2021
UNIVERSAL
REGISTRATION
DOCUMENT
Including the annual financial report
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
2
5
3
4
11
12
13
MANAGEMENT REPORT
5.1.
BUSINESS ACTIVITIES DURING
THE 2020 FINANCIAL YEAR
5.2. OUTLOOK
5.3.
TABLE SUMMARIZING THE RESULTS
OF PAST FINANCIAL YEARS
6
REPORT ON CORPORATE GOVERNANCE
15
FINANCIAL STATEMENTS
2.1. GOVERNANCE CODE
FUNCTIONING OF THE GENERAL MANAGEMENT
BOARD OF DIRECTORS
COMPENSATION PAID TO THE DIRECTORS
AND THE MANAGEMENT
ADDITIONAL INFORMATION IN RESPECT
OF CORPORATE GOVERNANCE
STATUTORY AUDITORS’ REPORT
ON REGULATED AGREEMENTS
2.2.
2.3.
2.4.
2.5.
2.6.
3
RISKS AND RISK MANAGEMENT
RISK FACTORS
INTERNAL CONTROL AND RISK MANAGEMENT
PROCEDURES
3.1.
3.2.
4
STATEMENT ON EXTRA-FINANCIAL
PERFORMANCE
4.1.
4.2.
4.3.
4.4.
4.5.
4.6.
4.7.
4.8.
ESI – THE PRODUCT PERFORMANCE LIFECYCLE
COMPANY
ESI – A COMMITTED GROUP
BEING A COMMITTED EMPLOYER
BEING AN OUTSTANDING PARTNER
BEING AN ETHICAL AND COMMITTED COMPANY
82
BEING AN ENVIRONMENTALLY FRIENDLY PLAYER 84
EUROPEAN TAXONOMY
89
REPORTING
91
16
17
20
36
49
54
55
56
58
63
64
65
70
80
CONSOLIDATED FINANCIAL STATEMENTS
ESI GROUP ANNUAL FINANCIAL
STATEMENTS
6.1.
6.2.
7
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
8
INFORMATION ON THE COMPANY
AND SHARE CAPITAL
INFORMATION ON THE COMPANY
INFORMATION ON THE COMPANY’S CAPITAL
ESI SHARES – MARKET
8.1.
8.2.
8.3.
9
ADDITIONAL INFORMATION
9.1.
PERSONS RESPONSIBLE FOR THE
UNIVERSAL REGISTRATION DOCUMENT
9.2.
STATUTORY AUDITORS
9.3. DOCUMENTS AVAILABLE TO THE PUBLIC
9.4.
INFORMATION INCLUDED BY REFERENCE
CROSS-REFERENCE TABLES
KEYWORDS OF THE 2021 UNIVERSAL
REGISTRATION DOCUMENT
95
96
100
100
101
102
142
169
171
175
176
177
178
180
186
187
188
188
189
189
190
196
This Universal Registration Document was filed on April 11, 2022 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 Universal Registration Document is available on ESI Group’s website (www.esi-group.com) and on the AMF’s website (www.amf-france.org).
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.
French and English copies of this document are available free of charge from ESI Group (the “Company” or the “Group”) – 3 bis rue Saarinen, 94150 Rungis, France.
CONTENTS
SHAREHOLDERS MESSAGES
SHAREHOLDERS
MESSAGES
ALEX DAVERN’S MESSAGE
Chairman of the Board of Directors
ESI GROUP: New Core Strategic Vision to drive
growth and new governance in line with the
best market standards
2021 was a foundational year for ESI. It was marked by the
introduction of new Core Strategic Vision for growth,
the
a profound governance evolution and also by
communication of its first publicly shared three-year plan.
The Group led by Cristel de Rouvray and her Leadership
Team demonstrated their vision for future growth and
profitability and their ability to lead and transform this
company. The 2021 financial results released in March 2022
validated this motion. I thank Cristel, her team, and all
employees for this performance in 2021.
When joining the group’s Board of Directors as Chairman a
year ago, I was convinced by the value of this Group and that
by releasing some historical constraints, Cristel and her team
would be able to transform it into a best-in-class software
company.
To unlock this value, we needed to focus our innovation and
modernize our governance, and that’ what we did.
A Clear and focused Core Strategic Vision (CSV)
As Cristel discusses below ,she and the team introduced the
new CSV to focus our innovation and drive the next phase of
ESI’s growth.
No majority shareholder
In May 2021, the legacy founders shareholders’ agreement
was terminated by its different stakeholders. The Group no
longer has any majority shareholders.
Greater transparency
Continuing our
in
communication with its shareholders, the team unveiled the
first-ever communicated three-year strategic plan.
journey toward more transparency
An independent Board
Following the addition of both myself and Patrice Soudan, the
former CFO and Deputy CEO of Legrand, the Board of
Directors is now composed of seven Directors, including six
independent ones, and is led by a Non-Executive Chairman.
The interests of ESI Group’s stakeholders are now totally
aligned in support of the new Core Strategic Vision and I’m
convinced that the Group will unleash its full potential.
€136.6M
REVENUE
+4.6% cer
(constant exchange rate)
€12.7M
ADJUSTED EBIT (a)
9.6%
(b)
(a) Adjusted EBIT is a non-GAAP indicator based on EBIT (IFRS). Adjusted EBIT corresponds to EBIT before stock-based
compensation expenses, restructuring charges, impairment charges and amortization of intangibles charges related to
acquisition, the application of IFRS 16 standard on leases and other non-recurring items.
(b) Adjusted EBIT margin is calculated based on revenue excluding special projects (public grant for R&D projects).
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
1
CONTENTS
SHAREHOLDERS MESSAGES
CRISTEL DE ROUVRAY’S MESSAGE
Chief Executive Officer
2021, a turning point year
for ESI Group
“We have introduced our new Core
Strategic Vision to focus our innovation
and deliver new value to our customers:
‘To be a leading software partner
in selected virtual test markets,
by leveraging our predictive physics IP
and platform for chaining’.”
2021 was a turning point year for our Group.
The introduction of our new Core Strategic Vision is designed to
focus our innovation and deliver new value to our customers. ESI’s
CSV is:
“To be a leading software partner in selected virtual test markets,
by leveraging our predictive physics IP and platform for chaining.”
By focusing on our innovation on our core markets and by investing
to win we will strengthen our market position and accelerate our
growth by adding new value to our customers through integrating
previously siloed steps in the engineering workflow, to accelerate
our customers time to market. In addition, we are also globalizing
our distribution and executing in a more consistent fashion.
In 2021 we also successfully steered our company through a
governance change, announced our redefining three-year strategic
plan, and demonstrated considerable performance improvements.
We reignited growth (€136.6 million, +4.6% YoY at constant
exchange rate) and more than doubled our Adjusted EBIT margin
(from 4.5% to 9.6%). On this excellent foundation, we now enter
the 1st year of our “OneESI 2024 – Focus to grow” plan. Across the
globe, all our stakeholders are now experiencing the early benefits
of this significant change in our ability to focus and drive results.
I am confident in our ability to deliver our communicated multi-year
objectives and long-term value to our shareholders by repositioning
our Group.
We are entering a period of unprecedented change in our history,
driven and accelerated by our “OneESI 2024 - Focus to Grow” plan.
In 2022, we are becoming more global, more user-friendly, more
reliable, more ambitious, to address all the needs of our customers
to become one of their key software solutions partners.
Now more than ever, our talents are mobilized to deliver ESI
Group’s full value to industry.
Thank you to all our shareholders for their support and confidence.
They can count on our collective motivation and enthusiasm to
make ESI Group a reference in its sector.
2
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
1 THE
GROUP
1
4
4
5
7
9
10
10
11
12
12
12
13
1.1. ACTIVITIES, STRATEGY AND MARKETS
1.1.1. Main activities
1.1.2. Main markets
1.1.3.
Core strategic vision
1.1.4.
1.1.5.
A focused multi-horizon offer
Research and development (R&D) policy
1.1.6.
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
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
3
23456789 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”.
Founded in 1973, ESI Group envisions a world where Industry
commits to bold outcomes, addressing high stakes concerns –
impact, safety & comfort for consumers and
environmental
workers, adaptable and sustainable business models.
Acting principally in automotive & land transportation, aerospace,
energy and heavy industry, ESI is present in more than 20 countries,
employs around 1,200 people globally and reported 2021 sales of
€136.6 million.
ESI provides Virtual Prototyping software solutions anchored on
predictive physics modeling and its capacity to chain the physics
and its solutions to allow industries to make the right decisions at
the right time, while managing their complexity.
ESI is headquartered in France and is listed on compartment B of
Euronext Paris.
1.1. ACTIVITIES, STRATEGY AND MARKETS
1.1.1. Main activities
ESI’s core strategic vision is to be a leading software partner in
selected virtual test markets, leveraging its predictive physics IP and
platform for chaining.
ESI’s business model is based on software licensing with selected
consulting services. Its software enables reliable and predictive
simulation of the performance of products and industrial assets, the
identification of optimum manufacturing processes and the
development of solutions for real-time monitoring of product
ageing during use. At all these stages, ESI’s solutions help to
address the following complex equation: innovation, reduction of
production lead-time, control of environmental impact and cost
reduction.
1.1.1.1. Software Editor/Distributor
(Licensing activity)
Licenses business is the Group’s main activity, accounting for 81.5%
of revenue in 2021. 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 of ESI’s solutions mobilizes highly
qualified research engineers with expertise in multi-physics, multi-
materials and complex simulation methodologies. ESI Group’s
approach – to continuous technological improvement, performance
and disruption – requires research and development work carried
out by the Group’s Research & Innovation teams in situ or as part of
a partnership.
Software solutions are distributed worldwide. In 2021, distribution
subsidiaries directly managed 90.4% 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 as follows:
■ By contract type:
▪ Rental license – user license contract renewable annually and
including maintenance services; this type of contract is
predominant;
▪ Maintenance contract – maintenance includes updates and
technical support applicable as of the second year of a
perpetual
the second year,
maintenance revenue is recognized as software (maintenance)
revenue;
license contract. As of
▪ Paid-up license – long term license contract (paid-up licenses
for the duration of legal protection) including maintenance
services
(also named
Perpetual).
for renewable one-year periods
■ Or, according to criteria concerning new client purchases:
▪ “Repeat Business” includes contracts renewed by customers
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.
Annual (rental)
Licenses
Perpetual (paid-up)
Maintenance
Repeat Business
New Business
Renewal products
Add-on
New customers
New products
4
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
ACTIVITIES, STRATEGY AND MARKETS
THE GROUP 1
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 industries
(for example with Renault-Nissan, Volkswagen, or Honda in the
Automotive, Boeing or Safran in the Aeronautics).
This approach drives the sustainability of ESI Group’s business
model visible in its repeat business performance and its ability to
renew its contracts with its customers. In 2021, its repeat rate
is: 91%.
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 represents 18.5% of 2021 revenues,
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
already been proven
economic potential
that have
technologically viable. 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.
1
Services
Consulting
Others
Engineering studies
Field Services
Contracting
Special projects
1.1.2. Main markets
1.1.2.1. The Simulation & Analysis market
/ Market characteristics
ESI’s activity falls within the context of a major digitization of the
industry. Part of this trend, the Product Lifecycle Management (PLM)
sector is playing a key role.
fatigue analysis,
CIMdata describes the S&A segment as follow: Simulation & Analysis
includes a wide range of 0D/1D/2D/3D technologies such as
structural and
thermal analysis, dynamics,
acoustics, multi-body simulation, computational fluid dynamics,
materials characterization, systems modeling and simulation, design
optimization/DoE/robust design, simulation results visualization,
empirical data analytics, general math-based
calculations,
simulation process and data management, and others designed to
enable engineers to simulate real world functional behavior via
digital modeling and simulations to perform “what-if” scenarios,
explore and evaluate alternative design and technology concepts,
and gain deeper insight into system behavior during new product
development; perform final performance validation of the “as built”
product as well as to optimize the performance of products and
systems in real world operations (e.g., supporting digital twins).
The S&A segment, star of the PLM market for the last several years
is expected be one of the more rapidly growing segments within the
tools sector of PLM over the next five years ($12 billion in 2025 –
CAGR 10%).
Global product development & Manufacturing trends are making
simulation indispensable. It is the only way to enable the efficient
development of complex systems that combine software and real
industrial assets.
ESI’s solutions bring a considerable and fundamental improvement
in the decision-making process by allowing the physical properties
and behaviour of the materials to be realistically taken into account
in the digital model. Going beyond the CAD (computer-aided design)
phase of the PLM model, ESI Group’s CAE (computer-aided
engineering) solutions allow complete control over the performance
of products during their entire lifecycle (Product Performance
Lifecycle).
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
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23456789 1 THE GROUP
ACTIVITIES, STRATEGY AND MARKETS
CONTENTS
/ A market in strong consolidation
By CIMdata’s count there were 102 acquisitions during 2020 in the
PLM market, down slightly over 2019. Simulation and Analysis (S&A)
providers continued to acquire more physics to build out their
multiphysics capabilities:
■ Altair Engineering made five acquisitions, including newFASANT,
a specialist in technology for computational and high-frequency
electromagnetics; S&WISE Co. Ltd., a Seoul-based
leading
provider of polyurethane foaming simulation; Univa for HPC
management capabilities; Ellexus for I/O analysis tools; and M-
Base Engineering + software GmbH, an international supplier of
material information with a focus on plastics.
■ Ansys added two companies: Lumerical, a provider of photonic
design and simulation tools; and Analytical Graphics, Inc. (AGI) in
Q1, 2021, a provider of mission-driven simulation, modeling,
testing, and analysis software for aerospace, defense, and
intelligence applications.
■ Tech Soft 3D made two simulation-related acquisitions. Ceetron,
who offers 3D visualization technology for the CAE community;
and Visual Kinematics, a maker of DevTools, a suite of
component software development kits
for CAE
applications.
(SDKs)
/ ESI, in the heart of a competitive market
The complexity of the problems addressed by the Group, its long-
standing experience working closely with major
industrial
corporations,
research and
development, and the wide range of solutions it offers make it
difficult for any newcomers to enter its market.
investment
significant
its
in
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’s technologies draw on:
■ Its predictive physics IP;
■ Its capability to chain the different physics and solutions in order
to offer a differentiating value to its customers;
■ Highly skilled teams of researchers, whose specialized expertise
and reputation in the field of physical simulation are known.
Today, we cannot exclude, a priori, the arrival, as competitors in
ESI’s sector of intervention, of larger companies with greater
resources.
Given the considerable technical barriers that protect the Group’s
business, the arrival of new competitors could, in any event, only
take place in the context of a consolidation movement affecting the
sector. It would then be difficult for a new player in the sector to
rapidly build up, through company takeovers, a range of physical
simulation products as rich as that offered by ESI Group, and
offering the same predictive qualities recognized by major clients.
/ The need for a methodology disruption
Although the solutions developed by ESI 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 or heavy industry. This adds to the ESI’s solutions an
interactive decision-making space, in an immersive and real-time
virtual environment.
The Product Performance Lifecycle approach, which enables
manufacturers to develop a Hybrid Twin 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.
1.1.2.2. Geographic areas
Geographic areas are based on the economic breakdown of the
Company:
■ Americas;
■ Asia-Pacific;
■ Europe, Middle East and Africa.
Revenues
Europe, Middle East and Africa
Asia-Pacific
Americas
TOTAL
2021
(Jan. 1 – Dec. 31)
2020
(Jan. 1 – Dec. 31)
2019, 12-month comparable
(Jan. 1 – Dec. 31)
(In € thousands)
(In % of the total)
(In € thousands)
(In % of the total)
(In € thousands)
(In % of the total)
65,767
49,716
21,112
48.1%
36.4%
15.5%
62,598
50,103
19,867
47.2%
37.8%
15.0%
70,957
52,264
22,302
48.5%
36.2%
15.3%
136,595
100.0%
132,568
100.0%
146,223
100.0%
As in previous years, the Group maintained a strong international presence, with 87% of revenue generated outside France.
6
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
ACTIVITIES, STRATEGY AND MARKETS
THE GROUP 1
1.1.3. Core strategic vision
In October 2021, ESI Group announced a three-year strategic plan named “OneESI 2024 – Focus to Grow”. To increase its performance both in
term of revenue and in term of profitability, the Group built a self-help plan founded on the focus of its teams on core activities. To help in this
focus exercise, the Group unveiled a new Core Strategic Vision: “Being a leading software partner in selected virtual test markets, leveraging its
predictive physics IP and platform for chaining.”
1.1.3.1. A software partner for industry
for
its players. Draconian
The industrial market is deeply changing while new challenges
appear
regulations, disruptive
technologies (Artificial Intelligence, Big Data, Internet of Things…),
strong competition, shorten time to market, constrain industrial
players to be more demanding in terms of quality, reliability, safety,
production deadlines, and by the need to embrace environmentally
friendly manufacturing and production processes.
Well-aware of these challenges, ESI, as a leading software partner in
selected Virtual Test markets, empowers
industrials with
technological solutions that enable them to commit to outcomes.
By combining its chaining capabilities with its predictive physics
expertise, ESI helps customers develop virtual prototypes, thus
eliminating the need for physical testing and prototyping of
sub-assemblies during product design,
components and
manufacturing and maintenance.
Virtual reality technologies and Cloud/Saas availability significantly
increase the collaborative potential of ESI’s solutions, while
drastically reducing acquisition and ownership costs for companies.
By leveraging technologies such as Big Data, system modeling,
machine learning, and the Internet of Things (IOT), ESI’s solutions
can be integrated into an interactive, immersive, virtual decision-
making space in real time.
ESI’s solutions enable industry players to achieve their performance
and productivity objectives. More specifically, the Group’s know-how
enables its customers to meet the challenges of product pre-
certification, digitization of production lines, use of an operator-
centric approach, or predictability of product behavior and ageing,
even before design or upstream of decision-making represented
through its Hybrid Twin concept.
1.1.3.2. Selected virtual test markets
Focused on its customers’ needs, ESI has organized its solutions by
industry, prioritizing the four industrial sectors presented below:
/ The “Automotive & Land Transportation”
industry (Automotive, Busses, Truck,
Railway, etc.)
ESI has been supporting the automotive industry through its major
digital transformations since the 1980s, notably with the invention
of the virtual crash test carried out with a consortium of German car
manufacturers in 1985.
increase
they must
In the race to bring electric, autonomous and connected vehicles to
market, OEMs face a real challenge: to maintain profitability and
growth,
the existing
transportation paradigm while accelerating the time-to-market of
their new-generation concepts. Advanced simulation technologies
are already widely used in the industry. However, tasks to process
are still very complex to the point that more freedom and certainty
in vehicle development have become a competitive advantage.
the efficiency of
ESI supports players in this industry to help them:
■ Design, manufacture and assemble future mobility vehicles;
■ Meet their performance and quality goals with ever-shorter
production deadlines;
■ Guarantee passenger safety and comfort of and reducing vehicle
operation and maintenance costs.
Main customers: Alstom Transport, Daimler, FAW Group
Corporation, Fiat Chrysler Automobiles, Ford Motor Company,
General Motors, Gestamp Group, Honda, HKMC, Mercedes-Benz,
PSA, Renault-Nissan, Shanghai Automotive Industry Corporation,
TATA Group, Toyota, TRW Automotive, Volkswagen Group, Faurecia,
Volvo Group, Benteler, Autoliv, ZF, and Yanfeng.
/ The “Aerospace” industry
Over the past decade, aeronautical manufacturers had to face ramp
up challenge, doubling in few years the production rate for the best-
seller narrow-body aircraft segment. Although a deep digital
transformation have been engaged, achieving such ramp up was
achieved with an incremental approach mixing traditional legacy
with new paradigm. Covid pandemic had a strong impact on the
overall ecosystem, almost stopping
flight, production, even
engineering activity with a significant amount of cancellation
dropping down the OEM backlog. Digital transformation did
however not stop. OEM and their supply chain has benefitted from
the production downtime to refine their strategy and speed-up the
implementation of smart manufacturing and digital mindset.
In addition,
Industry bounce back natively goes
sustainability and climate neutrality become more than ever an
urgent matter that speed-up the engagement of several new
programs as it had never been the case in the past. ESI value
proposal is key to enable and support aerospace industry for this
new journey.
for digital.
Main customers: Airbus Group, Boeing, Bombardier, Embraer,
BAE, Rolls-Royce, Safran, Raytheon Technologies (Pratt & Whitney) ,
General Electric, Honeywell, United Engine Corporation, AECC, PCC,
ALCOA, NASA, Northrop Grumman, Lockheed Martin, Bell Flight,
Joby, Lilium.
1
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
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23456789 1 THE GROUP
ACTIVITIES, STRATEGY AND MARKETS
CONTENTS
/ The Heavy Industry
/ The “Energy” industry
From construction machinery to forestry machinery, agricultural
machinery, lifting and handling equipment and mining machinery,
including
the supply chain of primary metals and parts,
manufacturers of industrial machinery face many challenges related
not only to the design but also to the manufacturing and operations
of their products. Their goal is to provide safer, greener, and more
productive machines, controlling costs and lead times through
effective collaborative processes. ESI’s solutions for engineering and
manufacturing simulation covers well the needs related to this
industry, while committing to performance levels over the lifetime of
their products, even under the harshest operating conditions.
issues
financial
to managing
ESI’s customers in the energy and power sector face a number of
evolving challenges, ranging from resolving safety, environmental
and sustainability
risks and
strengthening technical requirements. Manufacturers must comply
with increasingly complex regulatory requirements while improving
operational efficiency. Solving
issues requires ad-hoc
technical modeling methodologies that must accurately address
operational and accidental events applicable to generation and
transmission facilities. Therefore, effective realistic modeling is
essential to remain competitive and requires a high level of
innovation.
these
For this sector, ESI works with its customers to help them:
In this sector, ESI supports its customers to help them:
■ Guarantee the safety and productivity of human source
operations during manufacturing and maintenance operations;
■ Ensure optimal operations of new facilities while controlling
costs and complying with safety standards;
■ Design safe, clean and efficient products aimed for the toughest
■ Manage profitability and plan the extension of the life cycle of
conditions;
operational installations;
■ Support the journey towards zero manufacturing defects and
■ Control dismantling costs.
zero interruption of operations.
Main customers: Komatsu, John Deere, Caterpillar, Cummins, Kion
Group, Baker Hughes, Sumitomo, ThyssenKrupp, Arcelor Mittal,
Nippon Steel.
Main customers: EDF, Farasis, Framatome, GDF, General Electric,
Japan Atomic Energy Agency, Samsung, Siemens.
In 2021, orders in the main industrial sectors above represented about 87% of software revenues, and broke down as follows:
62.1%
Automotive &
Land transportation
11.4%
Aerospace,
Defense & Naval
10.7%
Heavy Industry
3.1%
Energy
12.7%
Others
1.1.3.3. Two differentiators – predictive physics IP and platform for chaining
Focused on its customers’ needs, ESI has organized its solutions
by industry, prioritizing its differentiators:
■ Predictive physics
IP to give the Group’s customers the
confidence to replace a physical test with a virtual test.
■ Platform for chaining: ESI’s differentiated capability to chain
allowing the Company to give its customers the ability to connect
previously siloed elements on the simulation workflow brought
to life by a common user interface.
8
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
ACTIVITIES, STRATEGY AND MARKETS
THE GROUP 1
1.1.4. A focused multi-horizon offer
As part of its three-year plan, ESI is reshaping its offerings and
innovation by focusing and investing on its core business. To do so,
the Group is following three main principles:
/ Invest to win
R&D investments
■ Focus on the core;
■ Increase value;
■ Invest to win.
/ Focus on the core
The core strategic vision is helping the Group focus. It helped clarify
its core solutions and technologies. It will help ESI to invest
significantly in the most important and to reduce investment in
what is less important. It also implied end of life decisions for some
products where the Group is not in a position to win. At the same
time, the Group decided to open much more to the ecosystem and
partners to complete and strengthen its offering.
An offering divided into three main business lines:
■ Product Performance Simulation: 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.
■ Simulation of Smart Manufacturing processes: 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).
■ Simulation of Human Workflows: allows customers to
implement an operator centric approach to ensure the efficiency
and safety of assembly and maintenance operations.
/ Increase value
The Group is intended to better package its offer in order to deliver
more value to its customers, to answer their problematic rather
than selling technology while reducing the complexity for its
customers to purchase and combine its products. Historically, the
Group sold discrete products to
its customers which only
addressed one element of the workflow, for example: casting,
welding, vibro-acoustics, etc.
This approach clearly did not leverage its unique capability to chain
its predictive physics IP through the workflow. So, ESI has started
developing new industry solutions suited to more completely
address the challenges of its customers. These Industry solutions
are packaged specifically for that industrial workflow.
As introduced before, the objective of ESI Group’s with its “OneESI
2024 – Focus to Grow” is to focus on its core. It doesn’t imply to
stop investing. On the opposite, thanks to its core strategic vision,
the Group identified activities not aligned with its core and
redeployed these investments to better invest to win, to outpace
the competition in a selected market.
Part of its plan, the Group announced a redeployment of a
significant portion of its R&D investment to more valuable growth
opportunities. These actions will allow the Group to accelerate the
delivery of software to the customers in its core markets.
1
Research & Innovation
The Group is prioritizing its mid-term innovation on investments on
its core Hybrid Twin concept (enriching the existing knowledge
in
consolidated
its simulation tools with data and Artificial
in particular related to manufacturing problems
Intelligence),
(industry 4.0,
reduce scrap, energy usage, predictive
maintenance) and Asset Health monitoring (reduce maintenance,
warranty and operational cost). The value for the customer is to
continuously becoming safer, cleaner, and more productive.
to
The Group’s positioning is in progress with its world class research
&
the
development of ecosystems.
involve partnerships and
team and will
innovation
To ensure constant innovation, ESI also establishes partnerships
with several first-rate universities, technological institutes and
leading colleges, in 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
the École Nationale Supérieure des Arts et Métiers (ENSAM) and
Director of the Scientific Department and Chairman of the Scientific
Committee of ESI, received the Silver Medal of the French National
Centre for Scientific Research (CNRS) for his contribution to the
Center’s outreach and the advancement of research.
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
9
23456789 1 THE GROUP
ACTIVITIES, STRATEGY AND MARKETS
CONTENTS
1.1.5. Research and development (R&D) policy
The R&D policy is applied at different levels depending on the
maturity of the technologies and the target market:
■ In close collaboration with customers and users for existing
integrate
the
products
improvements and enhance
expectations of the installed base and to gain new customers;
product maintenance,
functionalities
to meet
ensure
to
■ By
industrializing technical and hardware
innovations, or
innovation in usage modes (model reduction, new generations
of processors, Cloud, etc.) in order to deliver new products that
meet a confirmed market need and to ensure faster adoption of
these products in an industrial environment;
■ Through research contracts with
industrial, academic and
institutional partners (academic chairs, European projects, co-
creation projects) in order to demonstrate the viability of new
technologies or the relevance of solutions in new application
areas or to meet new industrial requirements.
1.1.6. Ecosystem
Since the foundation of the Company, ESI Group developed strong
partnerships with the academic ecosystem. This strategy was not
applied similarly with the Simulation & Analysis ecosystem. The
industry’s needs evolved. All the different industrial players are now
tightening their supply chain and are looking for global solutions
with streamlined processes. Their suppliers need to develop
interoperable systems and solutions helping them to accelerate
their development and to reduce their costs.
Each of these R&D areas is supported by different departments
within the Group (products, innovation, Scientific Committee) and
corresponds to a level of investment adapted to each stage,
allowing to reduce risks through co-financing or the research tax
credit (CIR).
In addition, the teams adopt a dual specific/generic approach to
meet these different objectives:
■ Ensure the “genericity” of the product and its components to
cover multiple needs in multiple industrial segments;
■ Maximize synergies between products to facilitate the release of
new competitive and economical versions and minimize
maintenance efforts;
■ Ensure product competitiveness and productivity by targeting
specific high-potential business applications and solutions.
Aware of this trend, ESI Group integrated in its strategic plan the
clear objective to develop strategic partnerships with its ecosystem
in order to bring an integrated value proposition to its customers.
The Group develops partnerships with hardware suppliers, software
solution providers, leading industrial companies, and technological
and academic institutes alike.
10
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
HISTORY OF THE GROUP
THE GROUP 1
1.2. HISTORY OF THE GROUP
1973 to 1990
In 1973, Alain de Rouvray, 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.
1991 to 1999
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.
2000 to 2010
In July 2000, ESI Group launched an IPO, raising some €30 million.
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).
1
Meanwhile, ESI Group strengthened its international presence by opening subsidiaries in England, India, China, Italy,
Brazil, and Tunisia.
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 early 2017, ESI Group took over Scilab Enterprises, publisher of the Scilab open source analytical calculation
software.
These numerous acquisitions have allowed ESI Group to enrich its solution portfolio, putting forth a comprehensive
offering suited to the needs of industrial players.
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 while Alain de Rouvray remains non-executive Chairman of the Board
of Directors.
ESI continues its transformation journey with, in particular, its commercial focus and resource allocation plan,
announced in April 2019, aiming to develop specific industrial strategies by close cooperation with customers.
2011 to 2018
2019
2021
2021 was marked by two major evolutions for the Group: a governance one and a strategy one.
The governance:
As part of the evolution of its governance, ESI Board appointed Alex Davern as Chairman of the Board of Directors,
effective February 8, 2021, along other changes in the organization of the Board.
The strategy:
In October, ESI Group unveiled for the first time publicly a tree-year strategic plan “OneESI 2024 – Focus to Grow”
including mid-term forward-looking statement both for its revenue and its profitability.
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
11
23456789 1 THE GROUP
GROUP ORGANIZATION
CONTENTS
1.3. GROUP ORGANIZATION
1.3.1. Operational flowchart
As of the date of this Universal Registration Document, the Group’s operational flowchart was as follows:
ESI Group
CEO
Revenue
Generation
Product,
Innovation
& Industry Solutions
Software
Engineering
F&A &
Operations
Human
Resources
Corporate
Management
1.3.2. Legal flowchart
As of the date of this Universal Registration Document, the Group’s legal flowchart was as follows:
ESI GROUP SA
AMERICAS
ESI North America, Inc.
United States
(100%)
51%
ESI US R&D, Inc.
United States
(100%)
ESI South America
Comercio E Servicos
De Informatica Ltda
Brazil
(100%)
100%
49%
100%
EMEA
99.96%
100%
Engineering System
International SAS
France
(99.96%)
9.5%
ASIA-PACIFIC
ESI Software
Germany GmbH
Germany
(100%)
100%
ESI Japan, Ltd.
Japan
(100%)
100% 100%
ESI Group
Beijing Co., Ltd.
China
(100%)
ESI Services
Tunisie SARL
Tunisia
(100%)
90.5%
Engineering System
International GmbH
Germany
(100%)
Hankook ESI Co., Ltd.
South Korea
(100%)
100%
35%
AECC-ESI (Beijing)
Technology Co., Ltd.
China
(35%)
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%)
ESI Group Hispania s.l.
Spain
(100%)
100%
100%
ESI ITI GmbH
Germany
(100%)
ESI Italia s.r.l.
Italia
(100%)
100%
95%
Mecas ESI s.r.o.
Czech Republic
(95%)
ESI UK Ltd.
United Kingdom
(100%)
100%
99%
Calcom ESI SA
Switzerland
(99%)
OpenCFD Ltd.
United Kingdom
(100%)
100% 100%
ESI Nordics AB
Sweden
(100%)
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, 2021) in the notes to the consolidated financial statements.
12
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
In dissolution
process
% of holding
( )
% of control
CONTENTS
SELECTED FINANCIAL INFORMATION
THE GROUP 1
1.4. SELECTED FINANCIAL INFORMATION
This information are extracted from the consolidated financial statements.
2021: Strong performance improvements as foundation for the Group
OneESI 2024 strategic plan for higher growth and profitability
2021 results show that ESI Group continues delivering on its
commitments. FY21 marks the first significant improvement in
profitability, the result of actions initiated over a year ago while
reigniting growth.
ESI Group generated revenues at the top end of the range
communicated to the market
(between €133.5 million and
€136.5 million) at €136.6 million in 2021, up 4.6% at constant
exchange rate (cer). For licenses, repeat business (Renewals + Add-
ons) grew by 3.7% (cer) to €99.1 million and new business grew by
8.6% (cer). For services, consulting activity revenues increased by
9.6% cer at €24.8 million. Q4 revenues amounted to €30.6 million
(vs €29.9 million in 2020), up 2.2% cer, for an H2 growth of 5.8% cer.
The geographical breakdown of full-year revenues showed that all
regions grew: the EMEA region +4.5% (cer), Asia +2.7% (cer) and the
Americas +10% (cer). Asia and Americas were negatively impacted
by Forex (-3.5% for Asia and -3.7% for Americas).
In 2021, led by a renewed leadership team, ESI Group embarked on
its three-year strategic plan “OneESI 24 – Focus to Grow” by
initiating parallel and complementary projects aiming to transform
its operating model and practices. The Group continued investing in
talent, in its offerings, and its products within a healthy run-rate
framework to help drive cost reductions (headcount -6%, costs to
adjusted EBIT -2,3%). The growth of the topline of €4,0 million,
combined with costs reduction, led to an increase in Adjusted EBIT1
of €6,9 million.
Gross margin rate increased to 75.3% vs 74.5% in 2020 due to
higher licensing and consulting gross margins. In 2021, staff costs
decreased to €91.3 million vs €93.4 million last year. The Group
reduced its headcount as announced during its 2021 Investor’s
conference – from 1,217 (end of December 2020) to 1,144 (end of
December 2021).
In 2021, ESI Group demonstrated its capacity to improve its
financial situation. ESI Group controlled its costs, reduced its
financial debt (1) (from €24.9 million in 2020 to €12.5 million in 2021)
and significantly improved its gearing (net financial debt/Equity)
from 28.4% in 2020 to 17.2% in 2021.
The Group has significantly increased its cash position end of year
from €22.5 million to €30.3 million thanks to a substantial free cash
flow (2) of €10.9 million.
1
Revenue evolution
(In € millions)
________
132.6
23.4
136.6
25.2
+4.6% cer (a)
109.2
111.4
2020
2021
Licenses
Services
(a) Constant exchange rate.
(1) Gross financial debt retreated from available cash.
(2)
Free cash flow is composed of net cash margin generated from operating activities, change in working capital and capital expenditures.
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
13
23456789 1 THE GROUP
SELECTED FINANCIAL INFORMATION
CONTENTS
Adjusted EBIT (a)
(In € millions and % of revenue)
________
Gross margin
(In € millions and % of revenue)
________
12.7
98.7
102.9
5.8
+134.1% cer (b) (c)
9.6%
4.5%
74.5%
+6.0% cer (a)
75.3%
2020
2021
2020
2021
(a) Adjusted EBIT is a non-GAAP indicator based on EBIT (IFRS). Adjusted EBIT
corresponds to EBIT before stock-based compensation expenses, restructuring
charges, impairment charges and amortization of intangibles charges related
to acquisition, the application of IFRS 16 standard on leases and other non-
recurring items.
(b) Adjusted EBIT margin is calculated based on revenue excluding special
projects (public grant for R&D projects).
(c) Constant exchange rate.
(a) Constant exchange rate.
Geographical revenue breakdown
________
15.5%
(vs. 15%)
Americas
36.4%
(vs. 37.8%)
Asia-Pacific
48.1%
(vs. 47.2%)
Europe,
Middle East
and Africa
14
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
2
REPORT ON
CORPORATE
GOVERNANCE
2
2.1. GOVERNANCE CODE
2.2. FUNCTIONING OF THE GENERAL MANAGEMENT
2.2.1.
Chief Executive Officer
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.
Leadership Team (ELT)
2.3. BOARD OF DIRECTORS
2.3.1.
2.3.2.
2.3.3.
2.3.4.
2.3.5.
2.3.6.
Composition of the Board of Directors
Offices of Directors
Operations of the Board of Directors
Specialized committees
Function of Observer
Relationships with shareholders
2.4. COMPENSATION PAID TO THE DIRECTORS
AND THE MANAGEMENT
2.4.1.
Compensation policy for corporate officers for 2022 financial year
2.4.2.
Compensation due to Directors for financial year
ended on December 31, 2021
2.4.3.
Compensation to the corporate officers
2.5. ADDITIONAL INFORMATION IN RESPECT
OF CORPORATE GOVERNANCE
2.5.1.
2.5.2.
2.5.3.
2.5.4.
Regulated agreements and commitments
and related party transactions
Control of current agreements concluded under normal conditions
Delegations of authority
Provisions of the articles of association concerning the participation
of shareholders in General Meetings
2.5.5.
Factors that may have an impact in the event of a public offering
2.6. STATUTORY AUDITORS’ REPORT
ON REGULATED AGREEMENTS
16
17
17
17
17
19
20
20
25
28
32
35
35
36
36
38
39
49
49
49
50
52
53
54
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
15
13456789 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. and L. 22-10-3 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
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 Officer are
referred to collectively in this Universal Registration Document by
the term “corporate officers”.
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 (the
exception of the family tie between Alain de Rouvray, Board
member, and Cristel de Rouvray, Board member and CEO, not
being relevant anymore following Alain de Rouvray’s resignation
as Board member on December 16, 2021);
■ No conflict 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 (as the shareholders’
agreement is no longer existing as described under section 8.2.5
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
Exceptions to the Middlenext Code
R.12. Presence condition for Directors’ remuneration
Department, Finance and Administration Department and Human
Resources Department.
This report was approved by the Board of Directors on February 28,
2022, after review and recommendation 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 28, 2022.
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 officer has been in
the last five years:
■ 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 28, 2022, the Company confirmed it
voluntarily referred to the Middlenext Code, which is available on
the website www.middlenext.com as revised on September 2021.
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 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:
Explanations
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 (see Directors’
compensation policy for 2022 under section 2.4.1.1).
16
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
REPORT ON CORPORATE GOVERNANCE 2
FUNCTIONING OF THE GENERAL MANAGEMENT
2.2. FUNCTIONING OF THE GENERAL MANAGEMENT
2.2.1. Chief Executive Officer
In accordance with the legal provisions and articles of association,
the Board of Directors decided on September 18, 2018 to separate
the functions of Chairman of the Board of Directors and Chief
Executive Officer (“CEO”): Cristel de Rouvray took function as CEO on
February 1, 2019.
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).
In accordance with Article L. 225-54-1 of the French Commercial
Code, Cristel de Rouvray does not hold any other position as CEO in
a public limited company with its registered office in France.
2.2.2. Chief Operating Officers
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. On the recommendation of the Nomination and Governance
Committee, the Board of Directors, which met on 28 February 2022,
decided to propose to the next General Meeting, called to approve
the accounts for the financial year ending 31 December 2021, that
the Company’s Articles of Association be amended to lower the age
limitation for the Chief Executive Officer to 65 years.
2
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.
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.
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.
As of the date hereof, no Chief Operating Officer has been
appointed following the end of Vincent Chaillou’s mandate as Chief
Operating Officer on 22 June 2021 (1).
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;
■ 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.
(1)
Vincent Chaillou, whose employment agreement had been suspended because of his mandate as Chief Operating Officer, went back to his employee’s missions from
23 June 2021 until 31 December 2021, date of his retirement.
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
17
13456789 2 REPORT ON CORPORATE GOVERNANCE
FUNCTIONING OF THE GENERAL MANAGEMENT
CONTENTS
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:
■ 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;
■ To enter into commercial contracts or agreements on behalf of
the Company within its commercial territory and authority;
■ 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
to establish or dissolve
in other companies,
positions
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.
18
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
REPORT ON CORPORATE GOVERNANCE 2
FUNCTIONING OF THE GENERAL MANAGEMENT
2.2.4. Leadership Team (ELT)
In the framework of ESI transformation plan, the Company modified
its management organisation to reflect the Group evolution.The
CEO is assisted by the Leadership Team for the Company’s daily
management pertaining to growth strategy.
The Leadership Team 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 Leadership Team 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.
As at the date of this Universal Registration Document, the
Leadership Team comprises the following members (by alphabetical
order):
Cristel de Rouvray
Chief Executive Offi cer
Yannick Charron
Vice-President
Human Resources
Ajit Gokhale
Executive
Vice-President Engineering
Francis Griffi ths
Executive
Vice-President Sales
2
Dominique Lefebvre
Senior Vice-President
Product Development
Planning
Emmanuel Leroy
Executive Vice-President
Product, Innovation &
Industry Solutions
Corinne Romefort-Régnier
Senior Vice-President General
Secretary & Governance
Mike Salari
Corporate Chief
Operating Offi cer,
Revenue Generation
Olfa Zorgati
Executive Vice-President
Operations &
Chief Financial Offi cer
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
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2 REPORT ON CORPORATE GOVERNANCE
BOARD OF DIRECTORS
CONTENTS
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
the Middlenext
accordance with
Code (R.11). Directors may be re-elected. They may be dismissed at
any time by the Ordinary General Meeting.
recommendations of
the
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.
On the recommendation of the Nomination and Governance
Committee, the Board of Directors, which met on February 28,
2022, decided to propose to the next General Meeting, called to
approve the accounts for the financial year ending on December 31,
2021, that the Company’s Articles of Association be amended to
lower the age limitation for the Chairman of the Board to 75 years.
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
its composition with regard to criteria such as
independence, age, gender or qualifications and professional
experience. In view of the evolution of the Board’s composition,
these diversity criteria will be decisive in the choice of candidates for
appointment.
in
20
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
REPORT ON CORPORATE GOVERNANCE 2
BOARD OF DIRECTORS
Overview of the Board of Directors during 2021
and until the date of this Universal Registration Document (a)
For a better understanding of the table below, it is reminded that Alain de Rouvray was Chairman of the Board of Directors until 8 February 2021, when
he was replaced by Alex Davern as Chairman of the Board of Directors.
Vincent Chaillou and Alain de Rouvray resigned as Directors respectively on August 26, 2021 and December 16, 2021.
________
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Members considered as non independent by the Board of Directors (see section 2.3.1.3)
Cristel de Rouvray
Alain de Rouvray (b)
Vincent Chaillou (c)
45 Å French-
American
P
ó
78 Ä French
72 Ä French P
P P 1999
2021
SM 2025
Technologies, Leadership,
CSR
1991
2015
SM 2023
P 2004
2020
SM 2024
Industries, Technologies,
Leadership, M&A
Industries, Technologies,
Leadership, M&A
2
Members considered as independent by the Board of Directors (see section 2.3.1.3)
Alex Davern
Yves de Balmann
Éric d’Hotelans
Véronique Jacq
Rajani Ramanathan
Patrice Soudan (e)
Observer
55 Ä Irish,
American P
75 Ä French,
American P
71 Ä French P P
54 Å French P P
55 Å American,
Indian P
63 Ä French P
P
ó
P
ó
P
P
P
ó
P 2021
2021
SM 2025
Finance, Leadership, M&A,
Listed company
2016
2020
SM 2024
Finance, Leadership, M&A,
Listed company
2008
2019
SM 2023
P 2014
2018
SM 2022 (d)
P P
P
ó
2014
2018
SM 2022 (d)
P
P 2021
2021
SM 2024
Technologies, Finance,
Leadership, Listed
company
Finance, M&A,
Listed company
Technologies, Business,
Leadership, CSR
Finance, Leadership,
Technologies, Listed
Company
Charles-Helen des Isnards
77 Ä French
2021
2021
SM 2022 (d)
Finance, M&A, Listed
company
60 years
AVERAGE AGE (f)
85.7%
INDEPENDENT
MEMBERS (f) (g)
3 WOMEN &
4 MEN (f) (h)
57.1%
DIVERSITY (f) (i)
SM: Shareholders’ Meeting.
ó Chairman.
P Member.
(a) Refer to the Universal Registration Document 2020 to see the composition of the Board of Directors from January 1st, 2021 until February 8, 2021. https://investors.esi-
group.com/governance/governance.
(b) Board Member who resigned with effect on December 16, 2021.
(c) Board Member who resigned with effect on August 26, 2021, including Committee mandates.
(d) Mandates proposed to be renewed at the Shareholders’ Meeting of June 28, 2022.
(e) Board member whose cooptation was decided by the Board of Directors on 3 September 2021, as a replacement for Vincent Chaillou, who had resigned.
(f)
(g) At the date of this Universal Registration Document and in accordance with the recommendation R.3 of the Middlenext Code which recommends that the Board include
At the date of this Universal Registration Document and excluding the Board Observer.
at least two independent Directors and sets the independence criteria.
In accordance with the Article L. 22-10-3.
Board members/Directors who are foreign nationals, at the date of this Universal Registration Document.
(h)
(i)
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
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2 REPORT ON CORPORATE GOVERNANCE
BOARD OF DIRECTORS
CONTENTS
2.3.1.1. Chair of the Board of Directors
Following the dissociation of functions decided by the Board of
Directors on September 18, 2018 and in accordance with Article 11
of the articles of association, the Board must appoint a Chairman
among its physical members, for a term which may not exceed his
mandate.
Thus, Alain de Rouvray was Chairman of the Board of Directors until
February 8, 2021. Since February 8, 2021, Alex Davern acts as
Chairman of the Board.
As part of his duties, the Chairman sets the agenda for the Board
Meetings. In accordance with the internal regulations, the Chairman
also chairs the Meetings of the Board, directs the deliberations and
ensures compliance with the internal regulations. The Chairman
also ensures the quality of discussions and the collegiality of
decisions. The Chairman maintains a regular dialogue with the CEO
and the Directors and ensures that they are able to fulfil their
mission. The Chairman may also request any document or
information that may help the Board of Directors prepare for its
meetings and ensures the quality of the information provided to the
Directors prior to their meetings.
2.3.1.2. Changes in the composition of the Board of Directors and its committees
Changes in the composition of the Board of Directors in 2021
and until the date of this Universal Registration Document
________
Board members
Alex Davern
Cristel de Rouvray
Charles Helen des Isnards
Vincent Chaillou
Patrice Soudan
Alain de Rouvray
Changes
Cooptation (a)
Nomination as Chairman of the Board
Renewal (b)
Renewal (b)
Resignation from his mandate as Director
Nomination as Board Observer
Resignation
Cooptation (c)
Revocation as Chairman of the Board of Directors
Resignation from his mandate as Director
Effective date
February 8, 2021
June 22, 2021
June 22, 2021
February 8, 2021
June 22, 2021
August 26, 2021
September 3, 2021
February 8, 2021
December 16, 2021
(a) Ratified by the General Meeting of 22 June 2021 for the remainder of the term of Charles Helen des Isnards’ mandate, i.e. until June 22, 2021rs’ Meeting.
(b) For a duration of four years, i.e until the General Meeting which will be held in 2025 to approve the accounts of the year 2024.
(c)
Following recommendation of the Nomination and Governance Committee, as a replacement for Vincent Chaillou, who resigned, for the remaining duration of his
mandate, i.e. until the General Assembly to be held in June 2024 to approve the accounts of the year 2023.
22
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
REPORT ON CORPORATE GOVERNANCE 2
BOARD OF DIRECTORS
Changes in the composition of the committees in 2021
and until the date of this Universal Registration Document
________
Board members
Changes
Charles-Helen des Isnards
Resignation
Committees
■ Strategic Committee
■ Audit Committee
■ Compensation Committee
■ Nomination and Governance
Committee
Alex Davern
Appointment
■ Nomination and Governance
Alain de Rouvray
Removal by
Board decision
Yves de Balmann
Cristel de Rouvray
Appointment
Appointment
Committee
■ Technology and Marketing
Committee
■ Strategic Committee
■ Strategic Committee
■ Nomination and Governance
Committee
■ Technology and Marketing
Committee
■ Compensation Committee
Committees’
chairmanship
Audit Committee
Effective date
Nomination and
Governance Committee
Strategic Committee
Nomination and
Governance Committee
February 8, 2021
2
Strategic Committee
February 8, 2021
Board decision
■ Nomination and Governance
Committee
Véronique Jacq
Patrice Soudan
Appointment
Board decision
Appointment
■ Technology & Marketing Committee
■ Strategic Committee
■ Compensation Committee
■ Technology and Marketing
Committee
Audit Committee
Audit Committee
Audit Committee
Alex Davern
Board decision
■ Audit Committee
September 3, 2021
February 8, 2021
December 31, 2021
September 3, 2021
January 1st 2022 for
Chairmanship
September 3, 2021
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
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2 REPORT ON CORPORATE GOVERNANCE
BOARD OF DIRECTORS
2.3.1.3. 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 analysed and determined at a Meeting of February 28, 2022, 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 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
Criterion 2 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 six independent Director out of seven, representing 85.7% of independence, largely above the one-
third of independence recommended by the Middlenext Code for a controlled company.
Director
Cristel de Rouvray
Alex Davern
Yves de Balmann
Éric d’Hotelans
Véronique Jacq
Rajani Ramanathan
Patrice Soudan
X: Not compliant.
✓: Compliant.
Criterion 1
Criterion 2
Criterion 3
Criterion 4
Criterion 5
X
✓
✓
✓
✓
✓
✓
X
✓
✓
✓
✓
✓
✓
X
✓
✓
✓
✓
✓
✓
X
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Classification chosen by the
Board of Directors
Non-independent
Independent
Independent
Independent
Independent
Independent
Independent
2.3.1.4. Balanced gender representation on the Board
At the date of this Universal Registration Document, the Board of Directors is composed of three women and four men.
24
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
REPORT ON CORPORATE GOVERNANCE 2
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.
Cristel de Rouvray
Ñ Board member
Ñ Chief Executive Officer
Ñ Chairwoman of the Strategic Committee
Date of birth: 10/15/1976
French, American
Shares held at December 31, 2021:
253,054 shares
Cristel de Rouvray is Chief Executive Officer since February 1, 2019.
Cristel de Rouvray joined the ESI Group Board in 1999. She 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.
2
Current offices held outside the Group:
Ñ Director of Open Foam Foundation
Expired offices held over the past five years:
Ñ None
Alex Davern
Ñ Independent Board member
since February 8, 2021
Ñ Chairman of the Board of Directors
Ñ Chairman of the Nomination and
Governance Committee
Date of birth: 09/23/1966
Irish and US
Shares held at December 31, 2021:
12,024 shares*
Alex Davern, observer since October 21, 2020, was appointed as
Chairman of the Board following his co-optation as Director on February
8, 2021.
Alex Davern served National Instruments (NATI: NASDAQ, global leader
in automated test and automated measurement systems for 26 years in
different top management positions from Chief Financial Officer, Chief
Operating Officer to Chief Executive Officer. Alex Davern contributed to
the Company’s development until it reached approximately $1.4 billion in
sales with 7,400 people spread in 50 countries today. Alex Davern
assisted the founder of National Instruments for 20 years. In Feb 2020,
Alex stepped down from his role as CEO to focus on serving as a Board
member of National Instruments and other Nasdaq-listed companies
(Cirrus Logic, and previously Helen of Troy, Sigmatel Inc.). He is a former
President of the American Electronics Association‘s Small Business
Advisory Committee and a former member of the SEC’s Small Business
in
Advisory Committee. Alex started his career as Auditor
PricewaterhouseCoopers. He Graduated from the University College
Dublin with a degree in Commerce and a post graduate Diploma in
Professional Accounting and has both Irish and American citizenships.
Current offices held outside the Group:
Ñ Member of the Board of National Instruments (NATI:NASDAQ)
Ñ Member of the Board and Audit Committee Chairman of Cirrus Logic
(CRUS:NASDAQ)
Ñ Member of the Board of FARO Technologies (FARO:NASDAQ)
Expired offices held over the past five years:
Ñ Member of the Board and Audit Committee Chairman of Helen of Troy
(HELE:NASDAQ)
* See chapter 8.2.5 for all registered shares and bearer shares held at the date of
publication of the Universal Registration Document.
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BOARD OF DIRECTORS
CONTENTS
Patrice Soudan
Ñ Independent Board member
Ñ Chairman of the Audit Committee
since January 1, 2022
Date of birth: 09/29/1958
French
Shares held at December 31, 2021:
2,100 shares
Patrice Soudan, a French citizen, was born on September 29, 1958. He
held various positions in finance in an international audit firm and in the
food industry before joining Legrand in 1991.
He began his career as Management Controller, then Director of
Management Control, and finally Group Chief Financial Officer in 2001.
He was appointed Deputy Chief Executive Officer and member of
Legrand’s Executive Committee in 2008, taking over the management of
the group’s main industrial division, and then of all the group’s industrial
divisions and operations as of 2014 until the end of 2018.
Current offices held outside the Group:
Ñ President of P3C Management
Expired offices held over the past five years:
Ñ Chairman of the Board and CEO of Legrand France
Ñ Member of the Board of Netatmo
Rajani Ramanathan
Ñ Independent Board member
Ñ Chairwoman of the Technology
and Marketing Committee
Date of birth: 03/25/1967
American, Indian
Shares held at December 31, 2021:
1 share
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 of Guidewire which is the platform P&C insurers trust to
engage, innovate, and grow efficiently. She also sits on the Board of
Hayden.ai and Vayu technologies corp. She serves as a Board advisor
and/or investor in several technology startups including Cere.ai, Invicara,
Feathercap and has previously advised companies such as Pipefy,
CloudCherry (acquired by Cisco), Medium, Realine Technology, Lifograph,
Traction Labs, Relatas, Growbot to name a few.
She joined Salesforce.com in 2000, when it was a small startup, and she
helped build 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:
Ñ Member of the Board of the company Vayu
Ñ Member of the Board of the company Guidewire
Ñ Member of the Board of the company Hayden.ai
Expired offices held over the past five years:
Ñ Member of the Board of the company CloudCherry
Éric d’Hotelans
Ñ Independent Board member
Ñ Chairman of the Compensation
Committee
Date of birth: 03/07/1950
French
Shares held at December 31, 2021:
261 shares
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:
Ñ Chair of the M6 Group Corporate Foundation
Expired offices held over the past five years:
Ñ President of the company Home Shopping Services SA
Ñ President of the company T-Commerce SAS
Ñ Member of the Board of the company Société Nouvelle de Distribution SA
Ñ Member of the Board of the company Métropole Production SA
Ñ Managing Director of the company Home Shopping Services SA
Ñ Member of the Board of the M6 Group Corporate Foundation
Ñ Member of the Board of the company M6 Films
Ñ Member of the Board of the company M6 Diffusion SA
Véronique Jacq
Ñ Independent Board member
Ñ Chairwoman of the Audit Committee
until December 31, 2021
Date of birth: 01/02/1968
French
Shares held at December 31, 2021:
157 shares
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 in enterprise software, consumer, marketplaces,
hardware, IoT (€700 millions under management).
Current offices held outside the Group:
Ñ Member of the Board of the company Evaneos
Ñ Member of the Board of the company OpenClassrooms
Ñ Member of the Board of the company Scality
Ñ Board observer of the company Acinq
Ñ Board observer of the company Uavia
Expired offices held over the past five years:
Ñ Member of the Board of the company Netatmo
Ñ Member of the Board of the company Klaxoon
Ñ Member of the Board of the company Famoco
Ñ Member of the Board of the company Cardiologs
26
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
Yves de Balmann
Ñ Independent Board member
Date of birth: 05/28/1946
French, American
Shares held at December 31, 2021:
1 share
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
its Proprietary Trading
Currency Derivatives Division, as well as
Department. He joined Bankers Trust in 1988, where he eventually rose
to become Head of its Global Investment Bank and Vice-Chairman of the
Corporation. After the 1999 merger of this company with Deutsche
Bank, de Balmann became Co-Head of the Global Investment Bank (GIB)
of Deutsche Bank and Co-Chairman and Co-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 top international player in the field of
private equity, which he co-managed until 2012.
Current offices held outside the Group:
Ñ Member of the Board of the company Constellation
Ñ Member of the Board of the non-profit organization Sonoma Valley
Hospital Foundation
Expired offices held over the past five years:
Ñ Member of the Board and non-executive Chairman of the company IP
Management
Ñ Member of the Board of the company Laureate Education
Ñ Member of the Board of the non-profit organization Sweetwater
Spectrum
Ñ Member of the Board of the company Finalsite
Ñ Member of the Board of the company Exelon Corporation
Alain de Rouvray
Ñ Founder
Ñ Board member until December 16, 2021
Date of birth: 10/08/1943
French
Shares held at December 31, 2021:
459,758 shares
Alain de Rouvray was Founder and CEO of ESI France (1973), then
Chairman and CEO of ESI Group from its creation in 1991 until
January 31, 2019, then Chairman of the Board of Directors from
February 1, 2019 to February 8, 2021.
A graduate of the École Centrale de Paris (1967) and the Sorbonne
(Economics), Alain de Rouvray was awarded a Fulbright scholarship and a
Study and Research grant from the University of California (Berkeley),
where he earned a doctorate (Ph.D.) in Civil Engineering (1971). Back in
France, Alain de Rouvray was initially a Research Engineer at the École
polytechnique (Paris, Laboratoire de Mécanique des Solides, 1972), then a
partner and Director of the Advanced Mechanics Department of the
Société
(‘2I’), which became a scientific
computing subsidiary (1976) of the CISI Group and the Commissariat à
l’Énergie Atomique (CEA) from 1972 to 1976. In parallel, he founded ESI SA
in 1973, with a minority shareholding from 2I, and was its General
Manager and Sales Director from 1973 to 1990, at which time he
founded and took over the management of ESI Group. Alain de Rouvray
was awarded the French title of “Chevalier de la légion d’honneur” for
Foreign Trade in 2012.
Internationale
Informatique
Current offices held outside the Group:
Ñ None
Expired offices held over the past five years:
Ñ None
CONTENTS
REPORT ON CORPORATE GOVERNANCE 2
BOARD OF DIRECTORS
Charles-Helen des Isnards
Ñ Independent Board member until
February 8, 2021
Ñ Observer since February 8, 2021
Date of birth: 01/01/1945
French
Shares held at December 31, 2021:
3,551 shares
Charles-Helen des Isnards, Board member until February 8, 2021, date
of his appointment as observer.
He 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:
Ñ Member of the Board of the Day-Solvay Foundation
Expired offices held over the past five years:
Ñ Member of the Board of the association Les Arts Florissants
Ñ Member of the Supervisory Board of the company Nature
et Découvertes
Others offices held:
Ñ Senior Advisor of CAP M – New York, independent consulting firm
on strategy and M&A
2
Vincent Chaillou
Ñ Board member until August 26, 2021
Ñ Chief Operating Officer
until June 22, 2021
Date of birth: 03/24/1950
French
Shares held at December 31, 2021:
22,207 shares
Vincent Chaillou was Director and Chief Operating Officer until June 22,
2021 and Group Strategy and EMEA Regional Director until
December 31, 2021, date of his retirement.
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:
ÑChairman of the association ID4CAR
Expired offices held over the past five years:
Ñ Member of the Board of the association TECH’IN France
Ñ Member of the Board of the company CADEMCE SAS
ÑMember of the Board of Directors of the association “Alliance Industrie
du Futur” (Tech’In representative)*
Ñ Member of the Board of the association ASTech and Vice President
International Relations*
Ñ Member of the Board of the Railenium Technological Research
Institute*
Ñ Member of the Board of Nuclear Valley*
Ñ Member of the Board of the French Mechanics association*
Ñ Member of the Excelcar collaborative innovation platform*
* Mandates expired on 31/12/2021.
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
27
13456789 2 REPORT ON CORPORATE GOVERNANCE
BOARD OF DIRECTORS
CONTENTS
2.3.3. Operations of the Board of Directors
2.3.3.1. Internal rules
2.3.3.2. Professional ethics of Board
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 and
Observers. These internal rules were reviewed by the Board of
Directors:
■ On October 21, 2020 in order to update it with the PACTE law
No. 2019-486 of May 22, 2019, to establish the function of
Observer, and as well as to limit the role of the Chairman of the
Board of Directors to legal provisions;
■ On February 8, 2021 to take into account the change of
governance;
■ On February 28, 2022, to be in compliance with the last
recommendations of the Middlenext Code as revised
in
September 2021 regarding the training of Board members, the
independance of the chairmanship of the committees, and the
communication of potential conflicts of interests by any Board
member involved with respect to each session agenda. The
digitalisation of the Board Meetings and documentation has also
been strengthened and the new remuneration policy for the
Board members has been updated.
The Internal Rules of the Board of Directors can be consulted on
the Company’s website (www.esi-group.com). Considering the new
recommendation of Middlenext, each Board of Directors signed a
copy of the last version of the internal rules.
In accordance with recommendations of the Middlenext Code (R.9),
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, etc.);
■ Protection of corporate officers: liability insurance for corporate
officers;
■ Rules for determining the remuneration of Directors;
■ The succession of the officers and key people.
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. During each Board of Directors
Meeting, each Board Member is requested to communicate any
potential conflict of interest with respect to the agenda, and in
compliance with the Middlenext recommendations (R.2). 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.
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
It must act
The Board of Directors is and must remain a collegial body that
collectively represents all shareholders.
in the
Company’s corporate interests under any and all circumstances.
for the
The Board of Directors determines the guidelines
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.
28
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
REPORT ON CORPORATE GOVERNANCE 2
BOARD OF DIRECTORS
The Board of Directors
responsibilities in accordance with the law:
is entrusted with
the
following
■ 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
legal representative and setting monetary limits on these
powers;
■ Preparing parent company and consolidated annual financial
statements and
the annual
management report and the interim financial report, as well as
approval of these documents;
financial statements,
interim
■ 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
In accordance with Middlenext Code Recommendation R.6, 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
financial
Annual General Meeting called to approve said
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
the
approved and signed by
subsequent Meeting. The minutes set out the discussions, specify
the decisions made and mention the questions and reservations
raised.
the Board members during
2
Furthermore, during each Board 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 unless
specific derogations related to sanitary measures.
of the Board of Directors’ work
An attendance sheet is drawn up and signed by the Board
members attending the Board of Directors’ Meeting.
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 fulfil 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,
the
Middlenext Code.
in accordance with Recommendation R.6 of
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-
its
depth review and discussion of the topics falling under
responsibility. The same principle applies to Meetings of Board
committees.
2.3.3.5. Training
The internal rules of the Board of Directors approved by the Board
on February 28, 2022 state that “Each Director may receive
additional training on the specific characteristics of the Group, its
businesses and sectors of activity as well as on accounting and
financial aspects in order to improve his or her knowledge.”
This may involve external or internal training courses either on
governance or on the activity of the Company, as it has been the
case recently with a two-days internal seminar focusing on the
Company’s business. Such training is organized by the Company
and is its sole responsibility.
Following the review of the Middlenext Governance Code and in
particular the new recommendation No. 5, Directors have been
made aware of the need to prepare and implement a three-year
training plan in the coming months.
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
29
13456789 2 REPORT ON CORPORATE GOVERNANCE
BOARD OF DIRECTORS
CONTENTS
2.3.3.6. Works of the Board of Directors in 2021
In 2021, the Board of Directors held nine Meetings. The attendance rate was 90.28%.
Attendance of Directors at Board Meetings in 2021
________
Dates of Board of Directors’
Meetings
Alex Davern
Cristel de Rouvray
Yves de Balmann
Éric d’Hotelans
Véronique Jacq
Rajani Ramanathan
Patrice Soudan
Charles-Helen des Isnards
Alain de Rouvray
Vincent Chaillou
OVERALL ATTENDANCE
08/02/2021
15/03/2021
07/05/2021
10/06/2021
22/06/2021
03/09/2021
10/09/2021
04/10/2021
19/11/2021
✓
✓
✓
✓
✓
✓
n/a
✓
✓
✓
✓
✓
✓
✓
✓
✓
n/a
✓
x
✓
✓
✓
✓
✓
✓
✓
n/a
✓
✓
✓
✓
✓
✓
✓
x
x
n/a
✓
✓
✓
✓
✓
✓
✓
✓
✓
n/a
✓
✓
✓
✓
✓
✓
✓
✓
✓
n/a
✓
✓
n/a
x
✓
✓
✓
x
✓
✓
✓
x
n/a
✓
✓
✓
✓
✓
✓
✓
✓
n/a
✓
✓
✓
✓
✓
✓
✓
✓
x
n/a
% of
attendance
89
100
100
100
83
89
100
100
67
100
90.28
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%
100%
100%
100%
100%
100%
100%
100%
4/4
4/4
4/4
4/4
4/4
4/4
2/2
4/4
1/1
2/2
—
100 %
—
—
100%
100%
—
100%
100%
—
—
100%
5/5
—
—
6/6
6/6
—
1/1
6/6
—
—
—
100%
100%
—
100%
—
100%
—
100%
100%
—
100%
4/4
5/5
—
5/5
—
5/5
—
5/5
1/1
—
—
100%
100%
100%
100%
100%
—
—
100%
75%
100%
—
—
100%
100%
100%
—
—
100%
95%
3/3
4/4
4/4
4/4
4/4
—
—
—
3/4
4/4
—
—
4/4
4/4
2/2
—
—
2/2
—
Director/Observer
Alex Davern
Cristel de Rouvray
Yves de Balmann
Éric d’Hotelans
Véronique Jacq
Rajani Ramanathan
Patrice Soudan
Charles-Helen
des Isnards
Alain de Rouvray
Vincent Chaillou
OVERALL
ATTENDANCE RATE
30
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
REPORT ON CORPORATE GOVERNANCE 2
BOARD OF DIRECTORS
In addition to approving the minutes of previous Boards of
Directors, and beyond the usual decisions in the framework of the
Company’s activity and results, the main items discussed, and
decisions taken by the Board of Directors at its Meetings in 2021
are as follows:
/ Corporate Governance
On February 8, 2021, the Board of Directors discussed the reshuffle
of its composition as well as the ones of its committees in alignment
with the evolution of the governance. The Board notably appointed
a new Chairman in the context of the evolution of the Board. The
Board Secretary has been reappointed, as well as for the position of
Secretary to the Audit Committee, the Strategic Committee, the
the Nomination and Governance
Compensation Committee,
Committee, and
the Technology and Marketing Committee.
In addition, the Board of Directors discussed topics related to its
functioning and the preparation of its works, the internal rules, the
policy related to internal control, and the implementation of the
program of shares buy back. Among the governance topics, the
Board of Directors also discussed the need to harmonize the
governance within each subsidiary of the Company. The Board of
Directors also approved the dissolution of several subsidiaries
during the fiscal year for legal simplification purposes. The Board
reviewed new regulated agreements and current regulated
agreements.
At the Meeting of March 15, 2021, the Board decided on the
independence criteria for Directors based on the proposal of the
Nomination and Governance Committee.
At its Meeting of May 7, 2021, the Board of Directors convened the
Ordinary and Extraordinary General Meeting of June 22, 2021.
At its Meeting of September 3, 2021, the Board appointed Patrice
Soudan as new independent Board member in replacement of
Vincent Chaillou. The results of the annual self-assessment were
presented at this session.
/ Activity and results
The systematic and in-depth review of the Company’s activity is
carried out at each meeting.
In accordance with the recommendation of the Audit Committee,
the Board of Directors held on February 8, 2021 approved the
revenue for fiscal year 2020 and the capital increase following the
exercise of options during the 2020 financial year.
At its Meeting of March 15, 2021, the Board of Directors approved
the 2021 results based on the recommendation of the Audit
Committee and defined the strategic orientations.
Based on the recommendation of the Audit Committee, the Board
of Directors held on June 22, 2021 authorized the renewal and
extension for five years of bank loans guaranteed by the State,
whose signature was authorized by a decision dated June 25, 2020.
On September 3, 2021, the Board reviewed and approved the
three-year business plan which was communicated externally in
October 2021.
The budget for the financial year 2022 was also approved during
the Board Meeting held on November 19, 2021.
/ Compensation policy and human resources
At the Meeting of March 15, 2021, the Board based on the
recommendation of the Compensation Committee, approved the
new policy for the remuneration of the Board members for the
financial year 2020, including the remuneration of the Chairman.
The Board also deliberated and approved the rules relating to the
compensation of executive corporate officers.
2
On September 10, 2021, the Board granted a Long-term incentive
plan based on stock option plan for the Chief Executive Officer.
On October 4, 2021, the Board granted long term incentive plans of
free shares to executives and selected beneficiaries.
As every year, the Board, deliberated on the Company’s policy in
terms of professional equality between women and men.
2.3.3.7. Board assessment
In accordance with Middlenext Code Recommendation R.13 and
with the provisions of Article 2.9 of the Board of Directors Internal
Rules, the Board of Directors carried out during 2021 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 annual Retreat and during the
Board Meeting held on September 3, 2021. During the ensuing
debate, reflections were raised on the achieved Company’s
transformation work, which should allow the improvement of the
performance, as well as the need to bring new expertise to support
the development strategy.
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
31
13456789 2 REPORT ON CORPORATE GOVERNANCE
BOARD OF DIRECTORS
CONTENTS
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 (1) (see
section 2.3.3.1 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
thus draw up proposals,
its decisions. The committees
recommendations and opinions relative to their respective areas at
each of their meetings. In accordance with current legislation and
Middlenext Code Recommendation R.7, the following committees
have been established within the Company:
2.3.4.1. Strategic Committee
■ 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, 2021 is presented under
section 2.3.3.5 above.
Composition in 2021 since February 8, 2021 until the date of the present document (a)
Cristel de Rouvray (Chairwoman)
Alex Davern*
Yves de Balmann*
Éric d’Hotelans*
Véronique Jacq*
7
members (c)
100%
attendance rate (c)
4
meetings (c)
Rajani Ramanathan*
Patrice Soudan* (b)
*
(a) Refer to the Universal Registration Document 2020 to see the composition of the Committee from January 1st, 2021 until February 8, 2021. https://investors.esi-
Independent members in accordance with recommendation R.3 of the Middlenext Code (see above section 2.3.1.3).
group.com/governance/governance.
(b) As of September 2, 2021.
(c)
At December 31, 2021.
The Strategic Committee is namely in charge of, upon proposal
from the Chief Executive Officer:
a. Considering the position occupied by ESI Group on the market
where the Group operates as well as its expected evolution,
taking into account the development of major competitors;
2.3.4.2. Audit Committee
b. Making proposals
lines of
the Board on
development of the Group in the medium / long term as well as
the necessary resources to conduct this development;
the main
to
c. Analyzing M&A opportunities.
Composition in 2021 since February 8, 2021 until the date of the present document (a)
Patrice Soudan (Chairman) (b)
Véronique Jacq* (c)
Éric d’Hotelans*
3
members (d)
100%
attendance rate (d)
6
meetings (d)
Independent members in accordance with recommendation R.3 of the Middlenext Code (See above section 2.3.1.3).
*
(a) Refer to the Universal Registration Document 2020 to see the composition of the Committee from January 1st, 2021 until February 8, 2021. https://investors.esi-
group.com/governance/governance.
(b) As of January 1, 2022.
(c) Chairman until December 31, 2021.
(d) At December 31, 2021.
In accordance with regulations in force, Board members having
executive roles within the Company are not allowed to serve as
the Audit Committee, and all members are
members of
independent.
its members have
In addition, the majority of
expertise in the area of finance or accounting.
The CEO and the Chief Financial Officer of the Company attend the
Meetings of the Audit Committee as guests in accordance with
Middlenext recommendations and best market practices.
(1)
32
The composition of all the committees was reviewed during the Board Meetings held on February 8, 2021 and September 3, 2021.
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
REPORT ON CORPORATE GOVERNANCE 2
BOARD OF DIRECTORS
Similarly, the Chairman of the Board of Directors no longer attends
the Audit Committee as a member but as a guest if applicable.
According to the regulation in force, the Audit Committee monitors
issues relating to the preparation and control of accounting and
financial information.
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:
■ 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
management 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;
■ It controls the
foreign exchange and
management policy and reviews the mapping of the main risks;
interest rate risk
■ Issuing a recommendation regarding appointment of Auditors by
the General Meeting, as well as regarding the potential
reappointment of Auditors;
■ Monitoring Auditors as they fulfil 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;
■ It makes a global review on the services other than account
certification (SACC) which can be ordered by the Company.
The Statutory Auditors are invited to participate in the Board
Meetings
financial
statements.
that validate
figures and
the sales
the
2.3.4.3. Compensation Committee
Composition in 2021 since February 8, 2021 until the date of the present document (a)
2
Éric d’Hotelans* (Chairman)
Yves de Balmann*
Rajani Ramanathan*
Patrice Soudan* (b)
4
members
100%
attendance rate (c)
4
meetings (c)
Independent members in accordance with recommendation R.3 of the Middlenext Code (See above section 2.3.1.3).
*
(a) Refer to the Universal Registration Document 2020 to see the composition of the Committee from January 1st, 2021 until February 8, 2021. https://investors.esi-
group.com/governance/governance.
(b) Since September 3, 2021.
At December 31, 2021.
(c)
The Chairman of the Board of Directors no longer attends the
Compensation Committee as a member but as a guest if applicable.
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, etc.), to issue an opinion
on the legal and financial conditions of these plans, and the list
of beneficiaries related to strategic goals;
■ 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).
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
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13456789 2 REPORT ON CORPORATE GOVERNANCE
BOARD OF DIRECTORS
CONTENTS
2.3.4.4. Nomination and Governance Committee (including CSR)
Composition in 2021 since February 8, 2021 until the date of the present document (a)
Alex Davern* (Chairman)
Cristel de Rouvray
Éric d’Hotelans*
Rajani Ramanathan*
4
members (b)
100%
attendance rate (b)
5
meetings (b)
Independent members in accordance with recommendation R.3 of the Middlenext Code (See above section 2.3.1.3).
*
(a) Refer to the Universal Registration Document 2020 to see the composition of the Committee from January 1st, 2021 until February 8, 2021. https://investors.esi-
group.com/governance/governance.
(b) At December 31, 2021.
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 Directors and observers;
■ 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;
■ In deliberation with the CEO, appointment and dismissal of
senior management positions, primarily in the ELT;
■ The monitoring of the Corporate Social Responsibility (CSR)
policy in line with the Group’s strategy.
2.3.4.5. Technology and Marketing Committee
Composition in 2021 since February 8, 2021 until the date of the present document (a)
Rajani Ramanathan* (Chairwoman)
Cristel de Rouvray
Alex Davern*
Patrice Soudan* (b)
4
members (c)
95%
attendance rate (c)
4
meetings (c)
Independent members in accordance with recommendation R.3 of the Middlenext Code (See above section 2.3.1.3).
*
(a) Refer to the Universal Registration Document 2020 to see the composition of the Committee from January 1st, 2021 until February 8, 2021. https://investors.esi-
group.com/governance/governance.
(b) As of September 3, 2021.
(c)
At December 31, 2021.
The Technology and Marketing Committee advises the Board of
Directors on the strategy, development and marketing of the
Group’s solutions. Within the framework of this mission, the scope
of action of the Technology and Marketing Committee mainly
concerns, upon proposal of
the Chief Executive Officer,
deliberations on:
■ The Company’s competitive position;
■ Industry strategy (multi-horizon), including ecosystem levers
(partnerships) and acquisitions;
■ The internal organization to define, develop, market and price
solutions, including differentiating by market;
■ Revenue generation strategy and execution;
■ Return on Investment (ROI).
34
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
REPORT ON CORPORATE GOVERNANCE 2
BOARD OF DIRECTORS
2.3.5. Function of Observer
2.3.5.1. Role
2.3.5.2. Appointment of observers
The Extraordinary General Meeting of October 21, 2020 approved
the amendment to the articles of association which incorporates
the function of observer. An Article 16 has thus been inserted in the
ESI Group’s articles of association (1). The number of observers may
not exceed four. They are appointed for a maximum period of
one year.
The observers have a general and permanent advisory and
supervisory role for the Company. They are responsible for
ensuring the strict application of the articles of association and their
main mission is to participate, as necessary, in Meetings of the
Board of Directors and committees, to provide the necessary
information, their expertise and their knowledge of the various
businesses of the Company. When they attend Board Meetings or
committees, they have an advisory capacity. They should not
in the management of the Company under any
interfere
circumstances.
The Board of Directors’ internal regulations (2) have also been
updated in order to align the obligations and responsibilities of the
observers with those of the Directors.
The Board of Directors may devote a part of the compensation that
the General Assembly granted to the Board members to the
observers and/or allocate to them exceptional compensations.
2.3.6. 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, the Directors and the Observers 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.
On October 21, 2020, the Board of Directors appointed Alex Davern
as observer, in accordance with the recommendations of its
Nomination and Governance Committee.
On February 8, 2021, following the resignation of Charles-Helen des
Isnards from the Board of Directors, Alex Davern was co-opted as
Director, for the remaining term of office, thereby ceasing his
function as observer. Charles-Helen des Isnards was appointed, on
the same date, observer until June 22, 2021, the date of the last
General Meeting (3). His renewal as observer has been decided by
the Shareholders’ Meeting held on June 22, 2021 for a duration of
one year, i.e. until the General Meeting to be held in 2022 to
approve the accounts for the year 2021 (resolution No. 8). It will be
proposed during this General Meeting to renew Charles-Helen des
Isnards as Observer for a new period of one year (resolution No. 9).
2
Moreover, in addition to the General Meeting, the Chief Executive
Officer 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.
(1)
(2)
(3)
https://investors.esi-group.com/regulated-information
https://investors.esi-group.com/governance/governance and section 2.3.3.1 above.
https://www.esi-group.com/company/news/esi-group-announces-governance-evolution
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
35
13456789 2 REPORT ON CORPORATE GOVERNANCE
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
CONTENTS
2.4. COMPENSATION PAID TO THE DIRECTORS
AND THE MANAGEMENT
2.4.1. Compensation policy for corporate officers for 2022 financial year
In accordance with Article L. 22-10-8 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 corporate officers for 2021 financial year
are presented below and will be subject to the approval of the Shareholders’ Meeting to be held on June 28, 2022.
2.4.1.1. Compensation policy applicable
/ Chairman of the Board of Directors’
to Directors and Chairman
of the Board of Directors
for 2022 financial year
/ Directors’ compensation
the
their mandate,
independent Directors
For
receive
compensation, the total amount of which is set by the General
Meeting. Their allocation is made, on proposal of the Compensation
Committee to the Board of Directors, according to the following
criteria:
1. Frequency of Meetings and participation (effective presence);
2. Chairmanship of specialized committees;
3. Chairmanship of the Board of Directors.
Non-independent Directors receive fixed compensation without
being subject to presence condition depending on existing of
former corporate officer’s role.
Allocation of compensation for Directors (a)
(Per year, in €)
________
compensation
The compensation of the Chairman is only linked to the attribution
of Board fees.
The compensation policy of Directors and Chairman of the Board of
Directors for the 2021 financial year was approved by 99.71% of the
votes of the General Meeting of June 22, 2021.
The draft resolutions (Nos. 15 and 17) related to the remuneration
policy attributable to the members and to the Chairman of the
Board of Directors for 2022 and submitted to the General Meeting
of June 28, 2022, are presented in chapter 7 of this Universal
Registration Document.
Below is a summary of the compensation policy attributable to the
Directors and the Chairman of the Board of Directors for the 2022
financial year as decided by the Board of Director on November 19,
2021.
Board
Chairmanship
Board of
Directors
Independent Director (b)
Non independent Director (d)
TOTAL COMPENSATION APPROVED BY THE SHAREHOLDERS’ MEETING OF JUNE 22, 2021: €450,000
120,000
10,000
30,000
n/a
Committee
membership
4,000 (c)
n/a
Audit
Committee
Chairmanship
24,000 (c)
n/a
Other
Committee
Chairmanship
14,000
n/a
(a)
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.
(b) Payment subject to an annual presence at 100%, failing which the amount is calculated in proportion to the annual presence.
For each Committee membership, annually.
(c)
(d) Fixed payment not subject to presence condition.
36
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
REPORT ON CORPORATE GOVERNANCE 2
2.4.1.2. Chief Executive Officer’
Cash compensation for 2022
remuneration policy applicable
in 2022 financial year
/ Principles of remuneration policy
the Company’s corporate
In accordance with Article L. 22-10-8 of the French Commercial
Code, the compensation policy for corporate officers must be in line
its
with
sustainability and be part of its business strategy. To this end, the
Company’s compensation policy establishes a competitive
compensation framework, adapted to the strategy and the context
of the Company and notably aims at promoting its performance
and competitiveness over the medium and long term.
interests, contribute
to
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 February 28th, 2022 in order to
be aligned with the corporate interest.
This compensation policy also contributes to the sustainability of
the Company and is part of its business strategy insofar as it takes
into account the performance of the Company in the calculation of
the variable compensation. Indeed, 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.
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.
For the 2021 financial year, the General Assembly approved by
75.8% of the votes the compensation policy applicable to the Chief
Executive Officer.
/ 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 62.5% of the
fixed remuneration: it is subject to an assessment based
exclusively on quantitative criteria related to the performance of
the Group (growth and profitability). These objectives are set at
the beginning of the year by the Board of Directors on the
recommendation of the Compensation Committee and aligned
with the strategic plan. 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;
■ A fixed part established at $400 thousand; This amount was
determined by the Board of Directors in its February 28th, 2022
Meeting, on
the Compensation
Committee and based compensation paid to executive officers
for similar companies. The Chief Executive Officer’s annual fixed
compensation under 2022 compensation policy was increased
relative to the $378 thousand awarded under the 2021 policy;
the recommendation of
■ A variable part established at $250 thousand on 100%
quantitative criteria related to growth (50%) and profitability
(50%). The framework includes an overachievement criteria for
the growth component.
Exceptional compensation
(for example because of
Very specific circumstances
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.
2
Benefits in kind
Benefits in kind include a Company car or equivalent allowance.
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.
■ A
long
term
incentive compensation
financial
performance over the long term. This can take the form of one
or more of the following financial instruments: Stock option or
free shares. Please refer to the tables in section 2.4.2.1.4
onward.
linked
to
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
37
13456789 2 REPORT ON CORPORATE GOVERNANCE
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
CONTENTS
2.4.2. Compensation due to Directors for financial year
ended on December 31, 2021
Summary table of compensation and other components of compensation
due to non-executive corporate officers (Table 3 of AMF nomenclature)
________
Amounts allocated
for 2021 financial
year
Amounts paid
for 2021 financial
year (a)
Amounts allocated for
2020 fiscal year
Amounts paid for
2020 fiscal year (a)
18,334
139,654
85,000
490,568
100,000
465,144
Compensation
Non-executive corporate officers
Alain de Rouvray (b)
■ Compensation as Director
■ Other compensation (c)
Alex Davern (d)
■ Compensation as Director
■ Other compensation
Charles-Helen des Isnards (e)
■ 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
Patrice Soudan
■ Compensation as Director
■ Other compensation
TOTAL
25,000
114,305
171,722
n/a
24,427
n/a
36,000
n/a
37,944
n/a
35,722
n/a
33,000
n/a
6,167
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
19,125
n/a
35,700
n/a
27,200
n/a
11,036
n/a
27,200
n/a
24,650
n/a
—
n/a
19,125
n/a
35,700
n/a
27,200
n/a
11,036
n/a
27,200
n/a
24,650
n/a
—
n/a
244,911
465,144
■ Compensation as Director
■ Other compensation
(a) Before taking into account the withholding tax.
(b) Alain de Rouvray, Chairman of the Board until February 8, 2021.
(c) Other compensation due to Alain de Rouvray for other mandates exercised within the Group are presented in detail under section 2.4.3 of this document.
(d) Alex Davern, Chairman of the Board from February 8, 2021.
(e) Charles-Helen des Isnards was Board member until February 8, 2021, when he resigned from his mandate and now Board Observer.
490,568
229,911
139,654
369,982
114,305
18,334
For 2021 financial year, the compensation of non-executive corporate officers amounts to €369,982.
In addition, the compensation allocated to executive corporate officers due to their mandate as Director, respectively €10,000 for Cristel de
Rouvray and €4,000 for Vincent Chaillou (see 2.4.3.1.2); have to be included. Consequently, out of the total compensation package of €450,000
approved by the General Meeting of June 22, 2021, a total amount of €383,982 was allocated.
38
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
REPORT ON CORPORATE GOVERNANCE 2
2.4.3. Compensation to the corporate officers
2.4.3.1. Compensations paid to the Chairman of the Board, the Chief Executive Officer
and Chief Operating Officers for financial year ended on December 31, 2021
The following tables are prepared in accordance with the recommendation No. 2021-02 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, 2021.
It should be noted that the remuneration of Alex Davern, Chairman of the Board of Directors since 8 February 2021, is solely in respect of this
mandate and that he does not receive any other remuneration (see section 2.4.1.1).
/ 2.4.3.1.1. Summary table of compensation and stock options granted
to each corporate officer (Table 1 of AMF nomenclature)
(In €)
Alex Davern
Chairman of the Board of Directors since February 8, 2021
Compensation due for the year (detailed in 2.4.1.1 and 2.4.2)
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 other long-term compensation plans
Cristel de Rouvray
CEO
Compensation due for the year (detailed in 2.4.3.1.2 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 other long-term compensation plans
Alain de Rouvray
Chairman of the Board of Directors until February 8, 2021 (a)
Compensation due for the year (detailed in 2.4.3.1.2 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 other long-term compensation plans
Vincent Chaillou
Chief Operating Officer until June 22, 2021 (a) (b)
Compensation due for the year (detailed in 2.4.3.1.2 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 other long-term compensation plans
(a) See Press release of February 8, 2021.
(b)
Including compensation under employment contract till December 31, 2021.
2021
2020
171,722
19,125
2
None
None
None
None
509,022
None
357,476
None
None
None
None
None
None
365,652
None
None
None
None
139,305
576,436
None
None
None
None
None
None
None
None
426,626
240,818
None
None
None
—
None
None
None
74,456
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
39
13456789
2 REPORT ON CORPORATE GOVERNANCE
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
CONTENTS
/ 2.4.3.1.2. Summary table of compensation to each corporate officer
(Table 2 of AMF nomenclature)
It should be noted that the remuneration of Alex Davern, Chairman of the Board of Directors since 8 February 2021, is solely in respect of this
mandate and that he does not receive any other remuneration (see section 2.4.1.1).
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
Alain de Rouvray
Chairman of the Board of Directors
until February 8, 2021*
(In €)
Fixed compensation
Annual variable compensation
Multi-annual variable compensation
Exceptional compensation
Compensation as Director
Benefits in kind
TOTAL
* See press release of February 8, 2021.
2021
2020
Amount due
Amount paid
Amount due
Amount paid
319,679
123,519
—
45,685
10,000
10,139
509,022
319,679
311,635
311,635
—
—
—
10,139
329,818
—
—
35,000
8,500
10,517
365,652
—
—
34,980
8,500
10,517
365,632
2021
2020
Amount due
Amount paid
Amount due
Amount paid
114,305
None
None
None
25,000
None
139,305
114,305
None
None
None
18,334
None
132,639
465,144
None
None
26,293
85,000
None
576,436
465,144
None
None
26293
100,000
None
591,437
Vincent Chaillou*
Chief Operating Officer until June 22, 2021
(In €)
Fixed compensation
Annual variable compensation
Multi-annual variable compensation
Severance pay (including retirement)
Exceptional compensation
Other Compensation
Compensation as Director
Benefits in kind
TOTAL
2021
2020
Amount due
Amount paid
Amount due
Amount paid
198,550
198,550
198,550
198,550
—
—
160,924
60,000
4,000
3,153
426,626
—
—
160,924
—
60,000
3,153
422,626
—
—
—
—
30,000
30,000
5,100
7,168
240,818
5,100
7,168
240,818
* Including compensation under employment contract till December 31, 2021. Payment done in January 2022 for the severance pay.
/ 2.4.3.1.3. Summary table of compensation and other components of compensation
due to Directors (Table 3 of AMF nomenclature)
Please refer to section 2.4.2 above of the Universal Registration Document
40
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
REPORT ON CORPORATE GOVERNANCE 2
/ 2.4.3.1.4. Share subscription or purchase options granted to each corporate officer
by the Company and any Group company during 2021 financial year
(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
Name of the executive
corporate officer
Cristel de Rouvray
CEO
Alain de Rouvray
Chairman of the Board of Directors
until February 8, 2021 (a)
Vincent Chaillou
Chief Operating Officer
until June 22, 2021
TOTAL
(a) See press release of February 8, 2021.
Plan No.
and date
Type of options
(purchase or
subscription)
Value of options
on the method
used for the
consolidated
financial
statements
Number of
options
granted
during the
year
Exercise
price
(in €)
Exercise
period
No. 21
Purchase
357,476
24,000
60.47
3 years
None
24,000
2
/ 2.4.3.1.5. Share subscription or purchase options exercised to each corporate officer by the
Company and any Group company during financial year ended on December 31, 2021
(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
Plan No. and date
Number of options
exercised during
the year
Exercise price
None
No. 10
1,000
1,000
27.82
Cristel de Rouvray
CEO
Alain de Rouvray
Chairman of the Board of Directors
until February 8, 2021 (a)
Vincent Chaillou
Chief Operating Officer until June 22, 2021
TOTAL
(a) See press release of February 8, 2021.
/ 2.4.3.1.6. Free shares allocated to each corporate officer during financial year
ended on December 31, 2021 (Table 6 of AMF nomenclature)
Free shares allocated to each executive corporate officer
Free shares allocated by the Shareholders’
Meeting during the year to each executive
corporate officer by the Company and any
Group company
Plan No.
and date
Number
of shares
allocated
during
the year
Value of shares
on the method
used for the
consolidated
financial
statements
Acquisition
date
Availability
date
Performance
conditions
Cristel de Rouvray
CEO
Alain de Rouvray
Chairman of the Board of Directors
until February 8, 2021 (a)
Vincent Chaillou
Chief Operating Officer until June 22, 2021
TOTAL
(a) See press release of February 8, 2021.
None
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
41
13456789 2 REPORT ON CORPORATE GOVERNANCE
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
CONTENTS
/ 2.4.3.1.7. Free shares vested to each executive corporate officer during financial year
ended on December 31, 2021 (Table 7 of AMF nomenclature)
Free shares allocated vested to each
executive corporate officers
Cristel de Rouvray
CEO
Alain de Rouvray
Chairman of the Board of Directors
until February 8, 2021 (a)
Vincent Chaillou
Chief Operating Officer until June 22, 2021
TOTAL
(a) See press release of February 8, 2021.
Plan No. and date
Number of shares
vested available during
the year
Acquisition
conditions
None
No. 9 quinquies
No. 9 sexies
500
10
510
Presence
Presence
/ 2.4.3.1.8 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)
Plan No. 10:
06/26/2012
Plan No. 17:
07/24/2014
12/19/2012
02/07/2014
03/26/2015
07/22/2015
07/22/2015
03/11/2016
05/05/2017
Plan No. 19:
06/29/2017 (b)
07/18/2018
02/01/2019
12/18/2019
Plan No. 20:
25/06/2020
Plan No. 21:
25/06/2020
09/10/2021
Number of options allocated
180,000
37,400
88,485
Of which:
■ Cristel de Rouvray, CEO
■ Alain de Rouvray, Chairman of the Board
of Directors until February 8, 2021 (a)
■ Vincent Chaillou, Chief Operating Officer
until June 22, 2021
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
0
0
24,000
24,000
n/a
n/a
3,500
n/a
20,000
n/a
—
n/a
—
2016 to 2019
2017 to 2021
2021 to 2022
2023 to 2025
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
60.47
Subscription
Subscription
Subscription
Subscription
Purchase
69,200
7,900
49
110,425
15,800
18,900
375
13,700
70,786
24,000
(a) See press release of February 8, 2021.
(b) All plans, with the exception of Plan 19 ter, are subject to performance conditions.
Allocation of share subscription
and purchase options
The only allocation of options during 2021 is linked to Cristel de
Rouvray, as shown above in the table.
Exercise of share subscription options
The Board of Directors has noted during its Meeting of February 28,
2022, that the number of new shares issued as a result of the
exercise of options during 2021 financial year amounted to
27 549 shares with a nominal value of €3 representing an increase
in the share capital of the Company of an amount of €82 647, which
increased from €18,109,776 to €18,192,423.
42
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
REPORT ON CORPORATE GOVERNANCE 2
/ 2.4.3.1.9. 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, 2021 (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.
24,000
60.47
21
11,523
27.52
10 & 17
/ 2.4.3.1.10. History of free shares allocations (Table 10 of AMF nomenclature)
Date of Shareholders’ Meeting
Date of the Board of Directors’ Meeting
Plan No. 6:
07/21/2016
07/21/2016
Plan No. 7:
07/21/2016
12/23/2016
Plan No. 8:
07/21/2016
08/01/2017
2
Plans No. 9,
9 bis, 9 ter,
9 quater,
9 quinquies,
9 sexies,
9 septies:
07/18/2018
07/18/2018
07/18/2019
12/18/2019
19/03/2020
Plans No. 10 ,
10 bis, 10 ter,
10 quater,
10 quinquies,
10 sexies,
10 septies,
10 novies:
25/06/2020
25/06/2020
10/06/2021
04/10/2021
19/11/2021
Number of shares allocated
25,000
2,275
9,000
58,666
59,674
Of which
■ Cristel de Rouvray, CEO
■ Alain de Rouvray, CEO till Jan. 31, 2019
Chairman of the Board of Directors from
February 1, 2019 to February 8, 2021 (a)
■ Vincent Chaillou, Chief Operating Officer
until June 22, 2021
Date of delivery
Term of vesting period
Number of shares delivered
Number of shares cancelled or expired
Remaining shares as at December 31, 2021
(a) See press release of February 8, 2021.
n/a
n/a
5,000
From
07/21/2018
From
07/21/2020
25,000
0
0
n/a
n/a
–
n/a
n/a
–
12/23/2018
12/23/2020
1,962
313
0
From
08/01/2019
From
08/01/2021
9,000
0
0
n/a
n/a
2,520
From
07/18/2020
From
07/19/2022
39,016
5,078
14,572
n/a
n/a
n/a
from
25/06/2022
From
25/06/2024
0
3,000
56,574
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
43
13456789
2 REPORT ON CORPORATE GOVERNANCE
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
CONTENTS
/ 2.4.3.1.11. Summary table of benefits or advantages to corporate officers
(Table 11 of AMF nomenclature)
Employment contract
Supplemental
pension plan
Compensation or benefits
due or likely to be due
following termination or
position change
Compensation
relating to a non-
competition
clause
Executive corporate officers
Yes
Cristel de Rouvray
CEO
No
×
Yes
No
×
Yes
No
Yes
×
No
×
Alain de Rouvray
Chairman of the Board of Directors
from February 1, 2019
to February 8, 2021 (a)
Vincent Chaillou
Chief Operating Officer
until June 22, 2021 (b)
(a) See press release of February 8, 2021.
(b) Vincent Chaillou’s employment contract had been suspended for the duration of his term of Chief Operating Officer. His employment contract took effect from June 23,
Suspended
×
×
×
×
×
×
×
2021 to December 31, 2021, date of his retirement.
44
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
REPORT ON CORPORATE GOVERNANCE 2
/ 2.4.3.1.12. Equity Ratio between the level of compensation of corporate officers and the average
and median compensation of employees of the Company (Article L. 22-10-9-(6) and (7)
of the French Commercial Code)
Performance of the Company
Net results of the Company (in € million)
Compensation of employees
Average compensation of employees
(Evolution compared to the previous year)
Median compensation of employees
(Evolution compared to the previous year)
Cristel de Rouvray, CEO since February 1, 2019
Compensation
(Evolution compared to the previous year)
Compensation ratio compared to average compensation of employees
(Evolution compared to the previous year)
Compensation ratio compared to the median compensation of employees
(Evolution compared to the previous year)
Compensation ratio compared to SMIC (c)
Alain de Rouvray, Chairman from February 1st, 2021 to February 8th, 2021
Compensation
(Evolution compared to the previous year)
Compensation ratio compared to average compensation of employees
(Evolution compared to the previous year)
Compensation ratio compared to the median compensation of employees
(Evolution compared to the previous year)
Vincent Chaillou, Chief Operating Officer until June 22, 2021
Compensation
(Evolution compared to the previous year)
Compensation ratio compared to average compensation of employees
(Evolution compared to the previous year)
Compensation ratio compared to the median compensation of employees
2021 (b)
2020 (b)
2019 (a)(b)
(18.5)
1,4
(20.9)
66,679
1,4%
53,562
(1,9%)
65,776
10.1%
54,603
5.8%
59,726
(1.3%)
51,605
0.3%
509,022
365,652
392,256
39,2%
7.63
37.3%
9.50
41.9%
27.13
(6.8%)
5.56
(15.4%)
6.70
(11.9%)
6.57
7.60
2
114,305
550,144
582,109
n/a
n/a
n/a
n/a
n/a
366,626
52.2%
5.50
50.2%
6.84
(5.5%)
8.36
(14.2%)
10.08
(10.7%)
240,818
(19.0%)
3.66
(26.4%)
4.41
6.1%
9.75
7.5%
11.28
5.8%
297,268
29.6%
4.98
31.3%
5.76
(Evolution compared to the previous year)
Compensation ratio compared to SMIC (c)
*
(a) 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
2019 revenue 12-month comparable (January to December) to ensure comparability of data.
(23.4%)
55.2%
29.2%
19.54
to maintain the comparability of the ratios presented.
(b) Executive compensation includes base salary, variable compensation, exceptional bonuses, benefits in kind and Directors fees as part of the compensation paid.
(c)
SMIC: minimum salary in France at 18655€ as of January 2021 and 19074 as of October 2021.
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
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13456789 2 REPORT ON CORPORATE GOVERNANCE
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
CONTENTS
/ 2.4.3.1.13. Summary table of compensation to corporate officers
The General Meeting to be held on June 28, 2022 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, 2021 to the
corporate officers of ESI Group pursuant to Article L. 225-100 of the French Commercial Code.
Compensation payable or granted for 2021 financial year
to Cristel de Rouvray, Chief Executive Officer
________
Components
of the compensation
Fixed compensation
Variable annual compensation
Amount or
accounting
valuation
submitted for
approval
(in €) Description
319,679 The fixed compensation payable to Cristel de Rouvray as Chief Executive Officer
and for her other mandates exercised within the Group in respect of 2021
financial year amounts to €319,679.
123,519 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.
Long term or deferred compensation
n/a No long term of differed compensation was granted by the Board of Directors.
Exceptional compensation
45,685 The Board of Directors granted an exceptional compensation on February 28,
Compensation for Director’s mandate
Stock-options and performance shares
Benefits in kind
Severance pay
Retirement compensation
Non-compete compensation
2022.
The Board emphasized Cristel de Rouvray’s exceptional leadership during the
year 2021 and her ability to continue to motivate all the teams to pursue the
intense transformation underway and ensure a positive net result in a
particularly adverse context linked to the pandemic.
10,000 Aligned with Board member compensation policy for Executive Directors.
357,476 At the Meeting of September 10th, 2021, the Board of Directors decided to
allocate a maximum of 24,000 share purchase options subject to presence and
performance conditions.
10,139 The benefits in kind include an allowance for vehicle of €10,139.
n/a Cristel de Rouvray is not a beneficiary of any severance pay.
n/a Cristel de Rouvray is not a beneficiary of any retirement compensation.
n/a Cristel de Rouvray is not a beneficiary any non-compete compensation.
Supplementary retirement plan
n/a Cristel de Rouvray is not a beneficiary of any supplementary retirement plan.
46
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
REPORT ON CORPORATE GOVERNANCE 2
Compensation payable or granted for 2021 financial year
to Alain de Rouvray, Chairman of the Board of Directors until February 8, 2021
________
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 €) Description
25,000 Alain de Rouvray was paid €25,000 for his mandate as Director and Chairman
of the Board of Directors till Feb. 8, 2021.
Other fixed compensation
114,305 Alain de Rouvray’s fixed compensation due for his other mandates within the
Variable annual compensation
Group from January to March 2021 financial year was €114,305.
n/a 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.
Long term or deferred compensation
n/a No long term of deferred compensation was granted by the Board of Directors.
Exceptional compensation
n/a No exceptional compensation was granted by the Board of Directors for 2021.
2
Stock-options and performance shares
n/a No stock-options nor performance shares were granted by the Board of
Benefits in kind
Severance pay
Retirement compensation
Non-compete compensation
Directors.
n/a Alain de Rouvray does not receive an allowance for a company vehicle or
accommodation.
n/a Alain de Rouvray is not a beneficiary of any severance pay.
n/a Alain de Rouvray is not a beneficiary of any retirement compensation.
n/a Alain de Rouvray is not a beneficiary any non-compete compensation.
Supplementary retirement plan
n/a Alain de Rouvray is not a beneficiary of any supplementary retirement plan.
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
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13456789 2 REPORT ON CORPORATE GOVERNANCE
COMPENSATION PAID TO THE DIRECTORS AND THE MANAGEMENT
CONTENTS
Compensation payable or granted for 2021 financial year
to Vincent Chaillou, Chief Operating Officer until June 22, 2021
________
Components
of the compensation
Fixed compensation
Amount or
accounting
valuation
submitted for
approval
(in €) Description
198,550 The fixed compensation payable to Vincent Chaillou as Chief Operating Officer and
employee in respect of 2021 financial year amounts to €198,550.
Variable annual compensation
— No variable compensation – See severance pay in the context of retirement.
Long term or deferred
compensation
Exceptional compensation
Compensation for Director’s
mandate
Stock-options and performance
shares
Benefits in kind
Severance pay
n/a No long term of differed compensation was granted by the Board of Directors.
No Exceptional compensation for 2021.
4,000 The compensation for his Director’s mandate amounts to €4000 for the period till
his resignation.
— Not grant of stock options or performance shares.
3,153 The benefits in kind include an allowance for vehicle of €3,153.
139,185 Allowance linked to departure and left vacation days in the context of his
departure.
Retirement compensation
Other compensation
21,739 Vincent Chaillou is a beneficiary of a retirement compensation.
60,000 Vincent Chaillou is a beneficiary of other compensation.
Non-compete compensation
n/a Vincent Chaillou is not a beneficiary any non-compete compensation.
Supplementary retirement plan
n/a Vincent Chaillou is not a beneficiary of any supplementary retirement plan.
48
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
ADDITIONAL INFORMATION IN RESPECT OF CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE 2
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
internal rules organise
The law, the Company's Articles of Association and the Board of
the control of regulated
Directors’
agreements. Proposed new agreements are examined prior to their
conclusion. In addition, the Board of Directors examines each year,
at the beginning of the financial year, the purpose and application
of the agreements that are to continue in effect. It verifies whether
they still meet the criteria that led it to give its initial approval.
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 2020 financial year is set out under
section 2.6 below.
During the 2021 fiscal year, the amendment to Vincent Chaillou’s
employment agreement has been qualified as related party
transaction, Vincent Chaillou’s employment agreement was
suspended for the duration of his mandate as Board member and
Chief Operating Officer. This related party transaction came into
effect on June 23, 2021, i.e the day after the end of his mandate as
Chief Operating Officer, and this until August 26, 2021, date of his
resignation with immediate effect as Board member. Vincent
Chaillou pursued his missions as Company’s employee until
December 31, 2021, date of his retirement.
To the best of the Company’s knowledge, there are since no other
agreements and regulated commitments.
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.
2
2.5.2. Control of current agreements concluded under normal conditions
The Board of Directors assesses whether the agreements relating to current operations and concluded under normal conditions meet these
conditions. The Board has adopted the principle of an annual assessment.
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
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13456789 2 REPORT ON CORPORATE GOVERNANCE
ADDITIONAL INFORMATION IN RESPECT OF CORPORATE GOVERNANCE
CONTENTS
2.5.3. Delegations of authority
At the date of this Universal Registration Document, the Company’s
share capital amounted to €18,192,423.
into
6,064,141 shares with a nominal value of €3 each, all of the same
class, fully paid up.
It was divided
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.
Table summarizing currently valid delegations granted to the Board of Directors
and use of such delegations during 2021 financial year
______
Resolution
number
Purpose
Term
Expiration
date
Maximum
Combined General Meeting of July 18, 2019
Used in 2021
and available
as at December
31, 2021
Resolution 15
Resolution 16
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
Resolution 17
Increase of the issue amount
in the event of over-demand
Resolution 18
Increase of the share capital
by the capitalization of premiums,
reserves, profits and other
amounts
Resolution 19
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
26 months September 2021 Global amount of capital increases:
None
less than €20,000,000
Nominal amount of the debt
securities: less than €300,000,000
26 months September 2021 Global amount of capital increases:
None
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
None
of the original issue (referred to in
resolutions 15 and 16), and the total
ceiling of €20,000,000
26 months September 2021 Not to exceed the total amount
None
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)
26 months September 2021 Not to exceed 10% of the
None
Company’s share capital, and
the total ceiling of €20,000,000
Resolution 20
Increase of the share capital
without preferential subscription
rights through private placement
26 months September 2021 Not to exceed 20% of the
None
Company’s share capital, and
the total ceiling of €20,000,000
50
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
ADDITIONAL INFORMATION IN RESPECT OF CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE 2
Resolution
number
Purpose
Term
Expiration
date
Maximum
Combined General Meeting of June 25, 2020
Resolution 17 Grant of stock subscription
38 months August 2023
options
Resolution 18 Grant of stock purchase options
38 months August 2023
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.
300,000 shares
Resolution 19
Share capital reduction
by canceling shares purchased
by the Company under Article
L. 225-209 of the French
Commercial Code
26 months August 2022
Not to exceed 10% of
the Company’s share capital
Resolution 20 Grant of free shares to eligible
38 months August 2023
employees and executive
corporate officers of the Company
and affiliated companies (a)
Not to exceed 60,000 shares
representing 1% of the share capital
as of the date of the Combined
General Meeting
Combined General Meeting of June 22, 2021
Resolution 21
Resolution 23
Company’s purchase of its own
shares (a)
Increase of the share capital
by issuing shares reserved
for employees enrolled in
the employee savings plan
18 months December 2022 Not to exceed 10% of the
26 months August 2023
Company’s share capital
Not to exceed 2% of the Company’s
share capital
(a) Renewal of the delegation submitted to the vote of the Shareholders’ Meeting on June 28, 2022.
Used in 2021
and available
as at December
31, 2021
Options granted
at the date of this
Universal
Registration
Document: 0
Options
remaining:
180,000
Options granted
at the date of this
Universal
Registration
Document:
24,000
Options
remaining:
276,000
None
Free shares
granted during
the year 2021:
59,698
Free shares to be
allocated: 302
None
None
2
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13456789 2 REPORT ON CORPORATE GOVERNANCE
ADDITIONAL INFORMATION IN RESPECT OF CORPORATE GOVERNANCE
CONTENTS
2.5.4. Provisions of the articles of association concerning the participation
of shareholders in General Meetings
General Meetings
(Article 19 of the articles of association)
In accordance with Article 19 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
identity, to take part in Meetings by attending them in person, by
video
electronic
telecommunication or transmission, or by returning the mail-in
ballot or designating a proxy.
other means
conference
by
or
of
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.
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 20 of the articles of association)
first convened unless
The Ordinary General Meeting cannot validly conduct business
when
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.
52
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
ADDITIONAL INFORMATION IN RESPECT OF CORPORATE GOVERNANCE
REPORT ON CORPORATE GOVERNANCE 2
2.5.5. 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
information
in section 8.2.5 of this Universal
Registration Document under the heading “Change in the
breakdown of the Company’s share capital over the past three
financial years”;
included
is
■ There are no statutory restrictions on the exercise of voting
rights and share transfers;
■ To the Company’s knowledge, there are no agreements or other
commitments signed by the shareholders other than those
in section 8.2.5 of this Universal Registration
mentioned
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 by-laws on the exercise of voting
rights and the transfer of shares;
■ 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;
■ Any amendments to ESI Group’s articles of association are made
in accordance with legal requirements and regulations;
■ 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.
2
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
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STATUTORY AUDITORS’ REPORT ON REGULATED AGREEMENTS
CONTENTS
2.6. STATUTORY AUDITORS’ REPORT ON REGULATED AGREEMENTS
This is a translation into English of a report issued in French and it is provided solely for the convenience of English-speaking users. This report should
be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.
Annual General Meeting held to approve the financial statements for the year ended 31 December 2021
To the Annual General Meeting of ESI Group,
In our capacity as statutory auditors of your Company, we hereby present to you our report on related party agreements.
We are required to inform you, on the basis of the information provided to us, of the terms and conditions of those agreements indicated to
us, or that we may have identified in the performance of our engagement, as well as the reasons justifying why they benefit the Company. We
are not required to give our opinion as to whether they are beneficial or appropriate or to ascertain the existence of other agreements. It is
your responsibility, in accordance with Article R. 225-31 of the French Commercial Code (Code de commerce), to assess the relevance of these
agreements prior to their approval.
We are also required, where applicable, to inform you in accordance with Article R. 225-31 of the French Commercial Code (Code de
commerce) of the continuation of the implementation, during the year ended 31 December 2021, of the agreements previously approved by
the Annual General Meeting.
We performed those procedures which we deemed necessary in compliance with professional guidance issued by the French Institute of
Statutory Auditors (Compagnie nationale des commissaires aux comptes) relating to this type of engagement. These procedures consisted in
verifying the consistency of the information provided to us with the relevant source documents.
Agreements submitted for approval to the Annual General Meeting
In accordance with Article L. 225-40 of the French Commercial Code (Code de commerce), we have been notified of the following related party
agreement, entered into during the year ended 31 December 2021, which received prior authorization from your Board of Directors.
■ With Mr Vincent Chaillou, Deputy CEO until 22 June 2021, director until 26 August 2021
Amendment to Mr Vincent Chaillou’s employment contract
/ Nature and purpose
Mr Vincent Chaillou’s employment contract was suspended for the duration of his term of office as Deputy CEO of the Company. The term of
office ended on 22 June 2021. Mr Vincent Chaillou continued to perform his duties as director of the Company until 26 August 2021, date of
his resignation.
With respect to the reactivation of Mr Vincent Chaillou’s employment contract, the Board of Directors, at its meeting on 10 June 2021,
authorized the signing of an amendment to the contract, whereby Mr Vincent Chaillou would act as strategic advisor to the Company’s CEO as
from 23 June 2021.
/ Conditions
The terms for the fixed compensation, variable compensation and benefits in kind resulting from this amendment to the employment
contract, as approved by the Board of Directors on the recommendation of the Compensation Committee, were as follows:
■ A fixed gross annual salary of €198,550;
■ Variable compensation of up to €120,000 subject to the achievement of targets set by the Company unilaterally and assigned to the
employee at the beginning of the financial year;
■ A benefit in kind: a company car for which the monthly lease payment was not to exceed €1,527 including taxes.
Mr Vincent Chaillou performed his role as strategic advisor to the CEO until the date of his retirement on 31 December 2021.
The amounts of fixed compensation, variable compensation and benefits in kind for the period from 23 June 2021 to 31 December 2021 were
thus as follows:
■ Fixed compensation paid: €103,787.50;
■ Variable compensation paid or awarded in respect of the employment contract which was performed until 31 December 2021: €0;
■ Amount of the benefit in kind: €1,864.25.
/ Reasons justifying why the Company benefits from this agreement
Your Board of Directors gave the following reasons: “it is necessary to amend his reactivated employment contract in order to take into
account the changes in his duties within the Group”.
Agreements previously approved by the Annual General Meeting
We hereby inform you that we have not been notified of any agreements previously approved by the Annual General Meeting, whose
implementation continued during the year ended 31 December 2021.
Paris-La Défense, 8 April 2022
The Statutory Auditors
French original signed by:
KPMG Audit
Département de KPMG S.A.
Stéphanie Ortega
ERNST & YOUNG Audit
Pierre-Henri Pagnon
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3 RISKS AND RISK
MANAGEMENT
3.1. RISK FACTORS
3.1.1.
Risk analysis and evaluation method
3.1.2.
Strategic and operational risks
3.1.3.
3.1.4.
Digital risk
Risk related to the environment
3
56
56
57
57
58
3.2.
INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES 58
3.2.1.
Control environment
58
3.2.2.
Internal control organization
3.2.3.
Risk management
60
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3.1. RISK FACTORS
The Group has reviewed the major risks that could have a significant effect on its business, financial position or results. The data presented
below constitute the main 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 five stages, according
to the methodology described below:
The risks listed on the following pages have been assessed
(Stages 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” (high, important,
medium, low), which then implies the implementation of measures
to control these risks (Stage 4).
importance, considering
In each category (table below), risk factors are listed in descending
order of
their
materialization and the estimated magnitude of their impact and
after
the mitigation measures already
taking
implemented by ESI.
the probability of
into account
STAGE 1
Context & Risk
Identification
STAGE 5
Risk Monitoring
& lifecycle control
STAGE 2
Risk Analysis
STAGE 4
Risk Mitigation
STAGE 3
Risk Assessment
Strategic and operational risks
Digital risk
Risks related to the environment in which the Group operates
■ Concentration among top customers and industry sector
■ Competition and differentiation
■ Intellectual Property
■ Alignment of Human resources
■ Information security
■ International environment, geopolitical, and regulatory risks
■ Environment: Global Pandemic situation
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RISK FACTORS
3.1.2. Strategic and operational risks
3.1.2.1. Concentration among top
3.1.2.3. Intellectual property
customers and industry sector
the
The Group works with customers willing
performance and manufacturing process of
their products.
Historically some industries have been more mature in their
approach, as have larger industrial players. This results in business
concentration and particularly among the top 20 customers and
Ground transportation.
improve
to
ESI seeks to manage a profitable path to scale and continued
growth via focus and simplification. It has structured its approach in
four main industries & three lines of business, allowing focused
R&D & Innovation investments. The Group is transforming to
globalize customer facing activities, to deepen footprint in existing
customers and increase new business.
3.1.2.2. Competition (competitive edge),
differentiation
Simulation & Analysis
is a vibrant, high stakes market with
consolidation and concentration of competition. These larger actors
have considerably higher growth and profitability performance than
ESI Group. This results in a heightened need for ESI to clearly
position itself and focus to grow profitably.
ESI clearly outlines the differentiators in its offering and positioning,
focusing on the core business.
It creates more clarity and
simplification of the offer around three lines of business, to increase
the value by chaining our predictive physics capabilities, and to
invest to win by aligning on the core business.
3.1.3. Digital risk
3.1.3.1. Information security
ESI’s value chain relies heavily on an IT infrastructure that is of a
paramount importance in the processing, transmission and storage
of data related to internal and external operations. The Company
may be exposed to computer attacks of all kinds (viruses, fraudulent
e-mails, phishing, financial fraud, industrial espionage, etc.). The
General Data Protection Regulation (GDPR) is also integrated in the
legal requirements environment. ESI also seeks to comply with
client requirements concerning the confidentiality, integrity and
availability of information entrusted to the Group.
ESI’s earnings are based on the ownership of the software or for
which it owns a commercial license. Due to the nature of its activity,
the Company may be exposed to risks such as counterfeiting/piracy
of the products marketed by the Group.
ESI controls the intellectual property of codes developed in house
for which ESI retain the ownership through the clauses on the
employment contracts, ad-hoc development agreements inside the
Group and through the protection of codes via bailiff deposits. The
Group implements a password protection method on most of its
products, and a counterfeit detection software associated with a
legal assistance service to prosecute counterfeiters. ESI is managing
a protection through contracting based on the generalization of our
EULA
(End User License Agreement) and negotiation with
customers on general terms and conditions.
3.1.2.4. Alignment of human resources
The Group’s success depends in large part on its ability to attract,
retain, and motivate talented employees, with a constant focus on
aligning their skills with the Group’s needs and challenges, which is
of utmost importance in a context of transformation.
3
ESI constantly manages the evolution in headcount to align with the
core activities. ESI implements retention and loyalty policies, by
setting up talent development plans and attractive compensation
policy for key people.
ESI relies on the reliability of its Information Management System
based on the requirements of the ISO 27001. The Group benefits
from a TISAX (Trusted Information Security Assessment Exchange)
certification for several sites. The setting up of a global cyber
insurance policy allows the Group to protect its activities, while
reviewing and validating its internal systems and control points.
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3.1.4. Risk related to the environment
3.1.4.1. International, geopolitical,
3.1.4.2. Environment: Global pandemic
and regulatory environment
situation
The economic context and limited visibility may have an impact on
customer investments and could lead to lengthened sales cycles.
The increased tensions, in or between certain regions or countries,
could lead to the implementation of protective laws and regulations
in certain areas that would slow down the deployment of our
solutions. In the event of non-compliance ESI would face the
penalties and sanctions laid down on those legal text.
The Group’s presence in many countries protects it from the
adverse effects of unfavourable local economic conditions. The
Group ensures compliance with Export Trade laws and regulations
as they evolve, when necessary.
In the current context and environment and specifically the
Covid-19 crisis, it has been necessary to keep adapting and
transforming the operational activities, in order to limit its influence
on the development of the Group. The Group put in place a crisis
management system
to Crisis
management) enabling
identification of action plans and
deployment of the necessary measures to ensure the continuity of
the activity while protecting the employees.
(see section 3.2.3
related
The health crisis created opportunities for increased engagement
with the customers in a different manner but also for bringing new
working methods to ensure the continuity of the operations.
3.2.
INTERNAL CONTROL AND RISK MANAGEMENT
PROCEDURES
3.2.1. Control environment
General organization
ESI is a multinational corporation that includes 23 subsidiaries (the
“subsidiaries”), 22 of which are based outside of France, as of the
date of publication of this document.
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.
Given the current constraints, in particular regarding the size of the
subsidiaries, the availability human resources and regulations that
may differ from country to country, the Group’s structure has been
based on the following key factors:
■ A global organisation around business activities with proper
delegation structure;
■ A centralized organization to manage the Group’s business
activities;
■ A limited number hierarchical levels to streamline decision-
making processes;
■ 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. The Board of Directors is
supported by five Board committees to prepare the reviews and
decisions.
■ A relatively small size for efficient communication among the
various departments.
Leadership Team
internal control processes are
The Company considers that
intended to provide reasonable assurance that the following
objectives are met (the principles implemented cannot provide an
absolute control of all risks):
■ Ensuring that management activities and operations, as well as
employee conduct, are aligned with the guidelines set out by the
Company’s management and the operational departments
overseeing the various business activities and countries, as well
as with regards to any applicable laws and regulations and the
Company’s core values and internal rules;
The Leadership team oversees effective implementation of the
internal policies. The Leadership team gives strategic orientation
and makes the arbitration decisions concerning the allocation of
resources
the Company’s worldwide
development. The Team generally meets once a month.
to ensure
in order
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Operational and corporate departments
The operational departments primarily oversee business processes
and manage projects. Their role is to ensure the implementation of
procedures to guarantee:
■ Effective business processes:
identification of business
opportunities,
partnerships,
responsiveness, assessment of potential economic benefits,
negotiation and signing of contracts, profitability monitoring;
distribution
network,
■ Effective project management: evaluation of technical feasibility,
team management
compliance with
specifications, customer satisfaction tracking and customer
service.
leadership,
and
The Support functions departments are responsible for formalizing
their respective areas and
in
internal control procedures
coordinating and applying these procedures. These departments
are the following:
Administration and Finance Department
The Administration and Finance Department handles
implementation of the internal control policy at its level by:
the
■ Establishing the operations procedures for the internal financial
control system;
■ Organizing financial control operations on different Group
activities, as well as the accurate transcription in the Group’s
accounts, ensuring regulatory compliance.
Legal Affairs Department
The Legal Affairs Department is the guarantor of the respect of laws
and regulations while being a business partner, and covers two
main areas:
■ The Corporate Legal Affairs activity, which manages all stock
exchange and company laws aspects for ESI Group and its
in order to ensure compliance and a good
subsidiaries,
harmonisation among the Group’s subsidiaries;
■ The Contract and Intellectual Property activity, which covers
reviews, drafts, and negotiation of the various contracts with
clients and partners in the industry, government bodies and
academic institutions, and ensures that the Group’s intellectual
property rights are protected.
Quality Management Department (QMD)
The Quality Management Department has three main missions:
first, to support the Leadership Team to define and then implement
the Corporate Quality Policy. Second, to support the Process
Owners and Process Pilots to design and deploy robust processes
which will deliver the expected outcomes. And third, act as a
catalyst to spark the continuous improvement of activities.
To achieve the above-mentioned missions, the QMD will use the
following tools:
■ Internal Audits;
■ External Audits;
■ Process Analysis;
■ Process Review.
Information and Technology (IT)
In an increasingly digital and connected world, data security is of a
paramount importance for ESI, its customers, and its partners, who
are posing stricter conditions with regards to the way the Company
is handling its information.
In this context, ESI is committed to improve its capabilities on this
aspect by implementing the requirements of the international
standard ISO 27001:2013, and TISAX obligations to comply with the
particular constraints from the Automotive’s sector customers.
The IT Department ensures the application of the security policy
and the internal controls necessary to the proper application and
execution of actions to secure our assets, from a point of view
physical, logical and Human.
Internal and external audits contribute
the continuous
improvement process to help us keep our infrastructure and
procedures up to date.
to
Human Resources Department (HRD)
Working closely with management, ESI’s Human Resources
Department assists the Company’s strategy by factoring in the
employer-employee considerations.
ESI’s HR policy is based on four main components:
■ Personal management;
■ Performance management;
■ Compensation management;
■ An advisory function for operational staff.
Advising operational staff seeks to fostering independence among
Managers on employment issues by offering them assistance in the
field on a day-today basis, and by providing them with services
tailored to their specific needs.
3
The Group HRD sets the guidelines for the Group’s Human
Resources Policy which is cascaded into operational objectives for
Regional Directors of Human Resources. They coordinate the
implementation of these objectives in collaboration with a team of
HR operating managers located in each country, and with the
support from the central HR functions.
is to create a great work
ESI’s Human Resources mission
environment, acting as a partner between the organization for the
best employee engagement and experience. ESI’s HR Policy is based
on four main components:
■ Culture;
■ Career Growth & Employee Engagement;
■ Learning Programs;
■ Compensation & Benefits.
By respecting our organization’s ethics, values, and strategy, we will
constantly ensure to foster the positive attitude of teamwork, career
growth, employee engagement, empowerment, and motivation
leading us to great achievements individually and as a whole
organization.
The Global HR Coordinators sets the guidelines for the Group’s
Human Resources Policy which
into operational
objectives
for the Performance Units. They coordinate the
implementation of these objectives in collaboration with a team of
HR Business Partners working with global teams and supported by
Culture Representative member ensuring the local regulation
requirements.
is cascaded
/ Third-parties to the Company
The Company may call on renowned law firms for specific expertise,
dispute management, as well as a tax advisory firm. The Company
may also call on specialists from time to time to review the legal
aspects of complex mergers and acquisitions, or to verify local legal
constraints within the Group’s subsidiaries outside of France.
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3.2.2. Internal control organization
The increasingly international nature of the Group’s business and
the cross-organizational character of
involving
international interactions of ever-greater complexity and speed,
have highlighted the need for more rapid and efficient methods and
operational management
the
subsidiaries.
tools, both centrally and
its projects,
in
In order to achieve this objective, the organization of the
Administration and Finance Department has been structured to
ensure a high-level quality of operations and of controlling, Meeting
the level of requirements to support operational staff in the
development of the activity, and to allow a reactivity adequate to the
in which the Group operates. The
changes
organization of the Administration and Finance Department is
based on the following three pillars:
in the market
■ A network of financial controllers having both central and local
approach, enabling to gather all required information;
■ Centralized tools;
■ Processes to organize reporting and control of
financial
information.
A network of financial controllers
financial controllers are dedicated to the
This network covers the monitoring and control of all financial
operations within the Group, according to a dual organization:
central
functional
monitoring of worldwide activities (e.g. monitoring of research and
development activities, revenue generation activities, support
activities etc.), while local financial controllers are dedicated to
monitoring the scope of their subsidiaries and geographic coverage,
by providing detailed local financial information to central team.
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 having access
to information as close as possible to the operations, interactions
between the teams of local and central controllers enable gathering
of information to ensure a good understanding of operations, and
analyses carried out at several levels for better anticipation and
more efficient piloting.
The size of local financial teams depends on the size of related
entities. In large countries, controlling and accounting functions are
performed by separate teams, in charge of 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 IT system
Financial control is based on a management IT system consisting of
the following centralized tools, deployed on a worldwide scope:
■ Salesforce, the customer relationship management tool, is the
backbone of the organization and internal control system for
sales. Salesforce gathers data about customer contracts for
Licensing and Services activities, and also more detailed
licensing contract. This
for each
operational
information is automatically integrated to the accounting tool, to
allow customer
invoices generation as well as revenue
recognition;
information
■ HR-IS (HR-Information System), the HR data management tool,
enables consolidation at Group level of data related to salaries
and headcount. This tool also allows monitoring of the different
steps of the hiring process and provide managers with any
information necessary to optimize management of their teams.
HR-IS data are one of the sources used for financial reporting
regarding employees;
■ Anaplan, the financial planning and analysis tool,
is the
cornerstone of the budget process and ensures complete
reporting of all activities through centralizing data for the entire
Group from Salesforce, from HR-IS, and from management
systems for research and development activity as well as for
consulting activity;
is performed
■ Netsuite, the accounting tool, deployed in all countries where
accounting
internally, enables booking of
operations for each entity according to both local accounting
standards of the country and to Group standards. Deployment
of Netsuite in countries where accounting is externalized has
followed on 2021, to achieve the target of having a worldwide
single accounting tool in 2022. Netsuite is integrated with the
customer relationship management
travel
expenses management tool and with the procurement tool (in
France);
tool, with
the
■ Talentia CPM, the financial consolidation tool, enables to
centralize data for all Group entities, necessary to produce
consolidated financial statements compliant with IFRS standards.
Main accounting and financial
information monitoring processes
/ Accounting and consolidation process
Consolidated financial statements are prepared on a quarterly
basis. Revenue is published on a quarterly basis, whereas full
financial statements are published twice a year.
Consolidated financial statements result from the centralizing of
accounting and financial data for all Group entities, applying a
process organized around the following key points:
■ A calendar of tasks to be carried out and deadlines to meet for
all people involved, be it in accounting, consolidation or FP&A
team;
■ The phased deployment of a single Group accounting tool,
ensuring a homogeneous closing process and enabling to
optimize closing deadlines, and use of a specialized
consolidation software;
■ The separation between preparation of consolidated financial
information and control activities;
■ A review of the half-year and yearly financial statements by legal
auditors, the Audit Committee and the Board of Directors.
The deployment of Netsuite in 2020 in countries where accounting
is performed internally enabled to change from a quarterly to a
monthly accounting closing.
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/ Budget monitoring and reporting process
The Group budget is established at the end of each previous
financial year. It is built on assumptions related to business
development of each entity, based on Group strategy per industry,
per outcome and per customer type. These assumptions are
discussed with all internal stakeholders, then consolidated to verify
alignment with Group targets. Budget is finally validated by the
Board of Directors.
Budgeted results are compared each month with actuals and
monthly forecasts of yearly results. This reporting is sent to Group
top management each month before Group Executive Committee
Meetings.
(KPIs)
FP&A team also prepares key performance
enabling performance monitoring and necessary for Group piloting.
These KPIs mostly refer to:
indicators
In countries where Netsuite is deployed, revenue is calculated in the
tool on the basis of information retrieved from Salesforce. All
recognition rules, those compliant with local accounting standards
of each country, and also those compliant with Group standards
(IFRS), are configured in the system. As customer invoicing is also
performed with Netsuite, the tool enables automation of related
period-end book entries in the balance sheet.
/ Client risk management process
Client risk management process is the joint responsibility of the
Sales and the Finance Departments.
Regular monitoring of cash collection by accounting team enables
efficient incident resolution, with the help of sales team if necessary.
/ Cash management process
■ Licensing and Services revenue, be it actuals or forecasted year-
end revenue, and correlation with current backlog;
Finance Department is responsible for cash flows and financing
facilities management. It is in charge of:
■ Headcount and staff costs evolution;
■ Other costs evolution and their possible optimization;
■ Cash position and cash forecast until the end of the current year
and at year-end for next year.
Group internal matrix organization is based on crossing activities
and geographies
in charge
(Business Units) with
(Performance Units). Strengthening of tools and processes during
last years (tools with worldwide scope of deployment, homogeneity
of related processes, enhanced use of analytical dimensions) aims
at preparing a reporting and performance indicators for each unit
manager, to optimize piloting.
teams
/ Revenue recognition process
Revenue recognition process is the joint responsibility of the
Finance, the Sales and the Technical Departments.
Revenue recognition calculation for Licensing is based on the
different types of existing customers contracts. For Services it is
based on the percentage of completion rate of the projects.
Reliability of data filled in business tools (customer relationship and
projects monitoring management tools) ensures accuracy of
recognized revenue.
■ Controlling cash positions for all Group entities and their
adequacy to current needs, through tracking of cash inflows and
outflows. If authorized by local regulations, subsidiaries’ cash
positions are centralized;
■ Establishing monthly cash forecasts for each Group entity and at
level, and reviewing their consistency with results
Group
forecasts;
3
■ Negotiating and setting necessary financing facilities (signed by
Group parent company) to ensure sufficient cash level to meet
short and medium terms engagements and enable Group
development;
■ Assessing
foreign exchange risks, to take any necessary
preventive action.
/ Payroll 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;
■ Ensuring compliance with labor-related reporting obligations.
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3.2.3. Risk management
Process management and certification
Crisis management
ESI Group has been ISO 9001-certified since the 2000’s and has
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 been supplemented by the transition to the 2015
is an additional asset to strengthen process
version, which
management and facilitate the implementation of risk management,
thereby ensuring long term and effective prevention.
The Global Quality Management System (ISO 9001) has reached a
global coverage in 2021 with the incorporation of the last affiliates.
integrating additional key requirements
This global approach to Process alignment and continuous
improvement continues with a commitment by Group management
to continue
(TISAX,
ISO 27001: see section 3.1.3.1 “Information Security” for details) and
terms of Performance,
thus
Confidentiality, Integrity, and Availability of information (employees,
customers, Company).
strengthen operations
in
Insurance and risk coverage – general
information
In the framework of its strategy regarding risk management, the
Group subscribes to several insurance policies with internationally
known insurance companies.
Thanks to these policies, the Group manages a transfer of major
risks that it might face and creates a prevention mechanism to
reduce the hazards as much as possible. The Group follows up on a
daily basis the level of risks in order to adjust at best its insurance
coverage.
The Group (ESI Group and its subsidiaries) benefits from the
following insurance policies worldwide:
■ Cybersecurity and professional civil
liability: covering the
interruption of activity due to a failure or break down of the
system, as well as the security attacks on the network, and all
their consequences (damages to third parties, loss of revenues,
cyber extortion, loss of documents, and attempt to the Group’s
reputation);
■ IT risks: covering damages on our IT material and loss of
revenues;
■ Liability of our managers
(Directors and Officers Liability
Insurance – D&O);
■ Specific coverage for business trips of employees.
Depending on local risks, ESI Group subsidiaries may also subscribe
to local insurance to cover mainly the offices and vehicles, but also
some employees insurance (civil liability, accidents).
/ General crisis management system
The Group has developed a business continuity plan that is
intended to ensure that necessary systems, plans and actions are in
place to protect the teams and ensure the business continuity. Each
action plan is adapted to local constraints and context in order to
consider adequately specificities for each site. A crisis cell is
activated whenever particular and identified typologies of events
appear requiring a coordinated and collaborative response.
/ Specific approach related to the management
of the Covid-19 crisis
In the current context of health crisis that can affect both
employees and customers, the crisis management system has been
activated involving the creation of two specific cells:
■ One rapid response cell to be in contact on the day to day with
the employees and answer all their questions. This cell, including
members from each region, was very active at the beginning of
the crisis. Nowadays, the head of each entities are the active
local relays;
■ One crisis cell to ensure continuity of activities including HR,
Facilities, IT, Quality, Communication, Finance and Governance.
The crisis cell focused on:
■ Coordinating all actions and information from the government
and other sources (e.g. Legal, Insurance, HR/Social, etc.) and
assessing the situation globally and locally;
■ Defining and
implementing
the necessary measures or
guidelines (e.g. work from home, adequate infrastructures,
guidance and instructions for travellers or in case of site visits or
others aspects);
■ Transforming the way of working to open new opportunities and
support business functions with new ways to interact with
customers (e.g. digital trainings, digital forums, etc.).
The measures and initiatives of the crisis cell are supported by
regular communication initiatives (“Business Continuity Plan Talk”)
held at worldwide level.
link. The
Creative Social events also have enabled employees to maintain a
importance of maintaining team spirit, the
strong
conviviality and looking after the well-being of our employees, led to
the setting up of activities such as “Virtual Contest”, “Virtual Coffee
break” events as well as other local or global initiatives.
Concerning the financing, ESI Group was granted State-guaranteed
loans (PGE). This helped strengthening the Group’s financial
position to face the foreseeable consequences of the pandemic
situation.
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4
STATEMENT ON
EXTRA-FINANCIAL
PERFORMANCE
4
4.1. ESI – THE PRODUCT PERFORMANCE LIFECYCLE COMPANY
4.1.1.
Value creation
4.1.2.
ESI values
4.2. ESI – A COMMITTED GROUP
4.2.1.
4.2.2.
4.2.3.
Setting priorities: CSR framework
Evaluating sustainability challenges: materiality assessment
CSR distinctions and commitments
4.3. BEING A COMMITTED EMPLOYER
4.3.1.
Developing talents and encouraging leadership
and collaborative management
4.3.2.
Promoting diversity, inclusion and multicultural exchanges
4.3.3.
Fostering Employee well-being and job satisfaction
4.3.4.
Set up initiatives to interact with civil society (give-back)
4.4. BEING AN OUTSTANDING PARTNER
4.4.1.
4.4.2.
4.4.3.
Support the transformations of industries and customers
by developing a network of partners who share ESI’s values
of innovation and performance
Committing to continued customer satisfaction
while meeting quality and safety requirements
Being a long-term trusted advisor and partner to support
the delivery of customers outcomes and business values,
involving the entire ecosystem
4.5. BEING AN ETHICAL AND COMMITTED COMPANY
4.5.1.
4.5.2.
Guaranteeing solid and diversified governance
Act ethically and responsibly – Ethics Charter
4.6. BEING AN ENVIRONMENTALLY FRIENDLY PLAYER
4.6.1.
Developing solutions aiming to have a positive impact on planet
4.6.2. Moving forward to the carbon-neutrality of the Group
4.6.3.
Engaging employees in the creation of a green world
4.7. EUROPEAN TAXONOMY
4.7.1.
Determination of eligible activities within the meaning of the taxonomy
4.7.2. Methodology for calculating the KPIs
4.8. REPORTING
4.8.1.
4.8.2.
Reporting methodology
Report of the inspecting organization
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ESI – THE PRODUCT PERFORMANCE LIFECYCLE COMPANY
CONTENTS
4.1. ESI – THE PRODUCT PERFORMANCE LIFECYCLE COMPANY
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 virtualizing 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 impact 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.
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
4.1.2. ESI values
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:
Automotive, 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.
The year 2021 continued on the trend seen these past years with a
major impact on the expectations and practices of both consumers
and industrial players: Corporate Social Responsibility (CSR) has
become a key and visual element to assess the Company’s
performance. This has accelerated the importance of companies’
commitment to a responsible approach to their employees, the
environment and all their stakeholders. Since its creation, ESI has
been committed to supporting strong social and environmental
topics such as safety and the reduction of the
industry’s
environmental footprint. In the current particular year, ESI has
strengthened its various commitments, as you will discover in this
chapter.
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, partners and employees for nearly 50 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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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 has gradually developed a Corporate Social
Responsibility (CSR) policy that contributes to shared economic and
social development and the preservation of human balance.
ESI core strategic vision is to be a To be a leading software partner
in selected virtual test markets, by leveraging our predictive physics
IP and platform for chaining.
The Group thus intends to be its customers’ preferred software
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 2021, ESI supported by its CSR Steering Committee has updated
its commitments and aligned them with its strategy and offer,
through the implementation and monitoring of social, societal and
environmental initiatives with and for the Group’s stakeholders.
into thirteen
Moreover in 2021 ESI has updated its materiality matrix to better
visualize its priorities, challenges , their impact on the Company and
on 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
(13) commitments, aims to continue
ensuring harmonious working conditions for its employees, to
provide its customers with innovative solutions enabling them to
limit the environmental
become
footprint of the Group and its customers while acting ethically and
responsibly within civil society. Through its activities, ESI 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.
long-term partners, and to
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ESI – A COMMITTED GROUP
4 STATEMENT ON EXTRA-FINANCIAL PERFORMANCE
ESI – A COMMITTED GROUP
CONTENTS
ESI Group’s CSR approach
The Group’s CSR approach is aligned with its business strategy and contributes to the achievement of its strategic
objectives. It enables ESI to create social and economic value in response of the four main challenges: Transparency/
Compliance, Virtual Prototype for good, People first and Environmentally friendly.
2021 performance
____
SUSTAINABILITY
CHALLENGES
COMMITMENTS
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.
BEING A COMMITTED EMPLOYER
Developing talents & Encouraging Leadership
and collaborative management
Promoting diversity, inclusion
and multicultural exchanges
Fostering employee well-being
and job satisfaction
Setting up initiatives to interact
with civil society (give-back)
BEING AN OUTSTANDING PARTNER
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, ESI provides
them with solutions enhancing
their competitive advantage.
Supporting customers in their digital
transformation from physical to virtual
by unleashing and securing innovation while
sustaining productivity (Performance)
Committing to continued customer satisfaction
while meeting quality and safety requirements
Being a long-term trusted advisor and partner to
support the delivery of customers’ outcomes and
business values, involving the entire ecosystem
The social acceptability of ESI’s
operations is essential.
Therefore, the Group ensures
the integrity of its ethics and
the robustness of its corporate
governance. This enables ESI
to ensure the sustainability
of its business model.
BEING AN ETHICAL AND
COMMITTED COMPANY
Guaranteeing solid and
diversified governance
Acting ethically and responsibly
While the Group’s business sector
has an impact on the environment,
its services help to reduce
the environmental footprint of
its customers’ business. Therefore,
to increase the positive impact
of its business, ESI is committed
to limiting the impact of
its operations as much as possible.
BEING AN ENVIRONMENTALLY
FRIENDLY PLAYER
Developing solutions aiming to have
a positive impact on planet
Moving toward the carbon-neutrality
of the Group
Engaging employees in the creation
of a green world
PEOPLE FIRST
VIRTUAL PROTOTYPE
FOR GOOD
TRANSPARENCY/
COMPLIANCE
ENVIRONMENTALLY
FRIENDLY
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4 STATEMENT ON EXTRA-FINANCIAL PERFORMANCE
ESI – A COMMITTED GROUP
ESI Group’s CSR approach
The Group’s CSR approach is aligned with its business strategy and contributes to the achievement of its strategic
objectives. It enables ESI to create social and economic value in response of the four main challenges: Transparency/
Compliance, Virtual Prototype for good, People first and Environmentally friendly.
2021 performance
____
CONTENTS
STATEMENT ON EXTRA-FINANCIAL PERFORMANCE 4
ESI – A COMMITTED GROUP
PERFORMANCE 2021
+ 1,144 EMPLOYEES SERVING
CUSTOMERS WORLDWIDE,
80~100% WORKING
FROM HOME OFFICE
3 “WELCOME DAYS” (ONLINE)
HAVE BEEN ORGANIZED AROUND
THE WORLD TO INTEGRATE
NEW EMPLOYEES
6,912 HOURS DEVOTED
TO TRAINING
0 ALERT LINKED
TO DISCRIMINATORY PRACTICESS
4
€99.2M
STABLE REPEAT BUSINESS
29.8% OF LICENSES
REVENUE HAS BEEN
DEDICATED TO R&D EFFORTS
16 JOINT-EVENTS
ORGANIZED WITH CUSTOMERS
AND 10 PUBLISHED SUCCESS
STORIES IN 2021
0 CUSTOMER-RELATED
DATA INCIDENT (GDPR)
85.7% OF THE BOARD
OF DIRECTORS ARE INDEPENDENT
MEMBERS
37.5% OF THE ESI LEADERSHIP
TEAM (ELT) MEMBERS
ARE WOMEN
100% OF EMPLOYEES HAVE
TAKEN A TRAINING/QUIZ ON THE
ETHICS CHARTER
0 ALERTS HAVE BEEN HANDED TO
AND MANAGED BY THE ETHICS
COMMITTEE
ESI IS INSTALLING ECO-
RESPONSIBLE EQUIPMENT
TO LIMIT ITS ENERGY
CONSUMPTION (a)
67% LESS CO2 EMISSIONS (b)
RELATED TO EMPLOYEE TRAVEL
BY TRAIN AND PLANE
- 20% LESS PAPER (C)
WAS CONSUMED
COMPARED TO 2020
20% REDUCTION IN DELIVERY
DISTANCES THANKS TO LOCAL
PRINTING OF MARKETING
MATERIALS VIA GELATO (c)
(a) Average calculated based on 2020 data provided by ESI sites representing 98.4% of the total workforce.
(b) Average calculated for countries with data available for the last 3 consecutive years.
(c) Estimation for the year 2021, given by Gelato, a global print-on-demand platform used by ESI group.
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ESI – A COMMITTED GROUP
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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 society, economy, planet and governance, and that most influence stakeholders’ decision-making, ESI has updated its materiality matrix
in 2021.
This matrix represents a key tool in the execution of the CSR 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 involves the identification and
preliminary assessment of various risk and opportunity factors for
ESI in terms of sustainable development.
This identification step is based on:
■ Sustainable Development Goals (SDGs) defined by the United
Nations Global Compact (UNGC), to which ESI contributes
through its activities and its CSR approach. ESI is also a member
of UNGC since 2018;
■ Consultation of existing internal documentation, including the
2020 materiality assessment;
■ A benchmark of the materiality assessment of other companies
operating in the same sector.
The
identified material challenges have been reviewed and
consolidated by the CSR Steering Committee (presented under the
previous section).
/ 2. Evaluation and prioritization
The objective of this step is to rank and assess the identified
material challenges (called “commitments” henceforth) according to
their potential impact on the business and their importance to ESI’s
stakeholders.
Thirteen (13) commitments have been defined under four axes
(presented above under the 2020 performance table.
Materiality matrix
In 2019, and for its first materiality matrix, ESI evaluated its
commitments thanks to an internal workshop with a limited staff
representing several departments. In 2020, the Group structured its
approach through two global surveys (Internal questionnaire to all
employees and external questionnaire addressed to some of the
main stakeholders).
For 2021, ESI has decided to focus its efforts to understand the
challenges of a priority group (in the context of the Company’s
Transformation), represented by
the
Leadership Team. To this end, an investigation was launched to
recover their inputs.
the direct reports of
In the same line, we wanted to broaden the feedback from our
external stakeholders,
in particular our customers, without
forgetting our suppliers, investors, financial and legal ecosystem.
A dedicated and targeted survey was launched which allowed us to
increase our customer return rate compared to last year and to
collect valuable
information to proceed with the update of
our Matrix.
These commitments were then positioned in a matrix – the axes of
which are represented by the two evaluated internal and external
dimensions above, evaluated via the both surveys presented 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 reviewed.
Finally, the matrix followed an internal validation process and has
been audited by an external CSR agency.
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
PEOPLE FIRST
VIRTUAL PROTOTYPE FOR GOOD
TRANSPARENCY & COMPLIANCE
ENVIRONMENTALLY FRIENDLY
CRITICAL
IMPACT
Leadership
& collaborative management
Talent development
& growth of expertise
Customer satisfaction,
quality & security
Customer support
innovation and productivity
Ethics
& compliance
Group’s carbon-
neutrality objective
Long-lasting
& trusted relationships
IMPORTANT
IMPACT
Interaction with civil
society (give-back)
Diversity, inclusion
& multicultural exchanges
MODERATE
IMPACT
Engagement of ESI’s
colleagues in sustainability
Diversified
& solid governance
Quality of work-life
Development of
planet-friendly solutions
IMPACT ON ESI’S PERFORMANCE
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ESI – A COMMITTED GROUP
Understanding the materiality results
Exploiting the materiality results
In the materiality matrix above, ESI’s sustainable commitments (13)
are divided into three distinct sections/areas, allowing a better
visualization and understanding of the impact of each challenge and
its importance to ESI’s stakeholders, internally and externally:
■ The “Critical Impact” section contains ESI’s six (6) priority
commitments;
■ The “Important impact“ component encompasses six (6) major
commitments;
■ The “Moderate Impact” section includes one (1) commitment.
The materiality matrix is made available and accessible to all ESI’s
internal and external stakeholders. In addition, the identified
commitments are being constantly discussed by the CSR Steering
Committee in the aim to continue developing concrete sustainable
initiatives and monitor CSR performance, as part of the Group’s
commitment to ensuring a responsible and sustainable activity.
Furthermore, 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 commitments will be
analysed and presented
in the next sections of
in detail
this chapter.
The Sustainable Development Goals of the United Nations Global Compact
to which ESI Group contributes
________
As will be detailed below, the Group’s CSR commitments are strongly linked to the following Sustainable Development Goals:
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4.2.3. CSR distinctions and commitments
Gaïa Index
Global Compact
Being rewarded for its continuous improvement approach to its
social, societal, environmental and governance practices, ESI Group
has once again ranked first in the 2021 Gaïa campaign for mid-caps
with annual revenues under €150 million for its 5th time.
The Gaia Index (www.gaia-index.com) was created in 2009 and
is now the benchmark sustainability index for medium-sized
listed
EthiFinance
(www.ethifinance.com), the Gaia Index selects small and medium-
sized companies based on their non-financial performance. It is
composed of the 70 best stocks out of a panel of 230.
companies.
Developed
French
by
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
release of a
its stakeholders
Communication on Progress (COP).
through
the
to
For more information, visit: www.unglobalcompact.org.
The ratings are based on 174 criteria (economic, governance,
human capital, environment and stakeholders) and are used by the
main management companies in their management process and
their investment decisions.
4.3. BEING A COMMITTED EMPLOYER
ESI Group is a key technology provider operating in a vibrant
market. As employer the Group aims to create a great work
environment for the best employee engagement and experience.
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’s mission as employer is based on:
■ Develop talents and encourage leadership and collaborative
management;
■ Promote diversity and multicultural exchanges;
■ Contribute to the well-being of employees and ensuring the
quality of working life.
This policy draws on various tools, including the Human Resources
Information System (HR-IS), on a worldwide scope, 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.
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BEING A COMMITTED EMPLOYER
4.3.1. Developing talents and encouraging leadership
and collaborative management
are
to
the major
Employees
the success of
contributors
our company
inclusive
and equitable quality education
and promote lifelong learning
“Ensure
inclusive and
opportunities for all” and “Promote sustained,
sustainable economic growth, full and productive employment and
decent work for all”. Talent Development is the key for improved
business performance for the Group’s sustainability. Indeed, in
order to respond to the industrial market transformation and the
new challenges, the Group constantly ensure to foster the
employee engagement, empowerment, and motivation, to get great
achievements individually and as a whole organization.
Moreover, the Group has developed the “OneESI 2024 – Focus to
Grow” plan by globalizing its operating model, focusing its offerings
& innovation management and leveraging its global technical
expertise.
Also, the Group’s transformation and its end-to-end software
solutions are an opportunity to develop and enrich the professions
and skills of existing teams.
/ Policies
In this way, ESI focuses on:
■ Onboarding Programs: Ensure the future performance of new
talents with the onboarding program “Welcome Days“;
■ Performance Management: Promote talents, measure and
develop employees‘ skills;
■ Learning Programs: Deploying training enabling employees to
develop their expertise and supporting in the career growth;
■ Partnerships with Universities: Participating in the training and
development of junior population and employment-enhancing;
■ Internal and
transparent communication: Promoting
the
dissemination of information to all employees.
/ Results
Recruiting and retention of talents
The Group pays particular attention to the integration of new
talents through onboarding programs. In the context of the
globalization, the standard tools and the intranet portal have 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 the first days, weeks and months at ESI Group.
Since 2018, the Group integrated a practical onboarding, called
“Welcome Days”, for culturally integrate new joiners into the
company within a short time . 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 (EMEA, AMERICAS,
ASIA), it allows newcomers 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 path
The Group has a digital process for evaluating the performance and
development of each employee, which aims to organize at least
once a year with his or her direct report an evaluation of the past
year’s performance in relation to previously assigned objectives and
to define the objectives for the coming year.
These assessments are the first source for collecting the training
and development needs 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.
4
In order to facilitate exchanges between countries, a platform of
language courses has been deployed in 20 countries. This platform
suits to individual constraints and location, and helps to facilitate
the sharing of knowledge and expertise across countries. In 2021,
230 employees took language courses, including 76% in English,
17% in French and the rest in German and Spanish.
In term of technical skills, the Group has set up a partnership with
Pluralsight, an e-learning platform. 246 licenses have been given to
employees to take part of several hundred online technical training
courses. In 2021, 1,340 hours of online courses were taken in
12 countries, Most of them concerned Python programming
language and C++ language.
In addition, in 2021, thanks to the implementation in 2020 of our
interaction platform Metacompliance, we provided our employees
with online training in the areas of management, GDPR and
information security. In 2021 alone, we delivered 13 “online”
courses for a total of 412 hours, all countries combined (for 2020,
we had produced eight online training courses for a total of 474
hours).
Actions to promote trainee apprenticeship
Numerous partnership agreements with universities and
engineering schools enable ESI Group to participate actively in the
training of students.
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Several partnerships are currently in place:
■ In France: ENSAM (Bordeaux, Angers, Aix, Metz, Lille and Paris),
Gustave Eiffel University, Saint-Étienne University, South Brittany
University, Notre Dame University (Lebanon), UTT (Troyes), UTC
(Compiègne);
■ In Germany: Aachen University;
■ In India: Indian Institute of Science, BMS College of Engineering,
Rashtreeya Vidyalaya College of Engineering
(RVCE), PES
University, Dayanand Sagar College of Engineering; IIT Bombay;
Vellore institute;
■ In Russia: Ural Federal University, Siberian Federal University,
Toliatti State University;
■ In Malaysia and in Thailand with universities of Suranaree
University of Technology;
■ In Spain: EHU, UJI, UJRC, University of Zaragoza;
■ In Czech Republic: University of West Bohemia;
■ In Tunisia: ENIT;
■ In Korea: Hongik University;
■ In UK: University College London, Swansea University.
In 2021, the Group has welcomed a total of 18 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 its teams based in
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.
At the end of 2021 the Group launched a new communication tool,
Yammer, an enterprise social network, to create a strong internal
communication, highlight the initiatives, and give a safe and open
place to the employees to share and collaborate, boosting a global
sense of belonging.
Also, multiple communication actions are proposed in order to
strengthen information sharing and cohesion within the Group,
such as web conferences worldwide, monthly newsletters, Flash
Corporate News, Business News and webinars.
In addition, several internal communication initiatives have been
launched during last years, as part of a new change management
approach:
■ The Group also created, a internal exchange format which aimed
to update employees on the evolution of the global health
situation, answer
internal
measures to ensure the continuity of the Group’s activity. These
talks were delivered until June 2021;
their questions and announce
■ In 2020, ESI launched a series of internal “informal” discussions
with key people in the Company, called “Break & Chat”, enabling
employees to talk to these people, beyond formal Meetings, to
discover their personality and career, their motivations and their
role at ESI. In 2021, six sessions have been organized at the
global level and one local session in India;
■ 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
Sales Kick Off Meeting. The Software Engineering 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. Unlike previous years, in 2021, these
events took place online, due to the global pandemic;
■ Adopted since 2019, the use of “Teams”, a Microsoft platform,
enables employees to exchange and organize remote Meetings
easily and more efficiently. During the pandemic, this tool has
enabled employees to work from home efficiently, while
continuing to keep in touch with their colleagues around the
world, with a connectivity rate that has doubled compared to the
pre-Covid period.
Change management
2021 was marked by the creation and the implementation of the
Group three-year plan called “OneESI 2024 – Focus to Grow”. To
accompany the change, the Group created several initiatives:
■ The Group initiated quarterly global Q&A sessions in 2019. In
2021, these sessions were transformed in quarterly talks now
called Global Townhall Meetings led by the CEO and the
leadership team. The objective of these talks are to accompany,
cascade and inform all employees about the transformation and
its progresses;
■ As these global townhall were, by definition, global, to
accompany the team more closely, PU (performance unit)
townhall have been created and hosted at least once a quarter
or once a month. These PU townhall are led by each Leadership
team member. During these sessions they cascade the
messages delivered by the top management while disseminating
them to their perimeter: impact of decisions in their team, their
team evolution, challenges, objectives, etc.;
■ The change is a long process where all stakeholders need to
receive the adequate level and type of communication, support
and answers. As a global company, with dispersed teams, the
Group created three types of groups aiming to play a specific
role in the transformation to come:
▪ The core transformation team mainly composed by the
thinking, designing,
in charge of
team
management
implementing the transformation,
▪ The extended transformation team initially composed by
change agents in the middle management with a key role to
play in the transformation either because of their new
function or because of their crucial contribution in transversal
projects key
transformation project and now
composed by the direct report of the leadership team,
the
for
▪ The
“Change Ambassadors” with a role to share and
brainstorm on internal initiatives, create local initiatives and
share important information and guidelines locally, which
helps strengthening our internal communication and global
sense of cohesion, which further enhances the effectiveness
of the Group’s internal communication.
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BEING A COMMITTED EMPLOYER
4.3.2. Promoting diversity, inclusion and multicultural exchanges
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 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”.
/ Results
/ 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 favour 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
other
philosophical
characteristics protected by locally applicable law;
union membership
opinions,
or
■ Not tolerate any form of sexual, physical or moral harassment,
coercion or persecution.
The following tables present the distribution of staff by geographical area and country based on total headcount of 1,144 people:
Distribution of staff by geographical area
________
Europe, Middle East and Africa
Asia-Pacific
Americas
Distribution of staff in the main countries
________
France
India
Germany
United States
Japan
Others
2021
56.9%
34.7%
8,4%
2021
25.8%
21,1%
16,7%
7,6%
7,9%
20,9%
4
2020
56.6%
34.5%
8.9%
2020
26.2%
20.5%
15.9%
8.1%
7.2%
22.1%
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Gender distribution and equity
(In %)
________
78.7
80.2
83.8
82.9
74.2
74.8
77.9
78.1
21.3
19.8
16.2 17.1
25.8
25.2
22.1
21.9
Americas
Asia-Pacific
Europe,
Middle East and Africa
TOTAL
Women 2020
Women 2021
Men 2020
Men 2021
The proportion of female employees with open-ended contracts, at
22%, 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. In 2021, 26 women joined the Group,
representing 28% of total newcomers.
In this context, ESI is supporting Girls in Tech, an non-governmental
organization focused on education and empowerment of women in
the field of technology and entrepreneurship.
Age pyramid
________
> 61 years
56 to 60 years
51 to 55 years
46 to 50 years
41 to 45 years
36 to 40 years
31 to 35 years
26 to 30 years
21 to 25 years
51
46
35
34
32
40
80
5
39
13
20
69
84
116
135
167
147
98
13
0
30
40
Women
Men
80
120
160
200
The average age of the Group’s employees is 41.4 years (women:
39.8 years and men: 41.8 years).
ESI Group respects the laws in favour of the accession and
retention of employees, regardless of their age. Thus, 23.2% of
employees are over 50 years, i.e. 265 employees worldwide.
66% of the population aged over 50 is located in EMEA, compared
to 15% in the Americas and 19% in Asia.
In addition, 76% of employees hired on permanent contracts are
under 35 years old.
Breakdown of workforce by seniority
________
> 26 years
21 to 25 years
16 to 20 years
11 to 15 years
11
15
19
30
44
64
100
136
6 to 10 years
60
1 to 5 years
94
217
262
< 1 year
19
62
150
100
50
0
50
100
150
200
250
Women
Men
The average seniority in the Group is 9.8 years (8.7 years for women
and 10.1 years for men).
DEI – Diversity, Equity and Inclusion
22% of employees are holding a management role, including 18,6%
of women.
The Ethics Committee (composed of two women and two men) 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 equity is an integral part of the Group’s strategy, aiming to
increase both the percentage of women managers and the
percentage of women engineers.
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STATEMENT ON EXTRA-FINANCIAL PERFORMANCE 4
BEING A COMMITTED EMPLOYER
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 labour 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, ESI Group, in France, has
calculated its Gender Equality Index, the results of which are as
follows:
■ The gender pay gap: 33/40;
■ The gap in individual rates of pay increase: 10/20;
■ 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;
■ The gap in promotion rates between women and men: 15/15;
■ Total: 78/100, 3 points above the requirement.
In France, a panel of staff representatives, general management and
the Human Resources Department has been engaged in a training
program to
harassment.
identify and determine ways to combat sexual
In France a group is working on a Charter for FY22 on the topic of
harassment. India has an Anti-Sexual Harassment Charter signed in
July 2019 and established an Anti-Sexual Harassment Committee
composed of a Chairperson and eight members. Local information
sessions have been organized on the subject. ESI teams in the
United States and South Korea are undergoing compulsory training
on the same topic.
Integration of disabled workers
Since the beginning of 2016, the Group has been collaborating with
Elise for the Lyon and Rungis sites in France to ensure selective
sorting. Elise is a company called “adapted” which create open-
ended contracts for the persons with disabilities.
ESI cares about its employees and uses remote communication
systems with closed captions to help mitigating hearing problems.
4.3.3. Fostering Employee well-being and job satisfaction
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 is focused on.
This challenge contributes
following Sustainable
to
Development Goal: “Promote sustained, inclusive and sustainable
economic growth, full and productive employment and decent
work for all”.
the
/ Policies
As an employer ESI strives to:
■ Control its workforce in connection with the growth of the
activity;
4
/ Results
Headcount data is calculated on the basis of the number of
employees present at December 31 of each fiscal year1.
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, 2021, ESI Group’s workforce stood at
1,144 employees.
96% of the Group’s workforce
is on permanent contracts.
Precarious contracts such as internships, apprenticeship contracts,
etc., are not covered by the Group’s employment contract. and
fixed-term contracts represent 4% of the workforce. ESI continued
to pursue its ambitions to control its workforce in line with business
evolution.
■ “No-Meeting Day”: one-day per week dedicated to restoring the
time, without meetings, enabling
importance of
employees to work differently;
taking
■ Working from home policy to encourage a great work life
balance;
■ Improve working conditions (such as modern and well-equipped
office), which has a direct impact on the well-being, efficiency
and motivation of employees;
■ Create a favourable social climate;
■ Employee Listening Campaigns.
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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
Leavers
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
2021
2020
2019
60
12
10
38
6
1
5
28
8
9
11
94
2021
100
12
7
81
20
1
19
53
2
18
33
173
67
15
13
39
8
4
4
23
1
4
18
98
88
20
22
46
24
15
9
37
8
6
23
149
2020
2019
81
18
19
44
20
9
11
17
1
4
12
118
94
18
8
68
28
10
18
28
4
4
20
150
In 2021, ESI Group recruited 54 employees on open-ended
contracts, i.e. 57% of total hirings.
The departure rate of employees on open-ended contracts is 12%
in 2021. (number of departures under open-ended contracts/total
headcount under open-ended contracts at the beginning of the
period) × 100] compared to 6% in 2020.
The turnover rate on open-ended contracts is 8.4% in 2021
[(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 5.6% for the year 2020.
Working time
The duration of the working time shall be set in accordance with the
local legislation in force.
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.
Staff representative institutions shall be designated in accordance
with the laws in force in the countries as for France, Brazil and
Vietnam. They are regularly involved in matters relating to the
employees’ career within ESI and its development.
French legal entity has signed several agreements with its social
partners, as part-time agreement, profit sharing agreement,
employee saving agreement.
Due to Covid 19 period we realised we were able to work on a
remote way. ESI sets up a work from home policy depending of local
practise and type of job position. For instance, for France, the
agreement plans eight days of remote per month
As part of
in France,
the pandemic crisis management
representatives of Health, Safety and Working Condition
Commission met regularly with ESI’s management to consider the
best strategy of a safe working environment.
In 2021, 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.
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STATEMENT ON EXTRA-FINANCIAL PERFORMANCE 4
BEING A COMMITTED EMPLOYER
Workplace Well-being
Due to the global Covid context, and the deployment of home
office, each country managed to adapt and show creativity in
supporting it’s teams in digital workplace and well-being actions.
One of the objective was to maintain informal communication in
this virtual work environment by using Team’s tool:
■ Organization of drawing and photo contests;
■ E-coffee breaks and random coffee breaks to meet new
colleagues;
■ Digital Christmas Parties with team building activities;
■ Step Challenge creating friendly competition in the workplace
while also encouraging healthy living;
■ Digital yoga and fitness sessions in some countries, such as
France and India.
Health and safety: a leitmotiv
of the year 2021
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.
About the coronavirus pandemic (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 except for essential
workers, while ensuring the safety of the workplaces;
■ 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;
■ ESI has maintained a reasonable recruitment policy and has
continued to invest in the training of its employees.
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.
compliance with
The Group sets workplace health and safety best practices to
protect the employees. For example, 13 out of 20 countries offer
their employees the opportunity to finance a local health insurance
in
the well-being of
regulations and
employees.Some countries, such as India or Spain offer a free
medical check-up to employees, and Tunisia 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 on short and
long term.
4
is made up of direct and
indirect
Employee compensation
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.
As part of its “OneESI 2024 – Focus to Grow” plan, the Group is
gradually deploying an Long Term Incentive stock plan to catch up
with best practices in software companies.
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.
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4.3.4. Set up initiatives to interact with civil society (give-back)
By developing part
nerships with
the
various digital players,
ESI Group
is once
again contributing to
the following Sustainable Development Goals (4, 5 and 17,
respectively): “Ensure inclusive and equitable access to quality
education and promote lifelong learning opportunities for all”,
“Achieve gender balance and empower all women and girls” as
well as “Strengthening the means of implementation and revitalize
the global partnership for sustainable development”.
ESI believes that its by working with various players in the industrial,
academic and associative digital community, that the Group will
strengthen its position as a key player in digital transformation and
as a leading player in Virtual Prototyping.
Academic Partnerships and R&D
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.
in-house specialists and
ESI’s Scientific Committee, led by Professor Francisco Chinesta and
made up of
international
professors, acts in support of the Group’s research policy and
strategy. This Committee has relays in some countries: the first one
was created in 2019 in Germany, followed by two others, in Japan
and USA, in the process of being set up (delayed by the pandemic).
leading
ESI has built a fully comprehensive program of initiatives to support
universities and research laboratories around the world. The Group
participates in several academic chairs with prestigious universities
and distinguished professors. Each chair incorporates a number of
sponsored PhDs who research state-of-the-art technologies in
specific domains, for instance:
■ With ENSAM (École Nationale Supérieure des Arts et Métiers in
France), on the subject of Hybrid Twins combining physics-based
and data-based models;
■ With Zaragoza University in Spain, on the subject of virtual and
augmented multi-sensorial reality;
■ With CEU-UCH University in Valencia in Spain, on the subject of
real time process control;
■ With ENISE, CNRS, Safran, Cetim, Airbus Helicopters, Framatome:
the MISU chair (Maîtrise de l’Intégrité de Surface des pièces Usinées),
regarding machine tooled piece integrity control;
■ With ICC, an entity of the Kanazawa Institute of Technology, in
Japan for the manufacture of composites;
■ In India with the National Institute of Advanced Manufacturing
Technology (NIAMT); Birla Institute of Technology and Science,
Pilani.
ESI and CNRS partnered to build the “DesCartes” project supported
by CNRS@CREATE,
flagship project on hybrid
modeling in the context of the digitally connected city.
in Singapore,
In addition to the core activities covered by the Chair directly, an
extended network of academic collaborators is also established in
order to support widening the range of research topics, as well as
to design and deliver some advanced teaching courses at the
following universities:
■ In Germany/Austria: HTW Berlin, RWTH Aachen, Technikerschule
München, TU Dresden, TU Wein;
■ In Spain: UPV (Valence), CEU (Valence), Universidad de Zaragoza,
University of Barcelona, Madrid;
■ In France: Valenciennes University, UBS
(Bretagne Sud),
Bordeaux University, Université de Technologie in Troyes, Université
de Technologie in Compiègne, INSA Lyon, IPSA, the École des Mines
in Albi and campuses ENSAM (Bordeaux, Metz, Aix, Angers, Lille
and Chalons-en-Champagne);
■ In the UK: Imperial College London, University of Nottingham,
University College London, Swansea University, University of
Leicester, University of Glasgow, University of Warwick, and
University of Bristol;
■ In Czech Republic: Czech Technical University Prague, University
of West Bohemia, Brno University of Technology;
■ In Italy: Politecnico di Bari and Politecnico di Torino;
■ Globally at the European level, ESI as a founding member is a
member of the EDUCATION programs of EIT Manufacturing
(European institute for Innovation and Technology). As such, ESI
has provided teaching at Master’s level and developed training
materials with universities
the
for
manufacturing sector;
future engineers
in
■ In India at the IIT in Bombay.
This network also extends well beyond Europe to include leading
national universities across Brazil, China, Estonia, USA, Greece,
Ireland, Japan, Mexico, Portugal, Russia, Sweden and Switzerland.
Targeting to reach out further and support the wider academic
community worldwide, by fully democratising access to its software
for all students as part of their studies and research, ESI has
created a new web-based portal (ESI Academy). This portal is also
accessible from the EIT Manufacturing GLP platform.
Industrial Innovation Programs
ESI participates
programs which promote technological progress in our society:
innovative projects and
in several
industrial
■ Performance and industrial optimization;
■ Decarbonization, especially transport electrification;
■ Reduction of CO2 emissions thanks to weight reduction of multi-
material parts;
■ Support green energy projects.
For instance:
■ Excelcar: ESI is also one of the founding members of the
Excelcar association, which aims 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. 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; Along with Renault and Constellium, ESI is also involved
in the ISA3 project, which aims to reduce the weight of all-
aluminum doors by 15% and their cost by 20%.
■ CORAC: ESI actively participates in initiatives from the Council for
Civil Aeronautics Research (CORAC) undertaken as part of the
“Plan d’Investissement d’Avenir”. Thanks to ESI’s participation in
several projects, the Group helps to make commercial aircraft
cockpits safer and more comfortable, and thus keep cost
margins under control for manufacturing important parts in
helicopter gear boxes.
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STATEMENT ON EXTRA-FINANCIAL PERFORMANCE 4
BEING AN OUTSTANDING PARTNER
Competitiveness Clusters
Notably in France:
ESI Group participates
in several competitiveness clusters,
principally in France, namely: Aerospace Valley (Toulouse), Astech
Paris Région (Île-de-France), Nuclear Valley (Bourgogne), NextMove
(Normandy and Île-de-France), Systematic (Île-de-France),A few
more detailed examples:
the
to create
■ SMART 4D: ESI Group has worked with the Nouvelle-Aquitaine
Regional Council
“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 HPC simulation,
Virtual Prototyping and
immersive experience to support
tomorrow’s industries and applications;
■ Nuclear Valley: ESI Group is also an active member of the
Nuclear Valley
the
cluster, which helps
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;
restore
to
is a
■ AerospaceValley. ESI
facilitator within the Materials,
Structures and Processes group of the Ecosystem of Excellence.
ESI participates in the development of the roadmap and is
regularly involved in the organization of thematic days around
simulation and digital transformation.
Professional associations
■ ESI is a member of the Board of Directors of the Française de
Mécanique Association (AFM), a body for information exchange,
dialogue and discussion
the mechanical engineering
community with the mission of representing French mechanical
engineering to its foreign counterparts;
for
■ ESI is a member of the France Committee of NAFEMS which is a
global organization whose mission is to provide knowledge,
international collaboration and educational opportunities for the
use and validation of simulations in engineering. ESI is a member
of several Working Groups (Composites, Manufacturing, Additive)
and Chairman of the Composites Manufacturing working group.
And also in Europe: The Group contributes to several European
organisations and initiatives, namely: European Green Vehicles
Initiative, EIT Manufacturing, European Factories of the Future
Research Association
IN EUROPE), European
Technology Platform for Road Transport and ETP4HPC Association
(European Technology Platform For High Performance Computing),
Big Data Value Association, BATTERIES EUROPE, EARPA, European
Material Modeling Council, European Welding Federation (European
Sector Skills Strategy).
(now MADE
ESI also contributes to the Composites Materials Handbook
(CMH-17), an American organization supported by the FAA and the
world aeronautics industry, which has the vision of being the world’s
focal point for technical information on composite materials and
structures. ESI collaborates with the University of Bologna (I) on this
subject.
In order to create favourable conditions for collaboration and
industrial innovation, the Group strives to create and foster good
relations with the digital ecosystem in France and Europe.
Scientific societies
4
ESI is a member of societies such as AMAC, SAMPE, ESAFORM, etc.
ESI is a member of the ESAFORM jury for the yearly Best industrial
research thesis award.
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CONTENTS
4.4. BEING AN OUTSTANDING PARTNER
To respond effectively to the transformations of the industries it serves, ESI Group places its activities and the solutions it delivers within the
framework of the broad ecosystem of players who also contribute to these responses through their products and services.
It is the combination of ESI’s capacity for innovation and the development of relationships of trust with its partners that will ultimately ensure
customer satisfaction by meeting their quality and safety requirements in particular.
4.4.1. Support the transformations of industries and customers
by developing a network of partners who share ESI’s values
of innovation and performance
How can an organization bring
innovative products to market while
deadlines
keeping
an
reasonable?
can
new
organization
materials and processes safely?
integrate
costs
How
and
The
industries served by ESI’s solutions must face multiple
challenges related in particular to the extraordinary increase in the
intrinsic complexity of the products they deliver, but also to the
additional constraint for these products to function and deliver a
service by interconnecting themselves with other products or
systems.
The best example of this evolution is perhaps in the automotive
industry and with the autonomous vehicle which, beyond its own
functionalities, will have to communicate and synchronize in real
time with other vehicles and multiple urban systems.
It also appears that the diversity and scale of the problems to be
solved in this area, to bring the marketed solutions to the expected
levels of performance and security, can only be achieved by the
active collaboration between multiple contributors.
This example
illustrates quite well the need for ESI Virtual
Prototyping and simulation solutions to be integrated over time
with other solutions covering in a complementary manner all the
disciplines involved in development, validation and certification of
the products and services concerned. An expected benefit of this
integration will also be to make the use of simulation more natural
and more accessible in the chain of activities relating to the
development and use of the product in operation.
/ Policies
In its approach, ESI strives to:
■ Meet its customers’ demand for ever more innovative products;
■ The methodical identification of partners;
■ An active collaboration between multiple contributors.
/ Outcomes
Innovative solutions to allow industries to make
the right decisions at the right time
ESI’s desire to adapt to the requirements mentioned on the
previous chapter resulted in the course of 2021 in the methodical
identification of the partners who will best be able to contribute to
meeting these requirements and this for all components of the
solutions we offer and for all of our strategic development projects
too.
This resulted initially in the engagement of exchanges with various
players falling under three categories:
■ technology and platform providers;
■ software players complementary to ESI solutions and finally
integrators; and
■ service providers ensuring the quality of deployment required to
enable customers to achieve their objectives.
From these commitments emerge some trends that deserve
mentioning
in particular the need for ESI to develop close
relationships with the following actors:
■ Those whose solutions in real-time contact with the product or
manufacturing process provide Hybrid Twin solutions with the
quality data they require;
■ The main players in PLM (Product Lifecycle Management) who
are both suppliers of the 3D geometry to which part of the ESI
solutions apply, but who also host the collaborative processes
for managing the life of products and for manufacturing
processes at its optimization to what ESI contributes;
■ And finally the ecosystem of suppliers of solutions related to
systems engineering whose digital integration is required to
access the expected levels of quality and security.
To remain at the
innovation while sustaining
productivity the Group invested 29,8% of its Licenses activities
revenues in R&D in 2021.
forefront of
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BEING AN OUTSTANDING PARTNER
4.4.2. Committing to continued customer satisfaction
while meeting quality and safety requirements
followed by
In 2000, ESI Group obtained its first ISO 9001
certification,
independent
certification of its subsidiaries, to guarantee the
quality of its products and services and ensure
client satisfaction.
the
The benefits of ISO 9001 certification accrue to external as well as
in-company stakeholders. Outside the Company, certification
guarantees that ESI 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
towards the improvement of processes and to actively participate
to create a Global Quality Management System (QMS) that will be
the cornerstone of our performance execution.
Since 2010, ESI has extended the scope of its Global Quality
Management System certification. 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.
In 2021, ESI completed a global coverage for its QMS, the
certification now covers all ESI Group subsidiaries and sites
worldwide.
(Trusted
ESI Group is also involved in an ISO 27001 certification project, and
is implementing an information security management system that,
through appropriate risk asset management, guarantees the
confidentiality, integrity and availability of its information. This
project considers specific demands of clients, particularly those
from the automotive sector and crystallized under the TISAX. The
TISAX
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 this
sector to secure exchanges between various players. In 2019, ESI
achieved the TISAX certification for, ESI MECAS (Czech Republic) and
ESI GmbH (Germany) and for ESI Hispania (Spain) in 2020. The
scope of this certification was reinforced
in 2021 with the
integration of other ESI sites such as Germany (Wolfsburg) and for
2022 in Dresden.
Also, as a French company, ESI is complying with the European
Union data protection regulations, which are supervised in France
by the CNIL (Commission Nationale Informatique et Libertés). In 2020,
no customer related GDPR (General Data Protection Regulation)
incidents have been reported.
4.4.3. Being a long-term trusted advisor and partner to support
the delivery of customers outcomes and business values,
involving the entire ecosystem
4
a
that
developing
partnership
By
ecosystem
the
Group’s values and commitments,
ESI contributes to the Sustainable
Development Goal 12:
respects
“Ensure sustainable consumption and production patterns”, and
goal 17: “Strengthen the means of implementation and revitalize the
global partnership for sustainable development”.
Supporting customers’ outcomes delivery
and business values, involving the entire
ecosystem
ESI remains fully responsible for all external subcontractors. In this
regard, subcontractors are subject to the same rules and
verifications as any other employee of the Group. ESI and its
subcontractors shall, throughout all operations, be committed to
ethical conduct and the respect for human rights in the spirit of
internationally recognized standards.
To continue delivering quality customers’ outcomes, ESI:
■ 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 on our internal systems and updated
periodically;
■ The selection and evaluation procedure
includes CSR &
environmental criteria;
■ Makes sure not to create a situation of dependence on suppliers
and subcontractors.
The achievement of the results expected by our customers can call
on multiple forms of partnerships, here are some of areas explored
by ESI during the year 2021:
■ Direct integration with third-party solutions such as ESI’s Virtual
Reality solution IC.IDO with a market-leading PLM platform to
accelerate the access to PLM data from the IC.IDO environment
and to launch a Virtual Reality review right after and that from a
PLM user’s workstation. In both cases the saving in terms of time
and process efficiency at customer side are significant.
■ The development of ESI’s relationships with certain cloud players
allows its customers to scale up the access tor simulation
without
investments
(IT infrastructure).
incurring
heavy
long
and
in
■ Finally, the collaboration between ESI and certain service players
accelerates the dissemination and access of its solutions by
customers of all sizes who, for various reasons, do not have the
time or the resources necessary to accelerate the adoption of
advanced solutions.
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CONTENTS
4.5. BEING AN ETHICAL AND COMMITTED COMPANY
The Group considers its main stakeholders to be its employees,
customers, suppliers, and industry and academic partners, but also
its investors and shareholders.
Furthermore, ESI is hiring profiles with new technology skill-sets,
thus preparing to be well positioned in the technological landscape
for the coming decades.
Since its creation in 1973, ESI has placed Civil Society at the heart of
its commitments.
People first!
For ESI, the main driver for technological progress is related to the
impact on society in general, by using some applications which have
been developed to help saving
instance: the first
simulation of a crash test in 1985), to improve the operational
performance of industrial processes and to enhance workers’ well-
being, using virtual reality and artificial
intelligence. These
commitments provide the foundations of the Group’s operational
ethics.
lives (for
Innovating sustainably and responsibly!
Innovation is essential to preparing the future of society, but
innovating responsibly is even more so. By developing solutions
with a positive and optimal impact on the environment and the
economy for its customers, and which are also safe, secure and
human-centric, ESI contributes to the development of a safer and
more responsible society.
ESI strongly believes that its ability to innovate and research is a key
factor in its differentiation therefore of its competitiveness, which
are the two key drivers to ensure a sustainable growth.
4.5.1. Guaranteeing solid and diversified governance
Nowadays, as the world has become more
complex and requiring companies to constantly
adapt, a strong and effective governance has
become a real necessity and ESI Group attaches
particular importance to governance topics as it
ensures the coherence and sustainability of the
the best
strategy, guaranteeing
Company’s
framework to serve the
its
stakeholders: employees, customers,
investors,
etc. In February 2021, the Board of Directors
appointed
non-executive
Chairman.
interests of all
independent
an
As a priority, the Group strives to maintain a diversified and efficient
governance. By separating, since February 1, 2020, the functions of
Chief Executive Officer and that of Chairman of the Board of
Directors, ESI has ensured a better balance of powers. In February
2021, the Board of Directors appointed an independent non-
executive Chairman. Now composed of seven members, six of
whom are independent and one observer, the Board is aligned with
best practices in terms of governance.
On the other hand, ESI being a group with an international
dimension, its governance takes care to integrate the different
nationalities representative of the territories in which it carries out
its activities. Thus, beyond fulfilling the conditions for gender
balance as required by law, the composition of the Board of
Directors reflects the diversity of nationalities, skills, and experience
of which the Group avails itself (see section 2.3.1 of this document).
In addition, the Chief Executive Officer relies on an array of
operational committees (in the field of sales, technologies and
techniques, finance, human resources) through global steering
bodies. This organizational structure makes it possible to benefit
from the diversity and complementarity of the expertise of the
members of these committees.
4.5.2. Act ethically and responsibly – Ethics Charter
the
The Ethics Charter applied across the Group is in
Sustainable
principles
line with
Development Goal 16: “Promote peaceful and
inclusive societies for sustainable development,
provide access to justice for all and build effective,
accountable and open institutions at all levels”.
of
In 2016, the Group has issued its Ethics Charter (which is regularly
updated) to promote the observance of its values and confirm its
commitment to the main rules of conduct that the Group wishes 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 and forced labour. It is
based on the respect of the ethical provisions promoted by the
conventions of the International Labour Organization. The Ethics
Charter is 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 and frauds, and that in application of the French law
“Sapin II”. A new version will be available in 2021.
The full document can be consulted here (https://bit.ly/3ab78o3).
A four-member Ethics Committee (two women and two men) is
responsible for creating a safe environment where employees can
adhere to the Ethics Charter and ensure that its principles are
upheld by everyone, on a daily basis. The Committee listens to and
assists employees so that they can discuss any issue involving the
implementation of and/or respect of the Ethics Charter. It also
ensures that all Group’s subsidiaries apply the principles set out in
the Charter. This Committee meets regularly, at least once a year, to
discuss ethics
if
necessary.
issues and propose corrective measures,
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BEING AN ETHICAL AND COMMITTED COMPANY
Whistle-blowing policy
Any ESI employee, 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
involving the HR
correspondent or the direct manager, contact the Group’s HR
Corporate Directors or the N+2 manager;
interest
■ Otherwise, contact the Ethics Committee directly at the following
address: ethics@esi-group.com.
This procedure is secure and guarantees the strict confidentiality of
the whistle-blower, the facts that are the subject of the report and
the other hand, any abusive
the persons concerned. On
denunciation may
legal
proceedings.
lead to disciplinary sanctions and/or
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). Within this framework, the Group has 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
e-Learning
via
an
platform:
Metacompliance;
■ “Candidatus” recruitment platform to control compliance in the
processing of applications. “Implementation in France”.
As part of its continuous improvement approach, the Group has
started using the “Metacompliance” platform, an innovative solution
providing access to quality learning content on cybersecurity and
compliance for all employees, mainly:
■ 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.
4
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CONTENTS
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:
■ Developing solutions that helps reducing the environmental
footprint of customers;
■ Progressing toward the Group’s carbon neutrality;
■ Engaging employees in the creation of a more sustainable world.
4.6.1. Developing solutions aiming to have a positive impact on planet
From the outset, by developing
Prototyping
Virtual
innovative
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
inclusive and
Nations “Build resilient
sustainable industrialization and foster innovation”, as well as
Goal 12:
“Ensure sustainable consumption and production
patterns”.
infrastructure, promote
/ Policies
Throughout 2021, ESI has supported its industrial partners and
customers in developing products and solutions that meet their
environmental expectations, while enhancing productivity and
business continuity in a global context of limited presence in offices.
Among these topics, we can mention:
■ Supporting the integration of new materials in manufacturing
processes;
■ Optimizing battery life for electric vehicles;
■ Supporting for the definition of secure and adapted scenarios to
allow the return to offices and assembly lines in the context of
Covid-19;
■ Reducing the number of prototypes and physical tests, which
not only saves time and costs, but also reduces waste and raw
materials or consumables;
■ Using virtual reality solutions to design collaboratively and train
operators remotely, thus reducing the need of travelling;
ESI is committed through its solutions to helping its customers to:
■ Supporting the development of new products or business
models – ecological by nature.
Several illustrations of these topics can be found on the Company’s
website (under the Press or Customer Success Stories sections) and
on its blog and social networks.
In 2021, seven press releases have spotlighted examples in this
sense, as well as three customer success stories, six blog articles, as
well as video testimonials presented during the 100% digital ESI Live
event organized in November of the same year.
■ 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.
/ Outcomes
Tighter regulations on greenhouse gas emissions and recycling
requirements, higher
fuel prices and consumers’ growing
environmental concerns are all boosting demand for more planet-
friendly products. In 2020, the Covid-19 health crisis has reinforced
the quest
limitation of the
environmental impact of customers, as well as the need for
industries to evolve toward standards more in line with these
values.
In this context, the solutions developed by ESI are
undoubtedly essential.
for meaning, responsibility and
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BEING AN ENVIRONMENTALLY FRIENDLY PLAYER
4.6.2. Moving forward to the carbon-neutrality of the Group
Reducing greenhouse gas emissions
As ESI operates both in France and
internationally, and as its activity is
within the tertiary sector, transport
is the main source of its greenhouse
gas emissions.
ESI’s actions meet the Sustainable Development Goal 12 (presented
above) and 13 “Take urgent action to combat climate change and its
impacts”.
/ Policies
In order to reduce its carbon footprint, ESI is committed to a
process of:
■ Limit emissions resulting from employees’ business travel by
train, plane and company car;
■ Limit CO2 emissions resulting from goods and documents
transportation;
■ Develop the use of web conferencing tools.
Considering the nature of its licensing activities and sales of
consulting services, please note that the Group’s CO2 emissions are
indirect ones, mainly part of Scope 3 of the greenhouse gas (GHG)
emissions balance sheet, particularly those related to employee
transportation.
/ Outcomes
Employees’ business travel
In order to limit its environmental footprint, the Group continues to
promote a proactive policy aimed at restricting travel to what is
strictly necessary. The use of the plane is reserved for journeys
above three hours and the use of the railway must be the preferred
option. The use of a single centralized travel management tool
makes it possible to consolidate a global, vision common to all the
subsidiaries. In addition, in 2021 the car use policy was updated to
include environmental requirements for company cars.
In 2021, following the trend in 2020 but to a lesser extent, was
marked by restrictions in terms of travel in order to mitigate the
spread of SARS-COV2, that coupled with the maintaining of a
proactive work from home policy. The Group’s desire, for the years
to come, is to continue to limit these emissions, by promoting a
hybrid working model, mixing face-to-face and working from home
by encouraging the use of web conferencing tools.
CO2 emissions due to employee travel by train and plane (for countries for which ESI has data):
CO2 emissions due to employee travel by train and plane
(In tons)
________
-67% averagely (a) in 2021 vs. 2020
4
50.8
27.1
43
9.8
4
n/a
n/a
0
1.2
3
0
0
92.7
15.6
France
Germany
South Korea
Spain
Sweden
Tunisia
United States
3.4 2.8
Czech Republic
and Russia
(a) Average of emissions calculated for countries with data available for the last three consecutive years.
2020
2021
For Czech Republic, France, Germany, Russia, Tunisia and the
United States, these emissions amounted to 49,5 tons, down 67%
compares to 2020. For all countries mentioned above, the data is
supplied by the travel agencies responsible for booking the travel
requests. Any reservations taken directly by employees are not
counted because the information is not available.
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CO2 emissions due to employee travel by company car (for countries for which ESI has data):
CO2 emissions due to employee travel in company cars
(In Kg:car)
________
-10% avegerely (a) in 2021 vs. 2020
-54% averagely (a) in 2021 vs. 2019
2,969.7
3,258.6
1,322.2
1,635
3,839.6
3,018.7
2,407
2,204
1,646
1,716
597.0
409
Czech Republic
and Russia
320.3
400
n/a
395
n/a
n/a
400
320.3
n/a
France
Germany
Japan
South
Korea
Spain
Sweden
(a) Average of emissions calculated for countries with data available for the last three consecutive years.
2019
2020
2021
In 2021, 49 employees had a company car in France, 45 in
Germany, 33 in the Czech Republic, five in Spain, five in Italy and
four in Sweden. In China, India, Japan, South Korea and Switzerland,
only one person had a company car. There were no company cars
in Brazil, the United States, the United Kingdom and Tunisia in 2021.
The higher allocation of company cars in Germany and France is
due in particular to a higher proportion of sales staff and a culture
that favours this form of compensation. For Czech Republic, France,
Germany, Russia and South Korea, these emissions amounted to
1.56 tons/car averagely, down 10.58% compared to 2020.
For the safety of its employees, the Group has continued the home
office policy in 2021, using Microsoft’s “Teams” platform, allowing
more efficient online audio-visual meetings for up to 250 people.
In 2020, and due to the evolution of the Covid-19 pandemic, the use
of “Teams” increased by 87% compared to 2019, with more than
560 meetings/day averagely. The average number of planned
meetings from August 2021 to January 2022 was 320 meetings
per day.
In 2021, the level of use of Teams continued to be very strong, with
an average over the year of 92.4% of users active on the platform.
The Group has implemented, since March 2021, a more exhaustive
reporting to have a clearer vision on the use of our online
communication tools (see image below).
The Group’s objective is to extend the coverage of this practice to
its entire perimeter.
In addition, among the measures taken over the past several years,
the adoption of the Gelato platform, which allows subsidiaries to
order locally the amount of documents they need. This solution
enabled the Group to save paper thanks to print-on-demand. In
2020, Gelato has enabled the Group to avoid the equivalent of
1,274 km, a 68% saving on the average distances taken to deliver
brochures and other documents. In 2021 this initiative allowed us
to avoid 445Km, this represents savings of 10 times on the average
distance to deliver the brochures traditionally.
Managing resources
in a more sustainable way
that
believes
environmental
ESI Group
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
same Sustainable
Development Goal as the previous section (13):
“Take urgent action to combat climate change and
its impacts”.
the
to
On average, between March 2021 and January 2022, there were
more than one thousand (>1000) “calls” (unplanned meeting)
per day.
/ Policies
Goods and documents transportation
For several years now, ESI has digitized the delivery of its software
and associated documentation through its MyESI customer portal.
For various reasons (practices, regulations, network infrastructure),
some countries in the Group’s Asia region still use physical formats.
The main environmental issues in which ESI is involved are:
■ Limiting energy consumption;
■ Limiting paper consumption and transitioning to the use of
recycled paper;
■ Develop a waste recycling process all over the sites.
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BEING AN ENVIRONMENTALLY FRIENDLY PLAYER
■ In Tunisia, total consumption was about 110,115 kWh in 2021,
an increase of 53% compared to 2020. This overconsumption
can be partly explained by the refurbishment work done in the
offices;
■ Finally, energy consumption is not measurable in Italy, and other
sites not mentioned above. For these sites, energy consumption
is included in common bills, measured annually along several
parameters other than electricity.
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 (Stuttgart). In Japan, the lights
automatically turn off after a while, in the absence of physical
presence.
Finally, the Spanish office in Madrid has received a certification of
compliance with the requirements of the LEED (Leadership in
Energy and Environmental Design) standard, carried out by the
building owner.
In 2021, the Group has begun to
implement a workspace
rationalization initiative (New Ways of Working) which will ultimately
allow us to find economic and ecological gains in the way we
manage our physical resources. The first effects of this initiative
happened in 2021 with, for example, the move to co-working
spaces and the relocation of the Data Center.
This rationalization exercise will continue
in 2022 and the
appearance of the “Coworking spaces” concept will offer us an
additional tool to host our employees
(in certain countries
and regions) in a more flexible, secure, economical and ecological
manner.
4
/ Outcomes
Energy consumption
In 2021, energy consumption has dropped significantly at several
sites, mainly due to the effect of work-from-home at the Group’s
level. Below is a presentation of the collected and consolidated data
from different sites.
For France:
Before 2020, for France, the Group reported mainly on electricity
consumption at the Rungis site. In 2020, ESI has integrated other
sites within the French perimeter,
including Aix-en-Provence,
Compiègne, Ter@tec, Colomiers and Paris (definitely closed at the
end of 2020). The Group estimates that these sites are accounting
for approximately 98% of total electricity consumption; data from
other French sites are not available as it is included in rental or
collective bills.
In October 2021, the Group moved its Data Center towards an
external structure with the intention to gain both in information
security and in energy efficiency.
Thus, total consumption at the above-mentioned sites amounted to
1,058,355 kWh in 2010, of which 564,620 kWh correspond to its site
in Ter@tec (Data Center). This consumption, up of around 19.78%
compared to 2020 (883,611 KWh) can be explained by the fact that
the “Aix-en-Provence” site was not included in 2020 and that for the
Colomiers site a low estimate was taken into account for the final
result.
For other countries:
■ In Brazil, Czech Republic, Germany, India and Russia, average
consumption per employee accounted to 2,159.7 kWh, down
12.3% compared to 2020;
■ In Japan and South Korea, consumption per employee averagely
accounted to 2331,1 kWh and 8,599.8 kWh respectively, with an
decrease of of 11,7 and 8,2% respectively;
Paper consumption
Everyday use by employees is the main source of paper consumption.
Paper consumption per employee
(In number of reams of 500 sheets)
________
-20% averagely in 2021 vs. 2020
1.3
1.3
1.1
1.7
0.65
0.6
0.8 0.8
2.6
2.3
1.3
1.1
1.2
0.8
1.1
1.1
0.7 0.8
0.3
0.1
0.1 0.1
0.3 0.3
0.1 0.1
0.2
0.2
Brazil
China
Czech
Republic
and Russia
France
Germany
India
Italia
Japan
South
Korea
Spain
Sweden
Tunisia
United
Kingdom
United
States
2020
2021
For the entire reporting scope, average paper consumption
decreased by 20% in 2021, with an average of 0,7 reams of paper
per employee (vs. 2 in 2018, 1.6 in 2019 and 0,9 in 2020). This is
mainly due to the effect of home office, the deployment in France
and Germany of a secured and controlled printing solution
(its deployment to others location will continue over 2022) as well as
the evolvement of employees’ behaviour toward reasonable and
more sustainable consumption.
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Even if access to the premises has been reduced due to COVID-19,
the list of initiatives below, mentioned in 2020, is still relevant and
allows us to act in a sustainable way during our “on site” operational
activities:
■ Japan made 100% of its prints with recycled paper, followed by
Spain on 50% of its prints and China on 35%. More than 80% of
the countries included in the scope have automatically set up
black and white and double-sided printing;
■ ESI
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. Employees are also
strongly encouraged to use the cloud storage service under
Microsoft 365, more specifically via the Sharepoint platform;
■ 2021 saw the perpetuation and expansion of the use of
DocuSign allowing authenticated and electronically traced
signatures. This service has proven to be even more essential in
this year 2021 due to the pandemic context. The utilization rate
increased by 139% between 2020 and 2021 (885 envelopes in
2020, 2,122 envelopes in 2021;
■ ESI perpetuated in France the use of Digiposte to dematerialize
HR documents such as pay slips and uses Metacompliance to
digitally send each newcomer all the documents they need to
know;
■ The use of Gelato platform, a local printing and delivery tool,
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, since 2019, the Group continued to stop printing its
Universal Registration Document in paper format, reflecting ESI’s
desire to adapt to sustainable trends in communication. 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.
Water consumption
The Company’s business is not very water intensive as it does not
require water for production. ESI’s water is therefore solely for
sanitary use and is drawn from urban networks.
Waste disposal and recycling
Due to its tertiary activity, ESI mainly generates office waste. To the
best of its knowledge, the Group does not generate any hazardous
waste, except Waste Electrical and Electronic Equipment (WEEE).
In France, employees are made aware of selective sorting in their
daily lives, thanks in particular to the implementation of dedicated
waste bins . On the Rungis and Lyon sites, ESI works with Elise, a
waste collection and recycling company that provides stable
employment for people with integration difficulties, particularly with
disability issues. In 2021, Elise recovered 710 kg of waste, including
174 kg of paper. Recycling or paper helped saving 455 kg of CO2
emissions, 5,095 kWh of energy consumption and 7,847 liters
of water.
All the German, American, Czech, Japanese, Spanish and Italian 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
(WEEE), ESI Group attaches great
and electronic equipment
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 Germany,
In France and the United States, end-of-life or obsolete hardware is
collected by an authorized provider that manages the processing of
the Cleaning and Facilities
electronic waste.
Management Department, in coordination with the IT Departments,
is tasked with collecting used electronic equipment. In Japan, end-
of-life material is returned to the subcontractor. In India the
collection of our obsolete equipment is managed jointly with the
municipal waste management services. WEEE wastes are 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.
in France, printer
Furthermore, on request to our supplier
cartridges are collected and recycled via a completely ecological
chain.
Lastly, in the entire environmental scope, 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.
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EUROPEAN TAXONOMY
4.6.3. Engaging employees in the creation of a green world
ESI believes that a company’s responsibility is not
limited to acting on its clients’ environmental
footprint or its own, but also to raise awareness
and engage its employees in implementing a
proactive approach and in carrying out concrete
actions.
This commitment contributes to the same objective mentioned
above (13): “Measures to combat climate change”.
/ Policies
The main environmental topics to which ESI is committed are:
■ Raising the awareness of its employees on an ongoing basis of
the measures taken to avoid wasting energy;
■ Suggesting concrete actions to employees to engage them in
favour of the Planet.
/ Results
In 2018, ESI produced a short video for all employees on simple
eco-responsible
(https://
to
www.youtube.com/watch?v=nUIdRRLDgRk&ab_channel=ESIGroup).
at work
gestures
adopt
4.7. EUROPEAN TAXONOMY
The European Taxonomy of Sustainable Economic Activities aims to
establish a classification of economic activities considered
environmentally sustainable based on ambitious and transparent
technical criteria. The implementation of this framework aiming to
distinguish the economic activities contributing to the European
objective of carbon neutrality – the Green Deal – underlines the
scale of the economic and
industrial transformations to be
accomplished. Aligned with its environmental, social and societal
commitments, ESI Group is closely following the work of the
European Commission which consists in analyzing activities in order
to drive the public and private investments towards projects
contributing to the transition towards a sustainable and low
carbon (1) economy.
In accordance with European Regulation 2020/852 of June 18, 2020
framework aimed at promoting
on the establishment of a
sustainable investments within the European Union (EU (2)), ESI
Group is required to publish, for the 2021 financial year, the share
of its eligible revenues, investments and operating expenses
resulting from products and/or services associated with economic
activities considered as sustainable within the meaning of the
classification and criteria defined in the Taxonomy for the first two
climate objectives.
At the beginning of 2021, the Group communicated on its
commitment to plant 10,000 trees by 2025, on the aim to
contribute to the reforestation of the planet. By the end of 2021,
several hundred trees will have been planted by ESI’s customers
and employees thanks to the Reforest’Action program, a social
enterprise whose main mission is to preserve, restore and create
in France and around the world through collective
forests
reforestation projects. Thus, each participant has the possibility to
follow the evolution of this reforestation project and its benefits in
real time (impact on climate, biodiversity, health and employment)
at: https://www.reforestaction.com/en/esi-group.
In 2021, we planted 2000 trees in Portugal and we have just re-
engaged with ReforestAction on a new planting project
in
Washington State in the US for 2000 additional trees.
The benefits of the 2000 trees in Portugal are:
a. 300 tonnes of CO2 stored;
b. 6 000 animal shelters created;
c. 8 000 months of oxygen generated;
d. 2 000 hours of works created.
4
This first reporting on the eligibility of the Group’s activities was
produced based on:
(3) supplementing
■ The Climate Delegated Regulation of June 4, 2021, and its
appendices
the Regulation 2020/852
specifying the technical criteria for determining under which
conditions an economic activity can be considered as
contributing substantially to the mitigation of climate change or
to its adaptation;
■ The Delegated Regulation 2021/2178 of July 6, 2021, and its
appendices supplementing the Regulation 2020/852 specifying
the way to calculate the performance indicators as well as the
narrative information to be published (4);
■ The FAQ of February 2, 2022, providing details on the texts
mentioned above.
The methodological elements used by the Group are described
below. The Group will revise
its methodology, analysis and
calculations as the Taxonomy is implemented and as the evolution
of the activities and the technical review criteria that complement it.
(1)
(2)
(3)
(4)
https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_fr
https://eur-lex.europa.eu/legal-content/FR/TXT/PDF/?uri=CELEX:32020R0852&from=F
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=PI_COM:C(2021)2800&from=EN
https://eur-lex.europa.eu/legal-content/FR/TXT/PDF/?uri=CELEX:32021R2178&from=EN
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4.7.1. Determination of eligible activities
within the meaning of the taxonomy
Convinced of the environmental benefits of Virtual Prototyping and
its role in the overall reduction of greenhouse gas emissions, the
Group carried out the analysis of eligible activities. As a result, all of
its revenues contribute to the reduction of greenhouse gas
emissions thanks to the benefits of its solutions such as:
■ Replacement of physical prototypes by digital twins;
■ Improving product performance through simulation;
■ Making products lighter to reduce the resources needed to use
them;
■ Optimizing the manufacturing process to reduce errors and
waste and the resources required.
However, pending clarification from the regulator and market
practices, ESI Group has considered its activity ineligible under the
Taxonomy regulation. Thus, the Group has decided not to value any
items in relation to its revenues. With regard to capital and
operating expenditures, the Group limits itself to following the
regulation by valuing only the capital and operating expenditures
related to the so-called individual measures of the Taxonomy that
lead to reductions in greenhouse gas emissions and mainly on its
real estate assets.
Activities leading to capital and operating expenditures associated with economic activities that can be considered individually eligible from an
environmental point of view:
Environmental objective
Climate Change Mitigation (a)
Activity covered by the European Taxonomy
6.5. Transport by motorbikes, passenger cars and light commercial vehicles
7.4. Installation, maintenance and repair of charging stations for electric vehicles in buildings (and
parking spaces attached to buildings)
7.6. Installation, maintenance and repair of renewable energy technologies
7.7. Acquisition and ownership of buildings
8.1. Data processing, hosting and related activities
(a) Where the Group’s activities are cited in both the climate change mitigation and adaptation objectives, it has been determined that these activities should be allocated
to the mitigation objective.
4.7.2. Methodology for calculating the KPIs
The Group has calculated the indicators in accordance with the
provisions of Delegated Regulation 2021/2178 of the European
Commission of July 6, 2021, and its annexes supplementing
Regulation (EU) 2020/852, based on its existing processes and
reporting systems and on assumptions made by management.
The results cover all the Group’s activities included in the scope of
financial consolidation as of December 31, 2021. The financial
information used has been identified through the accounting
information reporting used to prepare the consolidated statements
and has been supplemented by discussions with Group
management.
capital expenditures
As part of this approach, the analysis focused on analyzing the
eligibility of
(CAPEX) and operating
expenditures (OPEX) in relation to investments in real estate assets
and individual measures that enable the target activities to become
low-carbon or lead to greenhouse gas reductions.
ESI Group’s eligible capital expenditures (CAPEX) performance
indicator for the year 2021 is 43.6% with a numerator of 5.3 million
euros, 99% of which are acquisitions of fixed assets corresponding
to the IFRS16 standard. The Group’s share of eligible capital
expenditures (CAPEX) is determined by dividing the sum of capital
expenditures of eligible activities by the change
in capital
expenditures reported in the consolidated financial statements
(including rights of use calculated in accordance with IFRS 16, mainly
associated with building and vehicle leases).
indicator
ESI Group’s performance
for eligible operating
expenditures (OPEX) for the year 2021 is 5.6% with a numerator of
€2 million. The Group’s share of eligible operating expenditures
(OPEX) is determined by dividing the sum of the operating
expenditures of eligible activities by the operating expenditures
retained by the Group pursuant to the provisions of Annex 1 to
Delegated Regulation 2021/2178 of
July 6, 2021 concerning
research and development expenditures, including in particular
associated personnel costs; short-term rental contracts and
maintenance, maintenance and repair expenses for real estate
assets, including associated personnel costs.
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REPORTING
4.8. REPORTING
4.8.1. Reporting methodology
Data collection and consolidation
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
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.
communication
responsible
corporate
team
is
The available data are sorted
corresponding to the Company’s business divisions:
into three geographic areas
■ Americas = Brazil and United States;
■ 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, and
Tunisia.
Scope
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 2021, 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
management of all payroll systems in order to take into account
local specificities. Social data thus represents 100% of the
workforce;
■ Scope of environmental reporting, representing 98.4% of total
workforce in 2021:
It includes Brazil, China, the Czech Republic, France, Germany,
India,
Japan, Russia, South Korea, Spain, Sweden,
Switzerland, Tunisia, the United Kingdom and the United States;
Italy,
■ 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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4.8.2. Report of the inspecting organization
This is a free translation into English of the original report issued in the French language and it is provided solely for the convenience of English
speaking users. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in
France.
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 Inspection 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 year ending December, 31 2021 (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 1st, 2022 and April 5, 2022 for a period of approximately eight days/person.
We held two 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;
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REPORTING
REPORTING
R. 225-105;
R. 225-105;
■ We checked that the Statement presents the business model and the main risks linked to the activity of all of the companies falling within
■ 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
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;
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
■ We checked, where relevant in view of the main risks or policies presented, that the Statement presents information set out in II of article
■ We looked into the selection and validation process of the main risks;
■ 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 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 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
■ 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;
accordance with article L. 233-16 with the limits set out in the paragraph;
■ We studied the information-gathering process set up by the entity aiming to obtain information that is exhaustive and sincere;
■ 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:
■ 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
• Analytical procedures consisting of checks to ensure that the data collected was consolidated correctly and that its evolution was
coherent,
coherent,
• Detailed tests on the basis of surveys, consisting of checks to ensure definition and procedures were applied correctly and of checks
• 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 (1) and covered between 15%
linking data to supporting documentation. This work was carried out with a selection of contributing entities (1) and covered between 15%
and 100% of the consolidated data of the key performance indicators selected for these tests (2);
and 100% of the consolidated data of the key performance indicators selected for these tests (2);
■ We consulted documentary sources and held interviews to corroborate what we considered to be the most important qualitative
■ We consulted documentary sources and held interviews to corroborate what we considered to be the most important qualitative
■ We looked into the overall coherence of the Statement with reference to our knowledge of the companies as a whole falling within in the
■ We looked into the overall coherence of the Statement with reference to our knowledge of the companies as a whole falling within in the
information (actions and results);
information (actions and results);
scope of the consolidation.
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
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.
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
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.
and internal control, we cannot rule out totally the risk that a significative anomaly in the Statement has not been detected.
Conclusion
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-
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
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.
sincerity, in accordance with the Pronouncements.
4
Lyon, on April 8, 2022
Lyon, on April 8, 2022
FINEXFI
FINEXFI
Isabelle Lhoste
Isabelle Lhoste
Partner
Partner
(1)
(1)
(2)
(2)
Social indicators: ESI Group SA.
Social indicators: ESI Group SA.
Environmental indicators: France (Rungis and Lyon sites), Germany.
Environmental indicators: France (Rungis and Lyon sites), Germany.
Structuring its priorities: CSR approach (Total headcount, Number of training hours), Supporting talent/encouraging the development of expertise, leadership and
Structuring its priorities: CSR approach (Total headcount, Number of training hours), Supporting talent/encouraging the development of expertise, leadership and
collaborative management (Number of training hours on Metacompliance), Promoting diversity, inclusion and multicultural exchanges (Total headcount, Breakdown of
collaborative management (Number of training hours on Metacompliance), Promoting diversity, inclusion and multicultural exchanges (Total headcount, Breakdown of
staff by geographical area, Breakdown of staff in main countries, Breakdown and equality of women and men by geographic zone, Percentage of women on permanent
staff by geographical area, Breakdown of staff in main countries, Breakdown and equality of women and men by geographic zone, Percentage of women on permanent
contracts, Number of women recruited, Age pyramid, Average age, Average age for men, Average age for women, Average seniority, Population over 50 in EMEA,
contracts, Number of women recruited, Age pyramid, Average age, Average age for men, Average age for women, Average seniority, Population over 50 in EMEA,
Population over 50 in Asia, Population over 50 in the Americas, Percentage of employees recruited under 35 years of age, Percentage of women with a managerial role
Population over 50 in Asia, Population over 50 in the Americas, Percentage of employees recruited under 35 years of age, Percentage of women with a managerial role
within the Group), Promote well-being and job satisfaction (Total workforce, Hirings and departures, Percentage of part-time employees), Progress towards the Group’s
within the Group), Promote well-being and job satisfaction (Total workforce, Hirings and departures, Percentage of part-time employees), Progress towards the Group’s
carbon neutrality (Waste collected in kg for recycling, Paper collected in kg for recycling, Total electricity consumption for France, Average number of reams per Group
carbon neutrality (Waste collected in kg for recycling, Paper collected in kg for recycling, Total electricity consumption for France, Average number of reams per Group
employee, CO2 emissions due to employee travel by train and plane for Germany, the United States, France, the Czech Republic, Russia and Tunisia, Average CO2
employee, CO2 emissions due to employee travel by train and plane for Germany, the United States, France, the Czech Republic, Russia and Tunisia, Average CO2
emissions due to employee travel in company cars for Germany, South Korea, France, the Czech Republic and Russia).
emissions due to employee travel in company cars for Germany, South Korea, France, the Czech Republic and Russia).
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5 MANAGEMENT
REPORT
Financial year ended December 31, 2021
5.1. BUSINESS ACTIVITIES DURING THE 2020 FINANCIAL YEAR
5.1.1.
Highlights of 2021 financial year
5.1.2.
Consolidated financial statements
5.1.3.
Research and development
5.1.4.
ESI Group annual financial statements
5.2. OUTLOOK
5.3. TABLE SUMMARIZING THE RESULTS
OF PAST FINANCIAL YEARS
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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97
98
98
100
100
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BUSINESS ACTIVITIES DURING THE 2020 FINANCIAL YEAR
CONTENTS
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
February 28, 2022. This report accounts for the Company’s activities
during the 2021 financial year, including the result of these activities
and the Company’s outlook, and presents the Company’s accounts
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 2020 FINANCIAL YEAR
5.1.1. Highlights of 2021 financial year
Evolution of Group Governance
■ As part of the evolution of its governance, ESI Board has co-
opted Alex Davern as a Board member and appointed him as
Chairman of the Board of Directors, effective February 8, 2021,
along other changes in the organization of the Board, including
the composition of the committees.
■ In May, the shareholder pact uniting the founders’ family since
2000, was terminated. Since this date, the Group no longer has a
majority shareholding.
■ In September 2021, the Board appointed Patrice Soudan as
independent Board member in replacement of Vincent Chaillou
who resigned.
■ In December 2021, Alain de Rouvray resigned from his Board
mandate.
Communication of a new three-year
business plan: OneESI 2024 – Focus to
Grow
In October, ESI Group unveiled for the first time publicly a tree-year
strategic plan “OneESI 2024 – Focus to Grow” including mid-term
forward-looking statement both for its revenue and its profitability.
To find more details about the plan, see part 1.1 of the document.
Financing
Based on the recommendation of the Audit Committee, the Board
of Directors held on June 22, 2021 authorized the renewal and
extension for five years of bank loans guaranteed by the State,
whose signature was authorized by a decision dated June 25, 2020.
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5.1.2. Consolidated financial statements
5.1.2.1. Review of financial performance
The consolidated financial information presented below is compliant with IFRS standards.
(In € millions)
Total sales
Licenses
Services
Gross margin
% of sales
EBIT (Adjusted (a))
% of sales
EBIT
Net result
% of sales
Cash
2021
136.6
111.4
25.2
102.9
75.3%
12.7
9.3%
-16.4
-18.5
(13.5%)
30.3
Variation at
actual currency
rate
Variation at
constant
currency rate
3.1%
4.7%
4.2%
6.0%
120.0%
134.2%
(555.4%)
(533.3%)
2020
132.6
109.2
23.4
98.7
74.5%
5.8
4.4%
4.0
1.4
1 %
22.5
(a) Adjusted EBIT is a non-GAAP indicator based on EBIT (IFRS). Adjusted EBIT corresponds to EBIT before stock-based compensation expenses, restructuring charges,
impairment charges and amortization of intangibles charges related to acquisition, the application of IFRS 16 standard on leases and other non-recurring items.
Changes in revenue and adjusted EBIT are presented in section 1.4
of this document.
guaranteed loans. ESI Group did not use its short term RCF
(Revolving Credit Facility) this year.
in operating profit
The change
is explained by the change
in adjusted EBIT and by the recognition in other operating expenses
of the costs of departures and write-off of assets due to the new
strategic plan initiated in 2021 for 27.4 millions of euros. After
taking
income tax expense of €1.3 million
(compared to €1.0 million in 2020), net income amounted to
-€18.5 million .
into account an
5.1.2.2. Financial situation
In 2021, ESI Group demonstrated its capacity to improve its
financial situation.
The Group has significantly increased its cash position end of year
from €22.5 million to €30.3 million thanks to a substantial free cash
flow of €10.9 million.
The net financial debt decreased to €12.5 million vs. €24.9 million at
end 2020, with a gearing at 17.2% (Net debt/Equity) vs. 28.4%
end 2020.
Gross financial debt amounts to €42.8 million (compared to
€47.4 million at end 2020) and includes €13.75 million of State
Cash position at December 31, 2021 amounted to €30.3 million
compared to €22.5 million at end 2020. The €7.8 million increase
results from:
■ A net cash-margin of +€9.9 million: compared with +€5.9 million
in 2020, increasing significantly by +€4.0 million thanks to better
results;
5
■ A change in working capital requirements (WCR) of €2.7 million
versus -€2,8 million in 2020;
■ Current capital expenditures paid of -€1.7 million (compared to
-€2.0 million in 2020);
■ Others representing a net outflow of €3.1 million, out of which +
€0.8 million of capital increase further to the exercise of stock-
options by Group employees, and syndicated
loan yearly
instalment of -€4.5 million.
At December 31, 2021, ESI Group held 5.7% of its share capital in
treasury shares.
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BUSINESS ACTIVITIES DURING THE 2020 FINANCIAL YEAR
CONTENTS
5.1.3. Research and development
5.1.3.1. Research and development costs
Details of costs are given in note 6.1.2 of the consolidated financial
statements.
The Group’s R&D workforce is spread over three continents around
specific high-level skill centers in Europe (mainly France, Germany
and the Czech Republic), Asia (India), America (United States). This
distribution reflect the long-standing ESI culture of relying on talents
wherever they are and enabling easy interactions that are becoming
the norm after COVID pandamy and the acceleration of working
from home.
5.1.3.2. Intellectual property
Most of the Company’s intellectual property consists of software
products that are protected by copyright, and of databases
protected 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 (notably with affiliates
which first developed some products and still own them).
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 different from affiliates. 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 few patents directly or through its
subsidiaries.
ESI also owns a portfolio of brands, including Product Performance
Lifecycle (PPL) and Hybrid Twin brands.
5.1.4. ESI Group annual financial statements
5.1.4.1 Presentation of annual financial
statements
ESI Group is the parent company of the Group; therefore, it owns
and/or controls all of
its
It oversees all of
its subsidiaries.
subsidiaries and centralizes most of software publishing activities.
Financial result of ESI Group is a net loss of -€3.1 million, compared
with -€15.8 million in 2020. It is mostly composed of -€3.0 million of
reversal of
impairments, and of forex result of
-€6.0 million (probable losses on reevaluation of receivables and
payables booked
in French accounting standards, whereas
probable gains are not booked).
investments
We remind that information presented here below is prepared in
accordance with French accounting standards.
Consequently, current result before tax amounts to -€0.8 million.
Income tax is an income of +€3.0 million (R&D tax credit for 2021).
ESI Group revenue stands at €85.8 million in 2021, compared with
€82.9 million in 2020.
ESI Group also recorded exceptional losses of -€30.2 million,
corresponding mainly to restructuring cost (-27.6 million).
It is composed of revenue realized with other Group entities for
€70.9 million, mainly royalties received from ESI distribution
subsidiaries as compensation for the right to grant licenses to end
customers, of Licensing revenue realized directly with end
customers for €12.4 million and of consulting revenue for
€2.1 million.
Increase vs. 2020 results from the higher global level of Licensing
activity in the Group, which impacted the level of royalties received
from distribution subsidiaries.
Operating result for 2021 is a profit of €2.4 million, compared with a
loss of -€1.6 million in 2020. Increase of €4 million mainly results
from revenue growth.
Net result is a loss of -€28.0 million.
The Company’s equity stands at €31.3 million due to 2021 net
result, compared to €58.2 million end 2020.
(compared with
Financial debt decreases at €41.3 million
€46.6 million end 2020), mainly due to payment of syndicated loan
yearly instalment of -€4.5 million.
ESI Group had recourse to a promissory bill at the end of the year
for an amount of €2.5 million with a variable interest rate.
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CONTENTS
BUSINESS ACTIVITIES DURING THE 2020 FINANCIAL YEAR
MANAGEMENT REPORT 5
Breakdown of invoices issued and received at December 31, 2020
(Article D. 441-4 of the French Commercial Code)
________
Reference terms of payment used are contractual terms.
Terms greater than 91 days are mostly debts to Group subsidiaries.
Invoices issued (Customers)
(In € thousands)
Instalment 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)
Instalment 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)
250
54
7,792
2,205
26
646
53
1,970
2,103
1,301
29,685
33,837
10.60%
3.00%
0.90%
1.80%
40.30%
46.00%
3,654
3,654
0 day
(indicative)
47
2,468
1 to 30 days 31 to 60 days 61 to 90 days
91 days and
more
Total (1 day
and more)
9
319
5
21
68
103
1,095
3,683
7,518
12,615
4.20%
0.50%
1.90%
6.30%
12.90%
21.70%
Two branches are integrated within ESI Group’s financial statements; details are shown in note F.3 to the financial statements.
5
5.1.4.2. Allocation of net result
Allocation:
Situation at December 31, 2021:
■ Net loss for the year: -€27,993,026.85;
■ Loss carried forward: €1,745,615.10;
■ Total to be allocated: -€27,993,026.85.
■ -€27,993,026.85 to loss carried forward.
Following this allocation, the legal reserve stands at €1,805,367.60.
Loss carried forward stands at -€29,738,641.95.
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5 MANAGEMENT REPORT
OUTLOOK
5.2. OUTLOOK
In 2021 we successfully steered our Company through a
governance change, announced our redefining three-year strategic
plan and demonstrated considerable performance improvements.
We reignited growth and more than doubled our Adjusted EBIT
margin. On this excellent foundation we now enter the 1st year of
our “OneESI 2024 – Focus to Grow” plan. Across the globe, all our
stakeholders are now experiencing the early benefits of this
significant change in our ability to focus and drive results. The
Group is confident in its ability to deliver the communicated multi-
year objectives and
to shareholders by
long-term value
repositioning the Group.
5.3. TABLE SUMMARIZING THE RESULTS
OF PAST FINANCIAL YEARS
Closing date
31/12/2021
31/12/2020
31/12/2019
31/01/2019
31/01/2018
Duration of financial year (number of months)
12
12
11
12
12
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 €)
Revenue (excl. tax)
Earnings before tax, employee profit-sharing,
allowances for amortization and provisions
Income tax
Employee profit-sharing
18,192,423
18,109,776
18,055,476
18,053,676
18,049,326
6,064,141
6,036,592
6,018,492
6,017,892
6,016,442
180,861
120,210
205,334
151,448
108,843
85,820,626
82,935,829
55,295,671
86,022,988
83,883,977
6,806,831
28,948,002
(2,973,365)
27,025,120
31,555,313
3,026,196
3,122,046
(3,024,257)
(2,698,695)
(2,228,379)
Allowances for amortization and provisions
37,826,054
47,244,034
33,849,027
26,903,999
28,762,466
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 (a)
Payroll (in €)
Amounts paid in benefits (social security,
social welfare, etc.) (in €)
(27,993,027)
(15,173,986)
(27,851,406)
2,819,816
5,546,976
1.44
5.31
(0.21)
4.94
(4.62)
(2.51)
(4.63)
0.47
5.70
0.92
234
259
258
264
243
17,877,629
16,903,205
15,027,428
15,880,764
14,766,952
8,500,368
7,689,415
6,969,914
7,466,508
6,971,314
(a) Average headcount in France and in branches outside France, presented starting financial year ending January 2019.
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CONTENTS
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.
6.1.6.
Notes to the consolidated financial statements
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
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.
102
102
103
104
105
106
137
142
142
143
144
164
6
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CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
6.1. CONSOLIDATED FINANCIAL STATEMENTS
6.1.1. Consolidated income statement
(In € thousands)
Licenses and maintenance
Consulting
Co-financed projects (a)
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
EBIT
Financial result
Share of profit of associates
Income before income tax expense and minority interests
Provision for income tax
Net income before minority interests
Non-Controlling interests
NET INCOME (GROUP SHARE)
Earnings per share (in €)
Diluted earnings per share (in €)
Note
December 31, 2021
December 31, 2020
111,356
20,773
4,017
449
136,595
(33,717)
(31,302)
(38,990)
(21,586)
11,000
(27,401)
(16,401)
(883)
80
(17,204)
1,280
(18,484)
(10)
(18,474)
(3.24)
(3.24)
109,201
18,845
4,020
508
132,573
(33,838)
(30,867)
(40,242)
(23,589)
4,037
9
4,046
(1,355)
(258)
2,433
1,008
1,425
11
1,414
0,25
0,25
4.1
4.8
6.1.2
4.9
7.2
8.1
9.3
9.3
(a) The Group has separated the co-financed projects from the consulting revenue in 2021, so the comparative information has been restated.
Consolidated 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 non-controlling interests
The notes are an integral part of the consolidated financial statements.
December 31, 2021
December 31, 2020
(18,484)
7
1,170
876
2,053
(16,431)
(16,423)
(8)
1,425
11
(1,698)
(133)
(1,820)
(395)
(403)
8
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2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
Note
December 31, 2021
December 31, 2020
125,828
145,297
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
10.2.2
7.1.2
4.7
10.2.1
10.2.2
4.3
41,381
41,042
4,094
16,706
883
18,391
3,102
229
75,186
35,548
6,371
2,948
30,319
201,014
72,623
72,537
18,192
26,986
45,256
(18,474)
577
86
55,586
33,832
11,818
9,124
—
4
808
72,805
8,954
4,552
5,288
26,609
7,129
20,273
41,002
63,424
4,696
17,742
728
14,685
3,014
6
71,062
33,486
11,912
3,198
22,466
216,359
87,861
87,779
18,110
26,280
42,477
1,414
(502)
82
63,737
39,264
12,324
11,474
—
14
661
64,761
8,148
5,184
6,655
22,754
1,624
20,396
6
201,014
216,359
6.1.2. Consolidated balance sheet
(In € thousands)
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Rights-of-use assets
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 (a)
Net income (loss)
Translation differences
Non-controlling interests
Non-current liabilities
Non-current share of financial debt
Non-current lease obligation
Provision for employee benefits
Deferred tax liabilities
Cash-flow hedging instruments
Other long term debt and provisions
Current liabilities
Current share of financial debt
Current lease obligation
Trade payables
Accrued compensation; taxes and others current liabilities
Current provisions
Contract liabilities
TOTAL LIABILITIES
(a) Other comprehensive income (excluding translation reserves) is classified as “Reserves”.
The notes are an integral part of the consolidated financial statements.
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6 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
Translation
differences
Equity
attributable
to parent
company
owners
Minority
interests
Total
Equity
At December 31, 2019
6,018,492 18,055
25,833
41,039
987
85,912
71
85,983
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
18,100
54
447
Treasury shares
Share-based payments
Transactions with non-controlling interests
Other movements
At December 31, 2020
Change in fair value of hedging Instruments
Translation differences
Actuarial gains and losses
Income and expenses recognized
directly in equity
Net income
Comprehensive income
6,036,592 18,110
26,280
43,894
11
(133)
(122)
1,414
1,292
25
33
783
722
7
877
884
(18,474)
(17,590)
(84)
681
(150)
34
(1,695)
11
(1,695)
(133)
(1,695)
(1,817)
(1,695)
206
(502)
1,167
1,167
1,414
(403)
526
33
783
—
928
87,779
7
1,167
877
2,051
(18,474)
11
(1,698)
(133)
(1,820)
1,425
(395)
526
33
783
—
931
87,861
7
1,170
876
(3)
0
(3)
11
8
3
82
3
(1)
2
2,053
(10)
(18,484)
1,167
(16,423)
(8)
(16,431)
788
(84)
681
(201)
(3)
788
(84)
681
(189)
(3)
12
72,537
86
72,623
(51)
(37)
577
Proceeds from issue of shares
27,549
83
705
Treasury shares
Share-based payments
Transactions with non-controlling interests (a)
Other movements
AT DECEMBER 31, 2021
6,064,141
18,192
26,986
26,785
(a) Transactions with non-controlling interests: these are buyouts of minority shares (ESI Services Tunisie 5%, Straco 2%, ESI Japan 3%, ESI South America 5% and
Hankook ESI 1.2%).
The notes are an integral part of the consolidated financial statements.
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CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
6.1.4. Consolidated statement of cash flows
(In € thousands)
Net income before minority interests
Share of profit of associates
Amortization and provisions (a)
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 (a)
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 and lease debt (a)
Proceeds from issue of shares
Purchase and proceeds from disposal of treasury shares
Purchase of non-controlling interests
Net cash used for 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, 2021
December 31, 2020
(18,484)
(80)
14,222
223
1,280
(2,624)
(559)
681
20,983
15,642
(1,010)
(1,477)
5,222
2,735
18,377
(432)
(1,285)
0
0
(33)
(1,750)
716
(11,176)
788
(84)
(380)
(10,136)
1,362
7,853
22,466
30,319
7,853
1,425
258
11,575
(1,841)
1,008
(1,620)
114
783
20
11,722
9,544
(1,866)
(10,444)
(2,766)
8,956
(918)
(1,105)
0
173
133
(1,717)
13,723
(19,351)
526
33
(5,069)
55
2,225
20,241
22,466
2,225
6
(a)
IFRS 16 application results in an increase of amortization cost and reimbursement of lease debt, it thus implies an improvement of Operating cash flow by
+5.7 million in 2021 (vs. +€5.7 million in previous year), and increase of repayments in the financing part of the Cash Flow Statement for -€5.7 million (vs.
-€5.7 million in 2020).
Additional information: Interested paid amounted to -€714 thousand in 2021 (compared to -€979 thousand in 2020).
The notes are an integral part of the consolidated financial statements.
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6 FINANCIAL STATEMENTS
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
106
107
108
111
116
122
126
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
131
133
134
135
136
136
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 3 bis rue Saarinen, Rungis (94150), France. ESI
Group SA is the parent company of 26 subsidiaries operating
throughout the world (see note 3 of ESI Group’ Scope of
Consolidation).
Founded in 1973, ESI Group envisions a world where Industry
commits to bold outcomes, addressing high stakes concerns –
environmental
impact, safety & comfort for consumers and
workers, adaptable and sustainable business models. ESI provides
reliable and customized solutions anchored on predictive physics
NOTE 1.2. ACCOUNTING STANDARDS APPLIED
The consolidated financial statements at December 31, 2021 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.
modeling and Virtual Prototyping expertise to allow industries to
make the right decisions at the right time, while managing their
complexity. ESI
land
in automotive &
transportation, aerospace, defense & naval and heavy industry.
is acting principally
The Group’s financial year runs from January 1 to December 31,
2021.
Financial statements are presented in thousands of euros. The
2021 financial statements were approved by the Board of Directors
on February 28, 2022 and will be submitted for approval to the
General Meeting of June 28, 2022.
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.
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CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
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 January 1, 2021
New standard mandatory for fiscal years beginning on January 1,
2021 had no significant impact on the Group’s consolidated
financial statements.
The Group undertakes no early application of any standard or
interpretation or associated amendments which were already
published
Journal of the European Union at
December 31, 2021.
in the Official
(IFRS
Standards, amendments and interpretations published by the IASB
and not yet approved by the European Union is under evaluation by
the Group. Finally, in April 2021, the IASB Board has approved the
final decision rendered in March 2021 by the IFRS Interpretations
IC) concerning the recognition of software
Committee
configuration and customization costs within the
framework
regarding a Saas contract. Given the work to be carried out and the
required time to analyse and assess the possible impacts of a
change in method, the methodology used by the Group to
recognize these costs at the closing date of December 31, 2021
remains unchanged. Analytical work is ongoing and will continue
in 2022.
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
trades
receivables, income tax expense, provisions for risks and litigation
and provisions for post-employment commitments.
for depreciation of
NOTE 2. Significant events of the year
/ Financial consequences of new three-years
/ Change in scope of consolidation
strategic plan – Restructuring costs
During the year ended December 31, 2021:
In 2021, the Group initiated its new growth and profitability plan
“OneESI 2024 – Focus to Grow”.
■ In March, ESI Group acquired 5% of minority share of the
Tunisian subsidiary ESI Tunisie for €61 thousand;
impairment of
This transformation has resulted in headcount reductions as well as
the
to software
intangible assets
development projects now
considered non-core or not
corresponding to the Group’s product offerings.
relating
The impacts of this restructuring and transforming plan are
estimated to €27.4 million, in which €6.7 million related to
severance costs already notified and €20.7 million to asset
impairments (development costs and assets with indefinite life).
■ In April, the French subsidiary Civitec. was absorbed by ESI
Group;
■ In June, ESI Group acquired 2% minority share of the French
subsidiary Straco for €95 thousand and, French entity Straco
was absorbed by ESI Group;
■ In September, the Group obtained 3% shares of ESI Japan for
€96 thousand;
■ In December, ESI Group purchased minority
interests
(5% shares) of ESI South America for €50 thousand and 1.2%
shares of Hankook ESI for €27 thousand.
6
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NOTE 3. Scope of consolidation
NOTE 3.1. ACCOUNTING POLICIES RELATED TO THE SCOPE OF CONSOLIDATION
/ Business combinations
Business combinations are recognized by the acquisition method:
■ The
identifiable assets acquired and
measured at fair value as of the acquisition date;
liabilities assumed are
■ 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
non-current debt” or “Other current 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”.
intangible assets acquired
For
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, Customer
relationships are amortized, the depreciation charge is recorded in
“selling and marketing expenses” in the income statement over a
period which vary according to each newly acquired activity.
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FINANCIAL STATEMENTS 6
/ 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
centrally managed R&D efforts and the integration of acquired
technologies (source codes, algorithms, etc.) and the support of
distribution subsidiaries managed by the Group.
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;
■ For the years Y+2 to Y+5 multi-annual business plan.
The cash flows derive from the business plan drawn up by the
Group’s Management.
The discount rate applied as of December 31, 2021 is the Group’s
weighted average cost of capital (WACC) adjusted with a risk
premium. It stands at 10.46% compared to 8.56% at December 31,
2020.
The present value of the CGU is determined by adding:
■ The present value of forecasted future cash flows over the explicit
period of five 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, 2021
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.
NOTE 3.2. CHANGE IN GOODWILL
/ For the year ended December 31, 2021
(In € thousands)
Gross values
TOTAL NET VALUES
December 31,
2020
41,002
41,002
/ For the year ended December 31, 2019
Increase
Decrease
Foreign exchange
gain/loss
December 31,
2021
379
379
41,381
41,381
6
(In € thousands)
Gross values
TOTAL NET VALUES
December 31,
2019
41,449
41,449
Increase
Decrease
Foreign exchange
gain/loss
December 31,
2020
0
(447)
(447)
41,002
41,002
No acquisition took place during financial years 2020 and 2021.
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
research and
development costs and selling and marketing expenses depending
on their type (respectively for codes and customer relationships).
result, allocated between
At December 31, 2021, the amortization of codes amounts to
€1,129 thousand (€819 thousand as of December 31, 2020), and
the amortization of
the customer relationships stands at
€398 thousand (€406 thousand as of December 31, 2020).
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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 entities
Date of creation
or acquisition
Subsidiary head office
December 31, 2021 December 31, 2020
% of capital held
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
May 2001
Compiègne, France
Plzen, Czech Republic
January 2002
London, England
ESI US Holding, Inc.
August 2002
Dover, Delaware, United States
ESI US R&D, Inc.
Calcom ESI SA
August 2002
San Diego, California, United
States
December 2002
Lausanne, Switzerland
ESI Software (India) Private Ltd.
February 2004
Bangalore, India
Hong Kong ESI Co., Ltd.
ESI-ATE Holdings Ltd.
February 2004
Hong Kong, China
July 2006
Hong Kong, China
ESI South America Comércio e Serviços
de Informatica, Ltda
ESI Italia s.r.l.
ESI Services Tunisia
June 2008
São Paulo, Brazil
September 2008
Bologna, Italy
April 2009
Tunis, Tunisia
ESI Group Beijing Co., Ltd.
October 2010
Beijing, China
ESI Software Germany GmbH
August 2011
Stuttgart, Germany
ESI Nordics AB
OpenCFD Ltd.
December 2011
Sollentuna, Sweden
September 2012
Berkshire, 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
Entities accounted for using the equity method
JV AECC-ESI (Beijing) Technology Co., Ltd. February 2014
Beijing, China
100%
100%
100%
100%
100%
100%
—%
95%
100%
100%
100%
99%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
—%
100%
100%
35%
100%
100%
97%
100%
99%
100%
98%
95%
100%
100%
100%
99%
100%
100%
100%
95%
100%
95%
100%
100%
100%
100%
100%
100%
100%
100%
35%
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FINANCIAL STATEMENTS 6
NOTE 4. Operating data
NOTE 4.1. REVENUE
ESI Group revenue derives from two activities: software licensing and
related maintenance, and services.
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
include updates and technical
services. Maintenance services
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.
(In € thousands)
Total licenses and maintenance
Consulting
Co-financed projects
Other revenue
Total services
CONSOLIDATED REVENUE
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 (IFRS 15)
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.
6
December 31, 2021
December 31, 2020
111,356
20,773
4,017
449
25,239
136,595
109,201
18,845
4,020
508
23,372
132,573
Backlog as of December 31, 2021 amounts to €42 million
(compared with €37 million in 2020), out of which €40 million for
Licensing (compared with €35 million in 2020) and €2 million for
Services (compared with €2 million in 2020).
Revenue realized with Group 10 top customers amounts to
€56.5 million (compared with €52,2 million in 2020), representing
41% of total revenue, out of which €44 million for Licensing activity
(compared to €40,9 million in 2020) and €12.5 million for Services
activity (versus €11.3 million in 2020). These are mainly customers
from the automotive sector.
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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, 2021
December 31, 2020
40,204
(4,656)
35,548
38,569
(4,227)
34,342
(In € thousands)
Depreciation
TOTAL
December 31,
2020
Consolidation
scope change
(4,226)
(4,226)
—
Provisions
Reversals
(866)
(866)
433
433
Foreign
exchange gain/
loss
Other
movements
December 31,
2021
(32)
(32)
35
35
(4,656)
(4,656)
The amount presented in the column “Consolidation scope change"
refers to the dissolution of ESI-ATE Technology China Ltd. (fully
impaired very old receivables).
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.
Not due
0 to 30 days
30 to 90 days
Higher than 90 days
TOTAL
December 31,
2021
December 31,
2020
28,096
1,199
1,000
5,253
35,548
21,138
862
2,762
9,580
34,342
Age of trade receivables as of December 31, 2021
________
The amount of trade receivables due for more than 90 days
includes receivables from Chinese public sector customers, for
which collection time is more important.
14.8%
Higher than 90 days
2.8%2.8%
30 to 90 days
3.4%
0 to 30 days
79.0%
Not due
/ Contract assets
Contracts relating to the Licensing activity are generally invoiced at
the beginning of the software access period, so this activity does
not generate invoices to be issued or assets on contracts.
The Services activity, corresponding mainly to consulting services, is
subject to various invoicing schedules, defined in the customer
contracts. In the case of invoicing schedules that are misaligned
with completion rate of services, invoices to be issued (in the vast
majority of cases) or contract assets
(in rare cases, when
completion milestones require client acceptance) are booked.
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NOTE 4.3. CONTRACT LIABILITIES
Contracts relating to the Licensing activity are invoiced at the
beginning of the software access period, and all revenues remaining
and regarding to maintenance, to be recognized in the following
year are therefore contract liabilities.
This principle is also generally applicable to the Services activity,
where invoicing may be subject to a schedule, but where the due
dates generally precede the completion of the services.
For most contracts the usual term of contract liabilities is maximum
one year.
NOTE 4.4. OPERATING EXPENSES
(In € thousands)
Other purchases and external expenses
Short-term and low-value assets leases
Fees
Taxes and duties
Amortization and provisions
Personnel costs (a)
Other external expenses and income
Total current operating expenses
Other operating income and expenses
TOTAL OPERATING EXPENSES
(a) Details on personnel costs are presented in note 5.2.
NOTE 4.5.
INFORMATION BY GEOGRAPHIC AREA
December 31, 2021
December 31, 2020
(10,805)
(1,344)
(3,333)
(309)
(10,415)
(91,343)
(8,047)
(125,596)
(27,401)
(152,998)
(10,705)
(1,971)
(4,362)
(604)
(11,064)
(93,441)
(6,390)
(128,536)
9
(128,527)
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).
The Group develops sells and provides technical support for its
software which allow engineers to predict and improve, by virtual
tests, the performance and the expected quality of a product.
6
Revenue is split between regions where it is actually produced.
(In € thousands)
Year ended December 31, 2021
External clients
Affiliate companies
Net sales
ASSETS ALLOCATED
Year ended December 31, 2020
External clients
Affiliate companies
Net sales
ASSETS ALLOCATED
Europe, Middle
East and Africa
Asia-Pacific
Americas
Eliminations
Consolidated
65,767
69,871
135,638
237,271
62,597
77,114
139,711
326,225
49,716
1,957
51,673
52,268
50,109
9,267
59,376
53,362
21,112
2,524
23,637
22,173
19,867
6,242
26,109
33,419
(74,352)
(74,352)
(110,697)
(92,623)
(92,623)
(196,648)
136,595
—
136,595
201,014
132,573
132,573
216,359
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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NOTE 4.6. OFF-BALANCE SHEET COMMITMENTS RELATED TO OPERATIONAL ACTIVITIES
At December 31, 2021, 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. 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.
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.
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 (except for contracts renewable by
tacit agreement) or leases with underlying asset of low value.
The Group has applied, with retroactive effect from January 1, 2019,
the interpretation of IFRS IC relating to assessment of lease terms for
contracts renewable by tacit agreement or without a contractual
expiry date. IFRS IC confirms the need to determine the enforceable
period, taking an economic view, beyond the legal characteristics. The
contracts concerned are essentially real estate leases and vehicule
rentals.
To determine the lease liabilities, the Group has discounted future
lease payments using weighted average marginal borrowing rate of
2.5%.
In the assets of the balance sheet, the rights of use of leased assets represent a net value of €16.707 million, of which a gross value of
€29.403 million and the amortization of €12.696 million.
(In € thousands)
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
(In € thousands)
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
December 31,
2020
Increase
Decrease
Others
December 31,
2021
28,263
25,486
2,777
(10,522)
(9,189)
(1,333)
17,741
16,297
1,444
5,224
4,890
334
(5,736)
(4,943)
(793)
(512)
(53)
(459)
(4,093)
(3,443)
(650)
3,566
2,915
651
(527)
(528)
1
8
8
—
(4)
(4)
—
4
4
—
29,402
26,941
2,461
(12,696)
(11,221)
(1,475)
16,706
15,720
986
December 31,
2019
Increase
Decrease
Others
December 31,
2020
27,155
25,174
1,981
(5,372)
(4,633)
(739)
21,783
20,541
1,242
1,395
642
753
(5,766)
(4,887)
(879)
(4,371)
(4,245)
(126)
(574)
(333)
(241)
532
333
199
(42)
(42)
289
4
285
83
(2)
85
372
2
370
28,265
25,487
2,778
(10,523)
(9,189)
(1,334)
17,742
16,298
1,444
In the liabilities of the balance sheet, the lease debts are split between €11,818 million of non-current debts (compared with €12,318 million in
2020) and €4,551 million of current debts (compared with €5.184 million in 2020).
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Maturity of lease debts as at December 31, 2021:
(In € thousands)
Debts – leased offices
Debts – leased cars
LEASE DEBTS
< 1 year
4,011
540
4,552
Between 1
and 2 years
Between 2
and 4 years
More than
5 years
December 31,
2021
3,778
282
4,060
3,978
170
4,148
3,609
—
3,609
15,376
992
16,369
In the income statement, the restatement of rental expenses
amounted to €6.214 million (compared with €5.210 million in 2020),
almost entirely offset by the right-of-use amortization: the impact
on the operational result is +€477 thousand (compared with
€377 thousand in 2020). The impact of IFRS 16 restatement on
is an additional expense of -€374 thousand
financial result
(compared with -€301 thousand in 2020). The impact on the result
net is +€103 thousand (compared with +€74 thousand in 2020).
NOTE 4.8. COST OF SALES
In the cash flow statement, IFRS 16’s impact is an increase of
amortization and an improvement of cash flow amounted to +
€5.639 million (compared with +€5.775 million in 2020), against a
reimbursement of lease debts in the financial part of the cash flow
statement for -€5.743 million (compared with -€5.775 million
in 2020).
The cost of sales correspond to costs included in gross margin,
relating to the Licensing and Services activities. It consists mainly of
costs related to teams providing first-level support for Licensing
activity and performing consulting services for Services activity
(direct and indirect costs – salary costs and environmental costs).
Cost of sales also includes external royalties and operational
subcontracting costs.
Cost of sales evolution is not directly proportional to revenue
evolution.
NOTE 4.9. OTHER OPERATIONAL INCOME AND EXPENSES
/ Other income and expenses
/ Current operational profit
The Other income and expenses item includes capital gains and
losses on disposals of tangible and intangible assets, impairment of
assets, restructuring costs, and clearly
identified non-recurring
income and expense items that are material to the consolidated
financial statements.
Current operating income is calculated from operating income less
other operating income and expenses.
6
(In € thousands)
Restructuring costs related to “OneESI 2024 –
Focus to Grow”
Impairment, disposal of intangibles assets and
other
TOTAL
December 31,
2021
(6,667)
(20,737)
(27,404)
The “OneESI 2024 – Focus to Grow” transformation plan initiated in
2021 will result in headcount reductions as well as the impairment
of intangible assets relating to software development projects now
considered non-core or not corresponding to the group’s product
is estimated at
offerings. The
€27.4 million, including €6.7 million in severance costs related to
the “OneESI 2024 – Focus to Grow” plan and €20.7 million in asset
write-offs induced by the new strategic plan.
impact of this restructuring
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CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
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:
France
Rest of the world
TOTAL
December 31, 2021
December 31, 2020
302
843
1,145
317
900
1,217
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
31 décembre 2021
31 décembre 2020
(71,528)
(18,623)
(681)
(510)
(91,343)
(74,137)
(17,850)
(783)
(670)
(93,441)
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.
An IFRS IC decision was validated by the IASB in May 2021 concerning
IAS 19 “Employee Benefits” relating to the allocation of employee
benefits to periods of service. Thus, the vesting period is determined
from the date of retirement and no longer from the date of hire for
collective agreements for which rights are defined by seniority. Where
rights are capped, the vesting period is limited to the length of service
required at the time of capping. The methodology used by the Group
to measure its obligations at December 31, 2021 remains unchanged.
For defined-benefit plans, in accordance with IAS 19 R “Employee
Benefits”, obligations are determined 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 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.
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FINANCIAL STATEMENTS 6
/ 5.3.1. Actuarial assumptions
Discount rates
France
Germany
Japan
South Korea
India
December 31, 2021
December 31, 2020
0.90%
1.05%
0.48%
2.40%
7.09%
0.35%
0.88%
0.41%
1.84%
6.67%
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, 2021
December 31, 2020
France
Germany
Japan
South Korea
India
2.50%
2.00%
3.00%
4.00%
7.00%
2.50%
2.00%
3.00%
4.00%
10.00%
Turnover rates are calculated per subsidiary and per age group according to the past experience of each subsidiary.
6
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/ 5.3.2. Change in commitment and provisions
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
Staff reduction
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
Others
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
December 31, 2021
December 31, 2020
(13,802)
(13,521)
(984)
(187)
679
1,154
1,539
15
(1,046)
(209)
592
(22)
48
357
(11,585)
(13,801)
2,414
91
208
(297)
(11)
56
2,461
(984)
(96)
(187)
91
1,625
545
(3,874)
2,461
(1,412)
(7,711)
(9,124)
(11,474)
545
1,143
208
382
71
2,536
76
350
(322)
(146)
(136)
2,359
(1,046)
(132)
(209)
76
48
(1,130)
(4,934)
2,414
(2,520)
(8,953)
(11,473)
(11,017)
(1,131)
(167)
350
270
221
(9,125)
(11,474)
The commitments financed break down as follow by country: 19% in France, 38% in South Korea, 34% in India and 9% in Germany. Employer
contributions correspond to payments made to pension funds.
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CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
/ 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
TOTAL ACTUARIAL GAINS/LOSSES
NOTE 5.4. SHARE-BASED PAYMENTS
Stock options may be granted to selected Group employees. They
entitle employees to subscribe to new shares or to 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
requirements,
include performance
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.
December 31, 2021
(12,025)
(11,585)
(10,693)
December 31, 2021
(95)
1,213
(11)
1,107
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.
/ Terms and conditions of stock options and free shares plans
Stock options and free share plans have been authorized by various General Meetings and could potentially dilute ESI Group’s capital.
The tables below describe ongoing plans.
6
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6 FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
Stock options
Plan number (date
of General Meeting)
Plan 10 (GM 2012)
Plan 10 bis (GM 2012)
Plan 10 ter (GM 2012)
Plan 10 quater (GM 2012)
Date of Board of
Directors
12/19/2012
02/07/2014
03/26/2015
07/22/2015
Number of
attributable
options
granted
Number of
options
granted
O/w
performance
shares
150,850
62,300
11,000
15,000
3,150
Total GM 2012
180,000
180,000
62,300
Plan 17 (GM 2014)
Plan 17 bis (GM 2014)
Plan 17 ter (GM 2014)
Plan 17 quater (GM 2014)
07/22/2015
03/11/2016
05/05/2017
05/05/2017
Total GM 2014
180,000
Plan 19 (GM 2017)
Plan 19 bis (GM 2017)
Plan 19 ter (GM 2017)
07/18/2018
02/01/2019
12/18/2019
Plan 21 (GM 2021)
09/10/2021
Total GM 2017
180,000
Total GM 2020
300,000
7,350
10,000
18,175
1,875
37,400
43,950
20,000
25,785
89,735
24,000
24,000
1,875
1,875
32,963
15,000
47,963
24,000
24,000
TOTAL STOCK-OPTIONS
840,000
331,135
136,138
Number of
options
exercisable at
December 31,
2021
Limit year
for
exercising
options
Exercise
price
27.82
24.42
21.66
27.17
27.17
23.35
50.92
50.92
42.97
27.04
29.12
60.47
2021
2022
2025
2025
2023
2026
2025
2025
2026
2027
2027
2029
375
—
375
13,700
13,700
8,089
—
—
8,089
—
—
22,164
Free shares
Plan number (date
of General Meeting)
Plan No. 6 (GM 2016)
Plan No. 7 (GM 2016)
Plan No. 8 (GM 2016)
Plan No. 9 (GM 2018)
Plan No. 9 bis (GM 2018)
Plan No. 9 ter (GM 2018)
Plan No. 9 quater (GM 2018)
Plan No. 9 quinquies (GM 2018)
Plan No. 9 sexies (GM 2018)
Plan No. 9 septies (GM 2018)
Plan No. 10 (GM 2020)
Plan No. 10 bis (GM 2020)
Plan No. 10 ter (GM 2020)
Plan No. 10 quater (GM 2020)
Plan No. 10 quinquies (GM 2020)
Plan No. 10 sexies (GM 2020)
Plan No. 10 septies (GM 2020)
Plan No. 10 octies (GM 2020)
Plan No. 10 novies (GM 2020)
TOTAL FREE SHARES
Date of
Board of
Directors
Authorized
number of
shares
Number of
shares
granted
O/w
performance
shares
Number of
shares in
progress at
December 31,
2021
End of
vesting
period
07/21/2016
12/23/2016
08/01/2017
07/18/2018
07/18/2018
07/18/2018
07/18/2018
12/18/2019
12/18/2019
03/19/2020
25/06/2020
06/10/2021
10/04/2021
10/04/2021
10/04/2021
10/04/2021
10/04/2021
11/19/21
11/19/21
60,000
60,000
25,000
2,275
9,000
10,617
2,441
15,500
16,250
6,337
2,521
5,000
3,000
7,000
8,122
3,255
60,000
15,250
716
8,331
4,000
10,000
7,964
4,061
2,000
180,000
154,615
14,025
2020
2020
2021
2021
2020
2022
2023
2022
2021
2023
2023
2023
2025
2024
2025
2025
2024
2025
2025
—
—
3,002
2,333
4,237
—
5,000
7,000
8,122
3,255
15,250
716
8,331
4,000
10,000
71,246
The total expense related to stock-options plans for the financial
year ended December 31, 2021 stands at €115 thousand, vs.
€138 thousand for the previous year. That related to free shares
plans stands at €566 thousand, vs. €645 thousand in 2020.
All stock options and free shares plans include a continued
employment requirement.
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FINANCIAL STATEMENTS 6
/ Movements in stock options
2021
2020
Numbers
of options
Weighted
average exercise
price
Stock options existing at the opening
Stock options granted
Stock options expired or canceled
Stock options exercised
Stock options existing at the closing
OPTIONS THAT MAY BE EXERCISED AT THE CLOSING
120,810
24,000
(8,400)
(27,549)
108,861
22,164
34.36
60.47
30.80
27.52
42.01
38.54
/ Fair-value of stock options and free shares
The main data and assumptions underlying the valuation of stock options at fair value were as follows:
Numbers
of options
145,135
—
(7,350)
(18,100)
120,810
27,975
Weighted
average exercise
price
33.71
—
36.19
22.44
34.36
27.08
Stock options
price at grant
date
Expected term
of stock options
(in years)
Volatility
Dividend
rate
Interest
rate
Plan No. 10 (02/01/2013)
Plan No. 10 bis (02/07/2014)
Plan No. 10 ter (02/01/2015)
Plan No. 10 quater (07/22/2015)
Plan No. 15 (02/01/2015)
Plan No. 17 (07/22/2015)
Plan No. 17 bis (03/11/2016)
Plan No. 17 ter (05/05/2017)
Plan No. 17 quater (05/05/2017)
Plan No. 19 (07/18/2018)
Plan No. 19 bis (02/01/2019)
Plan No. 19 ter (12/12/2019)
Plan No. 21 (10/09/2020)
26.99
24.50
24.94
28.31
24.94
28.31
24.39
55.56
55.56
42.97
27.04
29.12
60.47
5
5
6
6
6
6
7,5
5,5
5,5
5,5
5,5
5,5
5.2
24.80%
23.73%
22.13%
23.36%
23.36%
22.13%
22.79%
28.16%
28.16%
37.33%
34.56%
26.76%
22.71%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
The main data and assumptions underlying the valuation of free shares at fair value were as follows:
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
Plan 9 septies
Plan 10
Plan 10 bis
Plan 10 ter/10 quater/10 quinquies/10 sexies/10 septies
Plan 10 octies/10 novies
Stock options price
at grant date
Period of non-
transferability after
acquisition
(in years)
30.30
45.73
46.19
42.97
31.40
31.00
33.50
35.40
59.00
68.40
71.00
1 à 2
0 à 2
1 à 2
1 à 3
1 à 2
2
0
0 à 2
0
0 à 4
0
6
1.30%
0.30%
0.36%
0.65%
0.65%
0.36%
0.65%
0.86%
0.86%
0.66%
0.61%
0.65%
(0.02%)
Interest
rate
1.20%
1.10%
1.10%
0.95%
0.70%
0.65%
0.65%
0.80%
0.65%
1.00%
0.60%
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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
Acquired codes
Other intangible assets
TOTAL
Amortization
Development costs
Acquired codes
Other intangible assets
TOTAL
Net carrying amounts
Development costs (a)
Acquired codes (b)
Other intangible assets
TOTAL
December 31,
2020
Increase
Decrease
Foreign
exchange gain/
loss
Other
movements
December 31,
2021
75,783
12,044
22,899
110,726
—
47,293
11,971
4,158
63,424
28,134
(41,608)
432
28,567
(5,129)
(1,633)
(48,370)
26,617
73
1,019
27,708
(14,991)
(5,056)
(615)
(223)
(641)
(857)
(1,721)
(20,662)
(28,492)
(28,357)
(73)
(18,739)
(47,304)
(641)
(1,289)
(30,287)
7,167
(7,163)
4
(5,633)
5,629
62,310
14,082
14,397
90,789
—
(30,232)
(6,274)
(13,243)
(4)
(49,750)
1,535
(1,535)
—
32,080
7,808
1,153
41,042
(137)
(137)
138
138
—
1
1
(a) Development costs – see note 6.1.2
(b) Acquired codes (formerly called “Intangible assets with an indefinite useful life”) – see note 6.1.3.
As part of the “OneESI 2024 – Focus to Grow“ plan, the Group has
announced the redeployment of a significant portion of its R&D
investments to growth opportunities. This has resulted in the
following identified intangible assets being disposed:
■ Development costs: developments in progress, not in service yet,
for a net amount of €14,991 thousand;
■ Acquired codes: source codes belonging to activities that are no
longer aligned with ESI’s core business for a net amount of
€5,056 thousand. The Group has also maintained source codes
that enable the continued development of products in these
strategic areas, which are amortized over a period of eight years;
■ Other intangible assets: codes and patents that are no longer in
line with the strategic plan for a net amount of -€615 thousand.
(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
December 31,
2019
Increase
Decrease
Foreign
exchange gain/
loss
Other
movements
December 31,
2020
69,525
31,211
(24,953)
12,044
22,143
103,712
—
918
32,129
(320)
(25,273)
115
115
42
42
(24,075)
(29,370)
24,953
(73)
(17,427)
(41,575)
(1,464)
(30,834)
304
25,257
(117)
(117)
(35)
(35)
45,452
1,841
11,971
4,715
62,139
(546)
1,295
(16)
(16)
(2)
(2)
7
7
75,783
12,044
22,898
110,725
—
(28,492)
(73)
(18,739)
(47,304)
47,293
11,971
4,158
63,423
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FINANCIAL STATEMENTS 6
/ 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;
■ Ability to reliably estimate expenditures attributable to the
development project.
The expenses thus converted into assets include the cost of direct
labor as well as sub-contracting related to the creation of new
offerings or major improvements to existing solutions..
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. The amortization
period is estimated on a project-by-project basis according to the
period during which ESI Group expects to generate revenue from the
corresponding solution. An impairment of the net book value of
capitalized development costs is recognized when, at the balance
sheet date, the probable future economic benefits are no longer
sufficient to cover the assets residual value. This analysis is performed
on a project-by-project basis.
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.
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, 2021
December 31, 2020
28,134
(28,357)
(223)
31,211
(29,370)
1,841
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.
6
value of
capitalized developments
Net
represents
11.7 months of research and development costs (€32.1 million)
incurred at December 31, 2021, compared to 16.54 months
(€47.3 million) at December 31, 2020.
costs
As a result of the OneESI transformation plan, development
projects were abandoned, representing a net asset value of
€14.9 million.
Reconciliation of R&D costs incurred and accounted for in the income statement
________
(In € thousands)
R&D costs incurred during the period (a)
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
(a)
Including €4,842 million in expenses accounted for as direct costs in 2021, compared to €3,098 million in 2020.
December 31, 2021
December 31, 2020
(32,976)
28,134
(28,357)
3,026
(1,129)
(31,302)
(35,060)
31,211
(29,370)
3,172
(819)
(30,867)
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CONTENTS
/ 6.1.3. Acquired codes and other intangible assets
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:
Method
Useful life
Office and similar software applications
Straight-line
1 to 3 years
Other operational software
Straight-line
3 to 5 years
Codes – third-party software integrated
into products
Straight-line
5 to 8 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
for
impact of such change
amortization. The
prospectively as a change in estimate.
is accounted
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.
The asset line corresponding to acquired codes previously named
“Indefinite life intangible assets” has been renamed “Acquired
codes” in order to enhance the readability of the intangible assets
shown on the balance sheet. ESI Group has identified, on one half,
source codes that belong to unprofitable activities and these codes
have been disposed for a net value of €5.056 million.
On the other half, codes that allow the development of softwares
linked to the growth of the Group’s activity; ESI Group has also
identified source codes that enable the development of sofwtares
for growth activities, which are depreciated for a period of eight
years. In order to have visibility of all acquired codes, the Group has
reclassified codes
in gross value of €7.167 million and the
impairment of these codes for €5.633 million from other intangible
assets to acquired codes.
NOTE 6.2. PROPERTY, PLANT AND EQUIPMENT
/ 6.2.1. Accounting principles
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
Computer hardware
Office furnishings
Method
Useful life
Straight-line 5 to 10 years
Straight-line
3 to 5 years
Straight-line 5 to 10 years
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CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
/ 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
(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
December 31,
2020
Increase
Decrease
Other
movements
Foreign
exchange
gain/loss
December 31,
2021
4,589
15,443
3,811
23,843
(2,687)
(13,334)
(3,125)
(19,147)
1,902
2,108
686
4,696
212
947
43
1,202
(302)
(1,140)
(205)
(1,647)
(90)
(194)
(162)
(446)
(1,163)
(1,739)
(427)
(3,329)
931
1,743
461
3,135
(232)
3
34
(195)
25
(7)
(221)
(202)
(23)
(7)
220
190
2
(14)
(1)
(13)
13
253
62
328
(16)
(207)
(54)
(277)
(3)
46
8
51
3,676
14,896
3,268
21,840
(2,098)
(12,946)
(2,704)
(17,748)
1,578
1,950
565
4,093
December 31,
2019
Increase
Decrease
Other
movements
Foreign
exchange
gain/loss
December 31,
2020
4,735
15,777
3,412
23,924
(2,555)
(13,070)
(2,666)
(18,291)
2,180
2,707
746
5,633
46
942
78
1,066
(276)
(1,272)
(208)
(1,756)
(230)
(331)
(130)
(691)
(177)
(29)
(269)
(475)
147
35
295
477
(30)
6
26
2
49
(844)
704
(92)
(45)
660
(625)
(10)
3
(184)
78
(103)
6
(63)
(403)
(114)
(580)
42
312
79
433
(21)
(91)
(35)
(147)
4,589
15,443
3,811
23,843
(2,687)
(13,334)
(3,125)
(19,147)
1,902
2,108
686
4,696
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6 FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
NOTE 7. Financing and financial instruments
NOTE 7.1. FINANCIAL ASSETS AND LIABILITIES
Financial assets and liabilities mainly comprise:
■ Non-current
financial debts, short-term borrowings and
overdrafts, together comprising gross debt – see details in
note 7.1.2;
■ Loans and other current 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
Deposits and guarantees
Derivative assets
Trade receivables
Cash and cash equivalents
Liabilities
Bank borrowings
Derivative liabilities
Other financial liabilities
Payables
(In € thousands)
Assets
Non-current financial assets
■ Non-consolidated investments
■ Deposits and guarantees
Trade receivables
Cash and cash equivalents
Liabilities
Bank borrowings
Derivative liabilities
Other financial liabilities
Payables
Carrying amount
December 31, 2021
Fair value of financial
instruments
measured at
amortized cost
Fair value
through equity
Fair value through
profit and loss
2,793
35,548
42,785
5,288
229
30,319
4
Total
2,793
229
35,548
30,319
42,785
4
—
5,288
Carrying amount
December 31, 2020
Fair value of financial
instruments
measured at
amortized cost
Fair value
through equity
Fair value through
profit and loss
14
22,465
2,661
34,646
47,410
6,655
14
75
Total
14
2,661
34,646
22,465
47,410
14
75
6,655
In accordance with IFRS 13, the various valuation techniques for each
financial instrument must be ranked. The different categories are as
follows:
■ 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 1: direct reference to quoted (unadjusted) prices accessible
■ Level 3: valuation method based on unobservable data.
on active markets for identical assets or liabilities;
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CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
The fair value of cash and cash equivalents is calculated using
level 1.
Derivative instruments (see notes 7.1.4 and 7.3) are valued using
level 2.
/ 7.1.2. Gross financial debt
ESI Group’s main source of financing is the syndicated loan, which
consists of a part reimbursable over several years of €20 million at
end 2021, and of a €10 million revolving credit, not used at end
2021. Yearly instalments of the long-term part are paid on April 30
each year, until April 30, 2025. Exceptionally in 2020 the yearly
instalment has been paid in October as ESI benefited from
governmental Covid-19 measure authorizing later payment. The
syndicated loan remuneration is 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 in 2021 was 2.25%.
ESI Board Meeting held on June 22, 2021 validated the extension of
reimbursement of both State-guaranteed loan pursuant to options
proposed by the contracts signed respectively with BPI France
in August 2020 for €1.75 million and with ESI French banking pool in
October 2020 for €12 million. The interest paid on these loans
during the first year corresponds to the sole remuneration of the
State guarantee for ETIs, i.e. 0.5%. Both State-guaranteed loans will
be reimbursed over a five years period, with start of repayment
differed by one year. The fixed interest rates of between 0.75% and
1.95% are specific to each bank and applied to their respective
financing shares.
ESI Group has also taken out other loans, mainly a loan with BPI
France for an initial amount of €4 million, the outstanding capital of
which as at December 31, 2021 amounts to €3.2 million, with
quarterly repayments for a period of five years.
ESI Group also had recourse to a promissory bill at the end of the
year for an amount of €2.5 million with a variable interest rate.
Costs related to the set up of syndicated loan and State guaranteed
loans are presented in the tables here below as a deduction of
related financial debt.
All financial debts are denominated in euros.
Detail and maturity of financial debt
As of December 31, 2021
(In € thousands)
Syndicated loan
Short-term revolving loan
State-guaranteed loans
Other bank borrowings
Repayable advances
Other financial debts
TOTAL
As of December 31, 2020
(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
Maturity at December 31
2023
4,823
3,413
2,375
283
2024
4,911
3,425
800
340
2025
4,973
3,425
800
281
2026 and
beyond
—
3,319
—
664
Total
19,707
13,691
7,575
1,773
39
6
10,893
9,476
9,479
3,983
42,785
2022
5,000
109
3,600
205
39
8,954
CURRENT: 8,954
NON-CURRENT: 33,832
Maturity at December 31
2021
4,500
2022
4,904
2023
4,904
2024
4,904
3,590
58
800
241
2,375
210
800
2025 and
beyond
4,904
13,680
800
740
Total
24,116
—
13,680
8,365
1,191
58
8,148
5,945
7,489
5,704
20,124
47,410
CURRENT: 8,148
NON-CURRENT: 39,263
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6 FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
Financial debt by type of interest rate and maturity
As of December 31, 2021
(In € thousands)
Fixed-rate debt
Variable-rate debt
No-interest debt
TOTAL
Maturity at December 31
2021
3,409
5,000
544
8,954
2022
5,788
4,823
283
10,894
2023
4,225
4,911
340
9,476
2024
4,225
4,973
281
9,479
2025 and
beyond
3,319
663
3,982
Total
20,968
19,707
2,111
42,785
CURRENT: 8,954
NON-CURRENT: 33,832
The following table shows the changes in financial debt in 2021, with a split between flows with cash impact and flows without cash impact.
Flows with cash impact
Flows without cash impact
At
December
31, 2020
New
borrowings Repayment
Other cash
flows from
financing
activities
Change in
consolidation
scope
Foreign
exchange
gain/loss
Other
movement
At December
31, 2021
24,116
—
13,680
8,365
1,191
58
47,410
—
—
—
—
761
—
761
(4,500)
—
—
(800)
(5,300)
—
—
—
—
—
—
—
—
—
—
—
—
—
2
2
89
—
13
—
(180)
(10)
(88)
19,705
—
13,680
7,565
1,772
50
42,785
(In € thousands)
Syndicated loan
Short-term revolving loan
State-guaranteed loans
Other bank borrowings
Profit-sharing funds
Other financial debts
TOTAL
/ 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
investments, subject to an
insignificant risk of changes in value, in accordance with IAS 7.
liquid and easily convertible
Group cash position is spread over all entities, nevertheless internal
cash management rules require centralizing cash surpluses at
headquarters when possible. Cash position in countries with local
regulatory constraints on cash transfer are carefully monitored.
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.
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.
(In € thousands)
Cash
Marketable securities
TOTAL CASH AND CASH EQUIVALENTS
December 31, 2021
December 31, 2020
30,319
—
30,319
22,465
—
22,465
Cash and cash equivalents consist mainly of the euro, Japanese yen, US dollar, Czech crown and Chinese yuan. Cash items whose availability
for the parent company is not immediate mainly concern cash in China (€8.4 million).
128
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CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
/ 7.1.4. Financial derivative instruments
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
instruments are
these derivative
value measurement of
recognized in Financial Result.
Interest rate instruments
Foreign exchange instruments
Interest rate swaps signed by ESI Group have always been set up to
hedge the variable interest rate of the syndicated loan.
The syndicated loan signed in December 2018 requires set up of
interest rates hedging instruments for 50% of the outstanding loan.
Two swaps have been setup in the 2019 first semester, with a
nominal value of €7 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%. At the end of 2020, the underlying assets covered by
each of these contracts amounted to €5 million. These financial
instruments are accounted for as cash flow hedges.
NOTE 7.2. FINANCIAL INCOME AND EXPENSES
(In € thousands)
Interest and related expenses on borrowings
Interest income
Foreign exchange gain/(loss)
Interest for provisions for employee benefits
Interest for rights-of-use assets
Other financial expenses
FINANCIAL RESULT
Details on foreign exchange gains and losses are as follows:
(In € thousands)
USD
JPY
KRW
Other currencies
TOTAL
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 2021 concerned Japanese yen (non
delivery FX forward) , Korean won (non delivery FX forward) and
Indian rupee (non delivery FX forward). These financial instruments
are accounted for at fair value through profit or loss.
December 31, 2021
December 31, 2020
(714)
13
1,041
(96)
(374)
(753)
(883)
(979)
12
314
(136)
(301)
(265)
(1,355)
6
December 31, 2021
December 31, 2020
1,750
(396)
166
(478)
1,041
(426)
111
(128)
757
314
The positive foreign exchange result is mainly due to the revaluation at closing rate of the accounts payables and receivables.
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6 FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
NOTE 7.3. RISK MANAGEMENT POLICY
/ Country risk and foreign currency risk
During the financial year ended December 31, 2021, 48.2% of the
Group’s revenue was generated in Europe, 36.4% in Asia (mainly
Japan, South Korea, China and India) and 15.5% 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,
2021, 43% of revenue was generated in EUR, 18.4% in USD (US
dollar), 20.2% in JPY (Japanese yen), 3.7% in KRW (Korean won) and
5.3% in CZK (Czech koruna).
Furthermore, 59.5% of costs are spent in EUR, 13% in USD, 8% in
JPY, 6.5% in INR (Indian rupee), 2.5% in KRW, 3.5% in CZK and 2.5%
in GBP (Great Britain Pound).
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.
Currency
JPY
KRW
CZK
USD
INR
CHF
Average consolidation
exchange rate
Exchange rate
used for analysis
Effect on Current
Operating Result
(in € millions)
129.86
1,353.95
25.65
1.18
87.47
1.08
142.84
1,489.34
28.21
1.30
96.22
1.19
(1.6)
(0.2)
(0.3)
(0.5)
0.5
0.1
Forex hedging instruments are described in note 7.1.4.
/ Interest rate risk
Sensitivity analysis to 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.
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
foreign-exchange sensitivity
discretion. The calculations of
presented below assume that financial debts remain stable at
December 31, 2021 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
* Excluding currency hedges.
<1 year
≥1 year, <5 years
≥5 years
(5,000)
(14,707)
Total
(19,707)
(5,000)
8,232
(6,475)
—
(11,475)
—
(88)
/ Equity risk
/ Liquidity 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
free
share grants.
to cover stock options and
intended
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.
As part of its cash flow management strategy, the Group does not
directly hold any other listed stock and does not invest in 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.
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CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
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 the French
subsidiary Engineering System International and 100% of the shares
of the German subsidiaries ESI Software Germany GmbH and 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 as defined in the agreement,
the thresholds to be respected over the term of the syndicated loan
agreement are gradually decreasing. As at December 31, 2021, the
NOTE 8.
Income tax
NOTE 8.1.
INCOME TAX EXPENSE
liability
Deferred tax assets and
liabilities reflect future decreases or
increases in income tax expense to be paid that result, for certain
items, from temporary valuation differences
asset and
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.
The Group has three tax groups:
■ In France, with the parent company, ESI Group, as head company;
■ In Germany, with ESI Software Germany GmbH as head company;
■ In the United Kingdom, with ESI ESI UK as head 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
Other items
Recognition of previously unrecognized deferred tax assets
GROUP INCOME TAX EXPENSE
Effective tax rate
threshold to be respected is 3%. At December 31, 2020, on the
basis of the annual consolidated financial statements, the Group
was in compliance with this ratio.
Off-balance sheet financial commitments also include factoring of
French R&D tax credit receivables of 2018, 2019 and 2020 which
have been respectively factored in 2019 for €2.659 million, in 2020
for €2.742 million and in 2021 for €2.831 million. The terms and
conditions of those factorings justify the non-recognition of those
commitments as
the balance sheet
(deconsolidating contracts).
liabilities on
financial
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.
6
December 31, 2021
December 31, 2020
(5,540)
4,261
(1,280)
(2,192)
1,184
(1,008)
December 31, 2021
December 31, 2020
(17,204)
80
26.5%
4,580
(3,527)
(591)
(67)
(283)
(1,392)
(1,280)
(7.4%)
2,433
(258)
28.0%
(754)
65
(15)
104
(419)
11
(1,008)
37.5%
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6 FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
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
Offset of deferred tax assets/liabilities*
Total deferred tax assets
Deferred tax liabilities
Amortization of acquired intangible assets
Excess depreciation
Other adjustments
Offset of deferred tax assets/liabilities
Total deferred tax liabilities
December 31, 2021
December 31, 2020
12,650
1,035
2,085
3,622
(1,001)
18,391
(150)
(394)
(457)
1,001
0
9,741
966
3,248
(145)
4,636
(3,760)
14,686
(436)
0
(3,324)
3,760
0
14,686
NET DEFERRED TAX
* For a better understanding of the offsetting of deferred tax assets / liabilities, the Group has added a line and therefore restated the comparative information.
18,391
Please note that as of December 31, 2021 deferred tax assets and
liabilities are offset at the boundaries of the tax consolidation
groups.
In 2021, the tax loss carryforwards amounted to €37.7 million
against €39.8 million in 2020. Unrecognized deferred tax assets on
tax loss carryforwards came to €4.2 million. The timeframe used for
estimating the recoverability of these deferred tax assets is
generally five years. These tax loss carryforwards mainly concern
companies in the tax consolidation group in France.
/ Reconciliation of deferred income tax expense on the balance sheet and income statement
(In € thousands)
Net deferred tax assets at opening (January 1)
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
2021
14,685
(1)
4,261
(270)
(284)
2020
13,443
—
1,184
48
70
(59)
NET DEFERRED TAX ASSETS AT CLOSING (DECEMBER 31)
18,391
14,685
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CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
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.
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.
/ Share capital
At December 31, 2021, ESI Group’s share capital was €18.19 million,
comprising 6,064,141 common shares with a par value of €3 each.
/ Dividend payout
ESI Group did not pay out any dividend during the period.
/ Treasury shares
The number of treasury shared declined by 20,164 shares over the
financial year.
NOTE 9.2. MINORITY INTERESTS
The percentage of capital held as treasury shares following these
transactions stood at 5.7% at December 31, 2021, compared to 6%
at December 31, 2020. The Group owns a total of 344,014 treasury
shares, purchased at a historical cost of €3.894 million and with a
market value of €25.6 million at the same date.
/ Transactions with non-controlling interests
Transactions with non-controlling interests are recognized directly
in equity. See details in notes 3.1 and 3.2.
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.
December 31, 2021
December 31, 2020
6
(18,484)
(3.24)
5,704,319
(3.24)
5,704,319
1,425
0.25
5,649,786
0.25
5,706,998
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NOTE 10. Other balance sheet items
NOTE 10.1. OTHER ASSETS
/ 10.1.1. Other non-current assets
(In € thousands)
Security deposits
Other long term assets
Investments in non-consolidated companies
TOTAL OTHER NON-CURRENT ASSETS
December 31, 2021
December 31, 2020
2,793
210
99
3,102
2,661
236
117
3,015
Security deposits mainly concern real estate rentals and the factored French R&D tax credit receivables.
/ 10.1.2. Other current receivables
(In € thousands)
French R&D tax credit
Other tax credits
VAT and other receivables
TOTAL OTHER CURRENT ASSETS
French R&D tax credit receivable as of December 31, 2021 relates
to costs incurred in 2021.
ESI Group does not use its French R&D tax credit to pay income tax,
thus there is a factoring done on receivables each year. At end 2021
three years of R&D tax credit receivables are factored with a
deconsolidating contract. Consequently, related amounts are
/ 10.1.3. Prepaid expenses
December 31, 2021
December 31, 2020
3,579
163
2,628
6,370
3,172
1,880
6,860
11,912
booked
in Off-balance sheet financial commitments and not
in financial debt in balance sheet. Amounts involved are French
R&D tax credit receivables of 2017, 2018 and 2019 which have been
respectively factored in 2019 for €2.659 million in 2020 for
€2.742 million and in 2021 for €2.831 million.
Prepaid expenses consist primarily of yearly subscription of software in Saas mode and insurance contract, which premiums are paid at the
beginning of the year.
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FINANCIAL STATEMENTS 6
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
December 31, 2021
December 31, 2020
18,250
5,979
2,381
26,609
15,095
5,381
2,279
22,754
As of December 31, 2021 Tax payables consist primarily of VAT payables for €3.907 million (compared with €4.426 million at end 2020).
/ 10.2.2. Provisions
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.
December
31, 2020 Allowance Reversals
Other
comprehensive
Income impact
Reclassifications
ST/LT
Foreign
exchange
gain/loss
December 31,
2021
(In € thousands)
Other long term liabilities
Refurbishment of rented premises
Liabilities and earn out acquired
companies
Others risks
—
148
75
439
115
324
(14)
(276)
PROVISIONS AND OTHER
NON CURRENT LIABILITIES
Provisions for risks (a)
CURRENT PROVISIONS
(a) The provision corresponds to severance costs related to “OneESI 2024 – Focus to Grow” plan.
(1,148)
(1,148)
(289)
1,623
6,667
1,623
6,667
662
439
4
—
24
29
17
17
30
30
(30)
(30)
—
268
—
542
809
7,129
7,129
6
(62)
(62)
—
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, 2021 and
December 31, 2020 breaks down as follows:
(In € thousands)
Fixed compensation
Variable compensation
Travel bonus
Benefits in kind
Directors’ fees
TOTAL
Related party transactions
Nothing to report.
December 31, 2021
December 31, 2020
793
—
—
13
18
825
1,204
0
0
21
100
1,325
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NOTE 12. Fees paid to Statutory Auditors
2021
2020
KPMG
Ernst & Young
Total
Pricewaterhouse
Coopers
Ernst & Young
Total
(In € thousands, excluding tax)
Amount
% Amount
% Amount
% Amount
% Amount
% Amount
%
Certification, review of annual and consolidated financial statements
■ Parent company
226
86%
198
62%
424
73%
164
57%
195
53%
359
55%
■ Fully consolidated subsidiaries
29
11%
110
34%
139
25%
80
28%
153
42%
233
35%
Sub-total
255
97%
308
96%
563
98%
244
85%
348
98%
592
90%
Services other than certification of accounts
■ Parent company
7
3%
12
4%
19
2%
■ Fully consolidated subsidiaries
—
—%
—
—%
7
3%
12
4%
19
2%
17
26
43
6%
9%
15%
7
13
20
2%
3%
5%
24
39
63
4%
6%
10%
262
100%
320
100%
582
100%
287
100%
368
100%
655
100%
Sub-total
TOTAL
The total budget for certification fees for the parent company and
consolidated financial statements for the financial year ended
December 31, 2021 came to €582 thousand. Services other than
certification of accounts provided to parent company correspond
primarily to certification of costs statements issued for co-financed
projects and of bank covenant calculation.
NOTE 13. Subsequent events
In February 2022, the conflict between Russia and Ukraine
worsened. The situation is changing rapidly creating high volatility
in the energy markets, especially in Europe. Given the recent and
rapid escalation of events and the imposition of additional
sanctions, the Group is constantly assessing the potential impact
on the Group’s operating results. The Group does not have any
assets nor operations in Ukraine. The Group’s Russian operations
represented around 1.49% of the 2021 consolidated revenues.
There are no outstanding receivables from Russian customers.
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FINANCIAL STATEMENTS 6
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 regulations
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.
Year ended 31 December 2021
Statutory auditors’ report on the consolidated financial statements
To the Annual General Meeting of ESI Group,
Opinion
In compliance with the engagement entrusted to us by your Annual General Meeting, we have audited the accompanying consolidated
financial statements of ESI Group for the year ended 31 December 2021.
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 31 December 2021 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 the independence requirements of the French Commercial Code (Code de commerce)
and the French Code of Ethics for Statutory Auditors (Code de déontologie de la profession de commissaire aux comptes) for the period from
1 January 2021 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.
6
Justification of Assessments – Key Audit Matters
Due to the global crisis related to the COVID-19 pandemic, the financial statements for this period have been prepared and audited under
special circumstances. Indeed, this crisis and the exceptional measures taken in the context of the health emergency have had numerous
consequences for companies, particularly on their operations and their financing, and have led to greater uncertainties regarding their future
prospects. Some of these measures, such as travel restrictions and remote working, have also had an impact on companies' internal
organization and on the performance of audits.
It is in this complex, evolving context that, 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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/ Valuation of development costs and software codes acquired
Risk identified
Our response
We assessed the compliance of the accounting treatment of the
development costs and software codes acquired with the
accounting standards in force;
■ We reconciled the accounting data to the management data
giving detailed information on the capitalized projects, in order
to assess the reliability of the information reported;
■ For a selection of projects, we referred to the relevant time
sheets and the documentary evidence of the placed-in-service
date;
■ We verified the correct calculation of the amortization expense
on the basis of the period established for each project by the
Management of ESI Group;
■ We reconciled the individual net carrying amounts of the main
projects to the future volume of business for the related
software solutions included in the last business plan provided to
the Board of Directors at the end of 2021;
■ We verified the justification of the amortization recognized as at
31 December 2021 concerning, in particular, projects that are
not intended to generate revenue and software codes that are
not going to be included in the Group’s new strategy.
In the consolidated balance sheet,
include
capitalized development costs and software codes acquired, for
net carrying amounts as at 31 December 2021 of €32,080k and
€7,808k respectively.
intangible assets
The development costs correspond mainly to direct labour and
subcontracting costs relating to the development of new offers or
major improvements to existing software solutions.
As indicated in Note 6.1.2. to the consolidated financial statements,
the capitalization of these development costs
is subject to
compliance with the criteria set out in IAS 38 “Intangible Assets”.
The amortization times, which are between 12 and 36 months, are
estimated for each project depending on the period during which
ESI Group expects the software concerned to generate revenue.
Impairment for the net carrying amount of the capitalized
development costs is recognized when, at year-end, the probable
future economic benefits are no longer sufficient to cover the
residual value of the asset. This analysis is performed project by
project.
As indicated in Note 6.1.1 to the consolidated financial statements,
within the context of the “OneESI 2024 – Focus to Grow” plan, the
Group announced the redeployment of a significant share of its
R&D investments towards growth and core business opportunities.
This results in the scrapping of development costs for a net
amount of €14,991k in FY 2021.
identified,
In addition, as indicated in Note 6.1.3 to the consolidated financial
statements, within the context of this transformation plan, ESI
firstly, source codes that belong to
Group has
discontinued activities and that were scrapped in 2021 in the
amount of €5,056k, and, secondly, codes used to develop software
related to the Group’s growth activities and that are now amortized
over a period of eight years.
The assessment of compliance with the criteria for capitalization of
development costs, the determination of the amortization period,
and the impairment of capitalized projects no longer generating
future economic benefits, are based on Management’s judgment
and the reliability of the procedures applied for the identification
and allocation of the costs between the different projects.
On this basis, we considered the capitalization of development
costs and software codes acquired to be a key audit matter.
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FINANCIAL STATEMENTS 6
/ Recognition of revenue from software licences
Risk identified
Our response
A substantial amount of the Group’s revenue results from software
licencing and related maintenance services.
In accordance with IFRS 15, the Group’s contracts are analyzed in
five stages to determine, in particular, the transaction price, the
various service obligations, and the allocation of the transaction
price to each of them. Revenue from software licences derives
from two service obligations: access to the software (royalties for
rights of use granted to end customers), and the related
maintenance service. The share of
to
maintenance is determined according to the nature of the licence
sold, as described in Note 4.1 to the consolidated financial
statements.
revenue allocated
The determination of service obligations, the allocation of the
transaction price between the various components of a contract,
and the methods of revenue recognition require in-depth analysis
and a considerable degree of
the part of
Management.
judgment on
For all these reasons, we considered the recognition of revenue
from software licencing to be a key audit matter.
As part of our audit, we conducted tests on the contracts that we
deemed most significant, as well as on a sample of contracts
selected at random, in order to assess i) the allocation (according
to the accounting principles described
in Note 4.1 to the
consolidated financial statements) of the revenue between each
component of the contract, and ii) the amount and accounting
period of the revenue for each of these components.
These tests involved analyzing the contractual terms, recalculating
the amount allocated to each component and examining the
revenue recognition in accordance with the principles set out in
Note 4.1
financial statements, whose
compliance with IFRS we assessed previously.
the consolidated
to
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 relating to the Group given in the Board of Directors’ management report.
We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.
We attest that the consolidated non-financial statement required by Article L. 225-102-1 of the French Commercial Code (Code de commerce)
is included in the information relating to the Group given in the management report, it being specified that, in accordance with Article L.
823-10 of said Code, we have verified neither the fair presentation nor the consistency with the consolidated financial statements of the
information contained therein. This information should be reported on by an independent third party.
Report on Other Legal and Regulatory Requirements
6
/ Format of preparation of the consolidated financial statements intended to be included
in the annual financial report
We have also verified, in accordance with the professional standard applicable in France relating to the procedures performed by statutory
auditors regarding the annual and consolidated financial statements prepared in the European single electronic format, that the preparation
of the consolidated financial statements intended to be included in the annual financial report mentioned in Article L. 451-1-2, I of the French
Monetary and Financial Code (Code monétaire et financier), prepared under the CEO’s responsibility, complies with the single electronic format
defined in Commission Delegated Regulation (EU) No. 2019/815 of 17 December 2018. Regarding consolidated financial statements, our work
includes verifying that the tagging thereof complies with the format defined in the above-mentioned regulation.
On the basis of our work, we conclude that the preparation of the consolidated financial statements intended to be included in the annual
financial report complies, in all material respects, with the European single electronic format.
We have no responsibility to verify that the consolidated financial statements that will ultimately be included by your Company in the annual
financial report filed with the AMF (Autorité des marchés financiers) agree with those on which we have performed our work.
/ Appointment of the Statutory Auditors
We were appointed as statutory auditors of ESI Group by your Annual General Meeting held on 22 June 2021 for KPMG S.A. and on 16
December 1997 for ERNST & YOUNG Audit.
As at 31 December 2021, KPMG S.A. was in its first year of total uninterrupted engagement and ERNST & YOUNG Audit in its twenty-fifth year
(including twenty-two years since the securities of the Company were admitted to trading on a regulated market).
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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 risk
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 made 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;
■ 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.
140
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CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
/ 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 significant deficiencies, if any, 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 as set out in particular in Articles L. 822-10 to L. 822-14 of the French
Commercial Code (Code de commerce) and in the French Code of Ethics for Statutory Auditors (Code de déontologie de la profession de
commissaire aux comptes). Where appropriate, we discuss with the Audit Committee the risks that may reasonably be thought to bear on our
independence, and the related safeguards.
Paris-La Défense, 8 April 2022
The Statutory Auditors
French original signed by:
KPMG Audit
Département de KPMG S.A.
Stéphanie Ortega
ERNST & YOUNG Audit
Pierre-Henri Pagnon
6
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ESI GROUP ANNUAL FINANCIAL STATEMENTS
CONTENTS
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, 2021
December 31, 2020
E.1
E.2
E.2
E.2
E.3
E.4
E.5
E.5
E.6
E.7
E.8
F.5
85,821
—
30,151
—
5,477
1,409
122,858
11
56,888
1,287
17,878
8,500
31,686
1,983
2,262
120,495
2,363
(3,184)
(821)
(30,197)
0
3,026
(27,992)
82,936
—
33,188
—
2,032
2,178
120,334
269
59,341
1,147
16,904
7,689
31,202
2,655
2,715
121,922
(1,588)
(15,803)
(17,391)
(905)
0
3,122
(15,174)
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CONTENTS
ESI GROUP ANNUAL FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
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
TOTAL ASSETS
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
Operating liabilities and miscellaneous debts
Deferred income
Foreign exchange gains and losses
TOTAL LIABILITIES
December 31,
2020
Net value
Net value
December 31, 2021
Amortization/
Provisions
(38,023)
(7,769)
(20,065)
(65,857)
46,873
1,888
43,897
92,658
—
414
(3,828)
51,848
6,461
3,663
8,539
(3,828)
70,925
105,417
2,094
350
6,033
2,207
452
5,644
68,260
2,419
49,531
120,210
—
225
66,998
27,947
3,889
6,358
Notes Gross value
C.1
C.2
C.3
C.4
C.4
C.4
C.5
C.6
C.6
C.7
84,896
9,657
63,962
158,515
—
414
55,676
6,461
3,663
8,539
74,753
2,094
350
6,033
241,745
(69,685)
172,060
233,930
Notes
D.2
D.10
D.4
D.5
D.7
D.8
D.10
D.6
D.9
D.10
D.11
December 31,
2021
December 31,
2020
18,193
39,516
1,809
(1,746)
(27,992)
1,513
31,293
1,772
16,433
38,825
2,500
41,325
72
48,775
8,502
12,924
70,273
3,612
7,352
172,060
6
18,110
38,811
1,805
13,056
(15,174)
1,568
58,176
1,184
12,829
44,077
2,500
46,577
236
71,954
7,459
29,429
109,078
1,529
4,557
233,930
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6 FINANCIAL STATEMENTS
ESI GROUP ANNUAL FINANCIAL STATEMENTS
CONTENTS
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
144
145
148
NOTE D. Liability details
NOTE E. Details on income statement
NOTE F. Other information
153
157
160
Total balance sheet at December 31, 2021 amounts
to
€171.99 million and the income statement for the financial year
shows net loss of -€27.662 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).
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.
NOTE A. Significant events of the year
/ Impact of strategic plan on figures:
/ Changes in scope occurred during the year
Restructuring costs
During the year ended December 31, 2021:
In 2021, the Group initiated its new growth and profitability plan
”OneESI 2024 – Focus to Grow”.
■ The French entity CIVITEC has been absorbed into ESI Group on
February 10th, 2021, through a simplified merger;
This transformation has resulted in a reduction in headcount and
the withdrawal from non-core software development projects or
non-strategic research projects.
The impacts of this restructuring and transforming plan are
estimated to €26.7 million, in which €6.0 million related to
severance costs already notified and €20.7 million to asset
impairments (development costs and assets with indefinite life).
■ In March, ESI Group has acquired 5% minority share of ESI
Services Tunisie and holds now 100% of the entity’s shares;
■ In April, ESI Group has acquired minority share of the French
subsidiary STRACO to hold 100% of the entity’s shares, This
subsidiary has been absorbed into ESI Group on June 2021,
through a simplified merger;
■ In September and October, ESI Group has acquired minority
share of ESI Nihon and holds now 100% of the entity’s shares;
■ In December, ESI Group acquired minority share of ESI South
America, and holds now 100% of the entity’s shares;
■ In December, ESI Group acquired minority share of ESI Hankook,
and holds now 100% of the entity’s shares.
Refer to note C.3.
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FINANCIAL STATEMENTS 6
NOTE B. Accounting principles and methods
The rules and methods remain unchanged compared to last year.
• consistency in accounting methods from one financial year to
The general accounting conventions have been applied prudently,
in accordance with the following assumptions:
■ Basic assumptions:
• going concern,
the next,
• independence of financial years;
■ General rules for preparing and presenting annual financial
statements: the basic method used to measure accounting
items is the historical cost method.
NOTE B.1. USE OF ESTIMATES
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. 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.
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 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 criteria continue to be recognized
as expenses in the income statement. Projects that are unfinished
at the closing date are capitalized as work in progress.
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.
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.
These estimates mainly concern provisions for contingencies and
charges and assumptions used for the valuation of equity
investments and accumulated amortization of selected intangible
assets.
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
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 to 8 years on
a straight-line basis
6
These assets are subject to impairment tests if there are signs of
impairment.
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
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
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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 value in use of the shares is less than their
purchase price, a provision is established for the difference. The
value in use 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.
NOTE B.5. INVENTORIES
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
investments mainly comprise deposits and
Other
factoring
guarantee funds (factoring of receivables from the French R&D
tax credit).
/ 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.
NOTE B.7. MARKETABLE SECURITIES
All 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, 2021, marketable securities were made up
exclusively of the Company’s treasury shares, valued according to
the first in, first out method.
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.
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.
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
acquired in the context of other objectives set by the General
Meeting (primarily external growth and grants to employees) are
recognized as marketable securities.
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”.
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
if
related to financial flows/receivables/payables.
in financial result
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FINANCIAL STATEMENTS 6
NOTE B.10. FOREIGN EXCHANGE INSTRUMENTS
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.
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. At
NOTE B.11. REGULATED PROVISIONS
Regulated provisions consist of accelerated capital allowances of
two types:
■ Differences between tax-related amortization and amortization
for depreciation;
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. Signed financial instruments are
presented as Off-balance-sheet commitments in the notes to the
financial statements in the period between subscription and
maturity.
■ 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.
NOTE B.13. REVENUE RECOGNITION
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.
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;
■ The amount of the user license for the software is determined or
determinable;
■ The recovery is likely.
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 fully recognized:
■ In operating result for the amount pertaining to cost of services
and changes in actuarial gains and losses;
■ In financial result 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.
Since the contracts do not distinguish between the license and
maintenance portions, the entire contractual amount is recognized
as soon as the software is delivered, whereas the maintenance
services, which are considered incidental, will be performed over a
period of one year.
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.
6
Intragroup revenue mainly comprises royalty income received from
from
the Group’s distribution
subcontracted consulting services, re-invoicing of personnel
expenses and invoicing of management fees.
subsidiaries and
income
/ 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.
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6 FINANCIAL STATEMENTS
ESI GROUP ANNUAL FINANCIAL STATEMENTS
NOTE B.14. TAX CONSOLIDATION
On February 1, 2008, ESI Group has formed a tax consolidation
group with its French subsidiary, Engineering System International.
purposes would be equal to that which would have applied to it if
the subsidiary was not a member of the tax Group.
As part of the tax consolidation agreement, it was agreed that the
tax cost of Engineering System International integrated for tax
Tax integration has no impact on income tax cost recorded in the
Company income statement.
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
December 31, 2020
Increase
Decrease
December 31,
2021
49,421
30,287
1,028
20,383
7
101,126
(20,928)
(11,938)
(73)
25,455
861
26,751
357
53,424
(30,866)
(2,177)
(30,359)
(6,702)
(371)
(31,949)
(274)
(69,655)
26,866
1,019
73
27,958
(3,493)
(5,683)
(298)
(31,949)
(274)
(41,697)
44,517
24,446
657
15,185
90
84,895
(24,928)
(13,096)
—
(38,024)
19,589
11,350
657
15,185
90
46,871
Total amortization, provisions
(32,939)
(33,043)
Development costs
Patents, licenses, brands
Goodwill
Intangible assets in progress, development costs
Other intangible assets in progress
TOTAL NET VALUE
28,493
18,349
955
20,383
7
68,187
(5,411)
(1,316)
—
26,751
357
20,381
As part of the “OneESI 2024 – Focus to Grow” plan, the Group has
announced the redeployment of a significant portion of its R&D
investments to growth opportunities. This has resulted in the
following identified intangible assets being disposed:
■ Development costs: development costs and co-financed projects
in progress for an amount of -€31.949 million and developments
cost into service in the process of being depreciated for an
amount of 26.866 million;
■ Acquired codes: source codes belonging to activities no longer
aligned with ESI’s core business for a net amount of -€5.683
million. The Group has also retained source codes that allow the
continuity developments of products in its strategic areas, which
are amortized over a period of eight years;
■ Other intangible assets: codes and patents that are no longer in
line with the strategic plan for a net amount of -€572 thousand.
These other intangible assets also include goodwill acquired on
July 26, 1991, representing the digital simulation software and
package publishing business (Product in Applied Mechanics)
which still exists today. It has not been subject to depreciation or
amortization since its inception.
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FINANCIAL STATEMENTS 6
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 (a)
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
December 31,
2020
Increase
Decrease
December 31,
2021
3,053
8,956
27
12,036
(1,728)
(7,862)
(27)
(9,617)
1,325
1,094
—
2,419
64
339
403
(213)
(521)
(734)
(149)
(182)
—
(331)
(1,068)
(1,713)
—
(2,781)
847
1,736
2,583
(221)
23
—
2,049
7,582
27
9,658
(1,094)
(6,647)
(27)
(7,768)
955
935
—
(198)
1,890
December 31,
2020
Increase
Decrease
December 31,
2021
54,864
11,691
1,259
67,814
(15,444)
(2,767)
(72)
(18,283)
39,420
8,924
1,187
332
500
1,735
2,567
(5,405)
(90)
(5,495)
(5,073)
410
1,735
(2,928)
(2,845)
(2,107)
(1,468)
(6,420)
784
2,857
72
3,713
(2,061)
750
(1,396)
(2,707)
52,351
10,084
1,526
63,961
(20,065)
—
—
(20,065)
32,286
10,084
1,526
43,896
6
TOTAL NET VALUE
(a) This line primarily includes deposits and guarantees on rental properties and factoring guarantee.
49,531
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CONTENTS
/ 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 Holdings, Inc.
Frais Zhong Guo ESI Co., Ltd.
ESI Software (India) Private Ltd.
ESI US R&D, Inc.
Hong Kong ESI Co., Ltd.
Frais Hong Kong ESI Co., Ltd.
ESI-ATE Holdings Ltd.
Frais ESI-ATE Holdings Ltd.
ESI Italia s.r.l.
ESI South America Comércio e Serviços
de Informática Ltda
ESI Services Tunisie
Frais ESI Services Tunisie
ESI Group Beijing Co., Ltd.
ESI Software Germany gmbh
Frais ESI Software Germany gmbh
ESI Nordics AB
Frais ESI Nordics AB
Open CFD Ltd.
Frais Open CFD Ltd.
ESI Services Vietnam Co., Ltd.
Frais ESI Services Vietnam Co., Ltd.
AECC-ESI (Beijing) Technology Co., Ltd.
Frais AECC-ESI (Beijing) Technology Co., Ltd.
Participation Mineset Inc.
Frais Mineset Inc. fusionnée dans ESI US R&D Inc.
CIVITEC
Frais CIVITEC
ESI ITI Gmbh
Frais ESI ITI Gmbh
Scilab Enterprises
Frais Scilab Enterprises
Cademce SAS
TOTAL
December 31, 2020
Increase
Decrease December 31, 2021
458
75
3,726
164
2,678
941
100
912
1,789
834
2
2
4,128
119
2
1,737
56
1,050
6
242
8
543
10,708
322
446
129
2,351
162
124
14
448
87
0
293
900
62
18,710
436
0
0
100
54,864
96
29
95
50
62
(1,884)
(900)
(62)
458
171
3,726
164
2,678
970
100
912
0
834
2
2
4,128
119
2
1,737
56
1,050
56
304
8
543
10,708
322
446
129
2,351
162
124
14
448
87
0
293
0
0
18,710
436
0
0
100
332
(2,846)
52,350
Movements of the year are related to:
■ The purchase of remaining 5% minority share of ESI Service
■ The purchase of remaining minority share of ESI Nihon for
Tunisie for €62 thousand;
€96 thousand;
■ The purchase of remaining minority share of ESI South America
■ The purchase of remaining minority share of ESI Hankook for
for €50 thousand;
€29 thousand;
■ The purchase of remaining 2.3% minority share of STRACO for
€95 thousand allowing absorption into ESI Group. Result of this
operation is a confusion loss of -€1,755 thousand recorded in
financial result;
■ The simplified merger of CIVITEC into ESI Group, resulting in a
confusion loss of -€1,994 thousand recorded in financial result.
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FINANCIAL STATEMENTS 6
/ Movements in the provision for equity investments
(In € thousands)
ESI-ATE Holdings Limited
Hong Kong ESI CO., Limited
Open CFD Limited
Mineset
ESI US R&D
Cademce
Calcom
ESI ITI GmbH
Civitec
TOTAL
December 31,
2020
Increase
Decrease
December 31,
2021
1,737
119
1,589
—
3,479
100
1,646
5,990
784
645
376
4,384
15,444
5,405
1,737
119
2,234
—
3,479
100
2,022
10,374
—
20,065
(784)
(784)
As of December 31, 2021, the net book value of investments in
Calcom has been aligned with it’s net equity. Net book value of
investments in ESI ITI GmbH and Open CFD Limited has been
aligned with the re-estimated value of each subsidiary (Note B.4). In
the context of the merger of CIVITEC, Equity investment been
removed, leading a reversal of the provision booked previously.
/ Receivables related to equity investments
(In € thousands)
Loan ESI North America, Inc. ($9.7 million)
Loan Hong Kong ESI ($1.124 million) (a)
Loan ESI Group Hispania SL
Loan ESI ATE Holdings ($2.271 million) (a)
TOTAL
(a) These two loans are fully impaired.
Gross value
December 31,
2021
December 31,
2020
8,564
—
1,520
—
7,904
916
1,020
1,851
10,084
11,691
Remuneration rate
6-month Libor $ +1% margin
6-month Libor $ +1% margin
Profit-sharing loan capped at 5%
6-month Libor $ +1% margin
Receivables related to equity investments for Hong Kong ESI and ESI ATE Holdings have been considered as financial loss in 2021.
ESI Group has granted to ESI Group Hispania an additional loan of €500 thousand.
Movement of ESI North America loan are related to foreign exchange reevaluation.
Financial interests are recorded in account 7617*.
6
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ESI GROUP ANNUAL FINANCIAL STATEMENTS
CONTENTS
NOTE C.4. RECEIVABLES – PROVISIONS FOR DEPRECIATION OF RECEIVABLES
(In € thousands)
Loans granted to subsidiaries (C.3)
Treasury shares (C.3)
Deposits and guarantees (C.3)
Doubtful or disputed receivables
Trade receivables
Trade receivables with affiliate companies
Income tax receivables – advance payment
R&D tax credit receivable (a)
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 (C.6)
TOTAL
At December 31, 2021
At December 31,
2020
Gross value
Due in 1 year
or less
Due in between
1 and 5 years
Gross value
10,084
232
1,295
3,654
13,063
38,919
—
3,579
332
923
414
687
913
2,094
76,189
3,654
13,063
38,919
—
3,579
332
—
923
—
414
687
913
2,094
64,578
10,084
232
1,295
11,691
69
1,189
3,043
9,232
57,794
—
3,122
378
292
2,549
2,708
225
18,267
627
2,208
11,611
113,394
(a) The research tax credit receivable has been factored, the counterpart is recognized in research tax credit
/ Details of provisions for depreciation of receivables
(In € thousands)
Provisions for doubtful receivables
Provisions for other receivables
TOTAL
December 31,
2020
3,071
3,071
Increase CIVITEC Provision
Reversal used
977
—
977
10
—
10
230
230
December 31,
2021
3,828
—
3,828
NOTE C.5. TREASURY SHARES
Treasury shares in the balance sheet are classified in Financial assets for €232 thousand (liquidity contract) and in Marketable securities for
€3,663 million.
/ Change in the number of treasury shares
TREASURY SHARES
December 31,
2020
362,693
Increase
Decrease
21,786
December 31,
2021
340,907
The total value on the balance sheet is thus €3.895 million, compared to a market fair value of €25.407 million at December 31, 2021.
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 and State guaranteed loans set up (a)
TOTAL
(a) Amortization over the duration of the loans.
December 31,
2021
December 31,
2020
368
1,355
371
350
2,444
673
1,464
71
452
2,660
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ESI GROUP ANNUAL FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
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
Others
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
NOTE D. Liability details
NOTE D.1. EQUITY
The main movements during the financial year are summarized in the table below:
December 31, 2021
December 31, 2020
4,707
1,308
18
6,033
4,691
867
86
5,644
December 31, 2021
December 31, 2020
7,553
6,455
18
396
—
14,422
3,500
7,384
4
396
—
11,284
(In € thousands)
Capital
Share premium
ESI Software merger premium
Systus merger premium
Legal reserve
Retained earnings
Net result for the year
Regulated provisions
TOTAL
December 31,
2020
Allocation of
2020 profit 2021 net result
18,110
26,280
9,677
2,854
1,809
13,056
(15,174)
1,568
58,180
Other
83
705
372
(55)
December 31,
2021
18,193
26,985
9,677
2,854
1,809
(1,746)
(27,992)
1,513
31,293
6
(15,174)
15,174
(27,992)
—
(27,992)
1,105
Movements presented in the “Other” column refer to the capital
increase resulting from the exercise of 27,549 stock options
(issuance of new shares with a nominal value of €3), to regulated
amortization of investments acquisition costs and retained earnings
have increased of €372 thousand due to R&D capitalized in CIVITEC.
NOTE D.2. LEGAL CAPITAL
Common shares (par value of €3)
O/w preferred shares (double voting rights)
The capital increase is attributable to the exercise of 27,549 stock-options.
Number of shares
At the end of the
financial year
Created during the
financial year
Repaid during the
financial year
6,064,141
2,052,211
27,549
—
—
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CONTENTS
NOTE D.3. 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 tables below describe ongoing plans.
/ Stock options
Plan number (date
of General Meeting)
Plan 10 (GM 2012)
Plan 10 bis (GM 2012)
Plan 10 ter (GM 2012)
Plan 10 quater (GM 2012)
Plan 17 (GM 2014)
Plan 17 bis (GM 2014)
Plan 17 ter (GM 2014)
Plan 17 quater (GM 2014)
Plan 19 (GM 2017)
Plan 19 bis (GM 2017)
Plan 19 ter (GM 2017)
Date of Board of
Directors
12/19/2012
02/07/2014
03/26/2015
07/22/2015
Number of
attributable
options
granted
Number of
options
granted
O/w
performance
shares
150,850
62,300
11,000
15,000
3,150
Total GM 2012
180,000
180,000
62,300
07/22/2015
03/11/2016
05/05/2017
05/05/2017
7,350
10,000
18,175
1,875
Total GM 2014
180,000
37,400
07/18/2018
02/01/2019
12/18/2019
1,875
1,875
32,963
15,000
47,963
24,000
24,000
43,950
20,000
25,785
89,735
24,000
24,000
Number of
options
exercisable at
December 31,
2021
Limit year
for
exercising
options
Exercise
price
27.82
24.42
21.66
27.17
27.17
23.35
50.92
50.92
42.97
27.04
29.12
60.47
2021
2022
2025
2025
2023
2026
2025
2025
2026
2027
2027
2029
375
—
375
13,700
13,700
8,089
—
—
8,089
—
—
22,164
Plan 21 (GM 2021)
9/10/2021
Total GM 2017
180,000
Total GM 2020
300,000
TOTAL STOCK-OPTIONS
840,000
331,135
136,138
/ Free shares
Plan number (date
of General Meeting)
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)
Plan 9 quinquies (GM 2018)
Plan 9 sexies (GM 2018)
Plan 9 septies (GM 2018)
Plan 10 (GM 2020)
Plan 10 bis (GM 2020)
Plan 10 ter (GM 2020)
Plan 10 quater (GM 2020)
Plan 10 quinquies (GM 2020)
Plan 10 sexies (GM 2020)
Plan 10 septies (GM 2020)
Plan 10 octies (GM 2020)
Plan 10 novies (GM 2020)
TOTAL FREE SHARES
Date of Board of
Directors
07/21/2016
Authorized
number of
shares
Number
of shares
granted
O/w
performance
shares
60,000
25,000
12/23/2016
08/01/2017
07/18/2018
07/18/2018
07/18/2018
07/18/2018
12/18/2019
12/18/2019
03/19/2020
25/06/2020
06/10/2021
10/04/2021
10/04/2021
10/04/2021
10/04/2021
10/04/2021
11/19/21
11/19/21
60,000
60,000
2,275
9,000
10,617
2,441
15,500
16,250
6,337
2,521
5,000
3,000
7,000
8,122
3,255
15,250
716
8,331
4,000
10,000
7,964
4,061
2,000
180,000
154,615
14,025
Number of shares
in progress at
December 31,
2021
End of vesting
period
2020
2020
2021
2021
2020
2022
2023
2022
2021
2023
2023
2023
2025
2024
2025
2025
2024
2025
2025
—
—
3,002
2,333
4,237
—
5,000
7,000
8,122
3,255
15,250
716
8,331
4,000
10,000
71,246
All stock options and free shares plans include a continued employment requirement.
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ESI GROUP ANNUAL FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
NOTE D.4. CONDITIONAL ADVANCES
(In € thousands)
Ademe advance
Bpifrance advance
TOTAL
December 31,
2021
768
1,004
1,772
Up to 1 year
1 to 5 years
More than 5
years
December 31,
2020
18
187
205
70
817
887
680
680
803
382
1,185
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
December 31,
2020
5,644
1,594
5,591
12,829
Increase
6,033
5,641
448
12,122
Reversal
(5,644)
(1,148)
(1,725)
(8,517)
December 31,
2021
6,033
6,087
4,314
16,434
Movements of the year refer to foreign exchange rates fluctuations.
for contingencies and charges
Provisions
(operating result)
correspond to social risks and social charges. €5,130 thousand are
related to the redundancy plan.
Provision allowance for retirement obligations breaks down as
follows:
■ €393 thousand of operating allowance, €1,364 thousand due to
downsizing, €288 thousand in actuarial profits and 73 thousand
for indemnities paid by the employer;
■ €15 thousand of financial allowance corresponding to interest
expenses.
/ Actuarial assumptions for retirement obligations
Discount rates
Rate of salary increase
December 31,
2021
December 31,
2020
0.90%
2.50%
0.35%
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.
6
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,
2021
38,825
2,500
3,769
45,006
3,871
3,559
373
700
Up to
1 year
6,210
2,500
3,769
45,006
3,871
3,559
373
700
—
11,481
11,481
1,444
3,612
115,140
1,444
3,612
82,525
1 to
5 years
32,615
More than
5 years
December 31,
2020
44,077
2,500
4,541
67,355
2,959
2,945
1,245
310
57
26,967
2,308
1,529
32,615
—
156,793
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CONTENTS
NOTE D.7. BANK BORROWINGS
At December 31, 2021, bank borrowings stand at €38.825 million
and break down as follows:
■ €20,000 thousand related to the part reimbursable over several
years, of which €5 million to be repaid in 2022;
■ €13,750 thousand related to two State guaranteed loans signed
in 2020;
■ €3,200 thousand related to a loan with BPI France, including
€800 thousand to be repaid in 2022;
■ €1,575 thousand corresponding to a loan to finance the cost of
moving Rungis office – fully due October 2023;
■ €300 thousand mostly on accrued interests on borrowings.
ESI Group’s main source of financing is the syndicated loan, which
consists of a part reimbursable over several years of €20.0 million at
end 2021, and of a €10 million revolving credit, not used at end
NOTE D.8. MISCELLANEOUS FINANCIAL DEBT
2021. Yearly instalments of the long-term part are paid on April 30
each year, until April 30, 2025. The syndicated loan remuneration is
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 in
2021 was 2.25%.
ESI Group signed in 2020 two State guaranteed loans: in August a
loan of €1.75 million with BPI France, and in October a loan of €
12 million with the bank pool of the syndicated loan. ESI Group has
decided to reimburse the loans in five years per quarter. Different
interests rates will be applied by each bank on their respective
financing share.
Off-balance-sheet commitments associated with this syndicated
loan are presented in note F.4.
(In € thousands)
Promissory note
TOTAL
December 31,
2021
2,500
2,500
Up to 1 year
1 to 5 years More than 5 years December 31, 2020
2,500
2,500
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, 2021
December 31, 2020
2,330
2,922
2,177
373
700
8,502
2,313
2,101
1,509
1,245
310
7,478
NOTE D.10. OTHER OPERATING PAYABLES
(In € thousands)
Creditor trade receivables
Subsidiaries current account
Advances on co-financed projects
Other liabilities
TOTAL
December 31, 2020
Increase
Decrease December 31, 2021
388
26,967
440
1,869
29,664
(317)
(15,486)
(440)
(425)
(16,668)
71
11,481
—
1,444
12,996
—
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CONTENTS
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FINANCIAL STATEMENTS 6
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
Other receivables and debts
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)
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
December 31, 2021
December 31, 2020
6,066
371
660
254
7,351
2,938
1,511
71
37
4,557
December 31, 2021
December 31, 2020
300
3,262
2,330
2,921
366
205
9,384
252
4,829
2,313
2,101
150
440
10,085
December 31, 2021
December 31, 2020
12,029
941
64,223
1,123
2,497
5,008
85,821
6
11,184
1,013
63,255
1,270
2,127
4,087
82,936
December 31, 2021
December 31, 2020
9,479
29,385
13,717
33,240
85,821
9,390
27,377
12,988
33,181
82,936
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CONTENTS
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, 2021
December 31, 2020
30,151
3,176
—
2,301
1,409
37,036
–
33,188
—
—
2,032
2,178
37,398
December 31, 2021
December 31, 2020
7,289
17,088
19,861
288
5,083
1,384
226
2,308
1,715
234
135
273
1,004
56,888
6,594
18,067
20,692
—
5,009
2,046
201
3,276
1,563
493
416
325
659
59,341
December 31, 2021
December 31, 2020
929
141
457
(240)
1,287
503
158
367
119
1,147
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CONTENTS
ESI GROUP ANNUAL FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
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 retirement obligations
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 and related receivables
Loss on simplified merger
Provision for foreign exchange loss
Other financial income/(expenses)
TOTAL
December 31, 2021
December 31, 2020
29,308
1,635
743
102
977
393
511
33,669
29,659
782
761
91
546
516
1,501
33,856
December 31, 2021
December 31, 2020
6
343
1,897
—
16
2,262
14
329
2,319
—
53
2,715
December 31, 2021
December 31, 2020
399
(917)
(42)
(15)
(5,405)
784
(239)
2,378
(127)
(3,184)
(52)
(904)
(247)
(40)
(9,254)
272
(1,356)
(4,206)
(16)
(15,803)
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NOTE E.8. EXCEPTIONAL RESULT
(In € thousands)
Profit or loss on movements of treasury shares
Accelerated capital allowances
Loss of expired foreign tax credits
Staff cots related to restructuring
Fixed asset restructuring – write-off
Loss on tangible fixed assets
Loss on Financial fixed assets
Provision for departures Restructuring
IP litigation compensation
Miscellaneous
TOTAL
NOTE F. Other information
NOTE F.1. AVERAGE HEADCOUNT
(In full-time equivalent)
Executives
Office personnel
TOTAL
Average headcount in France and in branches outside France.
December 31, 2021
December 31, 2020
(149)
(7)
(879)
(874)
(21,370)
(184)
(2,387)
(5,130)
883
(101)
(30,198)
(174)
(159)
(616)
0
0
0
0
0
0
43
(906)
December 31, 2021
December 31, 2020
222
12
234
245
14
259
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, 2021
December 31, 2020
359
13
18
435
0
825
427
10
100
777
11
1,325
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CONTENTS
ESI GROUP ANNUAL FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
NOTE F.3. BRANCHES
There are two branches integrated within ESI Group’s financial statements.
Chinese branch office has been closed in 2021, remain at December 2021 Netherlands branch office:
Name
Address
ESI Group Netherlands – Branch Office
Vlieland 11, 2716AA Zoetermeer Zuid-Holland
ESI Group Shanghai Representative Office
Cross Region Plaza, Unit 20D, 899 Lingling Road 200235 Shanghai
Country
Netherlands
China
NOTE F.4. OFF-BALANCE SHEET COMMITMENTS
/ Future lease obligations
(In € thousands)
Real estate rentals
Movable property rentals
TOTAL
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
As part of the credit agreement dated December 20, 2018, ESI
Group granted a pledge of 99.98% of the shares of the French
subsidiary Engineering System International and 100% of the shares
of the German subsidiaries ESI Software Germany GmbH and 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, 2020, the threshold to be
respected is 3%. At December 31, 2020, on the basis of the annual
consolidated financial statements, 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:
Less than 1 year
1,423
152
1,575
Between 1
and 5 years
6,154
126
6,280
■ Interest rate 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 €7 million each, where ESI Group receives a three months
Euribor (with a 0% floor) and pays a fixed rate of 0.085% and
0.092% respectively. At the end of 2021, the underlying assets
covered by each of
to
€5.000 million;
these contracts amounted
■ Foreign exchange instruments:
• In order to hedge foreign currency cash flows between the
Group’s parent company and its subsidiaries, ESI Group has
used currency hedging in 2021 on the following currencies
JPY, KRW and INR.
/ Pledges
At December 31, 2020, 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.
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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
(821)
(30,197)
3,026
6,954
7,020
(1)
(3,026)
6,133
(23,177)
(1)
—
6,133
(23,177)
(1)
—
(27,992)
10,947
(17,045)
—
(17,045)
NOTE F.6.
INCREASES AND DECREASES IN FUTURE TAX LIABILITIES
(In € thousands)
Special social security contribution (contribution sociale de solidarité)
Retirement allowance
Translation differences
Interest
TOTAL TEMPORARY DIFFERENCES
NET DECREASE IN FUTURE INCOME TAX LIABILITIES (TAX RATE OF 26.5%)
December 31, 2021
—
4,313
7,352
200
11,865
3,144
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.
At end 2020, the Company tax losses carried-forward amounts to
€29 million, mostly created in 2019 further to the change of closing
date and related 11-month fiscal year.
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 6
NOTE F.8. TABLE OF CONTROLLED ENTITIES AND AFFILIATES (AT DECEMBER 31, 2020)
(In € thousands)
Capital
(converted
at the
closing rate
Head-
quarters
Shareholders’
equity other
than capital
and net profit
for the year
(converted at
the closing rate)
% of
capital
owned
(in %)
Carrying
number of
shares held
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
A. Detailed information on each security with gross value exceeding 10% of the Company’s capital
1. Over 50%-owned subsidiaries
Engineering System
International SAS
ESI Japan, Ltd.
Hankook ESI Co., Ltd.
ESI North America, Inc.
France
1,020
1,892 100.0 458 458
Japan
South
Korea
USA
99
(545) 100.0 171 171
998
0
(2,603) 100.0 970 970
(6,351) 100.0 3,726
3 726
ESI Group Hispania s.l.
Spain
100
(1,392) 100.0 100 100
(2,016)
(2,206)
8,564
1,520
16,928
27,562
291
211
5,059
(859)
19,997
5,185
573
170
Mecas ESI s.r.o.
ESI UK Ltd.
Czech
Republic
United
Kingdom
16
1,655 95.0 912 912
(1,143)
7,279
135
0
120
1,787 100.0 164 164
(821)
3,933
295
ESI US R&D, Inc.
USA
194
3,626 74.0 4,128 649
Switzerlan
d
83
666 98.5 2,678 656
India
China
China
Italy
2
1
10
500
7,840 100.0
2
2 100.0 119
398 100.0 1,737
2
0
0
52 100.0 1,050
1 050
40
588
0
0
0
225
83
66
2,091
0
0
66
793
1,369
4,636
(22)
ESI Services Tunisie
Tunisia
107
1,275 100.0 304 304
Brazil
9
208 100.0
56
56
(1)
26
89
47
6
China
602
3,339 100.0 543 543
6,046
198
Germany
Sweden
United
Kingdom
517
11
8,592 100.0 10,708 10,708
531 100.0 446 446
1
(905) 100.0 2,351 117
(200)
7
(76)
Vietnam
Germany
73
26
161 100.0 124 124
3,279 100.0 18,710 8,336
ESI US Holdings, Inc.
USA
588
111 100.0 834 834
2. 10-50% owned subsidiaries
JV AECC-ESI
Chine
1 275
1,713 35.0 576 576
Data as of December 31, 2021 presented in this table are non-audited data.
411
(69)
(65)
30
448
0
429
193
311
349
0
0
NOTE F.9. SUBSEQUENT EVENTS
In February 2022, the conflict between Russia and Ukraine
worsened. The situation is changing rapidly creating high volatility
in the energy markets, especially in Europe. Given the recent and
rapid escalation of events and the imposition of additional
sanctions, the Group is constantly assessing the potential impact
on the Group’s operating results. The Group does not have any
assets nor operations in Ukraine. The Group’s Russian operations
represented around 1.49% of the 2021 consolidated revenues.
There are no outstanding receivables from Russian customers.
ESI Group • 2021 UNIVERSAL REGISTRATION DOCUMENT
163
Calcom ESI SA
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 Group Beijing Co.,
Ltd.
ESI Software Germany
Gmbh
ESI Nordics AB
Open CFD Ltd.
ESI Services Vietnam
Co., Ltd.
ESI ITI Gmbh
12345789
6 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 regulations 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.
Year ended 31 December 2021
To the Annual General Meeting of ESI Group,
Opinion
In compliance with the engagement entrusted to us by your Annual General Meeting, we have audited the accompanying financial statements
of ESI Group for the year ended 31 December 2021.
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
31 December 2021 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 the independence requirements of the French Commercial Code (Code de commerce)
and the French Code of Ethics for Statutory Auditors (Code de déontologie de la profession de commissaire aux comptes) for the period from
1 January 2021 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.
Justification of Assessments – Key Audit Matters
Due to the global crisis related to the COVID‑19 pandemic, the financial statements for this period have been prepared and audited under
special circumstances. Indeed, this crisis and the exceptional measures taken in the context of the health emergency have had numerous
consequences for companies, particularly on their operations and their financing, and have led to greater uncertainties regarding their future
prospects. Some of these measures, such as travel restrictions and remote working, have also had an impact on companies' internal
organization and on the performance of audits.
It is in this complex, evolving context that, 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 6
/ Valuation of development costs and software codes acquired
Risk identified
the balance sheet,
In
include capitalized
development costs and software codes acquired, for net carrying
amounts as at 31 December 2021 of €19,589k and €9,484k
respectively.
intangible assets
The development costs correspond mainly to direct labour and
subcontracting costs relating to the development of new offers or
major improvements to existing software solutions.
indicated
As
in Note B.2. to the financial statements, the
capitalization of these development costs is subject to compliance
with the criteria set out in the rules on fixed assets according to
French accounting standards. The amortization times, which are
between 12 and 36 months, are estimated for each project
depending on the period during which ESI Group expects the
software concerned to generate revenue. Impairment for the net
carrying amount of the capitalized development costs is recognized
when, at year-end, the probable future economic benefits are no
longer sufficient to cover the residual value of the asset. This
analysis is performed project by project.
As indicated in Note C.1 to the financial statements, within the
context of the “OneESI 2024 – Focus to Grow” plan, the Group
announced the redeployment of a significant share of its R&D
investments towards growth and core business opportunities. This
results in the scrapping of development costs for a net amount of
€15,378k.
In addition, as indicated in Note C.1 to the financial statements,
within the context of this transformation plan, ESI Group has
identified, firstly, source codes that belong to discontinued
activities and that were scrapped in 2021 in the amount of €5,056k,
and, secondly, codes used to develop software related to the
Group’s growth activities and that are now amortized over a period
of eight years.
The assessment of compliance with the criteria for capitalization of
development costs, the determination of the amortization period,
and the impairment of capitalized projects no longer generating
future economic benefits, are based on Management’s judgment
and the reliability of the procedures applied for the identification
and allocation of the costs between the different projects.
On this basis, we considered the capitalization of development
costs and software codes acquired to be a key audit matter.
Our response
We therefore performed the following work:
■ We assessed the compliance of the accounting treatment of the
development costs and software codes acquired with the
accounting standards in force;
■ We reconciled the accounting data to the management data
giving detailed information on the capitalized projects, in order
to assess the reliability of the information reported;
■ For a selection of projects, we referred to the relevant time
sheets and the documentary evidence of the placed-in-service
date;
■ We verified the correct calculation of the amortization expense
on the basis of the period established for each project by the
Management of ESI Group;
■ We reconciled the individual net carrying amounts of the main
projects to the future volume of business for the related
software solutions included in the last business plan provided to
the Board of Directors at the end of 2021;
■ We verified the amount of the mark-up applied to R&D
expenses at ESI Group when the R&D is performed by
subsidiaries, according
in
intragroup agreements;
to contractual
rates defined
■ We verified the justification of the amortization recognized as at
31 December 2021 concerning, in particular, projects that are
not intended to generate revenue and software codes that are
not going to be included in the group’s new strategy.
6
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12345789 6 FINANCIAL STATEMENTS
ESI GROUP ANNUAL FINANCIAL STATEMENTS
CONTENTS
/ Valuation of equity investments
Risk identified
Our response
Equity investments are recorded in the balance sheet for the year
ended 31 December 2021 for the net carrying amount of €32,286k.
At acquisition date, these equity
investments are valued at
acquisition cost, which includes the purchase price and the costs
directly attributable thereto. At each year-end, the carrying amount
of an equity investment is compared to its value in use, and if the
latter is lower than the carrying amount, impairment is recognized
to reduce the carrying amount to the value in use.
The different methods used to determine the value in use are
described in Note B.4 to the financial statements and are as
follows:
■ Equity investments in active subsidiaries are valued on the basis
of a multiple of revenue adjusted for the net cash position of
the subsidiary, or alternatively on the basis of discounted
forecast cash flows;
■ Equity investments in subsidiaries that are dormant or with
reduced activity are valued on the basis of the share of net
equity attributable to ESI Group.
Estimating the value in use of these equity investments, which
represent a material amount in the balance sheet assets, requires
the exercise of Management’s judgment in identifying the criteria
determining the valuation method to be used and the factors to be
considered according to the investments concerned, particularly
historical items (shareholders’ equity) or forecasts (profitability
prospects).
We therefore considered the valuation of equity investments to be
a key audit matter.
We reviewed the compliance of the method used by the Company
for the valuation of equity investments with the accounting rules
and principles in force.
Our work consisted in reviewing the justification provided by
Management for the valuation method and the data used. Our
review of the method applied, according to the equity investments
concerned, is detailed as follows:
For the main equity investments in active subsidiaries:
■ We obtained the multiple of revenue adjusted for the net cash
position of the subsidiary and assessed the consistency of the
data used with the accounts of the corresponding entities;
■ We obtained the forecasts for the operating cash flows of the
entities concerned and assessed their consistency with the
forecast data from the latest strategic plan, drawn up under the
responsibility of senior management and approved by the
Board of Directors;
■ We assessed the consistency of the assumptions used with the
economic environment at the closing date;
■ We compared the forecasts adopted for previous periods with
in order to assess the
the corresponding actual figures
achievement of past targets;
■ We verified that the value resulting from cash flow forecasts was
adjusted for the net cash position of the entity in question.
For the main equity investments in subsidiaries that are dormant
or with reduced activity:
■ We reconciled the shareholders’ equity retained to the accounts
of the corresponding entities;
If applicable, we reviewed the documentary evidence for the
adjustments made to shareholders’ equity.
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
Board of Directors’ management report and in the other documents with respect to the financial position and the financial statements
provided to the shareholders.
We attest the fair presentation and the consistency with the financial statements of the information relating to payment deadlines mentioned
in Article D. 441‑6 of the French Commercial Code (Code de commerce).
/ Report on Corporate Governance
We attest that the Board of Directors’ Report on Corporate Governance sets out the information required by Articles L. 225‑37‑4, L. 22‑10‑10
and L. 22‑10‑9 of the French Commercial Code (Code de commerce).
Concerning the information given in accordance with the requirements of Article L. 22‑10‑9 of the French Commercial Code (Code de
commerce) relating to the remuneration and benefits received by, or allocated to the directors and any other commitments made in their favor,
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 companies controlled thereby, included in the consolidation
scope. 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. 22‑10‑11 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.
166
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CONTENTS
ESI GROUP ANNUAL FINANCIAL STATEMENTS
FINANCIAL STATEMENTS 6
/ 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 voting rights has been properly disclosed in the management report.
Report on Other Legal and Regulatory Requirements
/ Format of preparation of the financial statements intended to be included
in the annual financial report
We have also verified, in accordance with the professional standard applicable in France relating to the procedures performed by statutory
auditors regarding the annual and consolidated financial statements prepared in the European single electronic format, that the preparation
of the financial statements intended to be included in the annual financial report mentioned in Article L. 451‑1‑2, I of the French Monetary and
Financial Code (Code monétaire et financier), prepared under the CEO’s responsibility, complies with the single electronic format defined in
Commission Delegated Regulation (EU) No. 2019/815 of 17 December 2018.
On the basis of our work, we conclude that the preparation of the financial statements intended to be included in the annual financial report
complies, in all material respects, with the European single electronic format.
We have no responsibility to verify that the financial statements that will ultimately be included by your Company in the annual financial report
filed with the AMF (Autorité des marchés financiers) agree with those on which we have performed our work.
/ Appointment of the Statutory Auditors
We were appointed as statutory auditors of ESI Group by your Annual General Meeting held on 22 June 2021 for KPMG S.A. and on 16
December 1997 for ERNST & YOUNG Audit.
As at 31 December 2021, KPMG S.A. was in its first year of total uninterrupted engagement and ERNST & YOUNG Audit in its twenty-fifth year
(including twenty-two years since the 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
The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk
management systems and where applicable, its internal audit, regarding the accounting and financial reporting procedures.
The financial statements were approved by the Board of Directors.
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12345789 6 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 made 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 significant deficiencies, if any, 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 as set out in particular in Articles L. 822‑10 to L. 822‑14 of the French
Commercial Code (Code de commerce) and in the French Code of Ethics for Statutory Auditors (Code de déontologie de la profession de
commissaire aux comptes). Where appropriate, we discuss with the Audit Committee the risks that may reasonably be thought to bear on our
independence, and the related safeguards.
Paris-La Défense, 8 April 2022
The Statutory Auditors
French original signed by:
KPMG Audit
Département de KPMG S.A.
Stéphanie Ortega
ERNST & YOUNG Audit
Pierre-Henri Pagnon
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2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
7
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
171
175
176
7
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169
12345689 7 RESOLUTIONS SUBMITTED TO THE GENERAL MEETING
CONTENTS
This section outlines the issues and key points arising from the proposed resolutions to be submitted by the Board of Directors for approval at
the Shareholders’ Meeting on June 28, 2022. It is not intended to be exhaustive, and you should therefore read the proposed resolutions
carefully before voting at the Meeting.
Decisions falling within the competence of the Ordinary General Meeting
1.
2.
3.
4.
5.
6.
7.
8.
9.
Approval of the parent company financial statements for the
financial year ended December 31, 2021
Approval of the total expenses and charges not deductible
from profits subject to income tax
Approval of the consolidated financial statements for the
financial year ended December 31, 2021
Allocation of net result for the year
Special report of the Statutory Auditors on the regulated
agreements and commitments referred
in Article
L. 225-38 of the French Commercial Code
to
Renewal of Véronique Jacq’s mandate as Director
Renewal of Rajani Ramanathan’s mandate as Director
Ratification of co-optation of Patrice Soudan as Director
Renewal of Charles-Helen des Isnards’s mandate as Board
observer
10. Approval of the total compensation paid or allocated to the
members of the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer and the Chief
Operating Officer for the financial year ended on December
31, 2021, in accordance with Article L. 22-10-34 I of the
French Commercial Code
11. Approval of the components of the total compensation paid
or allocated to Alain de Rouvray, Chairman of the Board of
Directors until February 8, 2021, for the financial year ended
on December 31, 2021
12. Approval of the components of the total compensation paid or
allocated to Alex Davern, Chairman of the Board of Directors
since February 8, 2021, for the financial year ended on
December 31, 2021
13. Approval of the components of the total compensation paid or
allocated to Cristel de Rouvray, Chief Executive Officer, for the
financial year ended on December 31, 2021
14. Approval of the components of the total compensation paid or
allocated to Vincent Chaillou, Chief Operating Officer until June
22, 2021, for the financial year ended on December 31, 2021
15. Approval of the remuneration policy for the Chairman of the
Board of Directors for 2022 financial year, in accordance with
Article L. 22-10-8 II of the French Commercial Code
16. Approval of the remuneration policy for the Chief Executive
Officer for 2022 financial year, in accordance with Article
L. 22-10-8 II of the French Commercial Code
17. Approval of the remuneration policy for the members of the
Board of Directors for 2022 financial year, in accordance with
Article L. 22-10-8 II of the French Commercial Code
18. Authorization for the Board of Directors to buy back the
Company's own shares in accordance with article L. 22-10-62
of the French Commercial Code
Decisions falling within the competence
of the Extraordinary General Meeting
19. Delegation of authority to the Board of Directors to award free
shares to eligible employees and corporate officers of the
Company and its affiliates
21. Amendment of Article 14 II of the Company’s articles of
association: Executive management (age limit of the Chief
Executive Officer)
20. Amendment of Article 11 of the Company’s articles of
association: Board of Directors organization (age limit of the
Chairman of the Board of Directors)
22. Amendment of Article 15 of the Company’s articles of
association: Compensation of Directors (new compensation
policy)
Joint decisions
23 Powers to carry out formalities
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CONTENTS
DECISIONS FALLING WITHIN THE COMPETENCE OF THE ORDINARY GENERAL MEETING
RESOLUTIONS SUBMITTED TO THE GENERAL MEETING 7
7.1. DECISIONS FALLING WITHIN THE COMPETENCE
OF THE ORDINARY GENERAL MEETING
4First, second, third and fourth resolutions
4Third resolution
Statement of reasons
To increase its competitiveness, ESI implemented a transformation
of its management and a reduction in headcount in the various
regions of the Group in accordance with the legal rules applicable
to each of them. ESI also decided to disengage from non-core
software development projects or non-strategic research projects
outside the Group’s three offerings. This restructuring and
impacted the parent company financial
transformation plan
statements with provisions for reduction
in headcount and
impairment of intangibles.
Having reviewed the management report of the Board of Directors,
the reports of the Statutory Auditors on financial statements, you
are asked to vote on the parent company and consolidated
financial statements for the financial year ended December 31,
2021, and on the transactions reflected therein or summarized in
these reports.
At December 31, 2021:
■ The Company financial statements showed a negative result of
-€27,993,026.85;
■ The total expenses and charges not deductible from profits
subject to income tax, equal to €257,088;
■ The Company’s consolidated financial statements showed a
negative net result of -€18,474,017.
The General Meeting is requested to allocate the deficit of
-€27,993,026.85 as follows:
■ €0 to the legal reserve;
■ -€27,993,026.85 to retained earnings.
Following this allocation, the balance of the legal reserve will stand
at €1,805,367.60.
Following
-€29,738,641.95.
this allocation,
retained earnings will stand at
The Board of Directors reminds the General Meeting that no
dividends have been paid out for the past three financial years.
4First resolution
Approval of the parent company financial statements
for the financial year ended December 31, 2021
The General Meeting, having reviewed the management report of
the Board of Directors, 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,
2021, approves the financial statements and balance sheet, as
presented, showing a deficit of -€27,993,026.85.
It approves the transactions reflected in said financial statements or
summarized in said reports.
4Second resolution
Approval of the total expenses and charges not deductible
from profits subject to income tax
The General Meeting, having reviewed the management report of
the Board of Directors, 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,
2021, approves the total expenses and charges not deductible from
profits subject to income tax, equal to €257,088.
Approval of the consolidated financial statements
for the financial year ended December 31, 2021
The General Meeting, having reviewed the management report of
the Board of Directors, and the reports of the Statutory Auditors on
the consolidated financial statements and the consolidated financial
statements as at December 31, 2021, approves these financial
statements as presented, resulting in -€18,474,017.
4Fourth resolution
Allocation of net profit for the year
The General Meeting, noting that the net deficit for the year ended
December 31, 2021 amounted to -€27,993,026.85, decides, on a
proposal from the Board of Directors, to allocate the result as
follows:
Current position:
■ Net result for the year: -€27,993,026.85;
■ Retained earnings: -€1,745,615.10;
■ Total to be allocated: -€27,993,026.85.
Allocated as follows:
■ €0 to the legal reserve;
■ -€27,993,026.85 to retained earnings.
Following this allocation, the balance of the legal reserve will stand
at €1,805,367.60.
Following
-€29,738,641.95.
this allocation,
retained earnings will stand at
The Board of Directors reminds the General Meeting that no
dividends have been paid out for the past three financial years.
4Fifth resolution
Special report of the Statutory Auditors on the regulated
agreements and commitments referred to in Article L. 225-38
of the French Commercial Code
7
Statement of reasons
Based on the special report by the Statutory Auditors on regulated
agreements presented in section 2.6 of the 2021 Universal
Registration Document, the General Meeting is requested to
acknowledge that during the financial year ended on December 31,
2021, one new agreement gave rise to the procedure provided for
in Articles L. 225-38 et seq. of the French Commercial Code
mentioning the presence of one new regulated agreement for the
period of June 23, 2021 until August 26, 2021 concerning Vincent
Chaillou as employee and Board member of the Company.
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
agreement referred to therein.
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7 RESOLUTIONS SUBMITTED TO THE GENERAL MEETING
DECISIONS FALLING WITHIN THE COMPETENCE OF THE ORDINARY GENERAL MEETING
CONTENTS
4Sixth and seventh resolutions
4Ninth resolution
Statement of reasons
As the directorships of Véronique Jacq and Rajani Ramanathan
expire at the end of this General Meeting, the shareholders are
requested to renew their respective directorship for a term of four
years, until the General Meeting to be convened in 2026 to
approve the financial statements for 2025 financial year. The Board
of Directors reminds the General Meeting that Véronique Jacq and
Rajani Ramanathan have been Director of the Company since
2014. Each respective biography is presented in the report of the
Board of Directors on corporate governance in section 2.3.2 of the
2021 Universal Registration Document.
4Sixth resolution
Renewal of Véronique Jacq’s mandate as Director
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance and noting that the term of
office of Véronique Jacq expires at the end of the General Meeting,
resolves to renew her directorship for a term of four years, expiring
at the end of the General Meeting to be convened in 2026 to
approve the financial statements for 2025 financial year.
4Seventh resolution
Renewal of Rajani Ramanathan’s mandate as Director
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance and noting that the term of
office of Rajani Ramanathan expires at the end of the General
Meeting, resolves to renew her directorship for a term of four years,
expiring at the end of the General Meeting to be convened in 2026
to approve the financial statements for 2025 financial year.
4Eighth resolution
Ratification of co-optation of Patrice Soudan as Director
Statement of reasons
In accordance with Article L. 225-24 of the French Commercial
Code, the Board of Directors Meeting of September 3, 2021 co-
opted Patrice Soudan as a Director for the remaining term of
Vincent Chaillou, resigning from his mandate of Director, until the
General Meeting to be convened in 2024 to approve the financial
statements for 2023 financial year. The General Meeting is asked to
ratify this co-optation. Following the recommendation of the
Nomination and Governance Committee, the Board of Directors
proposes to the General Meeting the appointment of Patrice
Soudan as an independent Director for a term of four years.
Patrice Soudan’s biography is presented in the report of the Board
of Directors on corporate governance in section 2.3.2 of the 2021
Universal Registration Document.
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance, decides, to ratify the cooptation
of Patrice Soudan for the remaining term of office of Vincent
Chaillou, resigning from his mandate of Director.
This term of office will expire at the end of the General Meeting to
be convened in 2024 to approve the financial statements for 2023
financial year.
Renewal of Charles-Helen des Isnards’s mandate
as Board observer
Statement of reasons
As the term of office of Charles-Helen des Isnards expires at the
end of this General Meeting, the shareholders are requested to
renew his mandate as Board observer for a term of one year
expiring at the end of the General Meeting to be convened in 2023
to approve the financial statements for 2022 financial year.
Charles-Helen des Isnards will continue to provide his expertise in
finance and advice in banking relations. His biography is presented
in the report of the Board of Directors on corporate governance in
section 2.3.2 of the 2021 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 Charles-Helen des Isnards expires at the end of the
General Meeting, resolves to renew his mandate as Board observer
for a term of one year, expiring at the end of the General Meeting to
be convened in 2023 to approve the financial statements for 2022
financial year.
4Tenth, eleventh, twelfth, thirteenth
and fourteenth resolutions
Statement of reasons
In accordance with Article L. 22-10-34 of the French Commercial
Code, the General Meeting is requested every year to approve the
fixed, variable and exceptional components of
total
remuneration and benefits of all kinds paid or allocated to the
Chairman of the Board of Directors, Chief Executive Officer and
Chief Operating Officer in respect to their mandate.
the
The compensation was paid or awarded in accordance with the
compensation policy approved by the Shareholders’ Meeting on
June 22, 2020. It is reminded that payment of the variable and
exceptional compensation
is contingent upon shareholder’s
approval at the 2022 Shareholders’ Meeting.
These components of the remuneration, approved by the Board
of Directors under the recommendation of the Compensation
Committee, are presented in the report of the Board of Directors
on corporate governance in section 2.4 of the 2021 Universal
Registration Document.
4Tenth resolution
Approval of the total compensation paid or allocated
to the members of the Board of Directors, the Chairman
of the Board of Directors, the Chief Executive Officer and
the Chief Operating Officer for the financial year ended
on December 31, 2021, in accordance with Article L. 22-10-34 I
of the French Commercial Code
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance, approves, in accordance with
the provisions of Article L. 22-10-34 I of the French Commercial
Code, the information referred to in Article L. 22-10-9 I of the
French Commercial Code relating to the compensation paid or
allocated to corporate officers during the financial year ended 31
December 2021, as described in paragraph 2.4 and in particular
2.4.3.1.13 of the Company’s 2021 Universal Registration Document.
.
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DECISIONS FALLING WITHIN THE COMPETENCE OF THE ORDINARY GENERAL MEETING
RESOLUTIONS SUBMITTED TO THE GENERAL MEETING 7
4Eleventh resolution
Approval of the components of the total compensation paid
or allocated to Alain de Rouvray, Chairman of the Board
of Directors until February 8, 2021, for the financial year
ended on December 31, 2021
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance and in accordance with Article
L. 22-10-34 II of the French Commercial Code, approves the fixed,
variable and exceptional components of the total compensation
and benefits of all kinds paid or allocated for the financial year
ended on December 31, 2021 to Alain de Rouvray, Chairman of the
Board of Directors until February 8, 2021, as described
in
paragraph 2.4.3.1.13 of the Company’s 2021 Universal Registration
Document.
4Twelth resolution
Approval of the components of the total compensation paid
or allocated to Alex Davern, Chairman of the Board of Directors
since February 8, 2021, for the financial year ended on
December 31, 2021
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance and in accordance with Article
L. 22-10-34 II of the French Commercial Code, approves the fixed,
variable and exceptional components of the total compensation
and benefits of all kinds paid or allocated for the financial year
ended on December 31, 2021 to Alex Davern, Chairman of the
Board of Directors since February 8, 2021, as described in
paragraph 2.4.3.1.1 of the Company’s 2021 Universal Registration
Document.
4Thirteenth resolution
Approval of the components of the total compensation paid
or allocated to Cristel de Rouvray, Chief Executive Officer,
for the financial year ended on December 31, 2021
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance and in accordance with Article
L. 22-10-34 II of the French Commercial Code, approves the fixed,
variable and exceptional components of the total compensation
and benefits of all kinds paid or allocated for the financial year
ended on December 31, 2021 to Cristel de Rouvray, Chief Executive
Officer, as described in paragraph 2.4.3.1.13 of the Company’s 2021
Universal Registration Document.
4Fifteenth, sixteenth
and seventeenth resolutions
Statement of reasons
In accordance with Article L. 22-10-8 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 Officer, in respect to their mandate for 2021
financial year.
The remuneration policy applicable to corporate officers, approved
by the Board of Directors under the recommendation of the
Compensation committee, is presented in the report of the Board
of Directors on corporate governance in section 2.4.1 of the 2021
Universal Registration Document.
4Fifteenth resolution
Approval of the remuneration policy for the Chairman
of the Board of Directors for 2022 financial year, in accordance
with Article L. 22-10-8 II of the French Commercial Code
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance and in accordance with Articles
L. 22-10-8 II and R. 22-10-14 of the French Commercial Code,
approves the remuneration policy attributable to the Chairman of
the Board of Directors for the 2022 financial year, as described in
this report and set out in paragraph 2.4.1.1 of the Company’s 2021
Universal Registration Document.
4Sixteenth resolution
Approval of the remuneration policy for the Chief Executive Officer
for 2022 financial year, in accordance with Article L. 22-10-8 II
of the French Commercial Code
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance and in accordance with Articles
L. 22-10-8 II and R. 22-10-14 of the French Commercial Code,
approves the remuneration policy attributable to the Chief
Executive Officer for the 2022 financial year, as described in this
report and set out in paragraph 2.4.1.2 of the Company’s 2021
Universal Registration Document.
7
4Fourteenth resolution
4Seventeenth resolution
Approval of the components of the total compensation paid
or allocated to Vincent Chaillou, Chief Operating Officer until
June 22, 2021, for the financial year ended on December 31, 2021
Approval of the remuneration policy for the members
of the Board of Directors for 2022 financial year, in accordance
with Article L. 22-10-8 II of the French Commercial Code
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance and in accordance with Article L.
22-10-34 II of the French Commercial Code, approves the fixed,
variable and exceptional components of the total compensation
and benefits of all kinds paid or allocated for the financial year
ended on December 31, 2021 to Vincent Chaillou, Chief Operating
Officer until June 22, 2021, as described in paragraph 2.4.3.1.13 of
the Company’s 2021 Universal Registration Document.
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance and in accordance with Articles
L. 22-10-8 II and R. 22-10-14 of the French Commercial Code,
approves the remuneration policy attributable to members of the
Board of Directors for the 2022 financial year, as described in this
report and set out in the paragraph 2.4.1.1 of the Company’s 2021
Universal Registration Document.
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7 RESOLUTIONS SUBMITTED TO THE GENERAL MEETING
DECISIONS FALLING WITHIN THE COMPETENCE OF THE ORDINARY GENERAL MEETING
CONTENTS
4Eighteenth resolution
Authorization for the Board of Directors to buy back
the Company’s own shares in accordance with article L. 22-10-62
of the French Commercial Code
Statement of reasons
As the existing authorization will expire in December 2022, 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 28,
2022.
It is proposed to set the maximum purchase price at €110
(hundred and ten) per share. Pursuant to current legislation, the
maximum number of shares that may be purchased is limited to
10% of the capital, taking into account the treasury stock already
held by the Company, 5.67% as at December 31, 2021. Stated
otherwise the Company will not be allowed to pay out more than
€29,000,000
(twenty-nine 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.
For information purposes, the use of the previous authority is
reported in the paragraph 2.5.3 of the present Company's
Universal Registration Document
the year ending
December 31, 2021.
for
The General Meeting, having reviewed the report of the Board of
Directors in accordance with Article L. 22-10-62 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 28, 2022, 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 February 15, 2019 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 €110
(hundred and ten);
3. Decides to fix the maximum amount that the Company may
spend within the framework of this buyback program at
€29,000,000 (twenty nine million);
4. Acknowledges that this authorization shall render ineffective the
previous authorization granted by the twenty-first resolution of
the Combined General Meeting of June 22, 2021 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
its
management report.
in
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DECISIONS FALLING WITHIN THE COMPETENCE OF THE EXTRAORDINARY GENERAL MEETING
RESOLUTIONS SUBMITTED TO THE GENERAL MEETING 7
7.2. DECISIONS FALLING WITHIN THE COMPETENCE
OF THE EXTRAORDINARY GENERAL MEETING
4Nineteenth resolution
Delegation of authority to the Board of Directors to award
free shares to eligible employees and corporate officers
of the Company and its affiliates
Statement of reasons
As the Company is considering the granting of free shares to
employees and corporate officers of the Company and its affiliates,
is proposed to the General Meeting to terminate the
it
authorization granted to the Board of Directors in 2020 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 120,000 shares, representing
around 2% of the share capital existing on June 28, 2022.
ESI objective is to align with best practices with companies that ESI
competes with for talent, to attract and retain the needed talents
to achieve the three-year strategic objectives.
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. 225-197-2 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. 225-197-2 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 Articles L. 225-197-1 et seq., L. 225-197-2,
L. 22-10-59 and L. 22-10-60 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 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 2% of the
share-capital existing on the date of grant of the free shares by
the Board of Directors and limited to 120,000 shares;
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:
a. determine whether to grant existing shares or whether to
issue shares for such purpose,
b. 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, if any, performance
conditions), define
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,
the categories of beneficiaries,
c. carry out, if applicable, the increase of the share capital of the
Company at the end of the vesting period,
d. 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
e. 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
increases
subsequent to the vesting of Company shares, to amend the
articles of association;
increase or
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 twentieth
resolution of the Combined General Meeting held on June 25,
2020.
7
in accordance with
regulatory
Each year,
requirements, 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.
legal and
the
This authorization is granted to the Board of Directors for a
duration of 38 (thirty-eight) months from the date of this Meeting.
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12345689 7 RESOLUTIONS SUBMITTED TO THE GENERAL MEETING
JOINT DECISIONS
CONTENTS
4Twentieth and twentieth-first resolutions
4Twenty-second resolution
Statement of reasons
Statement of reasons
On the recommendation of the Nomination and Governance
Committee in order to be aligned with best market practices and in
the context of improvement and evolution of his governance, the
Board of Directors, which met on 28 February 2022, decided to
propose to the General Meeting, that the Company’s Articles of
Association be amended to lower (i) the age limit for the Chairman
of the Board of Directors to 75 years and (ii) the age limit for the
Chief Executive Officer to 65 years.
It is reminded that the current age limit for both Chairman of the
Board of Directors and Chief Executive Officer is at 80 years.
Following the related new Board compensation policy of Directors
approved by the Board of Directors which met on November 19,
2021 on the recommendation of the Compensation Committee, it
is proposed to the General Meeting to amend the Article 15 of the
Company’s articles of association relative to the Compensation of
Directors.
It is reminded that the of the total annual amount of compensation
to be allocated to members of the Board of Directors decided by
the General meeting hold on June 25, 2021, is set up at €450,000.
4Twentieth resolution
Amendment of Article 11 of the Company’s articles of association:
Board of Directors organization (age limit of the Chairman
of the Board of Directors)
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance, decides to lower the age limit
for the Chairman of the Board of Directors to 75 years and
consequently to amend the second paragraph of the article 11 of
the Company’s articles of association as follows, and the rest of the
article remaining unchanged:
Amendment of Article 15 of the Company’s articles of association:
Compensation of Directors (new compensation policy)
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance, decides to amend the article 15
of the Company’s articles of association as follows:
“The Board of Directors may receive a fixed annual amount to be
deducted from the general expenses. This total amount, fixed by the
General Shareholders’ Meeting, is maintained until a new decision is
taken.
The Board of Directors shall distribute the amount of the compensation
among its members as it sees fit.
“No one over the age of 75 may be appointed Chairman of the Board of
Directors. If the current Chairman age, he shall be deemed to have
resigned automatically.”
The compensation of the Chairman of the Board of Directors and of the
Chief Executive Officer shall be decided by the Board of Directors; it may
be fixed or proportional or both fixed and proportional.
4Twenty-first resolution
Amendment of Article 14 II of the Company’s articles
of association: Executive management
(age limit of the Chief Executive Officer)
The General Meeting, having reviewed the report of the Board of
Directors on corporate governance, decides to lower the age limit
for the Chief Executive Officer to 65 years and consequently to
amend the
“General
fourth paragraph of the article 14
Management” of the Company’s articles of association as follows,
and the rest of this paragraph and the article remaining unchanged:
II
“In order to perform his duties, the Chief Executive Officer must be less
than 65 years old.”
7.3.
JOINT DECISIONS
4Twenty-third 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.
No other compensation, permanent or otherwise, than that provided for
herein, may be allocated to members of the Board of Directors, unless
they are bound to the Company by an employment contract under the
conditions authorized by law.”
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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2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
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
8.1.3.
Information concerning administrative and management bodies
8.2.
INFORMATION ON THE COMPANY’S CAPITAL
8.2.1.
Statutory requirement governing modifications to the capital
and rights attached to shares (Article 8 of the articles of
association)
8.2.2.
Issued share capital and authorized unissued share capital
8.2.3.
History of changes in share capital
8.2.4.
8.2.5.
8.2.6.
Dividend distribution policy
Corporate shareholding structure
Company share buybacks
8.3. ESI SHARES – MARKET
8.3.1.
8.3.2.
Share price trends
Survey of identifiable bearer share
178
178
179
180
180
180
180
180
181
181
185
186
186
186
8
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12345679 8 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
3 bis, rue Saarinen
Immeuble Le Séville
94528 Rungis Cedex 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
Créteil Trade and Companies Registry No. 381 080 225.
Legal Entity Identifier (LEI)
LEI – 969500SJCEYK6O6RXV95
Phone number
+33 (0) 1 41 73 58 00
E-mail
communication@esi-group.com
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 above-mentioned 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
judicial or
arbitration procedure during
that ended at
December 31, 2021.
in any governmental,
the exercise
involved
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CONTENTS
INFORMATION ON THE COMPANY AND SHARE CAPITAL 8
INFORMATION ON THE COMPANY
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.
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.
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.
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.
However, double voting rights are not
lost and the above-
mentioned 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.
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
i.e. for a period of two years from the
Commercial Code,
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 fourth trading day following the day the
threshold is crossed.
8
Form and transfer of shares
(Article 9 of the articles of association)
/ Form
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.
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.
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.
/ 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.
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INFORMATION ON THE COMPANY’S CAPITAL
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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”.
8.2.
INFORMATION ON THE COMPANY’S CAPITAL
8.2.1. Statutory requirement 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
instalments within a period of five years from the date on which the
capital increase was finalized.
forth by
Subject to the restrictions and reserves set
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 (1) Operation type
BoD Meeting
of 02/01/2019
Share capital adjustment
Exercise of share subscription options
BoD Meeting
of 02/12/2020
Share capital adjustment
Exercise of share subscription options
BoD Meeting
of 02/08/2021
Share capital adjustment
Exercise of share subscription options
BoD Meeting
of 02/28/2022
Share capital adjustment
Exercise of share subscription options
(a) 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
3
40,339
1,450
18,053,676
6,017,892
16,692
600
18,055,476
6,018,492
501,267
18,100
18,109,776
6,036,592
705,333
27,549
18,192,423
6,064,141
3
3
3
3
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2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
INFORMATION ON THE COMPANY AND SHARE CAPITAL 8
INFORMATION ON THE COMPANY’S CAPITAL
8.2.4. Dividend distribution policy
The Company has not distributed any dividends over the last five
financial years. Based on the results for 2021, the Board of
Directors has no intention to propose a dividend distribution.
future dividend distribution policy will depend on the
The
Company’s results and financial position.
ESI Group’s dividend distribution policy is based on both prudent
capital management and the attractiveness of the share for the
shareholders.
8.2.5. Corporate shareholding structure
Shareholding structure
As of December 31, 2021, the shareholding structure of ESI Group is as follows:
84.2%
Public
5.7%
Treasury share
4.5%
Board
of Directors
5.7%
Employees
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, 2021
First and last name
Alexander Davern
Cristel de Rouvray
Charles-Helen des Isnards
Éric d’Hotelans
Véronique Jacq
Rajani Ramanathan
Yves de Balmann
Patrice Soudan
Members of the Board of Directors (registered shares)
Members of ESI Leadership Team (ELT)
Employee shareholding excl ELT (registered shares)
Public shareholding, registered shares
Public shareholding, bearer shares
Sub-total public shareholding
Treasury shares
TOTAL
Total number of theoretical voting rights: 8,116,303.
Number of
shares
11,333
253,054
3,551
261
157
1
1
2,100
270,458
27,598
315,672
1,509,915
3,596,802
5,106,717
343,647
6,064,092
Number of
voting rights
that may be
exercised
% of voting
rights that may
be exercised
% of capital
0.19%
4.17%
0.06%
0.00%
0.00%
0.00%
0.00%
0.03%
4.46%
0.46%
5.21%
24.90%
59.31%
84.21%
5.67%
11,333
506,108
7,102
522
218
2
2
2,100
527,387
41,056
602,152
3,004,298
3,596,802
6,601,100
0
8
0.15%
6.51%
0.09%
0.01%
0.00%
0.00%
0.00%
0.03%
6.79%
0.53%
7.75%
38.66%
46.28%
84.94%
0.00%
100.00%
7,771,695
100.00%
At the closing of the financial year 2021, the employee shareholding, as defined in Article L. 225-102 of the French Commercial Code, in the
Company's share capital is 0.46%.
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8 INFORMATION ON THE COMPANY AND SHARE CAPITAL
INFORMATION ON THE COMPANY’S CAPITAL
CONTENTS
At December 31, 2020
First and last name
Alain de Rouvray
Cristel de Rouvray
Amy de Rouvray
John Alexandre de Rouvray
Amy-Louise de Rouvray
Xiu Mei Dubois
Alex Peng Dubois-Sun
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: 8,298,004.
* In May 2021, the shareholders’ agreement was terminated.
At December 31, 2019
First and last name
De Rouvray
Xiu Mei Dubois
Alex Peng Dubois-Sun
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: 8,279,879.
Number of
shares
1,207,391
206,270
2,184
204,270
204,275
25,200
321,419
Number of
voting rights
that may be
exercised
% of voting
rights that may
be exercised
% of capital
20.00%
2,414,782
30.44%
3.42%
0.04%
3.38%
3.38%
0.42%
5.32%
412,540
4,368
408,540
408,550
50,400
642,838
5.20%
0.06%
5.15%
5.15%
0.64%
8.10%
2,171,009
35.96%
4,342,018
54.74%
21,207
3,551
261
157
1
1
25,178
82,155
23,808
3,371,161
3,394,969
363,281
6,036,592
0.35%
0.06%
0.00%
0.00%
0.00%
0.00%
0.42%
1.36%
0.04%
55.85%
56.24%
6.02%
37,404
7,102
522
158
2
2
45,190
137,084
37,779
3,371,161
3,408,940
—
0.47%
0.09%
0.01%
0.00%
0.00%
0.00%
0.57%
1.73%
0.48%
42.49%
42.97%
0.00%
100.00%
7,933,232
100.00%
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%
2,205,004
36.64%
4,410,008
55.86%
21,197
3,951
1,589
157
1
1
26,896
81,312
23,891
3,303,698
3,327,589
377,691
6,018,492
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%
100.00%
7,895,188
100.00%
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2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
INFORMATION ON THE COMPANY AND SHARE CAPITAL 8
INFORMATION ON THE COMPANY’S CAPITAL
Shareholdings above legal thresholds
Individual shareholders
As of the filing date of this Universal Registration Document, the
following shareholders each held more than 5% of the Company’s
capital:
■ Long Path Partners holds 839,087 shares, i.e. 13.84% of the
capital -10.07% of the voting rights;
■ Briarwood Chase Management holds 632,197 shares, i.e. 10.43%
of the capital -7.61% of the voting rights;
■ Alain de Rouvray holds 459,788 shares, i.e. 7.58% of the capital
-11.83% of the voting rights;
■ Amy-Sheldon
holds
429,761 shares, i.e. 7.09% of the capital -11.06% of the voting
rights;
(Lawrence)
Rouvray
Loriot
de
■ Alex Peng Dubois-Sun holds 321,419 shares, i.e. 5.30% of the
capital -8.27% of the voting rights.
Crossing of legal and statutory thresholds
declared to the Company during the
financial year ended December 31, 2021
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 February 12, 2021 sent by the Long Path
Partners fund, declares that the latter has crossed the statutory
threshold of 10% of the Company’s voting rights upwards with
627,767 shares representing 10.37% of the shares and 7.55% of
the voting rights;
■ By letter dated March 26, 2021 sent by the Long Path Partners
fund, declares that the latter has crossed the statutory threshold
of 12.50% of the Company’s capital upwards with 787,757
shares representing 13.00% of the shares and 9.46% of the
voting rights;
■ By letter dated June 30, 2021 sent by the Long Path Partners
fund, declares that the latter has crossed the legal and statutory
threshold of 10% of the Company’s voting rights upwards with
839,087 shares representing 13.84% of the shares and 10.07%
of the voting rights.
Briarwood Chase Management
■ By
letter dated
January 22, 2021, the Briarwood Chase
Management fund declared that it had crossed upward the
statutory threshold of 7.5% of the Company’s capital with
459,895 shares representing 7.62% of the shares and 5.54% of
the voting rights;
■ By
letter dated August 20, 2021, the Briarwood Chase
Management fund declared that it had crossed upward the legal
and statutory threshold of 10% of the Company’s capital with
606,511 shares representing 10.00% of the shares and 7.30% of
the voting rights;
■ By letter dated September 2, 2021, the Briarwood Chase
Management fund declared that it had crossed upward the
statutory threshold of 7.5% of the Company’s voting rights with
632,197 shares representing 10.43% of the shares and 7.61% of
the voting rights.
■ Following the termination of the shareholder’s agreement, on
May 5, 2021:
• Alain de Rouvray declared that he had crossed upward the
statutory threshold of 17.5% of the Company’s capital and the
statutory threshold of 27.5% of the voting rights with
1,207,391 shares representing 19.93% of the shares and
29.00% of the voting rights,
• Cristel Loriot de Rouvray declared that she had crossed
upward the statutory threshold of 2.5% of the Company’s
capital and voting rights with 206,270 shares representing
3.40% of the shares and 4.95% of the voting rights,
• John-Alexandre Loriot de Rouvray declared that he had
crossed upward the statutory threshold of 2.5% of the
Company’s capital and voting rights with 204,270 shares
representing 3.37% of the shares and 4.91% of the
voting rights,
• Amy-Louise Loriot de Rouvray declared that she had crossed
upward the statutory threshold of 2.5% of the Company’s
capital and voting rights with 204,275 shares representing
3.37% of the shares and 4.91% of the voting rights,
• Xiumei Dubois declared that she had crossed upward the legal
and statutory threshold of 5% of the Company’s capital and
the statutory threshold of 7.5% of voting rights with 693,238
shares representing 5.72% of the shares and 8.32% of the
voting rights;
■ By letter dated August 7, 2021, Alain de Rouvray declared that he
had crossed downward the legal and statutory threshold of 10%
of the Company’s capital and the legal and statutory threshold of
15% of the voting rights with 604,788 shares representing 9.97%
of the shares and 14.56% of the voting rights;
■ By letter dated August 7, 2021, Amy-Sheldon Loriot de Rouvray
(Lawrence) declared that she had crossed upward the statutory
threshold of 7.5% of the Company’s capital and the statutory
threshold of 12.5% of the Company’s voting rights with
604,787 shares representing 9.97% of the shares and 14.56% of
the voting rights;
■ By letter dated November 18, 2021, Cristel Loriot de Rouvray
declared that she had crossed upward the legal and statutory
threshold of 5% of
the Company’s voting rights with
253,054 shares representing 4.17% of the shares and 6.10% of
the voting rights;
■ By letter dated November 18, 2021, Amy-Louise Loriot de
Rouvray declared that she had crossed upward the legal and
statutory threshold of 5% of the Company’s voting rights with
251,118 shares representing 4.14% of the shares and 6.05% of
the voting rights;
■ By letter dated November 18, 2021, John-Alexandre Loriot de
Rouvray declared that he had crossed upward the legal and
statutory threshold of 5% of the Company’s voting rights with
251,054 shares representing 4.14% of the shares and 6.05% of
the voting rights.
■ By letter dated December 28, 2021, Alain de Rouvray declared
that he had crossed downward the statutory threshold of 12.5%
of the Company’s voting rights with 459,788 shares representing
7.58% of the shares and 11.33% of the voting rights.
8
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Shareholders’ agreement
and other agreements
In February 2021, ESI Group was informed by Cristel de Rouvray
that she had notified the parties to the shareholders’ agreement
entered
into on October 25, 2000 between herself, certain
members of her family and the Dubois estate, of her decision to no
longer be bound by the rights and obligations of this agreement as
from March 9, 2021. As a result, Cristel de Rouvray is no longer
this
deemed acting
shareholders’ agreement.
the other parties
in concert with
to
In May 2021, the shareholders’ agreement was terminated by its
members and since then, is no longer existing. As a reminder, the
agreement signed on October 25, 2000 and published in La Tribune
on Friday October 27, 2000, after CMF decision No. 200C1608 on
October 27, 2000, binded Alain de Rouvray (founder), the members
of his family group composed of Amy Sheldon Lawrence de
Rouvray, Cristel Anne de Rouvray, John Alexandre de Rouvray and
Amy Louise de Rouvray, as well as the heirs of the Dubois estate.
Name
Function
Patrice Soudan
Director
Alex Davern
Chairman of the
Board of Directors
Type of
security
Shares
Shares
Type of
transaction
Purchase
Purchase
For more
informations about the conditions of this former
shareholders’ agreement, please refer to 2020 URD accessible on
ESI Group’s investors website.
In accordance with the “Dutreil” law in France, an agreement was
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, 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.
Transactions on shares
individuals with responsibilities of
Transactions completed by
Officers or Directors at the time of the operation and during 2021
financial year and until the date of this Universal Registration
Document.
Date of
transaction
Gross unit
price (in €)
Number of
securities
Total gross
amount (in €)
10/11/2021
07/24/2021
07/22/2021
07/21/2021
07/19/2021
07/14/2021
06/04/2021
06/04/2021
06/02/2021
06/01/2021
05/31/2021
05/29/2021
05/27/2021
05/26/2021
05/19/2021
05/18/2021
05/07/2021
05/06/2021
05/05/2021
05/04/2021
05/03/2021
04/30/2021
04/01/2021
03/31/2021
03/30/2021
03/29/2021
03/27/2021
03/25/2021
03/24/2021
03/23/2021
02/12/2021
02/11/2021
02/10/2021
70.18
59.86
59.86
59.89
59.86
59.86
61.06
61.06
60.32
59.84
60.06
60.26
60.26
60.25
59.95
59.85
58.02
56.85
57.05
55.26
54.96
53.56
48.85
48.95
49.16
49.45
49.75
49.95
49.95
49.95
47.34
46.23
45.13
2,100
147,378.00
150
150
137
150
104
250
139
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
250
8,978.97
8,978.97
8,205.72
8,978.97
6,225.42
15,265.25
8,487.48
15,081.57
14,960.45
15,015.00
15,065.05
15,065.05
15,064.65
14,989,97
14,964.95
14,507.00
14,214.20
14,264.25
13,816.60
13,741.52
13,390.17
12,212.20
12,237.23
12,289.88
12,361.35
12,437.43
12,487.48
12,487.48
12,487.48
2,437
115,373.43
134
340
6,194.69
15,344.74
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2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
INFORMATION ON THE COMPANY AND SHARE CAPITAL 8
INFORMATION ON THE COMPANY’S CAPITAL
8.2.6. Company share buybacks
The Shareholders’ Meeting of June 22, 2021 authorized the Board of
Directors. pursuant to the provisions of Article L. 22-10-62 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
implementation of a buyback program. The maximum purchase
price has been fixed to €75 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 25, 2020.
The description of the share buyback program implemented by the
Board of Directors’ Meeting of June 22, 2021, pursuant to the
authorization granted by the Shareholders’ Meeting can be
consulted on the website.
Shares buyback for the financial year
ended December 31, 2021
In 2021, ESI Group did not buy back any shares.
Cancellation of shares for the financial
year ended December 31, 2021
In 2021, ESI Group did not cancel any shares.
Assignments or transfers of shares
for the financial year ended
December 31, 2021
In 2021, ESI Group distributed 21 786 shares under its free share
plans.
Liquidity contract
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.
Table summarizing the operations of the Company on its own shares
during its financial year ended on December 31, 2021
________
Date of authorization by the General Meeting
Date of expiration of the authorization
Ceiling on authorized buybacks
Maximum purchase price per share
Authorized purposes
Resolution 21 of June 22, 2021
December 20, 2022
10% of share capital at the transaction date
€75
Cancellation
Share purchase options
Free share grants
Liquidity and market-making
External growth
Board of Directors’ Meeting at which buybacks were implemented
June 22, 2021
Number of shares purchased in 2021
Number of shares cancelled in 2021
Number of treasury shares at December 31, 2021 (a)
Percentage of capital held by the Company at December 31, 2021
(a) Excluding liquidity contract.
0
0
377,691
5.7%
8
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ESI SHARES – MARKET
CONTENTS
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 January 1, 2019
until the end of March 2022:
300
250
200
150
4,689.39
€27,15
100
11,260.22
50
0
Jan.-19
March-19
(Basis 100)
6,659.87
€68.6
15,056.04
May-19
July-19
Sept.-19
Nov.-19
Jan.-20
March-20
May-20
July-20
Sept.-20
Nov.-20
Jan.-21
March-21
May-21
July-21
Sept.-21
Nov.-21
Jan.-22
March-22
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
2022 and the daily volume of transactions:
(In euros)
80
70
60
50
40
30
€26.72
20
10
0
(Number of shares)
400,000
350,000
€68.6
300,000
250,000
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
July
2020
July
2021
ESI Group stock price
Daily volume
8.3.2. Survey of identifiable bearer share
On March 23, 2021 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 March 23, 2021.
French institutional investors
Foreign investors
Individual shareholders
Companies
At March 30, 2022
At March 23, 2021
As % of free float As % of share capital
As % of free float
As % of share capital
18.0%
70.2%
7.3%
7.0%
10.9%
42.3%
4.4%
4.0%
23.2%
69.7%
6.0%
—
13.0%
39.1%
3.4%
—
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2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
9 ADDITIONAL
INFORMATION
9.1. PERSONS RESPONSIBLE FOR THE UNIVERSAL
REGISTRATION DOCUMENT
9.1.1.
9.1.2.
Person responsible for the information
contained in the Universal Registration Document
Statement by the person responsible for the information
contained in the Universal Registration Document
9.1.3.
Person responsible for the financial information
9.2. STATUTORY AUDITORS
9.3. DOCUMENTS AVAILABLE TO THE PUBLIC
9.4.
INFORMATION INCLUDED BY REFERENCE
CROSS-REFERENCE TABLES
KEYWORDS OF THE 2021 UNIVERSAL REGISTRATION
DOCUMENT
188
188
188
188
188
189
189
190
196
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PERSONS RESPONSIBLE FOR THE UNIVERSAL REGISTRATION DOCUMENT
CONTENTS
9.1. PERSONS RESPONSIBLE FOR THE UNIVERSAL
REGISTRATION DOCUMENT
9.1.1. Person responsible for the information
contained in the Universal Registration Document
Mrs. Cristel de Rouvray, Chief Executive Officer of ESI Group.
9.1.2. Statement by the person responsible for the information
contained in the Universal Registration Document
Rungis, April 8, 2022.
Mrs. Cristel de Rouvray, Chief Executive Officer of ESI Group:
“I certify, having taken all reasonable care to ensure that such is the
case, that the information contained in this 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 on pages 96 et seq. 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.”
9.1.3. Person responsible for the financial information
Mrs. Cristel de Rouvray, Chief Executive Officer of ESI Group.
9.2. STATUTORY AUDITORS
Statutory Auditors
KPMG S.A.
Tour Eqho – 2, avenue Gambetta
92066 Paris-La Défense Cedex
Represented by Stéphanie Ortega.
Date of 1st appointment: Combined General Meeting of June 22,
2021 for a term of six years.
Term of office: Annual General Meeting called to approve the
financial statements for the year ended December 31, 2026.
KPMG S.A. is a member of the Versailles & du Centre Regional
Association of Statutory Auditors.
Ernst & Young Audit
Tour First
TSA 14444
92037 Paris-La Défense cedex
Represented by Mr. Pierre-Henri Pagnon.
Date of last renewal: Combined General Meeting of June 22, 2021
for a term of six years.
Term of office: Annual General Meeting called to approve the
financial statements for the year ended December 31, 2026.
Ernst & Young Audit is a member of the Versailles & du Centre
Regional Association of Statutory Auditors.
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CONTENTS
ADDITIONAL INFORMATION 9
INFORMATION INCLUDED BY REFERENCE
9.3. DOCUMENTS AVAILABLE TO THE PUBLIC
All corporate documents related to the Company can be consulted
on its website: www.esi-group.com. 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 – Communication Department
3 bis, rue Saarinen – Immeuble Le Séville
94528 Rungis Cedex
France
investors@esi-group.com
9.4.
INFORMATION INCLUDED BY REFERENCE
Pursuant to Article 19 of Regulation (EU) 2017/1129 of the
European Parliament and of the Council of June 14, 2017, the
following information is included by reference in this Universal
Registration Document:
■ The financial information contained in the management report,
the consolidated financial statements and the corresponding
Statutory Auditors’ report, as well as the annual accounts and
report appearing
the corresponding Statutory Auditors’
respectively on pages 89 et seq., 96 et seq. and 132 et seq. of the
Universal Registration Document for fiscal year 2020 filed with
the AMF on April 16, 2021 under number D.21-0315;
■ The financial information contained in the management report,
the consolidated accounts and the corresponding Auditors’
report, as well as the annual accounts and the corresponding
auditors’ report appearing respectively on pages 95 et seq., 104
et seq. and 143 et seq. of the 2019 registration document filed
with the AMF on April 23, 2020 under number D.20-0340; The
parts not included in the 2019 Registration Document and the
2020 Universal Registration Document are either irrelevant to
the investor or covered in another part of the 2021 Universal
Registration Document.
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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
March 14, 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)
188
188
55 et seq.
178
4-10
4-5
4-5
4-5
5-6
7-8
8-10
N/A
6-8
N/A
12
12
12, 112 & 152
98 et seq.
98 et seq.
98 et seq.
98 et seq.
98 et seq.
57 et seq.
106, 135
107
126 et seq.
N/A
N/A
16 et seq.
102
102
16 et seq.
17 to 27
28
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CROSS-REFERENCE TABLES
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
18.3. Auditing of historical annual financial information
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
Page(s)
36 et seq.
36 to 48
36 to 48
20 et seq.
21
21
32-33
16
53
72 et seq.
76-77
36 et seq.
36 et seq.
183 et seq.
185
181
59 to 63
53
137
104 et seq.
104 et seq.
N/A
129 à 144, 164 to 168
104 et seq.
N/A
180
N/A
181 et seq.
182 et seq.
53, 180-181
7-8
192
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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.
Informations
■ 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)
188
142 et seq.
102 et seq.
164 et seq.
137 et seq.
See the next table
See the next table
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. 22-10-35, L. 22-10-36, L. 232-1 and R. 225-102 et seq. of the French Commercial Code.
Informations
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 et seq.
136
126 et seq.
100
10
177 et seq.
180-181
181-183
185
183
180
64 et seq.
84 to 88
70 to 77
78 to 83
99
100
58 et seq.
58-59
60-61
62
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2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
CROSS-REFERENCE TABLES
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 et seq., L. 22-10-3 et seq. of the French Commercial Code.
Informations
■ 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)
16-17
17-18
20 et seq.
25 to 27
36 et seq.
36 et seq.
16
39 et seq.
39 et seq.
50-51
53
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STATEMENT ON EXTRA-FINANCIAL PERFORMANCE CROSS-REFERENCE TABLE
CONTENTS
STATEMENT ON EXTRA-FINANCIAL PERFORMANCE CROSS-REFERENCE TABLE
For ease of reference, the following cross-reference table facilitates identification of environmental, social and societal information making up
the Statement on extra-financial performance, 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 and 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
Fair trade practices
■ Actions taken to prevent corruption
■ Measures promoting the health and safety of consumers
Page(s)
73 to 74
76
77
76
N/A
76
76
76-77
76
N/A
71
67, 71
74-75
75
75
N/A
75
82
82
70 to 79
81 to 83
79 to 81
N/A
N/A
80 to 82
82
80 to 82
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CONTENTS
CROSS-REFERENCE TABLES
SUSTAINABLE DEVELOPMENT AND CORPORATE SOCIAL RESPONSIBILITY CROSS-REFERENCE TABLE
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
■ Protecting biodiversity
Investor Relations
Corinne Romefort-Régnier and Florence Barré
3 bis, rue Saarinen – Immeuble Le Séville – 94150 Rungis – France
Phone: +33 (0)1 49 78 28 28
investors@esi-group.com
Page(s)
84 et seq.
89
84 et seq.
N/A
84 et seq.
84 et seq.
88
N/A
88
N/A
86 to 88
N/A
84 to 87
N/A
N/A
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KEYWORDS OF THE 2021 UNIVERSAL REGISTRATION DOCUMENT
CONTENTS
KEYWORDS OF THE 2021 UNIVERSAL REGISTRATION DOCUMENT
Keywords
Aerospace
Automotive & land transportation
Board of Directors
Business model
Capital
Consolidated financial statements
Corporate Social Responsibility (CSR)
Core Strategic vision (CSV)
Crash-test
Customers
Digital risk
Digital simulation
Distribution networks
Diversity
Ecosystem
Employees
Energy
Engineering studies
Environment
Environmental risks
Ethics Charter
Financial results
Financial risks
Gaïa Index
Governance
Human Resources
Hybrid Twin
IC.IDO
Industrial
Industrial sectors
Innovation
Innovative solutions
Page(s)
Keywords
6-7
7
Intellectual Property
Investment
20 et seq.
Investors
4 et seq.
ISO 27001
100 et seq.
102 et seq.
64 et seq.
1-2
7, 11
ISO 9001
Leadership Team ("ELT")
Licenses
Life cycle
Maintenance
6 to 10, 57, 80 to 82
Manufacturing
57
Manufacturing industries
5, 78, 178
OneESI 2024
11, 59
Operational performance
73 to 75
Operating results
10, 81
Outcomes
70 to 77
Physical tests
8, 87
5, 158
Product Lifecycle Management (PLM)
Product Performance Lifecycle (PPL)
84 to 89
Quality
92
82-83
13-14
92
70
R&D
Sales
Services
Smart Manufacturing
Software
15 et seq., 82
Stock Market Data
31,57, 59
Strategic and operational risks
6-7, 98
11, 81
Strategy
Suppliers
4 to 10, 57, 78-79
Sustainability
7-8
Threshold crossing
4 to 18, 55, 64, 77
Value creation
Page(s)
57, 98
9, 89, 146
186
57 to 62, 81, 83
62, 81
19
4-5, 97 et seq.
8
5 to 10, 111, 147
5 to 9, 78
7-8
2 et seq.
82
113, 136, 163
4,7, 59, 80 to 87
9, 84
5, 80
5,6, 9
81
5 et seq.
97 et seq.
4-5, 111 et seq.
7, 9
9 et seq.
186
57
4 to 10.
16, 68, 81, 99, 143
68 et seq.
183
64
65, 80
Virtual Prototyping
4 to 6, 64, 78 to 84
196
2021 UNIVERSAL REGISTRATION DOCUMENT • ESI Group
CONTENTS
Design and production: Ruban Blanc
Photos Credits: © ESI Group
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French limited company (société anonyme) with a share capital of €18,192,423
Registered office:
3 bis, rue Saarinen- Immeuble Le Séville – 94528 Rungis Cedex-France
Company Register (RCS) number: 381 080 225 Créteil
Tel.: +33 (0)1 41 73 58 00