#2016 - REGISTRATION DOCUMENT - akka-technologies.com · 4 . akka technologies. registration...

#2016 - REGISTRATION DOCUMENT

Societas europaea with share capital of 31,024,865.70 euros

Registered office: 9/11, rue Montalivet – 75008 PARISPARIS Trade and Company Register B 422 950 865

REGISTRATION DOCUMENT2016 FINANCIAL YEAR

This registration document in English is a translation of the French “Document de Référence” provided for information purposes. This document is qualified in its entirety by reference

to the “Document de Référence”

This 2016 registration document was filed with the Autorité des Marchés Financiers (AMF) on 19 April 2017

under number D. 17-0397, in accordance with article 212-13 of its general regulation. It may be used in support of

a financial transaction in conjunction with a securities note approved by the AMF. This document has been prepared

by the issuer and is the responsibility of its signatory.

4 AKKA TECHNOLOGIESREGISTRATION DOCUMENT 2016

CONTENTS

1 - PERSON RESPONSIBLE 61.1 - PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT 61.2 - DECLARATION BY THE PERSON RESPONSIBLE 6

2 - STATUTORY AUDITORS 72.1 - PRINCIPAL AUDITORS 72.2 - ALTERNATE AUDITORS 7

3 - SELECTED FINANCIAL INFORMATION 83.1 - DATA FROM THE CONSOLIDATED INCOME STATEMENT: BETTER-THAN-EXPECTED MARGINS 83.2 - DATA FROM THE CONSOLIDATED BALANCE SHEETS: A ROBUST FINANCIAL STRUCTURE 83.3 - CONSOLIDATED WORKING CAPITAL REQUIREMENT 93.4 - SUMMARY OF CONSOLIDATED CASH FLOW STATEMENTS 9

4 - RISK FACTORS 104.1 - BUSINESS AND CUSTOMER-RELATED RISKS 104.2 - RISKS RELATED TO STAFF AND MANAGERS 104.3 - RISKS RELATED TO ACQUISITIONS 104.4 - COMPETITION RISK 104.5 - LEGAL AND LITIGATION RISKS 114.6 - RISKS RELATED TO OFF-BALANCE SHEET ITEMS 114.7 - INSURANCE POLICY 124.8 - OTHER RISKS 12

5 - INFORMATION ON THE ISSUER 135.1 - HISTORY AND DEVELOPMENT OF THE COMPANY 135.2 - INVESTMENTS 14

6 - OVERVIEW OF OPERATIONS 156.1 - MAIN BUSINESS OPERATIONS 156.2 - MAIN MARKETS 186.3 - COMPETITIVE POSITION IN FRANCE AND EUROPE 19

7 - ORGANISATIONAL CHART 207.1 - OVERVIEW OF THE GROUP 207.2 - LIST OF MAJOR SUBSIDIARIES 21

8 - PROPERTY, PLANT AND EQUIPMENT 228.1 - SIGNIFICANT EXISTING OR PLANNED ITEMS OF PROPERTY, PLANT AND EQUIPMENT AND MAJOR RELATED EXPENSES 228.2 - ENVIRONMENTAL ISSUES LIABLE TO AFFECT THE USE MADE BY THE ISSUER OF ITS PROPERTY, PLANT AND EQUIPMENT 22

9 - EXAMINATION OF THE FINANCIAL POSITION AND RESULTS 239.1 - FINANCIAL POSITION – MANAGEMENT REPORT 239.2 - OPERATING PROFIT 389.3 - COMPENSATION OF EXECUTIVE OFFICERS 399.4 - CORPORATE SOCIAL RESPONSIBILITY 41

10 - LIQUIDITY AND CAPITAL RESOURCES 7410.1 - INFORMATION ON EQUITY 7410.2 - SOURCE AND AMOUNT OF CASH FLOWS 7410.3 - INFORMATION ON THE TERMS AND CONDITIONS OF BORROWINGS AND THE GROUP’S FINANCING STRUCTURE 7410.4 - INFORMATION ON ANY RESTRICTIONS ON THE USE OF CAPITAL OR LIABLE TO HAVE A MATERIAL IMPACT, DIRECTLY OR INDIRECTLY, ON THE GROUP’S BUSINESS 7510.5 - INFORMATION ON THE SOURCES OF FUNDING ANTICIPATED FOR PLANNED INVESTMENTS 75

11 - RESEARCH AND DEVELOPMENT, PATENTS AND LICENCES 76

12 - TREND INFORMATION 7712.1 - PRINCIPAL TRENDS AFFECTING PRODUCTION SINCE THE END OF THE PREVIOUS YEAR 77


CONTENTS

12.2 - COMMITMENTS LIABLE TO HAVE A MATERIAL IMPACT ON THE GROUP’S OUTLOOK 7712.3 - SUBSEQUENT PUBLICATIONS 77

13 - PROFIT FORECASTS OR ESTIMATES 82

14 - EXECUTIVE, MANAGEMENT AND SUPERVISORY BODIES AND GENERAL MANAGEMENT 8314.1 - EXECUTIVE AND MANAGEMENT BODIES 8314.2 - CONFLICTS OF INTEREST IN THE EXECUTIVE AND MANAGEMENT BODIES 83

15 - COMPENSATION AND BENEFITS 8415.1 - TOTAL COMPENSATION AND BENEFITS IN KIND PAID TO MEMBERS OF EXECUTIVE AND MANAGEMENT BODIES 8415.2 - TOTAL AMOUNTS SET ASIDE OR ACCRUED FOR THE PAYMENT OF PENSION, RETIREMENT OR OTHER BENEFITS 84

16 - OPERATION OF EXECUTIVE AND MANAGEMENT BODIES 8516.1 - EXPIRY DATES OF CURRENT TERMS OF OFFICE 8516.2 - SERVICE AGREEMENTS BETWEEN MEMBERS OF THE EXECUTIVE BODIES 8516.3 - INFORMATION ON THE AUDIT COMMITTEE AND THE COMPENSATION COMMITTEE 8516.4 - COMPLIANCE WITH PREVAILING CORPORATE GOVERNANCE STANDARDS 8516.5 - REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTOR ON CORPORATE GOVERNANCE AND INTERNAL CONTROL 8516.6 - STATUTORY AUDITORS’ REPORT PREPARED PURSUANT TO ARTICLE L. 225-235 OF THE FRENCH COMMERCIAL CODE BASED ON THE REPORT OF THE CHAIRMAN OF THE BOARD, WITH RESPECT TO INTERNAL CONTROL PROCEDURES RELATING TO THE PREPARATION AND PROCESSING OF ACCOUNTING AND FINANCIAL INFORMATION 93

17 - EMPLOYEES 9417.1 - NUMBER OF EMPLOYEES 9417.2 - EQUITY INTERESTS AND STOCK OPTIONS OF MEMBERS OF EXECUTIVE AND MANAGEMENT BODIES 9517.3 - AGREEMENTS PROVIDING FOR EMPLOYEE SHARE OWNERSHIP 96

18 - MAIN SHAREHOLDERS 9718.1 - BREAKDOWN OF SHARE CAPITAL 9718.2 - EXISTENCE OF DIFFERENT VOTING RIGHTS 9718.3 - HOLDING IN OR CONTROL OF THE GROUP, WHICH, IF IMPLEMENTED, COULD RESULT IN A CHANGE IN CONTROL AT A LATER DATE 9818.4 - AGREEMENTS KNOWN BY THE ISSUER, WHICH, IF IMPLEMENTED, COULD RESULT IN A CHANGE IN CONTROL AT A LATER DATE 98

19 - RELATED-PARTY TRANSACTIONS 99

20 - FINANCIAL INFORMATION CONCERNING THE ASSETS AND LIABILITIES, FINANCIAL POSITION AND RESULTS OF THE ISSUER 100

20.1 - HISTORIC FINANCIAL INFORMATION 10020.2 - PRO-FORMA FINANCIAL INFORMATION 10020.3 - 2016 CONSOLIDATED FINANCIAL STATEMENTS 10020.4 - STATUTORY AUDITOR’S REPORT ON THE 2016 CONSOLIDATED FINANCIAL INFORMATION 13120.5 - AKKA TECHNOLOGIES 2016 PARENT COMPANY FINANCIAL STATEMENTS 13220.6 - DIVIDEND POLICY 15220.7 - LEGAL AND ARBITRATION PROCEEDINGS 15220.8 - SIGNIFICANT CHANGE IN THE FINANCIAL OR TRADING POSITION SINCE THE END OF THE LAST YEAR 152

21 - ADDITIONAL INFORMATION 15321.1 - SHARE CAPITAL 15321.2 - MEMORANDUM OF INCORPORATION AND ARTICLES OF ASSOCIATION 157

22 - MATERIAL CONTRACTS 162

23 - THIRD-PARTY INFORMATION, STATEMENTS BY EXPERTS AND DECLARATIONS OF INTEREST 163

24 - DOCUMENTS ON DISPLAY 164

25 - INFORMATION ON INVESTMENTS AS OF 31 DECEMBER 2016 165


CHAPTER 01

1 - PERSON RESPONSIBLE 2 - STATUTORY AUDITORS

1.1 - Person responsible for the registration documentMaurice RICCI, Chairman and Chief Executive Officer of AKKA Technologies.

1.2 - Declaration by the person responsibleI hereby declare, to the best of my knowledge and having taken all reasonable precautions, the information contained in the Registration Document is in accordance with the facts and no information has been omitted that would be likely to give a false representation.

I certify that, to the best of my knowledge, the financial statements were 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 companies included in the consolidation, and that the management report presents fairly the business, results and financial position of the company and all companies included in the consolidation, as well as a description of the main risks and uncertainties they face.

I have obtained from the statutory auditors a completion letter stating that they have verified the information regarding the financial position and the financial statements provided in this document, and that they have read the entire Resgistration document.

This letter contains no observations.

Maurice RICCIChairman and CEO

1 - PERSON RESPONSIBLE


2 - STATUTORY AUDITORS

CHAPTER 02

2.1 - Principal auditorsORFIS BAKER TILLY149, boulevard de Stalingrad69100 VILLEURBANNERepresented by Bruno GENEVOIS,Appointed by the shareholders’ meeting of 12 February 1999 for a period of six years. The appointment was subsequently renewed for the same term by the shareholders’ meeting of 28 February 2005 and again by the shareholders’ meeting of 14 June 2011, i.e. until the shareholders’ meeting called to approve the financial statements for the year ended 31 December 2016.

DELOITTE & ASSOCIÉSImmeuble Higashi106, cours Charlemagne CS 4020769286 LYON Cedex 2Represented by Patrice CHOQUET,Appointed by the shareholders’ meeting of 06 July 2000 for a period of six years. The appointment was subsequently renewed for the same term by the shareholders’ meeting of 20 June 2006 and again by the shareholders’ meeting of 5 June 2012, i.e. until the shareholders’ meeting called to approve the financial statements for the year ending 31 December 2017.

2.2 - Alternate auditorsOlivier Brisac149, boulevard de Stalingrad69100 VILLEURBANNEAppointed by the shareholders’ meeting of 12 February 1999 for a period of six years. The appointment was subsequently renewed for the same term by the shareholders’ meeting of 28 February 2005 and again by the shareholders’ meeting of 14 June 2011, i.e. until the shareholders’ meeting called to approve the financial statements for the year ended 31 December 2016.

BEAS7-9, villa Houssay 92200 NEUILLY SUR SEINEAppointed by the shareholders’ meeting of 06 July 2000 for a period of six years. The appointment was subsequently renewed for the same term by the shareholders’ meeting of 20 June 2006 and again by the shareholders’ meeting of 5 June 2012, i.e. until the shareholders’ meeting called to approve the financial statements for the year ending 31 December 2017.


CHAPTER 03

3 - SELECTED FINANCIAL INFORMATION

Maurice RICCI, Chairman and CEO of the Group, said: “I am very pleased with our achievements in 2016. We improved the Group’s operating performance. But above all, 2016 was marked by the successful transformation of the France business unit, the strong momentum of the German pillar and the shift in the Group’s offerings and positioning in the direction of digital technology. We strengthened AKKA Life Sciences’ positio-ning as a close partner for the world’s top 10 healthcare companies, while also securing the acquisition of GIGATRONIK in early 2017. Combined with the acquisition of Erlkönig, GIGATRONIK rounds out our expansion in Germany, accelerates our customer diversification and reinforces our technological expertise in the automotive segments of tomorrow.Our successes in 2016 pave the way for those of the future. Our strong sales momentum and accelerated recruitment back up our 2018 targets and prepare us for the next stages in our development.”

3.1 - Data from the consolidated income statement: better-than-expected margins

The Group’s three business units together posted operating profit from ordinary activities of €86.4 million up 28% from €67.7 million in 2015. This very satisfactory performance was achieved thanks to the success of the transformation of the France BU, the swift recovery of Matis, the improvement of the Germany BU’s performance and the quality of International margins, which were above 10%. Operating profit from ordinary activities increased by 27% to €77.2 million. The operating margin firmed to 6.9% (6.1% in 2015).

Operating income amounted to €42.8 million. It reflects the impact of non-recurring expenses relating chiefly to the provision of €24 million on the French research tax credit (crédit d’impôt recherche – CIR). This accrual will not affect the Group’s operating performance in coming years, and has no impact on its cash position. Excluding the provision on the French research tax credit, non-recurring expenses eased to €10.3 million in 2016 from €12.8 million in 2015. They stemmed chiefly from the finalisation of PACT17 and the integration of acquisitions.

The tax rate was 47% of pre-tax profit. The apparent increase can be ascribed to the fact that the €24 million provision on the French research tax credit (CIR) is not tax deductible. Another factor is the recognition of a €3.5 million reduction in deferred tax assets to take into account the lowering of the corporate tax rate in France to 28.92% from 2019.

Consolidated net income was €16.9 million. Excluding the €24 million provision on the research tax credit, consolidated net profit was up 26% at €40.9 million. The net profit margin was 1.5%, compared with 3.3% in 2015 (3.6% excluding non-current impairment).

3.2 - Data from the consolidated balance sheet: a robust financial structure

Amounts in thousands of euros Consolidation 31/12/2016

Consolidation 31/12/2015

Consolidation 31/12/2014

Revenue 1,122,671 1,001,687 885,611

Operating profit from ordinary activities 77,190 60,828 55,057

% of revenue 6.9% 6.1% 6.2%

Operating profit 42,785 47,906 43,274

% of revenue 3.8% 4.8% 4.9%

Profit before tax 32,458 41,385 33,598

Consolidated net profit 16,908 32,570 27,181

Net profit attributable to owners of the parent 12,715 26,229 24,562

ASSETS - Amounts in thousands of euros 31/12/2016 31/12/2015 31/12/2014

Goodwill 218,183 192,586 128,256

Other non-current assets 163,285 159,972 115,660

Non-current assets 381,468 352,558 243,916

Current receivables and inventories 311,056 337,656 326,162

Cash and cash equivalents 158,958 215,120 220,079

Current assets 470,013 552,776 546,241

TOTAL ASSETS 851,481 905,335 790,157


CHAPTER 03

The Group had cash and cash equivalents of €159.0 million as of 31 December 2016, compared with €215.1 million a year earlier. The decline resulted from the early repayment of the 2012 revolving credit facility (RCF).

Net debt benefited from the strong cash generation. They amounted to €97 million as of 31 December 2016. The Group has a sound balance sheet, with gearing stable at 42% despite acquisitions and capital expenditure during the year. Its strong capacity to generate cash, the €200 million revolving credit facility and the recent implementation of an NEU CP programme give the Group the ability to pursue its policy of targeted acquisitions.

3.3 - Consolidated working capital requirement

The working capital requirement was €21.5 million as of 31 December 2016, a significant improvement compared with 2015. It narrowed from 6.0% of revenue in 2015 to 1.9% in 2016 (it was 7.4% in 2014). The change stems chiefly from the €24.1 million provision for R&D subsidies and the significant decrease in DSOs, which eased from 64 days as of 31 December 2015 to 54 days as of 31 December 2016 (excluding factoring).

3.4 - Summary of consolidated cash flow statements

The Group generated cash flow from operations of €66.4 million in 2016, compared with €59.8 million in 2015, an increase of 11%.

The ongoing optimisation of the working capital requirement has resulted in a significant improvement in cash flow from operating activities. It totalled €72.6 million over the full year in 2016, compared with €39.3 million in 2015, an increase of 84% year on year. Free cash flow also increased by 62% to €34 million, compared with €21 million in 2015.

This good performance helped finance the year’s acquisitions and capital expenditure, and confirms the Group’s ability to self-finance its growth.

Amounts in thousands of euros 31/12/2016 31/12/2015 31/12/2014

Inventories 4,742 4,276 3,160

Trade receivables 197,310 210,975 193,916

Other receivables 109,004 122,405 129,085

Other non-current assets 27,735 43,717 17,762

Trade payables (80,539) (83,438) (73,834)

Tax and social security liabilities (198,832) (185,470) (160,259)

Other liabilities (excluding debt on fixed assets and earn-outs) (37,941) (52,375) (44,632)

Working capital requirement (negative = source of funds) 21,479 60,090 65,199

Statement of cash flows – in thousands of euros 31/12/2016 31/12/2015 31/12/2014

Net cash from/operating activities 72,566 39,339 35,432

Net cash from/investing activities (55,101) (60,693) (25,956)

Net cash from/financing activities (73,556) 16,232 96,904

Impact of changes in foreign exchange rates (71) 163 295

Change in cash and cash equivalents (56,162) (4,959) 106,675

LIABILITIES - Amounts in thousands of euros 31/12/2016 31/12/2015 31/12/2014

Share of capital attributable to owners of the parent 199,963 199,661 180,621

Non-controlling interests 29,531 25,577 18,012

Financial liabilities (excluding restructured debt) 248,349 294,410 243,607

Discounted restructured debt 7,745 15,127 22,200

Other liabilities 365,893 370,559 325,718

TOTAL LIABILITIES 851,481 905,335 790,157


4 - RISK FACTORS

CHAPTER 04

The company has conducted a review of the risks liable to have a material adverse impact on its business, financial position or results, and consi-ders that it is not exposed to any significant risks other than those summarised below. Moreover, a detailed description of such risks is provided where necessary in the rest of the registration document, as indicated in the cross-reference table below.

4.1 - Business and customer-related risksThe AKKA Technologies Group’s operations cover a large number of customers located in different countries and operating in major industrial sectors. This serves to limit the Group’s exposure to uncertainties stemming from an unfavourable economic environment.Moreover, the customer portfolio comprises major groups operating in industry and the services, both in France and internationally, which very often work with AKKA Technologies through several contractors.

Customer diversification is a critical part of our strategy of balances, and a key plank of the PACT17 strategic plan. Significant progress has been achieved on diversification in recent years: the weighting of the top 10 customers has eased by 5 percentage points in the space of two years. This trend will be accentuated in the coming months and years thanks to our business strategy, combined with our external growth strategy. Gigatronik, for instance, will foster customer diversification in the automotive industry in Germany, while CTP System and Edelway bring sector diversification into the life sciences.

4.2 - Risks related to staff and managersCustomer relationships are structured around several people in order to limit the impact of the departure or absence of an employee or a manager.

The Group’s key executive officers are AKKA Technologies shareholders.

In 2005, the Group established an employee savings plan open to employees with at least three months’ service in the Group’s French companies covered by the plan. In 2006, an attractive AKKA Technologies mutual fund was also created.

4.3 - Risks related to acquisitionsAcquisitions are envisaged when they are of strategic interest to the Group in terms of geographical location or synergy between businesses, technology, customers and/or geographies, while respecting the strategy of balances that has guided the Group’s growth since its inception. The investment decision is taken after full due diligence of the target company (operational, financial, tax, social, and business) and rigorous analysis of the findings.

4.4 - Competition riskThe Group’s operations in the leading European and international business regions and its inclusion on the supplier lists of major industrial customers make it one of the leaders in its sector in Europe.

Most key accounts have initiated a policy aimed at reducing the number of technology consultancies with which they work. This has resulted in a reduction in the number of partners approved as suppliers, which has tended to benefit larger players such as AKKA Technologies.

These companies conduct approvals on a regular basis (every three years on average). AKKA confirmed its place on all significant supplier lists in 2016.

However, the loss by the Group of a position on a supplier list could have a temporary impact on its revenue, business volumes and profitability.

The AKKA Technologies Group’s organisation nevertheless gives it a significant measure of responsiveness and a high degree of flexibility, enabling it to adapt very quickly to changes in its markets and the requirements of its customers.

Risks Section Note

Business and customer-related risks6.1.4 - Breakdown of AKKA Technologies’ customers -

9.1 - Management report Note 2.3.1

Risks related to key people 9.1 - Management report Note 2.3.2

Risks related to acquisitions9.1 - Management report Note 2.3.3

20.3.6 - Notes to the consolidated financial statements Note 2.10 and 4.2

Legal risks 9.1 - Management report Note 2.3.4


CHAPTER 04

The geographical and sector spread of the Group’s revenue and the segmentation of its offerings further mitigate this risk.

Its expertise in the various phases of any project, from R&D to series production, its organisation around its centres of excellence, its 13,000 ex-perts worldwide, its ability to innovate on behalf of its customers and its unique know-how in turnkey projects are also incontestable competitive advantages that have played a part in its past resilience.

4.5 - Legal and litigation risksNote 4.5.1 - Legal risks

The General Management of each region, with the support of its Chief Financial Officer and the Group Legal Department, is responsible for ensuring that the company complies with laws and regulations in force.

Any disputes are immediately notified to the Group’s General Management and dealt with by the Group’s Legal Department.

The company has had a Key Accounts Department in charge of coordinating the commercial and legal analysis of prospective commercial agreements since 2007.

To date, and to the Group’s best knowledge, adequate provisions have been set aside to cover all disputes liable to have a significant impact on the Group’s business, results, financial position or assets and liabilities.

Note 4.5.2 - Litigation risks

There were no government, court-ordered or arbitration proceedings (including any proceedings of which the Group is aware that are pending or threatened) liable to have or having recently had a significant impact on the financial position or profitability of AKKA Technologies and/or the AKKA Technologies Group over the last 12 months.

The debt restructuring procedure involving AKKA I&S, initiated following a decision of the Paris Commercial Court of 13 November 2006, is mentioned here solely insofar as it is ongoing and that the tenth annual instalment under the plan will be paid in accordance with the terms of the ruling of 4 September 2007 under which the restructuring plan was approved. The tenth and final annual instalment amounts to €8,042 thousand. It will be paid in September 2017.

Provisions for litigation and risks mainly include provisions for employment-related litigation (€4,975 thousand) and commercial litigation (€938 thousand). Provisions for litigation are described in note 4.12 to the consolidated financial statements (20.3.6).

4.6 - Risks related to off-balance sheet itemsThe main commitments made by the AKKA Technologies Group are as follows:

The increase in assigned receivables is consistent with growth in the Group’s business.

Earn-out payments owed by the Group in connection with external growth transactions are not off-balance sheet items; they are recognised as liabilities in the balance sheet in the amount of €14,774 thousand.

The Group does not have any other significant off-balance sheet commitments under current accounting standards.

Amounts in thousands of euros 2016 2015 2014

Guarantees on contracts - - -

Trade receivables assigned not yet due (1) 136,358 123,444 109,841

Pledges, mortgages and sureties (2) 7,662 7,662 2,578

Bonds, sureties and guarantees given 56,492 60,913 43,953

Other commitments given - 6,000 6,000

Total amount of commitments given 200,512 198,019 162,372

Currency hedging instruments - - -

Commitments received with acquisitions 6,700 31,700 53,800

Total amount of commitments received 6,700 31,700 53,800(1) Trade receivables assigned not yet due: trade receivables assigned as part of factoring contracts(2) Pledges, mortgages and sureties: AKKA Technologies corporate guarantee


CHAPTER 04

The maturities of commitments given break down as follows:

Contractual obligations: long-term debt and finance lease obligations are given by maturity in the Group’s consolidated financial statements (see section 20.3 note 4.13).

In 2016, operating lease payments accounted for 3.7% of revenue (€41,938 thousand). Approximately 65% of such agreements are commercial leases, the individual amount of which is not material.

4.7 - Insurance policyThe main policies taken out within the Group are as follows:

- Operational, professional, after-delivery civil liability,- Aeronautics and space industry product civil liability,- Corporate officers’ civil liability,- Comprehensive property damage,- Repatriation assistance,- Vehicle fleet,- Social security.

In addition, each of the Group’s entities takes out the insurance policies required by the local laws of the host country (inexcusable fault civil lia-bility, employer’s liability, workers compensation, etc.) and those that are appropriate to its specific risks (operating losses, civil liability in respect of private vehicles used on company business, etc.).

The AKKA Technologies Legal Department carries out the annual contract negotiation and the monitoring of the insurance policy in relation to risks involving the civil liability of the company, its subsidiaries and its managers.

Civil liability policies are taken out by AKKA Technologies on behalf of all of its subsidiaries under international insurance programmes. Depending on local legal requirements, the Group’s subsidiaries also benefit from a “no excess” policy and, where applicable, a “difference in terms and condi-tions and limits” guarantee in respect of local policies, whether or not they are included in the international insurance programmes.

MBtech is now included in the Group’s insurance policy, while at the same time preserving the guarantees appropriate to its specific requirements.

The following table summarises the principal insurance policies taken out, namely:

4.8 - Other risks The other risks listed in the table below are dealt with in another part of the registration document, and are considered less material:

Amounts in thousands of euros Total Less than one year 1 to 5 years More than 5 years

Guarantees on contracts - - - -

Trade receivables assigned not yet due 136,358 136,358 - -

Pledges, mortgages and sureties 7,662 7,662 - -

Bonds, sureties and guarantees given 56,492 1,453 7,960 47,079

Other commitments given - - - -

Total amount of commitments given 200,512 145,473 7,960 47,079

Risks Section Note

Competitive risk 9.1 - Management report Note 2.3.5

Environmental risk 9.1 - Management report Note 2.3.8

Interest rate risk 20.3.6 - Notes to the consolidated financial statements Note 4.13.1

Liquidity risk 20.3.6 - Notes to the consolidated financial statements Note 4.13.2

Currency risk 20.3.6 - Notes to the consolidated financial statements Note 4.13.3

Investment and counterparty risk 20.3.6 - Notes to the consolidated financial statements Note 4.13.4

Insurance policy Insured party (parties) Excess Amount of cover

Operational civil liabilityAKKA Technologies and all its subsidiaries

€ 5,000 € 25,000,000 per incident

Professional/after-delivery civil liability € 100,000 € 25,000,000 per year and per incident

Aerospace and space industry product civil liability AKKA Technologies and all its subsidiaries None € 80,000 000 per year and per incident

Corporate officers’ civil liability Executive officers of the AKKA Technologies Group None € 25,000,000


CHAPTER 05

5.1 - History and development of the company

5.1.1 - Legal name and trading name of the issuer

The issuer’s legal name is “AKKA Technologies”. It trades under the name “AKKA”.

5.1.2 - Place of registration and registration number of the issuer

“AKKA Technologies” is registered with the Paris Trade and Companies Register under number 422 950 865 RCS Paris.

Since the 1 January 2008 revision of the French classification of business activities by INSEE (French National Institute for Statistics and Economic Studies), the company has been identified under the NAF code 6420Z (French Nomenclature Code).

5.1.3 - Date of incorporation and term of the issuer

The company, incorporated on 7 March 1999, was registered on 20 May 1999. Its term is ninety-nine (99) years from the date of its registration with the Trade and Companies Register, except in the event of early dissolution or extension.

5.1.4 - Registered office and legal form of the issuer, law governing its operations, country of origin, address and telephone number of its registered office

AKKA Technologies, a European Company with a Board of Directors constituted under French law, is governed by the provisions of Book II of the French Commercial Code and by its articles of association.

AKKA Technologies was registered as a European Company (societas europaea – SE) on 16 April 2015.

Its registered office has been located at 9/11 rue Montalivet, 75008 Paris, since 1 April 2007. Its telephone number is 01 56 69 26 59.

5.1.5 - Significant events in the development of the issuer’s business

In little more than 30 years, the Group has grown from being a French automotive engineering company to being the European leader in techno-logy consulting, operating in all business sectors. More than 15,000 engineers (including acquisitions made in early 2017), spread across Europe, America, Asia and the Middle East, provide solid expertise, sustainable project solutions and the ambition to serve our customers.

5 - INFORMATION ON THE ISSUER

STRATEGIC VISION

1984

CREATION OF THE FIRST GROUP COMPANY

1999 2005 2007 2010 2011 2012 2014 2015

CREATION OF AKKA TECHNOLOGIES

CREATION OF AKKA RESEARCH

CORIALISMATISEPSCO

COFRAMI

AEROCONSEIL

MBTECHAURONIK

2016 2017

ERLKÖNIGBERTONE

CTPEDELWAYGIGATRONIK

INTERNATIONAL DEVELOPMENT FOCUS GERMANYDIVERSIFICATIONSTRATEGY

OGANICGROWTH

REINFORCEMENT OF THE GERMAN PILLARCONSTITUTION OF CENTRES OF EXCELLENCE IN THE LIFE SCIENCES

AND ENERGY


CHAPTER 05

FASTER PACE OF TARGETED VALUE-CREATING ACQUISITIONS:

- The Group has accelerated its targeted acquisition strategy since 2015, building up its German pillar and strengthening its European positioning. In 2016, the Group exceeded its revenue and margin targets for the third consecutive year. Its good performance puts it ahead of the targets contained in its 2018 strategic plan, laying the foundations for its future development.

- 2017 will be a key milestone in our European balance and the progression of our strategic offerings. The Group anticipates strong revenue driven by the mobility sector. AKKA Technologies will also benefit from the integration of Erlkönig and Gigatronik, key players in the Internet of Things in Germany, and the two acquisitions announced in the life sciences in early February, namely CTP System and Edelway. In 2017, the Group will exceed the revenue target of €1.2 billion initially set for 2018.

- Against this backdrop, the Group is anticipating organic revenue growth in each of its three business units in 2017, combined with a further improvement in margins.

- The successful completion of the transformation in France, the diversification in Germany and enduringly high margins internationally leave the Group well placed to achieve its operating profit from ordinary activities* target of €100 million in 2018, with a margin between 8% and 10%.

* Operating profit from ordinary activities is calculated before non-recurring items and expenses relating to stock options and free shares

5.2 - Investments

5.2.1 - Main investments made in the last three years

The total price of acquisitions made between 2014 and 2016 was €93,322 thousand; associated earn-outs payments yet to be paid, falling between 2017 and 2020, represent €14,774 thousand.

5.2.2 - Main ongoing and future investments

As the AKKA Technologies Group provides intellectual services, its activities do not require substantial capital expenditure on equipment.

Following the successful integration of MBtech, AKKA Technologies has resumed its acquisitions strategy with the aim of accelerating the imple-mentation of its diversification strategy through targeted acquisitions as part of its 2018 strategic plan.

The Group has completed eight acquisitions in less than two years, adding aggregate revenue of approximately €300 million. The acquisition of Gigatronik was finalised on 3 March 2017. These acquisitions made it possible to accelerate the Group’s move up the value chain while expanding its technological offerings and increasing its geographical and customer diversification in the life sciences.

They have also strengthened the Group’s technological expertise and its high value-added positioning in the automotive segments of tomorrow: digital technology, hybrid platforms, connected objects, Internet of Things, autonomous driving and embedded computing. Gigatronik will also allow AKKA Technologies to accelerate its expansion in Germany, among major automakers and suppliers including Audi, BMW, Daimler, Ford, Porsche and Volkswagen.

2017 will be devoted to integrating these acquisitions. This will not prevent the Group from remaining attentive to potential acquisitions in tune with its 2018 strategic plan.

The company’s capex policy is one of the most dynamic in the sector. Capex represented 3% of revenue in 2016. It is expected to return gradually to a normative level of approximately 2.5% of revenue.

Acquisitions in the last 3 years Items acquired Date of first consolidation

Geographical breakdown of the business at the time of the acquisition

Auronik 100% of capital December 2014 Germany

EPSCO 100% of capital 2015 Italy/Slovakia/UK

Matis 100% of capital 2015 France/Belgium/Brazil/Spain/Netherlands/Switzerland

Corialis 100% of capital 2015 Angola/Congo/Spain/France

Erlkonig 100% of capital 2016 Germany/China


CHAPTER 06

6 - OVERVIEW OF OPERATIONS

6.1 - Main business operations

6.1.1 - Purpose and positioning

The Group was founded on 1 April 1984 with the aim of providing flexibility, responsiveness and quality of service to our first customer, the Renault group. Guided by a determination to innovate in the service of its customers, the Group grew fast by combining an entrepreneurial spirit with a constant and visionary strategy based on four balances: customers, geographies, sectors and finances. The objective was to establish a network in France before expanding into Germany in order to become an approved supplier of industrial customers in Europe’s two major industrial basins, and then to expand further within Europe and internationally.

Its wide-ranging expertise and the know-how of its cross-disciplinary teams enable the Group to cover the complete lifecycle of a product, and in that way to provide the technology solution best adapted to customers’ needs. Our already rapid pace of growth has accelerated since our IPO in 2005. The Group reported revenue of €1,123 million in 2016. Its growth has been achieved by combining organic growth and acquisitions:

- Coframi in 2007,- Aeroconseil in 2011, - MBtech, a subsidiary of Daimler, in Germany in 2012, - Auronik in 2014, - Epsco, Matis and Corialis in 2015, - Erlkönig in 2016.

The strategy of balances dating back more than 15 years allows the Group to pursue sustainable and profitable growth.

AKKA Technologies has doubled in size since 2011. By 2012, it had become an international Group with global offerings and a unique European platform; it was then set to accelerate its growth worldwide. Its transformation has continued since 2013 by virtue of the transformation plan.

AKKA Technologies reported operating profit from ordinary activities of €77.2 million in 2016. With more than 13,000 employees and operations in 20 countries, the Group has become the European leader in technology consulting in the mobility segment (79% of 2016 revenue).

6.1.2 - Competitive advantages

On top of its know-how in turnkey projects, its organisation around its centres of excellence and its constant search for innovation on behalf of its customers, AKKA Technologies’ expertise and global positioning allow it to play a role throughout the lifecycle of a project, offering its customers proximity, flexibility and commitment.AKKA reinforces this unique positioning with a policy of targeted acquisitions that serves to enrich its offering in promising segments. The Group has accelerated its targeted acquisition strategy since 2014, building up its German pillar and strengthening its European positioning. AKKA Technologies has developed unique know-how in energy and the life sciences. At the same time, the Group has acquired the Bertone brand, as well as Auronik, Erlkönig Group and, more recently, Gigatronik Group. Positioned in new businesses emerging from real-time computing, AKKA relies on the cross-cutting skills of the rest of the Group, reinforcing its determination to position AKKA in Germany and the world. By building up its positioning in Germany, AKKA stands to benefit from two major planks of know-how in customer offers:

- in hybrid automotive platforms, where it has a wealth of experience; and - in new solutions in the field of infotainment.

Last, with AKKA Research, the Group boasts its own transnational research centre dedicated to innovation and the anticipation of future tech-nologies. This gives the Group a head start in terms of innovation, real value added for its customers’ projects and the assignments undertaken by its engineers, in France and internationally. Its flagship successes include Link&Go, our connected, electric and autonomous concept car, a veritable technological and commercial platform for the Group. Other projects have emerged in other sectors. They include Aircobot, our visual aircraft inspection robot.

6.1.3 - Services tailored to market developments

A comprehensive offeringAKKA Technologies is an international Group that assists large manufacturing and tertiary services companies in the full range of their innovation processes and in the lifecycle of their products, from initial studies to the start of large-scale production. AKKA Technologies’ centres of excellence work throughout Europe on international work packages, offering unique expertise in key areas: systems engineering, product engineering, process engineering, support engineering, embedded software and electronics, information systems and management consulting. Its ability to carry out large transnational projects, which represent real strategic challenges for its customers, makes AKKA Technologies a key leader in technology consulting and engineering.


CHAPTER 06

MECHANICALENGINEERING

INFORMATIONSYSTEM

SUPPORTENGINEERING

PROCESS ENGINEERING

ELECTRICS/ELECTRONICS

& EMBEDDED SOFTWARE

CONSULTINGSYSTEMS ENGINEERING

INNOVATION, INTERNAL RESEARCH CENTER: AKKA RESEARCH

INDUSTRIALISATION PRODUCTION LIFE-CYCLE AFTER-MARKETDESIGN ENGINEERINGR&D

SYSTEMS ENGINEERINGOur teams develop complex systems, from the analysis of needs, functional specifications, architecture, qualification, validation and verification to their integration. Our engineers apply the most innovative concepts throughout the system development process with a view to providing an economical and efficient solution meeting the needs of our customers while satisfying all stakeholders.

EMBEDDED SOFTWARE AND ELECTRONICSFrom the design to the integration and implementation of technological solutions, our teams participate from the upstream phase in assessing the feasibility of a solution by means of advanced modelling and simulations. Our teams support customers in the development of embedded systems and electronics, scientific data processing applications and test benches. AKKA’s expertise in embedded systems also allows it to work in series production, covering maintenance, upgrading and re-engineering activities.

PRODUCT ENGINEERINGOur teams work in the product design and development phase, providing high value-added support in studies, calculations, simulations, mate-rials, testing and quality. We benefit from an international learning curve. For instance, we enjoy the support of European automakers in Russia on plastic design projects.

PROCESS ENGINEERINGOur consultants are involved in preparing and supporting post-design manufacturing and the so-called “new work” phase requiring the partial or total construction of workshops or plants, as well as the associated production facilities. Our teams cover each stage of an investment project, from the design of the production facility to its commissioning, as well as the supervision of the construction of industrial facilities, testing and dismantling.

SUPPORT ENGINEERINGWe offer a comprehensive approach to documentary services: creation of technical documentation, product data management, assistance with validation methods, definition and validation of electrical bundles, as well as the structuring, processing, visualisation and dissemination of materials via document management tools and the design of training tailored specifically to after-sales services. Our teams also conduct operational safety and integrated logistics support studies.Lastly, in the field of air transport, we can re-engineer aircraft (design, configuration management, project management, drafting of documen-tation and assistance in obtaining the necessary certification) and provide comprehensive support to air operations after delivery to airlines.

INFORMATION SYSTEMSOur consultants contribute to the creation of master plans for new information systems, communications between complex heterogeneous networks and the integration of new architectures. Our teams have expertise in facilities management and the day-to-day management of software applications, in web or “n-tier” technologies, business intelligence, customer relationship management and enterprise software.


CHAPTER 06

FRANCE€ 509 M

+8%

GERMANY€ 387 M

+15%

EASTERN EUROPE€ 34 M+17%

WESTERN EUROPE€ 138 M

+20%

MIDDLE EAST€ 32 M+36%

AMERICAS€ 12 M-32%

ASIA€ 11 M+14%

MANAGEMENT CONSULTINGWith its teams of experts in organisation, our consulting subsidiary Casciopé assists our customers in three main areas: advice on large project management, outsourcing and performance management. It recently helped an automotive industry player reduce time to market for its products, re-engineering the research and engineering process for the design and production of manufactured components.

6.1.4 - Breakdown of AKKA Technologies’ customers

The AKKA Technologies Group works with major industrial customers throughout the world. The Group has regular contacts with R&D, programmes and technical departments.

AKKA Technologies’ services are governed by master agreements setting out the Group’s major areas of operation, concluded with majors in industry that have given the AKKA Technologies Group a place on their official suppliers lists. Each project results in an order, which sets out the rules governing the delivery of the service.

The AKKA Technologies Group’s operations cover a large number of customers located in different countries and operating in the major industrial sectors. This serves to limit the Group’s exposure to uncertainties stemming from an unfavourable economic environment.

Moreover, the customer portfolio comprises major groups operating in industry and the services, both in France and internationally, which very often work with AKKA Technologies through several contractors.

In 2016, the Group’s largest customer, Daimler, accounted for 24.4% of revenue (25.7% in 2015). In 2016, the Group’s top 10 customers accounted for 62.9% of consolidated revenue (62.0% in 2015 and 67.8% in 2014).

6.1.5 - A strong international foothold

The Group’s strategy in terms of geographical balance, as set out at the time of its IPO in 2005, was to complete the development of its regional network before expanding in Europe and internationally. The Group’s robust growth allowed it to achieve its first two objectives in 2017: AKKA Technologies today ranks as a European Group, with a Franco-German pillar and four markets in which it has critical mass, namely Benelux, Italy, Spain and the Czech Republic. Its operations in 20 countries provide the foundations for its future international expansion, placing it close to its customers and allowing it to assist them in achieving their global projects.

6.1.6 - Certifications and accreditations

See note 4.3 in section 16.5 below.


CHAPTER 06

6.2 - Main markets

6.2.1 - Sectors in which AKKA Technologies operates

Global positioning

The AKKA Group derives 79% of its revenue from the mobility sector (aeronautics, space, automotive, equipment suppliers and rail), making it the European leader in mobility technologies. At the same time, the Group has built up acknowledged and unique expertise in the areas of energy and the life sciences.

Analysis by geographical segment is provided in note 3.1 to the consolidated financial statements, in section 20.3.6.

6.2.2 - Strategy

Since its creation in 1999, AKKA Technologies has had three overriding aims: to be proactive so as to provide innovative solutions, to cultivate the passion for technology that defines us, and to listen to our customers so as better to grasp their challenges.

The Group strives to pursue balanced development through an aggressive strategy combining both organic and external growth on an interna-tional scale, particularly in Germany. It cements its long-term viability by remaining at the forefront of the technology challenges of the future.

This strategy of balances ensures steady growth and freedom from reliance on business cycles in any one industry.

The balance of services, built around two core businesses, namely engineering and information technology & systems, gives the Group a strong presence throughout the product lifecycle, with a role in each stage from design to series production.

The balance of sectors frees the Group from reliance on a single industry, allowing it to benefit from different industrial cycles. It also gives employees the opportunity to work in diversified sectors.

The financial balance is aimed at achieving a sufficient margin to ensure the Group’s development and sustainability.

The geographical balance is built on the knowledge that proximity to customers is a key success factor. Achieving geographical balance in France means having a national footprint matching the size of each industrial basin and fostering independence from economic downturns. This is what led AKKA Technologies to expand into Germany, a major industrial area, with a view to establishing itself as a key link in the industrial chain, and a partner helping its customers resolve the challenges of competitiveness and productivity. The Group continues to develop and roll out its strategy in France, Germany and internationally (outside Germany) by remaining at the forefront of the technological challenges of the future so as to be in a position to meet its customers’ needs.

23%AERONAUTICS

42%AUTOMOTIVE

4%RAILWAY

3%DEFENSE

4%LIFE SCIENCES

3%OTHERS

7%ENERGY

4%SERVICES

10%SUPPLIERS

35%GERMANY

45%FRANCE

12%WESTERN EUROPE

3%EASTERN EUROPE

3%OTHER

1%AMERICA

1%ASIA

BALANCE BETWEEN SERVICES

FINANCIALBALANCE

GEOGRAPHIC BALANCE

BALANCE BETWEEN SECTORS


CHAPTER 06

6.3 - Competitive positioning in France and EuropeAKKA Technologies is the European leader in aeronautics and automotive engineering, with a unique ability to deliver large transnational contracts from its 21 Franco-German centres of excellence, in response to growing customer demand for global solutions.

The Group covers all phases of the product development cycle, from upstream to downstream, with acknowledged expertise in high value-added turnkey solutions.

In addition to its prominent presence in France and Germany, where it is a leader, AKKA Technologies operates in 20 countries worldwide. Its growth in these countries has been both rapid and profitable over recent years.

The technology consulting market is dominated by European players. The typology of the Group’s competitors varies depending on the country, the business sector and the nature of the projects undertaken.

In France, the Group’s main competitors can be broken down into four distinct categories:

- general technology consulting companies, such as Altran, Alten, Assystem, EGIS and Segula, - a number of IT services companies (Atos, Veritas, etc.) offering scientific, technical and industrial IT solutions,- temporary employment agencies (Ajilon, a subsidiary of Adecco, etc.) that are seeking to expand in the technical assistance market,- a multitude of small specialised companies capitalising on proximity and responsiveness but being pushed to consolidate by the majors.

The German market offers greater potential. It is structured by state (Land), with a competitive environment generally comprising unlisted companies addressing a single market segment and with little international reach. Among companies specialising in technology consulting, AKKA’s key competitors include AVL, Bertrandt, Edag, FEV, IAV, MVI, Altran, Alten, Assystem,…

For major transnational and comprehensive contracts, the Group is up against a contingent of players other than its customary French and German competitors. Such players are generally large engineering groups (Magna Steir,…).

The following table summarises the Group’s main competitors.

Major listed companies Country 2016 revenue (in € million) 2016 workforce

ALTRAN France 2,120 29,106

ALTEN France 1,748 24,000

AVL (1) Austria 1,270 8,050

AKKA TECHNOLOGIES France 1,123 13,252

HCL (2) India 1,120 19,210

BERTRANDT Germany 993 12,912

ASSYSTEM France 956 12,422

EDAG Germany 756 8,337

IAV Germany 734 6,700

FERCHAU Germany 600 7,400

RICARDO UK 393 2,900

SII (2) France 316 5,266

SEMCON Sweden 184 2,044

SOGECLAIR France 137 1,400(1) 2015 data/non-calendar fiscal year(2) EstimateSource: company financial disclosures, AKKA


CHAPTER 07

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7.1 - Overview of the Group

7.1.1 - Legal organisation of the main companies as of 31 December 2016

7 - ORGANISATIONAL CHART


CHAPTER 07

The operations of the various companies comprising the AKKA Technologies Group are described in section 9.1.1 (note 1.2) below.

Subsidiaries and equity interests representing less than 1% of revenue and net profit were not consolidated in the year ended 31 December 2016.

7.1.2 - Organisation of the Group

AKKA Technologies’ corporate governance is based on three key management bodies: the Board of Directors, the Executive Committee and the operational management of the various business units, France, Germany and International. The sharp acceleration of the diversification of the Group’s international activities in recent years has prompted it to expand its governance by setting up operating divisions in charge of Western Europe (excluding France and Germany), Eastern Europe and Asia & the Americas.

7.1.3 - Management structure

AKKA Technologies relies on a Group Executive Committee, made necessary by its significant growth in recent years. It is a response to the need for greater operational efficiency by geography. Each business unit is equipped with all the necessary support resources, and enjoys managerial autonomy designed to promote growth and intra-Group synergies.

The Group’s two key management bodies are:

- The Board of Directors, which is tasked with supervising the company’s management. It advises the Group Executive Committee on the course to take in its business activities and performs the functions delegated to the Compensation Committee and the Audit Committee,

- The Group Executive Committee (GEC), which is tasked with reviewing the Group’s strategic options. Chaired by Maurice RICCI, it defines and coordinates action taken at Group level. A working group within the GEC is responsible for the Group’s commercial performance, backed up by the CEO/CFO of each of the three business units.

7.1.4 - Summary presentation of the members of the Group Executive Committee

Maurice RICCI, 56, Chairman of the Board & Group CEOAfter beginning his career at Renault Automation, Maurice RICCI founded Hysys in 1984 with the aim of providing industrial companies with assistance in the field of series production and computer-integrated manufacturing, followed by consulting services in order to improve industrial productivity. Other structures were subsequently established to round out Hysys’s services. Anticipating future market developments, Maurice RICCI in 1999 imagined a Group strategy combining the activities of the various structures so as to offer all sectors of industry a comprehensive suite of services across the entire R&D, product and process cycle.

Jean-Franck RICCI, 48, Group CEO Sales & DevelopmentJean-Franck RICCI joined Hysys in 1988 as technical director. He subsequently became CEO of AKKA Product Engineering before taking charge of the Group’s international development within AKKA Development. He is now CEO in charge of developing key accounts.

Nicolas VALTILLE, 51, Group CFO Nicolas VALTILLE began his career as a financial controller for Europe in a large group. Working in a rapidly expanding multi-site organisation, he has successfully carried out many acquisitions in France and Europe. He joined the AKKA Technologies Group in 2001.

7.2 - List of major subsidiariesRefer to note 1.5 of the consolidated financial statements (section 20.3) describing the Group’s scope of consolidation.


CHAPTER 08

8 - PROPERTY, PLANT AND EQUIPMENT

8.1 - Significant existing or planned items of property, plant and equipment and major related expensesThe AKKA Technologies Group owns properties in Colomiers (Haute-Garonne), Pilsen (Czech Republic) and Ingolstadt (Germany).

Other premises housing the AKKA Technologies Group’s offices and subsidiaries are leased from third parties unrelated to the Group’s management, with the exception of the administrative headquarters in Vaise (Lyon), and offices leased in Marignane (Toulouse) and Sindelfingen-Böblingen (since 26 March 2014).

The utilisation rate of property, plant and equipment is 100%.

The legacy business does not require heavy equipment. The arrival of MBtech has increased the weight of capital expenditure in the Group, espe-cially for testing activities. Other than property and test benches, the bulk of property, plant and equipment is comprised of computer equipment.

AKKA Technologies’ headquarters are occupied under a commercial lease with the national pharmacists’ pension fund (Caisse d’assurance vieillesse des pharmaciens – CAVP).

8.2 - Environmental issues liable to affect the use made by the issuer of its property, plant and equipmentIn view of its business as a service provider, the Group is not directly confronted with environmental constraints.


9 - EXAMINATION OF THE FINANCIAL POSITION AND RESULTS

CHAPTER 09

9.1 - Financial position – Management report

9.1.1 - Presentation of the Group’s consolidated financial statements for the year

Note 1 - The Group’s business operations

Note 1.1 - The Group’s overall business operations

2016 was a very satisfying year. Other than the improvement in the Group’s operational performance, it was marked by the successful trans-formation of the France business unit, the strong momentum of the German pillar and the shift in the Group’s offerings and positioning in the direction of digital technology, with:

- the strengthening of AKKA Life Sciences’ positioning as a close partner for the world’s top 10 healthcare companies, and- the acquisition of Gigatronik in early 2017. Combined with the acquisition of Erlkönig, Gigatronik rounds out our expansion in Germany, accelerates our customer diversification and reinforces our technological expertise in the automotive segments of tomorrow.

AKKA Technologies’ revenue amounted to €1,122.7 million in 2016, an increase of 12%. In line with the objectives communicated to the market early in 2016, each of the Group’s three business units (BU) posted positive organic growth over the full year. The Group’s firm footing in mobility enabled it to lift its organic growth to 5.5% from 3.1% in 2015.

Our successes in 2016 pave the way for those of the future. Our robust momentum and accelerated recruitment back up our 2018 targets while preparing us for the next stages in our development.

Note 1.2 - Business operations of Group companies

Note 1.2.1 - Equity interests acquired during the year

The acquisition of German company Erlkönig dovetails with the reorganisation of the Group’s German activities around three areas (Northern, Southwest and Southeast Germany). Founded in 2003, Erlkönig specialises in high value-added activities in processes, mobility and digitisation in the automotive sector. With over 270 talented employees, it posted revenue of nearly €22 million in 2015, with front-ranking margins. It operates chiefly in Northern and Southeast Germany. Its skills complement those of Auronik, and its proximity with the Volkswagen Group, its leading customer, will accelerate the diversification of the AKKA Technologies Group among German automakers.

As of 31 December 2016, this group was wholly owned.

Note 1.2.2 - Business operations of subsidiaries and affiliates

The Group is structured around three operating segments: France, Germany and International (excluding Germany).

1.2.2.1 - Operations in France

France reported revenue of €509.1 million in 2016, an increase of 8.3%, with organic growth of 2.8%. This growth was achieved thanks to mo-mentum in the automotive sector and the resumption of growth in the rail sector. The Group’s diversification capacity allowed it to stabilise its business with the aerospace sector, despite the decline in demand from Airbus. The successful transformation of the France business unit is remarkable. It translated into a 70% increase in operating profit to €36.3 million in 2016, a margin of 7.1%. Including subsidies received in France, the margin comes to 9.9%, in line with industry standards. The good sales momentum and the acceleration of recruitments since the second half of 2016 offer the prospect of faster organic growth in 2017 than in 2016 for the France BU, with a further improvement in margins.

1.2.2.2 - Operations in Germany

Revenue in Germany increased by 14.8% to €386.8 million in 2016, with organic growth of 10.9%. Strong growth was recorded with the vast majority of customers. The Group recorded sustained business growth with Daimler and double-digit growth with Audi, BMW, Bosch and Porsche. The business unit’s operating profit from ordinary activities increased by more than 15% to €25.2 million, a margin of 6.5%. Our performance and our actions prepare the future. The new regional split between three major industrial basins (Northern, Southwest and Southeast Germany) in the second quarter of 2016, to-gether with the acquisitions of Auronik, Erlkönig and Gigatronik (in early 2017), will strengthen the business unit’s agility, proximity to customers and its expertise in the technologies of the future. Like France, strong momentum in recruitment and the success of this transformation will favour the business unit’s diversification and the gradual improvement of its margins.


CHAPTER 09

1.2.2.3 - International operations (excluding Germany)

In 2016, international operations (excluding Germany) recorded a 16.5% increase in revenue, with organic growth of 2.7% to €226.8 million. The temporary downturn was attributable to the decline in the Oil & Gas business, a demanding comparison base and the discontinuation of Matis’s loss-making businesses. Growth in international operations excluding Matis and Oil & Gas amounted to 8.6% over the full year. This strong growth allowed the Group for the first time in its history to cross the threshold of 3,000 international employees, and to have critical mass in four geographies, Benelux, Italy, Spain and the Czech Republic. The business unit’s operating profit from ordinary activities amounted to €25.0 million. The operating margin from ordinary activities was 11%, despite the unfavourable environment in Oil & Gas. The Group’s continued diversification and the creation of a single Life Sciences division will drive the business unit’s growth and margins in the medium term.

Note 1.3 - Research and development activities

Research and development expenses incurred in 2016 amounted to €52,471 thousand and were expensed during the year. They represented 4.7% of revenue (5.2% in 2015).

Note 1.4 - The Group’s development and future prospects

-> In 2016, the Group exceeded its revenue and margin targets for the third consecutive year. Its good performance puts it ahead of the targets contained in its 2018 strategic plan, laying the foundations for its future development.

-> 2017 will be a key milestone in our European balance and the progression of our strategic offerings.The Group anticipates strong revenue driven by the mobility sector. AKKA Technologies will also benefit from the integration of Erlkönig and Gigatronik, key players in the Internet of Things in Germany, and the two acquisitions announced in the life sciences in early February, namely CTP System and Edelway. In 2017, the Group will exceed the revenue target of €1.2 billion initially set for 2018.Against this backdrop, the Group is anticipating organic revenue growth in each of its three business units in 2017, combined with a further improvement in margins.

-> The successful completion of the transformation in France, the diversification in Germany and the maintenance of high margins inter-nationally leave the Group well placed to achieve its operating profit from ordinary activities target of €100 million in 2018, with a margin between 8% and 10%.

Note 1.5 - Subsequent events

-> Growth in life sciences: the Group has furthered its move up the value-added chain while expanding its technological offerings and in-creasing its geographic diversification and customer portfolio in the life sciences. The acquisitions of CTP System and Edelway in early 2017 will enable it to roll out its know-how in the fields of process engineering, equipment, general facilities, regulatory affairs, quality assurance and project management to the world’s top 10 healthcare companies.

-> Ramp-up of skills in the technologies of the future: AKKA Technologies completed the acquisition of Gigatronik on 3 March 2017. The acquisition is subject to the approval of the German competition authorities. Together with the recent acquisitions of Erlkönig, the Bertone brand and Auronik, completed at the end of 2014, Gigatronik reinforces the Group’s technological expertise and high value-added positioning in the automotive segments of tomorrow: hybrid platforms, connected objects, the Internet of Things, mobility, autonomous driving and embedded computing. Gigatronik will also allow AKKA Technologies to accelerate its expansion in Germany among such major automakers and suppliers as Audi, BMW, Daimler, Ford, Porsche and Volkswagen.

-> Implementation of an NEU CP (Negotiable European Commercial Paper) programme: in the first quarter of 2017, AKKA Technologies successfully implemented a €200 million NEU CP programme sponsored by the Banque de France. After the establishment on 1 July 2016 of a new five-year €200 million revolving credit facility on very attractive terms, the Group continues to show drive and creativity. This new funding reinforces its war chest while reducing its financing costs. It also enables the Group to extend the maturity of its debt while diver-sifying its sources of funding, by making its banking pool and its lenders more international. It gives the Group greater scope to pursue its diversification, both organically and through targeted acquisitions.

Note 2 - The Group’s results

As a preliminary comment, we set out the subsidiaries consolidated in the year ended 31 December 2016 in the table below.


CHAPTER 09

Companies % control % interest Consolidationmethod (1)

Country in whichthe company is based

AKKA TECHNOLOGIES SE - - CE FranceAEROCONSEIL PACIFIC SAS 100% 100% FC French PolynesiaAEROCONSEIL SAS 100% 100% FC FranceAKKA AEROCONSEIL ESPANA SL 100% 100% FC SpainAKKA BENELUX SA 100% 100% FC BelgiumAKKA DEUTSCHLAND GmbH 100% 100% FC GermanyAKKA DEVELOPMENT UK (ex-AEROCONSEIL UK LTD) 100% 100% FC Great BritainAKKA TECHNOLOGIES DEVELOPMENT SARL 100% 100% FC LuxembourgAKKA GROUPE AMERIQUE DU NORD INC 100% 100% FC CanadaAKKA GERMANY GmbH 100% 100% FC GermanyAKKA I&S SAS 100% 100% FC FranceAKKA INFORMATIQUE ET SYSTEMES SAS 100% 100% FC FranceAKKA INGENIERIE DOCUMENTAIRE SAS 100% 100% FC FranceAKKA INGENIERIE PROCESS SAS 100% 100% FC FranceAKKA INGENIERIE PRODUIT SAS 100% 100% FC FranceAKKA ITALIA SRL 100% 100% FC ItalyAKKA LIFE SCIENCE SAS 100% 100% FC FranceAKKA MANAGER SARL 100% 100% FC FranceAKKA MIDDLE EAST DMCC 100% 100% FC DubaiAKKA OCTOGON GmbH 100% 100% FC GermanyAKKA RESEARCH SAS 100% 100% FC FranceAKKA ROMSERV SRL 100% 100% FC RomaniaAKKA SERVICES SAS 100% 100% FC FranceAKKA SWITZERLAND SA 100% 100% FC SwitzerlandATP AUTOMOTIVE TESTING PAPENBURG GmbH 100% 65% FC GermanyAURONIK GmbH 100% 100% FC GermanyAURONIK Services GmbH 100% 100% FC GermanyAUTONATIC GmbH 100% 100% FC GermanyCASCIOPE SAS 100% 100% FC FranceCORIALIS AECWA SL 51% 51% FC SpainCORIALIS ANGOLA SL 100% 100% FC AngolaCORIALIS CEMAC SARL 100% 100% FC FranceCORIALIS CONGO SA 70% 70% FC CongoCORIALIS EAST SARL 75% 75% FC FranceAKKA ENERGY SAS (ex-CORIALIS ENGINEERS) 100% 100% FC FranceCORIALIS IBERICA SL 100% 100% FC SpainCORIALIS INGENIEROS SL 100% 100% FC SpainEKIS FRANCE SAS 100% 100% FC FranceEKIS SAS 100% 100% FC FranceEPSCO EUROPE S.r.o. 100% 100% FC SlovakiaEPSCO RESOURCING LIMITED 100% 100% FC Great BritainEPSCO Srl 100% 100% FC ItalyERDIMAT SAS 99.97% 99.97% FC FranceERLKONIG MANAGEMENT CONSULTING BEIJING Ltd. 100% 100% FC ChinaERLKONIG GmbH 100% 100% FC GermanyERLKONIG HOLDING GmbH 100% 100% FC GermanyERLKONIG TECHNOLOGY GmbH 100% 100% FC GermanyGEPILOG SAS 100% 100% FC FranceMATIS BENELUX SPRL 100% 100% FC BelgiumMATIS DO BRASIL CONSULTORIA E PROJETOS INDUSTRIALS LTDA 100% 100% FC BrazilMATIS HOLDING SAS 100% 100% FC FranceMATIS INFORMATIONS TECHNOLOGIES SAS 100% 100% FC FranceMATIS INTERNATIONAL SA 100% 100% FC FranceMATIS NETHERLANDS BV 100% 100% FC NetherlandsMATIS TECHNOLOGIES - M.T. SA 100% 100% FC FranceMB SIM TECHNOLOGY Co. Ltd. 100% 65% FC ChinaMBTECH BOHEMIA s.r.o. 100% 65% FC Czech RepublicMBTECH CONSULTING GmbH 100% 65% FC GermanyMBTECH EMC GmbH 100% 65% FC GermanyMBTECH GROUP GmbH & Co. KGaA 65% 65% FC GermanyMBTECH HUNGARY ENGINEERING AND CONSULTING LLC 100% 65% FC HungaryMBTECH MUHENDISLIK VE DANISMANLIK Limited Sirketi LLC 100% 65% FC TurkeyMBTECH NORTH AMERICA Inc. 100% 65% FC USAMBTECH VERWALTUNGS - GmbH 65% 65% FC GermanyMB-TECHNOLOGY NA LLC. 100% 65% FC USAMODELISATION ASSISTANCE TECHNIQUE INFORMATIQUE SCIENTIFIQUE (MATIS) SA 100% 100% FC FrancePROCEDA MODELBAU GmbH 100% 65% FC GermanyPROJEKTEXPERTISE GmbH 100% 100% FC GermanyREAL FUSIO SAS 100% 100% FC FranceSYSTEM DESIGN GmbH 100% 65% FC GermanyVELOCITY 368 Ltd (ex-AKKA DEVELOPMENT UK Ltd) 100% 100% FC Great Britain(1) CE = Consolidating Entity; FC = Full Consolidation


CHAPTER 09

Note 2.1 - Review of the financial statements and results

The table below contains a summary of the main indicators of the consolidated income statement prepared in accordance with IFRS for the years ended 31 December 2015 and 2016.

The table below contains a summary of the consolidated balance sheet prepared in accordance with IFRS, expressed in thousands of euros:

Note 2.2 - Analysis of change in the Group’s results and financial position

Note 2.2.1 - Revenue

The AKKA Technologies Group’s consolidated revenue increased by 12.1% in the year ended 31 December 2016. The acceleration of organic growth in 2016 was accompanied by further developments in our strategy of targeted acquisitions.

Consolidated revenue by geographical origin:

International activities accelerated their growth in 2016. The International business unit (excluding Germany) had more than 3,000 employees and four countries with critical mass at the end of 2016.International revenue (including Germany) increased by 15.4%, with organic growth of 7.8% over the year. This represented 54.6% of consolidated revenue in 2016 (53.1% in 2015).France also recorded faster growth over 2016 as a whole. However, in line with strategic objectives, even stronger growth internationally (including Germany) in recent years is gradually diluting the weight of the France BU.Going forward to 2018, the Group’s strategy is to rely on a Franco-German pillar (each country representing 40% of revenue) forming its European base.

ASSETS – Amounts in thousands of euros 31/12/2016 31/12/2015

Goodwill 218,183 192,586

Other non-current assets 163,285 159,972

Non-current assets 381,468 352,558

Current receivables and inventories 311,056 337,656

Cash and cash equivalents 158,958 215,120

Current assets 470,013 552,776

TOTAL ASSETS 851,481 905,334

LIABILITIES – Amounts in thousands of euros 31/12/2016 31/12/2015

Equity attributable to owners of the parent 199,963 199,661

Non-controlling interests 29,531 25,577

Non-current financial liabilities 241,340 288,300

Other non-current liabilities 24,986 21,330

Current financial liabilities 14,754 21,237

Other current liabilities 340,907 349,229

TOTAL LIABILITIES 851,481 905,334

Amounts in thousands of euros 31/12/2016 31/12/2015

Revenue 1,122,671 1,001,687

Operating profit from ordinary activities 77,190 60,828

Recurring operating profit 77,059 60,751

Operating profit 42,785 47,906

Profit before tax 32,458 41,385

Consolidated net profit 16,908 32,570

Net profit attributable to owners of the parent 12,715 26,229

Consolidated comprehensive income 14,967 34,312

Comprehensive income attributable to owners of the parent 11,027 27,784

% France % Germany % International (excluding Germany)

2016 financial year 45.3% 34.5% 20.2%

2015 financial year 47.0% 33.6% 19.4%


CHAPTER 09

Note 2.2.2 - Operating profit from ordinary activities

Operating profit from ordinary activities amounted to €77,190 thousand in 2016. It represented a margin of 6.9% of revenue in 2016, up from 6.1% in 2015. This performance is attributable chiefly to the 2.5-point increase in the operating margin of the France BU to 7.1% over the year.

Note 2.2.3 - Operating profit

Operating profit was €42,785 thousand in 2016, and the expense related to free shares and stock options was €131 thousand (€77 thousand in 2015).

It was impacted by a provision covering the French research tax credit (crédit d’impôt recherche – CIR). A ruling by the Council of State in late 2016 upheld the retroactive application of the change of doctrine by the tax administration in respect of the CIR. An impairment of €24 million was recognised on the CIR for the period from 2010 to 2014 to reflect this change. It has no impact on AKKA Technologies’ cash position, as the Group had not received the tax credit for the relevant years. The change in doctrine does not affect the Group’s financial statements for the years after 2014, as AKKA Technologies had complied with the new doctrine as a precaution.

The success and potential of its French operations will enable the Group to pursue its R&D efforts in the coming years in order to enhance its expertise and leadership in innovation.

Note 2.2.4 - Net borrowing costs

Net borrowing costs eased slightly to 0.8% of revenue (from 1.0% in 2015).

Note 2.2.5 - Corporation tax

The corporate tax expense was €15,550 thousand in 2016, representing 47.9% of profit before tax (compared with 21.3% in 2015). This included €6,800 thousand for the CVAE, a French local business tax based on value added.

The effective tax rate increased compared with 2015 due to the combined effects of the exceptional provision for non-deductible R&D subsidies of €24,049 thousand and the deferred tax expense of €3,493 thousand related to the reduction in the corporation tax rate in France to 28.92% from 2019.

Note 2.2.6 - Consolidated net profit

The share of consolidated net profit attributable to owners of the parent was €12,715 thousand in 2016 (compared with €26,229 thousand in 2015); it represented €0.65 per share, compared with €1.33 in 2015. It was impacted by the provision on the research tax credit.Excluding the €24,049 thousand provision on the research tax credit, the share of consolidated net profit attributable to owners of the parent was €36,764 thousand, or €1.87 per share.

Note 2.2.7 - Comprehensive income

Note 2.2.8 - Goodwill

Goodwill, consisting of goodwill and business assets, amounted to €218,183 thousand as of 31 December 2016, compared with €192,586 thou-sand a year earlier. The increase in this item resulted primarily from the acquisition of Erlkönig.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME in thousands of euros 31/12/2016 31/12/2015

CONSOLIDATED NET INCOME 16,908 32,570

Actuarial gains and losses on pension obligations (1,279) 1,132

Tax effect of items not to be recycled to profit or loss in subsequent periods 390 (367)

Items not to be recycled to profit or loss in subsequent periods (889) 765

Gains and losses on hedging instruments (599) (371)

Change in translation differences (653) 1,225

Tax effect of items to be recycled to profit or loss in subsequent periods 200 124

Items not to be recycled to profit or loss in subsequent periods (1,052) 978

CONSOLIDATED COMPREHENSIVE INCOME 14,967 34,312


Attributable to owners of the parent 11,027 27,784

In thousands of euros 31/12/2016 31/12/2015


CIR provision 24,049 -

Net profit attributable to owners of the parent excluding CIR provision 36,764 26,229


CHAPTER 09

Note 2.2.9 - Change in cash

Note that the Group issued a bond by private placement on 1 March 2013. The amount of the bond was €100 million, with a maturity of 5 years and 4 months (maturing on 29 June 2018) and an annual coupon of 4.45%.

On 30 October 2014, the Group further restructured its medium-term financing by placing a Shuldscheindarlehen loan (placement subject to German law). The €140 million placement matures in five to seven years. It includes a fixed tranche and a variable tranche, fully hedged by a swap contract.

On 30 June 2016, AKKA Technologies signed a new five-year €200 million revolving credit facility. The facility set up on 12 April 2012 and rene-gotiated in December 2014 expired in the first half of 2016.

The Group accordingly had a positive gross cash position of €215 million as of 31 December 2015. The cash position decreased to €159 million as of 31 December 2016, notably due to significant investments in future growth (acquisitions and capex) and the early repayment of an RCF credit. Business operations generated €73 million in cash over the year. This served to fund most of these investments, the balance being financed by drawing on existing credit facilities.

Note 2.2.10 - Shareholders’ equity

Shareholders’ equity amounted to €229,495 thousand as of 31 December 2016, compared with €225,238 thousand as of 31 December 2015, an increase of 1.9%. As of 31 December 2016, shareholders’ equity represented 27% of total assets.

The main changes in shareholders’ equity are as follows:

- consolidated net profit for 2016 of €16,908 thousand;- change in other comprehensive income of €(1,941) thousand;- purchase of a block of own shares for €(360) thousand;- dividends paid to shareholders in 2016 in respect of 2015 in the amount of €(9,830) thousand.

Note 2.2.11 - Borrowings

In view of the acquisitions made during the period, net borrowings (including restructured debt) totalled €97,136 thousand as of 31 December 2016, compared with €94,417 thousand as of 31 December 2015. Gearing was 42.3%, compared with 41.9% as of end-2015. This will enable the Group to continue its policy of targeted acquisitions accelerating the diversification of its international activities.

Note 2.2.12 - Interest rate hedging

On 30 October 2014, the Group signed an interest rate hedging contract on the Schuldscheindarlehen loan to protect itself against a possible increase in 6-month Euribor. The derivative financial instrument is a swap contract with the following characteristics:

- Swap at a fixed rate of 0.465% on the portion of the loan maturing in five years (30 October 2019), i.e. an amount of €67.0 million.- Swap at a fixed rate of 0.710% on the portion of the loan maturing in seven years (30 October 2021), i.e. an amount of €13.5 million.

This hedging instrument meets the definition of a cash flow hedge. Its fair value was recorded in the amount of €(599) thousand in other com-prehensive income as of 31 December 2016.

Note 2.3 - Description of the main risks and uncertainties facing the Group

The risk factors described below are presented in accordance with the principle of materiality, as recommended by the AMF. The risks described in sections 2.3.6 to 2.3.10 are deemed less material.

Statement of cash flows – in thousands of euros 31/12/2016 31/12/2015

Opening cash, cash equivalents and bank overdrafts 215,120 220,079

Net cash from/operating activities 72,566 39,339

Net cash from/investing activities (55,101) (60,693)

Net cash from/financing activities (73,556) 16,232

Impact of changes in foreign exchange rates (71) 163

Closing cash, cash equivalents and bank overdrafts 158,958 215,120

31/12/2016 31/12/2015

Net financial debt/equity 42.3% 41.9%

Net financial debt/revenue 8.7% 9.4%

Cost of net financial debt/revenue 0.8% 1.3%


CHAPTER 09

Note 2.3.1 - Risks related to the business and customers

The AKKA Technologies Group’s operations cover a large number of customers located in different countries and operating in major industrial sectors. This serves to limit the Group’s exposure to uncertainties stemming from an unfavourable economic environment.

Moreover, the customer portfolio comprises major groups operating in industry and the services, both in France and internationally, which very often work with AKKA Technologies through several contractors.

Customer diversification is a critical part of our strategy of balances, and a key plank of the PACT17 strategic plan. Diversification has been a success in recent years: the weighting of the top 10 customers has eased by 5 percentage points in the space of two years. This trend will be accentuated in the coming months and years thanks to our business strategy, combined with our external growth strategy. Gigatronik, for instance, fosters customer diversification in the automotive industry in Germany, while CTP System and Edelway bring sector diversification into the life sciences, thereby lessening the weighting of mobility in our business portfolio.

In 2016, the Group’s largest customer, Daimler, accounted for 24.4% of revenue (25.7% in 2015). In 2016, the Group’s top 10 customers accounted for 62.9% of consolidated revenue (62.0% in 2015 and 67.8% in 2014).

Note 2.3.2 - Risks related to key people

Customer relationships are structured around several people in order to limit the impact of the departure or absence of an employee or a manager.

The Group’s key executive officers are AKKA Technologies shareholders.

In 2005, the Group also established an employee savings plan open to employees with at least three months’ service in the Group’s French com-panies belonging to the plan. In 2006, an AKKA Technologies mutual fund was created on attractive terms.

Lastly, the Group’s strong culture serves to cement employee loyalty. Turnover amounted to 17.1% in 2016 (16.5% in 2015).

Note 2.3.3 - Risks related to acquisitions

Acquisitions are envisaged when they are of strategic interest to the Group in terms of geographical location or synergy between the businesses. The investment decision is taken after full due diligence of the target company (operational, financial, tax, social, and business) and rigorous analysis of the findings.

Such a strategy will only be implemented if the company is able to identify attractive targets, make acquisitions on satisfactory terms and in-tegrate them into its operations in such a way as to achieve harmonious commercial development, without sacrificing the strategy of balances that has guided the Group since its inception.

AKKA Technologies may have to finance these acquisitions by borrowing or making use of financial instruments, potentially obliging it to take financial risks, imposing certain restrictions or having a dilutive impact for shareholders.

Moreover, acquiring companies, in the same way as other substantial transactions, generally results in additional expenses.

The company’s business, financial position, results, growth and medium- and long-term prospects could be significantly affected if one or more of these risks were to materialise.

Note 2.3.4 - Legal risks

The General Management of each region, with the support of its Chief Financial Officer and the Group Legal Department, is responsible for ensuring that the company complies with laws and regulations in force.

Any disputes are immediately notified to the Group’s General Management.

Most confirmed or potential disputes are handled by the General Management and the Administrative and Financial Department of the company in question, with the support of the Legal Department in respect of commercial, administrative and insurance issues.

The Legal Department may call on independent counsel on matters in the litigation or pre-litigation stages.

The company has had a Key Accounts Department in charge of coordinating the commercial and legal analysis of prospective commercial agree-ments since 2007. As such, the holding company centralises customer contracts, especially those involving more than one Group company or containing a performance obligation.

To date, and to the Group’s best knowledge, adequate provisions have been set aside to cover all disputes liable to have a significant impact on the Group’s business, results, financial position or assets and liabilities.

See section 9 of the consolidated financial statements for the year ended 31 December 2016.


CHAPTER 09

Note 2.3.5 - Competition risk

The Group’s operations in the leading European and international business regions and its referencing by major industrial customers has made it a benchmark in its sector in Europe.

Most key accounts have initiated a policy aimed at reducing the number of technology consultancies with which they work. This has resulted in a reduction in the number of partners approved as suppliers, which has tended to benefit larger players.

These players conduct approvals on a regular basis (every three years on average). AKKA confirmed its place on all significant supplier lists in 2016.

However, the loss by the Group of a position on a supplier list could have a temporary impact on its revenue, business volumes and profitability.

The AKKA Technologies Group’s organisation nevertheless gives it a significant measure of responsiveness and a high degree of flexibility, enabling it to adapt very quickly to changes in its markets and the requirements of its customers.

The geographical and sector spread of the Group’s revenue and the segmentation of its offerings further mitigate this risk.

Its expertise in the various phases of any project, from R&D to series production, its organisation around its centres of excellence and its unique know-how in turnkey projects are also undeniable competitive advantages that have played a part in its past resilience.

Note 2.3.6 - Currency risk

See section 4.13.3 to the consolidated financial statements for the year ended 31 December 2016.

Note 2.3.7 - Investment and counterparty risks


Note 2.3.8 - Environmental risk

In view of our business, the Group’s companies are not subject to environmental risk (see note 7 and the CSR report included in the registration document, note 9.4).

Note 2.3.9 - Interest rate risk


Note 2.3.10 - Liquidity risk


Note 2.4 - Workforce information

Average workforce of consolidated companies:

The Group had 13,252 employees as of 31 December 2016 (compared with 12,222 as of 31 December 2015).

9.1.2 - Presentation of AKKA Technologies SE’s consolidated financial statements for the year

Note 1 - The company’s business operations

Note 1.1 - Situation and development of the company’s business operations during the year

During the year ended 31 December 2016, the company continued its role as a holding company for all Group companies.

The table below contains a summary of the main aggregates of the consolidated income statement for the years ended 31 December 2016 and 2015.

31/12/2016 31/12/2015

Managers 9,197 8,427

Non-managers 3,528 3,092

TOTAL 12,725 11,519


CHAPTER 09

The table below contains a summary of the consolidated balance sheet, expressed in thousands of euros:

Note 1.2 - Equity investments

AKKA Technologies did not make any significant direct acquisitions in 2016.

Note 1.3 - Anticipated developments and future prospects

As in previous years, the objectives for the year commencing 1 January 2017 are to promote faster growth and improved operational efficiency. This will notably involve:

- continuing to act as a service provider and facilitator for its subsidiaries;- continuing to build an organisation capable of responding to the needs of a Group with consolidated revenue of over €1 billion;- strengthening the corporate governance of the Group and its main BUs without sacrificing the Group’s family values;- continuing to gather technology intelligence to take advantage of any external growth opportunities, which will serve to speed up the Group’s future development.

Note 1.4 - Subsequent events

Implementation of an NEU CP (Negotiable European Commercial Paper) programme: in the first quarter of 2017, AKKA Technologies successfully implemented a €200 million NEU CP programme sponsored by the Banque de France. After the establishment on 1 July 2016 of a new five-year €200 million revolving credit facility on very attractive terms, the Group continues to show drive and creativity. This new funding reinforces its war chest while reducing its financing costs. It also enables the Group to extend the maturity of its debt while diversifying its sources of funding, by making its banking pool and its lenders more international. It gives the Group greater scope to pursue its diversification, both organically and through targeted acquisitions.

Note 1.5 - Information on payment terms

In accordance with articles L. 441-6-1 and D. 441-4 of the French Commercial Code, we hereby inform you that the balance of trade payables broke down as follows as of 31 December 2016:

Income statement Amounts in thousands of euros 31/12/2016 31/12/2015

Net revenue 17,590 14,470

Operating profit (4,744) (4,949)

Financial income/(expense) 11,262 14,017

Exceptional income/(expense) (34) (83)

Income tax (2,948) (259)

Profit or loss 9,431 9,244

Balance sheet – Assets Amounts in thousands of euros 31/12/2016 31/12/2015

Net intangible assets and property, plant and equipment 695 274

Net financial assets 159,718 158,527

Fixed assets 160,413 158,801

Net receivables 339,624 278,543

Cash and cash equivalents 33,014 118,339

Fixed assets 372,637 396,881

Accruals 1,802 2,606

TOTAL ASSETS 534,852 558,288

Balance sheet – LiabilitiesAmounts in thousands of euros 31/12/2016 31/12/2015

Shareholders’ equity 82,175 82,602

Provisions for risks and expenses 505 896

Financial liabilities 445,187 464,987

Operating liabilities 6,960 8,852

Miscellaneous liabilities 25 951



CHAPTER 09

Statement of the balance of trade payables as of 31 December 2016 and 2015 by due date (in € thousand)

Note 2 - Employee share ownership

Pursuant to article L. 225-102 of the French commercial Code, we set out below the details of employee share ownership as of 31 December 2016, the last day of the fiscal year.

The proportion of the capital represented by shares held by employees, within the meaning of article L. 225-102 of the French commercial Code was 1.0% as of 31 December 2016.

We remind you that a mutual fund under the name AKKA Actionnariat has been established for the Group’s employees, and that the fund subs-cribed to a capital increase reserved for employees in the amount of €27,901.08 in March 2006.

Note 3 - Treasury shares

As of 31 December 2016, the company held 618,267 of its own shares, representing 3.04% of share capital:

Note 4 - Stock options

No stock options were granted in 2016.

Note 5 - Results – Appropriation

Note 5.1 - Review of the financial statements and results

In the following sections, we will present in detail the annual financial statements that we submit for your approval, which were prepared in accordance with the rules of presentation and standards of measurement prescribed by regulations.

For the parent company financial statements, the rules and methods used in preparing the annual financial statements are identical to those used in previous years.

For the consolidated financial statements, the Group has changed its accounting policies as appropriate in accordance with changes in IFRS.

The financial statements of the previous year are provided for comparison.

Note 5.2 - Proposed appropriation of profit

We ask you to approve the annual financial statements (balance sheet, income statement and notes) as they are presented, showing a profit of €9,431,404.32.

Non-Group suppliers< 30 days Between 30 and 60 days > 60 days TOTAL incl. VAT

2015 2016 2015 2016 2015 2016 2015 2016

Accounts payable not yet due 539 728 30 - - - 569 728

Accounts payable past due 82 25 148 73 44 (38) 274 60

Total incl. VAT 621 753 179 73 44 (38) 844 788

Group suppliers< 30 days Between 30 and 60 days > 60 days TOTAL incl. VAT

2015 2016 2015 2016 2015 2016 2015 2016

Accounts payable not yet due 1,413 991 287 - - - 1,700 991

Accounts payable past due 112 - 206 585 2,598 1,177 2,916 1,763

Total incl. VAT 1,526 991 492 585 2,598 1,177 4,615 2,754

31/12/2015 Purchased SoldImpact of

changes in equity (1)

31/12/2016

Own shares held directly by AKKA Technologies 541,227 13,760 - 55,498 610,485

Own shares held through the share buyback programme 8,083 280,820 (281,580) 459 7,782

Total number of treasury shares 549,310 294,580 (281,580) 55,957 618,267

(1) Impact of the allocation of 1 share for every 10 shares held


CHAPTER 09

We also propose that you approve the following appropriation:

Profit for the year ............................................................................................................................................................................................................................€9,431,404.32

To the legal reserve .............................................................................................................................................................................................................................................. €0

The balance ......................................................................................................................................................................................................................................€9,431,404.32

Plus an amount taken from “other reserves” .........................................................................................................................................................................€2,383,531.68

Dividends paid to shareholders .............................................................................................................................................................................................. €11,814,936.00

This will leave “other reserves” amounting to €36,227,219.28.The dividend per share will be ................................................................................................................................................................................................................... €0.60

The amount of dividends takes into account the number of treasury shares as of [21 March 2017]. This amount will be adjusted in the event of a change in the number of treasury shares et/ou du nombre d’actions composant le capital social between [21 March 2017] and the ex-dividend date.

It is stated that:

The amount paid will, where applicable, be eligible for the 40% tax allowance provided for in article 158-3-2 of the French General Tax Code for individual shareholders resident in France.

The dividend will be paid within 45 days following the shareholders’ meeting of 15 June 2017.

The dividend will be paid to all shares outstanding as of the date of the shareholders’ meeting with the exception of treasury shares. If, however, at the time of payment, the company were to have acquired its own shares, the amount corresponding to the dividends not paid on these shares would be allocated to “other reserves”.

In accordance with the new provisions of the French General Tax Code, it is noted that dividends paid over the last three years are as follows:

For the year ended 31 December 2013, the net dividend was €0.55 per share (€0.41 after taking into account changes in share capital). The entire amount paid, i.e. the sum of €8,945,532, was, where applicable, eligible for the 40% tax allowance provided for in article 158-3-2 of the French General Tax Code for individual shareholders resident in France.



Note 5.3 - Non-tax deductible expenses

Pursuant to article 223 quater of the French General Tax Code, we ask you to approve the expenses and charges referred to in article 39-4 of the said Code, which amount to a total of €37,039 and which gave rise to a tax expense of €12,345.

Note 5.4 - Statement of results for the last five years

In accordance with article R. 225-102 of the French Commercial Code, a table is attached to this report showing the company’s results in each of the last five years.

Note 6 - Agreements referred to in article L. 225-38 of the French Commercial Code

Agreements entered into during the year ended 31 December 2016

• International support services and governance consulting agreement concluded with GLX Consulting

- Date of authorisation: Board of Directors meeting of 5 January 2016- Person concerned: Guy LACROIX

Guy LACROIX, director, having stepped down as CEO of Cofely Ineo GDF Suez on 31 December 2015, entered into two agreements for consulting services, at the request of AKKA Technologies, through GLX Consulting SAS, of which he is the main shareholder and executive officer, for an indefinite period.

Through these two contracts, one of which involves support services and the other consulting services in the field of governance, AKKA Technologies benefits from the experience gained by Guy LACROIX in steering complex projects within a company that has 13,000 employees and is a signi-ficant player in electrical engineering, electronics, digital technology, and information and communication systems, all of which are activities close to the expertise by AKKA Technologies.


CHAPTER 09

- An international support services agreement with an annual fee of €198,000 excluding VAT, corresponding to 60 days of consulting services.

- A governance consulting agreement for a fee determined on the basis of €3,750 excluding VAT per day for a premium consultant.

These agreements became effective on 5 January 2016.

The amount of services billed under the international support services agreement was €198,000 excluding VAT in 2016.

The amount of services billed under the governance consulting agreement was €300,000 excluding VAT in 2016.

• Conclusion of an amendment to the commercial lease with Andromède Valley

- Date of authorisation: Board of Directors meeting of 16 June 2016

- Persons concerned: Maurice RICCI, Jean-Franck RICCI and Nicolas VALTILLE

On 8 July 2014, following authorisation from the Board of Directors at its meeting of 17 June 2014, the company, alongside its subsidiary AKKA Services, entered into an off-plan commercial lease with SCI Andromède Valley for premises located on the “Andromède” BIA in Blagnac (31700). The building has been completed, and the lease took effect on 9 May 2016.

An amendment signed on 22 September 2016 brought the annual lease payment from €2,318,787 excluding VAT and expenses to €2,169,456 excluding VAT and expenses for an unchanged office space of 11,350 sq.m., with retroactive effect from 9 May 2016.

No expense was recognised in respect of 2016, lease payments having been fully borne by AKKA Services.

Agreements entered into in prior years and continued during the year ended 31 December 2016

• Conclusion of an autonomous guarantee

- Date of authorisation: Board of Directors meeting of 25 February 2014

- Persons concerned: Maurice RICCI, Jean-Franck RICCI and Nicolas VALTILLE

- Date of ratification by the shareholders’ meeting: 9 June 2015

Performance guarantee commitments made by MBtech Group GmbH & Co. KGaA to RALOSA GmbH & Co KG in respect of an off-plan lease for a building on the former airfield of the municipalities of Böblingen and Sindelfingen (Germany). The lease has a term of 20 years from the date of first occupancy, scheduled for 1 October 2015. The independent guarantee amounts to €42.5 million.

The guarantee was not exercised in 2016.

• Conclusion of a services agreement

- Date of authorisation: Board of Directors meeting of 30 August 2012

- Person concerned: Maurice RICCI

- Date of ratification by the shareholders’ meeting: 11 June 2013

Agreement entered into on 15 September 2012 between AKKA Technologies and BMC Management & Investment for the provision of commer-cial, strategic, administrative and relationship management services to assist the Group in its development for an annual fee of €642,000, plus additional services as required, invoiced on the basis of time spent.

The services billed in respect of this contract in 2016 amounted to €642,000 excluding VAT.

The auditors were regularly informed of these operations and will prepare a special report.

Note 7 - Societal and environmental information

Information on how the company takes into account the social and environmental consequences of its activity as well as its societal commitments in favour of sustainable development, the fight against discrimination and the promotion of diversity, provided pursuant to articles L. 225-102-1 section 5, R. 225-105 and R. 225-105-1 of the French Commercial Code, is presented in note 9.4 of the registration document.

Note 8 - Management and control of the company

Note 8.1 - List of offices and functions

Pursuant to article L. 225-102-1 of the French Commercial Code, we hereby provide the list of all positions held in any company by each of the executive officers.

Maurice RICCI, Chairman of the Board and Chief Executive Officer- Representative of AKKA Technologies

- Chairman of SAS DUBAIA9

- Joint Legal Manager of AKKA MANAGER SARL


CHAPTER 09

- Chairman of MB 2C SAS

- Legal Manager of SCI SAONE VALLEY

- Partner and Legal Manager of SCI STANDING COURCELLES

- Legal Manager of Flugfeld Valley GmbH

- Legal Manager of AKKA Deutschland GmbH

- Chairman of VALLEY INVESTMENT

- Representative of VALLEY INVESTMENT

- Chairman of the Board of Directors of AKKA Italia Srl

- Chairman of the Board of Directors of AKKA Switzerland SA

- Chairman of AKKA GROUPE AMERIQUE DU NORD INC.

- Joint Legal Manager of Hysys Consulting Maroc SARL

- Director of AKKA Technologies Rus LLC

- Legal Manager of BMC MANAGEMENT AND INVESTMENT

- Director of AKKA Middle East DMCC

- Director of AKKA DEVELOPMENT UK

- Legal Manager of MATIS BENELUX

- Chairman of the Board of Directors of MATIS INTERNATIONAL

Jean-Franck RICCI, Director and Deputy Chief Executive Officer- Manager in France of the foreign legal person MATIS INTERNATIONAL

- Director of AKKA Italia Srl, a company incorporated under Italian law

- Joint Legal Manager of Hysys Consulting Maroc SARL

- Joint Prokurist of AKKA Deutschland GmbH

- Vice Chairman of AKKA GROUPE AMERIQUE DU NORD INC.

- Director of AKKA Technologies Rus LLC

- Director of AKKA GROUP NORTH AMERICA INC

- Director of AKKA AEROCONSEIL ESPANA SL




Alain TISSERAND, Director- Joint Legal Manager of AMF Investisseurs SARL

- Legal Manager of MATIS SARL

- Legal Manager of SCI EMICAT

- Joint Legal Manager of SCI LIDREAN

Cécile MONNOT, Director- Legal Manager of IDEACTIVE FORMATION SARL

Nicolas VALTILLE, Director and Deputy Chief Executive Officer- Managing Director of DUBAIA9 SAS

- Joint Legal Manager of AKKA MANAGER SARL

- Managing Director of ERDIMAT SAS



- Joint Prokurist of AKKA Deutschland GmbH

- Director of AKKA AEROCONSEIL ESPANA SL

- Director of AKKA TECHNOLOGIES INDIA


CHAPTER 09

- Legal Manager of AKKA TECHNOLOGIES MAROC

- Director of AKKA GROUP NORTH AMERICA

- Joint Legal Manager of AKKA TRANS AFRICA


Charlotte RICCI, Director- Chairwoman of ALYS

- Legal Manager of SARL ADELAÏDE

Guy LACROIX, Director- Director of ENGIE INEO

- Legal Manager of XXL LAVAGE

- Joint Legal Manager of SCI PORTE DE L’ILE DE FRANCE

- Chairman of GLX CONSULTING

- Member of the Supervisory Board of DEMETER PARTNERS

- Chairman of SERCE (Syndicat des entreprises de génie électrique et climatique)

Note 8.2 - Executive compensation

Note 8.2.1 - Description of the fixed, variable and exceptional components of executive compensation

Note 8.2.2 - Information on deferred compensation commitments made by the company in favour of its executive officers

None.

Note 8.2.3 - Information on additional pension commitments in favour of executive officers

None.

Note 8.3 - Table of authorisations to increase capital

Pursuant to article L. 225-100 section 7 of the French Commercial Code, a table of valid delegations granted by the shareholders’ meeting to the Board of Directors in respect of capital increases is attached to this management report.

Note 8.4 - Special report on transactions carried out pursuant to the provisions of articles L. 225-177 to L. 225-186 of the French Commercial Code

You will also be informed by the Board of Directors, in its special report prepared in accordance with the provisions of article L. 225-184 of the French Commercial Code, of transactions carried out pursuant to the provisions of articles L. 225-177 to L. 225-186 of the French Commercial Code in respect of stock options.

Note 8.5 - Special report on free shares pursuant to the provisions of articles L. 225-197-1 to L. 225-197-5 of the French Commercial Code

In a special report prepared in accordance with the provisions of article L. 225-197-4 of the French Commercial Code, the Board of Directors will provide you with the information required by law in respect of free shares.

DirectorsFixed

remuneration- gross equivalent

Variableremuneration

- gross equivalent

Fixed and variableremuneration

- social securityagencies’ share

Attendancefees

Benefitsin kind

Supplementarypension

plans

Total cost tothe company

2016

Total cost tothe company

2015

Maurice RICCI (1) 566 - 227 None - None 793 782

Jean-Franck RICCI 524 - 210 None - None 734 732

Nicolas VALTILLE 351 203 222 None - None 776 744

Cécile MONNOT 67 - 27 None - None 94 92

Charlotte RICCI - - - None - None - -

Guy LACROIX - - - 40 - None 40 40

Alain TISSERAND - - - 40 - None 40 40

(1) Maurice RICCI was partly remunerated through a service contract between BMC MANAGEMENT AND INVESTMENT and AKKA Technologies in the amount of €642 thousand in respect of 2016.


CHAPTER 09

Note 8.6 - Shareholders

Note 8.6.1 - Change in share capital

Note 8.6.2 - Threshold crossings during the year

None.

Note 8.6.3 - Breakdown of share capital and voting rights as of 21 March 2017

The breakdown of share capital and voting rights has not varied significantly since 31 December 2016.

Changes in share capital and voting rights of shareholders holding more than 5% of capital

Information on the implementation of the share buyback programme (article L. 225-211 of the French Commercial Code)

Number of shares registered in the company’s name at year-end: 618,267

Number of shares Par value Amount of share capital

31/12/2015 18,434,264 1.53 28,204,423.92

Allocation of 1 bonus share for every 10 held (Board of Directors meeting of 30 March 2016) 1,843,426 1.53 2,820,441.78

31/12/2016 20,277,690 1.53 31,024,865.70

Shares with singlevoting rights

Shares with doublevoting rights

Non-votingshares Total shares Votes % total shares

RICCI FAMILY 155,536 9,017,605 - 9,173,141 18,190,746 45.2%

TREASURY SHARES - - 624,501 624,501 - 3.1%

DIRECTORS - 467,863 - 467,863 935,726 2.3%

EMPLOYEES 15,099 200,255 - 215,354 415,609 1.1%

Free float 9,713,539 83,292 - 9,796,831 9,880,123 48.3%

TOTAL 9,884,174 9,769,015 624,501 20,277,690 29,422,204 100.0%

Holder

Situation as of 31/12/2016 Situation as of 31/12/2015 Situation as of 31/12/2014

Numberof

shares

% ofshare

capital

Numberof voting

rights

% ofvotingrights

Numberof

shares

% ofshare

capital

% ofvotingrights

Numberof

shares

% ofshare

capital

% ofvotingrights

MR RICCI MAURICE (1) 6,060,246 29.9% 12,111,192 40.3% 5,519,316 29.9% 32.6% 5,381,197 32.1% 35.4%

MR RICCI JEAN-FRANCK 949,884 4.7% 1,795,512 6.0% 913,531 5.0% 7.4% 903,212 5.4% 7.9%

IDEACTIVE EVENTS 1,017,001 5.0% 2,034,002 6.8% 924,547 5.0% 7.9% 840,498 5.0% 7.7%

FIDELITY MANAGEMENT RESEARCH LLC (2) 2,509,980 12.4% 2,509,980 8.3% 2,259,061 12.3% 9.6% 2,137,000 12.8% 9.8%

ALLIANZ GLOBAL (3) 1,944,922 9.6% 1,944,922 6.5% 1,768,111 9.6% 7.5% 850,601 5.1% 3.9%(1) Including BMC Management and Investment(2) Soure: FIDELITY MANAGEMENT RESEARCH LLC(3) Based on the declation of exceeding the threshold of 15 April 2015

DURING THE LAST YEAR

Number of own shares bought back 280,820

Number of own shares sold (281,580)

Average price of shares purchased 29.76

Average price of shares sold 29.86

Total trading costs -

OWN SHARES REGISTERED IN THE COMPANY’S NAME

Amount in € 21,141,096

Percentage of share capital they represent 3.05%

Total value at purchase price 9,427,600

Par value € 1.53 per share

Reasons for purchases made Support for the secondary market or the liquidity of the share


CHAPTER 09

Note 8.7 - Summary disclosure of transactions exceeding €5,000 carried out on the company’s shares during the year by executives and persons mentioned in articles L. 621-18-2 and R. 621-43-1 of the French Monetary and Financial Code

A total of 21 declarations bearing on transactions in an aggregate amount of more than €5,000 (€20,000 from 3 July 2016) carried out on the company’s shares during the year by executives and persons mentioned in articles L. 621-18-2 and R. 621-43-1 of the French Monetary and Financial Code (excluding the share buyback programme) were made in 2016. They concern:

These statements were published by the AMF in accordance with regulations.

Note 8.8 - Work of the Board of Directors and internal control procedures

The report of the Chairman of the Board of Directors on the work of the Board and internal control procedures is attached to this report in accor-dance with the provisions of article L. 225-37 of the French Commercial Code.

Note 8.9 - Information on factors liable to have an influence in the event of a public offer

The Board of Directors has the option, during a public offer, of issuing and granting equity warrants to qualifying shareholders free of charge, before the expiry of the public offer period, pursuant to the provisions of article L. 233-33 of the French Commercial Code.

Article 15 of the articles of association includes an exclusive office clause that makes it impossible for a person to become an officer of the com-pany while holding an office in a competing company, or if the prospective director is a major shareholder thereof.

9.2 - Operating profit

9.2.1 - Significant factors affecting operating profit

Operating profit depends chiefly on consolidated revenue and the activity rate (number of days billed or worked in centres of excellence or on turnkey projects divided by the number of billable days excluding paid leave and scheduled time off ), which rose from 88.2% in 2015 to 89.6% in 2016.

9.2.2 - Material change in net revenue

Please refer to notes 1.2.2.1 to 1.2.2.3 in section 9.1 of the management report.

9.2.3 - Governmental, economic, budgetary, monetary or policy factors that have materially influenced or could materially influence, directly or indirectly, the issuer’s business

Not applicable.

Date of transaction Identity of the person making the declaration

Body/Person related to

Type of transaction Unit price Type of

securitiesAmount in euros

7 January 2016 Stéphane DESCOS Member of the Executive Committee Sale 28.0 Shares 27,871

7 January 2016 Stéphane DESCOS Member of the Executive Committee Sale 28.5 Shares 28,368

26 February 2016 Stéphane DESCOS Member of the Executive Committee Sale 27.5 Shares 27,373

8 March 2016 Maurice RICCI Chairman and CEO Sale 28.9 Shares 289,000

10 March 2016 Nicolas VALTILLE Deputy Chief Operating Officer Sale 28.9 Shares 289,000

10 March 2016 Jean-Franck RICCI Deputy Chief Operating Officer Sale 28.9 Shares 1,445,000

31 May 2016 Stéphane DESCOS Member of the Executive Committee Sale 31.5 Shares 31,405

8 June 2016 Alain TISSERAND Director Sale 30.9 Shares 89,024

9 June 2016 Alain TISSERAND Director Sale 30.8 Shares 1,540

22 September 2016 Stéphane DESCOS Member of the Executive Committee Sale 33.5 Shares 33,350

27 September 2016 Alain TISSERAND Director Sale 33.0 Shares 46,134




3 October 2016 Alain TISSERAND Director Sale 33.4 Shares 133,550






7 December 2016 DUBAIA9 Person related to M. RICCI, J.-F. RICCI and N. VALTILLE Sale 33.7 Shares 822,322


CHAPTER 09

9.3 - Compensation of executive officersIn addition to the table on executive compensation disclosed in note 8.2.1 of the management report in section 9.1 above, we hereby present tables showing the compensation of the company’s executive officers in accordance with the Afep-Medef recommendations, it being stipulated that the company has elected to adhere to the MiddleNext Corporate Governance Code.

9.3.1 - Tableau of compensation, stock options and free shares granted to each executive officer

Maurice RICCI – Chairman of the Board and Chief Executive Officer Amounts in thousands of euros 2015 2016

Compensation due for the financial year – gross equivalent 561 566

Compensation due for the financial year – portion going to social security bodies 221 227

Value of options granted during the year - -

Value of performance shares granted during the year - -

Value of free shares granted during the year - -

TOTAL COST TO THE COMPANY 782 793

Jean-Franck RICCI – Director and Deputy Chief Executive Officer Amounts in thousands of euros 2015 2016







Nicolas VALTILLE – Director and Deputy Chief Executive Officer Amounts in thousands of euros 2015 2016








CHAPTER 09

9.3.2 - Summary of the compensation of each executive officer

Compensation paid to Jean-Franck RICCI and Nicolas VALTILLE is in respect of their positions as Deputy Chief Executive Officers.

9.3.3 - Directors’ fees

In its fifth resolution, the shareholders’ meeting of 16 June 2016 decided to allocate an annual amount of €100,000 for directors’ fees for the current year. The Board used €80,000 of this sum in 2016 (Board of Directors meeting of 15 December 2016).

9.3.4 - Stock options or free shares granted to each executive officer during the year

Not applicable.

9.3.5 - Stock options or free shares exercised by each executive officer during the year

Not applicable.

9.3.6 - Stock options granted to the 10 biggest beneficiaries who are not executive officers and options exercised by such employees

Not applicable.

9.3.7 - Shares granted to each executive officer

9.3.7.1 - Performance shares granted to each executive officer

Not applicable.

Maurice RICCI – Chairman of the Board and Chief Executive Officer Amounts in thousands of euros

2015 2016

Amounts due Amounts paid Amounts due Amounts paid

- fixed compensation – gross equivalent 561 561 566 566

- variable compensation – gross equivalent - - - -

- fixed and variable compensation – portion going to social security bodies 221 221 227 227

- exceptional compensation - - - -

- directors’ fees - - - -

- benefits in kind - - - -

TOTAL COST TO THE COMPANY 782 782 793 793

Jean-Franck RICCI – Director and Deputy Chief Executive Officer Amounts in thousands of euros

2015 2016



- variable compensation – gross equivalent - - - -






Nicolas VALTILLE – Director and Deputy Chief Executive Officer Amounts in thousands of euros

2015 2016



- variable compensation – gross equivalent 181 181 203 203







CHAPTER 09

9.3.7.2 - Free shares not corresponding to performance shares granted to each executive officer

Not applicable.

9.3.8 - Shares that vested during the year for each executive officer

9.3.8.1 - Performance shares that vested during the year for each executive officer

Not applicable.

9.3.8.2 - Free shares not corresponding to performance shares that vested during the year for each executive officer

Not applicable.

9.3.9 - Other information relating to the compensation of executive officers

There are no employment contracts, supplementary pension plans, compensation or benefits due or liable to be due as a result of termination of employment or change of position, or compensation relating to a non-competition clause.

9.4 - Corporate social responsibilityAKKA Technologies’ 2016 CSR Report was prepared in accordance with new regulatory requirements in respect of disclosure of social and envi-ronmental information pursuant to Law No. 2010-788 of 12 July 2010 on the national commitment to the environment (“Grenelle 2”) codified in article L. 225-102-1 of the French Commercial Code and supplemented by Decree No. 2010-557 of 24 April 2012 codified in article R. 225-105 -1 of the French Commercial Code. This report serves to give stakeholders an understanding of the Group’s contribution to sustainable development.

Name Position Date of start of term of office Date of end of term of office

Maurice RICCI Chairman and CEO 17/02/1999 Shareholders’ meeting approving the 2016 financial statements

Jean-Franck RICCI Deputy Chief Operating Officer 07/03/2001 Shareholders’ meeting approving the 2018 financial statements

Nicolas VALTILLE Deputy Chief Operating Officer 30/08/2012 Shareholders’ meeting approving the 2017 financial statements


9.4.1 - STRATEGY AND PROFILE 43EDITORIAL PASSION FOR TECHNOLOGY IS IN OUR DNA SPECIFIC AND COMPLEMENTARY CHROMOSOMES SUSTAINABLE BUSINESS STRATEGY INNOVATION AS A MARKER OF OUR DNA

9.4.2 - SCOPE AND MANAGEMENT 50REPORTING SCOPE AND METHODOLOGY STEERING OF CSR DIALOGUE WITH OUR STAKEHOLDERS TO MOVE FORWARD TOGETHER

9.4.3 - SOCIAL CHALLENGES: PEOPLE AT THE CENTRE OF OUR APPROACH 53PROMOTING SOCIAL DIALOGUE ATTRACTING TALENT AND PROMOTING OUR EMPLOYER BRAND ENSURING THE HEALTH, SAFETY AND WELFARE OF EMPLOYEES FOSTERING EMPLOYABILITY PROMOTING A COMPREHENSIVE DIVERSITY POLICY ENCOURAGING MOBILITY

9.4.4 - ENVIRONMENTAL CHALLENGES: RESPONSIBLE GROWTH 66

9.4.5 - SOCIETAL CHALLENGES: BUSINESS ETHICS 68

9.4.6 - PERFORMANCE INDICATORS 70CROSS-REFERENCE TABLE TABLE OF INDICATORS

CONTENTS


EDITORIAL

9.4.1 - STRATEGY AND PROFILE

For over 30 years, our Group has been an acknowledged player in the engineering market. Through its growth, unshakable strategy and its ability to anticipate new technologies, AKKA has been able to achieve an international dimension and become a key partner for its customers. AKKA has built and preserved this unique positioning throughout its history,

enjoying sustainable momentum thanks to its strategy of balances. This allows - the Group to present a global services offering with high value added, which we continue to ramp up through strategic acquisitions, our innovative in-house research centre and the unique place we give to the men and women of the Group.

Over the past 30 years, we have created the solid foundations for an innovative and effective company focused on meeting environmental and social challenges through innovation and technology.

AKKA Technologies contributes to sustainable development and emer-ging challenges by integrating energy savings, personal and product security, new materials, Big Data and many other key challenges into its innovative solutions. Beyond legislative constraints, our 13,000 talented employees in 20 countries are aware of their role in the implementation of the company’s Corporate Social Responsibility and the opportunity it represents for our customers’ technology projects. Through a process of continuous improvement and commitment, we wish to continue our efforts, including increased visibility on the societal commitment, the reduction of our environmental footprint and the social dynamics within the Group and our subsidiaries.

This report shows how the Group integrates CSR into its operations and activities, including some of its customer projects. Much progress has been made in recent years since the signing of the Global Compact in 2010. This year in particular, we have included new subsidiaries in the non-financial reporting scope.

Corporate Social Responsibility is growing steadily and occupies an increasing place in our organisation. It mobilises and engages the men and women of the Group, making us confident in our ability to create a sustainable future.

"A UNIQUE POSITIONING, A DNA CHARACTERISED BY A PASSION FOR TECHNOLOGY AND A CLEAR VISION OF OUR STRATEGIC CHALLENGES"

Maurice RICCIChairman of the Board and Group CEO



PASSION FOR TECHNOLOGY IS IN OUR DNA

MECHANICALENGINEERING

INFORMATIONSYSTEM

SUPPORTENGINEERING

PROCESS ENGINEERING

ELECTRICS/ELECTRONICS

& EMBEDDED SOFTWARE

CONSULTINGSYSTEMS ENGINEERING

INNOVATION, INTERNAL RESEARCH CENTER: AKKA RESEARCH

INDUSTRIALISATION PRODUCTION LIFE-CYCLE AFTER-MARKETDESIGN ENGINEERINGR&D

Maurice RICCIChairman of the Board and Group CEO

CHANGE IN CONSOLIDATED REVENUE (IN €M)

AKKA Technologies is a European Engineering and Technology Consulting Group that supports large manufacturing and tertiary services com-panies, seeing their projects through from the initial studies and R&D to large-scale production.

Through expertise in complementary business lines and structured diversification, the Group brings real value added to customers in numerous business sectors including aerospace, automotive, space/defence, cybersecurity, consumer electronics, telecommunications, chemicals, phar-maceuticals, steel, energy, rail, marine and service industries.

2010

€400M

2011

€474M

2012

€827M

2013

€879M

2014

€886M

20152016

€1,002M

€1,123M

"THE BEST WAY TO PREDICT THE FUTURE IS TO INVENT IT. LET’S SHARE OUR PASSION FOR TECHNOLOGY."



35%GERMANY

45%FRANCE

12%WESTERN EUROPE

3%EASTERN EUROPE

3%OTHER

1%AMERICA

1%ASIA

23%AERONAUTICS

42%AUTOMOTIVE

4%RAILWAY

3%DEFENSE

4%LIFE SCIENCES

3%OTHERS

7%ENERGY

4%SERVICES

10%SUPPLIERS

BREAKDOWN OF 2016 REVENUE BY BU

GROUP

13,252FRANCE

6,349

GERMANY

2,928

OUR 10 MAIN CUSTOMERSAIRBUS GROUP • ALSTOM • BMW • DAIMLER • GSK • RENAULT • SAFRAN • THALES • VOLKSWAGEN • VOLVO

Leader in the automotive and aerospace sectors in Germany and France, AKKA Technologies works worldwide on projects at the forefront of technology thanks to the mobility of its teams and its international positioning. A respected employer, the AKKA Technologies Group has more than 13,000 employees and operates in 20 countries.

WORKFORCE

BREAKDOWN OF 2016 REVENUE BY BUSINESS SEGMENT



SPECIFIC AND COMPLEMENTARY CHROMOSOMES

GOVERNANCE

As a family company, AKKA Technologies is imbued with the thinking of its founder and Chairman. The Group was founded on 1 April 1984 with the aim of providing flexibility, responsiveness and quality of service to our first customer, the Renault Group. Guided by a determination to innovate in the service of its customers, the Group grew fast with the aim of com-bining an entrepreneurial spirit with a constant and visionary strategy.

This strategy is based on four balances: customers, geographical zones, business sectors and finance. The wide-ranging expertise it offers and the know-how of its cross-disciplinary teams enable the Group to cover the complete lifecycle of a product, and as such to provide the technology solution best adapted to customers’ needs.

Since the Group’s creation, three underlying values have been the foun-dation of the corporate project:

- Ambition: to give our customers the best;

- Respect: especially of all employees, customers and local communities;

- Courage: to take risks and to do what is needed to bring our ideas to conclusion.

The managerial dynamic aims to unite all employees around these col-lective values. But the underlying idea remains the same: embody and share innovation on a day-to-day basis without jeopardising the overriding sense of belonging and the company’s sustainability.

Over the years, and in line with its acquisitions, the Group has grown and evolved. Now structured by Business Units, the Group is committed to managerial autonomy. This is where growth, the empowerment of each team and intra-group synergies lie.

An international company, AKKA Technologies’ corporate governance is based on three key management bodies: the Board of Directors, the Executive Committee and the operational management of the various Business Units, France, Germany and International.

In recent years, the fast diversification of the Group’s international activities has prompted it to expand its governance by setting up operating divisions in charge of Western Europe (excluding France and Germany), Eastern Europe and Asia & the Americas.

Note that CSR is the subject of an annual management review involving a review of the non-financial report included in the registration document.

For more information on corporate governance, please refer to sections 14 and 16 of the Registration Document.



SUSTAINABLE BUSINESS STRATEGY

Being active across all industrial sectors guarantees the sustainability of the Group’s business expertise. In-depth knowledge of these sectors, leveraging the know-how built up within our 21 skill centres, enables AKKA Technologies to provide its customers with innovative, creative and sustainable solutions.

Sustainable development integrated into our offers and projects

The satisfaction of our customers is central to our concerns. Oriented by their specifications, we consistently aim to develop innovative solutions combining economic, environmental and social benefits. We act with our partners and employees in accordance with ethical standards; we are a player of excellence building the world of tomorrow.

For instance, AKKA Technologies provides its customers with techno-logical solutions making it:

- a strong player in sustainable mobility in the automotive sector, as well as in aerospace;

- a player in the development of smart and connected cities;

- a force in the improvement of economic performance through pre-dictive maintenance.

The strategic importance of the projects entrusted to us by our cus-tomers and compliance with non-disclosure agreements prevent us from going into detail on the integration of sustainable development in the assignments performed by the Group.

Diffusion of skills, appropriation of expertise

In a constantly evolving world where technology changes rapidly, sha-ring expertise and business skills with all Group employees is of strategic importance: this is why the Group over the last two years has developed its Marketplace project aimed at giving all customer-facing managers an understanding of the full range of our skills so that they can serve as ambassadors. The project was initiated in conjunction with a seminar in 2014. Further sessions followed until 2016, allowing more than 250 managers to be trained in over 30 major offers. In 2017, all managers will have access to even more detailed pre-sale presentations covering the full spectrum of the Group’s skills. These presentations are classified by market (aerospace, etc.) if they are sector-specific or assembled in the form of cross-cutting skills presentations.

Lastly, the customer approach process itself is now poised to evolve under the impetus of the Group’s new cross-cutting sales department. This approach will be presented as a massive open online course (MOOC) by the AKKA Institute to script the presentation of offers. The presen-tation kit will be available via the new Group CRM and backed up by modern tools and marketing methods.

Illustration of our multi-sector presence



All technical products and components are subjected to the most varied environmental influences determining the way they are used and their lifecycle. Water, salt and sun – are you thinking “holidays”? For some, these words are top of the list of environmental influences to which components and technical products are subjected during their useful lives.

Rapid fluctuations in temperature, amplitudes taking temperatures too high or too low, ultraviolet radiation, salt, dust, mist and acid rain are all phenomena with implications for components, some of which can even cause functional limitations or outages.

True to the motto “Bring the environment into the laboratory”, a team of MBtech mechanical engineers in Germany has been dedicated to “Complete Vehicle Trials” since the summer of 2016. The objective is to increase the resilience and functional reliability of vehicles, and in turn to enhance the product image.

“We are seeing an increase in customer demand, these services do-vetail very well with our portfolio”

The offer in the field of environmental simulation includes technical controls, climatic chambers, corrosion tests in artificial atmospheres, rooms with salt spray, salt fog spray testing, corrosion modification testing, condensed water testing, controls such as solar simulations, and temperature and water projection shock tests. The aim is to va-lidate the products used in specific environmental conditions and to ensure the development of economically sustainable products.

The automotive market is not the sole target of this exercise. Original equipment manufacturers, and the construction, energy, shipbuilding, aerospace and electronics industries are also part of the target.

“WE ARE SEEING AN INCREASE IN CUSTOMER DEMAND, THESE SERVICES DOVETAIL VERY WELL

WITH OUR PORTFOLIO”

ENVIRONMENTAL SIMULATION DIVISION A START-UP WITH BRIGHT PROSPECTS


INNOVATION AS A MARKER OF OUR DNA


Air-COBOT PLUME

Link&Go

Innovation has been AKKA Technologies’ prime strategic focus since the company was founded. The idea for the Group is to showcase its unique expertise, materialised in innovative solutions developed for its customers. To this end, the Group has created AKKA Research, an internal research centre. It is the tangible expression of the AKKA Group’s commitment to providing innovative solutions to current and future societal and environmental challenges.

The Group makes a principle of developing collaborative technology solutions that positively impact the environment.

A genuine collaborative platform, AKKA Research relies on the pooled knowledge and expertise of over 13,000 in-house employees. Externally, it builds on partnerships with customers, stakeholders in public and pri-vate research, and colleges. This combination of skills allows it to design and develop disruptive solutions in relation to existing technologies.

For several years, the Group has demonstrated its commitment in an innovative approach to sustainable mobility:

- In February 2013, AKKA Technologies unveiled Link&Go, the elec-tric and autonomous concept car of the future. The Group’s flagship project, this driverless vehicle is constantly pushing back the tech-nological boundaries of the smart city of the future as it progresses. Innovations such as Link&Go demonstrate our ability to think outside the box. This year, Link&Go travelled well beyond our borders: our in-novative ability won praise at the World Government Summit in Dubai and from the Ministers of the Economy of China, Belgium and Canada. Link&Go was also recently featured by our partner Dassault Systèmes in a virtual showroom at CES Las Vegas to demonstrate its role in the city of tomorrow. Today, AKKA no longer sees Link&Go as simply an autonomous vehicle; it is seeking to integrate it into an intelligent and connected environment. New mobility is central to the Group’s strategy: it will ultimately reduce the impact on the environment and ensure the highest level of security.

- In July 2014, AKKA Technologies coordinated the project behind the world’s first visual aircraft inspection robot, Air-COBOT (Aircraft enhanced Inspection by smaRt & Collaborative rOBOT). The main role of

this all-terrain and autonomous robot is to hunt down technical defects on aircraft on the ground, to ensure compliance with maintenance, en-vironmental and safety standards for aircraft, airports and passengers. Developed in a consortium, Air-COBOT is designed to carry out 70% of the visual inspections required by regulations, on a daily basis, for the maintenance, repair and inspection of aircraft. It works with airline staff. AKKA Technologies unveiled its prototype at the 2015 Paris Air Show. Dynamic demonstrations of the robot’s skills are planned in 2017.

- In March 2015, the Group announced that it was working with Stelia on the development of PLUME S3L, a lightweight composite structure for aircraft seats. The project is a response to the challenges of climate change, the need for the aviation sector to reduce greenhouse gas emissions and its exposure to fluctuations in the price of fossil fuels. PLUME accordingly aims to significantly reduce aircraft weight while maintaining the highest level of security. AKKA Technologies teams won the tender for this project thanks to their globally recognised aerospace expertise, but also thanks to their innovative approach to environmental issues. The PLUME project will enter a decisive phase this year, when many ways of lightening materials will be studied.

This spirit of innovation is part of our overall strategy and one of our daily concerns. It is the driver of our development and our very essence. For more information on our innovation strategy, please refer to chapter 11 of the Registration Document.

"INNOVATION AT AKKA REPRESENTS AN OBVISOUS LINK BETWEEN SECTORS, CULTURES

AND PEOPLE. IT IS OUR DNA, THE EXPERTISE EMBODIED BY OUR

ENGINEERS"Christele Wawrzyniak

Head of Innovation at AKKA Research


9.4.2 - SCOPE AND MANAGEMENT

REPORTING SCOPE AND METHODOLOGY

This CSR report covering the 2016 calendar year was prepared pursuant to article L. 225-102-1 of the French commercial Code (known as the “Grenelle 2” law).

In view of its international footprint, the Group takes into account the principles and recommendations of the Global Reporting Initiative.

As a signatory of the UN Global Compact, the Group also presents here its Communication On Progress for the year 2016.

Non-financial reporting scope

The CSR report is prepared in accordance with financial reporting and quantitative data extracted from the internal information system. The data make reference to the following scopes:

- Group: the scope referred to as “Group/AKKA Group/AKKA Technologies Group/AKKA Technologies” covers the consolidated data of the AKKA Technologies Group;

- France: the scope referred to as “France” includes CSR data relating to the following entities: AEROCONSEIL, AKKA I&S, AKKA Informatique & Systèmes, AKKA Ingénierie Documentaire, AKKA Ingénierie Process, AKKA Ingénierie Produit, AKKA Life Sciences, AKKA Research, AKKA Services, Casciopé, EKIS France, Real Fusio, Matis Informations Technologies, Matis Technologies-M.T., et Modélisation Assistance Technique Informatique Scientifique (Matis entities: new in 2016);

- Germany: the scope referred to as “Germany” includes CSR data re-lating to the following entities: MBtech Verwaltungs, MBtech Group and its subsidiaries, MBtech Consulting, Proceda Modelbau, MBtech EMC and ATP (subsidiaries: new in 2016).

Preliminary remarks

- The number of entities included in the CSR reporting scope continues to increase as planned. The Group aims ultimately to harmonise the financial and non-financial consolidation scopes.

At this stage, the information on the International BU is only consolidated for indicators bearing on the workforce and changes in the workforce, wages and some qualitative information.

The goal for 2017 will be to include new subsidiaries, including those of the International BU with significant impact or activities.

- As far as possible, and to show the change of certain CSR indicators over time – and thus highlight positive developments or those requi-ring special vigilance – the indicators are presented for the 2015-2016 period (at constant or current scope depending on the relevance).

- The reporting scope is confined to operational data and only partially includes indicators relating to assigned projects.

Definition of indicators

AKKA Technologies operates in numerous countries where legislation and cultures differ. Hence, some indicators relating to the French non-financial reporting have been subject to arbitrage. As such, the Group has established its own CSR reporting standards.

The information presented below has been subject to a report esta-blished by an independent third party.

The information was established in view of the nature of the activities of AKKA Technologies and the social, environmental and societal impacts associated with it. The following information required by law is less relevant to the services of the AKKA Technologies Group, performed primarily in offices:

- Elimination of forced or compulsory labour and the effective abolition of child labour;

- Provisions and guarantees for environmental risks;

- Measures to reduce waste or repair discharges into the air, water and soil that have an adverse impact on the environment;

- Noise and other forms of pollution specific to an activity;

- Fight against food waste;

- Water consumption and supply in relation to local constraints;

- Land use;

- Adaptation to the consequences of climate change.

Moreover, in view of their relationship with projects conducted by the Group on behalf of its customers, the following themes cannot be addressed. The Group is nevertheless aware of the impact that projects may have on the environment:

- Consumption of raw materials and measures to improve efficiency in their use;

- Measures taken to preserve or develop biodiversity;

- Measures taken for the health and safety of consumers.

The Group recognises that it may use its influence with its customers to prompt them to take sustainable development into account in their specifications, but is also aware of the free will of its contractors and by principle respects all clauses on which it is questioned.


52/100 CSR RATINGBY ECOVADIS

First Reporting CSRSigning of the UN Global Compact

Participation to the CSR

Committee of Syntec Ingénierie

60/100 CSR RATINGBY ECOVADIS

Analysis of the AKKA CSR 2015

report carried out by Oraveo, a com-pany specialized in

CSR communication & strategy

2010

2011

20162012

2015 2017

TARGET ECOVADIS


STEERING OF CSR

The preparation of the 2016 CSR Report was steered by the Group’s internal control department, in close collaboration with the numerous contributing cross-cutting functions: Human Resources, Quality, Safety, Environment, Purchasing, Consolidation, Communication, etc

Within each reporting scope, the CSR Committee worked with designated KPI Leaders in charge of collecting, analysing and reporting key indicators. To ensure consistency in the collection of information, the committee established internal standards and indicator sheets to facilitate mutual understanding.

GROUPMANAGEMENT

CROSS- CUTTINGFUNCTIONSGROUP COMMUNICATION

PROJECTMANAGEMENT

Project Management CSR

Corporate Social Responsibility occupies an increasing place in AKKA’s organisation and the completion of its projects.

In recent years, our determination to move forward has been reflected in greater involvement in initiatives related to social, environmental and societal commitments:



DIALOGUE WITH OUR STAKEHOLDERS TO MOVE FORWARD TOGETHER

In 2016, applying the approach laid down in the specific CSR guide for the engineering sector, AKKA Technologies worked to identify its stakeholders.

AKKA strives to deliver a clear, honest and transparent message to each of its stakeholders, and to develop information, consultation and dialogue tools. Special events such as fairs can be forums for dialogue.

In line with the determination to advance our approach and our commitment to openness and dialogue with our stakeholders, a dedicated CSR email address has been created: [email protected]

Please feel free to share with us your opinion on our initiatives or your expectations related to the AKKA Technologies Group’s CSR approach.

Video chat: Paolo Del Noce, CEO France, and Didier Baichère, HRD France, responded to numerous questions from AKKA France employees on subjects as diverse as AKKA’s organisation, markets, wages, well-being at work, etc.

Employees were able to ask questions in advance or live, and were encouraged to express themselves freely. The exchanges could be viewed in meeting rooms made available especially, or directly on PCs.

More than 1,600 employees attended the chat, and the replay was viewed 677 times.

The AKKA France management aims to continue this form of dialogue; another edition is scheduled for September 2017.

ShareholdersProfessional associations

State, Local authorities, Local elected o�cials

Rating agencies, Certi�cation

bodies

Financial institutions

Citizens/Residents MediaNGOs

VALUE CHAIN

SUPPLY CHAIN

Industrial Partners

Serviceproviders

Schools, Universi-ties, Sourcing and

R&D

Subcontractors

Industrialpartners

Companies Consumers

Employees Representativebodies


9.4.3 - SOCIAL CHALLENGES

SOCIAL CHALLENGES: PEOPLE AT THE CENTRE OF OUR APPROACH

As an engineering company, AKKA Technologies places people at the centre of its approach, - they are our primary asset. The OnTrack project launched in 2014 enabled the Group to identify social challenges and to respond through a robust and ambitious Human Resources policy, which will be described in the sections below.

CHALLENGES ACTIONS BY AKKA

Promoting social dialogue Social agreementsEmployees involved in the Group’s strategy

Attracting talent and promoting our employer brand School policyChallenge AKKA

Ensuring the health, safety and welfare of employees

Prevention and awarenessQuality of life at workSporting activity and healthWorking conditions

Fostering our employees’ employabilityTraining as a key focus Innovative training tools Management support

Promoting a comprehensive diversity policy Disability agreement Responsible subcontracting

Encouraging mobility Effective international mobility policyAn innovative HR information system

AKKA logo by the men and women of the AKKA Group



AGE DISTRIBUTION

<25 years

25-30 years

30-40 years

40-50 years

50-55 years

>55 years

798

3,16

5

5,09

6

2,71

6

792

686 46

8

1,49

8

2,38

7

1,28

9

386

321

<25 years

25-30 years

30-40 years

40-50 years

50-55 years

>55 years

110

551

1,11

0

725

257

175

<25 years

25-30 years

30-40 years

40-50 years

50-55 years

>55 years

HIRES

4,231GROUP

2,071FRANCE

652GERMANY GERMANY

DEPARTURES

3,279GROUP

1,778FRANCE

465

10 524 2 728GROUP

4 935 1 414FRANCE

2 414 514GERMANY

The recruitment policy of the AKKA Group is based on a principle of equal opportunities. Our principal hiring criteria are skills and personal qualities; - this enables us to build successful teams of men and women.

GROUP FRANCE GERMANY

GENDER DISTRIBUTION

CHANGE IN WORKFORCE



PROMOTING SOCIAL DIALOGUE

Social agreements

L’année 2016 a été riche en matière de dialogue social, en France 2016 was a remarkable year in terms of social dialogue, especially in France. Considering that the establishment of constructive social relationships is based in part on the institution of forums for the representation of employees, and also considering legal and societal developments, the AKKA Technologies Group’s management negotiated and signed a majority Group agreement (excluding Matis) on the right to organise. Other than the resources it gives employee delegates, the agreement sets out the way in which employee bodies operate, especially in view of the establishment of an Economic and Social Unit (ESU).

- Pre-electoral memorandum: noteworthy among major and defining agreements, after negotiations spanning many months, was the signing of a memorandum governing the organisation of elections for site com-mittees and employee delegates within an Economic and Social Unit.

This was the culmination of several years of discussions that resulted in the organisation, for the first time in France, of professional elections for more than 5,000 people between November and December 2016.

- Management of Employment and Professional Trajectories (MEPT): in France, the Group signed a new Management of Employment and Professional Trajectories (MEPT) agreement for a period of three years.

The objectives of this agreement are to:

- anticipate changes in our businesses and skills, especially targeting key skills needing to be strengthened or acquired;

- increase AKKA employees’ understanding of the various business lines, as well as any changes (regional, national, international) within the Group, with the implementation of professional development paths;

- establish the resources and accompanying measures necessary for the management and anticipation of these developments, particularly through training and support for geographical and job mobility: gra-duation bonus, payment of MOOC certification, mobility installation bonus, day off for moving, etc.

The various entities comprising AKKA Technologies apply and comply with local laws in their host countries, sector-wide agreements in the relevant countries (Syntec in France) and the provisions of collective agreements when signed at Group level (by country) or by legal entity.

“IN FRANCE, AKKA TECHNOLOGIES IMPROVES WORKING CONDITIONS AND STRENGTHENS SOCIAL DIALOGUE THROUGH 11 AGREEMENTS SIGNED IN 2016"

Patrick Houry - DRH Groupe



660733

2015

0

100

200

300

400

500

600

700

800

RÉMUNÉRATIONS(EN M€)

2016

- Disability agreement: the previous three-year agreement ended on 31 December 2016, with the goal well and truly achieved: the Group hired 25 permanent employees in 2016, on a target of 30 over three years. Taking a broader measure, the goal was to make 60 hires in all types of contract over three years; the final number was 71.

The negotiation of a new agreement for the employment of people with disabilities has begun, and should be completed early in 2017. Meanwhile, Matis concluded a three-year agreement on this subject in early 2016.

- Intergenerational contract: implementation of the agreement on intergenerational contracts continued, and the negotiation of a new agreement will take place in early 2017, the previous agreement ha-ving expired on 31 December 2016. Matis has also signed a three-year intergenerational contract, which came into force early in 2016.

- Wages: the Group in France also signed several addendums bearing on collective remuneration (profit sharing, company savings plan). This amendment allowed the Group (excluding Matis) to make an employer’s contribution on employee payments in both 2016 and 2017.

In Germany, the MBtech Economic Committee meets once a month, and the equivalent of France’s HSC met each quarter in 2016 (excluding MBtech Consulting and Proceda). The German system comprises several local bodies equivalent to the Works Council in France. If necessary, they meet weekly.

The Economic Committee must be informed and consulted on certain issues, especially those affecting working conditions. The consultation must result in a positive response before the company can implement the proposed initiative.

WAGES (IN €M)



SOCIAL DIALOGUE 11 agreements signed

TOUR DE FRANCE OF BRANCH OFFICES6,000 employees invited

VIDEO CHAT1,600 employees live

Employees involved in the Group strategy

Chaque année, la Direction AKKA France met en place des conditions Each year the AKKA France management establishes occasions for di-rect dialogue with its employees. The 2016 Tour des Agences attracted

more than 2,600 employees on 20 dates on several local sites. Other than being informed of the Group’s strategy, prospective changes in dimension and the challenges ahead, employees were encouraged to take the floor in order to intensify the exchange.

2016 Tour de France of our branch offices – Toulouse



ATTRACTING TALENT AND PROMOTING OUR EMPLOYER BRAND

Cultivating and sharing our passion for technology has been the AKKA Technologies Group’s overriding aim since its inception. Our goal is simple: enable all our employees to express their talent and enhance their skills.

How?

- By allowing them to work on complex projects of considerable size, both locally and internationally, thanks to our multi-sector footprint, our control of a product’s entire V-model and our decidedly interna-tional positioning.

- By offering a rewarding and stimulating environment through our own Design Centres in which more than half of our engineers work.

- By joining a team in which talents can exchange, learn or pass on their experience.

- By allowing them to participate in innovative projects disrupting the established market and to develop creativity within our in-house research centre, AKKA Research.

In this way, the AKKA Group’s school policy is designed to forge bonds with students, but also with school management teams, taking action in several different areas:

- HR, helping students establish their CV or assisting them in future job interviews, etc.

- Technological, sponsoring research chairs, courses on the innovations of the future or practical classes on technical problems, etc.

- Sponsoring students, by providing organisations with the financial and technological support needed to develop technical and sporting projects, such as the PV3E at ESTACA, which competes in the Shell Eco Marathon, ISAE SUPAERO Robotics, which takes part in the Coupe de France in Robotics, the ENSEIRB MATMECA Rocket Club, which participates in C’Space, and TOOS, managed by BDS at Supélec, an omni-sports tournament that brings together over 3,000 students on the Central Supélec campus over a weekend.

Challenge AKKA A key event for our Group, the Challenge AKKA is part of our history. During a skiing weekend, we offer students a venue for relaxed exchanges with all of the Group’s stakeholders and with management which is closely involved in the event and uses it as a forum for explaining our corporate vision and future plans.

The Challenge AKKA is a welcoming sporting event where stu-dents can interact in a special way with our leaders, managers, consultants – as well as our recruitment teams. It is a great oppor-tunity to explore our Group, our expertise and our professions or our business sectors through discussions with our ambassadors.

It is a weekend to talk about future careers and opportunities, etc. Exclusive career opportunities are offered in line with business expectations, sectors, etc.

Passion for technology, teamwork, respect, ambition and a hunger for performance are many values dear to the Group, and ones that are reflected in the Challenge AKKA.

Some of our partner schools in France and Germany

2016 Challenge AKKA at Serre Chevalier



ENSURING THE HEALTH, SAFETY AND WELFARE OF EMPLOYEES

An environmental health prevention policy was formalised by Maurice RICCI in 2010, and extended by the members of the France Management Committee in January 2015. The goal is to strive for zero accidents.

AKKA Technologies’ health and safety management system is focused on risk prevention, in strict compliance with regulations and the contrac-tual obligations of customers. It is on this basis that AKKA Ingénierie Process has obtained MASE certification for three years in two offices (Lezennes and Lyon) in France. The AKKA Ingénierie Process and EKIS entities have undergone the radiation protection audit No. 2 process for their activities with ionising radiation in nuclear facilities. In Germany, a plan to obtain ISO 45001 certification is being studied.

AKKA Technologies has established a seven-person structure to facili-tate its risk prevention policy in France and a three-person structure in Germany. All initiatives are managed by these prevention specialists, and local contact people are present on some sites (occupational safety officer), with 70 safety advisors in Germany for instance.

Prevention and awareness

Moreover, the Risk Prevention Services conduct a specific safety training programme for all employees; more than 800 people were trained in safety in 2016 in France, an increase of 3%. In Germany, specific training sessions for high-voltage electrical risk, introduced in 2015, were re-peated in 2016 for employees working on test benches, in partnership with the MBtech Academy.

Each year, employees designated to intervene immediately after accidents are trained internally via our occupational health and safety (OHS) officers or externally. In 2016, AKKA has over 320 OHS officers (170 in France and 150 in Germany). Defibrillators are installed in some offices, and training for emergencies such as fire has been deployed.

An internal communication system to inform employees about risk and prevention measures has been implemented within the Group. A Health and Safety Week is organised in Germany, in partnership with nutritionists. It features talks by nutritionists, athletes and company doctors aimed at raising employee awareness about well-being at work. In France, the Risk Prevention Service continued its work on road risk as well as on ergonomics and the prevention of musculoskeletal disorders through awareness raising and work by occupational medicine and specialised ergonomists.

Number of work related illness in the year

Number of workplace accidents with sick leave Frequency rate Severity rate

France Germany France Germany France Germany France Germany

2015 - - 18 14 2.33 3.10 0.028 0.025

2016 1 - 24 31 2.33 4.86 0.04 0.06

3.953.61

3.08

2.41

GERMANY FRANCE

2015

2016

7 PEOPLEIN FRANCE

3 PEOPLEIN GERMANY

RISK PREVENTION MANAGERS

ON-SITE SAFETY COORDINATORS

OCCUPATIONAL SAFETY OFFICER

70 COORDINATORS IN GERMANY

ABSENTEEISM RATE(%)



Quality of life at work

In accordance with commitments including the Agreement on Psycho-Social Risks signed in October 2012 and renewed in 2015, the AKKA Technologies Group’s general management (excluding Matis) com-missioned ELEAS to conduct a diagnosis of the quality of life at work. One hundred and fifty people were interviewed, and the result of the diagnosis was delivered to the members of the HSC and the Management Committee during the second half of 2016.

The diagnosis, the firm’s recommendations and the first draft of an action plan will now be presented in early 2017 to the Psycho-Social Risks Monitoring Committee. Management aims to work effectively with this body to finalise the constitution of working groups, leading to the determination of plans for concrete and operational actions.

Sporting activity and health

To encourage German employees to maintain good health, weekly running training is organised in some offices. Germany also promotes employee participation in local foot races. In Papenburg, gym mem-

bership is awarded to employees performing track driving endurance tests so as to reduce the monotony of their jobs.

In France, perpetuating AKKA’s commitment to open-air sports (motor sports, ski challenge, etc.), the Group offers a new course to encourage encounters between employees in offices and to promote sporting activities.

Working conditions

AKKA places particular emphasis on regularly improving its employees’ working conditions. AKKA opened two major sites this year, Andromède in Blagnac and Flugfeld in Sindelfingen. Both sites were designed and fitted out to promote synergies and exchanges, to allow close and quick collaboration on projects, but also to improve the environment and employees’ working conditions.

We believe that taking pleasure in working together is essential to AKKA Technologies’ success today and tomorrow.

AKKA’ttitude Having the AKKA’ttitude means offering a work environment that promotes wellness and supports employee health. Sports and innovation are both part of the AKKA Technologies DNA, so AKKA’ttitude owes it to itself to be innovative. High-tech and fun, the objective of the Challenge Connecté is to raise funds for a charity but also gives participants the opportunity to play sports or take part in afterwork events. Whether or not people are keen sports players is immaterial: the overriding aim is to foster social interaction and a team spirit.

The Andromède site inaugurated in 2016



FOSTERING EMPLOYABILITY

Training as a key focus

The AKKA Technologies Group sees training as a tool for the recogni-tion of skills and the promotion of individual performance, enabling everyone to achieve their full potential and to be an actor in their career development. It serves to anticipate and support change in our business, plays a role in the constant enhancement of the professional skills of our employees, and facilitates the understanding and day-to-day commitment of everyone to our corporate project. Moreover, revealing our talents, as part of new projects, mobility, or career development, is essential for the Group.

As such, AKKA Technologies firmly believes that the key to the success of its corporate project is a strong human and managerial dynamic where everyone can reveal their talents in motivating challenges, and be actors in their career paths.

Innovative training tools

Two internal structures, AKKA Research and AKKA Institute, are at the heart of the system for training and developing our employees’ innovation potential in the service of our customers: :

AKKA RESEARCHAKKA Research aims to:

- propose disruptive technological building blocks for customers and with our customer partners;

- promote technology transfer between sectors;

- promote exchanges between employees on innovative topics and to ramp up their skills;

- ensure technological intelligence and provoke new ideas among our employees by facilitating creativity sessions;

- promote employee inventors and technology projects

AKKA Institute – MBtech AcademyEstablished in 2007, AKKA Institute is the Group’s internal university. A similar structure, the MBtech Academy, exists in Germany.

These training institutes have several objectives:

- assist new consultants from their induction;

- promote career paths and facilitate employees’ sector and geogra-phical mobility;

- provide support to consultants’ business, technical and hierarchical developments;

- provide technological and methodological support to all stakeholders;

- encourage the deployment of the Group’s development model;

- leverage and standardise the Group’s good practices among mana-gement teams;

- In connection with the Group, AKKA Institute offers its employees trai-ning and support systems geared towards clear educational objectives.

Focus on Start training

The challenges facing the Group are to succeed, learn and excel, and to manage developments in the company and our employees’ “employa-bility capital” in a complementary manner. AKKA’s business managers are a precious and strategic force for the Group’s growth; considerable efforts are devoted to training and preparing them, building up their autonomy and responsibility. To help them, AKKA Technologies has designed training and support schemes specifically dedicated to the challenges faced by the sales teams. Split into 12 modules, the Start training allows young business managers to assimilate the Group’s strategic vision:

- learn the fundamentals of the job of manager;

- understand the environment and customers;

- assimilate the AKKA Technologies business model and find out what makes a good business manager;

- comprehend the Group services offer;

- become acquainted with the management consulting team

Focus on E-learninstitute

Innovation should also benefit our employees. With this in mind, AKKA Institute has expanded its range and launched a comprehensive trai-ning course in e-learning format. Its goal is to create a more attractive and more interactive environment to train our employees on certain fundamental issues, providing them with the keys to their success, and taking into account the constraints related to our business, such as geographical distance or the availability of our consultants. A new platform is set to open in 2017.

"THE FEEDBACK HAS ALLOWED ME TO SEE WHAT I WAS MISSING WHEN

INTERACTING WITH CUSTOMERS. IT WAS VERY USEFUL. REVIEWING

THE METHODS LEARNED IN START HELPED ME A LOT"

Damien Durant - Junior Business Manager



Management support

The induction process for new employees is well established. Each new employee is given a “Welcome Package” and has an induction godfather or godmother. They also get invitations to individual and collective events, which they can identify on the induction “roadmap” in France. In Germany, new employees also attend two-day training courses ai-med at facilitating their induction, preparing them for contact with customers, and strengthening their sense of belonging in the business.

• In addition to the training courses already implemented for our business managers, a qualifying training programme has been implemented in France (pilot in 2016) and Germany, backed up by various learning formats such as group-based workshops on the Agile methodology for specific learning topics.

• Specific training has been implemented in France and Germany to train managers on the annual performance review, focused on dialogue and motivation.

• In Germany, a 360° interview extending the OnTrack project has been implemented for managers, together with structured feedback at the end of the interview. This approach has been accompanied by return training, enabling managers to conduct improvement workshops with their team, focused on collaboration and communication.

• Experiments with new training methods: in an increasingly mobile and connected environment, the Group has encouraged its employees to take MOOCs in addition to conventional training since the beginning of 2016. They are accessible to all employees who want to develop their skills through additional and innovative solutions. All they need is an internet connection. Participating in a MOOC requires self-discipline and a healthy dose of motivation. But unlike conventional training programmes, MOOCs also allow participants to manage their time independently. With this in mind, a selection of MOOCs identified by the Group Training Department is offered each month through news flashes and on the Anais homepage. In addition, a Training 2.0 community is active on Yammer, the Group’s internal social network,

to relay information dynamically and to permit direct exchanges with employees. Lastly, the cost of the certification of such training, when it dovetails with the Group’s business, is paid by the Training Department on request.

• Graduation bonus: to support employees in their personal efforts to bolster their employability, we grant a bonus to all employees who graduate with a degree in one of the Group’s business specialities (excluding those that are in decline) when the training was not par-tially or totally funded by the employer (individual training schemes are excluded).

"MY GODMOTHER CONTRIBUTED A LOT WHEN I JOINED THE

COMPANY. SHE GAVE GREAT ADVICE AND HELPED MONITOR THE

ACHIEVEMENT OF OPERATIONAL OBJECTIVES THROUGH THE

ROADMAP. IT’S REASSURING TO HAVE THAT SORT OF SUPPORT"

Maxime d’Ornano - New employee, France



41,85247,704

32,247

47,642

GERMANYFRANCE

2015

2016

TRAINING EFFORT (IN HOURS)

The number of hours of professional training provided in 2016 was up significantly compared with 2015 in France and in Germany alike.

This trend can be ascribed to the extension of the CSR reporting scope, overall workforce growth and the inclusion of “Welcome Days” induction sessions (in Germany).

Roughly three-quarters of the training effort was devoted to the ac-quisition of new professional skills, and to technologies and solutions applied to our businesses. The remaining effort was devoted to the general professional development of employees, including language training – a key element in an international group such as AKKA.

Through this proactive policy, employees are usually trained at least once every three years, a pace that allows us to better anticipate tech-nological developments.

"I CAME AWAY WITH NEW CONFIDENCE IN HANDLING THE

MANAGEMENT OF MY TEAM; TAKING OVER AN EXISTING TEAM THAT DOUBLED THE SIZE OF MY

INITIAL SCOPE MEANT THAT I NEEDED ASSISTANCE"

Pierre Petit – Business Manager

AKKA Awards: recognising our employees’ talent!

It is through our motivated employees, and with the overriding aim of providing innovative solutions to our customers, that we strive to release our Group’s technological potential in each of our host countries. This is the thinking behind the AKKA Awards, which have been going for four years. The in-house com-petition, open to all Group employees, is geared towards rewarding our employees’ day-to-day work, talent and personal investment. To participate, employees can submit a project they brought to fruition alone or in teams, in-house or for a customer. It is based on the DNA of our Group: innovation. In 2016, the candidate projects were from from France, Belgium, Germany, Czech Republic, China, Italy, Spain and the United Kingdom.



PROMOTING A COMPREHENSIVE DIVERSITY POLICY

AKKA Technologies renewed its commitment to diversity in 2016:

- Signing of the Diversity Charter (France)

- Appointment of a person dedicated to diversity issues (France)

- Member of the AFMD (French Association of Managers of Diversity)

AKKA signed its first handicap agreement in 2014. Valid for a period of three years, it covers four main areas:

- Recruitment: appointment of a dedicated recruiter in France and par-tnerships with specialist local stakeholders to ensure smooth integration. In the last three years, AKKA France has recruited 71 people with disabilities (compared with a target of 60 set in the agreement). Moreover, for 2017, we set a target of recruiting 50 candidates from minority backgrounds, including 25 people through Mozaik RH. Mozaik RH is France’s leading recruitment and human resources consulting firm specialised in the promotion of diversity. Since its creation in 2007, Mozaik RH has worked with over 150 companies, generating more than 11,000 job interviews resulting in 4,000 hires of young graduates and experienced candidates.

- Integration and retention: with a three-person team deployed at the regional level, mechanisms are in place to facilitate integration, including adapted workstations, training, help with medical expenses and days of authorised absence. To facilitate the quality of daily life, Matis offers its eligible employees Employment Service vouchers to put towards domestic services (housekeeping, childcare, etc.).

- Communication and awareness: AKKA takes numerous initiatives to increase the awareness of its employees and managers. The HandiKap by AKKA application has been developed to provide information on the various types of disability. Participation in external events like the Free Handi’se Trophy also helps change perceptions and raise awareness among employees.

- Responsible subcontracting: AKKA seeks to foster partnerships with the protected sector (see Enjeux sociétaux : l’éthique des Affaires pour plus de détail).

DISABLED EMPLOYMENT RATE (%)

FREE HANDI’SE TROPHY 2016“Above all, it’s a gathering of several people with big hearts. The sporting conditions may be very arduous, but the combined efforts of the Free Handi’se Trophy team, the volunteers and participants from other companies make the experience a memorable one. The race is an opportunity to give people with disabilities the chance to work and move forward hand in hand with a “non-disabled” partner.

The atmosphere is festive and gives us a chance to get closer to each other: we all share the same sensations, the good ones and the less comfortable”

S. Bourlon - AKKA’Skou 2016 team member

The 2016 AKKA’Skou team: Guillaume, Stéphane, Yves and Florian

1.4 1.3

1.92.1

GERMANYFRANCE

2015

2016



ENCOURAGING MOBILITY

AKKA Technologies’ HR strategy aims to attract and develop the best talent in the market, as a means of giving fresh impetus to the Group’s growth. Our value proposal is based on our belief that an international group can provide fertile ground in which employees can achieve their potential, flourish and grow.

Effective international mobility policyThe objective of the Group’s international mobility policy is to establish shared rules for managing international skills transfers that match our business needs. The policy was drafted with a view to harmonising the practices of AKKA’s various entities. It is applicable to all employees and all locations. It was designed to promote flexibility within the organisation and to offer favourable conditions for employees on international assignments or working on customers’ premises. Various initiatives were carried out this year:

- Consolidation of the Mobility Community with the fourth mobility seminar in November 2016;

- Implementation of the process of monitoring employees in their mobility, with an annual appraisal and the practical use of acquired skills;

- Establishment of the AKKA Move communication programme;

- Launch of a monthly internal newsletter, putting each country successively in the spotlight;

- Development of a mobile application for mobility (information on subsidiaries, in-house jobs with the opportunity of submitting applications via the application) to be rolled out in the second half of 2017.

An innovative HR information system

In 2014, the Group rolled out an HR information system (Talentsoft’s Ingenium) for all of its French entities.

A central place is given to employees, who have a personal space (to file documents, a mini CV, diplomas, etc.), access to information (business references, links to internal offers, a link to the OnTrack contribution platform, etc.), and can air their views on various aspects of their job and future prospects when preparing the annual appraisal interview. Expressions of interest in mobility are also simplified (geographical mobility in France or internationally at any time in the year/professional mobility during individual interviews).

The system was expanded in 2015 by an integration assessment, allowing new employees to give feedback on their integration within the Group (with the aim of identifying areas for improvement in the process). In 2016, the Talentsoft solution was rolled out in Germany as a recruitment and mobility tool.

In France, we applied the solution’s Talent Management module to support the People Review for all employees. The main challenges are to apply objective criteria in employee management practices so as to promote talent retention consistent with the needs of the Group and to foster the loyalty of people identified as “essential”, but also to have a timeline tracking our talents year by year.

64ACTIVE VOLUNTEERING

FOR INTERNATIONAL EXPERIENCE(VIE)

127ACTIVE INTERNATIONALEMPLOYEE MOBILITIES

2,686MISSIONS ABROAD

INCREASE OF 25% VS 2015


9.4.4 - ENVIRONMENTAL CHALLENGES

ENVIRONMENTAL CHALLENGES: RESPONSIBLE GROWTH

In view of its international expansion, AKKA Technologies has rolled out IT tools designed to facilitate communication and exchange. Such tools also serve to reduce travel and related greenhouse gas emissions.

The Group continues to install videoconferencing equipment at its main sites. In 2016, 40 meeting rooms were equipped, 27 with Cisco technology and 13 with Skype technology.

In addition to these facilities, users can join audio- or videoconferences from their PC:

- The Cisco Jabber solution allows PCs to connect to rooms equipped with videoconferencing systems, offering the possibility of 32 connec-tions simultaneously throughout the Group. In 2016, we counted around 750 users (100 in Germany, 150 in international locations, 500 in France);

- The Microsoft Skype for Business solution is also gaining popularity within the Group. Some 1,500 employees used it in 2016. This com-munication tool facilitates contacts, both internally and with external companies. Our goal is to have 2,500 users by the end of 2017.

To support this commitment to reduce our greenhouse gas emissions, purchasing departments in France and Germany, in charge of mana-ging business travel, introduced a policy to improve monitoring and reduce business travel. One objective of this policy is to give priority to environmental aspects and only to authorise travel when alternative means such as videoconferencing or conference calls are unavailable.

The number of air trips on the French scope has increased in line with

The French and German operations together comprise more than 60 sites. The activities performed on these premises are mostly office ac-tivities (excluding test benches related to our automotive projects in Germany). Their impacts are chiefly those of standard business opera-tions (energy, travel, waste).

All sites are located in urban or suburban areas; none is located in a protected area. However, environmental consequences stem from the number of the sites involved and the need for substantial infrastructure and computer/electrical equipment on some sites.

The Group committed to reining in its environmental impact in France when obtaining ISO 14001 certification for its headquarters in Lyon in 2012. This certification was renewed in 2015. Germany in turn embarked on the ISO 14001 certification process for its Böblingen site in September 2016, with the goal of obtaining certification by the end of 2017.

The Group’s facilities in France and Germany are committed to conti-nuously improving their practices and preventing pollution by taking concrete initiatives consistent with their business lines. Employees are regularly informed of environmental impacts and encouraged to adopt an eco-aware attitude in their day-to-day behaviour:

-Sustainability Week with a product tasting fair;

- Photo contest during Mobility Week;

- Bike day: cycle to work, get free repairs and learn how to fix problems;

- Awareness raising about waste sorting and recycling through the sorting charter.

the Group’s international expansion.

At the same time, the impact of travel is reduced by virtue of a car policy under which service vehicles and company cars are selected on the basis of their GHG emissions.

In France and Germany, GHG emissions amounted to 18,610 Teq. CO2 in 2016.

The main sources of GHG emissions within the Group are the use of cars (hired and leased), followed by electricity in our buildings and air travel.

GREENHOUSE GAS EMISSIONS (%)

2% FUEL1% WATER VAPOUR

0% TRAIN

5% GAS

17% AIRPLANE

30% ELECTRICITY

45% CAR

GREENHOUSE GAS EMISSIONS (%)

Reducing greenhouse gas emissions

Publicity campaign in 2016


9.4.4 - ENVIRONMENTAL CHALLENGES

Reducing our energy consumption

Since 2015, AKKA has taken action to control and reduce its energy consumption. In 2016, this took concrete shape with the construction of two new sites in France and Germany (Andromède, located in the joint development zone eco-neighbourhood in Blagnac, and Flugfeld, in the town of Sindelfingen), both of which are High Environmental Quality (HQE) buildings. The Flugfeld site, for example, is equipped with a passive heating system in its “workshops”.

Factoring responsible management into our buildings (new BBC site, streamlining of surfaces, energy optimisation) helped cut electricity consumption per square metre by 14% in France between 2015 and 2016.

At the same time, AKKA continues its strategy of virtualisation to re-duce its server fleet. For AKKA in France and MBtech in Germany, 90% of servers are virtual and 10% physical. For Matis, 60% of servers are virtual and 40% physical.

In 2016, the energy consumption of AKKA Technologies’ buildings in France totalled 5.5 GWh.

In Germany, energy is derived from a range of sources (electricity, fuel oil, natural gas, etc.) and used in a variety of activities (offices, works-hops and test benches). MBtech’s annual energy consumption was 18.4 GWh in 2016.

Reducing office waste

The Group also manifests its environmental commitment through its policy of sorting and recycling waste, which involves the following initiatives:

- Introduction of a badge-based printing system to guarantee secure printing while reducing paper consumption. In 2016, the four sites concerned had 20 multi-function printers. In 2017, we will bring this initiative to seven sites, with 60 multi-function printers.

- Recovery and recycling of 100% of electrical and electronic equip-ment: a national contract with Reisswolf Germany provides for the centralised collection of paper and computer hardware. In 2016, 10 tonnes of waste were recycled in France through AfB, a company from the protected sector, and Veolia Triad Electronics. A further 2 tonnes were recycled in Germany;

- Launch of a tender in France to introduce waste sorting (paper, card-board, plastic, metal) in the main French offices in 2017.

Raising our employees’ awareness

REDUCTION OF THE ENERGY CONSUMPTION OF OUR BUILDINGS

Improvement of the air conditioning of our data centre on the Andromède site by an urbanisation system:

- Air conditioning through a raised floor;

- Hot aisle/cold aisle;

- Server racks lined up in a cold aisle to force the cold air flow over the equipment;

- Freecooling system consisting in directly using outdoor air to cool the cooling circuit so as to limit energy consumption.

The principle behind a cold aisle is to create a physical boun-dary between the cold air drawn in and the hot air released by the material.

This serves to improve cooling efficiency while achieving en-ergy savings by increasing the efficiency of air conditioning.

When a containment system is used to isolate the cold aisle, the side doors and roof retain cold air, all of which is used to cool the servers. This reduces the volume of air that needs to be cooled and avoids a return of hot air to the front of the racks. This results in reduced power consumption and allows for greater potential hosting capacity, thereby offering better preparation for the future.


9.4.5 - SOCIETAL CHALLENGES

SOCIETAL CHALLENGES: BUSINESS ETHICS

Since 2010, AKKA Technologies has confirmed its commitment to support and promote the United Nations Global Compact and its 10 principles.

While the CSR reporting scope does not yet cover all Group entities, the ethical principles of the Global Compact are part of the AKKA Code of Conduct, applicable to all of our employees.

To promote mutual respect and quality human relations at work, the Group’s Code of Ethics is available on the Intranet.

Ethical supplier relationships

AKKA’s Code of Conduct also sets out essential precepts underpinning relationships with the Group’s partners: the fight against corruption and fair trade practices.

We aim to ensure that the Group’s ethical principles are formally shared with our external service providers. The Code was accordingly distributed to all French subcontractors and suppliers of industrial purchases in early 2016. The Code is an integral part of the legal framework governing the relationship between the parties on the scope of suppliers in Germany.

It should be noted that in 2016, the Group was not the subject of any complaints in respect of corruption, conflicts of interest or non-com-pliance with legislation.

Responsible outsourcing

As AKKA is an engineering company, outsourcing mainly relates to services (business and operational services).

While the proportion of outsourcing is relatively stable for the Group as a whole (12% in 2016, compared with 11.3% in 2015), work conducted with companies in the protected sector is growing steadily:

- The process for inclusion on our suppliers panel encourages external suppliers to promote co-contracting with the protected sector;

- Most gardening and caretaking work is performed by companies in the protected sector;

- Since 2016, partnerships with the protected sector have spread to business outsourcing, with the integration of new suppliers in the areas of office and computer equipment.

CSR criteria are part of the supplier evaluation process, and will take on even greater importance in 2017. As such, companies seeking either to join the supplier panel or to renew their contracts will be asked to demonstrate their social and environmental commitment.

€363K AMOUNT OF SERVICES ENTRUSTED

TO FRENCH COMPANIES IN THE PROTECTED SECTOR IN 2016

"WE HAVE BEEN PERFORMING OUTSOURCED SERVICES IN AEROSPACE ENGINEERING SYSTEMS FOR AKKA SINCE 2016. FOR SOME OF OUR

EMPLOYEES, THIS PARTNERSHIP REPRESENTS REINTEGRATION INTO THE WORLD OF WORK; FOR ALL OF THEM, IT IS SYNONYMOUS WITH THE DEVELOPMENT OF SKILLS AND PROFESSIONAL GROWTH – ALL IN A

BENEVOLENT ENVIRONMENT. THE EXTENSION OF SCOPE PLANNED FOR 2017 REFLECTS THE QUALITY AND CONFIDENCE THAT CHARACTERISE OUR

RELATIONSHIP."Catherine Huard Lefin – Head of EA Bureau Gestion Conseil 31


9.4.5 - SOCIETAL CHALLENGES

Local roots

On top of its employer engagement, the AKKA Technologies Group supports local and national organisations that share its values of courage, respect and ambition in the fields of medicine, sports and professional integration.

Focus on Les Apprentis d’Auteuil:

AKKA Technologies has supported Les Apprentis d’Auteuil for several years. This year, it played a role in the development of a driving school for people experiencing hardship alongside Association pour la Mobilité et l’Emploi des Jeunes in Caluire, near Lyon. The company also helped finance Savoirs pour Réussir, a partner association of Les Apprentis d’Auteuil that offers workshops to combat illiteracy, notably helping 150 young people in an apprentice training centre in Savoie and Haute-Savoie. AKKA also took part in a program of helping 10 young people on their career path: adapt driving permit obtention to achieve greater success. AKKA Technologies plans to continue the partnership in 2017.

Focus on sponsoring:

Each year, AKKA France offers support for its employees’ personal projects. Nine projects received support in 2016. “Florian M. organises a volleyball tournament and competition during the Telethon. The idea is to bring together as many people as possible, whether or not they are registered players in a federation, for volleyball challenges and games – the challenge being to keep the ball in play for as long as possible – during the Telethon, over the weekend from 2 to 3 December. The money raised by the drink stand and from tickets was donated entirely to the Telethon. Stanislas Larnier of the Toulouse office supports Les Bouchons d’Amour.” AKKA France has committed to setting aside space to collect used corks for the association in its French offices. The association collects corks to buy equipment for disabled athletes, to improve the living conditions of people with disabilities and to assist humanitarian operations as they take place.

A societal commitment with benefits for all!

Vaincre la Mucoviscidose: the Group has developed medical management software for cystic fibrosis patients.

1 maillot pour la vie: an organisation that provides moral support, dreams and hope to hospitalised children by allowing them to meet

top athletes.

2012 Students Challenge: humanitarian student raid in Morocco.

Medical and humanitarian actions

Nos Quartiers ont des Talents: collective sponsorship to encou-rage the employment of young graduates from disadvantaged

neighbourhoods.

Ressort: job search for long-term unemployed people and new graduates.

Lyon-Duchère Sports Association: contributing to the social cohesion of a working-class neighbourhood. Acting for youth on the development

of educational and civic projects, on top of its sporting purpose.

Professional integration and social action


9.4.6 - PERFORMANCE INDICATORS

CROSS-REFERENCE TABLE

GRENELLE 2 - Article 225 GRI ISO 26000

Global Compact AKKA’s response

SOCIAL INFORMATION

1

Total workforceBreakdown by geographyBreakdown by gender Breakdown by age group

LA1

6.4.4

RD section 9.4.1

RD section 9.4.3

2 Change in workforce/Hires/Departures LA2 RD section 9.4.1

3 Wages LA3 RD sections 9.4.1 and 9.4.3

4 Organisation of working hours LA7

RD section 9.4.3

31 Absenteeism RD section 9.4.3

5 Organisation of social dialogue LA46.4.3/5 3 RD section 9.4.3

6 Review of collective agreements LA5

7 Occupational health and safety conditions LA4

6.4.6 4 and 5RD section 9.4.3

8Review of agreements signed with trade unions or employees’ representatives on occupational health and safety

LA9

32 Workplace accidents LA7LA7

RD section 9.4.3 RD section 9.4.3

9 Objectives and strategy in terms of training LA116.4.7

RD section 9.4.3

10 Total hours of training LA10 RD section 9.4.3

11 Measures taken to promote gender equality LA14

6

RD section 9.4.3

12 Measures taken in favour of people with disabilities LA13 RD section 9.4.3

13 Anti-discrimination policy LA13 RD section 9.4.3

33 Respect for freedom of association and the right to collective bargaining HR5/LA4/LA5

6.3.10

3 RD section 9.4.3

34 Elimination of discrimination in respect of employment and occupation HR4/LA13/LA14 6 RD section 9.4.3

35 Elimination of forced or compulsory labour HR 6/7 4 Issue not addressed, see 9.4.2

36 Effective abolition of child labour H6 5 Issue not addressed, see 9.4.2

ENVIRONMENTAL INFORMATION

14Organisation of the company to take account of environmental issues and, where applicable, environmental assessment or certification procedures

Management approach 6.5.1/2 7, 8 and 9 RD section 9.4.4

15 Employee training and information for the protection of the environment RD section 9.4.4

16 Resources devoted to the prevention of environmental risks and pollution EN30 RD section 9.4.4

37Amount of provisions and guarantees for environmental risks provided that such information is not liable to cause serious prejudice to the company in an ongoing dispute

EN28/EC2 Issue not addressed, see 9.4.2

17Measures to reduce waste or repair discharges with an adverse impact on the environment into the air, water or soil

EN22/EN23/EN24

6.5.3

Issue not addressed, see 9.4.2

18 Measures for prevention, recycling, reuse, other forms of recovery and disposal EN22 RD section 9.4.4

19 Noise and other forms of pollution specific to an activity EN25 Issue not addressed, see 9.4.2

20 Fight against food waste EN25 Issue not addressed, see 9.4.2

21 Water consumption and supply in relation to local constraints EN8/EN9/EN21

6.5.4

Issue not addressed, see 9.4.2

22 Consumption of raw materials and measures to improve efficiency in their use EN1 Issue not addressed, see 9.4.2

23 Energy consumption EN3/EN4 RD section 9.4.4

Measures taken to improve energy efficiency and the use of renewable energies EN5/EN6/EN7 RD section 9.4.4

38 Land use Issue not addressed, see 9.4.2

24Significant sources of greenhouse gas emissions generated as a result of the company’s activity, notably through the use of the goods and services it produces

EN16/EN17/EN19/EN20 6.5.5 RD section 9.4.4

25 Measures taken to preserve or develop biodiversity EN11-EN15/EN25 6.5.6 Issue not addressed, see 9.4.2

39 Adaptation to the consequences of climate change EN18/EC2 6.5.5 Issue not addressed, see 9.4.2

SOCIETAL INFORMATION

26 Employment or regional development EC8/EC9 6.8.5 RD section 9.4.3

27 Local, economic and social impact of the activity on local or local populations EC1/EC6 6.8 RD section 9.4.5

28Conditions of dialogue with these people or organisations (integration companies, teaching institutions, NGOs, residents, etc.)

4.14 to 4.17 5.3.3 RD section 9.4.5

29 Partnerships and sponsorship EC14.11-4.13 6.8.9 RD section 9.4.5

30 Consideration of societal and environmental Issues in the purchasing policy EC6/HR2/HR5-HR76.6.6 1, 2 and 9

RD section 9.4.5

40Importance of outsourcing and consideration of their societal and environmental responsibility in relations with suppliers and subcontractors

3.6 and 4.14 RD section 9.4.5

41 Action to prevent corruption SO2-SO4/SO7/SO8 6.6.3 10 RD section 9.4.5

42 Measures taken for the health and safety of consumers PR1/PR2 6.7.4 1 and 2 Issue not addressed, see 9.4.2

43 Measures taken in favour of human rights HR 6.3 1 and 2 RD section 9.4.5



TABLE OF INDICATORS

INDICATORS (GRENELLE 2 – Art. 225) Units 2016 2015

SOCIAL INFORMATION Group France Germany Group France Germany

1

Total workforce Number 13,252 6,349 2,928 12,222 ND ND

Breakdown by gender% men 79% ND ND 79% ND ND

% women 21% ND ND 21% ND ND

Breakdown by age group

< 25 years 798 468 110 631 ND ND

Between 25 and 30 years 3,165 1,498 551 2,746 ND ND

Between 30 and 40 years 5,096 2,387 1,110 4,915 ND ND

Between 40 and 50 years 2,716 1,289 725 2,576 ND ND

Between 50 and 55 years 792 386 257 755 ND ND

> 55 years 686 321 175 599 ND ND

2Change in workforce/Hires Number 4,231 2,071 652 2,775 ND ND

Change in workforce/Departures Number 3,279 1,778 465 2,624 ND ND

3 Wages € k 733,000 ND ND 660,000 ND ND

31 Absenteeism % ND 2.41% 3.61% ND 3.08% 3.95%

32

Accidents with lost time Number ND 24 31 ND 18 14

Frequency rate ND 2.33 4.86 ND 2.33 3.10

Severity rate ND 0.04 0.06 ND 0.03 0.03

Number of occupational diseases Number ND 1 - ND ND ND

10 Training/Effort Hours ND 47,704 47,642 ND 41,852 32,247

22 Employees with disabilities % ND 2.01% 1.30% ND 1.90% 1.40%

ENVIRONMENTAL INFORMATION

23 Energy consumption (buildings) GWh ND 5.5 18.4 ND ND ND

24 Greenhouse gas emissions (GHG) T. CO2 eq. ND ND 18,610 ND ND ND

SOCIETAL INFORMATION

40Outsourcing/revenue % 12.0% ND ND 11.3% ND ND

Amount of services entrusted to companies in the protected sector € k ND 363 ND ND ND ND



Absenteeism

Absenteeism: the types of absences taken into account in the ab-senteeism rate are sick leave and work-related accidents.

The rate is calculated by dividing the number of days of absence by the theoretical number of days worked over the period.

Number of days of absence for the period = sick leave + lost time due to occupational diseases + lost time due to an accident during a com-mute + lost time due to a workplace accident. The indicator does not include absences for scheduled, holiday or maternity/paternity leave.

Workplace accidents

Frequency rate: Tf1 = (number of accidents with lost time/hours worked) x 1,000,000.

Severity rate: Tg = (number of days lost due to workplace accidents/hours worked) x 1,000.

Hours worked: sum of hours worked for all employees in its contrac-tual definition and/or employment data for the period (scheduled and holiday leave excluded).

Days lost: days lost to workplace accidents are counted in calendar days.

Workforce, changes in the workforce

Headcount as of 31 December of the year in question.

All types of contracts are included in the workforce (permanent, fixed term, temporary, training contracts, apprenticeship contracts), except the following:

• suspended contracts (parental and sabbatical leave essentially),

• internships.

Intra-group movements are not reported in actual movements.

GHG emissions

Greenhouse gas emissions reported cover the main direct and indirect emissions attributable to AKKA’s activity under scopes 1, 2 and 3.

They stem chiefly from the consumption of fossil fuels (natural gas, heating oil and vehicle fuels). Their sources include travel (plane, train and hire cars) and electricity consumption. Other emissions sources are not considered material, and have not been quantified.

The emission factors used are those provided by ADEME’s greenhouse gas resource centre



Training

All types of internal and external training are included for all types of contracts, in accordance with legal standards governing the inclusion of training in each country.

Exclusions in France and Germany:

• Absenteeism: absences from a training course are not counted in the trained workforce. (Cancellation fees are included in training expen-diture where applicable.)

• Combined work-study programmes (and their equivalent in Germany): hours of attendance at the training centre are recorded (but time spent in the company is not taken into account).

• Security training (first aid, electrical, chemical clearances, nuclear, etc.) and other training which do not meet the applicable legal standards.

Other exclusions in France:

• Individual training leave (CIF),

• Any training given to interns and employees on apprenticeship contracts.

Other exclusions in Germany:

• Coaching,

• On-the-Job training.

Disability

Employees with disabilities.

For France, the data reported are consistent with the mandatory de-claration of employment of disabled workers (DOETH).

Exclusions: Interns.

Wages

Personnel expenses before the deduction of subsidies (hereof CICE).


10 - LIQUIDITY AND CAPITAL RESOURCES

CHAPTER 10

10.1 - Information on equityThe statement of changes in equity is provided in section 20.3.5 of this registration document. Equity increased by €4,257 thousand in 2016, due chiefly to the following factors:

- net profit for 2016 of €16,908 thousand;

- change in other comprehensive income in the amount of €(1,941) thousand;

- dividends paid to shareholders in 2016 in respect of the year ended 31 December 2015 in the amount of €(9,830) thousand;

- the buyback of own shares for €(360) thousand.

10.2 - Source and amount of cash flows

Cash flows from operating activities

Cash flow before net borrowing costs and taxes amounted to €66,410 thousand for the year. The working capital requirement increased by €19,337 thousand over the year and tax paid in 2016 was €(13,182) thousand.

Cash flows from operating activities accordingly had a positive impact of €72,566 thousand on cash over the year.

Cash flows from investing activities

The main investment flows are related to:

- the cost of the newly consolidated companies in the amount of €(20,471) thousand,

- purchases of fixed assets in the amount of €(33,563) thousand.

Cash flows from financing activities

In 2016, the amount of new loans and repayments of existing loans reduced the Group’s cash by €55,056 thousand. AKKA Technologies also paid €(9,830) thousand in dividends to its shareholders in July 2016.

10.3 - Information on the terms and conditions of borrowings and the Group’s financing structure

10.3.1 - Financing policy

Fixed assets: acquisitions

The Group’s sound and robust financial structure offers it genuine flexibility in its sources of funding. Originally financed by debt, bolt-on acquisi-tions are now financed from equity in their full amount, while larger acquisitions are financed by a blend of equity and medium-term bank debt.

> On 1 March 2013, the Group issued a €100 million European private placement. Non-dilutive to shareholders, and not affecting the Group’s net borrowings, this initiative illustrates AKKA Technologies’ change in dimension.

> On 30 October 2014, the Group successfully placed a Schuldschein-type bond (private placement subject to German law), put together and arranged by BayernLB and HSBC. Strong demand from German and Asian investors prompted the Group to double the initial amount of the bond to €140 million. AKKA Technologies consolidated its trailblazing reputation in the technology consulting sector by being the first company to issue a Schuldschein bond. Significant oversubscription among German and Asian investors reflects their confidence in the Group’s strategy and its new international dimension.

Change in cash position in thousands of euros 31/12/2016 31/12/2015

Opening net cash 215,120 220,079

Net cash from/(used in) operating activities 72,566 39,339

Net cash from/(used in) investing activities (55,101) (60,693)

Net cash from/(used in) financing activities (73,556) 16,232


Closing net cash 158,958 215,120


CHAPTER 10

The Schuldschein has two tranches, maturing in five and seven years respectively, with a mix of fixed and variable interest rates, and an average interest rate of approximately 2%. The bond, which is non-dilutive for shareholders and does not affect the Group’s net borrowings, reinforced its financial flexibility and diversified its sources of funding. It also extended the average maturity of the Group’s debt, on very attractive market conditions.

> On 30 June 2016, the Group signed a new five-year €200 million revolving credit facility. The facility set up on 12 April 2012 and renegotiated in December 2014 expired in the first half of 2016.

> In the first quarter of 2017, AKKA Technologies successfully implemented a €200 million NEU CP programme sponsored by the Banque de France. The Group continues to display energy and creativity, reinforcing its war chest while reducing its financing costs.

Fixed assets: financing of premises

The premises in Colomiers were the object of leasing contracts restated in the consolidated financial statements, which were completely finalised in December 2014.

The buildings and grounds of MBtech Bohemia (Pilsen and Prague in the Czech Republic) were financed by a loan that has since been repaid in full.

Fixed assets: financing of other assets

Not applicable.

Financing of working capital

The working capital of the Group’s main French and German companies is financed by factoring contracts or by assignment of trade receivables (Dailly form).

10.3.2 - Summary of borrowings

Detail of borrowing conditions (including covenants) and the financing structure as of 31 December 2016 is given in the consolidated financial statements (see section 20.3 below).

10.4 - Information on any restrictions on the use of capital or liable to have a material impact, directly or indirectly, on the Group’s business

Not applicable.

10.5 - Information on the sources of funding anticipated for planned investmentsOther than prospective acquisitions, the funding of which will be reviewed on a case-by-case basis, the Group has the financial capacity to carry out its investment programmes.


11 - RESEARCH AND DEVELOPMENT, PATENTS AND LICENCES

CHAPTER 11

To develop disruptive technologies for our customers, the Group created AKKA Research, its internal research centre, in 2010. AKKA Research relies on the work of nearly 500 innovation leaders every year, conducting research and development, both proprietary and on behalf of customers.

Its tasks are:

- to invent technological building blocks for use in internal or collaborative projects,

- to develop the expertise of our employees to meet the future challenges of our customers.

Led by a programme management team that works closely with the Group’s operational teams, AKKA Research works on four major areas of innovation in line with the Group’s overall strategy and the needs of our customers:

- innovative mobility (land, air or sea, on-board services or communication within smart cities);

- data processing (big data, cloud computing, etc.);

- industry of the future (new manufacturing processes, robotics, automation, image processing, etc.);

- new engineering tools: tools developed as part of R&D projects (automatic code generation, database of additive manufacturing, etc.).

In line with the Group’s strategy, AKKA Research is part of an ecosystem of national and international R&D partners comprising universities, research laboratories and private companies, some of which are our customers. It also facilitates innovation projects with numerous engineering schools (Centrale Paris, Centrale Lille, UTBM, ISAE, etc.). In 2016, it took in ten students and two apprentices. A CIFRE thesis, backed by France’s National Association of Research and Technology (ANRT), is currently underway. New proposals are being explored. Lastly, the Group also strengthens its expertise by recruiting young PhD graduates in flagship sectors such as mobility and image processing.

Six collaborative partnership projects are currently underway. A further two were won this year; they will get underway in 2017. Among them, the Autopilot project (AUTOmated driving Progressed by the Internet Of Things) aims to develop new services applied to autonomous vehicles (autonomous car sharing, automated parking, improved dynamic digital maps, etc.). Autonomous vehicles will be tested in real conditions on four major permanent pilot sites in Finland, France, the Netherlands and Italy; test results will be used for multi-criteria evaluation (technical, user feedback, business, regulation) of the impact of the IoT on the degree of autonomous driving.

Today, innovation is a key factor in growth for the Group and the French companies alike. France boasts a wealth of skills, and its companies have real capacity to bring about the innovation they need to grow. Any that lack the necessary tools need support.

AKKA sees innovation as part of its DNA and the expertise embodied by our engineers. It is also a springboard for our international development policy. Our customers can see that we can design disruptive solutions including our autonomous and connected electric car. Innovations such as Link&Go demonstrate our ability to think outside the box.

This year, our innovative strength went well beyond our borders: it recently won praise at the World Government Summit in Dubai and from the Ministers of the Economy of China, Belgium and Canada. Link&Go was also recently featured by our partner Dassault Systèmes in a virtual showroom at CES Las Vegas to demonstrate its role in the city of tomorrow. The list of its outings also includes the Days of Sustainable Mobility on the CEA/Minatech site in Grenoble In September 2016, where the prototype was demonstrated in autonomous mode, and the foundation stone ceremony of the Museum of the Future in Dubai, slated to open in December 2018.

Lastly, in the realm of intellectual property, the AKKA Technologies Group currently has 17 patents in force, out of 30 pending; it filed three Soleau envelopes this year. Five patents have been filed by customers as a result of assignments by AKKA Technologies engineers.

The Group devoted €52,471 thousand to research in 2016 (€52,108 thousand in 2015).


12 - TREND INFORMATION

CHAPTER 12

12.1 - Principal trends affecting production since the end of the previous year> 2016

- In 2016, the Group exceeded its revenue and margin targets for the third consecutive year. - Its good performance puts it ahead of the targets contained in its 2018 strategic plan, laying the foundations for its future development.

> 2017

- 2017 will be a key milestone in our European balance and the progression of our strategic offerings.- The Group anticipates strong revenue driven by the mobility sector. AKKA Technologies will also benefit from the integration of Erlkönig and Gigatronik, key players in the Internet of Things in Germany, and the two acquisitions announced in the life sciences in early February, namely CTP System and Edelway. In 2017, the Group accordingly expects to exceed the revenue target of €1.2 billion initially set for 2018.- Against this backdrop, the Group is anticipating organic revenue growth in each of its three business units in 2017, combined with a further improvement in margins.

> 2018

- The successful completion of the transformation in France, the diversification in Germany and the maintenance of high margins internationally leave the Group well placed to achieve its operating profit from ordinary activities target of €100 million in 2018, with a margin between 8% and 10%.

12.2 - Commitments liable to have a material impact on the Group’s outlookNot applicable.

12.3 - Subsequent publicationsPress releaseParis, 2 February 2017

AKKA TECHNOLOGIES – 2016 REVENUE2016 revenue of €1,122.7 million, an increase of 12.1%Faster organic growth of 5.5%Reinforcement of the Group’s German pillar with organic growth of 10.9%Successful transformation of the France BU confirmed

2016 REVENUE

> AKKA Technologies’ revenue amounted to €1,122.7 million in 2016, an increase of 12.1%.

> In line with the objectives communicated to the market early in 2016, each of the Group’s three business units (BU) posted positive organic growth over the full year:

- Acceleration of the Group’s growth: organic growth of 5.5%, after +3.1% in 2015; Targeted acquisitions in 2015 and 2016 strengthened its technological skills in the automotive sector and accelerated its diversification in the other sectors;

- Workforce growth: as of 31 December 2016, the Group had 13,252 employees (up from 12,222 at the end of 2015), of which 6,349 in France, 3,760 in Germany and 3,143 internationally;

- France: success of the transformation plan launched in 2015, materialised by accelerating organic growth and strong improvement in operating margins;

- Germany: strong sales momentum driven by growth in sales to legacy customers as well as diversification among other automotive manufacturers and subcontractors;

- International: robust organic growth driven by sustained growth in the mobility sector tempered by lower activity in the energy sector.

> Q4 2016 revenue: AKKA Technologies reported revenue of €299.5 million, an increase of 4.9% as reported, with organic growth of 1.4%. The slowdown in organic growth in Q4 was temporary: it was attributable to a demanding comparison base (+6.3% in Q4 2015) and the discontinuation of some of Matis’s loss-making businesses, in France and internationally (organic growth of 3.4% excluding Matis and Oil & Gas activities). Organic growth in Germany remained strong at 6.3% in Q4.


CHAPTER 12

Revenue (€ million) 2016 2015 % change % change organic *

France 509.1 470.1 +8.3% +2.8%

Germany 386.8 336.9 +14.8% +10.9%

International (excluding Germany) 226.8 194.7 +16.5% +2.7%

Total Group 1,122.7 1,001.7 +12.1% +5.5%

* Change in revenue at constant scope and exchange rate

2016 REVENUE BY REGION

> The France business unit recorded an acceleration in organic growth in 2016. France reported revenue of €509.1 million in 2016, an increase of 8.3% as reported, with organic growth of 2.8%. In a market driven by growth in the automotive sector and a resumption of growth in railways, the Group benefited from its position in the mobility sector and its ability to gain market share. Fourth-quarter revenue amounted to €133.0 million, edging down by 1.1% compared with Q4 2015 on a challenging comparison base inflated by one-off equipment revenue (+5.3% in Q4 2015) and the impact of the discontinuation of some of Matis’s loss-making businesses (organic growth of 5.2% excluding Matis and equipment revenue). The good sales momentum and the acceleration of recruitments since the second half of 2016 offer the prospect of faster organic growth in 2017 than in 2016.

> Revenue in Germany increased by 14.8% as reported to €386.8 million in 2016, with organic growth of 10.9%. Strong growth was recorded with the vast majority of legacy and newer customers alike. The Group recorded double-digit organic revenue growth with Audi, BMW, Bosch and Porsche. In the fourth quarter of 2016, the business unit’s revenue was €108.3 million, an increase of 16.9% as reported, with organic growth of 6.3%. The new regional split between three major industrial basins (Northern, Southwest and Southeast Germany) in the second quarter, together with the acquisitions of Auronik, Erlkönig and Gigatronik(1), will strengthen the business unit’s agility, proximity to customers and expertise in the technologies of the future. This will in turn accelerate the diversification and gradual improvement in margins.

> In 2016, international operations (excluding Germany) recorded a 16.5% increase in revenue, with organic growth of 2.7% to €226.8 million. Their fourth-quarter 2016 revenue was €58.2 million, virtually unchanged compared with Q4 2015. The temporary downturn was attributable to the decline in the Oil & Gas business, a demanding comparison base (9.6% organic growth in Q4 2015) and the discontinuation of Matis’s loss-making businesses. Growth in international operations excluding Matis and Oil & Gas was 7.3% in Q4 and 8.6% over the full year. Belgium reported stable organic revenue in 2016 (+0.2%). The Czech Republic (+13%), Spain (+15%), the United Kingdom (+67%) and Romania (+27%) posted double-digit organic growth. The continued deployment of the Group’s business model in recently acquired companies and the acceleration of hiring early in the first half of 2017 should result in growth of international activities in 2017.

> In total, operations outside France grew by 15.4% as reported over the year, with organic growth of 7.9%. This represented 55% of the Group’s consolidated revenue in 2016.

2016 RESULTS AND OUTLOOK

> 2016

- The Group exceeded its revenue and margin targets for the third consecutive year. AKKA Technologies is accordingly forecasting for 2016 an operating margin from ordinary activities in line with consensus expectations, above the margin of 6.1% recorded in 2015.

- A ruling by the Council of State in late 2016 upheld the retroactive application of the change of doctrine by the French tax administration in respect of the research tax credit (crédit d’impôt recherche – CIR). An impairment of €24 million will be recognised on the CIR for the period from 2010 to 2014 to reflect this change. This impairment has no impact on AKKA Technologies’ cash position, as the Group had not received the tax credit for the relevant years. The change in doctrine does not affect the Group’s financial statements for the years after 2014, as AKKA Technologies had complied with the new tax doctrine as a precaution.

- The success and potential of its French operations will enable the Group to pursue its R&D efforts in the coming years in order to enhance its expertise and leadership in innovation.

> 2017 and 2018

- The Group anticipates strong activity driven by the mobility sector in 2017. AKKA Technologies stands to benefit from ongoing negotiations for the acquisition of Gigatronik, a key player in the Internet of Things in Germany, and the two acquisitions announced today – CTP System and Edelway – in life sciences. The Group now hopes to exceed the €1.2 billion revenue threshold, initially set for 2018, in 2017.

- The completion of the transformation in France, the diversification in Germany and the maintenance of high margins internationally leave the Group well placed to achieve its operating profit from ordinary activities(*) target of €100 million in 2018, with a margin between 8% and 10%.

(1) In exclusive negotiations(*) Operating profit from ordinary activities is calculated before non-recurring items and expenses relating to stock options and free shares


CHAPTER 12

In millions of euros 2016 2015 % change

Revenue 1,122.7 1,001.7 +12%

Operating profit from ordinary activities * 77.2 60.8 +27%

As a % of revenue 6.9% 6.1% -

Net profit 16.9 32.6 -48%

Adjusted net profit, excluding the impact of the provision on the research tax credit 40.9 32.6 +26%


Operating cash flow 72.5 39.3 +84%


* Operating profit from ordinary activities is calculated before non-recurring items and expenses relating to stock options and free shares

Upcoming events:Full-year 2016 results: Tuesday 21 March 2017 Q1 2017 revenue: Thursday 4 May 2017

21 March 2017

PRESS RELEASE – 2016 results

Sustained revenue growth of 12%Operating profit from ordinary activities up 27%

Reinforcement of technological expertise in the car of the future

At its meeting of 21 March 2017, the Board of Directors of AKKA Technologies approved the financial statements for the year ended 31 December 2016. The accounts have been audited, and an unqualified certification report was issued on the same date.

Maurice RICCI, Chairman and CEO of the Group, said: “I am very pleased with our achievements in 2016. We improved the Group’s operating perfor-mance. But above all, 2016 was marked by the successful transformation of the France business unit, the strong momentum of the German pillar and the shift in the Group’s offerings and positioning towards digital technology. We thus strengthened AKKA Life Sciences’ positioning as a close partner for the world’s top 10 healthcare companies, while also securing the acquisition of Gigatronik. Combined with the acquisition of Erlkönig, Gigatronik rounds out our expansion in Germany, accelerates our customer diversification and reinforces our technological expertise in the automotive segments of tomorrow.

Our successes in 2016 pave the way for those of the future. Our robust momentum and accelerated recruitment back up our 2018 targets and prepare us for the next stages in our development.”

2016 RESULTS

KEY FIGURES

> AKKA Technologies’ revenue amounted to €1,122.7 million in 2016, an increase of 12%. In line with the objectives communicated to the market early in 2016, each of the Group’s three business units (BU) posted positive organic growth over the full year. The Group’s firm footing in mobility enabled it to lift its organic growth to 5.5%, from 3.1% in 2015. Targeted acquisitions have strengthened its technological skills in the automotive sector and accelerated its diversification in the life sciences.

> The Group’s three business units posted operating profit from ordinary activities of €86.4 million, up from €67.7 million in 2015. This very satisfactory performance was achieved thanks to the success of the transformation of the France BU, the swift recovery of Matis, the improvement of the Germany BU’s performance and the quality of International margins, which were above 10%. Operating profit from ordinary activities increased by 27% to €77.2 million. The operating margin firmed to 6.9% from 6.1% in 2015.

> Operating profit amounted to €42.8 million. It reflects the impact of non-recurring expenses relating chiefly to the provision of €24 million on the research tax credit (crédit d’impôt recherche – CIR). This provision will not affect the Group’s operating performance in coming years, and has no impact on its cash position. Moreover, operating cash flow doubled year on year.

> Consolidated net profit was €16.9 million. Excluding the €24 million provision on the research tax credit, consolidated net profit was up 26% at €40.9 million.

> Operating cash flow amounted to €72.5 million in 2016, an increase of 84% compared with 2015. This good performance helped finance the year’s acquisitions and capital expenditure, and confirms the Group’s ability to self-finance its growth.

> Net borrowings benefited from the strong cash generation. They amounted to €97 million as of 31 December 2016. The Group has a sound balance sheet, with gearing under control at 42% and cash and cash equivalents of €159 million. Its strong capacity to generate cash, the €200 million revolving credit facility and the recent implementation of an NEU CP programme give the Group the ability to pursue its policy of targeted acquisitions.


CHAPTER 12

> In 2016, the Group pursued an active recruitment policy to support its growth ambitions: as of 31 December 2016, it had 13,252 employees (up from 12,222 at the end of 2015), of which 6,349 in France, 3,760 in Germany and 3,143 internationally.

2016 RESULTS BY GEOGRAPHY

> France reported revenue of €509.1 million in 2016, an increase of 8.3%, with organic growth of 2.8%. This growth was achieved thanks to momentum in the automotive sector and the resumption of growth in the rail sector. The Group’s diversification capacity allowed it to stabilise its business with the aerospace sector, despite the decline in demand from Airbus. The successful transformation of the France business unit translated into a 70% increase in operating profit to €36.3 million in 2016, a margin of 7.1%. Including subsidies received in France, the margin comes to 9.9%, in line with industry standards. The good sales momentum and the acceleration of recruitments since the second half of 2016 offer the prospect of faster organic growth in 2017 than in 2016 for the France BU, with a further improvement in margins.

> Revenue in Germany increased by 14.8% as reported to €386.8 million in 2016, with organic growth of 10.9%. Strong growth was recorded with the vast majority of customers. The Group recorded sustained business growth with Daimler and double-digit growth with Audi, BMW, Bosch and Porsche. The business unit’s operating profit from ordinary activities increased by more than 15% to €25.2 million, a margin of 6.5%. Our performance and our actions prepare the future. The new regional split between three major industrial basins (Northern, Southwest and Southeast Germany) in the second quarter of 2016, together with the acquisitions of Auronik, Erlkönig and Gigatronik, will strengthen the business unit’s agility, proximity to customers and expertise in the technologies of the future. Like France, strong momentum in re-cruitment and the success of this transformation will favour the business unit’s diversification and the gradual improvement of its margins.

> In 2016, international operations (excluding Germany) recorded a 16.5% increase in revenue, with organic growth of 2.7% to €226.8 million. The temporary downturn was attributable to the decline in the Oil & Gas business, a demanding comparison base and the discontinuation of Matis’s loss-making businesses. Growth in international operations excluding Matis and Oil & Gas amounted to 8.6% over the full year. This strong growth allowed the Group for the first time in its history to cross the threshold of 3,000 international employees, and to have critical mass in four geographies, Benelux, Italy, Spain and the Czech Republic. The business unit’s operating profit from ordinary activities amounted to €25.0 million. The operating margin from ordinary activities was 11%, despite the unfavourable environment in Oil & Gas. The Group’s continued diversification and the creation of a single Life Sciences division will drive the business unit’s growth and margins in the medium term.

HIGHLIGHTS OF 2016 AND EARLY 2017

Faster pace of targeted value-creating acquisitions

> The Group has accelerated its targeted acquisition strategy since 2015, building up its German pillar and strengthening its European positioning.

Ramp-up of skills in the technologies of the future: AKKA Technologies completed the acquisition of Gigatronik on 3 March. The acquisition is subject to the approval of the German competition authorities. Together with the recent acquisitions of Erlkönig, the Bertone brand and Auronik, completed at the end of 2014, Gigatronik reinforces the Group’s technological expertise and high value-added positioning in the automotive segments of tomorrow: hybrid platforms, connected objects, the Internet of Things, mobility, autonomous driving and embedded computing. Gigatronik will also allow AKKA Technologies to accelerate its expansion in Germany, among major automakers and suppliers including Audi, BMW, Daimler, Ford, Porsche and Volkswagen.

Growth in the life sciences: the Group has furthered its move up the value-added chain while developing its technological offerings and increasing its geographic diversification and customer portfolio in the life sciences. The acquisitions of CTP System and Edelway will enable it to roll out its know-how internationally to the top 10 global healthcare companies in the fields of process engineering, equipment, general facilities, regulatory affairs, quality assurance and project management.

FINANCING

> Implementation of an NEU CP programme(1): In the first quarter of 2017, AKKA Technologies successfully implemented a €200 million NEU CP programme sponsored by the Banque de France. After the establishment on 1 July 2016 of a new five-year €200 million revolving credit facility on very attractive terms, the Group continues to show drive and creativity. The new funding reinforces the Group’s war chest while reducing its financing costs. It also enables it to extend the maturity of its debt while diversifying its sources of funding, by making its banking pool and its lenders more international. It gives the Group greater scope to pursue its diversification, both organically and through targeted acquisitions.

Increase in the Group’s attractiveness

> Top Employer certification: In early 2017, for the second consecutive year, AKKA Technologies received Top Employers certification, which re-cognises the world’s best companies in terms of HR practices, for France. Awarded annually by Top Employers Institute following an independent evaluation of HR policies and practices, it rewards the Group’s ability to offer its teams a quality work environment, to promote the development of talent at all levels, and to improve its policies in favour of its employees. In addition to its recognition of the Group’s sound and powerful human resources policy, the distinction is a concrete illustration of the values that have guided the Group for over 30 years.

> ISO/IEC certification: AKKA Technologies has obtained ISO/IEC 27001 certification in France. This international certification attests to the Group’s good practices and procedures in information system security, both internally and on behalf of its customers, in the fields of cybersecurity and the protection of their information.


CHAPTER 12

2016 DIVIDENDS AND OUTLOOK

> 2016

- In 2016, the Group exceeded its revenue and margin targets for the third consecutive year.

- Its good performance puts it ahead of the targets contained in its 2018 strategic plan, laying the foundations for its future development.

- As such, the Board of Directors of AKKA Technologies, at its meeting of 21 March 2017, decided to propose to the shareholders’ meeting of 16 June 2016 the payment of a dividend of €0.60 per share (an increase of 20% compared with the dividend paid in 2016 in respect of 2015).

> 2017

- 2017 will be a key milestone in our European balance and the progression of our strategic offerings.

- The Group anticipates strong revenue driven by the mobility sector. AKKA Technologies will also benefit from the integration of Erlkönig and Gigatronik, key players in the Internet of Things in Germany, and the two acquisitions announced in the life sciences in early February, namely CTP System and Edelway. In 2017, the Group accordingly expects to exceed the revenue target of €1.2 billion initially set for 2018.

- Against this backdrop, the Group is anticipating organic revenue growth in each of its three business units in 2017, combined with a further improvement in margins.

> 2018

- The successful completion of the transformation in France, the diversification in Germany and the maintenance of high margins internationally leave the Group well placed to achieve its operating profit from ordinary activities(*) target of €100 million in 2018, with a margin between 8% and 10%.

(1) Negociable European Commercial Paper(*) Operating profit from ordinary activities is calculated before non-recurring items and expenses relating to stock options and free shares

Upcoming events: Q1 2017 revenue: Thursday 4 May 2017H1 2017 revenue: Thursday 27 July 2017H1 2017 results: Wednesday 27 September 2017


13 - PROFIT FORECASTS OR ESTIMATES

CHAPTER 13

Not applicable.


14 - EXECUTIVE, MANAGEMENT AND SUPERVISORY BODIES AND GENERAL MANAGEMENT

CHAPTER 14

14.1 - Executive and management bodiesSee management report in section 9.1 (note 8.1) of this registration document. The directors presented below complete the summary presentation of the members of the Management Committee provided in section 7.1.4.

Alain TISSERAND – Director – 62With more than 30 years’ experience in engineering and consulting, and a former head of one of France’s largest design offices, Alain Tisserand has lent his support to the AKKA Technologies Group since 2002. Since his arrival, he has contributed significantly to the Group’s growth, particular in the aerospace sector.

Cécile MONNOT – Director – 54After starting her career in management control at Rhône Poulenc, Cecile Monnot joined AKKA Technologies in 1995 as Administrative and Finance Director of a subsidiary, before taking charge of the Group’s management control from 2004 to 2011. Since 2012, she has been in charge of IDEACTIVE Training.

Guy LACROIX – Director – 66A graduate of the ESME mechanical and electrical engineering school and INSEAD, Guy LACROIX joined the SEEE group (Société d'Études et d'En-treprises Electriques) in 1977, performing a range of functions and ultimately becoming a director. In 1996, he was appointed Managing Director.

In 2001, he was called in to create Ineo within the Suez group, which later became GDF Suez and has since changed its name to Engie.

Appointed CEO of Ineo in 2001, he served in this capacity and the following functions until the end of 2015:

- CEO of the Energy division of the GDF Services-Suez group, since renamed Engie - Head of the FSIM BU, which housed Ineo, Axima, Endel and FSA

Guy LACROIX joined the AKKA Group’s general management in June 2016.

His business vision can be summed up as follows:

- an entrepreneurial spirit of continuous innovation in partnership with customers,- stimulation of management teams to anticipate changes in the environment, the development of skills, openness to digital technology and the complexity of markets.

Charlotte RICCI – Director – 27Charlotte RICCI has been a director of the Group since 5 June 2012.

14.2 - Conflicts of interest in the executive and management bodiesTo the Group’s knowledge, there is no conflict between the private interests of members of the executive bodies and their duties to the company.

To the knowledge of AKKA Technologies, no member of the Board of Directors has in the past five years been convicted of fraud, been involved in an executive capacity in a bankruptcy, receivership or liquidation of a fraudulent nature, been convicted and/or subject to official public sanction by any statutory or regulatory authority, been barred by a court from acting as a member of an executive, management or supervisory body or from acting in the management or conduct of the affairs of any issuer.


15 - COMPENSATION AND BENEFITS

CHAPTER 15

15.1 - Total compensation and benefits in kind paid to members of executive and management bodiesThis information is provided in the management report in section 9.1.2 (note 8.2.1) and section 9.3.1 of this registration document.

15.2 - Total amounts set aside or accrued for the payment of pension, retirement or other benefitsPensions

No amount was set aside in respect of pensions for members of the Board and the Group’s management in the financial statements for the year ended 31 December 2016.

Stock options and free shares granted to executive officers

See note 8.2.2 of the management report in section 9.1.2 of this registration document.

Information on agreements between the company and its executive officers, shareholders holding more than 10% of the capital of a company controlled by the parent

A service agreement was concluded between AKKA Technologies and BMC Management and Investment on 15 September 2012.

The conclusion of an autonomous guarantee was authorised at the Board of Directors on 25 February 2014 whereby AKKA Technologies guarantees the fulfilment of commitments made by MBtech Group GmbH & Co. KGaA to RALOSA GmbH & Co KG in respect an off-plan lease.

An off-plan lease agreement was concluded on 26 March 2014 between AKKA Services and AKKA Technologies (joint lessees) and Andromède Valley SCI (lessor) for a building located in Blagnac (31700).

An international support services and governance consulting agreement has been concluded with GLX Consulting. The Board of Directors ap-proved this agreement on 5 January 2016.

These agreements are mentioned in the special report of the auditors in section 20.5.5 of this registration document.

Interests held by managers in the capital of the issuer, in that of a company that holds a controlling interest in that of a subsidiary of the issuer or a significant customer or supplier of the issuer

As disclosed in section 18.1, the RICCI family group and other executives of the Group directly held 4,886,599 AKKA Technologies shares as of 21 March 2017. Moreover, Maurice RICCI and Jean-Franck RICCI, both directors, own 100% of the shares of IDEACTIVE EVENTS, which holds 1,017,001 AKKA Technologies shares. Maurice RICCI also owns 100% of the shares of BMC Management and Investment, which holds 3,695,424 AKKA Technologies shares.

Information on transactions not classified as recurring transactions

None.

Loans and guarantees provided for the executive and management bodies

None.


16 - OPERATION OF EXECUTIVE AND MANAGEMENT BODIES

CHAPTER 16

General management of the company (article 20 of the bylaws)

The company’s general management is assumed by the Chairman of the Board (see decision of the Board of Directors of 24 June 2002).

16.1 - Expiry dates of current terms of officeSee the report of the Chairman of the Board of Director on corporate governance and internal control in section 16.5 (note 1.1) below.

16.2 - Service agreements between members of the executive bodies By an agreement entered into between AKKA Technologies and BMC Management and Investment on 10 September 2012, the latter company, whose legal manager is Maurice RICCI, provides know-how and expertise to assist the Group in its development. The amount of services invoiced in 2016 was €642,000 excluding VAT.

By an agreement between AKKA Technologies and GLX Consulting, approved on 5 January 2016, Guy LACROIX (manager of GLX Consulting) provides international support services and governance consulting services.The amount invoiced in respect of international support services in 2016 was €198,000 excluding VAT.

The amount invoiced in respect of governance consulting services in 2016 was €300,000 excluding VAT.

16.3 - Information on the audit committee and the compensation committeeSee the report of the Chairman of the Board of Director on corporate governance and internal control in section 16.5 (note 1.4) below.

16.4 - Compliance with prevailing corporate governance standardsSee the report of the Chairman of the Board of Director on corporate governance and internal control in section 16.5 below.

16.5 - Report of the Chairman of the Board of Director on corporate governance and internal controlPursuant to article L. 225-37 of the French Commercial Code, I hereby present my report on:

- the composition, conditions of preparation and organisation of the work of the Board during the year ended 31 December 2016, the extent of the powers of the Chairman and Chief Executive Officer, references made to a code of corporate governance and arrangements for the participation of shareholders at the shareholders’ meeting;

- the principles and rules for determining compensation and benefits of any kind granted to executive officers;

- the internal control and risk management system implemented by the company.

This report was approved by the Board of Directors at its meeting of 21 March 2017, pursuant to article L. 225-37 of the French Commercial Code.

AKKA Technologies (decision of the Board of Directors dated 29 January 2010) refers to the corporate governance code established by MiddleNext (the “MiddleNext Corporate Governance Code”), an updated version of which was published in September 2016, as the basis of its governance standards. The code is available on the MiddleNext website (www.middlenext.com).

The MiddleNext Corporate Governance Code contains 19 recommendations as well as points of vigilance for reasonable governance. The points of vigilance list the main questions that the Board must ask to ensure the proper functioning of its governance. The Board states that it has been made aware of the information presented in the “points of vigilance” of the MiddleNext Corporate Governance Code.

In this report, I will provide information on the implementation of the 19 recommendations of the MiddleNext Corporate Governance Code at AKKA Technologies.


CHAPTER 16

1 - PREPARATION AND ORGANISATION OF THE WORK OF THE BOARD OF DIRECTORS

1.1 - Composition of the Board (recommendations R3, R8 and R9 of the MiddleNext Corporate Governance Code on the composition of the Board, the election of directors and the term of office of directors)

AKKA Technologies is run by a Board of Directors that comprised seven members at the beginning of the year. There were no changes in the composition of the Board in 2016.

Pursuant to recommendation R3 of the MiddleNext Governance Code on the presence of independent directors, the Board will have to take in two independent directors during the year.

The rules of procedure set out the independence criteria used by the Board: a director’s independence is characterised by the absence of si-gnificant financial, contractual or family ties liable to impair independence of judgement. This reflects the criteria laid down in the MiddleNext Corporate Governance Code.

As such, to qualify as independent, a director may not:

- be an employee or executive officer of the company or a Group company or have been one during the last three years; - be a significant customer, supplier or banker of the company or its Group or for which the Group has represented a significant share of business over the last two years; - be a major shareholder of the company or hold significant voting rights;- have close family ties with an executive officer or major shareholder; - have been an auditor for the company over the last six years.

It is the Board’s responsibility to examine on a case-by-case basis the situation of each of its members with regard to the criteria set out above. Subject to being able to justify its position, the Board may consider one of its members to be independent even when he or she does not satisfy all criteria; in the same way, it may also consider one of its members satisfying all criteria not to be independent.

Since 30 September 2014, the Board has had two independent directors, Guy LACROIX and Alain TISSERAND.

Since 5 January 2016, AKKA Technologies has benefited from the services of GLX Consulting, a consulting firm run by Guy LACROIX; this has deprived Mr LACROIX of his status as independent director. The company is accordingly looking for a new independent director.

Director Position Date of appointment/reappointment Term

Maurice RICCI Chairman and CEO

Memorandum of incorporation of 12 February 1999SM of 28 February 2005 SM of 24 June 2008 SM of 14 June 2011 SM of 17 June 2014

Until the shareholders’ meeting approving the financial statements for the year ended 31 December 2016

Alain TISSERAND Director

SM of 28 June 2007 SM of 22 June 2010 SM of 11 June 2013 SM of 16 June 2016


Jean-Franck RICCI Director and Deputy Chief Operating Officer

SM of 7 June 2001SM of 28 June 2007SM of 22 June 2010 SM of 11 June 2013 (Dir.) BD of 11 June 2013 (Dep. CEO) SM of 16 June 2016 (Dir.)BD of 16 June 2016 (Dep. CEO)


Cécile MONNOT Director

SM of 7 March 2001SM of 28 February 2005 SM of 24 June 2008 SM of 14 June 2011 SM of 17 June 2014


Charlotte RICCI Director SM of 5 June 2012SM of 9 June 2015


Nicolas VALTILLE Director and Deputy Chief Operating Officer

SM of 5 June 2012 (Dir.) BD of 30 August 2012 (Dep. CEO)SM of 9 June 2015 (Dir.)BD of 9 June 2015 (Dep. CEO)


Guy LACROIX Independent Director SM of 5 June 2012SM of 9 June 2015


SM: Shareholders’ Meeting / BD: Board of Directors


CHAPTER 16

Two new members have been proposed, Muriel Barnéoud and Valérie Magloire. Both candidates meet all the criteria of independence. Their appointments will be submitted to the approval of the next shareholders’ meeting, to be held in June 2017.

Pursuant to recommendation R8 of the MiddleNext Corporate Governance Code on the selection of directors, information on the experience and expertise of each director is disclosed in the annual report and to the shareholders’ meeting on the initial appointment and subsequent reappointments of each director. The appointment of each director is the subject of a separate resolution.

Recommendation R9 of the MiddleNext Corporate Governance Code on the term of office of directors does not set a term for directors, but recommends that the Board of Directors ensure that the term of office is suited to the specific nature of the company, within the limits set by law. The term of office of members of the company’s Board of Directors is set at three years, in accordance with the law. In view of the company’s business, this period allows directors to gain an understanding of the various business lines and to monitor the strategy.

1.2 - Professional conduct of directors

Pursuant to recommendations R1 and R2 of the MiddleNext Government Code on the professional conduct of directors and conflicts of interest, each director is made aware of the responsibilities incumbent upon him or her in respect of his or her duties upon appointment. The rules of procedure of the Board of Directors also set out the obligations incumbent upon directors in respect of professional conduct. The rules of procedure, adopted by the Board of Directors at its meeting of 22 November 2012 and last updated on 19 January 2017, are given to all new directors.

Each member of the Board of Directors must therefore:

- observe the rules of conduct relating to obligations arising from his or her office, and comply with legal rules in respect of multiple directorships, prevention of insider trading, improvement of market transparency, and declarations of trading in shares and debt securities of the company,- inform the Board in the event of any conflict of interest arising after their appointment,- be available, devote the time and attention necessary to their duties and as far as possible attend all Board meetings and shareholders’ meetings,- ensure that he or she has all the necessary information in respect of the meeting agenda before making any decision, and- respect professional secrecy, as well as a duty of loyalty, ethics and confidentiality.

1.3 - Duties of the Board

The Board of Directors determines the orientations of the company’s business and ensures their implementation. Subject to the powers expressly vested in shareholders’ meetings, and within the limits of the company’s corporate purpose, the Board of Directors considers all matters with a bearing on the smooth running of the company.

In accordance with applicable legal and regulatory provisions, the Board votes on all transactions having or liable to have an impact on the compa-ny’s share capital or shareholders’ equity, notably capital increases or reductions, bond programmes, share buybacks and grants of stock options.

1.4 - Special committees

Pursuant to recommendation R6 of the MiddleNext Corporate Governance Code on the establishment of committees and in accordance with article L. 823-20 4 of the French Commercial Code, the Board of Directors assumes the role of the audit committee with a view to enabling all directors to help monitor the preparation of financial reporting and the effectiveness of internal control systems, given the directors’ accountability.

As such, the Board performs the following duties:

- review of the financial statements,- monitoring of internal audit,- selection of statutory auditors.

The Chairman and Chief Executive Officer and the Deputy CEOs performing management functions are required to refrain from attending Board meetings when the Board sits as an audit committee. The meeting is then chaired by another director. However, the Chairman and Chief Executive Officer and the Deputy CEOs may be invited to attend part of the meeting, depending on nature of the agenda items and the information that they can usefully bring to enrich the discussions.

The Board of Directors also performs the functions of an appointments committee and a compensation committee:

- appointment of executive officers,- definition of the compensation policy, allocation of free shares and stock options.

In view of the size of the Group and the company’s shareholding structure, no other committees have been established to date.


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1.5 - Rules of procedure

Pursuant to recommendation R7 of the MiddleNext Corporate Governance Code on the establishment of rules of procedure for the Board, rules were established at the meeting of 22 November 2012 and last updated at the meeting of 19 January 2017. These rules contain the following sections:

- Composition of the Board of Directors,- Duties and powers of the Board of Directors,- Functioning of the Board of Directors,- Information to directors,- Professional conduct of directors,- Compensation of directors,- Audit and financial statements committee and special purpose committees,- Corporate officers’ civil liability insurance,- Entry into force, binding.

The rules of procedures incorporate the principles of the MiddleNext Corporate Governance Code.

1.6 - Frequency of meetings

Recommendation R5 of the MiddleNext Government Code on Board and Committee meetings advocates a minimum of four meetings annually and requires that minutes be prepared at each of them.In 2016, the Board of Directors discussed all major issues affecting the Group. It met six times, under the chairmanship of Maurice RICCI.Minutes of meetings of the Board of Directors drawn up after each meeting are communicated or made available to all Directors and recorded in the corporate records required for this purpose and stored at the company’s premises.

1.7 - Notifying directors of meetings

In accordance with article 17 of the articles of association, the directors were notified of meetings in advance by various means, including by ordinary letter, electronic mail and orally. Pursuant to article L. 823-17 of the French Commercial Code, the statutory auditors were notified when the Board met to review and approve the interim and annual financial statements.

1.8 - Information to directors

Pursuant to recommendation R4 of the MiddleNext Corporate Governance Code on information to directors, all documents, technical files and information necessary for the directors to carry out their duties were sent to them at least two days before meetings of the Board. However, particularly sensitive and urgent issues were discussed without prior notice or on short notice.Furthermore, the directors were kept regularly informed between meetings of any event or information liable to have an impact on the company’s commitments, its financial position and its cash position, when events required it.

1.9 - Holding of meetings

Meetings of the Board of Directors are held at the registered office or the premises of the company in Lyon. The average attendance rate of members at meetings of the Board of Directors was 71.4% in 2016.

1.10 - Assessment of the Board’s work (recommendation R11 on the evaluation of the Board’s work)

Recommendation R11 of the MiddleNext Corporate Governance Code states that the Chairman of the Board shall once a year call on directors to comment on the functioning of the Board and the preparation of its work. This assessment took place at the meeting of 21 March 2017. The assessment was conducted on the basis of a detailed questionnaire. From the discussions that followed an analysis of the responses, it emerged that no adverse developments had been observed compared with the previous positive assessment of 30 March 2016. The Chairman took note of this assessment and undertook to call on the Board members to give their opinion again next year.

1.11 - Review of points of vigilance

Pursuant to the new recommendation R19 of the MiddleNext Corporate Governance Code on the review of points of vigilance, the Board of Directors, at its meeting of 21 March 2017, looked at the points of vigilance and will make sure to review them regularly.

2 - POWERS OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER AND DEPUTY CEOs

No specific restrictions have been placed on the powers of the Chairman and Chief Executive Officer or those of the Deputy CEOs other than those provided for by law or the articles of association.

Pursuant to the new recommendation R14 of the MiddleNext Corporate Governance Code on succession planning, the Board of Directors must include a discussion on succession planning in the agenda of a coming meeting so as to ensure that the issue is addressed.


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3 - COMPENSATION OF EXECUTIVE OFFICERS

3.1 - Concurrent holding of an employment contract and a corporate office

Pursuant to recommendation R1 of the MiddleNext Governance Corporate Code on the concurrent holding of an employment contract and a corporate office, it is stipulated that the corporate offices of Chairman and Chief Executive Officer and Deputy CEO may not be held concurrently with employment contracts.

3.2 - Executive compensation

The company complies with recommendation R13 of the MiddleNext Corporate Governance Code on the compensation of executive offi-cers. As such, the principles for determining compensation meet the criteria of comprehensiveness, balance, benchmarking, consistency, clarity, measure and transparency.

Compensation and benefits paid to executive officers are set in accordance with the following rules and principles:

- a fixed portion comprising, where appropriate, a company car as a benefit in kind,- variable compensation may be granted to certain executive officers based on performance indicators, linked to the company’s performance in respect of internal goals. The variable portion is determined in the proportion of 50% on the basis of economic and financial results, namely revenue, operating profit and net profit, and 50% on the basis of individual performance assessed on qualitative criteria.

The compensation paid to the company’s executives is summarised in the annual management report in section 9.1 of this registration document.Pursuant to recommendation R18 of the MiddleNext Corporate Governance Code on stock options and free shares, the following disclosure is made in respect of free shares and stock options: the company did not grant its executives any stock options or free shares in 2016.

3.3 - Deferred compensation

Corporate officers do not receive any deferred compensation, severance pay or pensions within the meaning of recommendations R3 and R4 of the MiddleNext Corporate Governance Code.

3.4 - Directors’ fees

Pursuant to recommendation R10 of the MiddleNext Corporate Governance Code on the compensation of directors, the following disclosure is made in respect of directors’ fees: in its fifth resolution, the shareholders’ meeting of 16 June 2016 decided to allocate an annual amount of €100,000 for directors’ fees for the current year. The Board used €80,000 of this sum in 2016 (Board of Directors meeting of 15 December 2016).

4 - RELATIONS WITH SHAREHOLDERS

Pursuant to recommendation R12 of the MiddleNext Corporate Governance Code on the relationship with shareholders, time is regularly set aside for exchanges with significant shareholders so as to create the conditions for fruitful dialogue. Prior to shareholders’ meetings, execu-tives and the people responsible for financial communications ensure that meetings are organised with significant shareholders who so wish.

5 - INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM

The system implemented by AKKA Technologies is based on the “Reference framework for risk management and internal control systems for small caps and midcaps” published by the AMF on 22 July 2010.This system is under the responsibility of the Control & Internal Audit Department, a cross-disciplinary Group function that is independent of operating entities.

5.1 - Objectives of the internal control system

The main objective of internal control is to contribute to the effectiveness of operations and the efficient use of resources.

Internal control is designed to address the risks to the entities of the AKKA Group, with the aim of providing reasonable assurance that risks arising from the company’s business, including the risk of fraud, particularly in the fields of accounting and finance, are controlled.

The system is based on the framework laid down by the Committee of Sponsoring Organisations (COSO) of the Treadway Commission, and serves to provide reasonable assurance in respect of the following:

- Compliance with laws and regulations,- The proper application of instructions and guidelines set by the general management,- The proper functioning of the internal processes of the company, particularly those aimed at safeguarding its assets,- The reliability of financial information.

The internal control system is applied across the entire AKKA Technologies Group, from the parent company to the subsidiaries, most of which are housed in three business units. Each business unit is run by a management team in charge of all operational and support functions.


CHAPTER 16

5.2 - Risk identification

The risks resulting from the company’s activities are reviewed periodically in the Group’s various entities. This approach serves to identify and analyse any factors liable to prevent the Group from achieving its objectives and/or preserving its assets.

The analysis draws on the input of the management of the relevant entities and managers in charge of key business processes and support functions. The involvement of managers helps raise the awareness of people in the field on the issues of internal control and the need to comply with best practices more generally.

The internal control system described below has been designed to respond to the risks identified through adequate procedures.

5.3 - Internal control framework

The AKKA Technologies Group’s internal control system comprises several reference documents that apply to all Group entities.It is the responsibility of each business unit’s manager to implement these standards.

AKKA Group Internal Control StandardsThe Group has established the AKKA Group Internal Control Standards with the purpose of clarifying operational management rules.

They refer to the basic principles of internal control:

- Organisation adapted to the challenges, - Separation of duties (SoD),- Supervision of the delegation of power and signing authority.

For each operational and support process, the Standards set out the management rules to be respected and procedures to be formalised, see 5.4 “Processes and key players in internal control”.

AKKA Code of ConductThe Code of Conduct sets out the Group’s values, the principles of ethical conduct, the obligation to comply with laws and regulations, and the rules to be followed in combating corruption and conflicts of interest. The Code applies to all Group entities and all Group employees. It has been translated into the Group’s three working languages (English, French, German), and is available on the intranet.

Quality Management System The Quality Management System encompasses all operational procedures applicable to the Group’s various businesses. Quality systems are certified in accordance with generic standards (ISO 9001, etc.) and/or business-specific standards (EN 9001, IRIS, etc.).

5.4 - Processes and key players in internal control

See note 5.3, the Group’s corporate support functions have laid down standards aimed at controlling perceived risks for each major process.

Sales & Project ManagementEach Group entity must comply with contracting and project management rules:

- Pre-sale analysis to identify and cover technical and financial risks,- Respect for intra-group transfer pricing rules,- Monitoring of orders so as to limit the risks of non-billable services,- Billing procedure to optimise cash flows and reduce amounts outstanding.

To regulate business and legal risks, the Group’s Executive Committee must approve all key customer contracts and commercial propositions. In each business unit, commitment authorisations in respect of customer contracts are governed by formalised delegation rules.

PurchasingThe selection of suppliers is subject to tenders and objective criteria aimed at ensuring the quality and competitiveness of the goods and services purchased. The Group’s purchasing policy consists of extending, as far as possible, the principle of establishing approved supplier panels by purchasing category so as to enable the Group to benefit from negotiated prices and better purchasing terms.Given its direct link with the quality of goods and services delivered to customers, outsourcing is subject to increased monitoring.

Human resourcesLocal entities are responsible for recruiting and managing human resources, payroll and relations with unions.As such, the business unit’s management team is responsible for compliance with the laws and regulations of each host country.Particularly sensitive procedures (recruitment, payroll, expense management, departures) must be formalised, and any potential or actual social conflict must be reported of the Group.


CHAPTER 16

FinanceThe Standards set by the Group finance function are designed to align financial operations and minimise the risk of fraud:

- Some issues such as financial communications and intra-group financial flows are managed directly at Group level,- Operating rules have been laid down by the Group’s corporate finance and control functions for the tasks managed locally: accounting policies, banking and payment systems, budget procedures and planning, etc.,- Monthly reporting of the statutory and management accounts provides ongoing visibility to the Group.

LegalWith the support of the Group’s Legal Department, each business unit ensures compliance with the laws and regulations in force within its scope. Subsidiaries may call on independent advisors, particularly in the event of disputes and for specific operations, after approval of such services by the Group.Coverage of the main civil and product liability risks is centralised at Group level. Monthly legal reporting is used at the Group level to track actual litigation or potential risks, allowing coordinated action to be taken if necessary.

ITManagement of IT standards and systems at Group level guarantees the overall consistency and constant availability of the company’s IT tools.All major supplier agreements (hardware, software and services) must also be approved by the IT function before being signed.A backup and archiving system ensures data continuity and immediate accessibility.

Information system securityThe Group Information Systems Security function is tasked with ensuring the availability, integrity and confidentiality of information.The system relies notably on a strict process of managing access to business applications.Common rules to protect employees and confidential information are set out in the Group’s security policy.

CommunicationTo preserve AKKA Technologies’ image, major communication initiatives and/or policies must be approved by the Group Executive Committee.

Quality, safety, environmentEach business unit is responsible for laying down a quality, safety and environmental management system adapted to customer requirements and complying with applicable laws and regulations.

5.5 - Preparation and control of accounting and financial information

BudgetA budget is drawn up each year by the Group’s entities and consolidated by each business unit. It is then subject to approval by the general management and consolidation at Group level. On this basis, Group management issues a memo setting out internal targets for the management of the business units.

Management controlThe purpose of management control within the Group is to reduce the risks of drifting off course or of poor profitability of business operations and, more generally, the risk of a drift in actual performance compared with the budget. The Group has a Management Control Department in charge of analysing the performance of each business unit and consolidating monthly results. Gaps in performance against internal goals are identified to enable management to take corrective action quickly.Each entity within the business unit also has one or more management controllers tasked with the monitoring and financial evaluation of business operations, and in particular the monitoring of margins and ensuring that customers are billed quickly.

Financial statementsThe Group’s consolidated financial statements are prepared in accordance with international financial reporting standards (IFRS), based on ac-counting data prepared under the responsibility of the management of each business unit.Except where the legislation of certain countries requires adjustments to the consolidated financial statements, accounting methods and charts of accounts have been standardised for all Group companies.Restatements specific to IFRS, and in particular impairment testing of non-amortisable assets pursuant to IAS 36, are processed centrally by the consolidation team.Off-balance sheet commitments are monitored centrally. The summary statement of off-balance sheet liabilities is updated at least twice a year at the end of the first half and at year-end. Off-balance sheet liabilities are disclosed in the consolidated financial statements.In addition, significant subsidiaries have at least one auditor in charge of certifying the annual financial statements as of 31 December and providing a limited review of the financial statements for the six months to 30 June, for the purpose of establishing the Group’s consolidated financial statements.

To limit the risk of errors in financial reporting, the Group has established an internal review and approval process for all draft financial communications.


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5.6 - Evaluation of the internal control system

The pertinence and effectiveness of the internal control system is assessed continuously through internal audits.

Eleven internal audits were conducted at Group level in 2016. Based on the audit reports and areas for improvement identified, corrective and preventive action plans have been drawn up with the audited entities.

With each audit, the auditors also check the implementation of recommendations made in previous audits.

Internal audit reports its findings to the Board at least once a year.

Based on the risk analysis conducted at the end of 2016, the main areas of work identified for 2017 are:

- Support for the integration of newly acquired businesses;- Awareness of fraud risk and heightened control of sensitive processes;- Optimisation of the “Sales & Project Management” process, which is central to the operating performance;- Support for the Information Systems security approach (ISO 27001);- Continuous improvement of the Group’s governance consistent with the principles of the MiddleNext Corporate Governance Code.

Lyon, 21 March 2017The Chairman of the Board of DirectorsMaurice RICCI


CHAPTER 16

16.6 - Statutory auditors’ report prepared pursuant to article L. 225-235 of the French commercial Code based on the Report of the Chairman of the Board, with respect to internal control procedures relating to the preparation and processing of accounting and financial information

In our capacity as statutory auditors of AKKA Technologies, and pursuant to the provisions of article L. 225-235 of the French Commercial Code (Code de commerce), we hereby report on the report prepared by the Chairman of your company in accordance with article L. 225-37 of the French Commercial Code (Code de commerce) for the year ended 31 December 2016.

It is the Chairman’s responsibility to prepare and submit for approval to the Board of Directors a report describing the internal control and risk management procedures implemented within the company and providing the other information required by the article L. 225-37 of the French Commercial Code (Code de commerce), particularly as regards corporate governance.

It is our responsibility:

- to inform you of our observations on the information contained in the Chairman’s report on internal control and risk management procedures relating to the preparation and processing of accounting and financial information, and

- to certify that the report includes the other information required by article L. 225-37 of the French Commercial Code (Code de commerce), bearing in mind that we are not responsible for verifying the fairness of this other information.

We conducted our work in accordance with professional standards applicable in France.

Information concerning the internal control and risk management procedures relating to the preparation and treatment of accounting and financial information.

Professional standards require the implementation of procedures to assess the accuracy of the information concerning the internal control and risk management procedures relating to the preparation and processing of the financial and accounting information contained in the Chairman’s report. These procedures include:

- reviewing the internal control and risk management procedures relating to the preparation and processing of the accounting and financial information underlying the information presented in the Chairman’s report, as well as existing documentation;

- obtaining an understanding of the work performed to compile this information and reviewing existing documentation;

- determining whether any major internal control deficiencies relating to the preparation and processing of accounting and financial information that we may identify as part of our engagement are properly disclosed in the Chairman’s report.

Based on our review, we have no observations to make on the information regarding the internal control and risk management procedures relating to the preparation and processing of the accounting and financial information contained in the report of the Chairman of the Board of Directors established pursuant to article L. 225-37 of the French Commercial Code (Code de commerce).

Other information

We hereby certify that the report of the Chairman of the Board of Directors contains the other information required by article L. 225-37 of the French Commercial Code (Code de commerce).

Villeurbanne and Lyon, 21 March 2017The Auditors

ORFIS Baker Tilly Deloitte & Associés Bruno GENEVOIS Patrice CHOQUET


17 - EMPLOYEES

CHAPTER 17

17.1 - Number of employees

17.1.1 - Change in headcount

The average employee headcount was 12,725 in 2016, an increase of 10.5% compared with the average headcount in 2015. Staff turnover was 17.1% in 2016 (16.5% in 2015).

The Group’s consolidated workforce was 13,252 as of 31 December 2016, an increase of 8.4% compared with 31 December 2015.

17.1.2 - Corporate culture and sense of belonging

From the creation of our first company in 1984 to the present date, the Group has been guided by the same determination:

- To pursue a policy of developing and strengthening AKKA Technologies and its subsidiaries in order to secure our future,

- To focus on the diversification of our activities in the industrial and service sectors: aerospace, automotive, rail, defence, space, IT, telecommunications and services,

- To make our passion for technology a source of differentiation by providing creative expertise in the world of engineering and technology consulting.

Today, the AKKA Technologies Group continues to pursue the Group’s fundamental vision: “to be the preferred partner of major customers and deliver innovative technology solutions across the entire product or service design chain, anywhere in the world.”

AKKA Technologies’ goal is not to be the biggest, but rather the best partner for its customers in all of its sectors and business lines. For this, our high level of technical expertise combined with an international dimension and genuine capacity for innovation are our best assets.

With over 30 years of experience, the Group is now an international group, recognised for the excellence of the men and women who make it. In recent years, we have pursued a sustained acquisition policy. Our priority today is to introduce consistency into all of our decisions and actions. This is the reason behind the launch of the OnTrack project in 2013.OnTrack reflects our determination to share mutual trust and respect more than ever, so as to build the future of a competitive and agile group responsive to a changing world, an innovative structure in which each employee can and find his or her own path and personal balance.

A unique and distinctive positioning:

Since its creation, the Group has built its growth on robust values: respect, ambition and courage. These three ideals are part of the Group’s DNA, a DNA based primarily on values that above all need to be shared. They advocate listening, respect for differences and the courage of convictions, and must guide a healthy ambition. These values allow us to grasp and overcome cultural differences to ensure better understanding. They are essential to the Group’s corporate project, particularly as regards its commitment to international development.

The Group’s culture is reflected in proximity, career opportunities (guaranteed by internal promotion and training), involvement (employee participation in the AKKA Challenge, recruitment evenings, co-optation, etc.) and sharing.

To ensure that its values are embodied in the life of the Group, AKKA Technologies strives to foster a strong sense of team loyalty and to attract employees with promising talent.

Average workforce 31/12/2016 31/12/2015 31/12/2014

Managers 9,197 8,427 7,687

Non-managers 3,528 3,092 2,928

TOTAL 12,725 11,519 10,615

Average workforce 31/12/2016 31/12/2015 31/12/2014

Non-billable workforce 1,535 1,398 1,223

Billable workforce 11,190 10,121 9,392

TOTAL 12,725 11,519 10,615


CHAPTER 17

17.1.3 - Recruitment policy

Today, the AKKA Technologies Group has over 13,000 people, and recruited more than 4,000 employees around the world in 2016.

With an innovative approach to recruiting tailored to each type of profile, the Group’s policy focuses proactively on hiring young graduates (five years’ post-secondary education) from engineering and business schools or universities. The communication plan, which covers all actions taken to increase the sourcing of CVs, selects the best candidates, offering the various entities candidates matching their needs and facilitating the process for people entering the job market. The aim of this plan is to improve the visibility and attractiveness of the employer brand through concrete actions:

- dynamic relations with schools to promote the recruitment of graduates from target schools and interns before they are hired. AKKA Technologies currently has relationships with 30 partner schools worldwide;

- effective communication operations: Ski challenge, AKKAjobs’day, AKKAPolis game in France, Karting challenge in Germany, Engineering day in Belgium, etc.

17.1.4 - Communication actions

The Group’s communication policy addresses the major challenge of enhancing AKKA’s image with its customers. The proliferation of communi-cation initiatives demonstrates its vitality and influence. A number of materials have been developed for this purpose, ranging from institutional or sector-specific brochures and fact sheets on products and services to websites.With its image as an international specialist, AKKA Technologies also takes part in many trade fairs in France and internationally (Paris Air Show, Paris Motor Show, Bibendum Challenge in China, Aircraft Interiors, Innotrans, Dubai Airshow, ITS international trade fair etc.).Public and press relations are a third major focus of external communications.

In 2016, several projects were launched or pursued:

- External communications with the main focus on: AKKA as a major player in innovation. Innovations such as Link&Go demonstrate our ability to think outside the box. Today, our innovative strength goes well beyond our borders: it recently won praise at the World Government Summit in Dubai and from the Ministers of the Economy of China, Belgium and Canada. Moreover, in the continuation of our partnership with Dassault Systèmes, Link&Go was recently featured at CES Las Vegas to demonstrate its role in the city of tomorrow.This spirit of innovation is part of our overall strategy and one of our daily concerns. It is the driver of our development and our very essence. It also allows us to differentiate ourselves against our competitors: developing this kind of concept allows us to stand out as the only engineering consulting company to have created an autonomous car embodying a veritable social revolution.

- Internal communication: in 2016, the cursor was placed on proximity and exchanges between management and employees. A video chat was organised in France, as well as a Tour de France of our branch offices. The latest edition of AKKA Awards ceremony served to highlight the projects of its engineers. Panorama, the Group’s in-house newsletter, continues to play a central role in international communications across the entire Group.

17.1.5 - Training policy

The AKKA Technologies Group sees training as a tool for the recognition of skills and the promotion of individual performance, enabling everyone to achieve their full potential and to be an actor in their career development.

It serves to anticipate and support change in our business, plays a role in the constant enhancement of the professional skills of our employees, and facilitates the understanding and day-to-day commitment of everyone to our corporate project.

Moreover, revealing our talents, as part of new projects, mobility, or career development, is essential for the Group. As such, AKKA Technologies firmly believes that the key to the success of its corporate project is a strong human and managerial dynamic where everyone can reveal their talents in motivating challenges, and be actors in their career paths.

The main goals of training are to:

- assist our employees from their induction with the implementation of an individualised career path, tutoring by an induction godfather/ godmother, and individual and collective meetings during this period of intense learning;

- provide support to adapting the technological and business skills of our employees;

- develop the skills of our employees, and reveal their talents in the course of new projects, mobility, or career development in France and internationally.

17.2 - Equity interests and stock options of members of executive and management bodiesSee note 8.2.2 of the management report in section 9.1 of this registration document.


CHAPTER 17

17.3 - Agreements providing for employee share ownership

17.3.1 - Free shares

The 2015 free share plan, which is in the process of vesting, covers 14,300 shares. It benefits from the preferential treatment laid down in France’s 2004 budget. A two-year vesting period opens after the grant date. The shares vest at the end of this period. Employees must nevertheless keep them for at least two more years before they can sell them.

A plan to award performance shares was approved in June 2016. It covers a total of 520,000 shares, with the total target grant representing 250,000 performance shares. The plan benefits from the preferential treatment laid down in the Macron law of 6 August 2015. It provides for a vesting period from the grant date until 1 April 2019, and does not include a lock-up period. Vesting is subject to various conditions, including performance conditions, assessed in 2017 and 2018.

17.3.2 - FCPE and PEE (employee shareholding funds and employee savings plans)

In 2005, the Group established an employee savings plan open to employees with at least three months’ service in the Group’s French companies belonging to the plan.

There was no employer contribution in 2014 or 2015. The employer’s contribution for 2016 amounted to €134 thousand.


18 - MAIN SHAREHOLDERS

CHAPTER 18

18.1 - Breakdown of share capitalShareholding structure as of 21 March 2017

The management report in section 9.1 (note 8.6.3) of this registration document sets out the details of change in the Group’s shareholding structure over the last three years.

As of 21 March 2017, the RICCI family group held 9,173,141 AKKA Technologies shares (45.2% of the share capital and 61.8% of voting rights), breaking down as follows:

- 4,418,736 directly,- 3,695,424 indirectly through BMC Management and Investment, controlled by Maurice RICCI,- 1,017,001 indirectly through IDEACTIVE EVENTS, wholly owned by Maurice RICCI and Jean-Franck RICCI,- 41,980 indirectly through DUBAIA 9.

In 2016, the company was informed that Moneta Asset Management had crossed the threshold of 2.5% of share capital set in the articles of association: upwards on 29 August 2016 and downwards on 18 November 2016.

There were no other material changes in 2016, until the date of filing of this document.

Shareholders’ agreements

There were no shareholders’ agreements relating to AKKA Technologies at the date of filing of this registration document.

18.2 - Existence of different voting rightsThe introduction of double voting rights granted to all fully paid-up shares registered for at least three years in the name of the same shareholder as of 31 December of the prior year was approved by the combined shareholders’ meeting of 23 June 2003. The combined shareholders’ meeting of 28 February 2005 increased the minimum period for which registered shares must be held to acquire double voting rights from three to four years.

It also gives the right to vote and to be represented in shareholders’ meetings and the right to be informed on the progress of the company and to obtain certain corporate documents at the times and in the manner prescribed by law and the articles of association.

In the event of a capital increase by incorporation of reserves, profits or share premiums, double voting rights are granted upon issue to new shares allocated to shareholders in respect of shares that already have double voting rights.

Any shares converted to bearer shares or subject to a transfer of title forfeit double voting rights. However, transfer by inheritance, liquidation of communal property between spouses or inter vivos gifts to a spouse or relative entitled to inherit does not result in the loss of the right acquired, and does not interrupt the four-year period.

Shareholders have the option of individually waiving their double voting rights temporarily or permanently. This waiver shall be binding on the company and other shareholders on the condition that the company is notified by registered letter with acknowledgement of receipt at least three working days prior to the meeting for which the shareholder intends to waive double voting rights.

Number of shares % Voting rights %

RICCI FAMILY 9,173,141 45.2% 18,190,746 61.8%

Of which Maurice RICCI (1) 6,060,246 29.9% 12,111,192 41.2%

Of which Jean-Franck RICCI 949,884 4.7% 1,795,512 6.1%

Of which IDEACTIVE EVENTS 1,017,001 5.0% 2,034,002 6.9%

TREASURY SHARES 624,501 3.1% - -

EXECUTIVES 467,863 2.3% 935,726 3.2%

EMPLOYEES 215,354 1.1% 415,609 1.4%

FIDELITY MANAGEMENT RESEARCH LLC (2) 2,509,980 12.4% 2,509,980 8.5%

ALLIANZ GLOBAL (3) 1,944,922 9.6% 1,944,922 6.6%

Other free float 5,341,929 26.3% 5,425,221 18.4%

TOTAL 20,277,690 100.0% 29,422,204 100.0%

(1) Includes BMC Management and Investment(2) Source: Fidelity Management Research LLC(3) Source: Allianz


CHAPTER 18

These provisions in respect of double voting rights are consistent with the provisions of article L. 225-123 of the French Commercial Code in the version resulting from Law No. 2014-384 of 29 March 2014.

18.3 - Holding in or control of the Group, which, if implemented, could result in a change in control at a later date AKKA Technologies is controlled by the RICCI family group. No specific measures have been taken to ensure that control is not exercised in an abusive manner.

18.4 - Agreements known by the issuer, which, if implemented, could result in a change in control at a later date To the knowledge of AKKA Technologies, there were no agreements whose implementation could cause a change of control of the company.


19 - RELATED-PARTY TRANSACTIONS

CHAPTER 19

Details of related-party transactions are presented in the statutory auditors’ special reports in section 20.5.5 and in the consolidated financial statements in section 20.3.6 (notes 8.1 and 8.2).


20 - FINANCIAL INFORMATION CONCERNING THE ASSETS AND LIABILITIES, FINANCIAL POSITION AND RESULTS OF THE ISSUER

CHAPTER 20

20.1 - Historic financial informationPursuant to article 28 of Regulation (EC) No. 809/2004, the following information is incorporated by reference in this registration document:

- The 2015 consolidated and annual financial statements and the corresponding auditors reports contained in the 2015 registration document filed on 21 April 2016 under number D. 16-0383.

- The 2014 consolidated and annual financial statements and the corresponding auditors reports contained in the 2014 registration document filed on 24 April 2015 under number D. 15-0398.

20.2 - Pro-forma financial informationNot applicable.

20.3 - 2016 consolidated financial statements

20.3.1 - 2016 consolidated income statement

INCOME STATEMENT in thousands of euros Note 31/12/2016 31/12/2015

Revenue 3.1 1,122,671 1,001,687

External expenses 3.2 (315,343) (284,169)

Taxes and duties (8,234) (8,022)

Personnel expenses 3.3 (706,858) (635,768)

Net depreciation and provisions 3.4 (18,323) (14,281)

Other current expenses (3,577) (2,903)

Other current income 6,855 4,308

Income from equity affiliates 4.4 - (25)

OPERATING PROFIT FROM ORDINARY ACTIVITIES 77,190 60,828

Free shares and stock options (131) (77)

RECURRING OPERATING PROFIT 77,059 60,751

Other non-current income and expenses 3.5 (34,274) (12,845)

OPERATING PROFIT 42,785 47,906

Income from cash and cash equivalents 3.6 2,165 2,803

Gross borrowing costs 3.6 (11,613) (12,617)

NET BORROWING COSTS (9,449) (9,814)

Other financial income and expense 3.6 (878) 3,293

PROFIT BEFORE TAX 32,458 41,385

Tax expense 3.7 (15,550) (8,816)

CONSOLIDATED NET PROFIT 16,908 32,570

Non-controlling interests (4,193) (6,340)

NET PROFIT ATTRIBUTABLE TO OWNERS OF THE PARENT 12,715 26,229

Earnings per share € 0.65 € 1.33

Diluted earnings per share € 0.65 € 1.33

Weighted average number of ordinary shares outstanding 19,659,423 19,727,288

Weighted average number of ordinary shares plus potential dilutive shares 19,673,723 19,740,288


CHAPTER 20

20.3.2 - 2016 consolidated statement of comprehensive income

20.3.3 - 2016 consolidated balance sheet

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME in thousands of euros 31/12/2016 31/12/2015

CONSOLIDATED NET INCOME 16,908 32,570

Actuarial gains and losses on pension obligations (1,279) 1,132

Tax effect of items not to be recycled to profit or loss in subsequent periods 390 (367)

Items not to be recycled to profit or loss in subsequent periods (889) 765

Gains and losses on hedging instruments (599) (371)

Change in translation differences (653) 1,225

Tax effect of items to be recycled to profit or loss in subsequent periods 200 124

Items not to be recycled to profit or loss in subsequent periods (1,052) 978

CONSOLIDATED COMPREHENSIVE INCOME 14,967 34,312


Group share 11,027 27,784

ASSETS in thousands of euros Note 31/12/2016 31/12/2015

Goodwill 4.1 218,183 192,586

Intangible assets 4.3 17,140 10,542

Property, plant and equipment 4.3 55,520 46,170

Non-current financial assets 4.5 27,769 24,829

Securities of affiliated companies and joint ventures 4.4 - -

Other net non-current assets 4.6 27,737 43,717

Deferred tax assets 3.7.3 35,120 34,715

Non-current assets 381,468 352,558

Inventories and work in progress 4,742 4,276

Trade receivables 4.7 197,310 210,975

Other receivables 4.8 109,004 122,405

Cash and cash equivalents 4.10 and 5.1 158,958 215,120

Current assets 470,013 552,776

TOTAL ASSETS 851,481 905,335

LIABILITIES in thousands of euros Note 31/12/2016 31/12/2015

Share capital 4.11 31,025 28,204

Share premium 4.11 - 2,068

Consolidation reserves 156,223 143,160


Equity attributable to shareholders of the parent 199,963 199,661


Shareholders’ equity 229,495 225,238

Non-current provisions 4.12 23,119 20,263

Non-current financial liabilities 4.13 241,340 281,215

Restructured debt > 1 year 4.14 - 7,085

Deferred tax liabilities 3.7.3 1,867 1,067

Non-current liabilities 266,326 309,630

Current provisions 4.12 8,821 18,946

Current financial liabilities 4.13 7,009 13,195

Restructured debt < 1 year 4.14 7,745 8,042

Trade payables 80,539 83,438

State – income taxes 3,686 4,850

Tax and social security liabilities excluding income tax 4.15 195,146 180,619

Other liabilities 4.16 52,715 61,375

Current liabilities 355,661 370,466



CHAPTER 20

20.3.4 - 2016 consolidated statement of cash flowsw

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME in thousands of euros Note 31/12/2016 31/12/2015


Reintegration of expenses (+) or elimination of income (-) connected to depreciation and impairment (excluding working capital) 3.4 31,948 11,946

Elimination of income from equity affiliates 4.4 - 25

Dividends received from equity affiliates 4.4 - -

Reintegration of tax expense (+) or elimination of tax income (-) 3.7.2 15,603 9,607

Reintegration of expenses (+) or elimination of income (-) calculated under IFRS (1) (1,137) 188

Reintegration of expenses (+) or elimination of income (-) from net disposals (6,361) (4,379)

Reintegration of expenses (+) or elimination of income (-) associated with net borrowings 3.6 9,449 9,814

Cash flow before net borrowing costs and tax 66,410 59,769

Tax paid (13,182) (8,108)

Change in working capital 5.2 19,337 (12,323)

Net cash from/(used in) operating activities 72,566 39,339

Acquisitions of fixed assets 4.3 (33,563) (22,169)

Disposals of fixed assets 2,781 1,124

Change in financial assets (3,848) (3,534)

Income from discontinued operations - -

Impact of changes in the scope of consolidation 5.3 (20,471) (36,114)

Net cash from/(used in) investing activities (55,101) (60,693)

Dividends paid to shareholders of the parent company 5.4 (9,830) (8,949)

Capital increases in cash 4.11 - -

Purchase of treasury shares (360) (205)

Proceeds from new borrowings 4.13 and 4.14 2,908 42,659

Repayment of loans 4.13 and 4.14 (57,963) (9,295)

Net interest received 2,165 2,803

Net interest paid (10,474) (10,781)

Net cash from/(used in) financing activities (73,556) 16,232


CHANGE IN CASH AND CASH EQUIVALENTS (56,162) (4,959)

Opening cash, cash equivalents and bank overdrafts 5.1 215,120 220,079

Closing cash, cash equivalents and bank overdrafts 5.1 158,958 215,120

CHANGE IN CASH AND CASH EQUIVALENTS (56,162) (4,959)(1) Expenses calculated on the basis of IFRS consist of the valuation of stock options and free shares (IFRS 2) and the capitalisation of borrowing costs.


CHAPTER 20

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CHAPTER 20

20.3.6 - Notes to the 2016 consolidated financial statements

These notes contain additional information regarding the consolidated balance sheet, the total of which is €851,481 thousand, and the consoli-dated income statement, which shows consolidated net profit attributable to the owners of the parent of €11,027 thousand.

Such information is only included when its importance is material.

Unless otherwise stated, all figures are expressed in thousands of euros.

The Board of Directors of the AKKA Technologies Group approved the financial statements at its meeting of 21 March 2017.

AKKA Technologies’ business operations:

AKKA Technologies is a European engineering and technology consulting group that supports large manufacturing and tertiary services com-panies, seeing their projects through from the initial studies and R&D to large-scale production.

Building on its expertise in various complementary business lines, AKKA Technologies brings real value added to customers in sectors including aerospace, automotive, space/defence, consumer electronics, telecommunications, chemicals, pharmaceuticals, steel, energy, rail, marine and service industries.

AKKA Technologies is the leader in the automotive and aerospace sectors in Germany and France, and, thanks to the mobility of its staff and its international positioning, works on projects at the cutting edge of technology around the world.

The AKKA Technologies Group has more than 13,000 employees, and operates in 20 countries, including Belgium, Canada, China, the Czech Republic, France, Germany, Hungary, India, Italy, Morocco, the Netherlands, Romania, Russia, Spain, Switzerland, Tunisia, Turkey, the UAE, the UK and the US.

The company’s registered office is located at 9-11 rue Montalivet, 75008 Paris.

AKKA Technologies is listed on EuronextTM Paris – Segment B – ISIN code FR0004180537. CAC® Small, CAC® Mid & Small, CAC® All-Tradable and CAC® All-Share indices.

Significant events and transactions in 2016:

> Reinforcement of expertise in automotive design: AKKA Technologies now operates its design activities under the Bertone Carozzeria brand, acquired during the second quarter. Since its creation by Giovanni Bertone in 1912, the illustrious Italian design house has created countless models for the major Italian automakers, including Alfa Romeo, Ferrari, Lamborghini, Maserati and BAIC. The acquisition dovetails with our strategy of expanding the AKKA Technologies Group’s offer in certain promising high value-added niches. Its aim is to accelerate the Group’s diversification in emerging countries under the auspices of a recognised and unique brand.

> On 30 June 2016, AKKA Technologies signed a new five-year €200 million revolving credit facility. It replaces the previous facility set up on 12 April 2012 and renegotiated in December 2014, which expired in the first half of 2016.

> German company Erlkönig joined the Group (note 1.6.1): Erlkonig’s entry into the Group comes against the backdrop of the reorganisation of the Group’s German activities around three areas (Northern, Southwest and Southeast Germany). Founded in 2003, Erlkönig specialises in high value-added activities in processes, mobility and digitisation in the automotive sector. With over 270 talented employees, it posted revenue of nearly €22 million in 2015, with front-ranking margins. It operates chiefly in Northern and Southeast Germany. Its skills complement those of Auronik, and its proximity with the Volkswagen Group, its leading customer, will accelerate the diversification of the AKKA Technologies Group among German automakers.¬

> A ruling by the Council of State in late 2016 upheld the retroactive application of the change of doctrine by the tax administration in respect of the research tax credit (crédit d’impôt recherche – CIR). A provision of €24 million was recognised on the CIR for the period from 2010 to 2014 to reflect this change. This impairment, recorded as non-current expense, has no impact on AKKA Technologies’ cash position, as the tax credit for the relevant years had not been received by the Group. The change in doctrine does not affect the Group’s financial statements for the years after 2014, as AKKA Technologies had complied with the new tax doctrine as a precaution.

Significant events and transactions in 2015:

> Acquisition of Epsco in the first half: Epsco is active mainly in processes in Italy. It recorded revenue of €18 million in 2014, with impressive margins. Its acquisition will speed up the diversification of the AKKA Technologies Group’s activities in Italy, allowing it to achieve critical mass in that market. The acquisition will also allow the Group to accelerate its diversification in the energy sector.

> Acquisition of Corialis in the second half: Corialis, which was founded in 2002, reported revenue of nearly €30 million in 2014 and boasts front-ranking margins. It generates most of its revenue internationally, in the Middle East and Africa. Its acquisition complements that of Epsco. It fits into the Group’s strategy of increasing the proportion of high value-added activities while accelerating its expansion in the processes and commissioning segment, and in the energy sector.

> Acquisition of Matis in the second half: Matis, which was founded in 1994, is a French technology consulting company with 1,000 employees. It reported revenue of €82 million in 2014, 65% in France and 35% internationally. Matis is truly a complementary fit with AKKA in terms of


CHAPTER 20

sectors, geographies and customers, and offers a distinctive positioning in high value-added assistance in contracting and processes.

Note 1 - Scope of consolidation and methods

Note 1.1 - Reporting standards

The consolidated financial statements of the AKKA Technologies Group were prepared in accordance with IFRS and interpretations issued by the International Accounting Standards Board (IASB) and adopted by the European Union at the reporting date.

These standards are available on the European Commission website at the following address: http://ec.europa.eu/finance/company-reporting/index_en.htm.

Note 1.1.1 - Standards, amendments and interpretations applicable from 1 January 2016

The main standards, interpretations and amendments with mandatory application for periods beginning on or after 1 January 2016 are:

- Annual improvements to IFRS, 2010-2012 and 2012-2014 cycles;

- Amendments to IAS 1 Presentation of Financial Statements – disclosure initiative;

- Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation;

- Amendments to IAS 19 Defined Benefit Plans: Employee Contributions;

- Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations.

These new standards are not applicable or did not have a material impact on the Group’s financial position or performance.

Note 1.1.2 - Standards, amendments and interpretations adopted by the IASB but not yet applicable as of 31 December 2016

The Group has not early adopted any of the following new standards and interpretations, which may concern it but which were not mandatory as of 1 January 2016:

- IFRS 9 Financial Instruments;

- IFRS 15 Revenue from Contracts with Customers;

- IFRS 16 Leases;

- Amendments to IAS 7 – disclosure initiative;

- Amendments to IAS 12 – accounting for deferred tax assets for unrealised losses;

- Amendments to IFRS 10 and IAS 28 – sale or contribution of assets between an investor and its associate or joint venture;

- Amendments to IFRS 2 – classification and measurement of share-based payment transactions;

- Annual improvements, 2014-2016 cycle;

- IFRIC 22 Foreign Currency Transactions and Advance Consideration.

A review of the impacts and practical consequences of the application of these standards is currently underway. Specifically for IFRS 15, the first analyses conducted have not identified any types of contracts with potentially material impacts for the Group.

Note 1.2 - Management estimates

The preparation of consolidated financial statements under IFRS requires the use of estimates and assumptions that have an impact on the financial statements. These estimates and assumptions are based on information available when they are drawn up. Estimates may be revised in the event of change in the circumstances on which they were based. Actual results may therefore differ from the initial estimate.

The annual consolidated financial statements were prepared taking into account the prevailing macroeconomic environment and the financial market parameters available as of the balance sheet date. The effects of these factors have been taken into account as appropriate, notably in the measurement of assets such as trade receivables. For longer-term assets such as intangibles (goodwill), it is assumed that conditions will change over time. The value of these assets is measured each year on the basis of the long-term economic outlook, using the best assessment of the Group’s management, bearing in mind that visibility over future cash flows is limited.

The use of estimates impacts the following information in particular:

- the assumptions used for asset impairment testing (notes 2.10 and 4.2),

- the calculation of deferred tax assets (notes 2.5 and 3.7.3),

- the assessment of earnings based on the state of progress of contracts (notes 2.1 and 3.1),

- the measurement of provisions and pension commitments (notes 2.15 and 4.12),

- the estimate of projects eligible for R&D subsidies (notes 2.20 and 3.3).


CHAPTER 20

Note 1.3 - Consolidation methods

The companies over which the Group directly or indirectly exercises exclusive control are consolidated by the full consolidation method.

Exclusive control is assessed in accordance with the criteria set out in IFRS 10 (power over the relevant activities, exposure to variable returns and ability to use power to affect the amount of returns). This is presumed to be the case in companies in which the Group directly or indirectly holds at least 50% of voting rights. Immediately exercisable potential voting rights, including those held by another entity, are taken into account in assessing control.

The analysis of joint arrangements pursuant to the criteria set out in IFRS 11 has resulted in the identification of joint ventures, but no joint acti-vities. Joint ventures are consolidated by the equity method.

No company was consolidated by the equity method in 2016, as in 2015.

Note 1.4 - Date of the financial statements

All financial statements of the companies included in the consolidation are for the year ended 31 December 2016.

Note 1.5 - Scope of consolidation


CHAPTER 20

Companies % control % interest Consolidationmethod (1)

Country in whichthe company is based

AKKA TECHNOLOGIES SE - - CE FranceAEROCONSEIL PACIFIC SAS 100% 100% FC French PolynesiaAEROCONSEIL SAS 100% 100% FC FranceAKKA AEROCONSEIL ESPANA SL 100% 100% FC SpainAKKA BENELUX SA 100% 100% FC BelgiumAKKA DEUTSCHLAND GmbH 100% 100% FC GermanyAKKA DEVELOPMENT UK (ex-AEROCONSEIL UK LTD) 100% 100% FC Great BritainAKKA TECHNOLOGIES DEVELOPMENT SARL 100% 100% FC LuxembourgAKKA GROUPE AMERIQUE DU NORD INC 100% 100% FC CanadaAKKA GERMANY GmbH 100% 100% FC GermanyAKKA I&S SAS 100% 100% FC FranceAKKA INFORMATIQUE ET SYSTEMES SAS 100% 100% FC FranceAKKA INGENIERIE DOCUMENTAIRE SAS 100% 100% FC FranceAKKA INGENIERIE PROCESS SAS 100% 100% FC FranceAKKA INGENIERIE PRODUIT SAS 100% 100% FC FranceAKKA ITALIA SRL 100% 100% FC ItalyAKKA LIFE SCIENCE SAS 100% 100% FC FranceAKKA MANAGER SARL 100% 100% FC FranceAKKA MIDDLE EAST DMCC 100% 100% FC DubaiAKKA OCTOGON GmbH 100% 100% FC GermanyAKKA RESEARCH SAS 100% 100% FC FranceAKKA ROMSERV SRL 100% 100% FC RomaniaAKKA SERVICES SAS 100% 100% FC FranceAKKA SWITZERLAND SA 100% 100% FC SwitzerlandATP AUTOMOTIVE TESTING PAPENBURG GmbH 100% 65% FC GermanyAURONIK GmbH 100% 100% FC GermanyAURONIK Services GmbH 100% 100% FC GermanyAUTONATIC GmbH 100% 100% FC GermanyCASCIOPE SAS 100% 100% FC FranceCORIALIS AECWA SL 51% 51% FC SpainCORIALIS ANGOLA SL 100% 100% FC AngolaCORIALIS CEMAC SARL 100% 100% FC FranceCORIALIS CONGO SA 70% 70% FC CongoCORIALIS EAST SARL 75% 75% FC FranceAKKA ENERGY SAS (ex-CORIALIS ENGINEERS) 100% 100% FC FranceCORIALIS IBERICA SL 100% 100% FC SpainCORIALIS INGENIEROS SL 100% 100% FC SpainEKIS FRANCE SAS 100% 100% FC FranceEKIS SAS 100% 100% FC FranceEPSCO EUROPE S.r.o. 100% 100% FC SlovakiaEPSCO RESOURCING LIMITED 100% 100% FC Great BritainEPSCO Srl 100% 100% FC ItalyERDIMAT SAS 99.97% 99.97% FC FranceERLKONIG MANAGEMENT CONSULTING BEIJING Ltd. 100% 100% FC ChinaERLKONIG GmbH 100% 100% FC GermanyERLKONIG HOLDING GmbH 100% 100% FC GermanyERLKONIG TECHNOLOGY GmbH 100% 100% FC GermanyGEPILOG SAS 100% 100% FC FranceMATIS BENELUX SPRL 100% 100% FC BelgiumMATIS DO BRASIL CONSULTORIA E PROJETOS INDUSTRIALS LTDA 100% 100% FC BrazilMATIS HOLDING SAS 100% 100% FC FranceMATIS INFORMATIONS TECHNOLOGIES SAS 100% 100% FC FranceMATIS INTERNATIONAL SA 100% 100% FC FranceMATIS NETHERLANDS BV 100% 100% FC NetherlandsMATIS TECHNOLOGIES - M.T. SA 100% 100% FC FranceMB SIM TECHNOLOGY Co. Ltd. 100% 65% FC ChinaMBTECH BOHEMIA s.r.o. 100% 65% FC Czech RepublicMBTECH CONSULTING GmbH 100% 65% FC GermanyMBTECH EMC GmbH 100% 65% FC GermanyMBTECH GROUP GmbH & Co. KGaA 65% 65% FC GermanyMBTECH HUNGARY ENGINEERING AND CONSULTING LLC 100% 65% FC HungaryMBTECH MUHENDISLIK VE DANISMANLIK Limited Sirketi LLC 100% 65% FC TurkeyMBTECH NORTH AMERICA Inc. 100% 65% FC USAMBTECH VERWALTUNGS - GmbH 65% 65% FC GermanyMB-TECHNOLOGY NA LLC. 100% 65% FC USAMODELISATION ASSISTANCE TECHNIQUE INFORMATIQUE SCIENTIFIQUE (MATIS) SA 100% 100% FC FrancePROCEDA MODELBAU GmbH 100% 65% FC GermanyPROJEKTEXPERTISE GmbH 100% 100% FC GermanyREAL FUSIO SAS 100% 100% FC FranceSYSTEM DESIGN GmbH 100% 65% FC GermanyVELOCITY 368 Ltd (ex-AKKA DEVELOPMENT UK Ltd) 100% 100% FC Great Britain(1) CE = Consolidating Entity; FC = Full Consolidation


CHAPTER 20

Note 1.6 - Comparability of financial statements

Note 1.6.1 - First-time consolidation in 2016

Founded in 2003, Erlkönig was consolidated on 1 July 2016. Its main entities are as follows:

- Erlkönig GmbH

- Erlkönig Technology GmbH

- Projektexpertise GmbH

- Autonatic GmbH

- Erlkönig Management Consulting Beijing Ltd

- Erlkönig Holding GmbH

As of 31 December 2016, these companies were wholly owned.

Note 1.6.2 - First-time consolidation in 2015

- On 1 April 2015, AKKA Development acquired Epsco S.r.l., based in Milan. Epsco in turn had two subsidiaries as of the date of its acquisition:

- Epsco Resourcing Ltd

- Epsco Europe s.r.o.

- On 30 July 2015, AKKA Technologies acquired the Matis group, the main entities of which are:

- Modélisation Assistance Technique Informatique Scientifique (MATIS) SA

- MATIS Technologies MT

- MATIS Benelux

- MATIS Netherlands

- MATIS Suisse

- MATIS Hispania

- On 27 October 2015, AKKA Technologies acquired the Corialis group, the main entities of which are:

- Corialis East SARL

- Corialis Engineers SAS

- Corialis Iberica SL

- Corialis Ingenieros SL

As of 31 December 2015, these companies were wholly owned.

Note 1.6.3 - Acquisition price of companies consolidated for the first time in 2015 and 2016

The Group devoted €18,741 thousand to acquisitions in 2016 (€49,485 thousand in 2015). A further amount of €14,774 thousand is to be paid on these acquisitions after 2016. The detail of goodwill and earn-out payments is disclosed in note 4.1.

Note 1.6.4 - Change in percentage interest

There was no significant change in percentage interests held in 2016.

Note 1.6.5 - Exits from the scope of consolidation

There were no exits from the scope of consolidation in 2016.

Note 1.6.6 - Other events affecting the scope of consolidation

No other material events affected the scope of consolidation in 2016.

Note 1.6.7 - Pro-forma information

In the absence of any significant impact from acquisitions, pro-forma information is not provided for the periods presented.

Note 1.7 - Translation of the financial statements of subsidiaries

The Group’s functional currency is the euro.

The financial statements of subsidiaries have been translated into euros using the closing rate for balance sheet items other than equity, the average rate for the year for the income statement and the historical rates for components of equity other than retained earnings.


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The differences arising from the translation of financial statements of subsidiaries are recorded in a separate section of the statement of changes in equity under “translation differences”. Movements during the year are presented on a separate line, in other comprehensive income.

Note 1.8 - Intra-group transactions

Transactions between Group companies (purchases, sales, dividends, receivables, payables, provisions, results of internal transfers, etc.) are eliminated for fully consolidated companies.

Note 2 - Accounting policies

Note 2.1 - Method of recognition of profit from contracts

Revenue and margin are recognised based on the individual technical progress of each contract. Services are recognised on the basis of work completed, taking into account an estimate of the amount remaining to complete the contract.

Where work completed exceeds the amount billed, the difference is recognised as “invoices to be issued” in assets, under the heading “trade receivables”. By contrast, where the work billed exceeds the amount of work actually completed, the difference is recognised in “deferred income” in liabilities, under the heading “other liabilities”.

For fixed-price contracts, where the work completed plus what remains to be done to fulfil the contract exceeds the total revenue from the contract, the excess amount is recognised as “provision for losses on completion” in liabilities, under the heading “current provisions”.

For some fixed-price contracts, where the customer requests the performance of work not included in the initial order, if the company is certain to receive payment, invoices to be issued are recognised on the basis of the work completed, provided that the customer recognises that the work was carried out in addition to the services referred to in the initial contract. As this income cannot be estimated with certainty, revenue is recognised on the basis of cost.

Note 2.2 - Research and development expenses

Research and development expenses are expensed.

Under IAS 38, development costs can only be recognised as assets if projects meet the following conditions:

- the project is clearly identified and the project costs can be measured reliably,

- the technical feasibility of the project has been demonstrated,

- the Group intends to complete the project and to use or sell the resulting solutions,

- the financial and technical resources needed to complete the development and to use or sell the asset are available,

- it is probable that future economic benefits will flow to the Group.

Note 2.3 - Share-based payments

IFRS 2 defines the methods for measuring and recognising share-based payments. Stock option and free share plans are regarded as benefits granted by the Group to the beneficiaries. As such, the benefit is measured based on the fair value of the equity instruments granted at the grant date. It results in the recognition of an expense spread over the vesting period of the rights, with a corresponding increase in equity, taking into account the probability of the departure of the employee in question.

Depending on the option chosen in the context of the transition to IFRS, the restatement only applies, and in full, to agreements relating to share-based payments made in the form of equity instruments granted after 7 November 2002 and vested after 1 January 2005.

On expiry of the vesting period, the amount of cumulative benefits recognised is maintained in equity for the part actually vested, whether or not the options are actually exercised.

The fair value of stock option plans is measured using the Black & Scholes model.

Free shares granted are subject to certain restrictions on their sale or transfer and to the employee’s presence in the Group at the end of the vesting period. The fair value of the benefit granted takes into account various parameters such as employee turnover and the non-transferability of shares during the vesting period.

Note 2.4 - Other non-recurring income and expenses

Other non-recurring income and expenses consists of income and expenses that are unusual owing to their frequency and immateriality in respect of the Group (see 3.5).

Note 2.5 - Tax expenseNote 2.5.1 - Income tax

Current tax expense represents the amounts paid or payable to the tax authorities for the year, based on the rules and rates applicable in the various countries.


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Deferred tax is recognised on differences between the carrying amounts of assets and liabilities and their tax basis in accordance with IAS 12, except for differences related to goodwill and investments in subsidiaries. They accordingly result primarily from the following:

- time lag between the recognition and tax deductibility of certain expenses,

- restatement of tax reserves,

- adjustments made between the financial statements prepared in local GAAP and financial statements prepared in accordance with IFRS (e.g. restatement of goods subject to fixed or movable property finance leases).

In accordance with IAS 12, deferred taxes are calculated using tax rates that were enacted or substantively enacted as of the reporting date. Changes in deferred tax rates and tax bases are recognised in profit or loss when they affect an item recognised in profit or loss, in other com-prehensive income or in reserves, depending on the method of recognition of the item on which the tax is levied.

Deferred tax assets are recognised only when their recovery is deemed likely. To assess its ability to recover deferred tax assets, the Group takes into account the following:

- future earnings forecasts as determined from multi-year budgets used for goodwill impairment testing. Forecasts are taken into account over a period of five years, which corresponds to the length of available forecasts;

- the probability of use of tax losses arising before and after tax consolidation;

- the specific treatment of tax losses under local tax rules.

Deferred taxes are not discounted.

Note 2.5.2 - Corporate value added contribution

According to the Group’s analysis, the corporate value added contribution (cotisation sur la valeur ajoutée des entreprises – CVAE), a French business tax based on the value added in the parent company’s financial statements, has features that meet the definition of an income tax within the meaning of IAS 12.2 (“taxes based on taxable profits”). It is therefore recognised under “income tax expense” in the income statement.

Note 2.6 - Earnings per share

In accordance with IAS 33, basic earnings per share is calculated by dividing the share of net profit attributable to owners of the parent by the weighted average number of shares outstanding less treasury shares.

Diluted earnings per share is calculated by dividing the share of net profit attributable to owners of the parent, adjusted for the financial cost of dilutive instruments, by the weighted average number of shares outstanding after the conversion into ordinary shares of dilutive instruments outstanding convertible into AKKA Technologies shares.

Note 2.7 - Goodwill

Goodwill recorded prior to the Group’s adoption of IFRS was frozen at 1 January 2004 as part of the transition to IFRS. The accumulated impairment was deducted from its gross value at that date.

IFRS 3R on business combinations was applied prospectively to business combinations that took place on or after 1 January 2010.

The principles presented below are those laid down in IFRS 3R.

When taking control of a new company, the identifiable assets and liabilities of the acquired subsidiary are recognised in the consolidated balance sheet at their fair value at that date. These assets and liabilities follow the rules for balance sheet items to which they are assigned.

The residual difference between the acquisition cost and the share of interest in the net fair value of contingent assets and liabilities is included in assets under “goodwill”. Analysis of the allocation of the acquisition cost is finalised at the end of a period of 12 months from the date of acquisition.

The acquisition cost is the amount of cash or cash equivalents and contingent considerations measured at fair value, excluding the acquisition costs of securities. Acquisition costs are expensed in the period.

The Group recognises non-controlling interest in a takeover, either at fair value (full goodwill method) or on the basis of their share in the net assets of the acquired company (partial goodwill method). A decision is taken for each acquisition.

The impact of buyouts of non-controlling interests after a takeover is recognised directly in equity. The treatment is the same in case of transfer without loss of control.

For acquisitions made on or after 1 January 2010, in accordance with IFRS 3R, changes in earn-out payments are recognised in profit or loss after the acquisition date.

When the impact is material, contingent considerations are discounted. The impact of the accretion is recognised in profit or loss.

Negative goodwill is recognised immediately in profit or loss.


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Goodwill is allocated to a cash-generating unit or a group of CGUs based on synergies expected by the Group. In practice, goodwill is allocated to geographical areas, as described in note 4.1.

Goodwill is not amortised. It is subject to impairment testing as defined in note 2.10, whenever there is an indication of impairment and at least once a year.

Note 2.8 - Property, plant and equipment and intangible assets

The basic method adopted for the recognition and measurement of fixed assets is the historical cost method. The Group has opted not to remea-sure fixed assets other than business combinations.

Among property, plant and equipment, land is the only asset with an indefinite life.

In accordance with IAS 16, buildings are measured using a component approach.

Buildings are broken down into four homogeneous components based on estimates and quotes made at the time:

- building shell,

- façade and sealing,

- general and technical fixtures,

- fittings.

Depreciation is generally calculated on a straight-line basis over the useful life of the item. Accelerated depreciation may however be used when it appears more appropriate to the conditions of use of the equipment in question.

The main useful lives of the various categories of property, plant and equipment and intangible assets are:

The implementation of IAS 23 Borrowing Costs has not resulted in the capitalisation of interest in the absence of significant eligible assets.

Note 2.9 - Leases

Note 2.9.1 - Finance leases

The following are considered to be finance leases:

- agreements that transfer ownership of the item at the end of the term,

- agreements containing a purchase option at a preferential price,

- leases covering the major part of the useful life of the item,

- agreements for which the present value of the minimum rent payments is equal to substantially all of the fair value of the asset leased,

- agreements relating to very specific assets.

In addition, the following situations may individually or jointly result in a lease being classified as a finance lease:

- if the lessee can cancel the lease, the losses incurred by the lessor for the cancellation are borne by the lessee,

- gains or losses resulting from change in the fair value of the residual value are borne by the lessee,

- the lessee has the option of extending the lease for a second term at a rent that is substantially below the market price.

Number of years

Software 1 to 3 years

Operating software (unit value < €23 thousand) 2 years

Operating software (unit value > €23 thousand) 3 years

Building shell 50 years

Façade and sealing 30 years

General and technical fixtures 4 to 20 years

Fittings 10 years

Plant, equipment and tooling 4 years

General facilities, fixtures and fittings 4 to 10 years

Transport equipment 4 years

Office equipment 4 years

Computer equipment 3 years

Furniture 7 years


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Finance leases are recognised in fixed assets and financial liabilities. Lease payments are broken down into interest expense and depreciation. The Group acts as lessee.

Note 2.9.2 - Operating leases

Operating lease payments are expensed on a straight-line basis over the duration of the term.

Note 2.10 - Impairment of non-financial assets

Periodically, once a year (for goodwill and other intangible assets with indefinite useful lives) and whenever an indication of impairment is identified (for other non-financial assets), impairment testing is performed to ensure that the recoverable amount of non-financial assets is at least equal to the carrying amount. If necessary, an impairment loss is recognised to align the carrying amount of these assets with their recoverable amount.

As recommended by IAS 36, the recoverable amount of an asset is the greater of its net fair value (fair value less costs to sell) and its value in use, which corresponds to the present value of the estimated future flows of the relevant cash-generating unit (CGU) or group of CGUs. CGUs are defined as the smallest identifiable groups of assets that generate independent cash flows (see note 2.7).

Impairment testing is performed by CGU or group of CGUs based on a five-year projections of net cash flows from operations (operating cash flow, cash flows related to working capital and investment) plus, if applicable, corresponding R&D subsidies. This projection is determined using the budget data of the CGU or group of CGUs, taking into account past experience and future prospects. Beyond this horizon, the Group calculates a terminal value of the CGU corresponding to the present value of cash flows from operations discounted to infinity.

The discount rate is determined in accordance with IFRS, without taking into account the level of debt. The discount rate is after tax, and is applied to cash flow after tax. Its use results in determining recoverable amounts identical to those obtained by applying pre-tax rates to pre-tax cash flows, as required by IAS 36. The discount rate is calculated using a risk free rate, an equity-market risk premium and a sector beta. Depending on the location of the CGU or groups of CGUs with goodwill, a country risk premium is also factored into the discount rate.

Projected cash flows do not include cash flows resulting from growth investments or cash flows from restructuring not yet begun.

Impairment losses recognised on a CGU or group of CGUs are allocated first to goodwill. Impairment losses recognised on the goodwill of fully consolidated companies cannot be reversed.

Projected cash flows do not include cash flows resulting from growth investments or cash flows from restructuring not yet begun.

Impairment losses recognised on a CGU or group of CGUs are allocated first to goodwill. Impairment losses recognised on the goodwill of fully consolidated companies are irreversible.

Note 2.11 - Trade receivables, related accounts and other receivables

Trade and other receivables are current assets initially measured at fair value, which generally corresponds to their nominal value, unless the effect of discounting is material.

At each reporting date, receivables are measured at fair value, taking into account where necessary any impairment to reflect the potential risks of non-recovery.

An impairment loss is recognised when there are objective indications that the Group will not be able to collect all amounts due under the terms of the original transaction. Bankruptcies, creditor protection processes, notorious insolvency or disappearance of the debtor and significant payment arrears are considered indicators that a trade receivable is impaired.

Note 2.12 - Factoring and financing tools

The working capital of the main French and German companies is funded mainly by the sale of receivables (factoring, Dailly, etc.). Analysis of the derecognition of assigned receivables is made on the basis of the decision tree provided by IAS 39.

The conditions enjoyed by the Group lead us to record the cash obtained from such assignments under “cash and cash equivalents” and holdbacks under “financial assets”. The assigned receivables are derecognised from assets on the balance sheet. Information on the amount of receivables assigned and derecognised is disclosed in note 4.7.

This method of recognition results notably from the following criteria:

- upon assignment, the rights to the cash flows of the asset have not expired,

- the rights to receive cash flows from the asset are transferred to the assignee,

- the risks and benefits are substantially transferred to the assignee,

- the Group does not retain control of the asset.

Note 2.13 - Cash and cash equivalents

This item includes current bank accounts (debit and credit), the amounts made available by the factor but not used and cash equivalents.


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Short-term investments (cash equivalents) are measured and recognised at fair value by reference to the most recent year-end price. Changes in fair value are recognised in profit or loss.

Note 2.14 - Foreign currency transactions

Transactions in foreign currencies are recorded at their equivalent value on the date of the transaction. Trade payables and receivables are re-corded at their equivalent value based on the year-end exchange rate. The corresponding translation differences are recognised in profit or loss.

Note 2.15 - Employee benefits

Note 2.15.1 - Post-employment benefits (see note 4.12)

Post-employment employee benefits comprise commitments in respect of retirement bonuses, and are the subject of a provision in non-current liabilities.

The calculation of such commitments takes into account:

- rights acquired, including social security contributions, for each employee using the projected unit credit method based on pay at retirement,

- the mortality table,

- the staff turnover rate,

- wage growth of 1% in France (3% in 2015) and 3% in Germany (3% in 2015).

This calculation was discounted at a rate of 1.31% in 2016, compared with 2.03% in 2015 (iBoxx AA10+).

The service cost and interest expense are recognised in profit or loss. Actuarial gains and losses are recognised in other comprehensive income; they are not recycled to profit or loss.

There is no deferred cost of past services, nor is there any change in regime over the year.

The Group does not outsource the funding of its liabilities.

Note 2.15.2 - Personal training account (Compte personnel de formation – CPF)

In France, the personal training account replaced the individual training entitlement from 1 January 2015. Employees with more than one year of service in the company are entitled to training of:

- 24 hours per person and per year for five years,

- 12 hours per year thereafter up to 150 hours.

Training may be taken during working time. The balance of the individual training entitlement acquired prior to implementation of the new system is transferred to the CPF.

Note 2.16 - Provisions

Obligations to third parties resulting from past generating events, whether legal, regulatory, contractual or constructive, are subject to a provision as soon as the Group has a present obligation, legal or constructive, arising from past events existing independently of future actions by the Group and it is probable that it will result in an outflow of resources.

Contingent assets are disclosed in the notes when their realisation is deemed probable and the amount is material. Contingent liabilities are disclosed in the notes when the amount is material.

The components comprising provisions (commercial disputes, industrial tribunal disputes, restructuring, etc.) are reviewed regularly to allow any necessary adjustments to be made.

When the effect is material, provisions are discounted.

Note 2.17 - Financial liabilities

Financial liabilities include loans from credit institutions (banks and leasing companies and bonds). Financial liabilities are recorded at amortised cost based on the effective interest rate method.

The portion due within one year is classified under “current financial liabilities”; that due in more than one year is classified under “non-current financial liabilities”.

Note 2.18 - Derivatives

The Group uses financial instruments to hedge its exposure to fluctuations in interest rates. Derivatives are initially measured at fair value on the date of inception, and are subsequently remeasured at fair value at each reporting date. In accordance with IAS 39, the recognition of changes in fair value depends on the classification of the derivative as a fair value or cash flow hedge.


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Fair value hedges are intended to hedge exposure to changes in the fair value of an asset or liability recognised in the financial statements or of an identified component of such assets or liabilities or a commitment to purchase or sell an asset at a predetermined price, which is attributable to a specific risk and which could affect the profit presented. Any gain or loss resulting from the remeasurement of the hedging instrument is recognised in profit or loss.The Group had no such contracts in the years presented.

Cash flow hedges are intended to hedge exposure to changes in cash flows attributable to a specific risk associated with an asset or liability recognised in the financial statements or to an intended transaction that could affect profit. Changes in fair value as at the year-end are broken down into an effective portion recognised in “other items of comprehensive income” and an ineffective portion recycled to profit or loss.The effective portion is recognised in profit or loss for the period at the maturities of the hedging instrument. If the hedging instrument expires or is sold, terminated or exercised, the gain or loss initially recognised in other items of comprehensive income must be maintained separately in other comprehensive income until the intended transaction takes place. If it is no longer expected that the commitment or the transaction will materialise, any impact previously recognised in other items of comprehensive income is recycled in profit or loss.

Note 2.19 - Restructured debt

AKKA I&S, acquired by the AKKA Technologies Group in 2007, has restructured debt, the repayment of which is spread over 10 years without interest.

In view of the large amounts involved, the restructured debt is recognised on two specific lines of the balance sheet (current and non-current). Its amount discounted, in accordance with IFRS, taking into account the repayment schedule.

Note 2.20 - Subsidies

In accordance with IAS 20, subsidies (including the research, and competitiveness and employment tax credits) are deducted from the expense to which they relate.The amount recognised as of 31 December 2016 is calculated based on the eligible expenses.

Note 2.21 - Other information on financial assets and liabilities

Treasury shares and related impacts (gain or loss on disposal, impairment, if any) are deducted from consolidated reserves.

Financial assets and liabilities are recognised under several headings in the balance sheet (non-current financial assets, trade receivables, other current assets, trade payables, other current liabilities, borrowings, cash and cash equivalents).

Financial instruments are allocated to five categories that do not correspond to identified balance sheet headings, bearing in mind that their allocation determines the applicable recognition and measurement rules.

The five categories are as follows:

> Assets held to maturity: not applicable in the Group in the years presented,

> Financial assets and liabilities at fair value through profit or loss: this item mainly includes cash equivalents. Changes in the fair value of the items allocated to this category are recognised in profit or loss at each-year end,

> Loans, receivables and payables: items under this heading are recognised “at cost” or “at amortised cost” as appropriate,

- Assets and liabilities carried “at cost” are mainly trade receivables and payables, and non-current financial assets (e.g. deposits and guarantees). These items are initially recognised at fair value, which for the Group corresponds to their nominal value (short maturities). In the event of loss of value, these items are subject to impairment,

- Assets and liabilities carried “at amortised cost” relate mainly to borrowings. The amortised cost of these items is the initial value of the asset or liability less repayments of principal, adjusted if necessary using the effective interest rate method and for possible impairment,

- Assets held for sale: this only applies to non-consolidated investments, recognised at cost, with the performance of impairment testing,

- derivatives: see note 2.18.

Under IFRS 13, applicable from 2013, financial instruments are presented in three categories (see note 4.17), according to a hierarchy of methods for determining fair value:

- Level 1: fair value determined by reference to unadjusted prices quoted in active markets for identical assets or liabilities;

- Level 2: fair value determined by reference to observable prices for similar assets or liabilities in active markets, either directly (adjusted level 1 quoted prices) or indirectly (derived from prices);

- Level 3: fair value determined by reference to unobservable market data.

Note 3 - Notes to the income statementNote 3.1 - Segment information

Segment information has been provided pursuant to IFRS 8 since 1 January 2009. The information provided in the segment breakdown is based on the internal reporting used by the chief operating decision-maker (Group Executive Committee) to assess the performance of the various segments.


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As of 31 December 2016, the Group had identified three segments within the meaning of IFRS 8 on segment reporting, representing geographic regions, namely France, Germany and International (excluding Germany).

With the exception of France and Germany, no country has reached the threshold of 10% of revenue, profit or assets cited in IFRS 8.

The biggest customer of each operating segment represents 23.9% of revenue in France, 66.2% in Germany and 10.9% in International (exclu-ding Germany). The five biggest customers of each operating segment represent 54.2% of revenue in France, 88.4% in Germany and 30.2% in international markets (excluding Germany).

December 2016 – In thousands of euros France Germany International (excl. Germany) Other TOTAL

INCOME STATEMENT

External revenue 509,086 386,793 226,809 (16) 1,122,671

% of revenue 45.3% 34.5% 20.2% 0.0% 100.0%

Intersegment revenue 13,462 2,217 18,056 22,784 56,519

Revenue 522,548 389,010 244,865 22,768 1,179,190

Operating income and expenses (472,786) (361,636) (201,831) (9,229) (1,045,482)

Operating profit from ordinary activities (3) 36,300 25,157 24,978 (9,245) 77,190

Other non-current income and expenses - - - - (34,274)

Net borrowing costs - - - - (9,449)

Other financial income and expense - - - - (878)

Tax expense - - - - (15,550)

Net income - - - - 16,908


INCOME STATEMENT

External revenue 470,097 336,916 194,652 22 1,001,687

% of revenue 46.9% 33.6% 19.4% 0.0% 100.0%

Intersegment revenue 10,729 4,065 15,297 20,250 50,341

Revenue 480,826 340,981 209,949 20,272 1,052,028

Operating income and expenses (448,690) (315,047) (170,272) (6,851) (940,859)

Operating profit from ordinary activities (3) 21,407 21,869 24,380 (6,829) 60,828

Other non-current income and expenses - - - - (12,845)

Net borrowing costs - - - - (9,814)

Other financial income and expense - - - - 3,293

Tax expense - - - - (8,816)

Net income - - - - 32,570


BALANCE SHEET

Segment assets (1) 120,862 108,194 61,048 28,475 318,579

Passifs financiers sectoriels (2) 7,915 - 5,264 242,916 256,094


BALANCE SHEET

Segment assets (1) 126,365 74,573 48,778 43,376 293,092

Segment financial liabilities (2) 15,690 - 11,005 282,843 309,538(1) Goodwill, intangible assets and property, plant and equipment, other non-current assets(2) Financial liabilities including restructured debt(3) Or operating margin from ordinary activities


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Note 3.2 - External expenses

Note 3.3 - Personnel

Note 3.3.1 - Average workforce of consolidated companies

The Group had 13,252 employees as of 31 December 2016 (compared with 12,222 as of 31 December 2015).

Note 3.3.2 - Personnel expenses

Subsidies were deducted from personnel expenses in the amount of €26,662 thousand in the year ended 31 December 2016 (including the competitiveness and employment tax credit), compared with €24,498 thousand in the year ended 31 December 2015.

Note 3.4 - Depreciation and provisions

Note 3.5 - Other non-recurring expenses

Other non-current income and expenses consist primarily of transformation costs and non-recurring expenses related to the integration of recently acquired companies. Restructuring expenses were incurred under the Group’s PACT 17 transformation plan and the Margin Improvement Plan (MIP) initiated in 2015. They are focused chiefly on reprofiling the Group’s offers and structures, industrialising its expertise and the processes used in the management of large projects, streamlining its cost structure, and adapting skills and profiles to the new challenges facing the Group. They also include non-recurring expenses related to the integration of companies acquired in 2015 and 2016, and are designed to support and bolster the Group’s development and improve its operating margins as part of its 2018 strategic plan.

Moreover, a ruling by the Council of State in late 2016 upheld the retroactive application of the change of doctrine by the tax administration in respect of the research tax credit (crédit d’impôt recherche – CIR). An impairment of €24 million was recognised on the CIR for the period from


Outsourcing (134,113) (112,858)

Other external expenses (181,230) (171,311)

External expenses (315,343) (284,169)

31/12/2016 31/12/2015

Managers 9,197 8,427

Non-managers 3,528 3,092

TOTAL 12,725 11,519

31/12/2016 31/12/2015

Non-billable workforce 1,535 1,398

Billable workforce 11,190 10,121

TOTAL 12,725 11,519


Wages and salaries (541,506) (486,236)

Social security contributions (164,307) (149,538)

Employee profit sharing (1,043) 6

Personnel expenses (706,856) (635,768)


Net depreciation, amortisation and impairment of assets (15,978) (15,987)

Net impairment of current assets (2,158) (854)

Provisions for risks and expenses (190) 2,561

Net depreciation and provisions (18,325) (14,281)


CHAPTER 20

2010 to 2014 to reflect this change. This impairment has no impact on AKKA Technologies’ cash position, as the Group had not received the tax credit for the relevant years. The change in doctrine does not affect the Group’s financial statements for the years after 2014, as AKKA Technologies had complied with the new tax doctrine as a precaution.

Note 3.6 - Financial income

Note 3.6.1 - Net borrowing costs

Note 3.6.2 - Other financial income and expenses

Other financial income in 2015 mainly included income from the sale of the subsidiary APS, formerly consolidated by the equity method.

Note 3.7 - Income tax

Note 3.7.1 - Breakdown of tax expense

Note 3.7.2 - Tax proof


Income from cash and cash equivalents 2,165 2,803

Interest expenseAccretion of restructured debt

(10,954)(659)

(11,649)(968)

Cost of gross borrowings (11,613) (12,617)

NET BORROWING COSTS (9,449) (9,814)


Other financial income and expense (878) 3,293


Current taxCVAEDeferred tax

(7,525)(6,800)(1,225)

(4,550)(5,550)1,284

Total corporation tax (15,550) (8,816)



Tax expense 15,550 8,816

Consolidated profit (before corporation tax) 32,458 41,386

Tax rate applicable to the parent company 33.33% 33.33%

Theoretical tax expense (10,818) (13,795)

Impact of permanent differences 3,268 9,808

Impact of unrecognised tax losses or previously subject to limitation (1) (1,622) 204

CVAE (6,800) (5,550)

Impact of the rate differential on foreign companies 1,983 2,015

Other differences (1,560) (1,498)

Income tax expense recognised (15,550) (8,816)

(1) Including the effect of the remeasurement of deferred tax assets at the tax rate of 28.92% from 2019, in accordance with the 2017 budget, i.e. an expense of €3.5 million over the period.


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Note 3.7.3 - Nature of deferred taxes

As indicated in note 2.5, the deferred tax assets of French and international subsidiaries are not recognised when the probability of charging them against future taxable profits is low.

Note 4 - Notes to the balance sheet

Note 4.1 - Goodwill

Breakdown by CGU

Amounts in thousands of euros 31/12/2016 Change 31/12/2015 ChangeChange in

the scope of consolidation

01/01/2015

Restatements of financial leases (231) - (231) (2) - (229)

Deferred tax on current account provisions 4 - 4 - 29 (25)

Deferred taxes resulting from local tax regimes 7,279 802 6,477 (498) 46 6,929

Deferred taxes on tax losses 32,020 261 31,759 4,192 8,099 19,468

IFRS adjustments (5,050) (1,551) (3,499) (506) 1,467 (4,460)

Other adjustments (769) 93 (862) (172) 284 (974)

Net deferred taxes 33,253 (395) 33,648 3,014 9,925 20,709

Of which deferred tax assets 35,120 405 34,715 2,983 9,925 21,807

Of which deferred tax liabilities (1,867) (800) (1,067) (3) - (1,064)

Net deferred taxes 33,253 (395) 33,648 2,980 9,925 20,743

Amounts in thousands of euros Cash-generating unit 31/12/2016

Change in the scope of

consolidation

Other changes Adjustment 31/12/2015

AKKA Octogon GmbH AKKA Germany - 2,168 - - - 2,168

AKKA Germany GmbH AKKA Germany - 3,274 - 438 - 2,836

Auronik GmbH AKKA Germany - 16,435 - - - 16,435

MBTECH GROUP GmbH & Co. KGaA MBtech - 16,420 - - - 16,420

Aeroconseil SAS AKKA France - 3,147 - - - 3,147

AKKA Ingénierie Documentaire SAS AKKA France - 5,347 - - - 5,347

AKKA Informatique et Systèmes SAS AKKA France - 16,163 - - - 16,163

AKKA I&S SAS AKKA France - 27,129 - - - 27,129

AKKA Life Sciences SAS AKKA France - 277 - 277 - -

AKKA Ingénierie Process SAS AKKA France - 3,128 - - - 3,128

AKKA Ingénierie Produit SAS AKKA France - 19,738 - - - 19,738

Ekis France SAS AKKA France - 8,438 - - - 8,438

Matis SA AKKA France - 23,786 400 - (8,696) 32,082

Real Fusio SAS AKKA France - 388 - - - 388

AKKA Benelux SA AKKA Benelux - 8,148 - - - 8,148

Matis Benelux Sprl AKKA Benelux - 5,719 - - 5,719 -

Matis Netherlands BV AKKA Benelux - 250 - - 250 -

AKKA Italia Srl AKKA Italy - 580 - - - 580

AKKA Romserv Srl AKKA Romania - 104 - - - 105

AKKA Aeroconseil Espana AKKA Spain - 2,727 - - 2,727 -

AKKA Switzerland SA AKKA Switzerland - 2,342 - 10 - 2,332

AKKA Energy SAS AKKA Energy - 16,104 - - - 16,104

Epsco Srl AKKA Energy - 11,898 - - - 11,898

Erlkönig Holding GmbH Erlkönig Ongoing 24,472 24,472 - - -

Montant du Goodwill 218,183 24,872 724 - 192,586

AKKA Germany Sub-total 21,877 - 438 - 21,439

AKKA France Sub-total 107,541 400 277 (8,696) 115,560

AKKA Benelux Sub-total 14,117 - - 5,969 8,148

AKKA Energy Sub-total 28,002 - - - 28,002


CHAPTER 20

2015 and 2016 were marked by the following acquisitions:

- Erlkönig: goodwill in the amount of €24,472 thousand was recorded in respect of Erlkönig. The Group opted for the full goodwill method.

- Matis: goodwill on Matis was modified following the adjustment of the fair value of assets and liabilities within the period of 12 months in an amount of €400 thousand.

- Corialis: goodwill in the amount of €16,104 thousand was recorded in respect of Corialis.

The Matis goodwill was reallocated following the mergers of AKKA and Matis in Belgium, Spain and Switzerland in late 2016 and early 2017.

In accordance with IFRS, the AKKA Technologies Group has a period of one year to measure the fair value of assets acquired and liabilities assumed, and to determine goodwill, namely the difference between the acquisition price and the Group’s share in the fair value of such assets and liabilities.

The amount of goodwill relating to earn-out payments totalled €14,774 thousand, with a corresponding debt to the vendors recognised under “other liabilities” on the balance sheet in the same amount.

Note 4.2 - Impairment of assets

Impairment testing was performed as of 31 December 2015 and 31 December 2016, with the research tax credit included in cash flow for the subsequent three years. In 2016, testing was conducted by discounting projected cash flows after tax using a weighted average cost of capital of 8.86% for all cash-generating units excluding the country risk premium (compared with 8.52 % in 2015).

Adding in the country risk premium, the weighted average cost of capital was 8.36% for Germany and Switzerland, 8.86% for France, 8.98% for Belgium, 10.3% for Italy and Spain, 10.61% for Romania and 9.58% for AKKA Energy (compared with 2015 rates of 8.04% for Germany, 8.52% for France, 8.63% for Belgium, 9.89% for Italy and Spain, and 10.19% for Romania).

The terminal value of the CGU or group of CGUs corresponds to the projected net cash flows from operations discounted to infinity assuming a growth rate of 1.5%. The growth rate used was also 1.5% in 2015.

The AKKA Technologies Group was divided into 17 CGUs as of 31 December 2016.

Only 10 CGUs or combinations of CGUs have non-depreciable assets (12 in 2015). Impairment testing did not reveal any impairment to be reco-gnised in the financial statements as of 31 December 2016 or 31 December 2015.

Impairment testing did not reveal any impairment to be recognised in the financial statements as of 31 December 2016 or 31 December 2015.

Sensitivity testing to a variation within a range of +/- 1 percentage point on the discount rate and the perpetual growth rate did not reveal any risks of impairment. The Group also conducted testing using the prior year discount rate due to its volatility over the year. The Group has not identified probable scenarios liable to result in the recognition of impairment.

Acquisitions come with collateral clauses covering assets and liabilities through sureties. Commitments received by the Group in this respect amounted to €6,700 thousand in 2016, compared with €31,700 thousand in 2015.

Note 4.3 - Property, plant and equipment and intangible assets

Amounts in thousands of euros Gross intangible assets Amortisation of intangible assets TOTAL

01/01/2015 38,589 (29,031) 9,558

Change in the scope of consolidation 1,856 (1,332) 524

Acquisitions 5,624 - 5,624

Disposals (1,670) 1,089 (581)

Depreciation and amortisation - (4,610) (4,610)

Translation adjustments 39 (30) 9

Other changes 96 (79) 17

31/12/2015 44,535 (33,993) 10,542

Change in the scope of consolidation 1,154 (1,099) 55


Disposals (42) 32 (10)


Translation adjustments (17) 16 (1)

Other changes (201) 193 (8)

31/12/2016 56,080 (38,940) 17,140


CHAPTER 20

Investments in intangible fixed assets include also acquisitions of licences, rights and the development of a new ERP in France.

Changes in property, plant and equipment correspond mainly to new buildings in Germany: expansion of buildings and lobby improvements in these buildings.

Note 4.4 - Investments in associates

There were no investments in associates as of 31 December 2016.

Note 4.5 - Non-current financial assets

Gross amounts:

Other financial assets mainly consist of holdbacks by the factor (€9,344 thousand in 2016 and €8,053 thousand in 2015), participation in the construction effort and guarantee deposits.

Provisions in respect of non-current financial assets amounted to €2,958 thousand as of 31 December 2015 and €3,228 thousand as of 31 December 2016.

Note 4.6 - Other non-current assets

This item includes receivables in respect of R&D subsidies in a net amount of €26,303 thousand in 2016, compared with €42,311 thousand in 2015. Variations of this item are related primarily to reclassifications of other receivables to current assets in accordance with IFRS.

Note 4.7 - Trade receivables and related accounts

Amounts in thousands of euros Gross property, plant and equipment

Depreciation of property, plant and equipment TOTAL

01/01/2015 138,096 (92,795) 45,301

Change in the scope of consolidation 2,541 (1,508) 1,033


Disposals (2,853) 2,528 (325)


Translation adjustments 438 (235) 204

Other changes 3 (16) (13)

31/12/2015 149,577 (103,407) 46,170

Change in the scope of consolidation 877 (501) 376


Disposals (6,520) 5,762 (758)


Translation adjustments (49) 29 (19)

Other changes 137 (144) (7)

31/12/2016 166,043 (110,523) 55,520

Amounts in thousands of euros Assets held for sale Other financial assets Total financial assets

01/01/2015 2,559 19,676 22,235

Change in the scope of consolidation 688 2,374 3,062

Increase 2,160 3,508 5,668

Decrease (1,421) (1,834) (3,255)

31/12/2015 3,986 23,723 27,709

Change in the scope of consolidation 4 51 55

Increase 225 4,473 4,698

Decrease (688) (853) (1,541)

31/12/2016 3,527 27,394 30,921


CHAPTER 20

Past-due receivables assigned to the factor and derecognised totalled €136,358 thousand in 2016, compared with €123,444 thousand in 2015. They represent the total amount of not past-due receivables assigned to the factor and not yet settled by customers, and are recorded as a credit in the trade receivables account.

The breakdown of net trade receivables as required by IFRS 7 is as follows:

Note 4.8 - Other receivables

Other net receivables amounted to €109,004 thousand as of 31 December 2016. This item relates mainly to claims on the Treasury in the amount of €75,385 thousand. This amount takes into account the exceptional impairment of €24,049 thousand on the research tax credit for the years from 2010 to 2014.

In 2015, other receivables amounted to €122,405 thousand. They related mainly to claims on the Treasury in the amount of €83,309 thousand.

In 2016, as in 2015, following analysis of the maturity of other receivables, the portion due in more than one year has been reclassified in “other non-current assets” (see note 4.6). In view of the very low rates, no discounting was performed in 2016.

Note 4.9 - Provisions for current assets

Note 4.10 - Cash and cash equivalents

This item breaks down into cash in the amount of €152,706 thousand in 2016, compared with €117,130 thousand in 2015, and cash equivalents in the net amount of €6,252 thousand in 2016, compared with €97,990 thousand in 2015.

Cash includes funds made available by the factor but not used in the amount of €41,600 thousand as of 31 December 2016 (compared with €32,350 thousand as of 31 December 2015).

The purchase price of cash equivalents in the financial statements as of 31 December 2016 was €6,252 thousand, compared with €97,990 thou-sand as of 31 December 2015.


Work in progress for customers 109,310 117,284

Unbilled work 99,996 105,796

Gross trade receivables 209,307 223,081

Provisions (11,996) (12,105)

Net trade receivables 197,310 210,975

Amounts in thousands of euros Total Not due and due < 6 months

Due 6 to 12 months Due > 1 year

31/12/2016 197,310 183,830 10,157 3,323

31/12/2015 210,976 207,158 3,054 764

Amounts in thousands of euros Inventories Trade receivables Other receivables Total

01/01/2015 958 8,221 5,000 14,178

Change in the scope of consolidation - 2,074 337 2,411

Allowances included in depreciation and net provisions - 4,236 107 4,343

Reversals included in depreciation and net provisions (609) (2,382) (502) (3,493)

Other - (71) 1 (70)

Translation adjustments 5 30 - 34

31/12/2015 354 12,105 4,943 17,403

Change in the scope of consolidation - 182 - 182

Allowances included in depreciation and net provisions - 6,215 600 6,815

Reversals included in depreciation and net provisions (30) (6,472) - (6,501)

Other - (13) - (13)

Translation adjustments - (22) - (22)

31/12/2016 324 11,996 5,543 17,864


CHAPTER 20

Note 4.11 - Share capital and share premium

As of 31 December 2016, the share capital of AKKA Technologies comprised 20,277,690 shares with a par value of €1.53 each, or a total of €31,025 thousand. The share premium was nil. These items varied as follows in 2015 and 2016:

As of 31 December 2016 and 31 December 2015, all potentially dilutive instruments were included in the calculation of diluted earnings per share.

Voting rights:

Potentially dilutive instruments:

Instruments issued by the AKKA Technologies Group with a potentially dilutive effect and outstanding as of 31 December 2016 are as follows:

These financial instruments represent 0.07% of the total number of shares outstanding at the end of 2016, compared with 0.07% at the end of 2015.

The free share plans currently vesting are set out in the following table:

Number of

shares

Par value

Amount of share capital

Share premium Commentaire

31/12/2014 16,756,955 1.53 25,638 4,635

Capital increase 1,675,695 1.53 2,565 (2,565) Allocation of 1 bonus share for every 10 held (Board of Directors meeting of 31 March 2015)

Capital increase 1,614 1.53 2 (1) Issue of free shares (Board of Directors meeting of 15 September 2015)

31/12/2015 18,434,264 1.53 28,205 2,068

Capital increase 1,843,426 1.53 2,820 (2,068) Allocation of 1 bonus share for every 10 held (Board of Directors meeting of 30 March 2016)

31/12/2016 20,277,690 1.53 31,025 -

31/12/2016 31/12/2015

Shares with single voting rights 9,870,270 12,247,200

Shares with double voting rights 9,789,153 5,637,754

Treasury shares (1) 618,267 549,310

Total number of shares 20,277,690 18,434,264

(1) Non-voting shares

Number of shares

Free shares granted on 1 June 2015 13,000

Allocation of 1 bonus share for every 10 held (Board of Directors meeting of 31 March 2016) 1,300

Total dilutive instruments 14,300

Issuer AKKA Technologies

Year 2015

Type of plan Grants of free shares

Decision of the Board of Directors 01/06/2015

Number of shares granted 16,000

Means of settlement AKKA securities

Vesting period 2 years

Performance conditions For some beneficiaries

Conditions for beneficiaries leaving the Group’s service Loss

Share price at the grant date (€) 29.97

Shares forfeited as of 31/12/2016 3,000

Shares outstanding as of 31/12/2016 14,300

Date of transfer 2 years after the final grant

Fair value (% at the share price on the grant date) 99.3%


CHAPTER 20

The vesting periods of free shares granted on 1 June 2015 are as follows:

- 14,300 shares have a vesting period of two years.

The company is not subject to any specific regulatory or contractual obligations in respect of its share capital. The Group has no specific mana-gement policy in respect of share capital. The choice between funding through debt or capital increase is made depending on the prospective transaction. Shareholders’ equity monitored by the Group contains the same components as consolidated equity.

Earnings per share:

Note 4.12 - Current and non-current provisions

Change in provisions

31/12/2016 31/12/2015

Net profit attributable to owners of the parent (€k) 12,715 26,229

Dilutive instruments (in €) - -

Diluted profit (€k) 12,715 26,229

Number of shares outstanding as of 1 January 18,434,264 16,756,955

Pro-rated weighted average number of shares taking into account free shares - 522

Pro-rated weighted average number of shares taking into account the issue of 1 share for 10 existing shares 1,843,426 3,519,121

Impact of treasury shares (618,267) (549,310)

Weighted average number of shares as of 31 December 19,659,423 19,727,288

Impact of dilutive free shares as of 31 December 14,300 13,000

Weighted average number of shares as of 31 December after dilution 19,673,723 19,740,288

Earnings per share (€) 0.65 1.33

Diluted earnings per share (€) 0.65 1.33

Amounts in thousands of euros Current Non-current

Maturity 31/12/2016 31/12/2015 31/12/2016 31/12/2015

Provisions for litigation and risks 8,409 18,537 5,770 5,021

Provisions for pensions - - 15,841 13,650

Provision for taxes - - 1,068 1,022

Provisions for other expenses 412 409 440 570

Total 8,821 18,946 23,119 20,263

Amounts in thousands of euros Litigation and risks Pensions Taxes Other provisions TOTAL

01/01/2015 23,137 13,510 977 1,501 39,125

Change in the scope of consolidation 4,463 328 - - 4,791

Allowances 3,414 1,222 45 194 4,875

Reversals of used provisions (5,990) (240) - (21) (6,251)

Reversals of unused provisions (1,528) (29) - (695) (2,252)

Translation adjustments 17 - - - 17

Actuarial gains/(losses) - (1,141) - - (1,141)

Reclassifications and other 45 - - - 45

31/12/2015 23,559 13,650 1,022 979 39,210

Change in the scope of consolidation - - - - -

Allowances 4,704 1,711 46 174 6,635

Reversals of used provisions (13,640) (756) - (301) (14,697)

Reversals of unused provisions (320) (44) - - (364)

Translation adjustments (4) - - - (4)

Actuarial gains/(losses) - 1,279 - - 1,279

Reclassifications and other (119) - - - (119)

31/12/2016 14,180 15,840 1,068 852 31,940


CHAPTER 20

Provisions for litigation and risks include provisions for employment-related litigation (€4,975 thousand) and commercial litigation (€938 thousand).

Sensitivity analysis was determined based on the balance of retirement bonuses as of 31 December 2016. The Group has elected to present sen-sitivity analysis to the discount rate based on a variation of the yield curve of +/- 0.5 percentage points compared with the rate as of the closing date. An increase of 0.5 percentage points would have an impact of €(935) thousand on pension obligations. A decrease of 0.5 percentage points would have an impact of €1,123 thousand on pension obligations.

Note 4.13 - Current and non-current financial liabilities

The current and non-current financial liabilities shown below exclude the restructured debt described in note 3.10 and debt resulting from acquisitions described in note 4.16.

Change in financial liabilities breaks down as follows:

Note that the Group issued a bond by private placement on 1 March 2013. The amount of the bond was €100 million, with a maturity of 5 years and 4 months (maturing on 29 June 2018) and an annual coupon of 4.45%.

On 30 October 2014, the Group further restructured its medium-term financing by placing a Shuldscheindarlehen loan (placement subject to German law). The €140 million placement matures in five to seven years. It includes a fixed tranche and a variable tranche, fully hedged by a swap contract.

Amounts in thousands of euros Total financial liabilities

Maturity 31/12/2016 31/12/2015

Current (less than 1 year) 7,009 13,195

1 to 5 years 241,340 281,215

More than 5 years - -

Total 248,349 294,410

Amounts in thousands of euros 2016 31/12/2016Change in


Increases Translation adjustments

Change in fair value

Reductions and reclassifications 01/01/2016

Loans from credit institutions 146,441 - 2,250 (126) 599 (49,042) 192,760

Restatement of leasing contracts - - - - - - -

Bonds 101,742 - - - - 315 101,427

Other borrowings 166 - - - - (56) 222

Bank overdrafts - - - - - - -

Financial liabilities 248,349 - 2,250 (126) 599 (48,783) 294,409

Cash equivalents (6,252) - - - - 91,738 (97,990)

Cash (152,706) - - - - (35,576) (117,130)

Cash and cash equivalents (158,958) - - - - 56,162 (215,120)

Net debt (less net cash) excluding restructured debt 89,391 - 2,250 (126) 599 7,379 79,289

Amounts in thousands of euros 2015 31/12/2015Change in


Increases Translation adjustments

Change in fair value

Reductions and reclassifications 01/01/2015

Loans from credit institutions 192,760 8,024 42,545 111 369 (316) 142,028

Restatement of leasing contracts - - - - - (71) 71

Bonds 101,427 - - - - 299 101,127

Other borrowings 222 25 114 - - (252) 335

Bank overdrafts - - - - - (46) 46

Financial liabilities 294,409 8,049 42,659 111 369 (386) 243,607

Cash equivalents (97,990) - - - - 41,328 (139,318)

Cash (117,130) - - - - (36,369) (80,761)

Cash and cash equivalents (215,120) - - - - 4,959 (220,079)

Net debt (less net cash) excluding restructured debt 79,289 8,049 42,659 111 369 4,573 23,528


CHAPTER 20

On 30 June 2016, AKKA Technologies signed a new five-year €200 million revolving credit facility. The facility set up on 12 April 2012 and rene-gotiated in December 2014 expired in the first half of 2016.

Pledges and guarantees amounted to €64,154 thousand as of 31 December 2016, compared with €74,574 thousand as of 31 December 2015. They relate primarily to:

- An autonomous MBtech guarantee in the amount of €42,500 thousand for a lease taken out off plan,- A guarantee to replace the vendor of Epsco under guarantees given,- Joint surety on Matis rents.

Acquisitions come with collateral clauses covering assets and liabilities through sureties. Commitments received by the Group in this respect amounted to €6,700 thousand as of 31 December 2016, compared with €31,700 thousand as of 31 December 2015. Commitments received following the acquisitions of Auronik and Corialis expired in 2016.

As of 31 December 2016, the covenants negotiated with the Group’s banks were as follows:

- Leverage ratio: consolidated net debt/consolidated EBITDA < 3.5x as of 30 June and 31 December each year.- Gearing: consolidated net debt/equity < 1.5x as of 30 June and 31 December each year.

The Group was in compliance with both covenants as of 31 December 2016.

Note 4.13.1 - Interest rate risk

> On 30 October 2014, the Group signed an interest rate hedging contract on the Schuldscheindarlehen loan to protect itself against a possible increase in 6-month Euribor. The derivative financial instrument is a swap contract with the following characteristics: - Swap at a fixed rate of 0.465% on the portion of the loan maturing in five years (maturing 30 October 2019), i.e. an amount of €67.0 million. - Swap at a fixed rate of 0.710% on the portion of the loan maturing in seven years (maturing 30 October 2021), i.e. an amount of €13.5 million.


Consolidated gross debt excluding restructured debt was €248,349 thousand as of 31 December 2016, of which €7,009 thousand due in less than a year. Bank loans are taken out at variable rates.

Sensitivity analysis was conducted on the basis of the balance of interest-bearing financial liabilities at floating rates as of 31 December 2016, taking into account the hedging instruments implemented in respect of the bonds. The tests were conducted on the basis of a variation of the yield curve of +/- 0.5 percentage points compared with the rate as of the closing date. Such change would have no impact on net profit.

Note 4.13.2 - Liquidity risk

The Group’s net borrowings break down as follows:

As of 31 December 2015, the AKKA Technologies Group had gross cash and cash equivalents of €158,958 thousand, breaking down as €152,706 thousand in cash and €6,252 thousand in cash equivalents.

Characteristics of borrowings (amounts in thousands of euros)

Company carrying the loan

Initial amount (loans > €400 thousand) Currency

Total amount of loans as of

31 December 2016Due dates

Bonds AKKA Technologies 100,000 Euros 100,000 june-2018

SSD bond AKKA Technologies 119,000 Euros 119,000 oct.-2019

SSD bond AKKA Technologies 21,000 Euros 21,000 oct.-2021

Other non-material loans - - Euros 8,349 -

TOTAL DEBT AS OF 31 DECEMBER 2016 248,349

Amounts in thousands of euros 31/12/2016 31/12/2015 31/12/2014

Non-current financial liabilities 241,340 281,215 239,124

Restructured debt – non-current portion - 7,085 14,158

Current financial liabilities 7,009 13,195 4,483

Restructured debt – current portion 7,745 8,042 8,042

Gross consolidated debt 256,094 309,537 265,807

Cash and cash equivalents (158,958) (215,120) (220,079)

Consolidated net debt 97,136 94,417 45,728


CHAPTER 20

The company has conducted a specific review of its liquidity risk, and considers itself able to meet its future payments.Current assets were substantially greater than current liabilities as of 31 December 2016. No detailed disclosures are provided in respect of maturities of less than one year.

Note 4.13.3 - Currency risk

Outside the euro area, the Group has operations in the United Kingdom, Switzerland, Romania, Turkey, the Czech Republic, China, Dubai, Brazil, the United States and Canada. These operations accounted for approximately 7.6% of consolidated revenue in 2016, compared with 8.1% in 2015. Flows of purchases and revenue in local currency are more or less balanced, with the exception of operations in the Czech Republic, where services are invoiced in euros but expenses incurred in local currency.

The investments undertaken in currencies other than the euro accounted for 6.7% of consolidated capital expenditure in 2016, compared with 6.9% in 2015.

AKKA Technologies has implemented the necessary hedges on its foreign exchange risks.

Note 4.13.4 - Investment and counterparty risk

Cash equivalents in the financial statements as of 31 December 2016 represent 0.7% of total consolidated assets (compared with 10.8% in 2015); they consist of risk-free money market funds and term deposits in euros.

There is no counterparty risk, as investments are confined to front-ranking financial institutions.

Owing to its position as a service provider and to the factoring agreement, the AKKA Technologies Group’s cash management policy does not include the acquisition of cash equivalents by the operating subsidiaries.

AKKA Technologies is therefore not exposed to investment risk at this time.

Note 4.14 - Restructured debt

AKKA I&S, acquired by the AKKA Technologies Group in 2007, was the subject of a debt restructuring procedure opened in November 2006. As part of this procedure, the company’s liabilities were “frozen”, and creditors were asked to submit claims.

The debt restructuring plan was approved by the Paris Commercial Court on 4 September 2007. The total amount of claims submitted was €80,881 thousand, and the liabilities identified by the receiver amounted to €71,704 thousand.

Creditors with claims in excess of €300 had the choice between two options:

- Option 2: repayment of 100% of the amount owed over 10 years without interest. Almost 99% of creditors opted for this solution,- Option 1: repayment of 50% of the amount owed upon the adoption of the debt restructuring plan.

Claims of less than €300 were repaid in full at the end of 2007.

The repayment schedule for option 2 is shown in the table below:

In accordance with IFRS, the restructured debt was discounted over 10 years on the basis of a risk-free rate, taking into account repayment schedules. The discount rate was set in accordance with the provisions of the relevant standard.

The impact of accretion of this debt in 2016 was a financial expense of €660 thousand. The 2016 repayment of €8,042 thousand was made in September.

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Repayment schedule 5% 5% 6% 8% 10% 12% 12% 14% 14% 14%

Amounts in thousands of euros 2016 31/12/2016 Increases Reductions and reclassifications 01/01/2016

Restructured debt – current portion 7,745 1 (298) 8,042

Restructured debt – non-current portion - 659 (7,744) 7,085

Restructured debt 7,745 660 (8,042) 15,127

Amounts in thousands of euros 2015 31/12/2015 Increases Reductions and reclassifications 01/01/2015

Restructured debt – current portion 8,042 - - 8,042

Restructured debt – non-current portion 7,085 968 (8,041) 14,158

Restructured debt 15,127 968 (8,041) 22,200


CHAPTER 20

Note 4.15 - Tax and social security liabilities

All such liabilities are due in less than one year.

Note 4.16 - Other liabilities

Note 4.17 - Financial instruments


Social security liabilities 122,451 118,094

Tax liabilities 72,695 62,525

Total tax and social security liabilities 195,146 180,619


Other liabilities related to acquisitions (1) 14,774 9,000

Deferred income 26,493 26,344

Other items 11,448 26,031

Total other liabilities 52,715 61,375

(1) see section 4.1 of these notes

Amounts in thousands of euros

31 December 2016 Breakdown of the carrying amount by category of instrument

Carrying amount on the balance

sheet

Fair value

Fair value through profit

or loss

Assets and liabilities held

for saleDerivatives

Loans, receivables and

liabilities at amortised cost

Securities held for sale 3,062 3,062 - 3,062 - -

Other non-current assets 24,707 24,707 - - - 24,707

Trade receivables 197,310 197,310 - - - 197,310

Other current assets related to operating activities 30,560 30,560 - - - 30,560

Marketable securities and other current financial assets 6,252 6,252 6,252 - - -

Cash and cash equivalents 152,706 152,706 152,706 - - -

ASSETS 414,596 414,596 158,958 3,062 - 252,577

Non-current borrowings and derivatives 241,340 241,340 - - 1,049 240,291

Current borrowings and derivatives 7,009 7,009 - - - 7,009

Restructured debt – current portion 7,745 7,745 - - - 7,745

Trade and other receivables 80,539 80,539 - - - 80,539

Other current liabilities 52,715 52,715 - - - 52,715

LIABILITIES 389,348 389,348 - - 1,049 388,299


CHAPTER 20

The Group only has Level 1 assets (marketable securities) (prices quoted in an active market). Level 2 (fair value determined by reference to observable data) relates to derivative contracts. Level 3 (fair value determined by reference to unobservable market data) is not applicable in the periods presented.

Note 5 - Notes to the consolidated statement of cash flows

Note 5.1 - Components constituting net cash at year-end

Note 5.2 - Change in working capital

Note 5.3 - Impact of changes in the scope of consolidation

The impact of changes in the scope of consolidation corresponds chiefly to earn-out and purchase price payments in 2015 and 2016, net of cash contributed by the acquired companies.


Cash 152,706 117,130

Cash equivalents 6,252 97,990

Closing net cash 158,958 215,120


Inventories (466) (1,113)

Trade receivables 3,846 19,697

Other receivables (91) (7,109)

Other non-current assets - 126

Trade payables 8,725 309

Tax and social security liabilities 10,801 (10,465)

Other liabilities (excluding debt related to acquisitions of fixed assets) (3,478) (13,767)

Change in net working capital 19,337 (12,323)


31 December 2015 Breakdown of the carrying amount by category of instrument

Carrying amount on the balance

sheet

Fair value

Fair value through profit

or loss

Assets and liabilities held

for saleDerivatives

Loans, receivables and

liabilities at amortised cost

Securities held for sale 3,818 3,818 - 3,818 - -

Other non-current assets 21,011 21,011 - - - 21,011

Trade receivables 210,975 210,975 - - - 210,975

Other current assets related to operating activities 36,786 36,786 - - - 36,786

Marketable securities and other current financial assets 97,990 97,990 97,990 - - -

Cash and cash equivalents 117,130 117,130 117,130 - - -

ASSETS 487,710 487,710 215,120 3,818 - 268,772

Non-current borrowings and derivatives 281,215 281,215 - - 1,049 280,166

Restructured debt – non-current portion 7,085 7,085 - - - 7,085

Current borrowings and derivatives 13,195 13,195 - - - 13,195

Restructured debt – current portion 8,042 8,042 - - - 8,042

Trade and other receivables 83,438 83,438 - - - 83,438

Other current liabilities 61,375 61,375 - - - 61,375

LIABILITIES 454,350 454,350 - - 1,049 453,301


CHAPTER 20

Note 5.4 - Dividends paid to shareholders of the parent company

The 2017 dividend policy has not yet been determined.

Note 6 - Fees paid to auditors

Note 7 - Subsequent Events

> Growth in life sciences: the Group has furthered its move up the value-added chain while expanding its technological offerings and in-creasing its geographic diversification and customer portfolio in the life sciences. The acquisitions of CTP System and Edelway in early 2017 will enable it to roll out its know-how in the fields of process engineering, equipment, general facilities, regulatory affairs, quality assurance and project management to the world’s top 10 healthcare companies.

> Ramp-up of skills in the technologies of the future: AKKA Technologies completed the acquisition of Gigatronik on 3 March 2017. The acquisition is subject to the approval of the German competition authorities. Together with the recent acquisitions of Erlkönig, the Bertone brand and Auronik, completed at the end of 2014, Gigatronik reinforces the Group’s technological expertise and high value-added positioning in the automotive segments of tomorrow: hybrid platforms, connected objects, the Internet of Things, mobility, autonomous driving and embedded computing. Gigatronik will also allow AKKA Technologies to accelerate its expansion in Germany, among major automakers and suppliers including Audi, BMW, Daimler, Ford, Porsche and Volkswagen.

> Implementation of an NEU CP (Negotiable European Commercial Paper) programme: in the first quarter of 2017, AKKA Technologies successfully implemented a €200 million NEU CP programme sponsored by the Banque de France. After the establishment on 1 July 2016 of a new five-year €200 million revolving credit facility on very attractive terms, the Group continues to show drive and creativity. This new funding reinforces its war chest while reducing its financing costs. It also enables the Group to extend the maturity of its debt while diver-sifying its sources of funding, by making its banking pool and its lenders more international. It gives the Group greater scope to pursue its diversification, both organically and through targeted acquisitions.

Note 8 - Information on related parties

Note 8.1 - Purchases and sales of goods and services

Three companies meet the definition of related parties within the meaning of IAS 24:

- Idéactive Events (organisation of events);

- Saône Valley (property leasing);

- Dubaia9 (provision of services).

As transactions with these three companies are not considered material, they are not disclosed in these notes.

in 2016 in 2015

Amount of dividend paid (in thousands of euros) 9,830 8,949

Dividend per share (€) 0.50 0.50

Adjusted dividend per share (€) (*) 0.45 0.45

* Taking into account the grant of 1 free share for 10 after payment


ORFIS Baker Tilly DELOITTE OTHER

Amount excl. VAT % Amount excl. VAT % Amount excl. VAT %

2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015

Statutory audit

Issuer (AKKA Technologies) 38 40 15.1% 17.2% 44 44 9.9% 8.3% - - - -

Fully consolidated subsidiaries 215 193 84.9% 82.8% 394 446 87.9% 84.7% 97 136 100.0% 100.0%

Total statutory audit 254 233 100.0% 100.0% 438 489 97.8% 93.0% 97 136 100.0% 100.0%

Other work

Acquisition audits - - - - - 37 - 7.0% - - - -

Other work - - - - 10 - 2.2% - - - - -

Total other work - - - - 10 37 2.2% 7.0% - - - -

TOTAL FEES 254 233 100.0% 100.0% 448 526 100.0% 100.0% 97 136 100.0% 100.0%


CHAPTER 20

Note 8.2 - Compensation paid to members of the executive and management bodies

In 2016, as in 2015, the composition of the executive body was identical to that of the management body.

No free shares were granted to members of AKKA Technologies’ executive and management bodies in 2015.

No free shares were granted to members of AKKA Technologies’ executive and management bodies in 2016.

Note 9 - Information relating to risk management

In the course of their operations, companies within the Group are subject to audit by tax authorities and social security bodies. Since 2005, the Group has been subject to regular audits of all of its accounting, tax (income tax, business tax replaced by the CVAE, subsidies, research tax cre-dits, VAT, etc.) and social security (social security contributions and taxes levied on wages) reporting obligations, for subsidiaries operating both in France and internationally.

These audits were completed in 2012, without significantly impacting the Group’s financial position. For certain audited companies, adjustment proposals were received in July 2012. The issues raised related notably to the eligibility of certain subsidised projects. Additional information and responses necessary for a proper understanding were provided point by point on all of the observations made by the authorities so as to allow them to validate the Group’s positions. The tax authorities refused to take these elements into account, but the Group strongly disputes the grounds for additional liabilities. It accordingly referred the matter to the administrative courts on 23 June 2014. The latest developments in the procedure, and in particular the favourable opinion received from the Ministry for Education, Higher Education and Research in February 2015 and October 2016 in respect of 2012 and 2013, back up the risk analysis made by the Group’s management. After taking into account the opinions of our independent legal and tax advisors, and considering the quality of the favourable elements contained in the file, we do not expect ultimately to see a material impact on the Group’s financial statements. For information, the consequences of the audits in the event of a com-pletely unfavourable outcome in the ongoing procedure would not impact the Group’s cash position. On 10 June 2016, the Paris Administrative Court ordered further investigation to allow it to rule on the merits of the case later. This midway ruling confirms the risk analysis made by the Group at this stage.

In addition, the Group received notice of the interruption of proceedings bearing on certain companies at the end of 2014. Notification notices were received in late 2015, and have been contested by the Group.

A ruling by the Council of State in late 2016 upheld the retroactive application of the change of doctrine by the tax administration in respect of the research tax credit (crédit d’impôt recherche – CIR). An impairment of €24 million was recognised on the CIR for the period from 2010 to 2014 to reflect this change. This impairment, recorded as non-current expense, has no impact on AKKA Technologies’ cash position, as the Group had not received the tax credit for the relevant years. The change in doctrine does not affect the Group’s financial statements for the years after 2014, as AKKA Technologies had complied with the new tax doctrine as a precaution.

Amounts in thousands of euros 2015 2016

Fixed compensation – gross equivalent 1,505 1,507

Variable compensation – gross equivalent 181 203

Fixed and variable compensation – portion going to social security bodies 663 687

Directors’ fees - 160

Benefits in kind - -

Supplementary pension plans None None

TOTAL COST TO THE COMPANY 2,350 2,557


CHAPTER 20

20.4 - Statutory auditor’s report on the 2016 consolidated financial informationPursuant to our appointment as Statutory Auditors by your General Meeting, we hereby present our report for the financial year ended 31 December 2016 on:

- our audit of AKKA Technologies’ consolidated financial statements as attached to this report;

- the justification of our assessments;

- the specific verifications required by law.

The Board of Directors has approved the financial statements. Our role is to express an opinion on these consolidated financial statements, based on our audit.

I. OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS

We conducted our audit in accordance with professional standards applicable in France; such standards require that we plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements are free of material misstatement. An audit involves performing procedures, using sample techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and results of the companies and entities included in the consolidated group in accordance with IFRS as adopted by the European Union.

II. JUSTIFICATION OF OUR ASSESSMENTS

In accordance with the requirements of article L. 823-9 of the French Commercial Code (Code de commerce) relating to the justification of our assessments, we bring to your attention the following matters:

- The company sets aside provisions to cover the risk relating to non-recovery of tax receivables derived from the research tax credit, as described in notes 3.5 and 9 to the financial statements. Our work consisted in assessing the data and assumptions on which these estimates are based, reviewing on a test basis calculations made by management, and examining the opinion of independent legal and tax advisors. We carried out an assessment of the reasonableness of these estimates.

- The company systematically, at each reporting date, performs impairment testing on goodwill and assets with indefinite useful lives, and also assesses whether there is any indication of impairment of other long-term assets, in accordance with the methods described in notes 2.10 and 4.2 to the financial statements. We reviewed the implementation of this impairment testing and the cash flow forecasts and assumptions used. We also verified that notes 2.10 and 4.2 provide appropriate information.

These assessments were made as part of our audit of the consolidated financial statements taken as a whole, and therefore contributed to the opinion we formed, which is expressed in the first part of this report.

III. SPECIFIC VERIFICATION

We also carried out specific verification, as required by law, of the information provided in the management report in relation to the Group, in accordance with professional standards applicable in France.

We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.




CHAPTER 20

HEADINGS Amounts in thousands of euros Gross Depreciation

and provisionsNet

31/12/2016Net

31/12/2015

UNCALLED SUBSCRIBED CAPITAL - - - -

Intangible assets - - - -

Start-up costs - - - -

Research and development expenses - - - -

Concessions, patents and similar rights 818 702 116 30

Business assets 15 4 11 11

Other intangible assets - - - -

Advances and down payments on intangible assets - - - -

Total intangible assets 833 706 127 41

PROPERTY, PLANT AND EQUIPMENT - - - -

Land - - - -

Buildings - - - -

Technical fittings, industrial equipment and tooling 31 31 - -

Other property, plant and equipment 1,540 1,024 516 233

Property, plant and equipment in progress - - - -

Advances and down payments 51 - 51 -

Total property, plant and equipment 1,622 1,055 567 233

FINANCIAL ASSETS - - - -

Equity method investments - - - -

Other equity investments 158,048 25 158,023 157,990

Receivables related to equity investments - - - -

Other long-term investments - - - -

Loans 128 13 115 94

Other financial assets 1,580 - 1,580 443

Total financial assets 159,757 38 159,719 158,527

FIXED ASSETS 162,212 1,799 160,413 158,801

INVENTORIES AND WORK IN PROGRESS - - - -

Inventories of raw materials - - - -

Inventories of work in progress – production of goods - - - -

Inventories of work in progress – production of services - - - -

Inventories of intermediate and finished products - - - -

Inventories of goods - - - -

Total des stocks - - - -

RECEIVABLES - - - -

Advances and down payments made on orders - - - -

Trade receivables and related accounts 11,458 - 11,458 5,863

Other receivables 328,292 126 328,166 272,679

Subscribed capital called but not paid - - - -

Total receivables 339,750 126 339,624 278,543

CASH, MISCELLANEOUS AND ACCRUALS - - - -

Marketable securities and treasury shares (9,310) 15,554 - 15,554 106,920

Cash 17,460 - 17,460 11,418

Prepaid expenses 157 - 157 91

Total cash and miscellaneous 33,171 - 33,171 118,430

CIRCULATING ASSETS 372,920 126 372,794 396,972

Loan issue costs to be spread out 1,342 - 1,342 2,005

Bond redemption premiums - - - -

Translation adjustments (assets) 303 - 303 510

TOTAL 536,777 1,925 534,852 558,288

20.5 - AKKA Technologies 2016 parent company financial statements

20.5.1 - 2016 balance sheet


CHAPTER 20

HEADINGSAmounts in thousands of euros

Net 31/12/2016

Net 31/12/2015

NET POSITION

Social or individual capital of which paid up: 31,025 31,025 28,204

Share, merger, contribution premium - 2,068

Revaluation differences of which equity associates: - -

Legal reserve 3,103 2,918

Statutory and contractual reserves - -

Regulated reserves - -

Other reserves 38,611 40,134

Retained earnings - -

Income for the period 9,431 9,244

Total net position 82,170 82,569

Investment subsidies - -

Regulated provisions 4 32

SHAREHOLDERS’ EQUITY 82,175 82,602

Proceeds from equity issues - -

Contingent advances - -

Other equity - -

Provisions for risks 403 809

Provisions for expenses 102 86


FINANCIAL LIABILITIES

Convertible bonds - -

Other bonds 100,000 100,000

Loans from credit institutions 142,746 183,758

Borrowings and financial liabilities 202,441 181,229

Total financial liabilities 445,187 464,987

OPERATING LIABILITIES

Trade and other payables 4,462 5,886

Tax and social security liabilities 2,498 2,966

Total operating liabilities 6,960 8,852

MISCELLANEOUS LIABILITIES

Debt on fixed assets and related accounts - -

Other liabilities 25 951

Total other liabilities 25 951

Deferred income - -

LIABILITIES 452,173 474,790

Translation adjustments (liabilities) - -

TOTAL 534,852 558,288


CHAPTER 20

20.5.2 - 2016 income statement

HEADINGS – Amounts in thousands of euros France Export 31/12/2016 31/12/2015

Sales of goods - - - -

Production of goods sold - - - -

Production of services sold 11,616 5,973 17,590 14,470

Net revenue 11,616 5,973 17,590 14,470Production transferred to inventory - -Capitalised production - -Operating subsidies - -Reversal of depreciation and provisions, transfer of expenses 1,112 107Other income - -Total operating income 18,702 14,577Purchases of goods 1 4

Change in inventories of goods - -

Purchases of raw materials and other supplies - -

Change in inventories (raw materials and other supplies) - -

Other purchases and external expenses 15,248 12,102

Taxes, duties and similar payments 197 197

Wages and salaries 4,320 3,924

Social security contributions 1,803 1,875

OPERATING PROVISIONSProvisions for depreciation on fixed assets 1,552 877

Provisions on fixed assets 102 86

Provisions on current assets - -


Other expenses 123 160

Total operating expenses 23,446 19,526OPERATING PROFIT (4,745) (4,949)

Profit allocated or loss transferred - -

Loss incurred or profit transferred - -

Investment income 19,692 17,438

Income from other securities and receivables from fixed assets - -

Other interest and similar income 626 6,246

Reversals of provisions and transfer of expenses 213 -

Positive exchange rate differences - -

Net income on disposals of marketable securities - -

Total financial income 20,716 23,684Depreciation, amortisation and provisions - -

Interest and similar expense - -

Negative exchange rate differences - -

Net expenses on disposals of marketable securities - -

Total financial expense - 9,667

FINANCIAL INCOME/(EXPENSE) 11,262 14,017

RECURRING PROFIT 6,517 9,068Exceptional income on management transactions - -

Exceptional income on capital transactions - -

Exceptional reversals of provisions and transfer of expenses - -

Total exceptional income 38 30Exceptional expenses on management operations - -

Exceptional income on capital transactions - -

Depreciation, amortisation and provisions - -

Total exceptional expense 72 113

EXCEPTIONAL INCOME/(EXPENSE) (34) (83)Employee profit sharing - -

Income tax - -

Total income 39,456 38,291

Total expense 30,025 29,046

PROFIT OR LOSS 9,431 9,244


CHAPTER 20

20.5.3 - Notes to the 2016 financial statements

Accounting policies

The financial statements for the year ended 31 December 2016 are presented in accordance with ANC Regulation No. 2014-03 of 5 June 2014 concerning the chart of accounts.

* Highlights of the year

On 30 June 2016, AKKA Technologies signed a new five-year €200 million revolving credit facility. It replaces the previous facility set up on 12 April 2012 and renegotiated in December 2014, which expired in the first half of 2016.

* Research expenses

The company did not incur any research expenses during the year.

* Intangible assets and property, plant and equipment

The basic method adopted for the recognition and measurement of fixed assets is the historical cost method. Depreciation and amortisation of property, plant and equipment and intangible assets are calculated on the basis of the following rates:

Where the tax system permits, they are recorded using the declining-balance method. However, economic depreciation is deemed to be the straight-line method. The difference between the two methods of depreciation is recognised in equity in the balance sheet as accelerated depreciation.

ANC opinion 2003-E (annexe 2, section 1.1) states that assets must be split into components when the components constituting them are significant and retain this character at the time of replacement and derecognition. It is therefore appropriate to focus the analysis not only on components with high unit values, but also those whose depreciation periods are significantly different from those of the main asset.

As the company only has assets with low unit values or whose components have relatively homogeneous useful lives, no assets have been split by component during the year.

* Financial assets

- Equity investments and other long-term investments

The gross amount comprises the purchase cost excluding incidental expenses. When the carrying amount is less than the gross amount, a provision is set aside in the amount of the difference.

The gross asset value is assessed on a dual approach:

- market value based on revenue, operating profit, net profit, equity and workforce,- value in use based on generation of recurring cash flows.

Management’s estimates were made based on information available at the reporting date, after taking into account subsequent events.

- Employers’ contribution to the construction effort loan

For 2016, the amount of the contribution to the construction effort was €19,506 thousand.Moreover, a provision for impairment of €3,069.69 was recorded at the year-end for loans deposited, with a discount rate of 0.66%.

New property acquired Used property acquired

Method Duration % Method Duration %

Small office software Straight-line 1 year 100 Straight-line 1 year 100

Operating software (unit value < €23 thousand) Straight-line 2 years 50 Straight-line 2 years 50

Operating software (unit value > €23 thousand) Straight-line 3 years 33.33 Straight-line 3 years 33.33

Plant, equipment and tooling Straight-line 4 years 25 Straight-line 2 years 50

General facilities, fixtures and fittings Straight-line 4 to 10 years 25 to 10 Straight-line 2 years 50

Transport equipment Straight-line 4 years 25 Straight-line 2 years 50

Office equipment Straight-line 4 years 25 Straight-line 2 years 50

Computer equipment Declining-balance 3 years 50 Straight-line 2 years 50

Furniture Straight-line 7 to 10 years 14 to 10 Straight-line 2 years 50


CHAPTER 20

* Receivables

Receivables are carried at nominal value. Where appropriate, receivables are impaired by means of a provision to reflect the risk of non-recovery.

* Borrowing costs – deferred charges

Issuing costs of bank loans and bonds are spread over the term of the contracts.

* Changes in equity

The change in equity in 2016 breaks down as follows (amounts in €k):

Share capital increased from €28,204 thousand to €31,025 thousand. Changes are as follows:

* Benefits payable at retirement

The amount of commitments in respect of retirement benefits are subject to a provision for expenses in the amount of €102,050 at the year-end.

The calculation of such commitments takes into account:

- rights acquired for each employee using the projected unit credit method based on pay at retirement,

- the probability of retirement at 65 given staff turnover in each consolidated company,

- the probability of each employee reaching retirement age,

- a payroll tax rate of 45%,

- an inflation rate of 1%,

- a rate of wage increases equal to 2%,

- a discount rate of 1.3103% (Iboxx AA10+).

* Provisions for risks and expenses

Obligations to third parties, whether legal, regulatory, contractual or constructive, are the subject of a provision for risks and expenses when they exist as of the reporting date and it can be established that they will result in an outflow of resources without an equivalent inflow from third parties.

The components comprising provisions (commercial disputes, industrial tribunal disputes, restructuring, etc.) are reviewed regularly to allow any necessary adjustments to be made.

* Marketable securities

Marketable securities are carried at acquisition cost. When the carrying amount determined by reference to the last fiscal year is less than the acquisition cost, an impairment loss is recognised for the difference.

The purchase price of securities was €15,310 thousand as of 31 December 2016, compared with €105,950 thousand as of 31 December 2015. They consist of €6,000 in short-term investments. The remaining €9,310 thousand comprise 614,868 AKKA Technologies shares whose aggregate closing price was €21,293 thousand.

Shareholders’ equity as of 31 December 2015 82,602

Dividends paid in 2016 (9,830)

Capital increase 2,820

Change in share premium (2,068)

Change in other reserves (752)

Change in accelerated depreciation (28)

Profit for 2016 9,431

Shareholders’ equity as of 31 December 2016 82,175

Number of shares Par value Amount of share capital

31/12/2015 18,434,264 1.53 28,204,423.92

Allocation of 1 bonus share for every 10 held (Board of Directors meeting of 30 March 2016) 1,843,426 1.53 2,820,441.78

31/12/2016 20,277,690 1.53 31,024,865.70


CHAPTER 20

Potentially dilutive instruments

Instruments issued by the AKKA Technologies Group with a potentially dilutive effect and outstanding as of 31 December 2016 are as follows:

These financial instruments represent 0.07% of the total number of shares outstanding at the end of 2016, compared with 0.07% at the end of 2015.

The free share plans currently vesting are set out in the following table:

The vesting periods of free shares granted on 1 June 2015 are as follows:

> 14,300 shares have a vesting period of two years.

The company is not subject to any specific regulatory or contractual obligations in respect of its share capital. The Group has no specific manage-ment policy in respect of capital. The choice between funding through debt or capital increase is made depending on the prospective transaction. Shareholders’ equity monitored by the Group contains the same components as consolidated equity.

* Covenants on loans

As of 31 December 2016, the covenants negotiated with the Group’s banks were as follows:

> Leverage ratio: consolidated net debt/consolidated EBITDA < 3.5x as of 30 June and 31 December each year.

> Gearing: consolidated net debt/equity < 1.5x as of 30 June and 31 December each year.

The Group was in compliance with both covenants as of 31 December 2016.

* Interest rate risk

On 30 October 2014, the Group signed an interest rate hedging contract on the Schuldscheindarlehen loan to protect itself against a possible increase in 6-month Euribor. The derivative financial instrument is a swap contract with the following characteristics:

- Swap at a fixed rate of 0.465% on the portion of the loan maturing in five years (maturing 30 October 2019), i.e. an amount of €67.0 million.

- Swap at a fixed rate of 0.710% on the portion of the loan maturing in seven years (maturing 30 October 2021), i.e. an amount of €13.5 million.


Number of shares

Free shares granted on 1 June 2015 13,000

Allocation of 1 bonus share for every 10 held (Board of Directors meeting of 31 March 2016) 1,300

Total dilutive instruments 14,300

Issuer AKKA Technologies

Year 2015

Type of plan Grants of free shares

Decision of the Board of Directors 01/06/2015

Number of shares granted 16,000

Means of settlement AKKA securities

Vesting period 2 years

Performance conditions For some beneficiaries

Conditions for beneficiaries leaving the Group’s service Loss

Share price at the grant date (€) 29.97

Shares forfeited as of 31/12/2016 3,000

Shares outstanding as of 31/12/2016 14,300

Date of transfer 2 years after the final grant

Fair value (% at the share price at the grant date) 99.3%


CHAPTER 20

* Compensation of members of the management bodies

* Information on related parties

The company carried out transactions with the following related parties within the meaning of IAS 24.

- Idéactive Events (organisation of events).

As transactions with this company are not considered material, they are not disclosed in these notes.

* Identity of the parent company

AKKA Technologies is the holding company of the AKKA Group consolidation.

* Tax integration

A tax consolidation group was created on 1 January 2003. AKKA Technologies is its holding company.

Under the tax consolidation agreement, subsidiaries pay AKKA Technologies the amount of tax they would have had to pay in the absence of tax consolidation. The tax credit arising from any tax losses for the year is recognised in the AKKA Technologies financial statements.

The net tax saving from the tax consolidation was €3,193 thousand in 2016.

* Auditors’ fees

The amount expensed in respect of audit fees was €100,000 in 2016.

* Subsequent events

Implementation of an NEU CP (Negotiable European Commercial Paper) programme: in the first quarter of 2017, AKKA Technologies successfully implemented a €200 million NEU CP programme sponsored by the Banque de France. After the establishment on 1 July 2016 of a new five-year €200 million revolving credit facility on very attractive terms, the Group continues to show drive and creativity. This new funding reinforces its war chest while reducing its financing costs. It also enables the Group to extend the maturity of its debt while diversifying its sources of funding, by making its banking pool and its lenders more international. It gives the Group greater scope to pursue its diversification, both organically and through targeted acquisitions.

No other significant events have occurred since the year-end.

Amounts in thousands of euros 2015 2016

Fixed compensation – gross equivalent 694 696

Variable compensation – gross equivalent - -

Fixed and variable compensation – portion going to social security bodies 268 281

Directors’ fees - 160

Benefits in kind None None

Supplementary pension plans None None

TOTAL COST TO THE COMPANY 962 1,137


CHAPTER 20

Fixed assets

Depreciation and amortisation

Amounts in thousands of euros Gross value atthe start of 2016

Revaluationduring 2016

Acquisitionsduring 2016

Transfersduring 2016

Disposalsduring 2016

Gross value at the end of 2016

Start-up and development costs - - - - - -

Other intangible assets 680 - 153 - - 833

TOTAL INTANGIBLE ASSETS 680 - 153 - - 833

Land - - - - - -

Buildings on own land - - - - - -

Buildings on third-party land - - - - - -

General fittings, structural fixtures - - - - - -

Plant, equipment and tooling 30 - - - - 30

General fixtures and fittings, sundry equipment 111 - - - - 111

Transport equipment 66 - 425 - 37 454

Office equipment and IT furniture 858 - 23 - - 881

Sundry returnable packaging materials 95 - - - - 95

Property, plant and equipment in progress - - - - - -

Advances and down payments - - 51 - - 51

TOTAL PROPERTY, PLANT AND EQUIPMENT 1,160 - 499 - 37 1,622

Investments consolidated by the equity method - - - - - -

Other equity investments 158,018 - 30 - - 158,048

Other long-term investments - - - - - -

Loans and other financial assets 553 - 1,156 - - 1,708

TOTAL FINANCIAL ASSETS 158,571 - 1,186 - - 159,757

TOTAL 160,411 - 1,838 - 37 162,212

Situation and changes over the year in thousand of euros Amount at the start of 2016 Increases Reductions Amount at the end

of 2016

Start-up and development costs - - - -

Other intangible assets 639 67 - 706

TOTAL INTANGIBLE ASSETS 639 67 - 706

Land - - - -

Buildings on own land - - - -

Buildings on third-party land - - - -

General fittings, structural fixtures - - - -

Plant, equipment and tooling 30 - - 30

General fixtures and fittings, sundry equipment 70 11 - 81

Transport equipment 63 103 37 130

Office equipment and IT furniture 764 50 - 814

Sundry returnable packaging materials - - - -

TOTAL PROPERTY, PLANT AND EQUIPMENT 927 165 37 1,055

TOTAL 1,566 232 37 1,761


CHAPTER 20

Expenses spread over several years

Depreciable fixed assets in thousands of euros

ALLOWANCES REVERSALSDepreciation

amount at the end of the year

Difference in

duration

Declining-balance method

Accelerated deprecia-

tion for tax purposes

Difference in

duration

Declining-balance method

Accelerated deprecia-

tion for tax purposes

Start-up and development costs - - - - - - -

Other intangible assets - - - 28 - - (28)

TOTAL INTANGIBLE ASSETS - - - 28 - - (28)

Land - - - - - - -

Buildings on own land - - - - - - -

Buildings on third-party land - - - - - - -

General fittings, structural fixtures - - - - - - -

Plant, equipment and tooling - - - - - - -

General fixtures and fittings, sundry equipment - - - - - - -

Transport equipment - - - - - - -

Office equipment and IT furniture - 2 - - 2 - -

Sundry returnable packaging materials - - - - - - -

TOTAL PROPERTY, PLANT AND EQUIPMENT - 2 - - 2 - -

TOTAL - 2 - 28 2 - (28)

TOTAL not broken down - - 2 - - 30 (28)

Expenses spread over several years in thousands of euros Amount at the startof 2016 Increases Reductions Amount at the end

of 2016

Loan issue costs to be spread out 2,005 658 1,320 1,342

Bond redemption premiums - - - -


CHAPTER 20

Provisions

Business assets

Type of provisionsAmount at

the start of 2016

Increases ReductionsAmount at

the end of 2016

Allowances during

the year

Used during

the year

Not used during

the year

Reversals during

the year

Regulated provisions

Provision for reconstitution of production sites (mines, oil) - - - - - -

Provisions for investment - - - - - -

Provisions for price increases - - - - - -

Accelerated depreciation 32 2 - 30 30 4

Including exceptional surcharge of 30% - - - - - -

Provisions for taxes on foreign operations (before 1/1/92) - - - - - -

Provisions for taxes on foreign operations (after 1/1/92) - - - - - -

Provisions for start-up loans - - - - - -

Other regulated provisions - - - - - -

TOTAL REGULATED PROVISIONS 32 2 - 30 30 4

Provisions for risks and expenses

Provisions for litigation 300 100 300 - 300 100

Provisions for guarantees given to customers - - - - - -

Provisions for losses on forward markets - - - - - -

Provisions for fines and penalties - - - - - -

Provisions for foreign exchange losses 510 - - 207 207 303

Provisions for pensions and similar obligations 86 102 - 86 86 102

Provision for taxes - - - - - -

Provisions for renewal of fixed assets - - - - - -

Provisions for major repairs and major overhauls - - - - - -

Provisions for social security and tax charges payable on holidays - - - - - -

Other provisions - - - - - -

TOTAL PROVISIONS FOR RISKS AND EXPENSES 896 202 300 293 593 505

Provisions for impairment

On intangible assets - - - - - -

On property, plant and equipment - - - - - -

On investments in associates - - - - - -

On equity investments 28 - - 3 3 25

On other financial assets 16 - - 3 3 13

On inventories and work in progress - - - - - -

On trade receivables 43 - - 43 43 -

Other impairment provisions 126 - - - - 126

TOTAL IMPAIRMENT PROVISIONS 214 - - 49 49 164

TOTAL 1,142 204 300 373 673 674

Of which operating allowances and reversals 202 300 130 429 -

Of which financial allowances and reversals - - 213 213 -

Of which exceptional allowances and reversals 2 - 30 30 -

In thousands of euros Gross value at the start of the year Increases Reductions Gross value at the

end of the year

Lease rights - - - -

Business assets acquired subject to legal protection - - - -

Business assets acquired not subject to legal protection 15 - - 15

Business assets resulting from legal revaluation - - - -

Business assets resulting from voluntary revaluation - - - -

Other - - - -

TOTAL 15 - - 15


CHAPTER 20

Maturities of receivables and debts

Statement of receivables (in thousands of euros) Gross amount Up to 1 year More than 1 year

Receivables related to equity investments - - -

Loans (1) (2) 128 - 128

Other financial assets 1,580 1,580 -

Doubtful or disputed trade receivables - - -

Other trade receivables 11,458 11,458 -

Receivables representing loaned securities - - -

Personnel and related accounts - - -

Social security and other welfare bodies 31 31 -

Income tax 106,922 106,922 -

Value added tax 973 973 -

Other taxes, duties and similar payments - - -

Miscellaneous - - -

Group and associates (2) 220,302 220,302 -

Sundry debtors 64 64 -

Prepaid expenses 157 157 -

TOTAL RECEIVABLES 341,615 341,487 128

(1) Amount of loans granted during the year(1) Amount of repayments received during the year(2) Loans and advances granted to associates (natural persons)

---

Statement of payables (in thousands of euros) Gross amount Up to 1 year 1 year to 5 years More than 5 years

Convertible bonds (1) - - - -

Other bonds (1) 100,000 - 100,000 -

Borrowings from credit institutions due in up to 1 year 142,746 2,746 140,000 -

Borrowings from credit institutions due in more than 1 year - - - -

Borrowings and financial liabilities (1) (2) (4) (4) - -

Trade and other receivables 4,462 4,462 - -

Personnel and related accounts 1,119 1,119 - -

Social security and other welfare bodies 955 955 - -

Income tax - - - -

Value added tax 403 403 - -

Guaranteed bonds - - - -

Other taxes, duties and similar payments 18 18 - -

Debt on fixed assets and related accounts - - - -

Group and associates (2) 202,445 175,813 26,632 -

Other liabilities 25 25 - -

Debt representing borrowed securities - - - -

Deferred income - - - -

TOTAL LIABILITIES 452,169 185,538 266,632 -

(1) Borrowings subscribed during the year(1) Borrowings repaid during the year(2) Amount of borrowings and liabilities owed to associates


CHAPTER 20

Accrued income

Accrued expenses

Expenses to be appropriated

Type of income (receivables in thousands of euros) 31/12/2016 31/12/2015

Financial assets

Receivables related to equity investments - -

Other financial assets - -

Receivables

Trade receivables and related accounts 176 -

Other receivables 89 89

Marketable securities 244 970

Cash - -

Other - -

TOTAL 509 1,059

Type of expenses (payables in thousands of euros) 31/12/2016 31/12/2015

Convertible bonds - -

Other bonds - -

Loans from credit institutions 2,746 2,758

Borrowings and financial liabilities - -

Advances and down payments received on orders in progress - -

Trade and other payables 921 373

Tax and social security liabilities 1,443 1,212

Debt on fixed assets and related accounts - -

Other liabilities - -

Other - -

TOTAL 5,109 4,343

Type of expenses in thousands of euros Net amount at the start of the year Increases Provisions for

depreciationNet amount at

the end of the year

Deferred expenses - - - -

Acquisition cost of fixed assets - - - -

Loan issue costs - - - -

Acquisition loan costs 162 - 162 -

Bond issue fees 235 70 135 170

Bond issue costs 1,607 588 1,023 1,172

Deferred expenses - - - -

TOTAL 2,005 658 1,320 1,342


CHAPTER 20

Deferred expenses and prepaid income

Exceptional expenses

Type of expenses in thousands of euros 31/12/2016 31/12/2015

Operating expenses

Supplies 15 13

Rent + Maintenance 88 27

Communication costs - 18

Advertising costs 16 13

Miscellaneous 32 14

Financial expenses

Interest on loans - -

Securities management fees 6 6

Exceptional expenses - -

TOTAL PREPAID EXPENSES 157 91

BALANCE SHEET comparison (Balance sheet assets: 2050 heading CH) 157 91

Type of income in thousands of euros 31/12/2016 31/12/2015

Operating income - -

Financial income - -

Exceptional income - -

TOTAL UNEARNED INCOME - -

BALANCE SHEET comparison (Balance sheet liabilities: 2051 heading EB) - -

TOTAL PREPAID EXPENSES AND UNEARNED INCOME 157 91

Type of expenses in thousands of euros 31/12/2016 31/12/2015

Exceptional expenses on management operations

Market penalties - -

Tax penalties and fines 1 2

Gifts, donations - -

Receivables that became unrecoverable during the year - -

Subsidies awarded - -

Tax arrears - -

Other exceptional expenses on management operations 72 110

Expenses relating to previous periods - -

Carrying amount of assets sold

Intangible assets - -

Property, plant and equipment - 1

Financial assets - -

Other assets (excluding inventories and securities) - -

Other exceptional expenses

Losses resulting from indexation clauses - -

Premiums - -

Losses resulting from buybacks of own shares - -

Miscellaneous exceptional expenses - -

TOTAL 72 113


CHAPTER 20

Exceptional income

Structure of the share capital

Average workforce

Type of income in thousands of euros 31/12/2016 31/12/2015

Exceptional income on management operations

Forfeits and penalties levied on purchases and sales - -

Gifts received - -

Cash on loans written off - -

Balancing subsidies - -

Tax rebates (other than taxes on profits) - -

Other exceptional income on management operations 30 27

Income relating to previous periods - -

Proceeds from sales of assets

Intangible assets - -

Property, plant and equipment 8 3

Financial assets - -

Other assets (excluding inventories and securities) - -

Share of investment subsidies transferred to profit or loss - -

Other exceptional income

Gains resulting from indexation clauses - -

Premiums - -

Gains resulting from buybacks of own shares - -

Miscellaneous exceptional income - -

TOTAL 38 30

Category of shares

Number of shares

TotalEnd of prior year Issued during

the periodRedeemed during

the period

Ordinary shares 18,434,264 1,843,426 - 20,277,690

Redeemed shares - - - -

Preferred dividend shares - - - -

Preference shares - - - -

Shares - - - -

Investment certificates - - - -

CategoryAverage workforce Average available workforce Total

31/12/2016 31/12/2015 31/12/2016 31/12/2015 31/12/2016 31/12/2015

Managers 38 40 - - 38 40

Supervisors 2 2 - - 2 2

Employees and technicians - - - - - -

Blue-collar workers - - - - - -

TOTAL 40 42 - - 40 42


CHAPTER 20

Breakdown of revenue

Breakdown of income tax

Information on the application of tax regulations

Breakdown of revenue in thousands of euros31/12/2016 31/12/2015

France Export Total France Export Total

Services 11,616 5,973 17,590 12,464 2,006 14,470

TOTAL 11,616 5,973 17,590 12,464 2,006 14,470

In thousands of euros

31/12/2016 31/12/2015

Profit before tax loss carryforwards

Taxloss

Profit before tax

Tax due

Net income

Net income

Recurring profit 6,517 - 6,517 256 6,261 8,813

Exceptional short-term profit (34) - (34) (11) (23) (55)

Exceptional long-term profit - - - - - -

Tax group profit - - - - - -

Employee profit sharing - - - - - -

Tax receivables - - - (3,193) 3,193 486

TOTAL 6,483 - 6,483 (2,948) 9,431 9,244

Impact on profit in thousands of euros Allowances Reversals Amount

Regulated provisions - - -

Retirement provisions 102 86 16

ORGANIC (3) (4) 1

Construction provision - - -

Directors’ fees - - -

Other provisions 99 83 16

Carryback - - -

Research tax credit and training tax credit - - -

IMPACT ON PROFIT IN THOUSANDS OF EUROS 99 83 16


CHAPTER 20

Financial commitments given and received

Commitments given in thousands of euros Total Executive officers Subsidiaries Equity interests Affiliates Other

Endorsements - - - - - -

Deposits - - - - - -

Guarantees

MB Sim Technology guarantees 7,662 - 7,662 - - -

MBtech Group Gmbh guarantees 42,500 - 42,500 - - -

MB-Technology NA guarantees 453 - 453 - - -

AKKA Italia guarantees 1,000 - 1,000 - - -

Airbus guarantees 4,538 - - - - 4,538

EPSCO guarantees 3,422 - 3,422 - - -

Matis joint guarantee 4,579 - 4,579 - - -

Other - - - - - -

TOTAL 64,154 - 59,616 - - 4,538

Commitments received in thousands of euros Total Executive officers Subsidiaries Equity interests Affiliates Other

Endorsements - - - - - -

Deposits - - - - - -

Guarantees on acquisitions 6,700 - - - - 6,700

Other - - - - - -

TOTAL 6,700 - - - - 6,700


CHAPTER 20

Com

pany

Shar

e ca

pita

l

Rese

rves

and

re

tain

ed e

arni

ngs

befo

re a

ppro

pria

tion

of e

arni

ngs

Shar

e of

ca

pita

l he

ld

(in %

)

Carr

ying

am

ount

of

secu

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s hel

dRe

venu

e ex

clud

ing

VAT

of p

rior

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r

Resu

lt (p

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ear)

Div

iden

ds re

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by th

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AKKA

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150

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969

(159

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MBT

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62,5

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47,6

2127

6,88

517

,335

-

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65%

2626

-2

-

AKKA

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63,

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100%

14,3

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,360

169,

502

(14,

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-

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120

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1,58

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773

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12,7

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,805

100%

8,95

58,

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117,

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(1,2

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ble

List of subsidiaries and shareholdings


CHAPTER 20

20.5.4 - Auditors’ report on the annual financial statements for the year ended 31 December 2016

Pursuant to our appointment as Statutory Auditors by your General Meeting, we hereby present our report for the financial year ended 31 December 2016 on:

- our audit of AKKA Technologies’ annual financial statements as attached to this report;

- the justification of our assessments;

- the specific verifications and information required by law.

The Board of Directors has approved the annual financial statements. Our role is to express an opinion on these consolidated financial statements, based on our audit.

I. OPINION ON THE FINANCIAL STATEMENTS

We conducted our audit in accordance with professional standards applicable in France; such standards require that we plan and perform the audit to obtain reasonable assurance as to whether the annual financial statements are free of material misstatement. An audit involves perfor-ming procedures, using sample techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the financial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, the financial statements give a true and fair view of the company’s operations during the financial year, as well as the company’s assets, liabilities, and financial position at the end of the financial year, in accordance with accounting principles generally accepted in France.

II. JUSTIFICATION OF OUR ASSESSMENTS

In accordance with the requirements of article L. 823-9 of the French commercial Code (Code de commerce) relating to the justification of our assessments, we bring to your attention the following matters:

The note “Accounting policies: Equity investments and other long-term investments” describes the methods used to measure the carrying amount of equity investments. Our work consisted in assessing whether the assumptions on which these estimates were based are reasonable, and we reviewed the calculations performed by the company. On this basis, we carried out an assessment of the reasonableness of these estimates.

These assessments were made as part of our audit of the financial statements, taken as a whole, and therefore contributed to the opinion we formed, which is expressed in the first part of this report.

III. SPECIFIC VERIFICATIONS AND INFORMATION

We also performed, in accordance with professional standards applicable in France, the specific verifications required by French law.

We have no matters to report as to the fair presentation and the consistency with the financial statements of the information provided in the management report of the Board of Directors, and in the documents addressed to the shareholders with respect to the financial position and the financial statements.

As regards the information provided in accordance with article L. 225-102-1 of the French Commercial Code (Code de commerce) concerning compensation and benefits paid to executive officers, as well as commitments made in their favour, we have verified their consistency with the financial statements or with the information used to prepare the financial statements and, if applicable, with the information collected by the company from the companies controlling it or controlled by it. On the basis of this work, we confirm the accuracy and sincerity of this information.

In accordance with the law, we have ascertained that the required information on acquisitions of the company’s shares and voting rights, along with the identities of the company’s shareholders, are disclosed in the management report.




CHAPTER 20

20.5.5 - Statutory Auditors’ special report on related-party agreements and commitments

To the shareholders,

As the Statutory Auditors of your company, we hereby present our report on related-party agreements and commitments.

It is our duty to inform you, on the basis of information provided to us, of the characteristics, essential terms and reasons explaining the interest for the company of agreements and commitments of which we have been advised or that we identified in the course of our assignment, without commenting on their usefulness and appropriateness or seeking to identify other such agreements and commitments. It is your responsibility, in accordance with article R. 225-31 of the French Commercial Code (Code de commerce), to evaluate the benefits resulting from these agreements and commitments prior to their approval.

In addition, we are required, where applicable, to inform you in accordance with article R. 225-31 of the French Commercial Code (Code de com-merce) of the implementation, during the year, of agreements and commitments previously approved by the General Meeting of Shareholders.

We performed the procedures we considered necessary to comply with professional guidance issued by the national auditing body (Compagnie Nationale des Commissaires aux Comptes) relating to this type of engagement. These procedures consisted in verifying that the information pro-vided to us is consistent with the documentation from which it was extracted.

AGREEMENTS AND COMMITMENTS SUBMITTED FOR APPROVAL BY THE SHAREHOLDERS’ MEETING

Agreements and commitments approved during the financial year

In accordance with article L. 225-40 of the French commercial Code (Code de commerce), we have been informed of the agreements and com-mitments that have obtained prior approval from your Board of Directors.

With AKKA Services

Persons concerned: Maurice RICCI, Jean-Franck RICCI and Nicolas VALTILLE

Nature and purpose: The Board of Directors, at its meeting of 16 June 2016, authorised the signing of an amendment to the commercial lease with SCI ANDROMÈDE VALLEY.

Terms: On 8 July 2014, following authorisation from the Board of Directors at its meeting of 17 June 2014, the company, alongside its subsidiary AKKA Services, entered into an off-plan commercial lease with SCI Andromède Valley for premises located on the “Andromède” BIA in Blagnac (31700). The building has been completed, and the lease took effect on 9 May 2016.

An amendment signed on 22 September 2016 brought the annual rent to €2,318,787 excluding VAT and to €2,169,456 excluding VAT and fixtures for an unchanged office space of 11,350 sq.m., with retroactive effect from 9 May 2016.

Justification of the interest of the agreement for the company: Your Board of Directors believes that this agreement is in AKKA Technologies’ interest since the parties have agreed not increase or decrease the rent.

No expense was recognised in respect of 2016, lease payments having been fully borne by AKKA Services.

AGREEMENTS AND COMMITMENTS PREVIOUSLY APPROVED BY THE SHAREHOLDERS’ MEETING

Agreements approved in prior years:

a - whose performance continued during the year

In accordance with article R. 225-30 of the French Commercial Code (Code de commerce), we were informed that the execution of the following agreements and commitments, already approved by the shareholders’ meeting in prior years, continued during the past year.

With GLX CONSULTING

Person concerned: Guy LACROIX, director of AKKA Technologies and Chairman of GLX Consulting

Nature and purpose: The Board of Directors, at its meeting of 5 January 2016, authorised the signing of an agreement for the provision of inter-national support.

Terms: An international support services agreement with an annual fee of €198,000 excluding VAT, corresponding to 60 days of consulting services. A governance consulting agreement for a fee determined on the basis of €3,750 excluding VAT per day for a premium consultant. These agreements became effective on 5 January 2016.

The amount of services billed under the international support services agreement was €198,000 excluding VAT in 2016.

The amount of services billed under the governance consulting agreement was €300,000 excluding VAT in 2016.


CHAPTER 20

With BMC MANAGEMENT AND INVESTMENT

Person concerned: Maurice RICCI

Nature and purpose: The Board of Directors, at its meeting of 30 August 2012, authorised the provision of commercial, strategic, administrative and relationship management services to assist the Group in its development.

Terms: Agreement entered into on 15 September 2012 between AKKA Technologies and BMC Management and Investment for the provision of commercial, strategic, administrative and relationship management services for the Group for an annual fee of €642,000, plus additional services as required, invoiced on the basis of time spent.

The services invoiced in 2016 amounted to €642,000.

b - not performed during the past year

We were also informed of the following agreements and commitments, already approved by the shareholders’ meeting in prior years, which were not performed during the year.

With MBtech Group Gmbh & Co KGaA

Persons concerned: Maurice RICCI, Jean-Franck RICCI and Nicolas VALTILLE

Nature and purpose: The Board of Directors, at its meeting of 25 January 2014, authorised the signing of an autonomous guarantee.

Terms: Performance guarantee commitments made by MBtech Group GmbH & Co. KGaA to RALOSA GmbH & Co KG in respect of an off-plan lease for a building on the former airfield of the municipalities of Böblingen and Sindelfingen (Germany). The lease has a term of 20 years from the date of first occupancy, scheduled for 1 October 2015. The independent guarantee amounts to €42.5 million.

The guarantee was not exercised in 2016.

With DUBAIA9 SAS

Person concerned: Maurice RICCI

Nature and purpose: The Board of Directors, at its meeting of 25 November 2009, authorised the signing of a service agreement corresponding to the provision of financial management, human resources and corporate secretariat services with DUBAIA9 SAS.

Terms: The amount billed under this agreement corresponds to costs actually incurred by SAS DUBAIA9 plus a margin of 15%.

No billing was recorded in 2016. This agreement was terminated with effect from 1 January 2016.




CHAPTER 20

20.6 - Dividend policyDividends paid during the last five years

The table below shows dividends per share (in euros) paid over the last five years.

The table below shows dividends per share (in euros) paid during the last five years adjusted for capital transactions:

- Allocation of 1 bonus share for every 10 shares held,

- 2-way share split,

- Dividends paid from reserves.

The dividend per share is as follows, based on a comparable number of shares, i.e. 20,277,690 shares outstanding as of 31 December 2016.

Payout policy

The Group cannot guarantee the amount of dividends paid. However, it aims to pay a dividend corresponding to between 20% and 30% of consolidated net profit attributable to owners of the parent subject to the analysis, each year, of the company’s profits, financial position and other factors deemed relevant by the Board.

Limitation period

Unclaimed dividends are forfeited to the French state after a period of five years from the date of the payment.

20.7 - Legal and arbitration proceedingsTo the knowledge of the company, there were no government, court-ordered or arbitration proceedings (including any proceedings of which the Group is aware that are pending or threatened) liable to have or having recently had a significant impact on the financial position or profitability of AKKA Technologies and/or the AKKA Technologies Group over the last 12 months.

The debt restructuring plan involving AKKA I&S established by a decision of the Paris Commercial Court of 4 September 2007 is mentioned here solely insofar as it is ongoing and that the tenth annual instalment under the plan will be paid in accordance with the terms of the ruling of 4 September 2007.

20.8 - Significant change in the financial or trading position since the end of the last yearNot applicable.

2012 2013 2014 2015 2016 (1)

Dividend per share 0.64 0.55 0.50 0.50 0.60

Amount of dividends paid 9,673,828 8,945,532 8,948,518 9,830,278 11,814,936

(1) Dividend proposed at the shareholders’ meeting of 15 June 2017

2012 (2) 2013 (2) 2014 (2) 2015 2016 (1)

Dividend per share 0.48 0.45 0.45 0.50 0.60

Amount of dividends paid 9,673,828 8,945,532 8,948,518 9,830,278 11,814,936(1) Dividend proposed at the shareholders’ meeting of 15 June 2017(2) For a comparable number of shares (i.e. adjusted for the grant of 5 bonus share awards for every 10 shares held in 2012, 2013, 2014, 2015 and 2016)


CHAPTER 21

21 - ADDITIONAL INFORMATION

21.1 - Share capital

21.1.1 - Information on the share capital

As of 31 December 2016, the share capital was THIRTY-ONE MILLION TWENTY FOUR THOUSAND EIGHT HUNDRED AND SIXTY-FIVE EUROS AND SEVENTY CENTS (€31,024,865.70), divided into TWENTY MILLION TWO HUNDRED AND SEVENTY-SEVEN THOUSAND SIX HUNDRED AND NINETY (20,277,690) shares with a par value of one euro and fifty-three cents (€1.53) each.

Authorised unissued capital

Status of authorisations given to the Board:

Date of the shareholders’ meeting

Purpose of the authorisation given to the Board of Directors

Duration of the

authorisationExpires on Use in 2016

(05/06/2009)(23/06/2012)09/06/201516/06/2016

Grants of free shares L. 225-197-1 38 months 15 August 2019

SM 16 June 2016Grant of 500,000 free shares

SM 3 November 2016Grant of 20,000 free shares

16/06/2016Issue of warrants enabling shareholders to subscribe for new

shares at preferential terms during a public offer L. 233-32 II L. 233-33

18 months 15 December 2017 None

16/06/2016 Authorisation to trade in the shares of the company L. 225-209 18 months 15 December 2017 Liquidity agreement

16/06/2016 Authorisation to reduce capital by cancelling shares 24 months 15 June 2018 None

09/06/2015 Issue by private placement of ordinary shares or any securities with cancellation of the preferential subscription right 26 months 8 August 2017 None

09/06/2015In the event of issue by private placement of ordinary shares or any securities with cancellation of the preferential subscription

right, authorisation to set the issue price26 months 8 August 2017 None

09/06/2015 Adjustment for any issue of securities 26 months 8 August 2017 None

09/06/2015 Capital increase with preferential subscription rights L. 225-129-2 and L. 228-92 26 months 8 August 2017 None

09/06/2015 Capital increase without preferential subscription rights L. 225-129-2 and L. 228-92 26 months 8 August 2017 None

09/06/2015 Capital increase in consideration for contributions in kind L. 225-147 26 months 8 August 2017 None

(11/06/2013)09/06/2015

Capital increase by incorporation of reserves, profits, premiums in the form of bonus shares or increase in the par value

L. 225-129-226 months 8 August 2017

SM of 30/03/2016Grant of bonus shares

(1 new share for 10 existing shares)

09/06/2015Capital increase reserved for employees

L. 225-129-6 and L. 225-138-1 of the French Commercial Code and L. 3332-18 et seq. of the French Labour Code

26 months 8 August 2017 None

09/06/2015 Stock purchase optionsL. 225-177 et seq. 26 months 8 August 2017 None

09/06/2015 Stock subscription optionsL. 225-177 et seq. 26 months 8 August 2017 None


CHAPTER 21

Changes in the share capital and voting rights attached to shares

Changes in the capital or voting rights attached to the securities comprising it is subject to legal requirements, as the articles of association do not contain specific provisions. A reconciliation of the number of shares outstanding at the opening date and the closing date in 2015 and 2016 is given in the 2016 consolidated financial statements in section 20.3.6 above.

Purchase by the Company of its own shares

The extraordinary shareholders’ meeting of 28 February 2005 authorised the Board, for an eighteen-month period from the admission of the com-pany’s shares to trading on a regulated market, to trade in the shares of the company, pursuant to article L. 225-209 of the French Commercial Code.

By a decision dated 14 April 2005, the Board of Directors decided to make use of the authorisation granted by the shareholders’ meeting of 28 February 2005 for the purpose of trading in the shares of the company. This share buyback programme was approved by the AMF under number 05-304 on 26 April 2005.

The authorisation allowing the Board of Directors to trade in shares of the company was renewed for successive periods of eighteen months each by the extraordinary shareholders’ meetings of 20 June 2006, 28 June 2007, 24 June 2008, 23 June 2009, 22 June 2010, 14 June 2011, 5 June 2012, 11 June 2013, 17 June 2014 and 9 June 2015, pursuant to article L. 225-209 of the French Commercial Code.

The extraordinary shareholders’ meeting of 16 June 2016 renewed for a period of eighteen months or until the date of its renewal by the share-holders’ meeting the authorisation allowing the Board of Directors to trade in shares of the company pursuant to article L. 225-209 of the French Commercial Code.

Shares concerned: ordinary shares (ISIN code: FR0004180537).

21.1.2 - Non-equity securities

None.

21.1.3 - Treasury shares

As of 31 December 2016, AKKA Technologies and its subsidiaries held 3,400 own shares purchased as part of the share buyback programme and 614,867 shares outside this programme. The Group management report in section 9.1.2 (note 3) of this registration document gives details about treasury shares.

21.1.4 - Potential capital

The potential capital of the company as of 31 December 2016 was represented by 14,300 shares resulting from the issue of free shares in the process of vesting. At that date, the total potential dilution represented 0.07% of the share capital. A table summarising the various plans is presented in note 4.11 of the consolidated financial statements in section 20.3.6 above.

21.1.5 - Other securities convertible into capital

None.

21.1.6 - Pledges, sureties on registered shares

At the date of filing of this report, the company was not aware of any pledges and other sureties bearing on registered shares.

21.1.7 - Information on the capital of any member of the Group subject to an option or a conditional or unconditional agreement placing it under option

Not applicable.


CHAPTER 21

21.1.8 - Table showing the change in the company’s share capital over the last five years

Date of meeting TransactionNumber of shares

issued

Par value of shares

in €

Nominal amount

of capital increase

in €

Contribution, share or merger

premium

Cumulative amount

of capital in €

Cumulative number

of shares

SM 31 March 2011 Capital increase by incorporation of amounts drawn from the «share premium» account 2,000 1.53 3,060 - 16,653,906 10,884,906

SM 31 March 2011 Exercise of 2,899 warrants 3,591 1.53 5,494 - 16,659,400 10,888,497

SM 31 March 2011 Capital increase following exercise of options 18,332 1.53 28,048 - 16,687,448 10,906,829

SM 14 June 2011 Capital increase by incorporation of amounts drawn from the «share premium» account 35,844 1.53 54,841 - 16,742,289 10,942,673

SM 7 July 2011 Capital increase by incorporation of amounts drawn from the «share premium» account 1,120,511 1.53 1,714,382 - 18,456,671 12,063,184

SM 5 September 2011 Capital increase by incorporation of amounts drawn from the «share premium» account 91,256 1.53 139,622 - 18,596,293 12,154,440

SM 25 November 2011 Capital increase by incorporation of amounts drawn from the «share premium» account 9,317 1.53 14,255 - 18,610,548 12,163,757

SM 25 November 2011 Exercise of 544 warrants 742 1.53 1,135 - 18,611,683 12,164,499

SM 5 June 2012 Exercise of 156,901 warrants 213,738 1.53 327,019 - 18,938,703 12,378,237

SM 05 June 2012 Capital increase by incorporation of amounts drawn from the «share premium» account 1,237,823 1.53 1,893,869 - 20,832,572 13,616,060

SM 22 June 2012 Exercise of 15,615 warrants 23,383 1.53 35,776 - 20,868,348 13,639,443



SM 28 March 2013 Exercise of 94,891 warrants 142,156 1.53 217,499 - 21,155,140 13,826,889

SM 7 May 2013 Capital increase by incorporation of amounts drawn from the «share premium» account 1,382,688 1.53 2,115,513 - 23,270,653 15,209,577


SM 5 May 2014Capital increase by exercise of stock options

and by incorporation of amounts drawn from the «share premium» account

1,539,558 1.53 2,355,524 - 25,635,898 16,755,489


SM 31 March 2015 Capital increase by incorporation of amounts drawn from the «share premium» account 1,675,695 1.53 2,563,813 - 28,201,954 18,432,650


SM 30 March 2016 Capital increase by incorporation of amounts drawn from the «share premium» and «other reserves» accounts 1,843,426 1.53 2,820,442 - 31,024,865 20,277,690


CHAPTER 21

Extracts from the articles of association on share capital:

- Following the decision by the Board of Directors of 31 March 2011, and pursuant to the authorisation of the shareholders’ meeting of 23 June 2009, the share capital was increased by €3,060 by the incorporation of sums from the “share premium” account and the creation of 2,000 new shares with a par value of €1.53 each.

- Following the decision by the Board of Directors of 31 March 2011, and pursuant to the authorisation of the shareholders’ meeting of 23 June 2009, the share capital was increased by €5,494.23 by the exercise of 2,899 warrants and the creation of 3,591 new shares paid in cash with a par value of 1.53 euros.

- The Board of Directors, at its meeting of 31 March 2011, recorded a capital increase of €28,047.96 by the exercise of 9,166 options and the creation of 18,332 new shares paid in cash with a par value of 1.53 euros each.

- Following the decision by the Board of Directors of 14 June 2011, and pursuant to the authorisation of the shareholders’ meeting of 14 June 2011, the share capital was increased by €54,841.32 by the incorporation of sums from the “share premium” account and the creation of 35,844 new shares with a par value of €1.53 each.

- Following the decision by the Board of Directors of 7 July 2011, and pursuant to the authorisation of the shareholders’ meeting of 14 June 2011, the share capital was increased by €36,502.74 by the incorporation of sums from the “share premium” account and the creation of 23,858 new shares with a par value of €1.53 each.

- Following the decision by the Board of Directors of 7 July 2011, and pursuant to the authorisation of the shareholders’ meeting of 14 June 2011, the share capital was increased by €1,677 879.09 by the incorporation of sums from the “share premium” account and the creation of 1,096,653 new shares with a par value of €1.53 each.

- Following the decision by the Board of Directors of 5 September 2011, and pursuant to the authorisation of the shareholders’ meeting of 14 June 2011, the share capital was increased by €130,986.36 by the incorporation of sums from the “share premium” account and the creation of 85,612 new shares with a par value of €1.53 each.

- Following the decision by the Board of Directors of 5 September 2011, and pursuant to the authorisation of the shareholders’ meeting of 14 June 2011, the share capital was increased by €8,298.72 by the incorporation of sums from the “share premium” account and the creation of 5,424 new shares with a par value of €1.53 each.

- Following the decision by the Board of Directors of 5 September 2011, and pursuant to the authorisation of the shareholders’ meeting of 14 June 2011, the share capital was increased by €336.60 by the incorporation of sums from the “share premium” account and the creation of 220 new shares with a par value of €1.53 each.

- Following the decision by the Board of Directors of 25 November 2011, and pursuant to the authorisation of the shareholders’ meeting of 23 June 2009, the share capital was increased by €14,255.01 by the incorporation of sums from the “share premium” account and the creation of 9,317 new shares with a par value of €1.53 each.

- Following the decision by the Board of Directors of 25 November 2011, and pursuant to the authorisation of the shareholders’ meeting of 14 June 2011, the share capital was increased by €1,135.26 by the exercise of 544 warrants and the creation of 742 new shares paid in cash with a par value of 1.53 euros.

- Following the decision by the Board of Directors of 5 June 2012, and pursuant to the authorisation of the shareholders’ meeting of 14 June 2011, the share capital was increased by €327,019.14 by the exercise of 156,901 warrants and the creation of 213,738 new shares paid in cash with a par value of 1.53 euros.

- Following the decision by the Board of Directors of 5 June 2012 adjusting the capital increase approved by the extraordinary shareholders’ meeting of 5 June 2012 through the allocation of one new share for ten existing shares, to take into account the shares issued between 25 November 2011 and 31 May 2012 on the exercise of warrants, the share capital was increased by €1,893,869.19 by the incorporation of sums from the “share premium” account and the creation of 1,237,823 new shares with a par value of €1.53 each.

- Following the decision by the Board of Directors of 22 June 2012, and pursuant to the authorisation of the shareholders’ meeting of 14 June 2011, the share capital was increased by €35,775.99 by the exercise of 15,615 warrants and the creation of 23,383 new shares paid in cash with a par value of 1.53 euros.




CHAPTER 21

- Following the decision by the Board of Directors of 28 March 2013, and pursuant to the authorisation of the shareholders’ meeting of 14 June 2011, the share capital was increased by €217,498.68 by the exercise of 94,891 warrants and the creation of 142,156 new shares paid in cash with a par value of 1.53 euros.

- Following the decision by the Board of Directors of 7 May 2013, and pursuant to the authorisation of the shareholders’ meeting of 14 June 2011, the share capital was increased by €2,115,512.64 by the incorporation of sums from the “share premium” account and the creation of 1,382,688 new shares with a par value of €1.53 each.

- Following the decision by the Board of Directors of 16 September 2013, the share capital was increased by €9,721.62 by the incorporation of sums from the “share premium” account and the creation of 6,354 new shares with a par value of €1.53 each.

- Following the decision by the Board of Directors of 5 May 2014, and pursuant to the authorisation of the shareholders’ meeting of 23 June 2003, the share capital was increased by €24,987.96 by the exercise of 8,166 stock options and the creation of 16,332 new shares paid in cash with a par value of 1.53 euros.

- Following the decision by the Board of Directors of 5 May 2014, and pursuant to the authorisation of the shareholders’ meeting of 11 June 2013, the share capital was increased by €2,330,535.78 by the incorporation of sums from the “share premium” account and the creation of 1,523,226 new shares with a par value of €1.53 each.


- Following the decision by the Board of Directors of 31 March 2015, and pursuant to the authorisation of the shareholders’ meeting of 11 June 2013, the share capital was increased by €2,563,813.35 by the incorporation of sums from the “share premium” account and the creation of 1,675,695 new shares with a par value of €1.53 each.


- Following the decision by the Board of Directors of 30 March 2016, the share capital was increased by €2,820,441.78 by the incorporation of sums from the “share premium” account and the creation of 1,843,426 new shares with a par value of €1.53 each.

21.2 - Memorandum of incorporation and articles of association

21.2.1 - Corporate purpose (article 2 of the articles of association)

The company’s purpose is:

- the acquisition, administration and management of a portfolio of investment and company securities,

- the acquisition of interests in any industrial, commercial and/or services company, the creation and/or acquisition of any business interests or branches of businesses involved in the field of workflow management, including the design, study and production of industrial automation equipment and systems,

- the management and coordination of any company, notably for the performance of all management and control offices, and the provision of any commercial, administrative, information technology or other services, as well as employee training, and management and financial advisory services,

- the trading and supply of all products and items useful or necessary to the operation of companies with which it has business relationship,

- the acquisition, filing and exploitation of patents and trademarks,

- the contribution of technology and the development of technical expertise,

- the provision of services of all types, especially engineering, consulting, support, organisation for industrial, commercial and service companies,

- the training of all people in all areas,

- the organisation of events of all kinds,

- the participation by the company, by any means, directly or indirectly, in all operations related to its purpose by way of the creation of new companies, the contribution, subscription or purchase of securities or rights, by merger or otherwise, by the creation, acquisition, rental or leasing of all businesses assets or premises, the creation, acquisition, operation or sale of any processes and patents concerning these activities.

And generally, all industrial, commercial, financial, civil, fixed or movable property transactions related directly or indirectly to the corporate purpose or any similar or related purpose.

21.2.2 - Board of Directors (article 15 of the articles of association)

The company is managed by a Board of Directors comprising at least three and no more than eighteen members, subject to the exemption provided by law in the event of merger.


CHAPTER 21

In the course of corporate life, directors are appointed, reappointed and dismissed by the shareholders’ meeting. They are always eligible for reappointment.

The term of office of directors is three years, expiring at the end of the ordinary shareholders’ meeting called to approve the financial statements for the previous year and held in the year in which their term expires.

No one may be appointed director if, being aged more than 80, his or her appointment has the effect of raising the number of directors over that age to more than a third of Board members. When this limit is exceeded, the oldest director is deemed to have resigned.

No one may be appointed director if he or she is also shareholder and/or director and/or executive officer and/or manager of an entity that has a business in direct or indirect competition with that of the AKKA Technologies Group.

If, during his or her term, a director becomes a major shareholder and/or director and/or executive officer and/or manager of an entity that, in fact and in law, has a business in direct or indirect competition with that of the AKKA Technologies Group, he or she undertakes, before making any equity investment and/or accepting an office in the entity in question, to notify the Board of Directors, which shall alone decide whether the director may continue to hold office or must relinquish his or her post.

Directors may be natural persons or legal entities. In the latter case, they must, upon appointment, designate a permanent representative, subject to the same conditions and obligations and having the same liability as if he or she were a director in his or her own name, without prejudice to the joint liability of the legal entity he or she represents.

In case of vacancy of one or more directorships, the Board of Directors may, between two shareholders’ meetings, make appointments on a provisional basis pursuant to article L. 225-24 of the French Commercial Code. A director appointed to replace another shall hold office for the remaining term of office of his or her predecessor.

An employee of the company may not be appointed director unless his or her employment contract corresponds to an actual position. The number of directors linked to the company by an employment contract may not exceed one-third of directors in office.

21.2.3 - Rights and obligations attached to the shares (articles 12 and 13 of the articles of association)

Each share entitles its owner to a share of the profits, corporate assets and liquidation surplus in proportion to the amount of capital it represents. It also gives the right to vote and to be represented in shareholders’ meetings and the right to be informed on the progress of the company and to obtain certain corporate documents at the times and in the manner prescribed by law and the articles of association.

Double voting rights are granted to all fully paid-up shares registered for at least four years in the name of the same shareholder as of 31 December of the prior year.

In the event of a capital increase by incorporation of reserves, profits or share premiums, double voting rights are granted upon issue to new shares allocated to shareholders in respect of shares that already have double voting rights.

Any shares converted to bearer shares or subject to a transfer of title forfeit double voting rights. However, transfer by inheritance, liquidation of communal property between spouses or inter vivos gifts to a spouse or relative entitled to inherit does not result in the loss of the right acquired, and does not interrupt the four-year period.

Shareholders have the option of individually waiving their double voting rights temporarily or permanently. This waiver shall be binding on the company and other shareholders on the condition that the company is notified by registered letter with acknowledgement of receipt at least three working days prior to the meeting for which the shareholder intends to waive double voting rights.

21.2.4 - Procedures necessary to modify shareholders’ rights

Shareholders’ rights may only be modified, as provided by law, by an extraordinary shareholders’ meeting, under the quorum and majority conditions set by the French Commercial Code.

The articles of association do not contain any more restrictive provisions.

21.2.5 - Shareholders’ meetings

Calling of meetings (article 26 of the articles of association)

Shareholders’ meetings are called either by the Board of Directors or the Statutory Auditors, or by a representative appointed by a court as provided by law and regulations. Additionally, the works council represented by its members nominated for this purpose may, in accordance with section I of article L. 432-6-1 of the French Labour Code, ask the presiding judge of the commercial court, acting in summary proceedings, to appoint a legal representative responsible for calling the meeting.

One or more shareholders together holding shares representing at least 10% of the subscribed capital may request the Board of Directors to call a shareholders’ meeting, specifying the items to be placed on the agenda.


CHAPTER 21

Meetings are held at the registered office or any other location indicated in the notice.

Notices and letters calling the meeting must contain the indications provided by law.

Participation in meetings (article 28 of the articles of association)

All shareholders are entitled to attend Shareholders’ Meetings and to vote in person or through a proxy, on proof of identity.

Participation in shareholders’ meetings, in any form whatsoever, is subject to the registration of shares in accordance with the conditions and deadlines set by regulations in force.

Shareholder may also take part in the meeting by video- or teleconference, as provided by the regulations in force.

Any shareholder may be represented by another shareholder, by his or her spouse or the partner with whom he or she has entered into a civil partnership. He or share may also be represented, as provided by law, by any other natural person or legal entity of his choice where the com-pany’s shares are admitted to trading on a regulated market or multilateral trading facility appearing on a list drawn up by the AMF. The proxy must provide proof of appointment.

The legal representatives of legally incapable shareholders and the natural persons representing corporate shareholders may take part in meetings whether or not they are shareholders.

Shareholders may vote by means of a postal voting form completed and sent to the company in accordance with the conditions and time limits set by law and regulations.

Two members of the works council, appointed by the Board as provided by law, may attend shareholders’ meetings. At their request, they must be heard in all decisions requiring the unanimity of shareholders.

AKKA Technologies’ next ordinary and extraordinary shareholders’ meeting will be held on 15 June 2017 at 4.00 p.m.

Agenda

Ordinary business:

- Review of the management report prepared by the Board of Directors;

- Review of the statutory auditors’ report on the annual financial statements and the consolidated financial statements for the year ended 31 December 2016;

- Review of the special report of the Chairman of the Board of Directors on internal control procedures adopted under the provisions of article L. 225-37 of the French Commercial Code;

- Review of the special report of the statutory auditors giving their opinion on the report of the Chairman of the Board of Directors;

- Approval of the annul financial statements and the consolidated financial statements for the year ended 31 December 2016 and discharge of directors;

- Approval of other non-deductible expenses;

- Approval of the compensation policy applicable to the Chairman and Chief Executive Officer and Deputy CEOs;

- Appropriation of profit for the year;

- Review of the special report of the auditors on the agreements referred to in articles L. 225-38 of the French Commercial Code and approval of said agreements;

- Reappointment of Cécile Monnot as director;

- Reappointment of Maurice RICCI as director;

- Appointment of Muriel Barnéoud as a new director;

- Appointment of Valérie Magloire as a new director;

- Approval of an annual budget of €200,000 for directors’ fees for the current year and future years;

- Reappointment of ORFIS SA as joint statutory auditor;

- Authorisation to trade in its own shares;

Extraordinary business:

- Authorisation granted to the Board of Directors to reduce the share capital by cancelling treasury shares following the implementation of the share buyback programme by the company;

- Delegation of authority to the Board of Directors to issue ordinary shares or securities convertible into shares, with preferential subscription rights;

- Delegation of authority to the Board of Directors to issue ordinary shares or securities convertible into shares, without preferential subscription rights;


CHAPTER 21

- Delegation of authority to the Board of Directors to issue ordinary shares or securities convertible into shares by way of public placement, without preferential subscription rights;

- Authorisation granted to the Board of Directors, in case of the issue of ordinary shares or securities convertible into shares, without preferential subscription rights, to set the issue price in the manner set by the shareholders’ meeting within the limit of ten percent (10%) of the share capital of the company;

- Authorisation granted to the Board of Directors to adjust possible issuance of securities;

- Authorisation granted to the Board of Directors to issue shares and securities convertible into shares in consideration for contributions in kind;

- Delegation of authority to the Board of Directors to increase the capital by incorporation of reserves, profits or premiums;

- Authorisation to the Board of Directors to grant stock subscription options;

- Authorisation to the Board of Directors to grant stock purchase options;

- Delegation of authority to the Board of Directors to issue shares of the company for the benefit of members of a company savings plan;

- Delegation of authority to the Board of Directors for eighteen (18) months to issue free equity warrants during a public offer on the company;

- Authorisation to the Board of Directors to make the necessary changes to the articles of association to bring them into compliance with laws and regulations, subject to ratification of these amendments by the next extraordinary shareholders’ meeting;

- Modification of the articles of association to reflect the regulation in respect of directors representing employees.

Ordinary and extraordinary business:

- Powers to carry out formalities.

21.2.6 - Provisions having the effect of delaying, deferring or preventing a change of control

Article 15 of the articles of association

The shareholders’ meeting of 24 June 2008, under its twelfth resolution, modified the company’s articles of association as follows, by inserting an exclusivity of office clause:

“No one may be appointed director if he or she is also a major shareholder and/or director and/or executive officer and/or manager of an entity that has a business in direct or indirect competition with that of the AKKA Technologies Group.

If, during his or her term, a director becomes a major shareholder and/or director and/or executive officer and/or manager of an entity that, in fact and in law, has a business in direct or indirect competition with that of the AKKA Technologies Group, he or she undertakes, before making any equity investment and/or accepting an office in the entity in question, to notify the Board of Directors, which shall alone decide whether the director may continue to hold office or must relinquish his or her post.

Shareholders’ meeting of 16 June 2016 – Tenth resolution

The shareholders’ meeting of 16 June 2016, under its tenth resolution, authorised the Board of Directors to issue and grant free equity warrants to shareholders during a public offer on the company.

“Tenth resolution: Delegation of authority to the Board of Directors for eighteen (18) months to issue free equity warrants during a public offer on the company;

The shareholders’ meeting, voting by exception to the quorum and majority requirements for ordinary shareholders’ meetings, having read the report of the Board of Directors and the Special Report of the Statutory Auditors, and pursuant to the provisions of articles L. 225-129 to L225- 129-6, L. 233-32 and L. 233-33 of the French Commercial Code in the version resulting from the Breton Law 2006-387 of 31 March 2006, delegates to the Board of Directors, with authority to delegate in the prevailing legal and regulatory conditions, the authority to issue, in France and internationally, equity warrants granted free to the shareholders of the company.

The shareholders’ meeting resolves that issues referred to under this resolution shall be implemented during a public offer for the securities of the company, and that only the shareholders having this quality before the expiry of the offer period may benefit from free grants of equity warrants (...).”

21.2.7 - Threshold crossings (article 12 of the articles of association)

Any natural or legal person, acting alone or in concert, who acquires in any manner whatsoever, a number of shares representing at least 2.5% of the capital or voting rights at shareholders’ meetings, or any multiple thereof, must inform the company within 15 days of crossing the ownership threshold, by registered letter with acknowledgement of receipt addressed to the head office, stating the total number of shares and the attached voting rights it holds, and, if applicable, the number of securities convertible into shares and the voting rights attached thereto.

This obligation applies under the same terms as those provided above whenever the percentage of capital or voting rights held falls below one of the thresholds.


CHAPTER 21

In the event of non-compliance with the aforementioned reporting obligations, shares exceeding the fraction that should have been declared are deprived of voting rights at any shareholders’ meeting for a period of two years from the date on which notification was duly given. Under the same terms, the voting rights attached to those shares that have not been duly declared may not be exercised or delegated by the shareholder in default.

Except when crossing the thresholds referred to in the first section of article L. 233-7 of the French Commercial Code, the suspension of voting rights shall only be applied on the request recorded in the minutes of the shareholders’ meeting of one or more shareholder(s) holding, together or separately, at least 5% of the share capital and/or voting rights.

Compliance with this requirement to declare the crossing of 2.5% thresholds of the capital or voting rights at shareholders’ meetings, or any multiple thereof, does not exempt shareholders, natural or legal persons, from complying with the legal provisions for requiring the notification of ownership more than one-twentieth, one-tenth, three-twentieths, one-fifth, one-quarter, one-third, one-half, two-thirds, eighteen-twentieths or nineteen-twentieths of the capital or the voting rights in accordance with articles L. 233-7 et seq. of the French Commercial Code, the time allowed for such notification being five trading days.

21.2.8 - Provisions governing changes in the share capital

Changes in the share capital are made as provided by law.


CHAPTER 22

Acquisition contracts are described in section 5.2.1. above.

The main current and future investments are described in section 5.2.2. above.

Apart from these contracts, the Group has not, at the date of filing of this registration document, concluded material contracts other than those entered into in the normal course of business.

22 - MATERIAL CONTRACTS


CHAPTER 23

23 - THIRD-PARTY INFORMATION, STATEMENTS BY EXPERTS AND DECLARATIONS OF INTEREST

Not applicable.


24 - DOCUMENTS ON DISPLAY

CHAPTER 24

In accordance with the Transparency Directive, AKKA Technologies has a section headed “Financial Information” on the www.akka-technologies.com website. To date, the following documents are available:

- financial press releases

- corporate press releases

- annual and interim results presentations

- annual and interim financial reports

- calendar of publications in the current year

- results of votes at shareholders’ meetings

- declarations of voting rights

- share buyback statements

- press releases on auditors’ fees (included in the registration documents)

- registration documents from 2007 to 2015, approved by the AMF

- preparatory documents for shareholders’ meetings

AKKA Technologies’ articles of association may be consulted at the company’s registered office – 9/11, rue Montalivet – 75008 Paris.

STOCK MARKET DECLARTATIONS

Declaration of trading in own shares

In accordance with the Transparency Directive, monthly declarations have been issued online through the authorised distributor (www.actusnews.com) and can may be consulted on the Group’s website (www.akka-technologies.com).

In accordance with applicable regulations, monthly declarations are sent directly to the AMF and made available on the Group’s website (www.akka-technologies.com) under “Investors”.


25 - INFORMATION ON INVESTMENTS AS OF 31 DECEMBER 2016

CHAPTER 25

Please refer to note 1.5 of the consolidated financial statements (section 20.3.6), which describes the scope of consolidation of the Group, and to the list of AKKA Technologies’ subsidiaries and affiliates contained in section 20.5.3.

AKKA TECHNOLOGIES9-11 rue Montalivet - 75008 Paris - FRANCE Tel. +33 (0)1 56 69 26 59 www.akka-technologies.com

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