upgrades during the year; in other cases, a new
version featuring a major innovation may be marketed even if
other improvements are planned in the near future. While project
releases are generally planned on a yearly basis, the actual release
timeline may vary from one year to the next. These changes have
an impact on amortization start dates and, consequently, on
amortization amounts recorded.
Net value of capitalized developments costs represents 15 months
of research and development costs (€45.5 million) incurred at
December 31, 2019, compared to 14.4 months (€44.1 million) at
January 31, 2019.
Reconciliation of R&D costs incurred and accounted for in the income statement
(In € thousands)
R&D costs incurred during the period(1)
Development costs capitalized during the period
Development costs amortized during the period
French R&D tax credit
Amortization of codes acquired in business combinations
TOTAL R&D COSTS RECOGNIZED AS EXPENSES DURING THE FINANCIAL YEAR
December 31, 2019
January 31, 2019
(33,656)
28,323
(27,024)
3,086
(562)
(29,832)
(36,763)
29,937
(27,258)
2,979
(613)
(31,718)
(1) Including €5,332 million in expenses accounted for as direct costs in 2019, compared to €6,826 million in 2018.
6.1.3. Intangible assets with an indefinite useful life
Intangible assets with an indefinite useful life include source
codes that allow the Company to obtain intellectual property
rights to the software code. Specifically, it involves the translation
of the laws of physics into programming language in the form of
algorithms that make it possible to simulate the reaction of materials
under external constraints.
The intangible assets stemming from the purchase of business units
are deemed to have indefinite useful lives as long as no substitute
technology currently exists and as long as the recurrent business
model (yearly leases) ensure that the installed base continues to
generate revenue over the long term.
The Group is of the opinion that the useful life of these intangible
assets cannot be determined as long as the underlying scientific
content in purchased products is not challenged by a technological
breakthrough that would render it obsolete. Furthermore, significant
research and development efforts (accounting for 30% of revenue
from licensing) focusing on these up-and-coming products guarantee
the long term value of the asset.
Assets with an indefinite useful life are not amortized. They are
subject to impairment tests performed each year. The impairment
testing process and results at December 31, 2019 are described
in note 3.1.
The useful life of an intangible asset with an indefinite useful life is
reviewed each year to determine whether events and circumstances
continue to support an indefinite useful life assessment for this
asset. If they do not, the change in the useful life assessment from
indefinite to finite must be accounted for prospectively.
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FINANCIAL STATEMENTS
Consolidated financial statements
CONTENTS
6.1.4. Other intangible assets
NOTE 6.2. PROPERTY, PLANT AND EQUIPMENT
6.2.1. Accounting principles
Intangible assets with a finite useful life consist mainly of
software. In accordance with IAS 38, they are valued at cost.
Amortization is recorded in the income statement based on the
estimated useful life of the asset, according to the following criteria:
Office and similar
software applications
Method
Useful life
Straight-line
1 to 3 years
Other operational software
Straight-line 3 to 5 years
Codes – third-party software
integrated into products
In accordance with IAS 16 “Property, Plant and Equipment”,
these assets are valued at cost. They are not subject to any type
of revaluation. Amortization is recorded in the income statement
based on the estimated useful life of the asset, according to the
following criteria:
Fixtures and fittings
Straight-line
5 to 10 years
Computer hardware
Straight-line
3 to 5 years
Method
Useful life
Straight-line 5 to 8 years
Office furnishings
Straight-line
5 to 10 years
The period and method of amortization for an intangible asset
with a finite useful life are re-measured at the end of each period
or more frequently. Any change in the estimated useful life or
the expected pattern of consumption of the future economic
benefits embodied in the asset are recorded by modifying the
period or method of amortization. The impact of such change is
accounted for prospectively as a change in estimate.
Amortization costs of intangible assets with finite useful lives are
recorded in the income statement under the category of expense
related to the function of the intangible asset.
6.2.2. Change in the gross value, amortization and net value of property, plant and equipment
(In € thousands)
Gross values
Fixtures and fittings
Computer hardware
Office furnishings
and other tangible assets
TOTAL
Amortization
Fixtures and fittings
Computer hardware
Office furnishings
and other tangible assets
TOTAL
Net carrying amounts
Fixtures and fittings
Computer hardware
Office furnishings
and other tangible assets
TOTAL
January 31, 2019
Increase
Decrease
Other
movements(1)
Foreign
exchange
gain/loss December 31, 2019
4,596
15,633
3,508
23,737
(2,254)
(12,791)
(2,591)
(17,636)
2,342
2,842
917
6,101
102
1,123
106
1,331
(283)
(1,334)
(5,359)
(6,976)
(181)
(211)
(5,254)
1,153
-
(1,072)
(243)
(1,315)
-
1,072
203
1,274
-
-
(40)
(41)
6
(17)
25,890
25,879
(2)
64
(92)
(29)
4
48
25,799
25,850
31
109
24
164
(16)
(81)
(19)
(116)
15
28
5
48
4,735
15,777
29,285
49,797
(2,555)
(13,070)
(7,858)
(23,484)
2,180
2,707
21,426
26,313
(1) Booking of right-of-use assets related to IFRS 16.
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FINANCIAL STATEMENTS
Consolidated financial statements
NOTE 7. FINANCING AND FINANCIAL INSTRUMENTS
NOTE 7.1. FINANCIAL ASSETS AND LIABILITIES
Financial assets and liabilities mainly comprise:
◗ long term financial debts, short-term borrowings and overdrafts,
together comprising gross debt – see details in note 7.1.2;
◗ loans and other short-term financial assets, and cash and cash
equivalents – see details in note 7.1.3 – which added to gross
debt represent net financial debt;
7.1.1. Fair value of financial assets and liabilities
◗ derivative financial instruments – see details in note 7.1.4;
◗ short-term trade receivables — see details in note 4.2, and
short-term trade payables.
(In € thousands)
Assets
Financial assets:
◆ Non-consolidated investments
◆ Deposits and guarantees
◆ French R&D tax credit receivables for 2016
◆ Derivative assets
Trade receivables
Cash and cash equivalents
Liabilities
Bank borrowings
Factoring of French R&D tax credit for 2016
Other financial debts
Derivative liabilities
Other financial liabilities
Payables
Carrying amount
December 31,
2019
Amortized
cost
Fair value
through equity
Fair value
through profit
and loss
28
-
20,241
-
28
490
2,968
2,433
44,733
45,851
2,433
1,305
8,631
Total
28
2,968
2,433
-
44,733
20,241
45,851
2,433
1,305
28
490
8,631
In accordance with IFRS 13, the various valuation techniques for
each financial instrument must be ranked. The different categories
are as follows:
◗ Level 1: direct reference to quoted (unadjusted) prices accessible
on active markets for identical assets or liabilities;
◗ Level 2: valuation method based on directly or indirectly observable
data associated with the asset or liability other than the quoted
prices included in level 1 data;
◗ Level 3: valuation method based on unobservable data.
The fair value of cash and cash equivalents is calculated using level 1.
7.1.2. Gross financial debt
Derivative instruments (see notes 7.1.4 and 7.3) are valued using
level 2.
Debts on earnouts, put options (other financial liabilities) and
investments in non-consolidated companies are valued using level 3.
ESI Group’s main source of financing is the syndicated loan
which consists of a long-term part of €28 million at December 31,
2019 and a €15 million revolving credit, out of which €10 million
confirmed. The long-term part will be gradually reimbursed annually
on April 30 each year until April 30, 2025. The syndicated loan
is remunerated based on the Euribor rate and a margin of 2%,
2.25% or 2.5% depending on the level of the Net financial debt/
EBITDA ratio related to previous year financial statements. The
margin applied since June 2019 is 2.25%.
All financial debts are denominated in euros.
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6
FINANCIAL STATEMENTS
Consolidated financial statements
/ Detail and maturity of financial debt
(In € thousands)
Syndicated loan
Short-term revolving loan
Other bank borrowings
Factoring of French R&D 2016 tax credit
Repayable advances
Other financial debts
TOTAL
2020
3,500
10,000
2,900
2,433
-
309
19,142
451
65
5,721
Maturity at December 31
2021
4,405
2022
4,905
2023
4,905
2024 and
beyond
9,810
800
800
800
2,775
Total
27,525
10,000
8,075
2,433
1,191
374
740
CURRENT: 19,142
NON-CURRENT: 30,457
5,705
5,705
13,325
49,598
(In € thousands)
Syndicated loan
Short-term revolving loan
Other bank borrowings
Maturity at January 31
2020
1,890
2021
3,390
2022
4,390
600
600
2019
2,000
1,000
3,111
Factoring of French R&D tax credit
for 2015, 2016 and 2017
2,448
2,433
2,441
Repayable advances
Other financial debts
TOTAL
119
123
33
65
8,801
5,021
65
4,055
CURRENT: 8,801
/ Financial debt by type of interest rate and maturity
2023 and
beyond
17,780
1,575
995
Total
29,450
1,000
5,886
7,322
1,147
253
6,831
20,350
45,058
NON-CURRENT: 36,256
(In € thousands)
Fixed-rate debt
Variable-rate debt
No-interest debt
TOTAL
2020
400
18,433
309
19,142
2021
800
4,405
516
5,721
Maturity at December 31
2022
800
4,905
2023
800
4,905
2024 and
beyond
2,775
9,810
740
5,705
5,705
13,325
Total
5,575
42,458
1,565
49,598
CURRENT: 19,142
NON-CURRENT: 30,457
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FINANCIAL STATEMENTS
Consolidated financial statements
The following table shows the changes in financial debt in 2019, with a split between flows with cash impact and flows without cash impact.
Flows with cash impact
Flows without cash impact
(In € thousands)
At
January 31,
2019
New
borrowings Repayment
Syndicated loan
29,450
(2,000)
Short-term
revolving loan
Other bank
borrowings
Factoring of
French R&D tax
credit
Profit-sharing
funds
Other financial
debts
1,000
10,000
(1,000)
5,886
4,000
(1,800)
7,322
1,147
253
-
162
260
(40)
(73)
TOTAL
45,058
14,422
(4,913)
Other cash
flows from
financing
activities
Change in
consolidation
scope
Foreign
exchange
gain/
loss
Other
movement
At
December 31,
2019
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
75
-
(11)
27,525
10,000
8,075
(4,889)
2,433
(78)
(68)
1,191
374
(2)
(4,971)
49,598
Other movement related to factoring of French R&D tax credit represents (i) the repayment by the French state of 2015 receivable
directly to the factoring bank and (ii) the deconsolidated factoring of 2017 receivable. These flows have no cash impact for ESI Group.
7.1.3. Cash and cash equivalents
“Cash and cash equivalents” correspond to cash, bank
deposits, interest-bearing accounts, mutual funds, money market
funds and other liquid and easily convertible investments, subject
to an insignificant risk of changes in value, in accordance with IAS 7.
In accordance with IFRS 9, marketable securities are recognized
at market value at the closing date. Changes in market value are
recognized in Financial Result.
(In € thousands)
Cash
Marketable securities
TOTAL CASH AND CASH EQUIVALENTS
7.1.4. Financial instruments
The Group classifies as cash equivalents no-risk investments in
interest-bearing accounts, commercial paper and certificates of
deposit originally maturing in three months or less and not bearing
any significant interest rate risk.
December 31, 2019
January 31, 2019
20,241
-
20,241
18,073
14
18,087
The Group uses derivative instruments to manage its exposure
to fluctuations in exchange rates and interest rates. In accordance
with IFRS 9, derivative instruments are recorded at fair value on
the balance sheet.
Changes in fair value of derivative financial instruments are
accounted for as follows:
◗ hedges accounting: changes in value are recognized in equity
and reclassified in profit or loss until the effective completion
of the forecast transaction;
◗ instruments not qualifying for hedge accounting: changes in
fair value measurement of these derivative instruments are
recognized in Financial Result.
/ Interest rate instruments
Interest rate swaps signed by ESI Group have always been set
up to hedge the variable interest rate of the syndicated loan.
Two swaps have been setup in the 2019 first semester, with a
nominal value of €14 million each, ESI Group receiving variable
rate 3-month Euribor (with a 0% floor) and paying a fixed rate
of 0.085% and 0.092%.
The syndicated loan signed in December 2018 requires set up of
interest rates hedging instruments for 50% of the outstanding loan.
At December 31, 2019, the market value of these instruments
was -€28 thousand.
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FINANCIAL STATEMENTS
Consolidated financial statements
CONTENTS
/ Foreign exchange instruments
In order to manage foreign currency risk on cash flows between
the Group’s parent company and its subsidiaries, ESI Group may
purchase foreign currency options at any time and enter into
any other type of foreign exchange contract. Foreign exchange
instruments in place during 2019 concerned Japanese yen. At
December 31, 2019, all foreign exchange instruments arrived to
maturity.
NOTE 7.2. FINANCIAL INCOME AND EXPENSES
(In € thousands)
Interest and related expenses on borrowings
Interest income
Foreign exchange gain/(loss)
Other financial expenses
FINANCIAL RESULT
Interests on borrowings are mostly related the syndicated credit and related charges.
Details on foreign exchange gains and losses are as follows:
(In € thousands)
USD
JPY
KRW
Other currencies
TOTAL
December 31, 2019
January 31, 2019
(994)
16
(998)
586
(2,563)
(1,187)
32
379
(501)
(1,277)
December 31, 2019
January 31, 2019
(708)
(23)
44
(311)
(998)
184
(54)
206
42
379
The negative foreign exchange result is mainly due to the revaluation at closing rate of the accounts payables and receivables.
Other financial expenses include:
◗ interest charges calculated on employee benefit commitments;
◗ factoring expenses for receivables related to the French R&D tax credit;
◗ overdraft interest charges.
NOTE 7.3. RISK MANAGEMENT POLICY
Country risk and foreign currency risk
During the financial year ended December 31, 2019, 42.6% of the
Group’s revenue was generated in Europe, 40.2% in Asia (mainly
Japan, South Korea, China and India) and 17.2% in the Americas
(mainly the United States). The Group is thus exposed to economic
and political uncertainties in these areas.
The Group is also highly exposed to risks stemming from changes
in foreign exchange rates: for the financial year ended December 31,
2019, 38.5% of revenue was generated in EUR, 20.3% in USD (US
dollar), 24.3% in JPY (Japanese yen), 5.3% in KRW (Korean won)
and 4.7% in CZK (Czech koruna).
Furthermore, 55.4% of costs are spent in EUR, 15% in USD, 8.6%
in JPY, 6.6% in INR (Indian rupee), 2.8% in KRW, 3.4% in CZK and
2.2% in CHF (Swiss franc).
The following table shows the results of sensitivity analysis of EBIT to exchange rate fluctuations. The assumption is a 10% decline
in the average exchange rate applied to all transactions (purchases and sales), with respect to the principal currencies to which the
Group is exposed.
Average consolidation
exchange rate
Exchange rate
used for analysis
Effect on Current
Operating Result
(in € millions)
121.85
1,307.03
25.67
1.12
78.67
1.11
134.03
1,437.73
28.24
1.23
86.54
1.22
(1.3)
(0.2)
(0.1)
(0.2)
0.5
0.2
Currency
JPY
KRW
CZK
USD
INR
CHF
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FINANCIAL STATEMENTS
Consolidated financial statements
Interest rate risk
Most of the Group’s financial debts feature variable interest
rates. To limit the negative impacts of rate fluctuation, the Group
applies a non-speculative management policy, using derivatives
described in note 7.1.4.
/ Sensitivity analysis to interest rate risk
The only debts included in the calculation of interest rate sensitivity
are those with variable interest rates. These are mostly bank loans
for which drawdown and repayment are left to the borrower’s
discretion.
At December 31, 2019, €10 million of the revolving credit line
has been used and this line was entirely paid off at the date
of approval of accounts by the Board of Directors. Given ESI
Group’s optimization of cash flow management, the amount of
debt incurred from bank loans over the course of the year has
fluctuated, with generally lower levels, like-for-like, than at the
end of the financial year.
The calculations of foreign-exchange sensitivity presented below
assume that financial debts remain stable at December 31, 2019
levels, meaning a fixed level of drawdown on bank loans as of
that date.
The table below simulates the effects in terms of outflows of interest rates rising and falling by 1%:
(In € thousands)
Variable rate financial liabilities
Variable rate financial assets
Off-balance sheet commitments
NET POSITION
Sensitivity to a 1-point decrease
Sensitivity to a 1-point increase
Equity risk
In accordance with IAS 32, treasury shares are accounted for as
part of consolidated shareholder equity and variations in value
are not recorded. When treasury shares are acquired or sold,
shareholder equity is adjusted to reflect the value of the shares
acquired or sold. note 9.1 contains a detailed description of changes
in treasury stock, whether in the context of a liquidity agreement
or intended to cover stock options and free share grants.
As part of its cash flow management strategy, the Group does
not directly hold any other listed stock and does not invest in
< 1 year
(18,433)
≥ 1 year,
< 5 years
(14,215)
≥ 5 years
(9,810)
Total
(42,458)
(18,433)
(14,215)
(9,810)
(42,458)
-
(145)
equity-dominated or equity-benchmark UCITS. Thus, the Group’s
net financial income is not directly or significantly affected by
variation in any given stock or market index.
Liquidity risk
The Company has specifically reviewed its liquidity risk and it
considers itself to be in a position to satisfy future payment
obligations. The ratio to be maintained with regard to the syndicated
loan contract entered into in December 2018 is detailed in note 7.4.
NOTE 7.4. OFF-BALANCE SHEET COMMITMENTS RELATING TO GROUP FINANCING
As part of the credit agreement dated December 20, 2018, ESI
Group granted a pledge of 99.98% of the shares of Engineering
System International, 100% of the shares of the subsidiary ESI
Software Germany, and 96% of the shares of the subsidiary ESI
ITI GmbH.
As long as it owes an obligation under the agreement or the
security documents, the borrower undertakes, under prepayment
constraint, to comply with the ratio of consolidated net financial
debt divided by consolidated EBITDA, the thresholds to be
respected over the term of the syndicated loan agreement are
gradually decreasing. As at December 31, 2019, the threshold to
be respected is 3.5%. At December 31, 2019, on the basis of the
annual consolidated financial statements certified by the Statutory
Auditors, the Group was in compliance with this ratio.
Off-balance sheet financial commitments also include factoring
of French R&D tax credit receivables of 2017 and 2018, which
have been factored in 2018 for €2.441 million and in 2019 for
€2.659 million. The terms and conditions of those factorings justify
the non-recognition of those commitments as financial liabilities
on the balance sheet (deconsolidating contracts).
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Consolidated financial statements
NOTE 8.
INCOME TAX
NOTE 8.1. INCOME TAX EXPENSE
Deferred tax assets and liabilities reflect future decreases or
increases in income tax expense to be paid that result, for certain
asset and liability items, from temporary valuation differences
between their carrying amounts and their tax base, as well as
from tax loss and tax credit carryforwards. Deferred tax assets
and liabilities are assessed by tax entity or group based on the
tax rates applicable to the years during which these temporary
differences are likely to be reversed or paid. Deferred tax assets
and liabilities are adjusted for each entity to present either a net
asset position or a net liability position.
Deferred tax assets are only recorded in cases where it is likely that
the future tax savings they represent will be realized. The Group
reviews the probability of future recovery of deferred tax assets
on a periodic basis for each tax entity. In some cases, this review
can lead the Group to derecognize deferred tax assets that it had
recognized in prior years.
The Group has three tax groups:
◗ in the United States, with ESI North America, Inc. as head
◗ in France, with the parent company, ESI Group, as head company;
◗ in Germany, with ESI Software Germany GmbH as head company;
company.
8.1.1. Income tax expense
(In € thousands)
Current taxes
Deferred taxes
TOTAL
8.1.2. Tax proof
(In € thousands)
Net income before taxes
Including share of profit of associates
Theoretical tax rate
Theoretical tax (expense)/benefit
Permanent differences between net result and taxable income
Impact of liability method
Impact of standard tax rate differentials between parent company and subsidiaries
Unrecognized deferred tax assets and unused tax losses
Recognition of previously unrecognized deferred tax assets
GROUP INCOME TAX EXPENSE
Effective tax rate
December 31, 2019
January 31, 2019
(2,372)
5,818
3,446
(2,397)
(109)
(2,505)
December 31, 2019
January 31, 2019
(24,360)
26
28%
6,828
(2,202)
13
44
(1,319)
81
3,446
(14.1)%
5,840
106
29.5%
(1,692)
(452)
(39)
384
(706)
-
(2,505)
43.7%
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Consolidated financial statements
NOTE 8.2. DEFERRED TAXES
Breakdown of deferred taxes by tax base
(In € thousands)
Deferred tax assets
Tax loss carryforwards
Temporary differences related to tax treatment of maintenance
Provisions for employee benefit commitments
Temporary differences related to personnel
Provisions and other adjustments
Total deferred tax assets
Deferred tax liabilities
Amortization of acquired intangible assets
Other
Total deferred tax liabilities
NET DEFERRED TAX
December 31, 2019
January 31, 2019
8,801
2,632
3,322
876
1,574
1,128
4,478
3,159
590
1,566
17,204
10,920
(808)
(2,953)
(3,761)
13,443
(1,323)
(2,415)
(3,738)
7,182
Unrecognized deferred tax assets on tax loss carryforwards came to €2.9 million. The timeframe used for estimating the recoverability
of these deferred tax assets is generally five years.
Reconciliation of deferred income tax expense on the balance sheet and income statement
(In € thousands)
Net deferred tax assets at opening (February 1, 2019)
Acquired companies
Deferred tax expenses recorded in the income statement
Deferred tax expenses recognized directly in equity (IAS 19 revised)
Foreign exchange gain/loss on deferred tax expenses
Other movements
NET DEFERRED TAX ASSETS AT CLOSING (DECEMBER 31, 2019)
7,182
83
5,617
262
(7)
306
13,443
NOTE 9. EQUITY AND EARNINGS PER SHARE
NOTE 9.1. SHARE CAPITAL, RESERVES AND TREASURY STOCK
ESI Group’s share capital is made up of ordinary shares.
/ Share capital
The “Currency translation difference” line item is used to
record losses or gains generated by converting the financial
statements of foreign subsidiaries into euros as well as foreign
exchange losses or gains on transactions characterized as long
term investments with foreign subsidiaries.
When the Group buys back its own shares, these shares are
recorded at their net purchase price as treasury stock and
deducted from equity. The proceeds from the sale of treasury
stock are accounted for directly in equity.
At December 31, 2019, ESI Group’s share capital was €18.053 million,
comprising 6,018,492 common shares with a par value of €3 each.
/ Dividend payout
ESI Group did not pay out any dividend during the period.
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/ Treasury shares
/ Transactions with non-controlling interests
The number of treasury shared declined by 13,540 shares over
the financial year. The percentage of capital held as treasury
shares following these transactions stood at 6.3% at December 31,
2019, compared to 6.4% at January 31, 2019. The Group owns a
total of 377,342 treasury shares, purchased at a historical cost of
€4.093 million and with a market value of €12.284 million at the
same date, for an unrealized gain of €8.171 million.
Transactions with non-controlling interests are recognized directly
in equity. See details in notes 3.1 and 3.2.
NOTE 9.2. MINORITY INTERESTS
If, in the event of losses, the part of equity corresponding to minority interests becomes negative, it will be retreated so as to be at
least equal to zero.
NOTE 9.3. EARNINGS PER SHARE
The table below details the net income (Group share) per share:
(In € thousands)
NET INCOME (GROUP SHARE)
Net earnings per share (in €)
Average number of shares
Diluted earnings per share (in €)
Average number of diluted shares
Only stock options and free shares may have a dilutive effect.
NOTE 10. OTHER BALANCE SHEET ITEMS
NOTE 10.1. OTHER ASSETS
10.1.1. Other non-current assets
(In € thousands)
Security deposits
Factored French R&D tax credit
Other long term assets
Investments in non-consolidated companies
TOTAL OTHER NON-CURRENT ASSETS
December 31, 2019
January 31, 2019
(20,946)
(4.06)
5,164,418
(4.01)
5,225,409
3,334
0.59
5,616,310
0.59
5,666,522
December 31, 2019
January 31, 2019
2,968
-
266
28
3,262
2,929
4,874
239
28
8,070
Security deposits mainly concern real estate rentals.
The evolution of factored French R&D tax credit results from
the reclassification of 2016 receivable in other current assets
(see note 10.1.2) and the deconsolidation of debt related to 2017
receivable (see note 7.4).
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Consolidated financial statements
10.1.2. Other current receivables
(In € thousands)
French R&D tax credit
Other tax credits
VAT and other receivables
TOTAL OTHER CURRENT ASSETS
December 31, 2019
January 31, 2019
5,847
1,501
6,371
13,720
6,036
1,392
7,920
15,348
French R&D tax credit receivables as of December 31, 2019 relates to costs incurred in 2019 for an amount of €3.103 million, and to
2016 receivable (repayment by the French State to the factor planned for 2019).
10.1.3. Prepaid expenses
Prepaid expenses consist primarily of rent for real estate and other property.
NOTE 10.2. OTHER LIABILITIES
10.2.1. Tax payables, employee-related liabilities and other short-term liabilities
(In € thousands)
Employee-related liabilities
Tax payables
Other current liabilities
TAX PAYABLES, EMPLOYEE-RELATED LIABILITIES
AND OTHER SHORT-TERM LIABILITIES
Tax payables consist primarily of VAT payables for €5.061 million.
10.2.2. Other provisions
December 31, 2019
January 31, 2019
16,008
6,275
1,946
15,329
10,640
4,590
24,229
30,560
In accordance with IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”, a provision is recorded when the following
three conditions are met: the Group has an obligation towards a third party resulting from past events, it is probable that future outflows
of resources embodying economic benefits will be necessary to settle the obligation, the amount of the obligation can be estimated in
a reliable way.
(In € thousands)
Disputes
CURRENT
PROVISIONS
FOR LIABILITIES
January 31,
2019
Provisions
Reversals –
provisions used
Reversals –
provisions not
used
Foreign
exchange
gain/loss
December 31,
2019
762
762
93
93
(193)
(193)
-
-
13
13
675
675
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NOTE 11. RELATED PARTY TRANSACTIONS
/ Executive corporate officers’ compensation
Compensation and benefits paid to the Group’s four executive corporate officers during the financial years ended December 31, 2019
and January 31, 2019 breaks down as follows:
(In € thousands)
Fixed compensation
Variable compensation
Travel bonus
Benefits in kind
Directors' fees
TOTAL
/ Related party transactions
Not applicable.
December 31, 2019
January 31, 2019
1,069
-
-
20
98
1,186
717
42
17
160
16
952
NOTE 12. FEES PAID TO STATUTORY AUDITORS
PricewaterhouseCoopers
Audit
Ernst & Young
Total
Amount
%
Amount
%
Amount
%
(In € thousands, excluding tax)
Y
Y-1
Y
Y-1
Y
Y-1
Y
Y-1
Y
Y-1
Y
Y-1
Statutory audit
Certification, review of annual and consolidated financial statements
◆ Parent company
◆ Fully consolidated subsidiaries
160
63
Services other than certification of accounts
◆ Parent company
◆ Fully consolidated subsidiaries
21
0
161
86
21
0
57%
23%
51%
28%
191
139
184
128
57%
41%
58%
28%
351
202
344
214
57%
33%
55%
34%
7%
0%
7%
0%
7
0
7
0
2%
0%
2%
0%
28
0
28
0
4%
0%
4%
0%
Sub-total statutory audit
244
267
87%
86%
337
319 100% 100%
581
586
94%
93%
Other work and services directly related to statutory audit
Legal, tax, social
Others
Sub-total other services
34
0
0
45
0
45
13%
0%
14%
0%
13%
14%
0
0
0
0
0
0
0%
0%
0%
0%
0%
0%
34
0
34
45
0
45
6%
0%
6%
7%
0%
7%
TOTAL
278
312
100% 100%
337
319 100% 100%
615
631
100% 100%
The Group opted to follow the recommendations of the French
Association of Statutory Auditors (CNCC) to record, at the
reporting date, expenses related to audit fees corresponding to
services actually rendered during the period. The total budget
for certification fees for the parent company and consolidated
financial statements for the financial year ended December 31,
2019 came to €351 thousand. Services other than certification of
accounts correspond primarily to certification of costs statements
issued for co-financed projects and of bank covenant calculation.
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NOTE 13. SUBSEQUENT EVENTS
CORONAVIRUS
In the short term, the global pandemic related to Covid-19 is expected to impact our financial year results, however many remaining
uncertainties make it impossible to precisely quantify this impact at this stage. The resilience of our business model solidly anchored
on renewable and critical software licenses will help us manage risks over the year.
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6.1.6. STATUTORY AUDITORS’ REPORT
ON THE CONSOLIDATED FINANCIAL STATEMENTS
This is a translation into English of the Statutory Auditors’ report on the consolidated financial statements of the Company issued in
French and it is provided solely for the convenience of English speaking users. This Statutory Auditors’ report includes information
required by European regulation and French law, such as information about the appointment of the Statutory Auditors or verification of
the information concerning the Group presented in the management report and other documents provided to shareholders. This report
should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
Eleven-months period ended December 31, 2019
To the General Meeting of ESI Group,
Opinion
In compliance with the engagement entrusted to us by your general meeting, we have audited the accompanying consolidated
financial statements of ESI Group for the eleven-months period ended December 31, 2019. These consolidated financial statements
were approved by the Board of Directors on March 19, 2020 on the basis of the elements available at that date, in the evolving context
of the health crisis related to Covid-19.
In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position
of the Group as at December 31, 2019 and of the results of its operations for the year then ended in accordance with International
Financial Reporting Standards as adopted by the European Union.
The audit opinion expressed above is consistent with our report to the Audit Committee.
Basis for opinion
/ Audit Framework
We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Statutory Auditors’ Responsibilities for the Audit of the
Consolidated Financial Statements section of our report.
/ Independence
We conducted our audit engagement in compliance with independence rules applicable to us, for the period from February 1, 2019 to
the date of our report and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation
(EU) No 537/2014 or in the French Code of Ethics (Code de déontologie) for Statutory Auditors.
Emphasis of matter
Without qualifying our opinion expressed above, we draw your attention to the following matters:
◗ The note 1.3 “New IFRS standards and interpretations” which describes the impact on the consolidated financial statements of the
first application of IFRS 16 – Leases;
◗ The note 2 “Significant events of the year “which presents the change in the closing date of the financial year and the information
established for comparability purposes.
Justification of assessments – Key Audit Matters
In accordance with the requirements of Articles L. 823-9 and R. 823-7 of the French Commercial Code (Code de commerce) relating
to the justification of our assessments, we inform you of the key audit matters relating to risks of material misstatement that, in our
professional judgment, were of most significance in our audit of the consolidated financial statements of the current period, as well
as how we addressed those risks.
These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on specific items of the consolidated financial statements.
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Consolidated financial statements
/ Capitalization of development costs
Risk identified
In the balance sheet of the Group, non-current assets include capitalized development costs. As of December 31,
2019, their net book value amounts to €45,452 thousand. They correspond mostly to cost of direct labor as well
as sub-contracting, incurred for the development of new annual versions or major improvements of existing ESI
software.
As indicated in note 6.1.2 to consolidated financial statements, development costs are capitalized in situations where
the six requirements set forth under IAS 38, “Intangible Assets”, are met. Capitalized development costs start to
be amortized after the market release of the related version of the software. Capitalized expenses are amortized
on a straight-line basis over a period of 12 months for new annual versions of software, and over 24 or 36 months
for major improvements to existing products, depending on the degree of innovation.
ESI Management set up procedures and rules to ensure that:
◆ the process to distinguish between research and development costs is respected;
◆ capitalized development costs met all criteria set forth under IAS 38; and
◆ useful life period over which each project is amortized is adapted to the nature/level of innovation of the project.
However, regarding the significant impact on the consolidated income statement of capitalization of development
costs amounting to €29,832 thousand, and the significant gross balance of these capitalized costs recorded as
assets in the consolidated balance sheet amounting to €69,525 thousand, it follows that any deviation from the
procedures in place or any misinterpretation of the capitalization criteria could lead to significant impacts on the
Group’s consolidated financial statements and financial performance.
The assessment of compliance with the criteria for capitalization of development costs, as well as the determination
of the amortization period depending on the nature of the project, are very much based on Management’s
judgment and the reliability of the procedures applied for the identification and allocation of expenses between
the different projects.
On this basis, we considered capitalization of development costs as a key audit matter.
Our response
We examined the compliance of the Group’s accounting treatment of research and development costs with current
accounting standards.
We also conducted a critical review of how this methodology was implemented. In particular, we conducted the
following procedures:
◆ we have taken notice of the procedure followed by the Group to distinguish between research and development
costs and, for the latter, the rules put in place to assess compliance with the capitalization criteria laid down in
IAS 38;
◆ we tested by sampling the correct application of the procedures implemented for the identification, monitoring
and recording of research and development costs;
◆ we audited, for a selection of projects, the correct application of the capitalization criteria set out in IAS 38 and
tested the accuracy and completeness of the most significant expenses charged to these projects;
◆ we verified the correct calculation of amortization expense mainly by controlling the correct application of the
rules for setting the straight-line amortization period, depending on the nature of the project (major improvement
or new version);
We have reconciled accounting and management data in order to assess the accuracy and completeness of
information reporting process for recording.
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/ Valuation of goodwill
Risk identified
As part of its development, the Group was led to carry out targeted acquisitions leading to recognition of goodwill.
This goodwill, which corresponds to the difference between the price paid and the fair value of identifiable assets
and liabilities acquired, amounts to €41,448 thousand at end December 2019.
Any adverse change in the expected returns of the business, due to internal or external factors, for example related
to the economic and financial environment, is likely to significantly affect the recoverable amount and require the
recognition of impairment. Such a change therefore implies a regular reappraisal (at least once a year, or when an
indication of loss of value is identified) of the relevance of all the assumptions used to determine this value as well
as the reasonableness and coherence of the valuation parameters. To this end, Management examines indicators
of potential losses and performs an impairment test by ensuring annually that the book value of goodwill does
not exceed their recoverable amount.
This recoverable amount is determined by reference to the value in use, itself calculated from the present value of
the expected cash flows of the group of assets. For the purpose of the impairment test, goodwill is allocated to
cash generating units (“CGUs”). ESI Group uses a single CGU for the entire Group.
Methodology applied for the impairment test and assumptions used are presented in note 3.1 to consolidated
financial statements.
The determination of the recoverable value of goodwill is largely based on Management’s judgment, in particular as
regards the growth rate used for the cash flow projections and the discount rate applied. We therefore considered
the valuation of goodwill as a key audit matter.
We obtained the last budget and strategic plan as well as the impairment test established by Management. Based
on this information, we performed the following procedures:
◆ We examined the regularity and permanence of the accounting principles and methods applied;
◆ We analyzed the key assumptions retained:
• regarding cash flows: critical review of the budget and strategic plan validated by Management, based on our
knowledge of the Group,
• regarding the long-term growth rate and the discount rate applied to these flows, we have assessed, with the
help of our valuation specialists, the main assumptions used,
• we obtained and reviewed sensitivity analyzes performed by Management.
Our response
/ Revenue recognition principles
Risk identified
The group ESI derives revenue from two primary sources: software licensing and related maintenance activity,
and services activity.
In the case of contracts that include several of these items sold together, the determination of the date of
recognition of the revenue and its allocation between the different components of the contracts may require,
if necessary, a part of the judgment of Management.
In compliance with IFRS 15, ESI customer contracts have been analyzed in five stages in order to identify the
component of the performance obligations and the price of each. For licensing revenue, two performance
obligations have been identified: access to the software (the licensing itself) and the maintenance service.
The part of revenue allocated to maintenance is determined as presented in note 4.1 to consolidated financial
statements. This allocation of revenue between the different components of a contract requires analyzes and
restatements of the Management.
We therefore considered for these various reasons the recognition of revenue as a key audit matter.
As part of our audit, we conducted tests on all contracts deemed significant as well as on a sample of contracts
selected at random, in order to (i) review the allocation (in accordance with the accounting principles described
in note 4.1 to consolidated financial statements) of the revenue between each component of the contract; (ii)
analyze the revenue recognition for the appropriate amount and the appropriate accounting period.
These tests include analyzing the contractual terms, recalculating each item and examining the revenue
recognition in accordance with the principles set out in note 4.1 to consolidated financial statements, which
compliance with IFRS was previously assessed.
Our response
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Consolidated financial statements
Specific verifications
We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and
regulations of the information given in the Board of Directors’s Group management report, as approved on March 19, 2020. Regarding
the events that occurred, and the elements known after the date of approval of the consolidated financial statements relating to the
effects of the Covid-19 crisis, Management has informed us that such events and elements will be communicated to the annual general
meeting called to decide on these financial statements.
We have no matters to report as to their fair presentation and their consistency with the consolidated financial statements.
We attest that the consolidated non-financial information statement required by Article L. 225-102-1 of the French Commercial Code
is presented in the Group’s information given in the management report, being specified that, in accordance with Article L. 823-10 of
this Code, the information given in this statement have not been verified by us with respect to the fair presentation and consistency
with the consolidated financial statements and has to be subject to a report by an independent third party.
Report on other legal and regulatory requirements
/ Appointment of the Statutory Auditors
We were appointed as Statutory Auditors of ESI Group by the General Meeting held on June 25, 2009 for PricewaterhouseCoopers
Audit and on December 16, 1997 for Ernst & Young Audit.
As at December 31, 2019, PricewaterhouseCoopers Audit and Ernst & Young Audit were in the 11th year and 23rd year of total uninterrupted
engagement (which is the 20th year since securities of the Company were admitted to trading on a regulated market) respectively.
Responsibilities of Management and those charged with Governance
for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
International Financial Reporting Standards as adopted by the European Union and for such internal control as management determines
is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated financial statements, Management is responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it
is expected to liquidate the Company or to cease operations.
The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risks
management systems and where applicable, its internal audit, regarding the accounting and financial reporting procedures.
The consolidated financial statements were approved by the Board of Directors.
Statutory Auditors’ responsibilities for the audit
of the consolidated financial statements
/ Objectives and audit approach
Our role is to issue a report on the consolidated financial statements. Our objective is to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from material misstatement. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As specified in Article L. 823-10-1 of the French Commercial Code (Code de commerce), our statutory audit does not include assurance
on the viability of the Company or the quality of management of the affairs of the Company.
As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditor exercises professional
judgment throughout the audit and furthermore:
◗ Identifies and assesses the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, designs
and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to
provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
◗ Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control;
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◗ Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by Management in the consolidated financial statements;
◗ Assesses the appropriateness of Management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s
ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report.
However, future events or conditions may cause the Company to cease to continue as a going concern. If the Statutory Auditor
concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in
the consolidated financial statements or, if such disclosures are not provided or inadequate, to modify the opinion expressed therein;
◗ Evaluates the overall presentation of the consolidated financial statements and assesses whether these statements represent the
underlying transactions and events in a manner that achieves fair presentation;
◗ Obtains sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
to express an opinion on the consolidated financial statements. The Statutory Auditor is responsible for the direction, supervision
and performance of the audit of the consolidated financial statements and for the opinion expressed on these consolidated financial
statements.
/ Report to the Audit Committee
We submit to the Audit Committee a report which includes in particular a description of the scope of the audit and the audit program
implemented, as well as the results of our audit. We also report, if any, significant deficiencies in internal control regarding the accounting
and financial reporting procedures that we have identified.
Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgment, were of most
significance in the audit of the consolidated financial statements of the current period and which are therefore the key audit matters
that we are required to describe in this report.
We also provide the Audit Committee with the declaration provided for in Article 6 of Regulation (EU) No. 537/2014, confirming our
independence within the meaning of the rules applicable in France such as they are set in particular by Articles L. 822-10 to L. 822-14
of the French Commercial Code (Code de commerce) and in the French Code of Ethics (Code de déontologie) for Statutory Auditors.
Where appropriate, we discuss with the Audit Committee the risks that may reasonably be thought to bear on our independence, and
the related safeguards.
Neuilly-sur-Seine and Paris-La Défense, April 23, 2020
The Statutory Auditors
French original signed by
PricewaterhouseCoopers Audit
Thierry Charron
Ernst & Young Audit
Frédéric Martineau
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FINANCIAL STATEMENTS
ESI Group annual financial statements
6.2. ESI GROUP ANNUAL FINANCIAL STATEMENTS
6.2.1. INCOME STATEMENT
(In € thousands)
Revenue
Production held as inventory
Capitalized production
Operating subsidies
Reversals of provisions and amortization, expense transfers
Other income
Operating income
Purchase and change in stock of goods
Other purchases and external expenses
Taxes and duties
Wages and salaries
Payroll taxes
Depreciation and amortization of non-current assets
Provisions
Other expenses
Operating expenses
OPERATING RESULT
FINANCIAL RESULT
CURRENT RESULT BEFORE TAX
EXCEPTIONAL RESULT
Employee profit-sharing
Income tax
NET PROFIT (LOSS)
Notes December 31, 2019
January 31, 2019
E.1
E.3
E.4
E.5
E.5
E.6
E.7
E.8
F.5
55,296
(495)
29,478
131
1,405
412
86,228
58
56,220
1,044
15,027
6,970
27,821
2,718
1,064
110,922
(24,694)
(5,223)
(29,916)
(958)
0
(3,024)
(27,851)
86,023
83
29,975
63
2,578
890
119,611
40
62,674
1,363
15,881
7,467
28,661
2,054
1,809
119,948
(337)
2,595
2,258
(2,138)
0
(2,699)
2,820
1
2
3
4
5
6
7
8
9
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ESI Group annual financial statements
CONTENTS
6.2.2. BALANCE SHEET
Assets
(In € thousands)
Intangible assets
Property, plant and equipment
Financial assets
Non-current assets
Inventories
Down payments to suppliers
Trade receivables
Other receivables
Marketable securities (treasury shares)
Cash
Current assets
Prepaid expenses
Expenses capitalized, to be amortized
Foreign exchange gains and losses
December 31, 2019
January 31, 2019
Gross
value
Amortization/
Provisions
95,632
11,472
69,951
(30,993)
(8,774)
(9,229)
Net
value
64,639
2,698
60,722
Net
value
61,649
2,928
64,387
177,055
(48,996)
128,059
128,964
1,091
7
42,534
10,042
4,036
5,178
62,888
2,498
473
1,435
(2,515)
(2,515)
1,091
7
40,019
10,042
4,036
5,178
60,373
2,498
473
1,435
1,998
152
61,559
9,840
4,163
2,365
80,077
1,550
552
890
Notes
C.1
C.2
C.3
C.4
C.4
C.5
C.6
C.7
C.7
TOTAL ASSETS
244,329
(51,511)
192,838
212,033
Liabilities
(In € thousands)
Share capital
Additional paid-in capital
Legal reserve
Retained earnings
Net profit (loss)
Regulated provisions
Equity
Other equity
Provisions for contingencies and charges
Bank borrowings
Miscellaneous financial debt
Financial liabilities
Down payments from clients
Trade payables
Tax payables and employee-related liabilities
Other liabilities
D.6 & D.10
Operating liabilities and miscellaneous debts
Deferred income
Foreign exchange gains and losses
TOTAL LIABILITIES
144
Notes December 31, 2019 January 31, 2019
D.2
D.10
D.4
D.5
D.7
D.8
D.6
D.9
18,055
38,364
1,805
40,908
(27,851)
1,434
72,715
1,184
6,566
43,859
2,500
46,359
225
45,878
7,288
9,076
62,498
1,083
2,432
192,838
18,054
38,350
1,805
38,088
2,820
1,284
100,400
1,029
5,452
34,386
2,500
36,886
219
42,034
8,500
14,992
65,745
630
1,890
212,033
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
FINANCIAL STATEMENTS
ESI Group annual financial statements
6.2.3. NOTES TO ESI GROUP ANNUAL FINANCIAL STATEMENTS
Table of contents of notes to the annual financial statements
NOTE A. Significant events of the year
NOTE B. Accounting principles and methods
NOTE C. Asset details
145
146
149
NOTE D. Liability details
NOTE E. Details on income statement
NOTE F. Other information
154
158
161
Total balance sheet at December 31, 2019 amounts to €192,838 million
and the income statement for the financial year shows net loss
of €27.851 million.
The financial statements were prepared in accordance with the
French General Accounting Plan and generally accepted accounting
principles (French GAAP Art. 831-1/1).
2019 fiscal year ran exceptionally for 11 months, from February 1
to December 31, further to the change of closing further to the
change of closing date from January 31 (Y+1) to December 31 (Y)
such as decided by the General Meeting held on July 18, 2019.
All amounts listed in these notes are in thousands of euros unless
otherwise indicated.
The notes below are an integral part of the annual financial
statements.
Refer to note A. Significant events of the year.
NOTE A. SIGNIFICANT EVENTS OF THE YEAR
Change of closing date & proforma information
Further to the decision by General Meeting held on July 18, 2019,
closing date of the fiscal year has been shifted from January 31 to
December 31. Accordingly, 2019 fiscal year has run exceptionally
for 11 months, from February 1 to December 31, not including the
month of January.
As January is a significant month in terms of sales (renewal of
almost half of the contracts in the licensing business), the results
for the 11 months 2019 fiscal year differ substantially from those
of a full 12 months year.
To ensure good comparability of information and in accordance
with AMF Recommendation 2013-08, the main aggregates of the
financial statements have been recalculated on proforma basis
from January to December for 2019 and 2018.
Proforma data allow to present the Group’ activity over two full
financial years.
The data presented mainly relate to the income statement,
cash and financial debt.
(In € millions)
Revenue
Operating result
(In € millions)
Financial debt
Cash
2019 Proforma
January –
December
2018 Proforma
January –
December
88.8
5.2
80.8
(0.7)
December 31, 2019 December 31, 2018
47.0
9.2
46.3
8.2
Changes in scope occurred during the year
◗ Acquisition of minority interests in ESI ITI Gmbh (4%): percentage
ownership of this German entity, as well as of its French subsidiary
company ITI Southern Europe, is 100% as of December 31, 2019.
◗ Payment of the purchase additional price (final) for Scilab
Enterprises.
◗ Dissolution of the Chinese entity Zhong Guo ESI Co., Ltd as of
December 31, 2019.
Refer to note C.3.
1
2
3
4
5
6
7
8
9
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FINANCIAL STATEMENTS
ESI Group annual financial statements
CONTENTS
NOTE B. ACCOUNTING PRINCIPLES AND METHODS
The rules and methods remain unchanged from last year.
• consistency in accounting methods from one financial year
The general accounting conventions have been applied prudently,
in accordance with the following assumptions:
to the next,
• independence of financial years;
◗ Basic assumptions:
• going concern,
NOTE B.1. USE OF ESTIMATES
◗ General rules for preparing and presenting annual financial
statements: the basic method used to measure accounting
items is the historical cost method.
Preparation of the financial statements requires the use of estimates
and assumptions that may have an impact on the carrying amount
of certain items in the balance sheet or income statement, as well
as the information provided in selected notes.
These estimates, assumptions and assessments are established
on the basis of existing information or situations at the time the
financial statements are drawn up, and which may not reflect
future realities.
ESI Group carries out comprehensive reviews of these estimates
and assessments to take account of past experience and other
factors judged relevant with regard to economic conditions.
These estimates mainly concern provisions for contingencies
and charges and assumptions used for the valuation of equity
investments and selected intangible assets.
NOTE B.2. INTANGIBLE ASSETS
Research and development costs
Internal research and development costs are recorded in the
appropriate expense category; expenses corresponding to research
and development performed by service providers within the
Group or third parties are recorded as subcontracting expenses.
Internal expenses related to development work incurred during
the financial year (wages, payroll taxes and environment-related
costs) are capitalized and recognized as capitalized production.
Capitalization is performed on a per-project basis. Only projects
meeting the six criteria for capitalization defined in the regulation
on assets are capitalized as assets. Research projects or the
portion of expenses not meeting all of the six criteria continue to
be recognized as expenses in the income statement. Amortization
starts upon release of the project. Projects that are unfinished at
the closing date are capitalized as work in progress.
Other intangible assets
Projects involving development of new versions of ESI software
delivered on a yearly basis are amortized over 12 months.
Projects involving the development of new, significant features
are amortized over 24 or 36 months depending on the degree
of innovation.
Amortization starts at release of the version.
If there is a risk that a project will not be marketed, a provision for
depreciation is recorded on developments that will not generate
future economic gains.
At the end of the amortization period, development costs are
removed from the asset line.
Other intangible assets (patents, software) are amortized according to the straight-line method according to their estimated useful life.
Office and similar software applications
Other operational software
Codes – third-party software integrated into products
1 year on a straight-line basis
3 years on a straight-line basis
5 years on a straight-line basis
Assets with an indefinite useful life (including goodwill) are not amortized. They are recorded on the balance sheet at their gross
carrying amount. They are subject to impairment tests if there are signs of impairment or at least once per year. A provision based on
the difference between the calculated value and the carrying amount is recorded if applicable.
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ESI Group annual financial statements
NOTE B.3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are valued at cost (purchase price plus related expenses), and amortized according to expected useful life:
General facilities
Fixtures and fittings, miscellaneous building work
Transportation equipment
Office equipment
New computer equipment
Used computer equipment
Furnishings
NOTE B.4. FINANCIAL ASSETS
Equity investments and related receivables,
acquisition costs
Equity investments are recorded on the balance sheet at the
historical cost of acquisition of shares.
At the closing date, if the restated value of the shares is less than
their purchase price, a provision is established for the difference.
The restated value is calculated using one of the methods presented
here below according to the situation of the subsidiary:
◗ equity investments in active subsidiaries are valued on the
basis of a multiple of revenue adjusted for net cash position
of the subsidiary, or alternatively on the basis of discounted
forecasted cash flows for recently acquired entities;
◗ equity investments in dormant subsidiaries or those with reduced
activity are valued on the basis of the share of the net equity
attributable to ESI Group.
6 years on a straight-line basis
10 years on a straight-line basis
5 years on a straight-line basis
3 years on a straight-line basis
3 years on a tapering basis
1 year on a straight-line basis
5 to 10 years on a straight-line basis
Acquisition costs are recorded as part of the cost of the equity
investments and deducted, for tax purposes, through accelerated
capital allowances, over a period of five years.
Receivables related to equity investments are provisioned if there
is a risk of non-recovery.
Other investments
Other investments mainly comprise deposits and factoring guarantee
funds (factoring of receivables from the French R&D tax credit).
NOTE B.5. INVENTORIES
Supply inventories
Work in progress
Other supply inventories are valued at cost according to the first
in, first out method.
Work in progress corresponds to consulting studies in progress
and valued at production cost with a margin assessed according
to the percentage of completion method.
NOTE B.6. RECEIVABLES AND DEBTS
Receivables and debts are measured at par value.
A provision for impairment is recognized where the inventory
value of a receivable (excluding advances to subsidiaries), based
on the likelihood of recovery, is lower than its net book value. All
NOTE B.7. MARKETABLE SECURITIES
impairment is determined on a case-by-case basis or following
statistical analysis. Regarding advances granted to subsidiaries,
the net book value of these receivables follows the same rules
as equity investments in terms of impairment.
Marketable securities are recorded at their net purchase price. If, at
the closing date, the net asset value is lower than the acquisition
value, impairment is recorded for the difference.
At December 31, 2019, marketable securities were made up
exclusively of the Company’s treasury shares, valued according
to the first in, first out method.
1
2
3
4
5
6
7
8
9
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6
FINANCIAL STATEMENTS
ESI Group annual financial statements
NOTE B.8. TREASURY SHARES
In the context of the authorizations, limits and objectives set by
the Shareholders’ General Meeting, ESI Group may purchase,
exchange or transfer its own shares.
acquired in the context of other objectives set by the General
Meeting (primarily external growth and grants to employees) are
recognized as marketable securities.
The recognition and impairment method for treasury shares
depends on the objective underlying the acquisition.
Treasury shares related to the liquidity contract signed by the
Company are recognized as financial assets. Treasury shares
Impairment is recorded when the share acquisition cost related
to liquidity contract exceeds the actual value as determined by
the share market price at the closing date.
NOTE B.9. FOREIGN CURRENCY TRANSACTIONS
Income and expenses in foreign currency are recorded at their
converted value using the exchange rate of the transaction date.
Liabilities, receivables and cash in foreign currency are recorded
on the balance sheet converted at the exchange rate of the
closing date.
The difference resulting from the conversion of the debts and
receivables at the exchange rate of the closing date is recorded
on the balance sheet as a “currency translation adjustment”.
NOTE B.10. FOREIGN EXCHANGE INSTRUMENTS
A provision for contingencies for foreign exchange losses is recorded
only for the part of related flows that does not have hedging.
Foreign exchange realized gains and losses, as well as provision
for unrealized losses, are booked in operating result if related to
operating flows/receivables/payables, and in financial result if
related to financial flows/receivables/payables.
ESI Group uses financial instruments to manage its exposure to
exchange rate fluctuations. The Group’s policy is to trade in the
financial markets only to hedge its business-related obligations
and not for speculative purposes.
At maturity date, gains and losses from financial instruments are
booked in operating result when they are related to operating
receivables or debts and in financial result when they are related
to financial receivables or debts.
Gains or losses stemming from the financial instruments used as
part of hedging operations are assessed and recorded in line with
the income and expenses recorded on underlined transactions.
Signed financial instruments are presented as Off-balance-sheet
commitments in the notes to the financial statements in the period
between subscription and maturity.
NOTE B.11. REGULATED PROVISIONS
Regulated provisions consist of accelerated capital allowances
of two types:
◗ differences between tax-related amortization and amortization
for depreciation;
◗ amortization of equity investments acquisition costs.
These regulated provisions are recorded in the income statement
as exceptional allowances and reversals.
NOTE B.12. PROVISIONS FOR CONTINGENCIES AND CHARGES
Provisions for contingency and charges are calculated on the basis of the assessment of related risks at the closing date.
Provision for retirement
and post-employment benefits
Retirement commitments are valued and recognized using the
projected unit credit method. This actuarial method stipulates
that each period of service entitles the employee to one unit of
benefit rights and evaluates each of these units separately to
arrive at a final commitment.
These calculations use assumptions in terms of mortality, staff
turnover, discount rate, inflation rate and future salary increases.
Differences observed between the valuation of obligations and
forecasts of such obligations (on the basis of new projections or
assumptions) are known as actuarial gains and losses.
The expense for the period is recognized:
◗ in operating profit or loss for the amount pertaining to cost of
services and changes in actuarial gains and losses;
◗ in financial income and expense for the amount pertaining to
interest on discounting to present value.
The provision at year-end represents the actuarial commitment.
The Company has no hedging asset.
NOTE B.13. REVENUE RECOGNITION
Licensing revenue is generated from royalties paid under licensing
agreements granted to end customers and related maintenance
services.
This revenue is recognized when the following four criteria are met:
◗ the Group can demonstrate the existence of an agreement
with the client;
◗ the software has been delivered and accepted;
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FINANCIAL STATEMENTS
ESI Group annual financial statements
◗ the amount of the user license for the software is determined
or determinable;
◗ the recovery is likely.
Revenues from services consist mainly of consulting and training
fees. They are recognized according to the percentage of completion
method with regard to projects, such as the margin. Costs are
recorded as soon as they are incurred. A provision for losses on
completion is recorded if necessary.
Intragroup revenue mainly comprises royalty income received
from the Group’s distribution subsidiaries and income from
subcontracted consulting services, re-invoicing of personnel
expenses and invoicing of management fees.
Co-financed projects
During production of a co-financed project, recognized revenue is
determined on the basis of the percentage of completion of the
project, on a prorata basis with regard to the proportion financed.
NOTE B.14. TAX CONSOLIDATION
On February 1, 2008, ESI Group has formed a tax consolidation
group with its French subsidiary, Engineering System International.
the tax borne as part of the tax consolidation group and that
which would have been borne in the absence of tax consolidation.
As part of the tax consolidation agreement, it was agreed that
the tax cost of Engineering System International integrated for
tax purposes would be equal to that which would have applied
to it if the subsidiary was not a member of the tax Group.
As regards the financial statements for the financial year, for
Engineering System International there is no difference between
Neither of the two companies in the tax Group has loss carryforwards
prior to the current year.
For information, the French competitiveness and employment
tax credit (crédit d’impôt pour la compétitivité et l’emploi or
CICE) is recognized in the income statement as a deduction
from tax expense.
NOTE C. ASSET DETAILS
NOTE C.1. INTANGIBLE ASSETS
(In € thousands)
Development costs
Patents, licenses, brands
Goodwill
Intangible assets in progress, development costs
Other intangible assets in progress
Total gross value
Development costs
Patents, licenses, brands
Goodwill
January 31,
2019
42,879
26,339
1,028
16,617
2,402
89,265
(17,146)
(10,397)
(73)
Increase
28,524
2,542
21,968
512
53,546
(26,309)
(736)
Decrease
(23,668)
0
(21,047)
(2,465)
(47,180)
23,668
December 31,
2019
47,736
28,881
1,028
17,539
449
95,631
(19,787)
(11,133)
(73)
Total amortization, provisions
(27,616)
(27,045)
23,668
(30,993)
Development costs
Patents, licenses, brands
Goodwill
Intangible assets in progress, development costs
Other intangible assets in progress
TOTAL NET VALUE
25,733
15,942
955
16,617
2,402
61,649
2,215
1,806
21,968
512
26,501
(21,047)
(2,465)
(23,512)
27,948
17,748
955
17,539
449
64,639
The decrease in development costs reflects scrapping of fully
amortized assets.
The goodwill mainly reflects the acquisition on July 26, 1991 from
the company Engineering System International, of the branch
specialized in the edition of digital simulation software (Product
in Applied Mechanics). It has not been impaired or amortized
since this date.
1
2
3
4
5
6
7
8
9
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FINANCIAL STATEMENTS
ESI Group annual financial statements
CONTENTS
NOTE C.2. PROPERTY, PLANT AND EQUIPMENT
(In € thousands)
Fixtures and fittings
Office furnishings and equipment
Other tangible non-current assets
Total gross value
Fixtures and fittings
Office furnishings and equipment
Other tangible non-current assets
Total amortization, provisions
Fixtures and fittings
Office furnishings and equipment
Other tangible non-current assets
TOTAL NET VALUE
NOTE C.3. FINANCIAL ASSETS
(In € thousands)
Equity investments
Receivables related to equity investments
Other financial assets(1)
Total gross value
Provisions for impairment of equity investments
Provisions for receivables related to equity
investments
Provisions for depreciation of other financial assets
Total amortization, provisions
Equity investments
Receivables related to equity investments
Other investments
TOTAL NET VALUE
January 31, 2019
Increase
Decrease December 31, 2019
2,961
8,013
27
11,001
(1,293)
(6,761)
(20)
(8,073)
1,668
1,252
7
2,928
42
423
465
(193)
(501)
(0)
(695)
(151)
(78)
0
(230)
3,003
8,435
27
11,466
(1,486)
(7,261)
(20)
(8,768)
1,517
1,174
7
2,698
January 31, 2019
Increase
Decrease December 31, 2019
55,002
12,419
1,368
68,788
(2,608)
(1,790)
(4)
(4,402)
52,394
10,629
1,364
64,386
795
320
56
1,161
(3,582)
(1,248)
(4,830)
(2,787)
(928)
46
(3,669)
55,797
12,739
1,414
69,950
(6,190)
(3,038)
0
(9,229)
49,607
9,700
1,414
60,722
(1) This line primarily includes deposits and guarantees on rental properties and factoring guarantee.
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group / Movements in equity investments (gross value)
(In € thousands)
Engineering System International
ESI Japan, Ltd.
ESI North America, Inc.
ESI UK Ltd.
Calcom ESI SA
Hankook ESI Co., Ltd.
ESI Group Hispania s.l.
Mecas ESI s.r.o.
STRACO SA
ESI US Holding, Inc.
Zhong Guo ESI Co., Ltd.
Acquisition costs Zhong Guo ESI Co., Ltd.
ESI Software (India) Private Ltd.
ESI US R&D, Inc.
Hong Kong ESI Co., Ltd.
Acquisition costs Hong Kong ESI Co., Ltd.
ESI-ATE Holdings Ltd.
Acquisition costs ESI-ATE Holdings Ltd.
ESI Italia s.r.l.
ESI South America Comércio e Serviços de Informática Ltda
ESI Services Tunisia
Acquisition costs ESI Services Tunisia
ESI Group Beijing Co., Ltd.
ESI Software Germany GmbH
Acquisition costs ESI Software Germany GmbH
Efield AB
Acquisition costs Efield AB
OpenCFD Ltd.
Acquisition costs OpenCFD Ltd.
ESI Services Vietnam Co., Ltd
Acquisition costs ESI Services Vietnam Co. Ltd.
Avic-ESI (Beijing) Technology Co. Ltd
Acquisition costs Avic-ESI (Beijing) Technology Co. Ltd.
Participation Mineset Inc.
Acquisition costs Mineset Inc.
CIVITEC
Acquisition costs CIVITEC
ESI ITI GmbH
Acquisition costs ESI ITI GmbH
Scilab Enterprises
Acquisition costs Scilab Entreprises
Cademce SAS
TOTAL
CONTENTS
FINANCIAL STATEMENTS
ESI Group annual financial statements
January 31, 2019
Increase
Decrease December 31, 2019
458
75
3,726
164
2,678
941
100
912
1,789
834
193
2
2
111
119
2
1,737
56
1,050
6
242
8
543
10,708
322
446
129
2,351
162
124
14
576
87
4,017
293
900
62
17,952
436
550
25
100
193
758
230
458
75
3,726
164
2,678
941
100
912
1,789
834
-
2
2
111
119
2
1,737
56
1,050
6
242
8
543
10,708
322
446
129
2,351
162
124
14
576
87
4,017
293
900
62
18,710
436
780
25
100
1
2
3
4
5
6
7
8
9
55,002
988
193
55,797
Movements of the year are related to acquisition of minority interests in ESI ITI Gmbh (currently 100% of the capital owned by ESI
Group); payment of the additional final price for Scilab Enterprises, and the liquidation of Zhong Guo Co (disposal of gross value of
equity investment and of acquisition costs).
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CONTENTS
/ Movements in the provision for equity investments
(In € thousands)
ESI-ATE Holdings Ltd.
Hong Kong ESI CO., Ltd.
Zhong Guo Co., Ltd.
OpenCFD Ltd.
Mineset
Cademce
TOTAL
January 31,
2019
Increase
Reversal
December 31,
2019
1,737
119
193
459
0
100
193
296
3,479
2,608
3,775
193
1,737
119
0
755
3,479
100
6,190
As at December 31, 2019, following dissolution of the subsidiary Zhong Guo Co., Ltd, its related equity investment provision has been
fully reversed, and those of the subsidiary OpenCFD has been adjusted according to the restated value of the shares (note B.4). The
net carrying amount of the equity investment of Mineset has been adjusted to the value of the subsidiary’s net equity.
/ Receivables related to equity investments
(In € thousands)
Loan ESI North America, Inc. ($9.7 million)
Loan Hong Kong ESI ($1.124 million)(1)
Loan ESI Group Hispania SL
Loan ESI ATE Holdings ($2.271 million)(1)
TOTAL
(1) These two loans are fully impaired.
Gross value
January 31,
2019
December 31,
2019
8,444
978
1,020
1,977
12,419
8,681
1,006
1,020
2,033
12,739
Remuneration
rate
6-month Libor $ +1% margin
6-month Libor $ +1% margin
Profit-sharing loan capped at 5%
6-month Libor $ +1% margin
NOTE C.4. RECEIVABLES – PROVISIONS FOR DEPRECIATION OF RECEIVABLES
(In € thousands)
Loans granted to subsidiaries
Treasury shares
Deposits and guarantees
Doubtful or disputed receivables
Trade receivables
Trade receivables with affiliate companies
Income tax receivables – advance payment
R&D tax credit receivable
Competitiveness and employment tax credit receivable
Other tax credits
Value added tax (VAT)
Co-financed projects
Trade payables debtors
Group and associates
Other receivables
Prepaid expenses
TOTAL
152
At December 31, 2019
At January 31,
2019
Gross
value
12,739
57
1,358
2,502
12,083
27,949
327
3,024
553
264
1,735
2,607
696
718
520
2,095
69,227
Due in
1 year
or less
Due in
between
1 and 5 years
12,739
57
1,358
2,502
12,083
27,949
327
3,024
553
264
1,735
2,607
696
718
520
2,095
55,072
14,154
Gross
value
12,419
70
1,298
1,939
12,978
48,600
210
3,189
620
443
1,569
2,732
742
486
130
1,550
88,974
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
FINANCIAL STATEMENTS
ESI Group annual financial statements
/ Details of provisions for depreciation of receivables
(In € thousands)
Provisions for doubtful receivables
Provisions for other receivables
TOTAL
January 31,
2019
1,958
280
2,238
Increase
578
0
578
Reversal
unused
Reversal
used
December 31,
2019
21
0
21
0
280
280
2,515
0
2,515
NOTE C.5. TREASURY SHARES
Treasury shares in the balance sheet are classified in Financial assets for €57 thousand (liquidity contract) and in Marketable securities
for €4.036 million.
/ Change in the number of treasury shares
TREASURY SHARES
January 31, 2019
410,306
Increase
56,196
Decrease December 31, 2019
69,736
396,766
The total value on the balance sheet is thus €4.093 million, compared to a market fair value of €12.284 million at December 31, 2019,
for an unrealized gain of €8.171 million.
NOTE C.6. PREPAID EXPENSES AND EXPENSES CAPITALIZED, TO BE AMORTIZED
(In € thousands)
Prepaid rent
Maintenance prepaid expenses
Other prepaid expenses
Expenses related to syndicated loan set up(1)
TOTAL
(1) Amortization over the duration of the loan.
NOTE C.7. FOREIGN EXCHANGE GAINS AND LOSSES
These gains and losses pertain to the following balance sheet items:
(In € thousands)
Trade receivables
Trade payables
TOTAL
NOTE C.8. ACCRUED INCOME
(In € thousands)
Receivables to be invoiced
Receivables to be invoiced from affiliate companies
Vendor credit notes to be issued
Group vendors credit notes to be issued
Miscellaneous income
TOTAL
December 31, 2019
January 31, 2019
847
903
749
473
2,971
420
493
638
552
2,102
December 31, 2019
January 31, 2019
897
538
1,435
473
416
890
December 31, 2019
January 31, 2019
2,594
731
0
696
17
4,037
5,755
1,552
123
619
0
8,050
153
1
2
3
4
5
6
7
8
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT6 CONTENTS
6
FINANCIAL STATEMENTS
ESI Group annual financial statements
NOTE D. LIABILITY DETAILS
NOTE D.1. EQUITY
The main movements during the financial year are summarized in the table below:
(In € thousands)
Capital
Share premium
ESI Software merger premium
Systus merger premium
Legal reserve
Retained earnings
Net result for the year
Regulated provisions
TOTAL
NOTE D.2. LEGAL CAPITAL
January 31,
2019
Allocation of
2018 profit
2019
net result
18,054
25,818
9,677
2,854
1,805
38,088
2,820
1,285
(2,820)
(27,851)
100,400
(2,820)
(27,851)
Other
16
2,819
151
2,986
December 31,
2019
18,054
25,834
9,677
2,854
1,805
40,907
(27,851)
1,435
72,715
Common shares (par value of €3)
O/w preferred shares (double voting rights)
Number of shares
At the end of
the financial
year
Created during
the financial
year
Repaid during
the financial year
6,018,492
2,254,387
600
-
-
The capital increase is attributable to the exercise of stock subscription options for 11,267 shares.
154
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
FINANCIAL STATEMENTS
ESI Group annual financial statements
NOTE D.3. STOCK SUBSCRIPTION OPTION PLAN
Stock options have been authorized by various General Meetings and could potentially dilute ESI Group’s legal capital. The table below
describes the status of the various plans under which options have been granted but not yet exercised.
Number of
stock
options/
shares
allotted
or to be
allotted
Number of
stock
options/
shares
granted
O/w
performance
shares
Exercise
price
Number of
existing stock
options/shares
at December 31,
2019
Limit
year for
exercising
options
Plan number
(date of General Meeting)
Date of Board
of Directors
Plan 10 (GM 2012)
Plan 10 bis (GM 2012)
Plan 10 ter (GM 2012)
02/01/2013
02/07/2014
02/01/2015
Plan 10 quater (GM 2012)
07/22/2015
Plan 15 (AG 2013)
Plan 17 (GM 2014)
Plan 17 bis (GM 2014)
Plan 17 ter (GM 2014)
07/22/2015
03/11/2016
05/05/2017
Total
180,000
180,000
02/01/2015
294,538
20,000
62,300
20,000
150,850
62,300
11,000
15,000
3,150
7,350
10,000
18,175
1,875
Plan 17 quater (GM 2014)
05/05/2017
Total
180,000
37,400
Plan 19 (GM 2017)
Plan 19 bis (GM 2017)
Plan 19 ter (GM 2017)
07/18/2018
02/01/2019
12/18/2019
43,950
20,000
24,660
1,875
1,875
32,963
15,000
Total
180,000
88,610
47,963
229,600
1,064,138
326,010
132,138
07/21/2016
12/23/2016
08/01/2017
60,000
07/18/2018
07/18/2018
07/18/2018
07/18/2018
7,964
25,000
2,275
9,000
10,617
2,441
15,500
16,250
6,712
2,521
Authorization given
at the GM of July 2017
Total stock-options
Plan 6 (GM 2016)
Plan 7 (GM 2016)
Plan 8 (GM 2016)
Plan 9 (GM 2018)
Plan 9 bis (GM 2018)
Plan 9 ter (GM 2018)
Plan 9 quater (GM 2018)
Total free shares
TOTAL STOCK-OPTIONS
AND FREE SHARES
27.82
24.42
21.66
27.17
21.66
27.27
27.27
27.92
50.92
42.97
27.04
29.12
38,700
375
2,100
41,775
4,900
16,300
21,200
38,100
20,000
24,660
82,760
145,135
4,164
2,501
10,367
2,184
15,500
16,250
6,712
2,521
53,534
2021
2022
2025
2025
2025
2023
2026
2025
2025
2026
2027
2027
2020
2021
2021
2020
2020
2022
2023
2022
2021
Plan 9 quinquies (GM 2018)
12/18/2019
Plan 9 sexies (GM 2018)
12/18/2019
60,000
120,000
90,316
7,964
1,184,138
415,876
140,102
205,334
All stock options and free shares include a continued employment requirement.
NOTE D.4. CONDITIONAL ADVANCES
(In € thousands)
Ademe advance
Bpifrance advance
TOTAL
December 31,
2019
Up to 1
year
803
382
1,184
1 to 5
years
803
382
1,184
More than
5 years
January 31,
2019
772
257
1,029
155
1
2
3
4
5
6
7
8
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FINANCIAL STATEMENTS
ESI Group annual financial statements
CONTENTS
NOTE D.5. PROVISIONS FOR CONTINGENCIES AND CHARGES
(In € thousands)
Foreign exchange unrealized losses (note C.7)
Provisions for contingencies and charges (operating result)
Provision for retirement obligations
TOTAL
January 31,
2019
Increase
Reversal
December 31,
2019
890
193
4,369
5,452
1,438
93
666
2,197
(890)
(193)
(1,083)
1,438
93
5,035
6,567
Movements of the year mostly refer to foreign exchange rates
fluctuations. Provisions for contingencies and charges (operating
result) correspond to social risks.
Provision allowance for retirement obligations breaks down as
follows:
◗ €609 thousand of operating allowance, o/w €257 thousand in
costs for services rendered, €398 thousand in actuarial losses
and -€46 thousand for indemnities paid by the employer;
◗ €57 thousand of financial allowance corresponding to interest
expenses.
/ Actuarial assumptions for retirement obligations
Discount rates
Rate of salary increase
December 31,
2019
January 31,
2019
0.80%
2.50%
1.45%
2.50%
The discount rate corresponds to AA-rate corporate bond rates in
the Eurozone, adjusted according to the duration of the Group’s
commitments. Turnover rates are calculated per age group
according to the past experience of the Company.
NOTE D.6. STATEMENT OF LIABILITIES
(In € thousands)
Banks borrowings (D.7)
Miscellaneous financial debt (D.8)
Trade payables
Group trade payables
Personnel and related receivables (D.9)
Payroll taxes (D.9)
Value-added tax (D.9)
Other tax expense (D.9)
Liabilities to fixed asset suppliers
Other operating payables – Group and
associates (D.10)
Other operating payables – out of Group
(D.10)
Deferred income
TOTAL
December 31,
2019
43,859
2,500
6,179
39,647
4,796
1,607
626
259
52
7,762
1,570
1,083
Up to 1
year
14,174
2,500
6,179
39,647
4,796
1,607
626
259
52
7,762
4,203
1,083
1 to 5
years
More than 5
years
January 31,
2019
24,275
5,400
34,386
2,500
7,293
34,690
4,361
1,652
1,999
489
51
12,362
2,630
630
109,940
80,264
24,275
5,400
103,042
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2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
FINANCIAL STATEMENTS
ESI Group annual financial statements
NOTE D.7. BANK BORROWINGS
At December 31, 2019, bank borrowings stand at €43.859 million
and break down as follows:
◗ €28,000 thousand related to the long-term syndicated lines
of credit, of which 3,5 million that needs to be repaid in 2020;
◗ €10 million in drawdowns from the revolving credit line;
◗ €4 million in long term borrowings from Bpifrance, including
€400 thousand due in 2020;
◗ €1,575 thousand corresponding to a loan to finance the cost
of moving Rungis’ offices – due October 2023;
◗ €284 thousand mostly in accrued interest on borrowings.
ESI Group’s main source of financing is the syndicated loan. This
syndicated loan consists of a long-term part of €28 million and
a revolving loan (at December 31, 2019) of €15 million, of which
€10 million has been confirmed. The long-term part will be gradually
reimbursed annually on April 30 each year until April 30, 2025.
The syndicated loan is remunerated based on the Euribor rate
and a margin of 2%, 2.25% or 2.5% depending on the level of the
Net financial debt/EBITDA ratio related to previous year financial
statements. The margin used since June 2019 is 2,25%.
Off-balance-sheet commitments associated with this syndicated
loan are presented in note F.4.
NOTE D.8. MISCELLANEOUS FINANCIAL DEBT
(In € thousands)
Promissory note
TOTAL
December 31,
2019
2,500
2,500
Up to 1
year
2,500
2,500
1 to 5
years
More than 5
years
January 31,
2019
2,500
2,500
NOTE D.9. TAX PAYABLES AND EMPLOYEE-RELATED LIABILITIES
(In € thousands)
Provision for paid leave, including payroll taxes
Provision for bonuses to be paid to employees, including payroll taxes
Other payroll taxes
VAT collected
Other taxes
TOTAL
December 31, 2019
January 31, 2019
2,295
2,501
1,607
626
259
7,288
2,557
1,804
1,652
1,999
489
8,500
NOTE D.10. OTHER OPERATING PAYABLES
(In € thousands)
Creditor trade receivables
Subsidiaries current account
Advances on co-financed projects
Other liabilities
TOTAL
January 31,
2019
Increase
Decrease
December 31,
2019
40
12,362
2,536
54
14,992
216
0
216
(4,600)
(1,260)
(17)
(5,859)
256
7,762
1,276
38
9,332
1
2
3
4
5
6
7
8
9
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FINANCIAL STATEMENTS
ESI Group annual financial statements
CONTENTS
NOTE D.11. FOREIGN EXCHANGE GAINS AND LOSSES
These gains and losses pertain to the following balance sheet items:
(In € thousands)
Trade receivables
Trade payables
Intercompany receivables
TOTAL
NOTE D.12. ACCRUED EXPENSES
(In € thousands)
Borrowings and financial debts
Trade payables
Provision for paid leave, including payroll taxes
Provision for bonuses to be paid to employees, including payroll taxes
Other tax expenses
Other liabilities (advances on co-financed projects)
Other liabilities
TOTAL
NOTE E. DETAILS ON INCOME STATEMENT
NOTE E.1. REVENUE
Breakdown by type:
(In € thousands)
Software licenses
Sub-contracting, consulting and other income
Royalties received from Group distribution subsidiaries
Sub-contracting, consulting and other income – Group
Income from related activities – Group
Management fees Group
TOTAL
Breakdown by geographic area:
(In € thousands)
France
Europe (except France)
Americas
Asia
TOTAL
158
December 31, 2019
January 31, 2019
304
505
1,622
2,432
359
229
1,302
1,890
December 31, 2019
January 31, 2019
197
13,517
2,293
2,592
229
1,276
0
11
12,195
2,557
1,804
182
2,536
2
20,104
19,287
December 31, 2019
January 31, 2019
9,195
2,214
35,270
3,422
1,859
3,335
55,296
15,531
2,958
58,583
3,831
1,855
3,264
86,023
December 31, 2019
January 31, 2019
4,477
14,807
10,419
25,593
55,296
13,449
27,105
13,746
31,723
86,023
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
FINANCIAL STATEMENTS
ESI Group annual financial statements
NOTE E.2. OTHER INCOME FROM OPERATIONS
(In € thousands)
Production held as inventory
Capitalized production
Reversal on depreciation and amortization
Reversal on foreign exchange provision on trade receivables and payables
Foreign exchange gains on trade receivables and payables
Other income
TOTAL OTHER INCOME
NOTE E.3. OTHER PURCHASES AND EXTERNAL EXPENSES
(In € thousands)
Engineering studies and other services
Engineering studies and other services – Group
Research and development costs – Group
Materials and supplies
Leases and rental expenses
Maintenance and repairs
Insurance
Payments to intermediaries and fees
Royalties on third-party products and sales commissions
Advertising, external relations
Travel expenses
Postage, telecommunications expenses
Miscellaneous
TOTAL
NOTE E.4. INCOME TAX EXPENSE
(In € thousands)
Corporate Value-Added Contribution (CVAE)
Corporate Real Estate Contribution (CFE)
Apprenticeship, continuing education and construction-related taxes
Other taxes
TOTAL
December 31, 2019
January 31, 2019
(495)
29,478
494
890
412
153
83
29,975
973
1,576
889
93
30,933
33,588
December 31, 2019
January 31, 2019
4,858
16,847
20,596
265
4,314
1,999
206
2,713
1,055
858
1,459
388
662
8,224
17,824
20,978
338
4,473
1,953
339
2,153
2,286
962
2,014
428
701
56,220
62,674
December 31, 2019
January 31, 2019
477
208
266
93
1,044
697
115
314
236
1,363
1
2
3
4
5
6
7
8
9
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FINANCIAL STATEMENTS
ESI Group annual financial statements
CONTENTS
NOTE E.5. OPERATING ALLOWANCES
(In € thousands)
Amortization allowance for development costs
Amortization allowance for other intangible assets
Amortization allowance for tangible assets
Amortization allowance for capitalized expenses to be amortized
Provision for impairment of trade receivables
Provision for impairment of other assets
Provision for retirement obligations
Provision for foreign exchange on trade receivables and payables
Provision for contingencies and charges
TOTAL
NOTE E.6. OTHER OPERATING EXPENSES
(In € thousands)
Royalties
Directors' fees
Foreign exchange losses on trade receivables and payables
Loss on trades receivables
Miscellaneous expenses
TOTAL
NOTE E.7. FINANCIAL RESULT
(In € thousands)
Foreign exchange gain/(loss) realized
Interest on borrowings
Interest on subsidiaries current account
Provision for retirement obligations
Provision for impairment equity investments and related receivables
Reversal provision for investments (C3)
AVIC ESI dividend
Mecas ESI s.r.o. dividend
Zhong Guo ESI Co, Ltd. dividend
Other financial income/(expenses)
TOTAL
December 31, 2019
January 31, 2019
26,309
27,225
736
695
81
578
609
1,438
93
500
856
80
491
150
322
926
165
30,539
30,715
December 31, 2019
January 31, 2019
68
263
322
282
129
1,064
56
169
1,148
433
3
1,809
December 31, 2019
January 31, 2019
103
(857)
(41)
(57)
(4,990)
193
0
0
194
(51)
(5,223)
144
(824)
39
(55)
0
1,517
18
1,690
0
67
2,595
160
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
FINANCIAL STATEMENTS
ESI Group annual financial statements
NOTE E.8. EXCEPTIONAL RESULT
(In € thousands)
Profit or loss on movements of treasury shares
Accelerated capital allowances
Exceptional amortization of set up costs of the previous syndicated loan
Exceptional amortization
Dissolution result of subsidiary CyDesign Labs, Inc.
Presto additional payment
Miscellaneous(1)
TOTAL
(1) Definitive loss on unused tax credit for €745 thousand.
NOTE F. OTHER INFORMATION
NOTE F.1. AVERAGE HEADCOUNT
(In full-time equivalent)
Executives
Office personnel
TOTAL
December 31, 2019
January 31, 2019
(100)
(150)
0
0
0
(3)
(705)
(958)
(211)
(224)
(291)
(30)
(1,285)
(73)
(24)
(2,137)
December 31, 2019
Employees
January 31, 2019
Employees
240
18
258
245
19
264
Average headcount in France and in branches outside France, data for year ended January 31, 2019 have been restated.
NOTE F.2. COMPENSATION PAID TO EXECUTIVE CORPORATE OFFICERS
Total compensation paid to ESI Group’s four executive corporate officers are as follows:
(In € thousands)
Wages
Benefits in kind
Directors' fees
Compensation paid by controlled companies
Fringe benefits paid by controlled companies
TOTAL
December 31, 2019
January 31, 2019
345
10
98
724
10
1,186
393
12
16
381
148
951
NOTE F.3. BRANCHES
There are two branches integrated within ESI Group’s financial statements:
Name
ESI Group Netherlands – Branch Office
ESI Group Shanghai Representative Office
Address
Country
Postbus 1000-Box E57-2260BA
Leidschendam
Netherlands
Cross Region Plaza, Unit 20D,
899 Lingling Road
200235 Shanghai
China
1
2
3
4
5
6
7
8
9
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FINANCIAL STATEMENTS
ESI Group annual financial statements
CONTENTS
NOTE F.4. OFF-BALANCE SHEET COMMITMENTS
/ Future lease obligations
(In € thousands)
Real estate rentals
Movable property rentals
TOTAL
Less than
1 year
Between
1 and 5 years
1,301
1,444
2,744
7,519
474
7,992
Future lease commitments correspond to the outstanding amounts due on the Group’s main lease and rental contracts until the
contractual next maturity date.
/ Financial commitments
◗ Interest rate instruments
As part of the credit agreement dated December 20, 2018, ESI
Group granted a pledge of 99.98% of the shares of Engineering
System International, 100% of the shares of the subsidiary ESI
Software Germany, and 96% of the shares of the subsidiary ESI
ITI GmbH.
As long as it owes an obligation under the agreement or the
security documents, the borrower undertakes, under prepayment
constraint, to comply with the ratio of consolidated net financial
debt divided by consolidated EBITDA, the thresholds to be
respected over the term of the syndicated loan agreement are
gradually decreasing. As at January 31, 2019, the threshold to
be respected is 3.5%. At December 31, 2019, on the basis of the
annual consolidated financial statements certified by the Statutory
Auditors, the Group was in compliance with this ratio.
In terms of managing its exposure to changes in foreign exchange
and interest rates, ESI Group has subscribed to the following
financial instruments. Results at maturity are recognized in financial
income for interest rate instruments and in operating income for
foreign exchange instruments:
• The syndicated credit agreement signed in December 2018
requires the set-up of variable rate hedging up to 50% of
the outstanding loan amount. Two swaps were signed during
2019 first half to meet this requirement, with a nominal value
of €14 million each, where ESI Group receives a 3 months
Euribor (with a 0% floor) and pays a fixed rate of 0.085%
and 0.092% respectively.
◗ Foreign exchange instruments
• In order to hedge foreign currency cash flows between the
Group’s parent company and its subsidiaries, ESI Group may
at any time acquire currency options and any other form of
currency contract. The instruments in place during the year
ended December 31, 2019 were the Japanese yen (tunnels).
As at December 31, 2019, all financial instruments had matured.
/ Pledges
At December 31, 2019, ESI Group had a rent security deposit with
Crédit du Nord in an amount of €82 thousand, established in
November 2012 and expiring November 28, 2021 plus 6 months.
NOTE F.5. RECONCILIATION OF PROFIT/(LOSS) AND TAX INCOME/(CHARGE)
(In € thousands)
Current income (loss)
Exceptional income
Competitiveness
and employment tax credit
French R&D tax credit
TAX INCOME (LOSS)
Profit (loss)
before tax
Reconciliation
of income/loss
Taxable
income
Tax (expense)/
income
Profit (loss)
after tax
(29,917)
(958)
3,024
8,024
3
(21,893)
(955)
0
(21,893)
(955)
8,027
(22,848)
(22,848)
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FINANCIAL STATEMENTS
ESI Group annual financial statements
NOTE F.6. INCREASES AND DECREASES IN FUTURE TAX LIABILITIES
(In € thousands)
December 31, 2019
Special social security contribution (contribution sociale de solidarité)
Translation differences
Interest
TOTAL TEMPORARY DIFFERENCES
NET DECREASE IN FUTURE INCOME TAX LIABILITIES (TAX RATE OF 33.33%)
90
2,432
902
3,424
1,141
Increases and decreases in future income tax liabilities were measured based on the statutory tax rate for the French income tax. They
result from time difference between tax and accounting treatment of income and expenses.
NOTE F.7. ESI GROUP, CONSOLIDATING COMPANY
ESI Group is the consolidating holding company of the Group of the same name.
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FINANCIAL STATEMENTS
ESI Group annual financial statements
CONTENTS
NOTE F.8. TABLE OF CONTROLLED ENTITIES AND AFFILIATES (AT DECEMBER 31, 2019)
Shareholders’
equity
other than
capital and
net profit
for the year
(converted
at the
closing rate)
Capital
(converted
at the
closing
rate)
Carrying number
of shares held
% of capital
owned
(In %)
Gross
Net
Outstanding
loans and
advances
granted by
the Company
or by the
subsidiary
Total
guarantees
granted
by the
Company
Revenues,
after tax,
for the last
financial
year
(converted
at the
average
exchange
rate)
Profit or
loss for the
last financial
year
(covered at
the average
exchange
rate
Dividends
received by
the Company
during the
financial year
(In € thousands) Head-quarters
A. Detailed information on each security with gross value exceeding 10% of the Company’s capital
1. Over 50%-owned subsidiaries
France
France
Japan
1,020
499
99
3,325
3,046
2,440
100.0
97.7
97.0
458
1,789
75
458
1,789
75
(2,976)
(511)
9,063
(2,482)
0
25,136
45
(389)
South Korea
1,126
(2,186)
98.8
941
941
5,458
(318)
USA
0
(1,599)
100.0
3,726
3,726
Spain
Czech
Republic
United
Kingdom
China
India
China
China
Italy
100
16
120
194
83
0
1
1
(631)
100.0
100
100
1,926
95.0
1,269
1,687
634
100.0
74.0
98.5
912
164
111
912
164
111
2,678
2,678
3
0
6,271
100.0
0
2
(838)
100.0
119
0
2
0
0
8,681
1,020
(1,210)
1,006
2,033
16,809
(2,320)
2,757
(533)
5,552
(626)
0
2,685
10,093
3,056
0
(99)
403
271
(3)
10,483
705
0
0
0
0
194
10
500
(965)
218
100.0
100.0
1,737
1,050
1,050
3,114
(220)
ESI US R&D, Inc.
USA
Calcom ESI SA
Switzerland
Brazil
Tunisia
9
61
99
95.0
6
6
1,042
95.0
242
242
696
434
16
(9)
China
650
1,785
100.0
543
543
2,577
(852)
517
10
0
73
1,125
8,169
682
100.0
10,708
10,708
100.0
446
446
(1,231)
(9)
7,440
1,663
342
54
(229)
100.0
2,351
1,595
(126)
1,155
(409)
25
(1,026)
100.0
80.0
124
900
124
900
715
180
285
12
(427)
Germany
ESI Nordics AB
Sweden
OpenCFD Ltd.
United
Kingdom
ESI Services
Vietnam Co.,
Ltd
CIVITEC
Vietnam
France
164
Engineering
System
International
STRACO
ESI Japan, Ltd.
Hankook ESI
Co., Ltd.
ESI North
America, Inc.
ESI Group
Hispania s.l.
Mecas ESI s.r.o.
ESI UK Ltd.
Zhong Guo Co.,
Ltd
ESI Software
(India) Private
Ltd
Hong Kong ESI
Co., Ltd.
ESI-ATE
Holdings Ltd.
ESI Italia s.r.l.
ESI South
America
Comércio e
Serviços de
Informática,
Ltda
ESI Services
Tunisia
ESI Group
Beijing Co., Ltd
ESI Software
Germany GmbH
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
FINANCIAL STATEMENTS
ESI Group annual financial statements
Shareholders’
equity
other than
capital and
net profit
for the year
(converted
at the
closing rate)
Capital
(converted
at the
closing
rate)
% of capital
owned
(In %)
3,209
463
100
100
Carrying number
of shares held
Gross
18,710
4,017
Net
18,710
538
Outstanding
loans and
advances
granted by
the Company
or by the
subsidiary
(1,299)
Total
guarantees
granted
by the
Company
(858)
100
780
780
(400)
(474)
100
834
834
(In € thousands) Head-quarters
ESI ITI GmbH
Germany
Mineset Inc.
SAS Scilab
Enterprises
ESI US
Holding, Inc.
USA
France
USA
2. 10-50% owned subsidiaries
26
0
424
674
JV AECC-ESI
China
1,275
672
45.0
576
576
Data as of December 31, 2019 presented in this table are non-audited data.
NOTE F.9. SUBSEQUENT EVENTS
Coronavirus
Revenues,
after tax,
for the last
financial
year
(converted
at the
average
exchange
rate)
5,893
570
41
0
0
Profit or
loss for the
last financial
year
(covered at
the average
exchange
rate
Dividends
received by
the Company
during the
financial year
201
74
(132)
0
236
In the short term, the global pandemic related to Covid-19 is expected to impact our financial year results, however many remaining
uncertainties make it impossible to precisely quantify this impact at this stage. The resilience of our business model solidly anchored
on renewable and critical software licenses will help us manage risks over the year.
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FINANCIAL STATEMENTS
ESI Group annual financial statements
CONTENTS
6.2.4. STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS
This is a translation into English of the Statutory Auditors’ report on the financial statements of the Company issued in French and it is
provided solely for the convenience of English-speaking users. This Statutory Auditors’ report includes information required by European
regulation and French law, such as information about the appointment of the Statutory Auditors or verification of the management
report and other documents provided to the shareholders. This report should be read in conjunction with, and construed in accordance
with, French law and professional auditing standards applicable in France.
Eleven-months period ended December 31, 2019
To the General Meeting of ESI Group,
Opinion
In compliance with the engagement entrusted to us by your general meeting, we have audited the accompanying financial statements
of ESI Group for the eleven-months period ended December 31, 2019. These financial statements were approved by approved by the
Board of Directors on March 19, 2020 on the basis of the elements available at that date, in the evolving context of the health crisis
related to Covid-19.
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company
as at December 31, 2019 and of the results of its operations for the year then ended in accordance with French accounting principles.
The audit opinion expressed above is consistent with our report to the Audit Committee.
Basis for opinion
/ Audit Framework
We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Statutory Auditors’ Responsibilities for the Audit of the Financial
Statements section of our report.
/ Independence
We conducted our audit engagement in compliance with independence rules applicable to us, for the period from February 1, 2019 to
the date of our report and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation
(EU) No. 537/2014 or in the French Code of Ethics (Code de déontologie) for Statutory Auditors.
Emphasis of matter
Without qualifying our opinion expressed above, we draw your attention to the following matter:
◗ The note A “Significant events of the year “which presents the change in the closing date of the financial year and the information
established for comparability purposes.
Justification of assessments – Key Audit Matters
In accordance with the requirements of Articles L. 823-9 and R. 823-7 of the French Commercial Code (Code de commerce) relating
to the justification of our assessments, we inform you of the key audit matters relating to risks of material misstatement that, in our
professional judgment, were of most significance in our audit of the financial statements of the current period, as well as how we
addressed those risks.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on specific items of the financial statements.
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FINANCIAL STATEMENTS
ESI Group annual financial statements
/ Capitalization of development costs
Risk identified
Our response
In the balance sheet of the Company, fixed assets include capitalized development costs. As of
December 31, 2019 their net book value amounts to €27,948 thousand. They correspond mostly to
direct labor costs as well as sub-contracting, incurred for the development of new annual versions or
major improvements of existing ESI software.
As indicated in note B.2 to annual financial statements, capitalization of development costs is subject to
compliance with the six criteria set out in the regulation on assets of the Autorité des Normes Comptables.
Capitalized development costs start to be amortized after the market release of the related version of
the software. Capitalized expenses are amortized on a straight-line basis over a period of 12 months
for new annual versions of software, and over 24 or 36 months for major improvements to existing
products, depending on the degree of innovation.
Regarding the significant impact on the income statement of capitalization of development costs
amounting to €20,596 million, and the significant gross balance of these capitalized costs recorded as
assets in the balance sheet amounting to €47,736 million, it follows that any deviation from the procedures
in place or any misinterpretation of the capitalization criteria could lead to significant impacts on the
Company’s annual financial statements and financial performance.
The assessment of compliance with the criteria for capitalization of development costs, as well as the
determination of the amortization period depending on the nature of the project, are very much based
on Management’s judgment and the reliability of the procedures applied for the identification and
allocation of expenses between the different projects.
On this basis, we considered capitalization of development costs as a key audit matter.
We examined the compliance of the Company’s accounting treatment of research and development
costs with current accounting standards.
We also conducted a critical review of how this methodology was implemented. In particular, we
conducted the following procedures:
◆ we have taken notice of the procedure followed by the Company to distinguish between research and
development costs and, for the latter, the rules put in place to assess compliance with the capitalization
criteria laid down in French accounting rules and principles;
◆ we tested by sampling the correct application of the procedures implemented for the identification,
monitoring and recording of research and development costs;
◆ we audited, for a selection of projects, the correct application of the capitalization criteria set out
in French accounting rules and principles and tested the accuracy and completeness of the most
significant expenses charged to these projects;
◆ we verified the correct calculation of amortization expense mainly by controlling the correct application
of the rules for setting the straight-line amortization period, depending on the nature of the project
(major improvement or new version).
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6
FINANCIAL STATEMENTS
ESI Group annual financial statements
/ Valuation of equity investments
Risk identified
Our response
In the balance sheet as of December 31, 2019, net book value of equity investments amounts to €49,607 thousand.
At acquisition date, equity investments are valued at acquisition cost, which includes the purchase price and the
costs directly attributable thereto. At each year-end, the net book value of equity investments is compared with
its value in use, and if the value is lower than the net book value, a provision for depreciation is recorded in order
to reduce the book value to the value in use of the asset.
The different methods used to determine the value in use of equity investments are described in note B.4 to annual
financial statements and are detailed as follows:
◆ Equity investments in active subsidiaries are valued on the basis of a multiple of revenue adjusted for net cash
position of the subsidiary, or alternatively on the basis of discounted forecast cash flows for recently acquired
entities;
◆ Equity investments in dormant subsidiaries or those with reduced activity are valued on the basis of the share
of the net equity attributable to ESI Group.
Estimating the value in use of equity investments requires the exercise of Management’s judgment in identifying the
criteria determining the choice of valuation method to be applied and the factors to be considered depending on
the participating interests, particularly historical items (equity) or forecasts (profitability forecasts and economic
conditions in related countries).
We therefore considered equity investments valuation as a key audit matter.
We examined the compliance of the Company’s methodology for the valuation of equity investments with the
applicable accounting standards. Our work consisted of reviewing the justification provided by Management for
the valuation method chosen and the data used. Our review of the methodology applied, for both types of equity
investments, is detailed as follows:
For equity investments related to active subsidiaries:
◆ Obtaining the multiple of revenue adjusted for net cash position of the subsidiary and assessing the consistency
of the data used with the accounts of the corresponding entities;
◆ Review of the permanence of the calculation method used and its execution;
◆ Obtaining the cash flow and operating forecasts of the entities concerned and assessing their consistency
with the forecast data from the latest strategic plans, drawn up under the control of Senior Management and
approved by the Board of Directors;
◆ Review of the consistency of assumptions used with the economic environment at the closing date;
◆ Comparison of the forecasts retained for previous periods with corresponding achievements in order to assess
the achievement of past objectives;
◆ Verification that the value resulting from the cash flow forecasts has been adjusted for the indebtedness of the entity.
For equity investments in dormant subsidiaries or those with reduced activity:
◆ Reconciliation of net equity attributable to ESI Group retained for the valuation with the accounts of the concerned
entities and, if applicable, examination of the documentation justifying the adjustments made.
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FINANCIAL STATEMENTS
ESI Group annual financial statements
Specific verifications
We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws
and regulations.
/ Information given in the management report and in the other documents with respect
to the financial position and the financial statements provided to the shareholders
We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given
in the management report of the Board of Directors as at March 19, 2020 and in the other documents with respect to the financial
position and the financial statements provided to the shareholders.
Regarding the events that occurred and the elements known after the date of approval of the financial statements relating to the
effects of the Covid-19 crisis, Management has informed us that such events and elements will be communicated to the annual general
meeting called to decide on these financial statements.
We attest the fair presentation and the consistency with the financial statements of the information relating to the payment terms
required by Article D.441-4 of the French Commercial Code.
/ Report on corporate governance
We attest that the Board of Directors’ Report on corporate governance sets out the information required by Articles L. 225-37-3
and L. 225-37-4 of the French Commercial Code (Code de commerce).
Concerning the information given in accordance with the requirements of Article L. 225-37-3 of the French Commercial Code (Code de
commerce) relating to remunerations and benefits received by the directors and any other commitments made in their favour, we have
verified its consistency with the financial statements, or with the underlying information used to prepare these financial statements
and, where applicable, with the information obtained by your Company from controlling and controlled companies. Based on these
procedures, we attest the accuracy and fair presentation of this information.
With respect to the information relating to items that your Company considered likely to have an impact in the event of a takeover
bid or exchange offer, provided pursuant to Article L. 225-37-5 of the French Commercial Code (Code de commerce), we have agreed
this information to the source documents communicated to us. Based on these procedures, we have no observations to make on this
information.
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2
3
4
/ Other information
In accordance with French law, we have verified that the required information concerning the purchase of investments and controlling
interests and the identity of the shareholders and holders of the voting rights has been properly disclosed in the management report.
5
Report on other legal and regulatory requirements
/ Appointment of the Statutory Auditors
We were appointed as Statutory Auditors of ESI Group by the General Meeting held on June 25, 2009 for PricewaterhouseCoopers
Audit and on December 16, 1997 for Ernst & Young Audit.
As at December 31, 2019, PricewaterhouseCoopers Audit were in the 11th year of total uninterrupted engagement and Ernst & Young
Audit were in the 23rd year (which is the 20th year since securities of the Company were admitted to trading on a regulated market).
Responsibilities of Management and those charged
with governance for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with French accounting
principles and for such internal control as Management determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, Management is responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is expected to
liquidate the Company or to cease operations.
6
7
8
The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risks
management systems and where applicable, its internal audit, regarding the accounting and financial reporting procedures.
9
The financial statements were approved by the Board of Directors.
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FINANCIAL STATEMENTS
ESI Group annual financial statements
CONTENTS
Statutory Auditors’ responsibilities for the audit of the financial statements
/ Objectives and audit approach
Our role is to issue a report on the financial statements. Our objective is to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As specified in Article L. 823-10-1 of the French Commercial Code (Code de commerce), our statutory audit does not include assurance
on the viability of the Company or the quality of management of the affairs of the Company.
As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditor exercises professional
judgment throughout the audit and furthermore:
◗ Identifies and assesses the risks of material misstatement of the financial statements, whether due to fraud or error, designs and
performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to
provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
◗ Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control;
◗ Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by Management in the financial statements;
◗ Assesses the appropriateness of Management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s
ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report.
However, future events or conditions may cause the Company to cease to continue as a going concern. If the Statutory Auditor
concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in
the financial statements or, if such disclosures are not provided or inadequate, to modify the opinion expressed therein;
◗ Evaluates the overall presentation of the financial statements and assesses whether these statements represent the underlying
transactions and events in a manner that achieves fair presentation.
/ Report to the Audit Committee
We submit to the Audit Committee a report which includes in particular a description of the scope of the audit and the audit program
implemented, as well as the results of our audit. We also report, if any, significant deficiencies in internal control regarding the accounting
and financial reporting procedures that we have identified.
Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgment, were of most
significance in the audit of the financial statements of the current period and which are therefore the key audit matters that we are
required to describe in this report.
We also provide the Audit Committee with the declaration provided for in Article 6 of Regulation (EU) No. 537/2014, confirming our
independence within the meaning of the rules applicable in France such as they are set in particular by Articles L. 822-10 to L. 822-14
of the French Commercial Code (Code de commerce) and in the French Code of Ethics (Code de déontologie) for Statutory Auditors.
Where appropriate, we discuss with the Audit Committee the risks that may reasonably be thought to bear on our independence, and
the related safeguards.
Neuilly-sur-Seine and Paris-La Défense, April 23, 2020
The Statutory Auditors
French original signed by
PricewaterhouseCoopers Audit
Thierry Charron
Ernst & Young Audit
Frédéric Martineau
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RESOLUTIONS
SUBMITTED
TO THE GENERAL
MEETING
7
7.1. DECISIONS FALLING WITHIN THE COMPETENCE
OF THE ORDINARY GENERAL MEETING
7.2. DECISIONS FALLING WITHIN THE COMPETENCE
OF THE EXTRAORDINARY GENERAL MEETING
7.3. JOINT DECISIONS
173
177
180
In accordance with the resolution of the General Meeting of July 18, 2019, the Group now closes its financial
statements at 31 December of each fiscal year.
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RESOLUTIONS SUBMITTED TO ThE gENERaL MEETINg
CONTENTS
DECISIONS FaLLINg WIThIN ThE COMPETENCE
OF ThE ORDINaRY gENERaL MEETINg
1. Approval of the parent company financial statements for the
10. Approval of the remuneration policy of the Chief Operating
financial year ended December 31, 2019
Officers for 2020 financial year
2. Approval of the consolidated financial statements for the
financial year ended December 31, 2019
3. Allocation of net profit for the year
4. Special report of the Statutory Auditors on the regulated agree-
ments and commitments and approval of the new agreements
referred to in Article L. 225-38 of the French Commercial Code
5. Renewal of mandate of Mr. Vincent Chaillou
6. Renewal of mandate of Mr. Yves de Balmann
7. Approval of the remuneration policy of the members of the
Board of Directors for 2020 financial year
8. Approval of the remuneration policy of the Chairman of the
Board of Directors for 2020 financial year
11. Approval of the components of the total compensation payable
or allocated to Mr. Alain de Rouvray, Chairman of the Board of
Directors, for the financial year ended on December 31, 2019
12. Approval of the components of the total compensation payable
or allocated to Mrs. Cristel de Rouvray, Chief Executive Officer,
for the financial year ended on December 31, 2019
13. Approval of the components of the total compensation payable
or allocated to Mr. Vincent Chaillou, Chief Operating Officer,
for the financial year ended on December 31, 2019
14. Approval of the components of the total compensation payable
or allocated to Mr. Christopher St John, Chief Operating Officer,
for the financial year ended on December 31, 2019
15. Determination of the compensation paid to the members of
9. Approval of the remuneration policy of the Chief Executive
the Board of Directors
Officer for 2020 financial year
16. Authorization to be granted to the Board of Directors for the
Company to buy back its own shares
DECISIONS FaLLINg WIThIN ThE COMPETENCE
OF ThE EXTRaORDINaRY gENERaL MEETINg
17. Delegation of authority to the Board of Directors to award
stock subscription options
18. Delegation of authority to the Board of Directors to award
20. Delegation of authority to the Board of Directors to award free
shares to eligible employees and executive corporate officers
of the Company and of its affiliated companies
stock purchase options
19. Delegation of authority to the Board to reduce the share
capital through the cancellation of shares purchased by the
Company within the scope of Article L. 225-209 of the French
Commercial Code
JOINT DECISIONS
21. Powers for formalities
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CONTENTS
RESOLUTIONS SUBMITTED TO ThE gENERaL MEETINg
Decisions falling within the competence of the Ordinary General Meeting
7.1. DECISIONS FaLLINg WIThIN ThE COMPETENCE
OF ThE ORDINaRY gENERaL MEETINg
First resolution
Third resolution
Approval of the parent company financial statements
for the financial year ended December 31, 2019
Renewal of the mandate of of net profit for the year
Statement of reasons
The General Meeting is requested to allocate the deficit of
-€27,851,405.66 as follows:
◗ €0 to the legal reserve;
◗ -€27,851,405.66 to retained earnings.
Following this allocation, the balance of the legal reserve will
stand at -€1,805,367.60.
Following this allocation, retained earnings will stand at
-€13,056,116.22.
The Board of Directors reminds the General Meeting that no
dividends have been paid out for the past three financial years.
The General Meeting, noting that the net deficit for the year
ended December 31, 2019 amounted to -€27,851,405.66, decides,
on a proposal from the Board of Directors, to allocate the result
as follows:
Current position:
◗ net result for the year: -€27,851,405.66;
◗ retained earnings: -€40,907,521.88;
◗ total to be allocated: -€27,851,405.66
Allocated as follows:
◗ €0 to the legal reserve;
◗ -€27,851,405.66 to retained earnings.
Following this allocation, the balance of the legal reserve will
stand at -€1,805,367.60.
Following this allocation, retained earnings will stand at -€13,056,116.22.
The Board of Directors reminds the General Meeting that no
dividends have been paid out for the past three financial years.
Statement of reasons
Based on the review of the Management report of the Board
of Directors, the report of the Board of Directors on corporate
governance, the reports of the Statutory Auditors on the parent
company financial statements, the General Meeting is requested to
approve the parent company financial statements for the financial
year ended December 31, 2019, showing deficit of -€27,851,405.66.
It is reminded that 2019 financial year has 11 months due to the
change in the financial closing date.
The General Meeting, having reviewed the Management report
of the Board of Directors, the report of the Board of Directors on
corporate governance, and the reports of the Statutory Auditors on
the parent company financial statements and the parent company
financial statements for the financial year ended December 31,
2019, approves the financial statements and balance sheet, as
presented, showing a deficit of -€27,851,405.66.
It approves the transactions reflected in said financial statements
or summarized in said reports.
The General Meeting also approves the total expenses and
charges not deductible from profits subject to income tax, equal
to €5,003,109.
Second resolution
Approval of the consolidated financial statements
for the financial year ended December 31, 2019
Statement of reasons
Based on the review of the Management report of the Board
of Directors, the report of the Board of Directors on corporate
governance, and the reports of the Statutory Auditors on
the consolidated financial statements, the General Meeting is
requested to approve the consolidated financial statements for
the financial year ended December 31, 2019 showing a net deficit
of -€20,914,070.
It is reminded that 2019 financial year lasts 11 months due to the
change of closing date.
The General Meeting, having reviewed the Management report
of the Board of Directors, the report of the Board of Directors on
corporate governance, and the reports of the Statutory Auditors
on the consolidated financial statements and the consolidated
financial statements as at December 31, 2019, approves these
financial statements as presented, resulting in a net deficit of
-€20,914,070.
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Decisions falling within the competence of the Ordinary General Meeting
CONTENTS
Fourth resolution
Sixth resolution
Special report of the Statutory Auditors on the regulated
agreements and commitments and approval of the new
agreements referred to in Article L. 225-38 of the French
Commercial Code
Statement of reasons
Based on the special report by the Statutory Auditors on regulated
agreements, the General Meeting is requested to acknowledge
that during the financial year ended on December 31, 2019,
no new agreement gave rise to the procedure provided for in
Articles L. 225-38 et seq. of the French Commercial Code.
It should be noted that the special report by the Statutory Auditors
on the agreements referred to in Article L. 225-38 of the French
Commercial Code is presented in section 2.6 of the 2019 Universal
Registration Document and will be submitted for approval of the
General Meeting to be held on June 25, 2020.
The General Meeting, having reviewed the special report by the
Statutory Auditors on the agreements and commitments referred
to in Articles L. 225-38 et seq. of the French Commercial Code,
takes note of the conclusions of the said report and approves
the agreements and commitments therein.
Fifth resolution
Renewal of the mandate of Mr. Vincent Chaillou
Statement of reasons
As the directorship of Mr. Vincent Chaillou expires at the end of
this General Meeting, the shareholders are requested to renew
his directorship for a term of four years, until the General Meeting
to be convened in 2024 to approve the financial statements for
2023 financial year.
The Board of Directors reminds the General Meeting that Vincent
Chaillou has been director of the Company since its creation in
2004. He also exercises the function of Chief Operating Officer.
His biography is presented in the report of the Board of Directors
on corporate governance in section 2.3.2 of the 2019 Universal
Registration Document.
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance and noting that the term of
office of Mr. Vincent Chaillou expires at the end of the General
Meeting, resolves to renew his directorship for a term of four years,
expiring at the end of the General Meeting to be convened in
2024 to approve the financial statements for 2023 financial year.
Renewal of the mandate of Mr. Yves de Balmann
Statement of reasons
As the directorship of Mr. Yves Balmann expires at the end of
this General Meeting, the shareholders are requested to renew
his directorship for a term of four years, until the General Meeting
to be convened in 2024 to approve the financial statements for
2023 financial year.
The Board of Directors reminds the General Meeting that Mr. Yves
Balmann has been an independent director since 2016. His
biography is presented in the report of the Board of Directors
on corporate governance in section 2.3.2 of the 2019 Universal
Registration Document.
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance and noting that the term of
office of Mr. Yves de Balmann expires at the end of the General
Meeting, resolves to renew his directorship for a term of four years,
expiring at the end of the General Meeting to be convened in
2024 to approve the financial statements for 2023 financial year.
Seventh, eighth, ninth and tenth resolutions
Approval of the remuneration policy for the members of the
Board of Directors, the Chairman of the Board of Directors,
the Chief Executive Officer and the Chief Operating Officers
for 2020 financial year
Statement of reasons
In accordance with Article L. 225-37-2 of the French Commercial
Code, the General Meeting is requested every year to approve
the principles and criteria for determining, distributing and
allocating the fixed, variable and exceptional components of
the total remuneration and benefits of all types attributable to
the Chairman of the Board of Directors, Chief Executive Officer
and the Chief Operating Officers, in respect to their mandate for
2020 financial year.
The remuneration policy applicable to corporate officers is presented
in the report of the Board of Directors on corporate governance in
section 2.4.1.2 and 2.4.2.2 of the 2019 Universal Registration Document.
Seventh resolution
The General Meeting, pursuant to Article L. 225-37-2 of the French
Commercial Code (paragraph 1), approves the remuneration
policy, attributable to members of the Board of Directors for
2020 financial year, as presented in the corporate governance
report of the Board of Directors referred to in Article L. 225-37
of the French Commercial Code and set out in section 2.4.1.2 of
the 2019 Universal Registration Document.
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Decisions falling within the competence of the Ordinary General Meeting
Eighth resolution
Twelfth resolution
The General Meeting, pursuant to Article L. 225-37-2 of the French
Commercial Code (paragraph 1), approves the remuneration policy,
attributable to the Chairman of the Board of Directors for 2020
financial year, as presented in the corporate governance report
of the Board of Directors referred to in Article L. 225-37 of the
French Commercial Code and set out in section 2.4.1.2 of the 2019
Universal Registration Document.
Ninth resolution
The General Meeting, pursuant to Article L. 225-37-2 of the French
Commercial Code (paragraph 1), approves the remuneration
policy, attributable to the Chief Executive Officer for 2020
financial year, as presented in the corporate governance report
of the Board of Directors referred to in Article L. 225-37 of the
French Commercial Code and set out in section 2.4.2.2 of the
2019 Universal Registration Document.
Tenth resolution
The General Meeting, pursuant to Article L. 225-37-2 of the French
Commercial Code (paragraph 1), approves the remuneration
policy, attributable to the Chief Operating Officers for 2020
financial year, as presented in the corporate governance report
of the Board of Directors referred to in Article L. 225-37 of the
French Commercial Code and set out in section 2.4.2.2 of the
2019 Universal Registration Document.
Eleventh, twelfth, thirteenth
and fourteenth resolution
Approval of the fixed, variable and exceptional components
of the total remuneration payable or allocated to the
Chairman of the Board of Directors, Chief Executive Officer
and Chief Operating Officers for the financial year ended
on December 31, 2019
Statement of reasons
In accordance with Article L. 225-100 II of the French Commercial
Code, the General Meeting is requested every year to approve
the fixed, variable and exceptional components of the total
remuneration and benefits of all kinds payable or allocated to the
Chairman of the Board of Directors, Chief Executive Officer and
Chief Operating Officers in respect to their mandate.
These components of the remuneration are presented in the
report of the Board of Directors on corporate governance in
section 2.4 of the 2019 Universal Registration Document, including
in particular a summary table under section 2.4.2.1.13.
Eleventh resolution
Approval of the components of the total compensation
payable or allocated to Mr. Alain de Rouvray, Chairman
of the Board of Directors, for the financial year ended
on December 31, 2019
The General Meeting, in accordance with Article L. 225-100 III
of the French Commercial Code, approves the fixed, variable
and exceptional components of the total compensation and
benefits of all kinds paid or allocated to Mr. Alain de Rouvray,
Chairman of the Board of Directors, for the financial year ended
on December 31, 2019 as set out in the report of the Board of
Directors on corporate governance pursuant to Article L. 225-37
of the French Commercial Code and presented in section 2.4.2.1.13
in the 2019 Universal Registration Document.
Approval of the components of the total compensation
payable or allocated to Mrs. Cristel de Rouvray,
Chief Executive Officer, for the financial year ended
on December 31, 2019
The General Meeting, in accordance with Article L. 225-100 III of
the French Commercial Code, approves the fixed, variable and
exceptional components of the total compensation and benefits
of all kinds paid or allocated to Mrs. Cristel de Rouvray, Chief
Executive Officer, for the financial year ended on December 31,
2019, as set out in the report of the Board of Directors on
corporate governance pursuant to Article L. 225-37 of the French
Commercial Code and presented in section 2.4.2.1.13 in the 2019
Universal Registration Document.
Thirteenth resolution
Approval of the components of the total compensation
payable or allocated to Mr. Vincent Chaillou, Chief Operating
Officer, for the financial year ended on December 31, 2019
The General Meeting, in accordance with Article L. 225-100 III of
the French Commercial Code, approves the fixed, variable and
exceptional components of the total compensation and benefits of
all kinds paid or allocated to Mr. Vincent Chaillou, Chief Operating
Officer, as set out in the report of the Board of Directors on
corporate governance pursuant to Article L. 225-37 of the French
Commercial Code, and presented in section 2.4.2.1.13 in the 2019
Universal Registration Document.
Fourteenth resolution
Approval of the components of the total compensation
payable or allocated to Mr. Christopher St John,
Chief Operating Officer, for the financial year
ended on December 31, 2019
The General Meeting, in accordance with Article L. 225-100 III of
the French Commercial Code, approves the fixed, variable and
exceptional components of the total compensation and benefits
of all kinds paid or allocated to Mr. Christopher St John, Chief
Operating Officer, as set out in the report of the Board of Directors
on corporate governance pursuant to Article L. 225-37 of the
French Commercial Code, and presented in section 2.4.2.1.13 in
the 2019 Universal Registration Document.
Fifteenth resolution
Determination of the compensation paid to the members
of the Board of Directors
Statement of reasons
The General Meeting is requested to set the total annual amount
of compensation to be allocated to members of the Board of
Directors for the 2020 financial year at €350,000 (vs. €280,000).
This increase is part of the remuneration policy of the Directors
as presented in the report of the Board of Directors on corporate
governance in section 2.4.1.2 of the 2019 Universal Registration
Document.
It will therefore allow the directors to be allocated specific missions
in favour of the transformation of the Company and to anticipate
possible changes in the composition of the Board of Directors.
The General Meeting decides to set the compensation paid to
the members of the Board of Directors at €350,000 for the 2020
financial year.
The Board will freely distribute this amount among its members.
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CONTENTS
Sixteenth resolution
Authorization to be granted to the Board of Directors
for the Company to buy back its own shares
Statement of reasons
As the existing authorization expires in January 2021, it is proposed
to the General Meeting to terminate this authorization and grant
the Board of Directors a new authorization for the Company to
buy back its own shares for a new period of 18 (eighteen) months
as from the General Meeting of June 25, 2020.
It is proposed to set the maximum purchase price at €60 (sixty)
per share. Pursuant to current legislation, the maximum number of
shares that may be vested is limited to 10% of the capital, after
deduction of treasury stock held by the Company, 6.3% as at
December 31, 2019. The Company will not be allowed to pay
out more than €13,000,000 (thirteen million) under the share
buyback program.
The Company can buy back its own shares to:
◗ stimulate the secondary market or the liquidity of ESI Group
shares through a liquidity contract signed with an investment
service provider;
◗ allocate them to free share awards or stock purchase options;
◗ hold them and use them at a later date as payment for acquisitions;
◗ cancel them by a reduction in share capital.
The General Meeting, having reviewed the report of the Board
of Directors in accordance with Article L. 225-209 of the French
Commercial Code:
1. authorizes the Board of Directors to purchase the Company’s
shares, not to exceed 10% of its capital, for a period of 18
months beginning on June 25, 2020, in order to:
(i) stimulate the secondary market or the liquidity of ESI
Group shares through a liquidity contract signed with an
investment service provider and compliant with the AMAFI’s
Code of Ethics dated September 23, 2008 and approved
by the French Financial Markets Authority (AMF),
(ii) fulfill its share issue obligations, in accordance with the
terms and conditions set forth by law, undertaken as part
of the following:
• plans granting stock options for the purchase of existing
shares by the Group’s employees or corporate officers,
• employee profit-sharing plans under which these shares
would be granted to employees and/or corporate officers,
• free share grants to the Group’s employees and corporate
officers,
• shares provided upon exercise of the rights attached to
securities giving access to shares by any means, whether
immediately or in the future, under the conditions set
forth by the AMF and at any time deemed appropriate
by the Board of Directors,
(iii) retain shares to subsequently use them in exchange or as
payment for future business acquisitions,
(iv) cancel shares by a reduction in share capital;
2. decides that the purchase price per share may not exceed
€60 (sixty);
3. decides to fix the maximum amount that the Company may
spend within the framework of this buyback program at
€13,000,000 (thirteen million);
4. acknowledges that this authorization shall render ineffective
the previous authorization granted by the fourteenth resolution
of the Combined General Meeting of July 18, 2019 authorizing
the Board to trade on its own shares;
5. decides that the shares may be purchased or retained at the
discretion of the Board of Directors by any means by trading
on or off the market, or on an over-the-counter market, on one
or more occasions. All shares purchased under the authorized
share buyback program may be acquired in the form of blocks
of shares. Such transactions may be carried out at any time,
including during public offering periods, in accordance with
the regulations in force;
6. acknowledges that the Company may not, at any time, hold,
either directly or via an intermediary, more than 10% of the
total shares making up its own share capital;
7. grants full authority to the Board of Directors to:
• publish, on the website of the AMF, a detailed notice explaining
this share buyback program authorized by the General Meeting
prior to using this authorization,
• place any and all stock market orders and enter into any and
all agreements to record share purchases and sales,
• make any and all disclosures to the stock market regulators,
carry out any other formalities and, in general, take any
necessary steps.
The Board of Directors shall inform shareholders of any purchases
or sales carried out pursuant to this authorization in its manage-
ment report.
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Decisions falling within the competence of the Extraordinary General Meeting
7.2. DECISIONS FaLLINg WIThIN ThE COMPETENCE OF ThE
EXTRaORDINaRY gENERaL MEETINg
Seventeenth resolution
Delegation of authority to the Board of Directors to award
stock subscriptions options
Statement of reasons
As the existing authorization expires in August 2020, it is
proposed to the General Meeting to terminate this authorization
and grant the Board of Directors a new authorization to award
stock subscription options to corporate officers and employees
of the Company and its affiliates, or certain categories of them,
for a new period of 38 months starting with the General Meeting
of June 25, 2020.
The number of shares that may be awarded under this authorization
must not exceed 3% of the share capital at the date of the General
Meeting, i.e. 180,000 options.
The subscription price of shares will be determined at the date on
which the options are granted by the Board of Directors. Pursuant
to current legislation, this price shall be no less than 80% of the
average share price from the last 20 trading days preceding the
date on which the options are granted.
The Board of Directors will determine the identity of the beneficiaries
of the share grants and the procedures and conditions under
which they are awarded within the limits of this authorization
and within legal and regulatory limits.
Options must be exercised no later than eight years after the date
on which they are granted; however, the Board of Directors may
nonetheless shorten this period for all or part of the beneficiaries.
The Board of Directors may prohibit the immediate resale of
the shares subscribed; however, the period of time during which
beneficiaries are required to retain shares may not exceed three
years from the date on which the option is exercised.
This authorization will entail the Shareholders’ express waiver, for
the benefit of beneficiaries of the options, of the Shareholders’
preferential subscription rights to shares that will be issued as
options are exercised.
In accordance with legal requirements, the increase in capital
resulting from the exercise of stock subscription options will
be final and definite as of the declaration of the exercise of the
option(s) accompanied by the corresponding payment made in
cash or by offsetting receivables with the Company.
The Extraordinary General Meeting, having reviewed the Report
of the Board of Directors and the special report of the Statutory
Auditors, authorizes the Board of Directors to grant to the corporate
officers defined by law and the employees of the Company and
its affiliates, as defined under Article L. 225-180 of the French
Commercial Code, options for the subscription of new Company
shares to be issued through the Company’s capital increase
operations, not to exceed the number of shares representing 3%
of the capital as of the date of this Meeting, i.e. 180,000 options.
This authorization, which may be exercised on one or more
occasions, is granted for a term of thirty-eight months from the
date of this General Meeting.
The subscription price of shares will be determined at the date
on which the options are granted by the Board of Directors.
This price shall be no less than 80% of the average share price
from the last 20 trading days preceding the date on which the
options are granted.
This price may not be subsequently modified, except where
necessary to protect the interests of beneficiaries of options
pursuant to Article L. 225-181 of the French Commercial Code.
No option may be granted less than 20 days following an
ex-coupon date (whereby the option entitled the holder to a
dividend or to participate in a share issue), nor within a period of
ten trading days preceding and following the date on which the
consolidated financial statements, or, in the absence thereof, the
parent-company financial statements, are published, nor within
the period between the date on which the Company’s corporate
bodies became aware of information that, if it were disclosed to
the public, would have a material impact on the Company’s share
price and the date ten trading days after the date on which said
information is made public.
Options must be exercised no later than eight years after the date
on which they are granted; however, the Board of Directors may
nonetheless shorten this period for all or part of the beneficiaries.
The Board of Directors may prohibit the immediate resale of
the shares subscribed; however, the period of time during which
beneficiaries are required to retain shares may not exceed three
years from the date on which the option is exercised.
The General Meeting acknowledges that this authorization entails
the Shareholders’ express waiver, for the benefit of beneficiaries of
the options, of the Shareholders’ preferential subscription rights
to shares that will be issued as options are exercised.
The General Meeting grants full authority to the Board of Directors
to decide all other terms and conditions regarding the granting
and exercising of options, within legal and regulatory limits, and
specifically authorizes the Board of Directors to:
◗ Grant options to designated individuals;
◗ Determine the expiration date of the options, within the limits
set forth above;
◗ Set forth requirements governing the granting and exercising
of options; the Board of Directors may:
• restrict, limit or prohibit (i) the exercise of options or (ii) the
sale or conversion to bearer shares of the shares obtained
through the exercise of options, during certain periods or
within a certain period following certain events,
• bring forward exercise dates or periods for the options, extend
the exercisable nature of the options or modify dates or
periods within which the shares obtained by exercise of the
options may not be transferred or converted to bearer shares;
◗ Establish, where applicable, a period during which shares arising
from the exercise of options may not be sold or converted to
bearer shares; such lock-up period may not exceed three years
from the date on which the option was exercised;
◗ Adjust the number and the price of the shares that may be
obtained by exercising options, where applicable, in keeping
with the legal and regulatory requirements in force.
The increase in capital resulting from the exercise of stock
subscription options will be final and definite as of the declaration
of the exercise of the option(s) accompanied by the corresponding
payment made in cash or by offsetting receivables with the
Company.
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CONTENTS
At its first meeting following the end of each fiscal year, the Board
of Directors will record the total shares issued during the course
of the year, where applicable, amend the articles of association
as necessary and perform any public disclosure formalities.
This authorization cancels, in the amount of the unused portion, the
tenth resolution of the Combined General Meeting of June 29, 2017.
Eighteenth resolution
Delegation of authority to the Board of Directors to award
stock purchase options
Statement of reasons
As the previous authorization expires in August 2020, it is
proposed to the General Meeting to terminate and grant the
Board of Directors with a new delegation to award stock purchase
options to corporate officers and employees of the Company and
its affiliates, or certain categories of them, for a new period of
38 months starting with the General Meeting of June 25, 2020.
The number of shares that may be awarded under this authorization
must not exceed 5% of the share capital at the date of the General
Meeting, i.e. 300,000 shares.
The purchase price of shares will be determined at the date on
which the options are granted by the Board of Directors. Pursuant
to current legislation, this price shall be no less than 80% of the
average share price over the last 20 trading days preceding the
date on which the options are granted.
The Board of Directors will determine the identity of the beneficiaries
of the share grants and the procedures and conditions under
which they are awarded within the limits of this authorization
and within legal and regulatory limits.
Options must be exercised no later than eight years after the date
on which they are granted; however, the Board of Directors may
nonetheless shorten this period for all or part of the beneficiaries.
The Board of Directors may prohibit the immediate resale of
the shares subscribed; however, the period of time during which
beneficiaries are required to retain shares may not exceed three
years from the date on which the option is exercised.
The Extraordinary General Meeting, having reviewed the Report
of the Board of Directors and the special report of the Statutory
Auditors, authorizes the Board of Directors to grant to the corporate
officers defined by law and the employees of the Company and
its affiliates, as defined under Article L. 225-180 of the French
Commercial Code, options to purchase existing shares bought
back by the Company under the conditions provided for by law,
not to exceed the number of shares representing 5% of the capital
as of the date of this Meeting, i.e. 300,000 shares.
This authorization, which may be exercised on one or more
occasions, is granted for a term of thirty-eight months from the
date of this General Meeting.
The purchase price of shares will be determined at the date on
which the options are granted by the Board of Directors.
This price shall be no less than 80% of the average share price
over the last 20 trading days preceding the date on which the
options are granted.
This price may not be subsequently modified, except where
necessary to protect the interests of beneficiaries of options
pursuant to Article L. 225-181 of the French Commercial Code.
No option may be granted less than 20 days following an
ex-coupon date (whereby the option entitled the holder to a
dividend or to participate in a share issue), nor within a period of
ten trading days preceding and following the date on which the
consolidated financial statements, or, in the absence thereof, the
parent-company financial statements, are published, nor within
the period between the date on which the Company’s corporate
bodies became aware of information that, if it was disclosed to
the public, would have a material impact on the Company’s share
price and the date ten trading days after the date on which said
information is made public.
Options must be exercised no later than eight years after the date
on which they are granted; however, the Board of Directors may
nonetheless shorten this period for all or part of the beneficiaries.
The Board of Directors may prohibit the immediate resale of
the shares purchased; however, the period of time during which
beneficiaries are required to retain shares may not exceed three
years from the date on which the option is exercised.
The General Meeting grants full authority to the Board of Directors
to decide all other terms and conditions regarding the granting
and exercising of options, within legal and regulatory limits, and
specifically authorizes the Board of Directors to:
◗ Grant options to designated individuals;
◗ Determine the expiration date of the options, within the limits
set forth above;
◗ Set forth requirements governing the granting and exercising
of options; the Board of Directors may (a)restrict, limit or
prohibit (i) the exercise of options or (ii) the sale or conversion
to bearer shares of the shares obtained through the exercise
of options, during certain periods or within a certain period
following certain events and (b) bring forward exercise dates
or periods for the options, extend the exercisable nature of the
options or modify dates or periods within which the shares
obtained by exercise of the options may not be transferred or
converted to bearer shares;
◗ Establish, where applicable, a period during which shares arising
from the exercise of options may not be sold or converted to
bearer shares; such lock-up period may not exceed three years
from the date on which the option was exercised;
◗ Adjust the number and the price of the shares that may be
obtained by exercising options, where applicable, in keeping
with the legal and regulatory requirements in force.
This authorization cancels, in the amount of the unused portion,
the eleventh resolution of the Combined General Meeting of
June 29, 2017.
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Decisions falling within the competence of the Extraordinary General Meeting
Nineteenth resolution
Twentieth resolution
Delegation of authority to the Board to reduce the share
capital through the cancellation of shares purchased
by the Company within the scope of Article L. 225-209
of the French Commercial Code
Delegation of authority to the Board of Directors to award
free shares to eligible employees and corporate officers of
the Company and of its affiliated companies
Statement of reasons
As the previous authorization expires in September 2020, it is
proposed to the General Meeting to terminate and grant the Board
of Directors with a new delegation to cancel shares purchased,
allowing it to carry out share cancellations, subject to the legal
limits and the limit of 10% of the share capital at the day of
operation. This authorization shall be granted for a duration of 26
(twenty-six) months from the General Meeting of June 25, 2020.
The General Meeting, having reviewed the report of the Board
of Directors and the special report of the Statutory Auditors:
1. Authorizes the Board of Directors, with the right to sub-delegate,
in accordance with the legal and regulatory requirements,
pursuant to Article L. 225-209 of the French Commercial Code,
to:
• cancel, at its sole discretion, on one or more occasions,
the shares purchased by the Company on the basis of the
authorization given by the General Meeting in the sixteenth
resolution (provided that this resolution is adopted) or any
similar resolutions adopted by previous General Meetings,
within the limit of 10% of its share capital, this percentage
applying to the share capital as subsequently adjusted
following transactions after this General Meeting, per 24
(twenty-four) months period, and
• conduct, for the same amount, a reduction in share capital
by cancelling shares;
2. Gives to the Board of Directors all powers, with the right to
subdelegate, in accordance with the legal and regulatory
requirements, pursuant to Article L. 225-209 of the French
Commercial Code, to:
• determine the final amount of the capital reduction within
the limits provided by the law and by this resolution,
• set the terms for said operation and record its completion,
• deduct the difference between the book value of the cancelled
shares and their par value from the available reserves and
premiums at the choice of the Board,
• carry out all deeds, formalities, or declarations in order to record
and finalize the capital reductions that may be conducted
in accordance with this authorization and that would result
in subsequent amendment to the articles of association;
3. Acknowledges that this authorization shall render ineffective
the previous authorization granted by the thirteenth resolution
of the Extraordinary General Meeting held on July 18, 2018.
This authorization is granted to the Board of Directors for a
duration of 26 (twenty-six) months from this General Meeting.
Statement of reasons
As the Company is considering the granting of free shares
to employees and corporate officers of the Company and its
affiliates, it is proposed to the General Meeting to terminate the
authorization granted to the Board of Directors in 2018 and to
grant it a new authorization for this purpose.
Under the scope of this authorization, the number of free shares
that may be granted may not exceed 60,000 shares, representing
around 1% of the share capital existing on June 25, 2020.
The Board of Directors will decide the identity of the beneficiaries
of the grants, the number of shares allocated to each one, the
terms, and, where applicable, the criteria for such share grants.
The Board of Directors will be able to set, in accordance with the
provisions of Article L. 225-197-1 of the French Commercial Code,
the duration of vesting and holding periods, provided that the
time condition respects a minimum vesting period of at least one
year and the total duration of both vesting and holding periods is
at least two years. Pursuant to Article L. 225-197-1 of the French
Commercial Code, the free grant of shares to their beneficiaries
will become final and binding subject to the satisfaction of the
other conditions set at the time of the grant, and specifically the
employment condition and/or the performance condition, after
a vesting period set out by the Board of Directors.
The General Meeting, having reviewed the report of the Board
of Directors and the special report of the Statutory Auditors,
and in accordance with Article L. 225-129-1 and L. 225-197-1 and
following. of the French Commercial Code:
1. Authorizes the Board of Directors to carry out, on one or several
occasions, free grants of existing shares or shares to be issued
by ESI Group, to employees and executive corporate officers
of the Company or its affiliated entities, in accordance with
Article L. 225-197-2 of the French Commercial Code and the
conditions set out hereinafter;
2. Resolves that the Board of Directors will decide the identity of
the beneficiaries of the grants, the number of shares allocated
to each one, as well as the conditions, and, where applicable,
the criteria for such share grants;
3. Decides that the number of free shares that may be granted
under the scope of this authorization may not exceed 60,000
shares, representing around 1% of the share capital existing on
June 25, 2020;
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RESOLUTIONS SUBMITTED TO ThE gENERaL MEETINg
Joint decisions
CONTENTS
4. Decides that the Board of Directors will be able to set, in
accordance with the provisions of Article L. 225-197-1 of the
French Commercial Code, the duration of vesting and holding
periods, provided that the time condition respects a minimum
vesting period of at least one year and the total duration of
both vesting and holding periods is at least two years;
5. Decides that the free grant to their beneficiaries will become
final and binding after a vesting period set out by the Board
of Directors;
6. Authorizes the Board of Directors to vest the shares prior to the
end of the vesting period as well as to permit the free transfer
of these shares in the event the beneficiary has a disability
corresponding to the second or third categories defined by
Article L. 341-4 of the French Social Security Code;
7. Decides that the Board of Directors shall have all powers,
including powers of sub-delegation in accordance with the
legal requirements, to implement this authorization, and, in
particular, in order to:
• determine whether to grant existing shares or whether to
issue shares for such purpose,
• determine all the terms relating to the granting of shares, in
particular the conditions under which such shares will be vested
(especially the presence and performance conditions), define
the categories of beneficiaries, the beneficiaries and establish
the number of shares granted to each of them and the grant
date or dates in compliance with the law and regulations in
force as of the date of transactions contemplated,
• adjust, during the vesting period, if it deems necessary, the
number of shares granted in order to protect the rights of the
beneficiaries, in compliance with the laws and regulations in
force as of the date of the transactions contemplated, based
on potential Company equity transactions, it being specified
that the shares, granted further to these adjustments, shall
be deemed granted on the same date as, that of the initial
share grant, and
• more generally, to take all necessary measures, in particular
to conclude any and all agreements and contracts to effect
the closing of an issuance, to carry out any and all formalities
to effect the related share capital increase or increases
subsequent to the vesting of Company shares, to amend
the articles of association;
8. Acknowledges that this authorization automatically entails
the waiver by shareholders of their preferential subscription
rights to ordinary Company shares which may be issued for
the purposes of the vesting of free shares, and of all rights to
ordinary shares granted under the scope of this authorization;
9. Acknowledges that this authorization supersedes the unused
portion of the previous authorization granted by the fourteenth
resolution of the Extraordinary General Meeting held on July 18,
2018.
Each year, in accordance with the legal and regulatory require-
ments, in particular pursuant to Article L. 225-197-4 of the French
Commercial Code, the Board of Directors shall inform the General
Meeting about the operations carried out under this authorization.
This authorization is granted to the Board of Directors for a
duration of 38 (thirty-eight) months from the date of this Meeting.
7.3. JOINT DECISIONS
Twenty-first resolution
Powers to carry out formalities
Statement of reasons
This resolution is intended to grant the powers necessary to carry
out formalities subsequent to the General Meeting.
The General Meeting grants full powers to the bearer of an original,
excerpt or copy of the minutes of this Meeting to carry out all legal
and administrative formalities, as well as all filing and publication
requirements set forth by applicable law.
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8
INFORMATION
ON THE COMPANY
AND SHARE CAPITAL
8.1. INFORMATION ON THE COMPANY
8.1.1. General information
8.1.2.
Information regarding rights, privileges
and restrictions attached to shares
Information concerning administrative
and management bodies
8.1.3.
8.2. INFORMATION ON THE COMPANY’S CAPITAL
182
182
182
183
184
8.2.1. Statutory requirements governing modifications
to the capital and rights attached to shares
(Article 8 of the articles of association)
184
8.2.2. Issued share capital and authorized unissued share capital 184
184
8.2.3. History of changes in share capital
185
8.2.4. Corporate shareholding structure
188
8.2.5. Company share buybacks
8.3. ESI SHARES – MARKET
8.3.1. Share price trends
8.3.2. Survey of identifiable bearer shares
189
189
190
In accordance with the resolution of the General Meeting of July 18, 2019, the Group now closes its financial
statements at 31 December of each fiscal year.
ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT
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181
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INFORMATION ON THE COMPANY ANd sHARE CAPITAl
Information on the Company
CONTENTS
8.1. INFORMATION ON THE COMPANY
8.1.1. GENERAl INFORMATION
Corporate name and head office
ESI Group
100-102, avenue de Suffren
75015 Paris, France
Legal form
ESI Group is a French limited company (société anonyme) with
a Board of Directors
Legislation governing the issuer
French
Date of incorporation and term
of the issuer
ESI Group was incorporated on January 28, 1991. The term of
the Company is 99 years from registration, unless extended or
dissolved before such time.
Company registration
Paris Trade and Companies Registry No. 381 080 225
Legal Entity Identifier (LEI)
LEI – 969500SJCEYK6O6RXV95
Corporate purpose (Article 2 of the
articles of association)
The Company pursues the following corporate purpose in France
and in all other countries:
◗ to research, develop, design, manufacture and distribute
computer software. To provide all forms of assistance, training
and, in general, all activities that may be directly or indirectly
related to the corporate purpose;
◗ to acquire, receive, hold, manage and trade in a portfolio of
securities, especially in fields related to the publishing of scientific
software, including digital simulation software for prototyping
and manufacturing processes and related decision-making
support tools.
The Company may perform any of the abovementioned operations
on its own behalf or on behalf of third parties by creating new
companies, forming partnerships, subscribing to shares in existing
companies, purchasing securities or rights to equity instruments,
merging companies, forming business alliances, undertaking joint
investments, obtaining the use of any property under a lease or
lease management agreement, forming joint ventures or otherwise.
To this end, the Company carries out any and all economic or
financial studies necessary and provides recommendations in
relation to investments, acquisitions and divestitures. It also helps
as a management consultant to companies in which it holds a
stake and to other companies. It prepares all types of reports and
expert opinions; it assists with business restructuring measures
and mergers.
In general, it carries out any and all financial, commercial or industrial
operations and real estate and property transactions that may
be directly or indirectly related to the corporate purpose of the
Company or likely to promote the Company’s expansion or growth.
Financial year (Article 22
of the articles of association)
The financial year begins on January 1 and ends on December 31
of each year. It covers 12 months.
Exceptional events and disputes
To the best of the Company’s knowledge, there is no exceptional
event or dispute that may have or has had a material impact on
the financial position or profit of the Company or the Group of
which it is a part.
Except for disputes arising in the ordinary course of business, the
Company was not involved in any governmental, judicial or arbitration
procedure during the exercise that ended at December 31, 2019.
8.1.2. INFORMATION REGARdING RIGHTs, PRIVIlEGEs
ANd REsTRICTIONs ATTACHEd TO sHAREs
Allocation of income and distribution
of profits (Article 22 of the articles of
association)
Pursuant to Article 22 of the articles of association, 5% of the net
profit for the financial year, less any losses carried forward, will
be set aside to form the legal reserve fund; this deduction is no
longer required once the legal reserve has reached one-tenth of
the share capital; the requirement applies again when, for any
reason, the reserve falls below said one-tenth fraction.
The balance of said profit, plus any retained earnings, forms the
profit available for distribution.
Shareholders have sole control over this profit and decide how it
will be appropriated at the Annual General Meeting. To this end,
the Annual General Meeting may decide to allocate this profit,
in full or in part, to any general or special reserve funds, carry it
forward or distribute it to the shareholders.
However, except in the case of a capital reduction, no profit may be
distributed to the shareholders if net assets are or will subsequently
become less than the total capital plus reserves that may not be
distributed in accordance with the law or the articles of association.
Any losses are recorded in the balance sheet under a special
account once the financial statements have been approved by
the Annual General Meeting.
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INFORMATION ON THE COMPANY ANd sHARE CAPITAl
Information on the Company
The General Meeting has the faculty to allow each shareholder, for
all or part of the dividend distributed or advances on dividends,
an option between the payment of the dividend or advances on
dividends in cash or in shares.
However, double voting rights are not lost and the abovementioned
four-year period is not interrupted in the event that shares are
transferred by way of an inheritance, following the liquidation of
a marital estate, or in the form of an inter vivos gift to a spouse
or a relative in the direct line of succession.
Provisions of the articles of association
concerning the participation
of shareholders in General Meetings
(Articles 18 and 19 of the articles
of association)
Please refer to section 2.5.3 of this Universal Registration Document.
Shareholders’ right to information
(Article 21 of the articles of association)
All shareholders are entitled to receive information, and the Board
of Directors is required to send or make available any documents
necessary for shareholders to make informed decisions relating
to the management and situation of the Company.
Shareholders’ right to information, the nature of documents provided
and the arrangements for such documents to be made available
or transmitted shall adhere to the terms set out by applicable law.
Double voting rights (Article 9
of the articles of association)
In accordance with Article 9 of the articles of association, each
share gives its holder ownership interest in the Company’s assets
and profits, proportionate to the percentage of the share capital
the share represents.
Anyone who has held fully paid-up registered shares for at least
four years as of the date of the Extraordinary General Meeting
of June 14, 2000 or thereafter is entitled to double voting rights
under the law. Furthermore, if the capital is increased through the
capitalization of reserves, profits or share premiums, this double
voting right will apply, from the time of issue, to registered shares
awarded free of charge to shareholders on the basis of shares
already held that bear this entitlement.
Any shares converted to bearer shares or transferred to a different
owner are stripped of double voting rights, although other rights
and obligations attached to the share are transferred to any
owner thereof.
Shareholding thresholds (Article 9 B
of the articles of association)
In accordance with the provisions of Article L. 233-7 of the French
Commercial Code, any natural or legal person, acting alone or in
concert, that comes to own, directly or indirectly, a number of
shares accounting for more than the twentieth, the tenth, the
three-twentieths, the fifth, the quarter, the three-tenths, the third,
the half, the two thirds, the eighteen twentieths or the nineteen
twentieths of the share capital or voting rights is required to so
inform the Company as provided by law.
In case they are not declared, the shares exceeding the participation
to be declared are deprived of the right to vote under the conditions
provided for by Article 233-14 of the French Commercial Code, i.e.
for a period of two years from the regularization of the notification.
In addition to the obligations provided for in paragraph 1 of
Article L. 233-7 of the French Commercial Code, any crossing of
a statutory threshold of 2.5% (and any multiple of this fraction) of
the total number of shares or the Company’s voting rights must
be declared at the latest on the 4th trading day following the day
the threshold is crossed.
Form and transfer of shares
(Article 9 of the articles of association)
/ Form
Shareholders may opt to hold fully paid-up shares as either
registered shares or bearer shares. Shares will be recorded in the
Company’s accounts in accordance with the terms and procedures
set forth by law.
/ Transfer of shares
Shares may be freely traded unless otherwise stipulated by law
or regulation. Shares may be sold or traded by the Company and
by third parties via transfer between accounts in accordance with
the regulations in force.
8.1.3. INFORMATION CONCERNING AdMINIsTRATIVE
ANd MANAGEMENT BOdIEs
Information on administrative and management bodies, as well as their respective authority, is presented in Chapter 2, “Corporate
governance”.
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INFORMATION ON THE COMPANY ANd sHARE CAPITAl
Information on the Company’s capital
CONTENTS
8.2. INFORMATION ON THE COMPANY’s CAPITAl
8.2.1. sTATUTORY REQUIREMENTs GOVERNING MOdIFICATIONs
TO THE CAPITAl ANd RIGHTs ATTACHEd TO sHAREs
(ARTICLE 8 OF THE ARTICLES OF ASSOCIATION)
Extraordinary General Meetings have sole authority to decide to
carry out or to authorize capital increases, upon recommendation
by the Board of Directors.
Shares representing contributions in kind or stemming from the
capitalization of profits or reserves must be fully paid up upon
issuance.
If the share capital is increased through the capitalization of
reserves, profit or share premiums, the General Meeting may make
such decision in accordance with the requirements for quorum
and majority set forth for Ordinary General Meetings.
The share capital must be fully paid up prior to any issue of new
shares to be paid up in cash; otherwise the transaction may be
declared null and void.
Shareholders are entitled, in proportion to their total shares, to
preferential subscription rights to shares issued for cash as part
of a capital increase.
The value of any contributions in kind must be appraised by one
or more contribution appraisers appointed upon request by the
presiding judge of the relevant commercial court.
At least one-fourth of the value of cash shares and the entire
share premium, where applicable, must be paid up at the time
of subscription. The remainder must be paid up in one or more
installments within a period of five years from the date on which
the capital increase was finalized.
Subject to the restrictions and reserves set forth by law,
Extraordinary General Meetings may also decide to carry out
or authorize a reduction in the share capital for any reason or in
any manner whatsoever, including due to losses or via repayment
or partial buyback of shares, reduction in the number of shares,
or reduction in the par value of shares; under no circumstances
may the reduction in capital undermine the principle of equality
between shareholders.
8.2.2. IssUEd sHARE CAPITAl ANd AUTHORIZEd UNIssUEd sHARE CAPITAl
For a summary of the delegations granted to the Board of Directors that may impact the Company’s share capital, please refer to
section 2.5.2 of this Universal Registration Document.
8.2.3. HIsTORY OF CHANGEs IN sHARE CAPITAl
Meeting
date*
BoD meeting
of 03/14/2018
BoD meeting
of 02/01/2019
BoD meeting
of 02/12/2020
Operation type
Share capital adjustment
Exercise of share
subscription options
Share capital adjustment
Exercise of share
subscription options
Share capital adjustment
Exercise of share
subscription options
* BoD: Board of Directors.
Change in share capital
Issue of cash shares
Par value
(in €)
Premium
(in €)
Number of
created
shares
Resulting
total share
capital
Number of
cumulated
shares
Par
value
(in €)
3
3
3
637,909
24,450
18,049,326
6,016,442
40,339
1,450
18,053,676
6,017,892
16,692
600
18,055,476
6,018,492
3
3
3
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Information on the Company’s capital
8.2.4. CORPORATE sHAREHOldING sTRUCTURE
Shareholding structure
As of December 31, 2019, the shareholding structure of ESI Group is as follows:
56.6%
Public
37.1%
Founders
and Board
of Directors
6.3%
Treasury stock
Change in the breakdown of the Company’s share capital over the past three financial years
Over the past three financial years, the breakdown of share capital and voting rights evolved as follows:
At December 31, 2019
First and last name
De Rouvray
Xiu Mei Dubois
Alex Peng Dubois-Sun
Number of
shares
1,824,385
25,200
355,419
% of capital
30.31%
0.42%
5.91%
Number of
voting rights
that may be
exercised
3,648,770
50,400
710,838
% of voting
rights that may
be exercised
46.22%
0.64%
9.00%
Sub-total of shareholders’ agreement (registered
shares)
2,205,004
36.64%
4,410,008
55.86%
Vincent Chaillou
Charles-Helen des Isnards
Éric d'Hotelans
Véronique Jacq
Rajani Ramanathan
Yves de Balmann
Members of the Board of Directors (registered shares)
(excluding founders)
Total employee shareholding (registered shares)
Public shareholding, registered shares
Public shareholding, bearer shares
Sub-total public shareholding
Treasury shares
TOTAL
Total number of theoretical voting rights: 8,279,879.
21,197
3,951
1,589
157
1
1
26,896
81,312
23,891
3,303,698
3,327,589
377,691
0.35%
0.07%
0.03%
0.00%
0.00%
0.00%
0.45%
1.35%
0.40%
54.89%
55.29%
6.28%
34,794
7,702
3,178
158
2
2
45,836
99,465
36,181
3,303,698
3,339,879
0
0.44%
0.10%
0.04%
0.00%
0.00%
0.00%
0.58%
1.26%
0.46%
41.84%
42.30%
0.00%
6,018,492
100.00%
7,895,188
100.00%
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INFORMATION ON THE COMPANY ANd sHARE CAPITAl
Information on the Company’s capital
CONTENTS
At January 31, 2019
First and last name
De Rouvray
Xiu Mei Dubois
Alex Peng Dubois-Sun
Number of
shares
1,824,385
25,200
355,419
% of capital
30.2%
0.42%
5.91%
Number of
voting rights
that may be
exercised
3,638,907
48,200
710,838
% of voting
rights that may
be exercised
46.1%
0.61%
9.03%
Sub-total of shareholders’ agreement
(registered shares)
2,205,004
36.64%
4,397,945
55.84%
21,197
3,951
1,589
61
1
1
26,800
70,953
32,782
3,294,006
3,326,788
388,347
6,017,892
0.35%
0.07%
0.03%
0.00%
0.00%
0.00%
0.45%
1.18%
0.54%
54.74%
55.28%
6.45%
34,794
7,352
3,178
62
2
2
45,390
87,416
50,234
3,294,448
3,334,682
0
0.44%
0.09%
0.04%
0.00%
0.00%
0.00%
0.58%
1.11%
0.64%
41.83%
42.47%
0.00%
100.00%
7,875,433
100.00%
Number of
shares
1,824,385
380,619
% of capital
30.3%
6.3%
Number of
voting rights
that may be
exercised
3,638,907
759,038
% of voting
rights that may
be exercised
46.4%
9.6%
2,205,004
36.6%
4,397,945
56.0%
16,197
3,751
1,589
61
1
1
21,600
68,311
27,709
3,286,830
3,314,539
406,988
6,016,442
0.3%
0.1%
0.0%
0.0%
0.0%
0.0%
0.4%
1.1%
0.5%
54.6%
55.1%
6.8%
28,893
6,852
3,178
61
1
1
38,986
84,874
42,31
3,286,830
3,329,140
0
100.0%
7,850,945
0.4%
0.1%
0.0%
0.0%
0.0%
0.0%
0.5%
1.1%
0.5%
41.9%
42.4%
0.0%
100.0%
Vincent Chaillou
Charles-Helen des Isnards
Éric d'Hotelans
Véronique Jacq
Rajani Ramanathan
Yves de Balmann
Members of the Board of Directors
(registered shares) (excluding founders)
Total employee shareholding (registered shares)
Public shareholding, registered shares
Public shareholding, bearer shares
Sub-total public shareholding
Treasury shares
TOTAL
Total number of theoretical voting rights: 8,263,780.
At January 31, 2018
First and last name
De Rouvray
Estate of Jacques Dubois
Sub-total of shareholders’ agreement
(registered shares)
Vincent Chaillou
Charles-Helen des Isnards
Éric d’Hotelans
Véronique Jacq
Rajani Ramanathan
Yves de Balmann
Members of the Board of Directors
(registered shares) (excluding founders)
Total employee shareholding (registered shares)
Public shareholding. registered shares
Public shareholding. bearer shares
Sub-total public shareholding
Treasury shares
TOTAL
Total number of theoretical voting rights: 8,257,933.
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INFORMATION ON THE COMPANY ANd sHARE CAPITAl
Information on the Company’s capital
Shareholdings above
legal thresholds
Pursuant to the provisions of Article L. 233-13 of the French
Commercial Code, it is noted that at December 31, 2019, Mr. Alain
de Rouvray, jointly with its family group, held 1,824,385 shares
representing 31% of the share capital and 46.21% of voting rights.
On December 31, 2019, Mr. Alex Pen Dubois-Sun held 355,419 shares
representing 5.91% of share capital and 9.03% of voting rights.
As of the filing date of this Universal Registration Document, the
Long Path Partners and Loys Investments funds each held more
than 5% of the company’s capital:
◗ Long Path Partners holds 461,475 shares, i.e. 7.50% of the
capital – 5.46% of the voting rights;
◗ LOYS Investments SA holds 271,079 shares, i.e. 4.50% of the
capital – 3.72% of the voting rights.
Crossing of legal and statutory thresholds
declared to the Company during the
financial year ended December 31, 2019
and until the filing date of
this Universal Registration Document
As of the filing date of this Universal Registration Document, the
following exceedances of thresholds have been declared:
◗ Long Path Partners
By letter dated October 7, 2019 sent by Vigilant Compliance,
LLC, acting on behalf of the Long Path Partners fund, declares
that the latter has crossed the legal and statutory threshold
of 5% of the company’s capital upwards with 307,393 shares
representing 5.11% of the shares and 3.89% of the voting rights.
By letter dated January 5, 2020 sent by Vigilant Compliance,
LLC, acting on behalf of the Long Path Partners fund, declares
that the latter has crossed the legal and statutory threshold of
5% of the company’s voting rights upwards with 414,752 shares
representing 6.89% of the shares and 5.01% of the voting rights.
By letter dated February 13, 2020 sent by Vigilant Compliance,
LLC, acting on behalf of the Long Path Partners fund, declares
that the latter has crossed the statutory threshold of 7.50% of
the company’s capital upwards with 451,475 shares representing
7.50% of the shares and 5.46% of the voting rights.
◗ LOYS Investments SA
By letter dated October 3, 2019, the LOYS Investment SA fund
declared that it had crossed the legal and statutory threshold
of 5% of the company’s capital downward with 264,672 shares
representing 4.40% of the shares and 3.20% voting rights.
By letter dated December 13, 2019, the LOYS Investment SA fund
declared that it had crossed the legal and statutory threshold
of 5% of the company’s capital upward with 305,412 shares
representing 5.08% of the shares and 3.69% voting rights.
By letter dated March 9, 2020, the LOYS Investment SA fund
declared that it had crossed below the legal and statutory
threshold of 5% of the company’s capital with 288,458 shares
representing 4.79% of the shares and 3.49% of the voting rights.
By letter dated March 25, 2020, the LOYS Investment SA fund
declared that it had crossed the legal and statutory threshold
of 5% of the company’s capital upwards with 305,739 shares
representing 5.08% of the shares and 3.70% of the voting rights.
By letter dated April 7, 2020, the LOYS Investment SA fund
declared having crossed the legal and statutory threshold of
5% of the company’s capital downwards with 291,614 shares
representing 4.84% of the shares and 3.52% of the voting rights.
By letter dated April 15, 2020, the LOYS Investment SA fund
declared having crossed the legal and statutory threshold of
5% of the company’s capital upwards with 308,079 shares
representing 5.12% of the shares and 3.72% of the voting rights.
By letter dated April 17, 2020, the LOYS Investment SA fund
declared having crossed the legal and statutory threshold of
5% of the company’s capital downwards with 271,079 shares
representing 4.50% of the shares and 3.28% of the voting rights.
Shareholders’ agreement
and other agreements
An agreement signed on October 25, 2000 and published in
La Tribune on Friday October 27, 2000, after CMF decision
n ° 200C1608 on October 27, 2000, related to the date of the
filing of this Universal Registration Document, Alain de Rouvray
(Chairman and founder), the members of his family group composed
of Amy de Rouvray, Cristel Anne de Rouvray, John Alexandre de
Rouvray and Amy Louise de Rouvray, as well as the heirs of the
Dubois estate. This pact includes a mutual pre-emptive right.
This agreement includes a right of first refusal.
This right of first refusal does not apply to transfers of shares
to the heirs of any shareholder who is a private individual and
a party to the agreement in the event of death, or to transfers
between members of the de Rouvray family who are party to
the agreement.
This agreement also contains:
◗ an obligation on the part of the parties to the agreement, to
either purchase or sell their shareholding: in the event that
Alain de Rouvray decides to sell all ESI Group shares that he
currently holds or may hold at some point in the future, each
party is irrevocably bound to either:
• exercise its right of first refusal and purchase the shares under
the conditions set forth under the agreement, or
• waive its right of first refusal and consequently sell its entire
shareholding at the sale price;
◗ a commitment to act in concert prior to the purchase of any
additional shares that would force the parties to the agreement
to jointly file a draft takeover bid.
In keeping with this agreement, the parties declare that they
act in concert. In accordance with the “Dutreil” law in France, an
agreement was also signed on December 22, 2003, and renewed
on December 31, 2011 for a term of five years and six months.
renewable indefinitely, between Mr. Alain de Rouvray (Chairman
and founder of the Company), Ms. Amy de Rouvray, Ms. Cristel
Anne de Rouvray, Mr. John Alexandre de Rouvray and Ms. Amy
Louise de Rouvray in their capacity as shareholders of the Company.
At December 31, 2019, this agreement represented 30.31% of the
Company’s capital and 46.22% of voting rights, and collectively
binds its signatories to retain half of their shares.
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT8 8
INFORMATION ON THE COMPANY ANd sHARE CAPITAl
Information on the Company’s capital
CONTENTS
8.2.5. COMPANY sHARE BUYBACKs
The Shareholders’ Meeting of July 18, 2019 authorized the Board of
Directors. pursuant to the provisions of Article L. 225-209 of the
French Commercial Code, of European regulation No. 596/2014
of April 16, 2014 on market abuse and of AMF’s General Rule, to
purchase or sell Company’s shares in the context of the imple-
mentation of a buyback program. The maximum purchase price
has been fixed to €60 per share. The number of shares acquired
could not exceed 10% of the share capital. This authorization was
granted for a duration of 18 months and supplanted the previous
authorization of the Shareholders’ Meeting of June 29, 2017.
The description of the share buyback program implemented
by the Board of Directors’ meeting of July 18, 2019, pursuant to
the authorization granted by the Shareholders’ Meeting can be
consulted on the website.
Cancellation of shares for the financial
year ended December 31, 2019
In 2019, ESI Group did not cancel any shares.
Assignments or transfers of shares for
the financial year ended December 31, 2019
In 2019, ESI Group distributed 10,667 shares under its free share
plans.
Liquidity contract
Shares buyback for the financial year
ended December 31, 2019
A liquidity contract was concluded with CIC in 2009 and remains
in force. The monthly report on the liquidity contract is also
available on the website.
In 2019, ESI Group did not buy back any shares.
Table summarizing the operations of the company on its own shares during its financial year
ended on December 31, 2019
Date of authorization by the General Meeting
Resolution 14 of July 18, 2019
Date of expiration of the authorization
January 17, 2021
Ceiling on authorized buybacks
Maximum purchase price per share
Authorized purposes
10% of share capital at the transaction date
€60
Cancellation
Share purchase options
Free share grants
Liquidity and market-making
External growth
Board of Directors’ meeting at which buybacks were implemented
July 18, 2019
Number of shares purchased in 2019
Number of shares cancelled in 2019
Number of treasury shares at December 31, 2019(1)
Percentage of capital held by the Company at December 31, 2019
(1) Excluding liquidity contract.
0
0
377,691
6.3%
188
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
INFORMATION ON THE COMPANY ANd sHARE CAPITAl
ESI shares – market
8.3. EsI sHAREs – MARKET
8.3.1. sHARE PRICE TRENds
The chart below shows how ESI Group’s stock price has performed relative to the CAC Mid & Small and CAC 40 index since February 1,
2017 until the end of March 2020:
150
125
100
4,794.58
75
11,880.7
€47.50
50
25
0
(Basis 100)
4,396.12
9,485.83
€28.20
March-17
May-17
July-17
Aug.-17
Nov.-17
Jan.-18
March-18
May-18
July-18
Aug.-18
Nov.-18
Jan.-19
March-19
May-19
July-19
Aug.-19
Nov.-19
Jan.-20
March-20
ESI Group
CAC 40
CAC Mid & Small
The chart below shows how ESI Group’s stock price has performed since its initial public offering on July 6, 2000 until the beginning
of April 2020 and the daily volume of transactions:
(In €)
70
60
50
40
30
€26.72
20
10
0
(Number of shares)
350,000
300,000
250,000
€28.20
200,000
150,000
100,000
50,000
0
July
2000
July
2001
July
2002
July
2003
July
2004
July
2005
July
2006
July
2007
July
2008
July
2009
July
2010
July
2011
July
2012
July
2013
July
2014
July
2015
July
2016
July
2017
July
2018
July
2019
ESI Group stock price
Daily volume
189
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4
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6
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8
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT8 8
INFORMATION ON THE COMPANY ANd sHARE CAPITAl
ESI shares – market
CONTENTS
8.3.2. sURVEY OF IdENTIFIABlE BEARER sHAREs
On March 31, 2020 the Group carried out a survey of identifiable bearer shares (TPI: titres au porteur identifiable) on 99% of its free
float (excluding treasury shares) which could be compared to the one realized on April 25, 2019.
French institutional investors
Foreign investors
Individual shareholders
Companies
At March 31, 2020
At April 25, 2019
As % of
free float
As % of
share capital
As % of
free float
As % of
share capital
28.2%
65.6%
6%
0%
15.4%
36%
3.9%
0%
33.9%
58.6%
7.5%
0%
18.6%
32.2%
4.1%
0%
This analysis points to a strong increase in foreign shareholders. which currently account for 36% of share capital. compared to 32.2%
last year.
190
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
9
ADDITIONAL
INFORMATION
9.1. PERSONS RESPONSIBLE
FOR THE UNIVERSAL REGISTRATION DOCUMENT
9.1.1. Person responsible for the content
of the Universal Registration Document
9.1.2. Person responsible for the financial information
9.2. STATUTORY AUDITORS
Statutory Auditors
Alternate Auditors
9.3. DOCUMENTS AVAILABLE TO THE PUBLIC
192
192
192
192
192
192
193
In accordance with the resolution of the General Meeting of July 18, 2019, the Group now closes its financial
statements at 31 December of each fiscal year.
1
2
3
4
5.
6
7
8
9
ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT
191
191
ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT 9
ADDITIONAL INfOrmATION
Persons responsible for the Universal Registration Document
CONTENTS
9.1. PErSONS rESPONSIBLE fOr THE UNIVErSAL
rEGISTrATION DOCUmENT
9.1.1. PErSON rESPONSIBLE fOr THE CONTENT
Of THE UNIVErSAL rEGISTrATION DOCUmENT
Paris, April 23, 2020.
Mrs. Cristel de Rouvray, Chief Executive Officer of ESI Group:
“I certify, after having taken all reasonable care to ensure that
effect, that the information contained in the Universal Registration
Document are, to the best of my knowledge, in accordance with
the facts and does not include any omissions that might alter
the contents thereof.
I hereby certify that, to the best of my knowledge, the financial
statements have been prepared in accordance with applicable
accounting standards and give a true and fair view of the assets,
liabilities, financial position and results of the Company and all
consolidated companies making up the Group, and that the attached
management report presents a fair picture of the business trends,
results and financial position of the Company and all consolidated
companies making up the Group, as well as a description of the
main risks and uncertainties these entities face.”
9.1.2. PErSON rESPONSIBLE fOr THE fINANCIAL INfOrmATION
Mrs. Cristel de Rouvray, Chief Executive Officer of ESI Group.
9.2. STATUTOrY AUDITOrS
STATUTOrY AUDITOrS
/ PricewaterhouseCoopers Audit
/ Ernst & Young Audit
63, rue de Villiers
92200 Neuilly-sur-Seine
Represented by Mr. Thierry Charron.
Date of appointment: Combined General Meeting of July 22, 2015
for a term of six years.
Term of office: Annual General Meeting called to approve the
financial statements for the year ended December 31, 2020.
PricewaterhouseCoopers Audit is a member of the Versailles
Regional Association of Statutory Auditors.
Faubourg de l’Arche
1/2, place des Saisons
92400 Courbevoie Paris-La Défense 1
Represented by Mr. Frédéric Martineau.
Date of appointment: Combined General Meeting of July 22, 2015
for a term of six years.
Term of office: Annual General Meeting called to approve the
financial statements for the year ended December 31, 2020.
Ernst & Young Audit is a member of the Versailles Regional
Association of Statutory Auditors.
ALTErNATE AUDITOrS
/ Auditex
Faubourg de l’Arche
11, allée de l’Arche
92037 Paris-La Défense Cedex
Represented by Mr. Emmanuel Roger.
/ Mr. Yves Nicolas
63, rue de Villiers
92200 Neuilly-sur-Seine
Date of appointment: Combined General Meeting of July 22, 2015
for a term of six years.
Date of appointment: Combined General Meeting of July 22, 2015
for a term of six years.
Term of office: Annual General Meeting called to approve the
financial statements for the year ended December 31, 2020.
Term of office: Annual General Meeting called to approve the
financial statements for the year ended December 31, 2020.
192
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
ADDITIONAL INfOrmATION
Documents available to the public
9.3. DOCUmENTS AVAILABLE TO THE PUBLIC
All corporate documents related to the Company can be consulted
at the Company’s headquarters, located at 100-102, avenue de
Suffren in Paris (75015), France, and on its website: www.esi-group.
com starting from April 23, 2020. The website provides both in
French and English a detailed description of the Group and its
business activities, as well as financial information for shareholders
and investors, including all mandatory information required
under the European Transparency Directive. It provides access
to Universal Registration Documents, financial reports, annual
and interim consolidated financial statements, press releases,
regulated information, the articles of association, shareholders
letters and guides and stock prices.
Following the Transparency Directive adopted in 2007, ESI Group
has decided to use a reporting service licensed by the French
Financial Markets Authority (AMF). This allows the Group to
provide proof of compliance with legal reporting requirements.
Lastly, if you have any questions regarding this Universal Registration
Document, please contact:
ESI Group
Florence Barré
100-102, avenue de Suffren
75015 Paris
investors@esi-group.com
Shan
Florent Alba
30, rue des Mathurins
75008 Paris
esigroup@shan.fr
1
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3
4
5.
6
7
8
9
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ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT9 ADDITIONAL INfOrmATION
Universal Registration Document cross-reference tables
CONTENTS
CrOSS-rEfErENCE TABLES
UNIVErSAL rEGISTrATION DOCUmENT CrOSS-rEfErENCE TABLES
These cross-reference tables include the headings provided in Appendices I and II of the Commission Delegated Regulation (EU)
2019/980 of 14 March 2019 and refer to the pages of this Universal Registration Document where the information relating to each of
these headings is mentioned.
Information
1. Persons responsible, third party information, expert reports
and approval of the competent authority
2. Statutory Auditors
3. Risk factors
4. Information concerning the issuer
5. Business overview
5.1. Main activities
5.1.1. Description of operations carried out by the issuer and its principal business activities
5.1.2. Significant new products or services launched on the market
5.2. Main markets
5.3. Important events in the activities’ development
5.4. Strategy and objectives
5.5. Level of dependence of the issuer on patents or licenses, industrial, commercial or financial
contracts or new manufacturing processes
5.6. Competitive position
5.7. Investments
6. Flowchart
6.1. Brief description of the Group and the issuer’s position within the Group
6.2. List of significant subsidiaries
7. Review of financial position and results
7.1. Financial situation
7.2. Operating income
7.2.1. Major factors
7.2.2. Reasons for major changes in net revenues or income
7.2.3. Strategy or factor of a governmental, economic, budgetary, monetary nature or policy having
materially influenced or potentially influencing, directly or indirectly, on the issuer's operations
8. Cash flows and capital
8.1.
Information on the issuer’s capital
8.2. Source and amount of the issuer’s cash flows and descriptions of these cash flows
8.3. Information on the financing requirements
8.4. Restriction on use of capital
8.5. Information concerning anticipated sources of funds
9. Regulatory Environment
10. Information on business trends
11. Profit forecasts or estimates
12. Administrative, management and supervisory bodies and executive management
12.1. Administrative and management bodies
12.2. Conflicts of interest within administrative, management and supervisory bodies
Page(s)
192
192
62 & seq.
182
14-15
14-15
14
15
16-17
N/A
15-16
N/A
16-17
25
21
22
22, 114 & 164-165
95 & seq.
95 & seq.
95 & seq.
95 & seq.
95 & seq.
62 & seq.
106, 133
107
127 & seq.
N/A
N/A
98
101
N/A
27
29 to 31
36
194
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
ADDITIONAL INfOrmATION
Universal Registration Document cross-reference tables
Information
13. Compensation and benefits
13.1. Compensation paid to corporate officers
13.2. Total amounts set aside or accrued to provide pension, retirement or similar benefits
14. Practices and procedures of the administrative and management bodies
14.1. End date of current terms of office
14.2. Service agreements
14.3. Information on the Audit Committee and the Compensation Committee
14.4. Declaration of compliance with the corporate governance standards
14.5. Potential significant impacts on corporate governance
15. Headcount
15.1. Number of employees
15.2. Profit-sharing and stock options
15.3. Description of any employee profit-sharing agreements involving the issuer’s capital
16. Key shareholders
16.1. Threshold crossing
16.2. Different voting rights
16.3. Control of the Company
16.4. Description of any agreements, known to the Company, the performance of which may result in a
change in control of the Company at a later date
17. Related party transactions
18. Financial information concerning the issuer’s assets and liabilities, financial position and performance
18.1. Historical financial information
18.2. Interim financial information and others
Page(s)
41 & seq.
41 to 56
43
29 to 40
29 & 32
56
39-40
28
32-33
76 & seq.
78 & 79
45 to 49
47 to 49
185-187, 190
187
183
185
59, 188
56, 136
95 to 170
95 to 170
N/A
18.3. Auditing of historical annual financial information
138 to 142, 166 to 170
18.4. Proforma financial information
18.5. Dividend payout policy
18.6. Legal and arbitration proceedings
18.7. Material changes in the financial position
19. Additional information
19.1. Legal capital
19.2. Instrument of incorporation and articles of association
20. Key contracts
21. Documents available to the public
145
N/A
182
N/A
191
184
58-59, 182 to 184
9, 18, 19, 101, 121
193
195
1
2
3
4
5.
6
7
8
9
ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT ADDITIONAL INfOrmATION
Annual financial report cross-reference table
CONTENTS
ANNUAL fINANCIAL rEPOrT CrOSS-rEfErENCE TABLE
For ease of reference, the following cross-reference table facilitates identification of information making up the annual financial report,
the publication of which is required under Article L. 451-1-2 of the French Financial and Monetary Code and Article 222-3 of French
Financial Markets Authority (AMF) General Regulations.
Information
◆ Person responsible for the document
◆ Annual financial statements of ESI Group
◆ Consolidated financial statements of ESI Group
◆ Statutory Auditors’ report on the annual financial statements
◆ Statutory Auditors’ report on the consolidated financial statements
◆ Management report
◆ Report of the Board of Directors on the corporate governance
Page(s)
192
143 to 165
104 to 137
166 to 170
138 to 142
See cross-reference table below
See cross-reference table below
mANAGEmENT rEPOrT CrOSS-rEfErENCE TABLE
For ease of reference, the following cross-reference table facilitates identification of information required in the Management report
pursuant to Articles L. 225-100 et seq., L. 232-1 et seq. and R. 225-102 et seq. of the French Commercial Code.
Information
Group position and business
◆ Objective and exhaustive analysis of development of the Group’s business, performance and
financial position
◆ Key events between the closing date and the date of the Management report
◆ Description of main risks and uncertainties and indication regarding
the use of financial instruments by the Group
◆ Foreseeable development of the Group’s situation and future outlook
◆ Research and Development activity
Shareholding and share capital
◆ Structure and development of the Group’s share capital
◆ Status of employee share ownership
◆ Acquisition and disposal of own shares by the Group
◆ Declarations of ownership thresholds crossed
◆ Shareholder agreements corresponding to securities comprising Company’s share capital
Environmental, social and societal information
◆ Environmental information
◆ Social information
◆ Societal information
Other information
◆ Information regarding supplier payment terms
◆ Table summarizing the results of the past five financial years
Internal control and risk management procedures
◆ Control environment
◆ Organization of internal control
◆ Risk management
Page(s)
96 to 99
137
127 & seq.
64, 101
98-99
184
185
188
187
187
87 to 91
76 to 82
82 to 84
100
102
65 to 68
65-66
67-68
68
196
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
ADDITIONAL INfOrmATION
Corporate governance report cross-reference table
COrPOrATE GOVErNANCE rEPOrT CrOSS-rEfErENCE TABLE
For ease of reference, the following cross-reference table facilitates identification of information required in the corporate governance
report pursuant to Articles L. 225-37, L. 225-37-2 to L. 225-37-5 of the French Commercial Code.
Information
◆ Executive management choices
◆ Limits on the powers of the Chief Executive Officer and Chief Operating Officers
◆ Composition of the Board of Directors, conditions for preparing
and organizing the work of the Board of Directors
◆ List of all positions held in all companies by each corporate officer during the financial year
◆ Compensation and benefits paid during the financial year to each corporate officer
◆ Report on the principles and criteria for attributing and distributing compensation
payable to executive corporate officers in respect of their term
◆ Agreements signed between a Director or a major shareholder and a subsidiary
◆ Grant and conservation of stock options to corporate officers
◆ Grant and conservation of free shares to corporate officers
◆ Table summarizing currently valid delegations granted by the Shareholders’ Meeting
◆ Factors that may have an impact in the event of a public offering
Page(s)
29
29-30
31 to 40
34 to 36
41 to 56
42, 54 -56
60
45, 47-48
46 & 49
57-58
59
1
2
3
4
5.
6
7
8
9
197
ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT ADDITIONAL INfOrmATION
Sustainable development and Corporate Social Responsibility cross-reference table
CONTENTS
SUSTAINABLE DEVELOPmENT AND COrPOrATE SOCIAL
rESPONSIBILITY CrOSS-rEfErENCE TABLE
For ease of reference, the following cross-reference table facilitates identification of environmental, social and societal information
making up the report on sustainable development and Corporate Social Responsibility, provided in accordance with Articles L. 225-102-1,
R. 225-105 and R. 225-105-1 of the French Commercial Code.
SOCIAL INFORMATION
Employment
◆ Total workforce and breakdown by gender, age and geographic area
◆ Recruitments and dismissals
◆ Compensation and changes in compensation over time
Work organization
◆ Work schedules
◆ Absenteeism
Labor relations
◆ Organization of employer-employee dialogue
◆ Summary of collective agreements
Health and safety
◆ Workplace health & safety conditions
◆ Summary of agreements signed with trade unions or employee representatives
regarding workplace health and safety
◆ Workplace accidents, in particular frequency and severity, as well as occupational illnesses
Training
◆ Training policies implemented
◆ Total number of training hours
Equal treatment
◆ Steps taken in support of gender equality
◆ Steps taken in support of employment and inclusion of people with disabilities
◆ Anti-discrimination policy
Promotion and observance of the fundamental conventions of the International Labor Organization
◆ Observance of freedom of assembly and the right to collective bargaining
◆ Elimination of discrimination in employment and occupation
◆ Elimination of forced or mandatory labor
◆ Effective elimination of child labor
SOCIETAL INFORMATION
Territorial, economic and social impact of the Company’s activity
◆ In terms of employment and regional development
◆ On neighboring or local communities
Relations with persons or organizations with an interest in the activity of the Company,
including NGOs, educational institutions and local communities
◆ Terms of dialog with such persons or organizations
Subcontracting and suppliers
◆ Consideration of social issues in the purchasing policy
◆ Consideration of environmental issues in the purchasing policy
◆ Amount of subcontracting and consideration of the social and environmental responsibility
of suppliers and subcontractors in relationships with them
198
Page(s)
78 to 80
80-81
82
81
N/A
81
81
81-82
81
N/A
77
73
79-80
80
79-80
N/A
79-80
78
80 & 85
84 to 87
84 to 87
84 to 87
N/A
N/A
82 to 84
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group CONTENTS
ADDITIONAL INfOrmATION
Sustainable development and Corporate Social Responsibility cross-reference table
Fair trade practices
◆ Actions taken to prevent corruption
◆ Measures promoting the health and safety of consumers
ENVIRONMENTAL INFORMATION
Overall environmental policy
◆ Organization of the Company for the consideration of environmental issues
and environmental evaluation or certification processes, where applicable
◆ Employee training and information on environmental protection
◆ Resources devoted to preventing environmental risks and pollution
◆ Amount of provisions and guarantees for environmental risks
Pollution
◆ Prevention, reduction or remediation of discharges with serious environmental impact on the air, water or soil
◆ Consideration of noise and any other form of pollution specific to an activity
Circular economy
◆ Waste prevention and management:
• prevention, recycling, reuse and other waste recovery and elimination measures
• measures to fight food waste
◆ Sustainable use of resources:
• water consumption and supply in relation to local constraints
• consumption of raw materials and measures to enhance efficiency
• energy consumption, measures to improve energy efficiency and use of renewable energies
• land use
Climate change
◆ Significant factors of greenhouse gas emissions caused by the Company’s activity,
particularly through use of the goods and services produced by the Company
◆ Adapting to the impact of climate change
Protecting biodiversity
◆ Measures to preserve or enhance biodiversity
Investor Relations
Corinne romefort-régnier & florence Barré
100-102, avenue de Suffren – 75015 Paris – France
Phone: + 33 (0)1 49 78 28 28
investors@esi-group.com
1
2
3
4
5.
6
7
8
9
Page(s)
85
83 to 85
87 & seq.
88 & seq.
87-88
N/A
88 & seq.
87 & seq.
91
N/A
91
90-91
89-90
N/A
88-89
N/A
N/A
199
ESI Group • 2019 UNIVERSAL REGISTRATION DOCUMENT CONTENTS
KEYWOrDS Of THE 2019 UNIVErSAL rEGISTrATION DOCUmENT
Keywords
Aeronautics
Aerospace
Automotive
Board of Directors
Business model
Capital
Civil Society
Clients
Commercialization
Communication
Page(s)
Keywords
18
18
18
31
Innovative offers
Intellectual property
Investment
Investors
3, 6, 14 & seq.
ISO 27001
184
ISO 9001
72, 84
Legal risks
18, 19, 82-84
Licenses
14, 23, 65, 96
Lifecycle
77, 78, 82
Maintenance
Page(s)
5, 14-17
7, 63, 66, 99
25
1, 40, 84, 193
64, 83, 85
7, 64, 68, 83
7, 63
14, 15, 23, 97
6, 14-16, 70
14-16, 98
Consolidated financial statements
103 & seq.
Manufacturers
2, 6, 14-19, 82-84
Crash-test
CSR
Digital simulation
Digital transformation
Distribution network
Diversity
EBITDA/EBIT
Ecosystem
Electric vehicle
Employees
Energy
Engineering studies
Environnement
Ethical charter
Euronext Paris
Field services
Financial results
Financial risks
Gaïa Index
Governance
Ground transportation
Group Executive Committee (GEC)
Human resources
Human-centric
Hybrid TwinTM
IC.IDO
Industrial sectors
Industry of the Future
Innovation
20, 88
Manufacturing
69
Manufacturing industries
15, 20, 182
Partnership
23
19
Performance
Physical simulation
10, 31, 72-78
Physics of materials
4, 23, 95 & seq.
Pre-Certification
10, 19, 69 & seq.
Pre-Experience
88
Product Lifecycle Management (PLM)
76-82
18
15
87-90
84
12
15
100
7, 130
75
8, 27-60, 84
5, 6, 16, 18, 63, 70
8, 30
40, 62, 66, 76
6, 16
3, 5, 9, 14,
16, 17, 64, 83, 88
Product Performance
LifecycleTM (PPL)
Quality
R&D
Real time
Revenue
Scientific literature
Services
Smart Manufacturing
Software
Stock market information
Strategic risks
Strategic vision
Strategy
Suppliers
Sustainable development
Threshold crossing
14-19, 87-88
5, 18
19, 82-84
6, 14, 16, 96
88
14-16
3, 16, 83, 97
3, 16, 97
6, 16
6, 14, 16,
64, 70
64, 68, 83
5, 62, 98, 125
14, 16
23
5
15
6, 16, 97
14, 15, 19, 63, 70, 99
12, 189
7, 62
15
14, 96, 101
19, 83-84
69 & seq.
187
14, 20, 87
Transformation
2, 16, 20, 76, 82, 101
6, 18
Value creation
16, 86-87
Virtual Prototyping
15, 18, 19, 21,
62, 64, 82-84
6, 70
14, 71
200
2019 UNIVERSAL REGISTRATION DOCUMENT • ESI Group Design and production: Ruban Blanc
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French limited company (société anonyme)
with a share capital of €18,055,476
Registered office:
100/102, avenue de Suffren, 75015 Paris – France
Paris Trade and Company Register (RCS) number: 381 080 225
Tel.: +33 (0)1 41 73 58 00