financial report fiscal year 2006
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01 GROUP PRESENTATION 3.4 Statutory Auditor’s Report AND ACTIVITIES p. 5 on the annual financial statements p. 78
1.1 Historical Highlights p. 6 3.5 Statutory Auditors’ Report on related party agreements and commitments p. 80 1.2 The Group Governance System p. 7 3.6 Statutory Auditors p. 82 1.3 Markets - Positioning p. 10 1.4 Steria Group Core Businesses Investment and Innovation p. 11 1.5 Corporate Social Responsibility 04 (CSR) p. 13 CORPORATE GOVERNANCE 1.6 The Corporate Mission Statement AND INTERNAL CONTROL p. 83 and its Governance p. 14 4.1 Report by the Chairman 1.7 Human R esources: Commitment of the Supervisory Board p. 85 to Respect for our Employees p. 16 4.2 Statutory Auditors’ Report 1.8 Risks and Risk Management p. 19 on the Chairman’s Report p. 103 02 05 FINANCIAL YEAR 2006, RECENT DEVELOPMENTS GENERAL COMPANY AND OUTLOOK p. 25 INFORMATION CONCERNING GROUPE STERIA SCA 2.1 Overall Business of the Group p. 26 AND ITS CAPITAL p. 105
2.2 Groupe Steria SCA Business Activity p. 28 5.1 Corporate Legal Information p. 106
2.3 Subsidiaries and Investments p. 28 5.2 Information on the Corporate Capital p. 113 5.3 Groupe Steria SCA and the Stock Market p. 122 5.4 Person Responsible 03 for the Reference Document p. 126 FINANCIAL STATEMENTS OF GROUPE STERIA SCA p. 29 3.1 Consolidated Financial Statements for the year ended 31 December 2006 p. 30 06 Notes to the Consolidated Financial DOCUMENTS AVAILABLE Statements p. 34 TO THE PUBLIC p. 127 3.2 Statutory Auditors’ Report on the consolidated financial statements p. 60 3.3 Parent Company Financial Statements for the Year Ended 31 December 2006 p. 62 CROSS-REFERENCE TABLE p. 130 Notes to the Parent Company
Financial Statements p. 66
SSTE008_DRF06GB_Livre1.indbTE008_DRF06GB_Livre1.indb Couv.IICouv.II 66/06/07/06/07 14:34:0714:34:07 FISCAL YEAR 2006
Groupe Steria SCA
Partnership limited by shares under French law, with a capital of €18,623,257 Head Office: 12, rue Paul-Dautier 78140 VÉLIZY-VILLACOUBLAY 344 110 655 RCS VERSAILLES
The French Document de Référence (hereinafter the « Reference Document » or « Financial Report » for the purposes hereof) was filed with the Autorité des Marchés Financiers (the French financial markets authority, also referred to as the « AMF ») on 18/04/2007 under the number D.07-0355, pursuant to Article 212-13 of the AMF general regulations. It may be used to support any financial transaction if it is supplemented by a prospectus approved by the Autorité des Marchés Financiers.
Pursuant to Article 28 of European Commission Regulation (EC) no. 809/2004, the following information is incorporated by reference in the Reference Document: ■ the activity report, the parent company financial statements, the statutory auditors’ report, the consolidated financial statements, the statutory auditors’ report on the consolidated financial statements and the statutory auditors’ report on agreements referred to in Article L. 226-10 of the Code de commerce (the French commercial code) and entered into by Groupe Steria SCA in fiscal year 2004 as presented on pages 29 to 102 (inclusive) of the Reference Document filed with the Autorité des Marchés Financiers on 11/05/2005 under the number D.05-671; ■ the activity report, parent company financial statements, the statutory auditors’ report, the consolidated financial statements, the statutory auditors’ report on the consolidated financial statements and the statutory auditors’ report on agreements referred to in Article L. 226-10 of the Code de commerce and entered into by Groupe Steria SCA in fiscal year 2005 as presented on pages 28 to 122 (inclusive) of the Reference Document filed with the Commission des Opérations de Bourse (the French securities and exchange commission) on 21/04/2004 under the number D.06-0310. No other information contained in the aforementioned Reference Documents is incorporated by reference in this Reference Document as irrelevant to or not covered by this Reference Document. The aforementioned Reference Documents may be consulted via the AMF website (www.amf-france.org) or via the issuer’s website (www.steria.com). This document is a free translation into English of the French Reference Document and is provided solely for the convenience of English speaking readers.
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Consolidated Key Figures for the Last Three Financial Years 1
(in millions of euros) 2004 2005 2006 2 Revenue 983.2 1,174.9 1,262.0 Operating margin 40.7 65.5 89.6 3 % Revenue 4.1% 5.6% 7.1% Net earnings 29.9 38.5 54.9 4 % rev 3.0% 3.3% 4.3% 5 Net earnings (Group share) 30.0 38.3 54.3 % rev 3.1% 3.3% 4.3% 6 Net earnings per share 1.68 2.12 2.96 Average number of shares outstanding during the year 17,952,873 18,019,876 18,357,865 Average number of employees (FTE) 7,900 8,962 9,940
REVENUE IN MILLIONS OF EUROS OPERATING MARGIN IN MILLIONS OF EUROS 89.6 1,262
1,200 1,175 80 983 65.5 900 60 40.7 600 40
300 20
2004 2005 2006 2004 2005 2006
NB: Figures under IFRS since 2004.
BREAKDOWN OF REVENUE BREAKDOWN OF REVENUE BREAKDOWN OF REVENUE BY COUNTRY IN 2006 BY CORE BUSINESS IN 2006 BY SECTOR OF ACTIVITY IN 2006
BeFrance: 42% Belux-Switzerland: 5% Consulting and System integration: 57% Public Sector: 38% Telecoms: 11% UK: 23% Spain: 4% Including TPAM*: 10% Managed Services: 43% Utilities Transport Finance: 24% Manufacturing: 27% Scandinavia: 9% Germany: 16% * Third Party Applications Maintenance
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Message from François Enaud, General Manager 1 2 In 2006, four years after the acquisition of the majority of the Bull/Integris core services activities in Europe and two years after that of Mummert Consulting in Germany, Steria has successfully transformed itself. The Group has cemented its position 3 as a strategic partner for large companies and European public authorities by offering them solutions that combine consulting 4 for their core business processes with creating and running their information systems.
Steria singled out three key areas of activity through which to achieve this: size, focus and performance. 5
With more than 10,000 employees in 15 countries and a revenue of €1.262 billion, Steria has consolidated its position within 6 the ranks of Europe’s Top 10 IT services companies.
More than 80% of the Group’s revenue is generated from major infrastructure and services companies, which means that Steria is focussed on markets with rapid change cycles and mounting IT costs: the public sector, banking and insurance, telecommunications, utilities and transport.
2006’s establishment of the industrial operations department, which is responsible for the Group’s IT and applications maintenance centres within the Global Delivery Unit, is a sign of Steria’s commitment to the performance of its processes, on which its ability to deliver industry level services, and therefore to offer its customers the best price-quality ratio, depends.
The results achieved by the Group in 2006, both in terms of growth and profitability, confirm the pertinence of our strategy. Borne by the healthy economic climate in the Group’s three main geographical zones, which are each growing at a rate of around 10%, Steria achieved organic growth of 7.4%. This result is once again significantly higher than the market average. The Group’s operating margin, which now stands at 7.1% of revenue, increased in all countries and was one of the best performances in the sector.
In 2006, Steria revised its governance model to support its new ambitions regarding growth and performance. On the occasion of the retirement of the founder from his position as General Partner and General Manager of the Group, the shareholders, both employees and public, approved changes to the Articles of Association that are intended to set up a model of governance unique in a listed company. The employee shareholders (the General Partner) will now have a say in the corporate project and in making strategic decisions, in constant communication with the General Manager and the supervisory board, which represents the Limited Partners. The two partners will challenge and oversee the General Manager, which will boost the independence of each individual stakeholder and guarantee healthy and efficient leadership for the company.
This is a win-win model that provides for long-lasting performance and makes our company even more attractive. The employee shareholders are consulted on corporate strategy every step of the way, which develops their entrepreneurial spirit. The Group’s customers and external shareholders benefit in turn from the increased level of performance delivered by employees who are committed to their company’s future.
François Enaud, General Manager, Groupe Steria SCA KEY FIGURES • MESSAGE FROM FRANÇOIS ENAUD, GENERAL MANAGER
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1 2 3 4 5 6
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ACTIVITIES
5 PRESENTATION
1.7 1.8
Risks andRiskManagement .. tra«aet p. 17 p. 18 p. 16 1.7.3 Steria «Development Institute» 1.7.2 Steria «Talent» 1.7.1 Steria «Resources Management» .. nuac p. 24 p. p. p. 22 22 21 19 p. 1.8.7 Insurance Other SpecificRisks:RisksRelatedtoSteria’s 1.8.6 1.8.5 Environmental Risks 1.8.4 Industrial Risks 1.8.3 Legal Risks Risk RelatedtoRedemptionCommitments 1.8.2 1.8.1 MarketRisks to Respect for our Employees p. 16 p. to RespectforourEmployees Human Resources:Commitment Business in Decreasing Order of Priority p. 22 p. 21 p. Business inDecreasingOrderofPriority to MinorityShareholders Steria CONTENTS -FinancialR p. 19 eport 01 2006 7
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GROUP PRESENTATION AND ACTIVITIES 1 4 :
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GROUP PRESENTATION 01 AND ACTIVITIES Historical Highlights
1.1 Historical Highlights 1
1969 2000 2 Steria founded by Jean Carteron: IT service provider specialising in Acquisitions of TECSI and Groupe EQIP. 3 key account contracts. Acquisition of Expérian’s managed services activity. 4 1973 2001 Automation contract signed with Agence France Presse. Acquisition of Bull’s core service activities in Europe (Integris): 5 United Kingdom, Germany, Denmark, Norway, Sweden, Belgium, 1978 Luxembourg, Switzerland and Spain. 6 Steria begins to achieve international scope: subsidiary created in Switzerland. 2002 Group General Management: Séverin Cabannes joins the group in 1981 June 2002 as Deputy CEO. He is appointed Joint CEO on 11 June Hired as prime contractor for Télétel 3V project, marking the launch following the Steria SA Board of Directors’ decision. of Minitel services in France. 2003 1986 The corporate savings plan is opened to the group’s European Signature of the largest export contract ever awarded to a employees. French IT services provider: computerisation of the Saudi Arabia Central Bank. 2005 Acquisition of Mummert Consulting in Germany (effective 1987 1 January 2005). Steria strengthens its strategic positioning in systems integration and Steria wins the OMNI (Offender Management National Infrastructure) managed services. contract in the United Kingdom for €365 million over 10 years. Large-scale projects carried out, such as automatic train operation for Line A of the Paris RER. 2006 The 10,000th employee joins the Group. 1990-1993 Orange Business Services/Syntec Informatique Trophées de Subsidiaries created and offices opened in Germany, Spain and Saudi l’Innovation: Steria wins the «Mobility Solutions, New Technology Arabia. Solutions» award. Information system developed for Jakarta airport. Steria is named best NICT employer in Scandinavia. 1994 2007 Steria wins major contracts with various key account customers, such The Articles of Association are modified to implement a unique as the development of a management system for the Centrale des participative governance in Europe. Règlements Interbancaires.
1998 François Enaud appointed Chairman and CEO of the Group.
1999 Listed on the Marché of the Paris Stock Exchange.
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SSTE008_DRF06GB_Livre1.indbTE008_DRF06GB_Livre1.indb 6 66/06/07/06/07 14:34:1014:34:10 ❮ contents ❯ 01 The Group Governance System
1.2 The Group Governance System 1 2 General Partner Limited Partners 3 (Shareholders) Soderi 4 Employee Shareholders FCP Steria Founder Public + Direct employees 5 6 Soderi Groupe Steria SCA “Board of Directors” Supervisory CHAIRMAN Board Groupe Steria SCA General Manager Executive Committee Major decision’s approval Supervision Nomination Major decision’s approval Nomination Steria SA
BS FR UK GE SP SC
The Groupe Steria SCA General Manager Its members are as follows: The Group General Manager is responsible for directing and acting in François Enaud the best interest of the Company, within the confines of its corporate (General Manager of Groupe Steria SCA purpose and in compliance with the powers granted by law and/or by and Chairman and CEO of Steria SA) the Articles of Association of the Company to the Supervisory Board, the General Meetings of Shareholders and the General Partner. François Mazon François Enaud was appointed General Manager of the Group on (CEO, Steria Southern Europe and Asia) 1 February 2007. John Torrie The Group Executive Committee (CEO, Northern Europe) The General Manager is assisted by the Group Executive Committee, Jürgen Sponnagel which is chaired by the General Manager. (CEO, Central Europe) The Executive Committee was founded in early 2007. Olivier Vallet (Industrial Operations Director)
Hervé Hannebicque (Group Human Resources Director) AND ACTIVITIES GROUP PRESENTATION
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GROUP PRESENTATION 01 AND ACTIVITIES The Group Governance System
The Supervisory Board The Group’s main premises are located in: The Supervisory Board exercises continuous control over the ■ France: management of the Company on behalf of its shareholders. 46, rue Camille-Desmoulins – 92130 Issy-les-Moulineaux ; 1 12, rue Paul-Dautier – 78140 Vélizy-Villacoublay ; Its members are as follows: ■ the United Kingdom: Three Cherry Trees Lane, Hemel Hempstead 2 – Hertfordshire – HP2 7AH ; Jacques Bentz 3 ■ Germany: Hans-Henny-Jahnn-Weg 29 – 22085 Hambourg. (Chairman of the Board since 01/02/2007 - Manager of Tecnet Participations) 4 Parent-Subsidiary Relationships Eric Hayat 5 Groupe Steria SCA is currently a non-operational holding company. (Vice Chairman of the Board - Director of Syntec Informatique) 6 It owns 100% of Steria SA, which in turn fully owns the European Patrick Boissier subsidiaries that trade in the Group’s core business sectors. (Chairman and CEO of Chantiers de l’Atlantique) Groupe Steria SCA also owns 100% of Stepar, whose purpose is to Séverin Cabannes hold minority stakes or subsidiaries whose businesses do not fall within (Member of the Société Générale Executive Committee - Director of the scope of the Steria core business. Group Resources at Société Générale) The main French operational company, Steria SA, organises certain Élie Cohen services centrally through specialised departments. These services (Director of Research at CNRS, Sciences PO-CAE) are supplied and invoiced to the subsidiaries to facilitate cost- effective operations. These departments and services include Group Pierre-Henri Gourgeon Communication, strategy and marketing, Risk and Audit, Human (Executive CEO of Groupe Air France) Resources, the Information System, the Finance Department (including cash management) and the Legal Department. Agreements are then Charles Paris de Bollardière drawn up between Steria SA and its subsidiaries and the corresponding (Treasurer of Groupe Total) costs are calculated according to actual use and divided between the companies. Jacques Lafay Steria SA has signed cash management agreements with some of its (Chairman of the Steria FCPE (mutual fund)) subsidiaries and as such has implemented a cash pooling system to optimise Group cash management as a whole. The General Partner The General Partner is Soderi SAS, a company with variable capital, Steria SA provides brand protection services for the entire Group and whose shareholders represent all of the Group’s employee shareholders. invoices its subsidiaries according to their revenue. There are currently over 3,000 Steria employee shareholders who own Steria SA also manages the negotiation, conclusion of contracts and a combined total of 16% of the Groupe Steria SCA capital (excluding monitoring of insurance (Master policy) on behalf of the Group and the founder). invoices the subsidiaries according to their revenue.
The Honorary Chairman No other specific agreements exist between Groupe Steria SCA and the rest of the Group apart from those mentioned in the statutory Jean Carteron auditors’ special report in Section 3. (Group Founder)
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STERIA GROUP ORGANISATION CHART AS AT 31/12/2006
SODERI SAS GROUPE 1 General STERIA SCA Partner Listed company (holding) 2 France 100% 100% STEPAR SYSINTER 3 100%
STERIA S.A. 4 5 65% IMELIOS 6 44% INTEST
40% DIAMIS
33.33% EUROCIS
UK Hertfordshire 100% Hertfordshire STERIA LIMITED 100% STERIA HOLDINGS LTD Hertfordshire 51% CABOODLE SOLUTIONS LTD
Germany Vienna 100% MUMMERT CONSULTING GmbH Hamburg Hamburg 100%STERIA MUMMERT 100% STERIA MUMMERT ISS CONSULTING AG GmbH Aachen 50% IMS/DRG BETRIEBSKONZEPT GmbH
Belux/Switzerland Belgium Luxembourg 100% 99.9% STERIA BENELUX STERIA PSF Switzerland 99% STERIA SCHWEIZ AG
Spain Madrid Madrid 100% 100% STERIA IBERICA SKILL SOFT
Scandinavia Denmark 100% STERIA AS Norway 100% STERIA AS Sweden Sweden 100% 100% STERIA AB IOCORE
Asia Malaysia 100% Singapore STERIA MALAYSIA 100% STERIA ASIA Hong Kong 100% STERIA HONG KONG
Poland Warsaw AND ACTIVITIES GROUP PRESENTATION 100% STERIA POLSKA
Excluding minority interests Excluding non-operational subsidiaries
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GROUP PRESENTATION 01 AND ACTIVITIES Markets - Positioning
1.3 Markets - Positioning 1
The European IT services market was worth €139 billion in 2006 Steria has adopted a position that is tailored to suit the structure of 2 (source: Gartner June 2006), excluding the sale of IT equipment, the European market and shaped to reap all of the benefits of market 3 software packages and maintenance. Three key trends which are growth. worth noting are: ■ The United Kingdom, Germany and France, which (together) are 4 ■ European IT spending was concentrated in three countries (United growing faster than the European average, are the source of over Kingdom, Germany and France) with a combined total of 63%, 80% of the Group’s revenue. For Steria, these countries constitute 5 according to Gartner; three extremely strong areas in terms of organic growth (around ■ Managed services activities (including Business Process Outsourcing) +10% in 2006 in all three countries) and profitability. 6 account for half of the total expenditure (Gartner 2006); ■ As for the European market, half of Steria’s revenue is generated ■ Europe’s biggest consumers of IT services are the finance sector via outsourcing activities (managed services and BPO). This enables (Banking and Insurance) and public authorities, which together the Group to draw on commercial synergies between its consulting account for 41% of the total expenditure (Gartner 2006). and systems integration businesses while continuing to benefit from the growth of the information systems outsourcing market. Following a long period of sustained growth from the early 90s to ■ Lastly, over 80% of the Group’s revenue is concentrated in business shortly after the year 2000, followed by three years of economic sectors where IT spending is growing at the fastest speed: the crisis with strong reductions in volumes and prices between 2002 public sector, healthcare, finance, utilities and transport. and 2004, the European IT services market began a new growth cycle in 2004. Gartner expects moderate growth in European IT Since the end of the 90s, the European IT services market has not only expenditure (consulting, systems integration, managed services and grown in size but also in maturity and character. The demand is no BPO) from 2006 to 2010 at around 6% per annum. longer the same. Customer expectations are now focused on three criteria: service excellence, what the service brings to operational and According to Gartner, a more in-depth analysis of the situation reveals commercial challenges and increased productivity. certain disparities in this forecast, whether in terms of geography, ■ Service excellence: this depends on the geographical and business business or sector of activity. coverage of the service provider, as well as its references, ■ The three countries (the United Kingdom, Germany and France) in competencies, the quality and security of projects already carried which two thirds of European IT expenditure is concentrated should out and its capacity for commitment to measurable results using boost the average growth of the market with an estimated average specific performance indicators. annual growth rate of around 7% between 2006 and 2010. ■ The service’s contribution to dealing with economic challenges ■ The managed services and BPO businesses are likely to progress depends on the service provider’s understanding of the customer’s faster than consulting and systems integration with an average business, particularly with a view to tailoring business processes to annual growth rate of around 8% between 2006 and 2010 deliver an offer that brings real added value in terms of improving (Gartner 2006). processes. The aim is to align the information system with the ■ The finance, public authorities, healthcare and utilities sectors, customer’s strategic objectives. which are responsible for half of Europe’s IT expenditure, should ■ Productivity increases depend on the efforts made by the IT services increase their spending at a faster rate than other sectors of activity. provider to industrialise its services: standardising development Gartner expects the rise in demand to amount to over 8% for all processes and tools, using global sourcing and looking for four sectors combined between 2006 and 2010. economies of scale.
The profile, organisation, culture and strategy of the Group are all tuned into fulfilling these criteria, while simultaneously making Steria a differentiated player with a difference, regarding both customer relations and human resources management.
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1.4 Steria Group Core Businesses – Investment and Innovation 1 2 1.4.1 Core Businesses 3 Information systems are perceived by private company directors the development of interfaces with existing customer applications, 4 and public authorities as one of the most important factors for and finally, the optimisation of the customer’s information system optimising performance, winning market share, managing regulatory in its new configuration. 5 compliance and limiting risk. IT infrastructure and applications are a major asset for helping companies and governments to anticipate the Operation Services 6 transformations they need to make to keep abreast of a fast-paced, changing environment. In addition to its business process transformation services, Steria is extremely competent at operating its customers’ processes by Steria’s aim is to provide businesses and public authorities with the delivering managed services. solutions they need to carry out these changes successfully. To achieve this, the Group has divided its business into services for helping its The GDU (Global Delivery Unit) platforms group Steria’s high customers transform their business processes and services for operating security production centres, the pooled third-party maintenance and business processes. applications acceptance activities and the user help desks to provide customers with the most effective price-quality ratio and a measurable Transformation Services return on their investment. These pooled service centres share tools and processes to deliver standardised service levels all over the To improve processes that are part of its customers’ day-to-day world. operations, Steria draws firstly on core business expertise that has been developed across Europe for a certain number of sectors of activity Operation Services Offers in which the Group specialises: these packaged, vertical offers are available for the public sector, finance, telecommunications, utilities Steria proposes the following dedicated services: total process and transport. Transforming customer business processes may also management (Business Process Outsourcing and Business Process require more technological competencies that the Group has organised Management), user help desks and project centres. into horizontal packages in which innovation is an important factor (Data Quality Management, Test to Market, CRM, Business Process Technical Support and Infrastructure Supervision Management and Security, etc.). ■ Consulting services help customers to make choices concerning Steria provides user support and system restart services in line with their information systems in terms of defining needs, systems contractual service levels. architecture or implementing optimum solutions for organising their major functions (finance, human resources, purchasing) and Hosting and Service Continuity Plans their business processes. The consultants and experts deployed on these missions are experienced professionals with extensive Whether at the customer’s site or from a Steria site, the Group’s knowledge of the specific features of the sectors in which they European IT centres are designed to comply with the most stringent work. They are involved in drawing up Steria’s «leading offers» security rules and to guarantee the availability of the customer’s and are part of operational units whose goal is to foster synergies infrastructure. between consulting and development activities. The London and Sophia-Antipolis centres are interconnected via a ■ Systems integration involves the design and development of a common platform known as Eurobridge. complete system by the prime contractor, incorporating specific developments and heterogeneous elements from different vendors. Steria draws on best practices from ITIL (Information Technology This service therefore includes the selection of the software
Infrastructure Library), the international reference in providing AND ACTIVITIES GROUP PRESENTATION packages, the configuration and integration of these software IT services for infrastructures. packages, the development of «modules» for specific programs,
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GROUP PRESENTATION 01 AND ACTIVITIES Steria Group Core Businesses – Investment and Innovation
Design, Development and Applications Proximity Tailored to Customer Needs Management The Group runs a number of end-to-end service centres: 1 The Group’s development teams work in compliance with the latest ■ for technical support (in Roanne, France, and Warrington, the quality standards: CMMi for project management and quality assurance United Kingdom); 2 of IT development. Our objective is to achieve level 5 appraisal for our ■ for infrastructure administration (in Louvain, Belgium, Copenhagen, application design, correction and update processes. Denmark, Nanterre and Sophia-Antipolis, France, Madrid, Spain, 3 Oslo, Norway, London, the United Kingdom and Stockholm, In 2005, Steria set up a third-generation application management 4 (AM3G) service centre in Nantes, France, with CMMi appraisal. Sweden); ■ for systems integration (Vélizy, France) and other centres in 5 Germany, Austria, Spain, Scandinavia and Switzerland. 6 BREAKDOWN OF REVENUE BY CORE BUSINESS
2004 2005 2006
€m % Rev €m % Rev €m % Rev Systems Integration (*) 506 51 687 58 725 57 Managed Services 477 49 488 42 537 43 TOTAL 983 100 1,175 100 1,262 100 (*) Including TPAM (third party applications maintenance) and consulting.
BREAKDOWN OF REVENUE BY GEOGRAPHIC AREA (FINANCIAL YEAR 2006)
(in thousands of euros) France United Kingdom Germany Rest of Europe Group Total Revenue 533,216 289,662 203,210 235,958 1,262,046 % of revenue 42% 23% 16% 19% 100%
Revenue for 2005 stood at 1,175,200 K€ based on the average exchange rates for 2006. Revenue for 2006 on a constant exchange rate basis therefore grew by 7.4% on 2005.
BREAKDOWN OF REVENUE BY SECTOR OF ACTIVITY
2004 2005 2006
€m % Rev €m % Rev €m % Rev Banking & Insurance 187 19 307 26 309 24% Telecommunications 108 11 129 11 133 11% Public Sector 374 38 432 37 483 38% Utilities, Transport, Manufacturing 314 32 307 26 337 27% TOTAL 983 100 1,175 100 1,262 100%
Customers & Partners
Steria’s twenty largest customers represent around 40% of revenues providers, sometimes within dedicated structures. Steria also but no individual customer represents more than 5% of Group maintains relationships with a network of specialised companies that revenue. participate on a subcontracting basis in projects managed by Steria. Subcontracting is used for both systems integration and managed Steria pursues an active partnership policy both with leading software services projects. editors and with customers, industrial players or even other IT services
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1.4.2 Investment and Innovation
1 Investment ■ standardising the components of the Group’s general offers, which are enriched by the added value accumulated through the different 2 The main investments made by Group companies, excluding projects led by our teams of experts; acquisitions, concerned IT equipment, licences and office furniture and ■ a programme concerning all Group entities designed to manage 3 equipment (see Note 4.3 to the consolidated financial statements). this accumulation of knowledge and make it available to all Group 4 The Group’s policy is to rent all offices used by Steria companies. The experts via knowledge centres. building that houses the corporate head office in Vélizy-Villacoublay is Steria also acknowledges the benefits that innovation may bring to 5 governed by a lease agreement with UNICOMI containing a purchase its customers. As a result, all Steria networks, both technical and clause. This contract was signed in June 1990 for a 20-year period, commercial, strive for innovation, which is also accomplished via 6 with an initial investment of €20 million, covering a total surface area the tools which have been put in place to ensure that knowledge is of around 8,000m2. capitalised up on. The net value of this building at 31 December 2006 was Innovation is achieved in four ways: €15.354 million. ■ active monitoring of new customer needs; ■ the systematic identification of experts with knowledge of Innovation innovative technologies; Steria and its subsidiaries seek constantly to capitalise on the skills ■ the integration of new innovative functionalities in our solutions; acquired and to drive innovation. ■ a prospective approach to identify our future technological partners in advance. This is accomplished by: ■ maintaining close relationships with customers in a bid to better understand their main strategic needs, both current and future;
1.5 Corporate Social Responsibility (CSR)
The Corporate Social Responsibility network, which was established Steria supports cultural, ethnic and social diversity by means of its in 2006, groups the main parties concerned by social challenges and recruitment and career management policy, due to its conviction looks to manage them within Groupe Steria. The company’s main that multiculturalism can be a source of wealth and creativity for the functional departments (Strategy, Human Resources, Legal, Internal company and its employees. Communication and External Communication) work together with the Steria – Institut de France Foundation to manage the network. Steria is also committed to promoting equal rights and opportunities for all. The Group is a member of the UN Global Compact, which The implementation of the new system of participative governance, was created to bring companies together to advance nine universal whereby Steria’s sole general partner is Soderi, and therefore the principles in the areas of human rights, labour standards, the employee shareholders, give them a say in the company’s strategy environment and anti-corruption. and major decisions. This took place in early 2007. Steria’s model of participative governance has two aims: firstly, entrepreneurship, In France, Steria is signatory to the Diversity Charter set up by the whereby the employees are involved in strategic decision-making Institut Montaigne and is committed to applying the «framework for (1) and are therefore more committed to the company; and secondly, a acting and reporting» proposed by HALDE to promote equality. Also AND ACTIVITIES GROUP PRESENTATION more patrimonial objective, whereby the employees benefit from their in France, Steria SA participates in a programme created by the French company’s growth by means of its share performance. Justice Ministry: «Parrainez un jeune qui a raté une marche dans la vie» (sponsor a young person who has made mistakes in his/her life).
(1) HALDE (Haute Autorité de Lutte contre les Discriminations et pour l’Égalité – French senior authority to combat discrimination and promote equality).
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GROUP PRESENTATION 01 AND ACTIVITIES The Corporate Mission Statement and its Governance
Three young people are currently being coached by Steria managers The Steria – Institut de France Foundation Grant was set up to enable and one has been an intern at the company. business and engineering students to get involved in community projects that meet the Foundation’s objectives, all as part of their 1 Since it was founded by Jean Carteron in 1969, Groupe Steria has been studies. committed to humanist values given concrete expression by a strong employee shareholding base, for example. The current management The virtual keyboard project designed for motor-disabled people by 2 team is convinced that performance goes hand in hand with respect for students at Intech Info (Esiea Group) in partnership with the Garches 3 the employees and that the two concepts are mutually enriching. hospital «new technologies» platform has been up and running since May 2006. The virtual keyboard provides assistance for persons who 4 In the United Kingdom, Steria has drawn up its own equality charter, are unable to use a regular keyboard by allowing them to complete which applies to all employees, and has introduced the notion of writing tasks. It is available in Open Source format via the internet 5 diversity awareness in some of its training sessions. New employees and can be customised and configured for the user’s computer to are also informed about the company’s commitments in this area, suit his/her disability. The keyboard has been downloaded over 6 which are also included in tenders for customer contracts. 5,000 times from the cvk.fr website, thus demonstrating its appeal to the medical community and people who work or live with motor- In Norway, the company is looking to improve gender equality among disabled people. its staff and is working with universities to encourage women to take up IT studies. Steria also takes part in humanitarian and environmental projects in association with its customers or local social or charitable Furthermore, and with its employees’ backing, Steria aims to promote organisations. actions set up to benefit local communities by using information technology to help people. The Steria – Institut de France Foundation In Germany, Steria-Mummert Consulting has forged a partnership with provides financial and logistics support to community projects thanks an institute that cares for sick children to enable them to communicate to volunteer work from Steria employees. with their families using IT equipment financed by the Group.
The Steria Foundation was created in 2001 due to Steria’s desire to share In Spain, Steria designed and developed the web portal of the its information technology skills and to use them to help those in need. It Fundación Biodiversidad (Biodiversity Foundation) and teamed up backs educational projects and the development of innovative solutions with its customer to improve employee awareness about greenhouse to improve the lives of persons in need and encourages initiatives set gas emissions, via a dedicated communications campaign. up by social entrepreneurs. In 2006, the Foundation supported eight associations and put around thirty volunteers to work.
1.6 The Corporate Mission Statement and its Governance
Right from the start, Steria’s culture has been based on a corporate The corporate mission statement and participative governance system mission statement with a major emphasis on human values and on have changed over time and subsequent to major events at the Group. a model of participative governance that is unique in the industry, They nevertheless continue to be a factor that makes Steria stand backed by a strong employee shareholding base. out from the competition and have always influenced our human resources policy.
1.6.1 Five Core Values: the Basis for Steria’s Success
In 2001 Steria adopted five core values: simplicity, creativity, ■ simplicity: part of our ambition is to be a source of progress and independence, respect and openness. The Group’s relationships with success for our customers by making their complex projects as its various stakeholders – employees, customers and shareholders simple as possible. This simplicity is also expressed on a daily – are based on these values: basis via the inter-personal relationships conducted within the company;
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■ creativity: our innovative solutions are inspired by the ■ respect: the ambition of our Human Resources policy is to be a source entrepreneurship we encourage among our staff and our proven of opportunity, in order to stimulate individual accomplishments, expertise in IT; the exchange of ideas and cooperation; 1 ■ independence: Steria’s independence lies in the freedom to make ■ openness: we are open to the world, receptive to new talent and the best strategic decisions in a sustainable context. This enables us new ideas and eager to bring people and IT closer together. 2 to serve the interests of our employees, customers and shareholders more efficiently; 3 4 1.6.2 Participative Governance 5 6 When the company was founded, an original system of governance opportunity to benefit from our work as a group. It is therefore has involving employee shareholding was also established. Today around two purposes: 16% of the capital is owned by Group employees (excluding the ■ entrepreneurship (participation in corporate mission and strategic founder but including retired employees). decisions);
Employee shareholding has been a fixture at Steria since the Group was ■ a patrimonial objective (benefit from the company’s growth via founded in 1969. It draws on our core values of Respect, Openness and the share performance). Independence and lies at the very heart of our corporate culture. Steria made this ambition a reality by establishing an innovative Steria’s employees are its principal shareholder, thereby illustrating system whereby Steria employee shareholders also own shares in the atmosphere of trust, loyalty and transparency established between Soderi, company which has been structured to be a stakeholder in the company and its employees from the beginning. participative governance. Steria employee shareholders automatically obtain the right to own Soderi shares and therefore to become «active» In addition to the values it represents, employee shareholding gives employee shareholders. Steria employees a say in the company’s strategic decisions and an
1.6.3 Soderi: the linchpin of participative governance
Steria’s decision to attribute the status of a partnership limited Soderi SAS is managed by a Board of Directors with 15 members (at by shares (société en commandite par actions – SCA) to its parent present) who are elected by the Soderi General Meeting. holding company has resulted in a capital structure that makes Soderi a General Partner. Half of the Director mandates are renewed every 2 years.
As General Partner, Soderi is consulted on all company strategic The Board of Directors elects one of its members as Chairman to orientations and decisions (changes to the Articles of Association, represent the Board. major acquisitions, substantial investments, etc.) alongside the This governance system is what makes Steria unique. It translates the Supervisory Board or the Groupe Steria SCA General Meeting of management’s desire to encourage the employees, who are the assets Shareholders, depending on the type of decision. of the company, to develop their entrepreneurial spirit and to adopt The General Manager must therefore report to Soderi, as General and get involved in the corporate mission. This ensures a high level of Partner, and to the Supervisory Board. commitment and motivation from the employees, which, in turn, has a positive impact on the performance of the company. Soderi is a simplified joint-stock company with variable capital owned by the Group’s employee shareholders. GROUP PRESENTATION AND ACTIVITIES GROUP PRESENTATION
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GROUP PRESENTATION 01 AND ACTIVITIES Human Resources: Commitment to Respect for our Employees
1.7 Human Resources: Commitment to Respect for our Employees 1
WORKFORCE (FULL-TIME EQUIVALENT) AT 31 DECEMBER 2006 2 Group France Germany United Kingdom Rest of Europe Head Office 3 10,484 5,813 1,366 1,274 1,967 64 4 Our human resources policy is based on the Group’s core values and ■ to be a company where the working environment is based on trust is designed to make Steria an exemplary employer (our ambition is to and the quality of inter-personal relations makes us stand out from 5 become «the best place to work in Europe») by pursuing the following the competition in order to develop strong employee loyalty. goals: 6 This policy can be broken down into three integrated «solutions» ■ to be a high-performance and innovative company in order to at the service of internal customers (management, employees) and motivate all contributors; in line with market and customer requirements. Large-scale training ■ to be an exemplary employer in order to attract the most talented programmes that are well-known within the company form the individuals; backbone of these «human resources solutions».
1.7.1 Steria «Resources Management»
1.7.1.1 Recruitment In France, operations involving personnel transfer are carried out in strict accordance with the Steria Employee Outsourcing Charter. Steria The success and organic growth of Steria are dependent on its goes above and beyond its legal obligations to commit to 24 specific capacity to attract and promote the most talented individuals. Once points covering the outsourcing operation from start to finish including we have evaluated their competencies and expertise, we make every personalised skill reviews, regular updates on the progress of the effort to select those men and women who incorporate our values: project during the transition phase and integration reviews within six respect, simplicity, creativity and openness to others, for example. Our months of the personnel transfer operation. Finally, each transferred recruitment policy focuses on hiring young graduates via partnerships employee is offered the opportunity to participate in the Group’s with the top schools and universities in the countries served by the employee shareholding programme, as well as in its development Group, experts and consultants with extensive knowledge of our and professional training schemes. In the United Kingdom, Steria has customers’ businesses and information system architects. developed a good conduct charter, known as «Managing Change in the 21st century», which incorporates similar commitments. We also highlight the option for all Steria employees to become Group shareholders and therefore play a role in its governance. In 2006, 3,059 new employees joined the Group, including over 850 staff at beginner level. 1.7.1.2 Integration We ensure that every employee works in an environment that enables Induction days for new recruits are held three months after their him or her to carry out the task assigned in good conditions. arrival at Steria in order to consolidate their knowledge of the Group, The main human resources focus in 2006 was on developing action remind them of its strategy and allow them to meet the management. plans to boost employee commitment to the Group. A survey will be Moreover, Steria in Scandinavia offers young recruits the opportunity to carried out in 2007 to assess the progress achieved on a continuous attend a seminar on personal development during their first three years basis. at the Group. This is part of the subsidiary’s policy on earning the loyalty of talented individuals.
Steria focuses particularly on informing, integrating, developing and managing IT teams taken over in the scope of outsourcing projects.
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1.7.1.3 Objectives for Progress 1.7.1.4 Mobility
Every employee, regardless of his or her assignment, must have a The Group encourages mobility, especially on an international 1 thorough understanding of his or her mission, provided by means of level. To this end, each country displays available job listings on the an information sheet given to the employee by his or her line manager. Steria Intranet. This tool may be accessed by all Group employees. 2 Furthermore, key annual objectives are determined for every employee Furthermore, the Group’s international mobility policy was revised during a personal performance and development interview with his in 2005 in order to ensure optimum conditions for expatriated 3 or her line manager at least once a year. Consequently, every person employees (supplier references, cross-cultural awareness training, knows unequivocally what the company expects of them. gross remuneration calculated from a guaranteed net amount, etc.). 4 5
1.7.2 Steria «Talent» 6
Detecting and developing talent from inside the company is more This policy, which is designed to encourage collective performance important today due to the «talent war» that is making applicants, and individual value, is based on the following elements: engineers, etc., an increasingly scarce commodity. Individuality Performance Management Interviews are an opportunity for employees to obtain line management feedback on their recent Pay increases are based on individual or collective (team) performance, performance. They are also a channel for expressing aspirations in taking into account the position of the employee within his or her terms of career advancement and for defining a personalised training salary band. Collective negotiations are carried out with employee and development plan. representation bodies in those countries whose law provides for these circumstances. Career paths by job family (management, sales, pre-sales, project management, technical, consulting, support functions) are defined, thus creating a common directory of functions within the Group. Competitiveness
Every year, Steria’s managers get together to assess the skills and Remuneration must be fair and in line with the market. Steria takes potential of employees at the Company Resource Evaluation and part every year in surveys designed to measure its position in relation Development Committee (CEDRE) meetings. to its closest competitors.
These crucial meetings enable the Group to plan for the future, Coherence identify its strengths and weaknesses, ensure that every person’s role is adapted to his or her competencies, obtain an overall vision of the Our remuneration policy reflects the contribution made to fulfilling human resources potential of the company, evaluate the employability the «corporate mission». of each member of the organisation, identify possible candidates for mobility, decide on new assignments at management level and Flexibility determine the direction the recruitment and training plan will take in the coming year. Part of the remuneration received by certain personnel categories (managers, sales staff, consultants, project directors, etc.) is based Recognition on achieving individual and collective annual targets.
The Group was developed on strong values –simplicity, creativity, Associating Employees with Results independence, respect and openness– that are shared by all and illustrated on a daily basis by the high quality relationships and team Profit-sharing agreements differ from country to country. spirit so appreciated by Steria employees and customers alike. GROUP PRESENTATION AND ACTIVITIES GROUP PRESENTATION
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GROUP PRESENTATION 01 AND ACTIVITIES Human Resources: Commitment to Respect for our Employees
Associating Employees with Creating Value for the Communication and Transparency Company The remuneration policy must be made available to the employees This concept refers to the option given to Steria employees to become and approved by the managers who will apply it. 1 shareholders in the company by subscribing to the Group Savings Plan and to capital increases reserved for employees. Employee compensation does not depend solely on direct remuneration 2 but also on certain benefits, social or otherwise (pension, medical insurance, paid holiday time, etc.). All French employees received a 3 Statement of Benefits in 2006 in order to provide them with the full details of their compensation packages. 4 5 1.7.3 Steria «Development Institute» 6
The Steria Development Institute, the Group’s management school, and Performance» and «Leadership and People Management». The aims to develop managers’ skills and their ability to work on major remaining module is entitled «Business Excellence». international projects. It offers three main programmes: «Leadership in Motion», «Move Ahead» and «Driving for Excellence». The «Steria Ambassadors» programme was developed in 2005, has been attended by over 1,600 employees and is open to everyone «Leadership in Motion» targets the Group’s high potential employees. (operational and functional staff). It aims to encourage participants to Its goal is to encourage the development of talented European appropriate Group strategy and the factors that make Steria different leaders: the future top managers in the Group. The course is divided from its competitors and therefore to become «ambassadors» for the into modules on personal leadership, strategy and innovation, Steria Group on a daily basis. markets and customers and change management. Moreover, each of the participants benefits from a 360-degree assessment of his or her Local training and development courses are available at all Steria personal leadership skills at the beginning and end of the course so entities and have been developed by job family. Two important as to measure their individual progress in this area. This group of key initiatives have been set up in France: the «Steria Project Institute» contributors from all over the world worked for 18 months on projects (SPI), for all project managers and directors, and «Steria Sales French related to Group strategy, submitted innovative ideas to the General University» (SURF), for sales staff. Management Board and was the driving force behind new services made available to our customers. Training
«Move Ahead» is aimed at the top 70 people responsible for the Steria’s training programmes are composed of two-thirds technical Group’s business development. The goal of these sessions is to give training relating to customer needs and technology developments these key contributors a clear and shared vision of strategy and and one-third management development training (leadership and managerial practices and to develop synergies and best practices communication, sales, performance management, team management, throughout the Group. project management, customer business knowledge, etc.).
«Driving for Excellence» concerns the Group’s 120 profit centre Steria signed a contract with an e-learning company in 2006 to provide managers. It is an ambitious programme that aims to create a community training for all Group entities. France has been the driving force in of managers who will gradually build up their competencies and this area and set up the e-pass that provides access to a catalogue of enhance their leadership skills while setting themselves challenges and technical and language training courses. federating their employees. All this is achieved in line with the Group’s strategy and core values. The programme is scheduled to take place The following table lists the total number of days of training (excluding in 2006-2007 in three two-day modules. The first two modules, which contract training) provided to employees and the related cost (excluding were completed in 2006, concerned the following themes: «Strategy internal costs):
Training 2004 2005 2006 Number of Days 14,053 15,642 20,457 Cost €6,850K €7,625K €7,311K
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KEY FIGURES
2004 2005 2006 Evaluation of the turnover rate (*) 7.3% 11% 13.8% 1 (*) Staff turnover is calculated as follows: the sum of resignations/retirements of employees on permanent or fixed term contracts over the year (2006) divided by the total workforce on 31 December of the previous year (2005). 2
2004 2005 2006 3 Evaluation of the average employee age 36.8 37 36.8 4 5 6 1.8 Risks and Risk Management
Steria applies an active risk management policy. The main risks for the Group are as follows:
1.8.1 Market Risks
Liquidity
Net financial debt for the Group on 31 December 2006 was as follows:
NET FINANCIAL DEBT ON 31 DECEMBER 2006
(in thousands of euros) Less than one year One to five years More than five years Total Financial liabilities 8,535 48,948 - 57,483 Financial assets (58,308) - - (58,308) Net position (49,773) 48,948 - (825)
TOTAL FINANCIAL DEBT (GROSS AMOUNTS) BY CATEGORY AND CURRENCY ON 31 DECEMBER 2006, IN THOUSANDS OF EUROS
Currency of origin EUR GBP Other Total Current bank loans 2,225 18 287 2,530 Leasing 6,486 0 1,083 7,569 Medium-term credit 41,000 0 0 41,000 Other (49) 6,429 4 6,384 Gross debt 49,662 6,447 1,374 57,483
Financial assets include cash and short-term investments: their net The credit facility was renegotiated in 2006 and increased from carrying amount equalled market value at 31 December 2006. €200 million to €250 million (the factoring contract - which had a maximum authorised limit of €60 million, €31 million of which had The Group’s gross debt capacity is as follows: been used by 31 December 2005 - has however been terminated). It has a 5-year term and two extensions options for extension until 2013. Total bank debt capacity for the Group on 31 December 2006 It has a variable rate and is indexed on Euribor.
amounted to €287 million. This breaks down into €37 million in current AND ACTIVITIES GROUP PRESENTATION bank lines (€3 million of which had been used at 31 December 2006) This credit line is accompanied by a commitment to respect financial and €250 million in medium-term credit (€41 million used at ratios calculated on the basis of the published consolidated financial 31 December 2006). statements. Respect of ratios (net financial debt/EBITDA and
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GROUP PRESENTATION 01 AND ACTIVITIES Risks and Risk Management
EBITDA/cost of net financial debt) is evaluated twice a year on a rolling The standard swap has a fixed rate of 2.80%. One of the tunnel swaps 12-month basis for periods ending 31 December and 30 June. is a variable Euribor 12 month with a floor rate of 2.81% and a capped rate of 3.00%. The other is a floating Euribor 3 month with a floor rate 1 Should these ratios not be respected, debt repayment may be required. of 2.49% and a capped rate of 3.29%. The ratios to be respected are as follows: 2 ■ net financial debt/EBITDA < 2.5; With respect to existing interest rate hedges at 31 December 2006, the total gross financial debt subject to interest rate risk amounted ■ EBITDA/net financial debt cost > 5. 3 to €22 million. On a consolidated basis, net financial debt refers to all accrued If interest rates were higher by 100 points on average compared 4 borrowings and long-term debt, including factoring, less available to 2006’s rates, the additional cost for the Group would have been cash. 5 €225,000 (excluding the impact of interest rate hedges) in addition EBITDA is the consolidated operating margin before current to the actual interest expense of €4,250,000. 6 depreciation and amortisation charges and provisions. Exchange Rate Risk Management At 31 December 2006, the ratios were respected: ■ net financial debt/EBITDA = -0.01; Fluctuations in exchange rates have a limited impact on the Group’s ■ EBITDA/net financial debt cost = 25.5. performance given that over 66% of its business is conducted in euros. Furthermore, the Group’s subsidiaries usually issue their invoices in No guarantees or collateral has been provided for this credit line. their own local currency and thus do not need to deal with exchange rate risk. Their assets, liabilities and off-balance sheet commitments Interest Rate Risk Management are generally denominated in their functional currency. However, the Group has set up an exchange rate hedging policy outside the Eurozone The Group uses derivative products. based on forward contracts for buying and selling currencies.
In order to limit its exposure to interest rate risk, the Group took out Regarding export contracts, as a rule the currency is euros, but if three swap contracts (interest rate swaps): one standard swap and the invoicing currency is different from the functional currency, the two «zero-cost» collars. The notional amount of these contracts is Group’s policy is to set up a specific rate hedge exchange for each €35 million with a maturity date in November 2007. contract. These contracts do not constitute a material part of the Group’s business.
Shares
Marketable securities at 31 December 2006 were as follows:
Liquidity contract Total (in thousands of euros) SICAV (unit trusts) Short-term investments cash advance marketable securities Net asset value 39 20,571 1,029 21,639 Off-balance sheet - - - Net global position 39 20,571 1,029 21,639
If SICAV values fell by 10%, the net global position would fall to The Group’s Finance Department is in charge of controlling financial €21,635,000. risk and comprises: ■ a Group Finance Department; Treasury shares, regardless of their usage, are accounted for under IFRS rules and deducted from the shareholders’ equity for a set ■ a Finance Department in countries with major sites. amount of €1,582,000. Their market value on 31 December 2006 The entities in each country are responsible for drawing up their was €2,390,000. financial reports and for management control. The market value is calculated based on the average share price over At central level, the Group Finance Department is in charge of the the last month before the close of accounts. following: financing and cash management, Group financial risk
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management, mergers and acquisitions, taxation, management Counterparty risk is managed locally and at Group level, within the control and consolidation, accounting policies and procedures and framework of a Group-wide policy. functional project ownership of the Group’s information system. The central (head office) functions are in regular contact with the 1 Within the Group Finance Department, the Corporate Finance local teams and review risk and the Group’s overall financial position Department is in charge of managing liquidity, interest rate and on a monthly basis. 2 exchange rate risks. All decisions concerning external financing are 3 managed at head office level, including management of credit lines. 4 1.8.2 Risk Related to Redemption Commitments to Minority Shareholders 5 6 Given that the Group has made no redemption commitments to its minority shareholders, it currently bears no such risk.
1.8.3 Legal Risks
The Group’s Legal Department is in charge of controlling legal risk Major risks are reviewed on a monthly basis by the Group Risk and is organised as follows: Committee. ■ a Group Legal Department; ■ a Legal Department in major countries. In the absence of a local Legal Watch department, local managers contact the Group Legal Department A legal watch has been organised by the various Legal Departments to for assistance. keep abreast of legal events and changes to regulations to be applied The Group Legal Department is in charge of the following: within the Group, such as updating standard agreements, contractual principles and directives. Legal Disputes Insurance Disputes are consolidated at Group level (less than ten outstanding litigation cases at present) and covered by a civil liability insurance This point is covered in the section 1.8.7 below. policy or by a financial provision. Legal disputes linked to human resources are managed by the Human Resources Department. Trademarks & Patents
There are no other outstanding or impending government, legal or Trademark protection is centralised at head office and managed by the arbitration proceedings, including proceedings of which the company Group Legal Department. The Group currently owns 227 trademarks, is aware, that is likely to have or have had during the last 12 months a which are monitored and managed by the Group Legal Department. significant impact on the financial position or earnings of the company Given the Group’s business and copyright regulations, no patents and/or the Group. have been filed. An internal directive stipulates that all disputes be handled by the Group Legal Department, which should immediately be informed Company Law and Follow-up of any summons or legal procedure. This enables the insurance companies to be brought in immediately and a legal representative, The Group Legal Department acts as the corporate secretary (General where necessary. Meetings, Board Meetings, posting financial statements, registrations, mandates, etc.) for the Group’s parent companies. The local Legal The assessment of risks is carried out based on an analysis by the and/or Finance Departments act as corporate secretaries for the other
operating department in question, the risk department, the finance European subsidiaries and the Group Legal Department consolidates AND ACTIVITIES GROUP PRESENTATION department and the legal department. Provisions are recorded the information thus transmitted. It also tracks and ensures compliance following this joint analysis of the genuine risk undertaken. with current financial market regulations, directors’ and officers’ liability, etc.
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GROUP PRESENTATION 01 AND ACTIVITIES Risks and Risk Management
Investments (companies of which Steria owns less than 50%) are Group managers receive legal and contractual awareness training. managed by the partners and majority shareholders. Steria has set The Group’s directive on the delegation of authority and responsibility up procedures to ensure regular contact with these investments, 1 especially in terms of financial and legal feedback, even though it governs authority in terms of delegation, signing contracts and does not have a controlling interest. responsibility as well as the processes that must be respected with a view to the various commitments involved. This directive has been 2 adapted on a country-by-country basis in order to take local legal 3 Contracts constraints into account. Contracts are managed and signed by the various operational entities 4 in question, depending on the level of authority delegated to them. This involves standard contracts drawn up by the Legal Department 5 or assistance from the Legal Department and other functional departments pursuant to the delegation rules. 6
1.8.4 Industrial Risks
These risks are covered in section 1.8.6.
1.8.5 Environmental Risks
The Group’s business does not have any particular impact on the Nevertheless, end-of-life IT equipment purchased for the Group’s environment. internal usage is processed by service providers specialised in IT recycling.
1.8.6 Other Specific Risks: Risks Related to Steria’s Business in Decreasing Order of Priority
Human Resources Risks Steria has set up as system of human resources managers who work closely with the operational departments to support them in terms of Steria’s success largely depends on the competence, experience, employee recruitment, follow-up, training, career development and efficiency and commitment of its employees. mobility.
In this respect, the risks involved mainly relate to: Reporting has also been centralised to ensure consistency between ■ recruitment and selection processes; the various actions undertaken and the Group’s human resources ■ employee commitment and working conditions; policy. ■ employee competence and their ability to meet customer needs, Furthermore, Steria has established a performance management policy employability; based on the definition of clear objectives, the measurement of the ■ retaining key personnel and managers; results obtained and the assessment of skills and behaviour in relation ■ the replacement plan for these employees; to the values of the corporate mission statement. ■ staff turnover. Steria also pays particular attention to career development and draws on a range of tools to provide employees with visibility on the The Human Resources Department therefore plays a vital role in risk development of their responsibilities, fostering internal promotion management. and mobility.
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Career paths by job family (management, sales, pre-sales, project ■ the adequacy of its competencies; management, technical, risk and operations management, consulting, ■ the organisation structure, etc. support functions) are defined, thus creating a common directory of 1 functions within the Group. The Group updates its rolling three-year strategic plan every year via a set process: the Business Strategic Review. Every year, Steria’s managers get together to assess the skills 2 This process has four stages: and potential of employees at Company Resource Evaluation and 3 Development Committee (CEDRE) meetings using this common ■ the Sector Units draw up strategic plans every year based on the directory of functions, in a bid to promote mobility. directions given by the Executive Committee on the following 4 points: In the same way, a annual survey of all Group employees has been 5 carried out every year since 2004. − market position (according to a vertical process by sector of activity), 6 − products and services, Project Risk (Project Management and Control) − customers, One of the main types of risk that could affect the Group’s results is cost − growth, or lead-time overrun on contracts, particularly fixed-price contracts. − profitability; Steria has set up a dedicated system to manage project-related risk ■ the second stage consists in the elaboration of a forward-looking combining: three-year strategic plan at Area Unit level. It is based in particular ■ operational departments in close proximity to customers and on a synthesis of the findings from the first stage carried out by projects (Sector Units or Profit Centres) to identify risks rapidly Sector Units; and enable the company to act quickly to eliminate them; ■ the Group Strategy Department and the Business Development ■ functional departments to assist the operational departments: Department then consolidate the various Area strategy plans; − the Human Resources and Risk Departments check the suitability ■ this consolidation, which is amended by the Executive Committee, of the project directors selected by line management. These forms the basis of the three-year Group Strategic Plan. Departments are also in charge of training and monitoring project directors, Customer Risks − the Risk Department controls risks and takes the necessary measures to minimise them for customers and for the Group. Steria’s customer base mainly comprises key accounts, meaning that It ensures that a provision is taken out to cover all risks borne the risk of insolvency or business exit is low. Customer counterparty by the company in relation to fixed-price operations. It defines, risk is nonetheless monitored by the Group Finance Department. A improves and promotes Steria’s long-standing risk management credit management policy has been issued to indicate the rules to be process, followed when setting up and monitoring credit operations. It also covers debt collection. − the Quality Department defines key internal processes to ensure supplier quality. It also oversees the ISO 9001:2000 certification Apart from key accounts, Steria evaluates its customers’ financial in all Group countries, solvency prior to making any commitments. Furthermore, a financial − the Internal Audit Department assesses the efficiency of internal schedule is drawn up to ensure payment, particularly in terms of cash control for the procedures that have been defined. management.
Around 40% of revenue is currently generated by Steria’s top twenty Strategy Risks customers. No one customer represents more than 5% of Group revenue. The Group Strategy Department works continuously to analyse the balance between market needs and the content of the Group’s Nevertheless, decisions and organisational changes by customers offers. can sometimes have a serious impact on projects or agreements in progress. Strategy is assessed by the Group Management Board and determined GROUP PRESENTATION AND ACTIVITIES GROUP PRESENTATION by the Executive Committee. It covers the following, in particular: The effects of these actions are monitored by Steria sales personnel ■ the company’s position; and provided for in the agreements entered into with the customer to ■ the adequacy of its size; prevent any changes from having a negative impact on the Group. ■ the relevance of its offers;
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GROUP PRESENTATION 01 AND ACTIVITIES Risks and Risk Management
In the same way, major Group customers are handled by dedicated These risks are covered by site directives and rules to ensure that they account managers whose role is to foster a relationship with the are controlled using resources suited to the critical nature of the data customer across the board and therefore have access to the different to be protected. 1 hierarchical and organisational levels of the company. The Group’s approach to security and business continuity is particularly strict in the following areas: 2 Export Risks ■ physical security (particularly secure access to dedicated high 3 An export directive and an analysis and decision process have been security sites); set up for these projects. ■ security through conduct (this aspect is governed at Group level 4 by rules, procedures and organisation structures managed by This directive requires an analysis of the political, customer, financial, the Human Resources Department, in addition to disciplinary 5 human and legal risks involved in all export operations. measures). The rules and procedures related to the evaluation 6 A political and customer risk hedging policy can be implemented if and management of these risks are addressed by ISO 27001. necessary, depending on the agreement and the context. Supplier & Partner Risks
IT Risks and Security Risks Integration and managed services contracts are becoming increasingly A breakdown in the company information systems could affect complex and are obliging providers to work in association with many the management of the company and the services provided to partners (editors, manufacturers, consultants, IT services companies, customers. etc.).
Our activities carry some inherent IT risks: Framework partnership contracts with carefully targeted partners have thus been drawn up and are tracked at Group or local level. ■ risk related to the Steria internal information system; ■ risk related to service from telecommunications networks; On a project-by-project basis, supply, subcontracting and/or co- ■ risk related to the IT production sites (mainly in France and the contracting agreements are negotiated and signed with partners in United Kingdom). line with the overall project based on our standard agreements or after a specific study. Risks concerning IT production may be broken down as follows: The Group remains nevertheless subject to a residual risk of default ■ risks related to the logistics environment of the site; by its providers. ■ risks related to data integrity; ■ risks related to security, confidentiality and intrusion; ■ hardware risks (provider breakdown, hardware breakdown, maintenance service problems).
1.8.7 Insurance
All Group companies are covered by a Master civil and professional Directors and senior managers of the different entities and subsidiaries liability insurance policy with DIC/DIL application (difference in are covered by directors’ and officers’ liability (D&O) insurance. conditions/difference in limits) regarding local policies, with a contractual general indemnity limit of €55,000,000 per claim and The suitability of policies with respect to revenue, business and per insurance year. insured assets and with respect to Group risk is reviewed on an annual basis. Similarly, all Group companies are covered by a Master property damages and business interruption (PDBI) policy on a DIC/DIL basis An insurance broker advises Steria on all of these issues. (difference in conditions/difference in limits) regarding local policies, with a contract general indemnity limit (all damages and business interruption combined) of €106,714,310 per claim and per year.
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SSTE008_DRF06GB_Livre1.indbTE008_DRF06GB_Livre1.indb 2424 66/06/07/06/07 14:34:1414:34:14 02 CONTENTS 02 FINANCIAL YEAR 2006, RECENT DEVELOPMENTS AND OUTLOOK
2.1 Overall Business of the Group p. 26 2.1.1 Position of the Group and its Business During Financial Year 2006 Progress Achieved and Difficulties Encountered p. 26 2.1.2 Results of the Financial Year p. 27 2.1.3 Predicted Development and Outlook p. 27 2.1.4 Significant Post-Closing Events p. 28 2.1.5 Research and Development p. 28
2.2 Groupe Steria SCA Business Activity p. 28
2.3 Subsidiaries and Investments p. 28
FINANCIAL YEAR 2006, RECENT DEVELOPMENTS AND OUTLOOK
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FINANCIAL YEAR 2006, 02 RECENT DEVELOPMENTS AND OUTLOOK Overall Business of the Group
2.1 Overall Business of the Group 1 2 2.1.1 Position of the Group and its Business During Financial Year 2006 Progress Achieved and Difficulties Encountered 3 4 2006 for Steria was characterised by sustained organic revenue growth The Group has reinforced its service model in the other European (+7.4% to €1,262 million) and a one-and-a-half percentage point rise countries it serves, resulting in a significant reduction (by more than 5 in operating margin (to 7.1%). The latter improvement follows on from €10 million) in hardware sales in 2006 compared to 2005, especially last year’s 1.5 point increase. in Scandinavia. Positive growth was posted in both Spain and Belgium/ 6 Switzerland. The Group experienced sustained business activity throughout the year. Its revenue growth, which amounted to 3.9% (organic) at At the end of financial year 2006, Steria’s revenue can be broken down the end of the first half 2006, accelerated during the second half to as follows: 42% from France, 23% from the United Kingdom, 16% reach 10.8% for that period. Order entries rose 11.5% year-on-year from Germany, 9% from Scandinavia, 5% from Belgium/Switzerland in 2006. The level of recruitment remained steady throughout the year and 4% from Spain. and brought the total Group workforce to 10,484 people (full-time equivalent) at the end of 2006, as against 9,289 in 2005. Among the major contracts signed in 2006 were CNES in France for €80 million over 5 years and, in the United Kingdom, DCLG The average on-the-bench rate in 2006 was 2.7% (2.9% in 2005). (€44 million over 5 years), Wiltshire County Council (€17 million over This refers to the number of persons who are completely available 5 years), Bristol International Airport (€9 million over 5 years) and in relation to the total number of employees over the year. In this NICS (€25 million over 8 years). instance, «completely available» employees are those with no specific assignment in the short term (i.e. the following week) excluding In 2006 the Group benefited from its position as an end-to-end services structural staff (management, secretarial, sales, etc.) and those who provider straddling two complementary core businesses: Consulting and are absent (holiday, illness, training, etc.). This indicator is monitored Systems Integration and Managed Services. Consulting and Systems weekly on a declarative basis. Integration, two businesses which have deliberately been woven together at Steria, generated a combined revenue of €725.5 million The latest instant rate was 3.0% on 2 April 2007. «Instant rate» refers (57% of the Group’s total revenue). This result equates to a 5.6% to the declared rate for the date specified. increase on 2005 and bears the impact of the €10 million reduction in hardware sales during the last financial year. The Managed Services The Group’s three main trading zones (France, the United Kingdom business posted a revenue of €536.5 million (up 9.9%) and constitutes and Germany), which generate a combined 80% of the total revenue, 43% of the Group’s total revenue. all put in a dynamic performance and posted average organic growth of 10.2% in 2006. The Group also saw a marked improvement in profitability in 2006. The operating margin rose 36.8% on 2005 to €89.6 million for an France, with a revenue of €533.2 million in 2006, saw marked growth operating margin rate of 7.1%, up 1.5 percentage points year-on-year. in both of its core businesses: +13% organic growth in Managed Steria’s net profit/(loss) (Group share) also increased, rising 41.8% to Services and +8.5% in Consulting and Systems Integration. The €54.3 million. United Kingdom (€289.7 million) reaped the benefits of major contracts concluded in late 2005 and early 2006 and the growth of All of the zones played a role in boosting the operating margin in 2006. In their activity over the year. Lastly, Germany (€203.2 million) profited France, this indicator (before Group expenses) climbed 0.6 percentage from the healthy economic climate on all of its market segments and points to 9.3%; in the United Kingdom it rose 8.8 points to 9.6%; in of business investments carried out during the first half of 2006. Germany, 2.7 points to 7.9% (mainly in the second half 2006); and, lastly, in the «Rest of Europe» zone, 1.9 point to 4.2%.
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2.1.2 Results of the Financial Year
1 The consolidated financial data presented in this report were prepared The consolidated balance sheet showed shareholders’ equity of according to the new International Financial Reporting Standards €323.5 million, provisions for €96.1 million (including €74.9 million 2 (IFRS) applicable from 31 December 2006, as approved by the for retirement commitments) and a positive net cash position of European Union. €0.8 million, which equates to a total invested capital of €418.7 million 3 (€410.3 million on 31 December 2005). The operating margin amounted to €89.6 million. The operating 4 profit/(loss) came to €81.1 million after the following non-recurring The use of this equity concerned goodwill of €241.2 million, net elements were taken into account: tangible and intangible fixed assets of €78.7 million, financial assets 5 ■ any depreciation of goodwill: depreciation tests did not result in of €7.8 million, deferred net tax assets of €37.2 million and working any charges being posted for the financial year; capital needs of €53.9 million. 6 ■ stock options and other payments in shares, totalling €3 million; Gross cash flow for the financial year amounted to €103.1 million ■ sale of activities: €0.2 million; (€67.3 million in 2005). Operating cash flow, after taking into ■ net restructuring costs of €5.2 million, mainly concerning Germany account the change in working capital needs of €29.5 million, rose and Scandinavia; from €58.1 million in 2005 to €73.6 million in 2006. Disbursements relating to net industrial investments totalled €25.5 million and those ■ other extraordinary events totalling €0.5 million. relating to restructuring operations €14.2 million. Operating free cash The Group reported a negative financial result of €3.2 million. This flow therefore amounted to €33.9 million (up 48.7% on 2005). After includes the cost of net financial debt of €4.2 million (the increase of taking into account non-operating cash flow (dividends, financial which is largely due to the rise in interest rates during the financial investments, capital increase, additional contribution to the pension year) and other financial income amounting to €1 million. fund, etc.), net free cash flow totalled €39.1 million and resulted in the financial year ending with a net cash position of €0.8 million, as Tax expenses totalled €23.6 million, including the activation of tax against a debt of €38.3 million in 2005. losses carried forward in Germany worth €5.9 million.
Taking into account these elements, the net profit/(loss) (Group share) amounted to €54.3 million (as against €38.3 million in 2005), resulting in net earnings per share of €2.96 (or net diluted earnings per share of €2.87), up 39.6%.
2.1.3 Predicted Development and Outlook
(1) The Book-to-Bill ratio stood at 1.1 on 31 December 2006, which Furthermore, given the actions undertaken by the Group, it has suggests that 2007 will herald new revenue growth. the necessary resources to improve its profitability in 2007 at its disposal. FINANCIAL YEAR 2006, RECENT DEVELOPMENTS AND OUTLOOK
(1) Orders taken over the financial year in relation to revenue from the financial year.
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FINANCIAL YEAR 2006, 02 RECENT DEVELOPMENTS AND OUTLOOK Subsidiaries and Investments
2.1.4 Significant Post-Closing Events
1 On 1 February 2007, the Extraordinary General Meeting of ■ the Groupe Steria SCA Supervisory Board, which represents the Shareholders of Groupe Steria SCA voted virtually unanimously to limited partner shareholders, now has a more influential role in 2 approve the alterations to the Articles of Association as proposed by terms of control and must approve all major strategic decisions; the General Manager backed by the Supervisory Board. ■ the general partner, Soderi SAS, which represents all employee 3 shareholders, retains its key role in terms of approving major Jean Carteron, who due to his age had expressed his desire to retire strategic orientations. 4 from his position as General Partner and General Manager of the Group, was appointed Honorary Chairman. The Articles of Association The General Meeting, with the approval of the General Partner, 5 thus adopted are intended to establish a participative governance appointed François Enaud to the position of General Manager of system that can be broken down as follows: Groupe Steria SCA. François Enaud has stated that he will fulfil this role 6 ■ the General Manager, who is responsible for the operational of General Manager with the assistance of an Executive Committee. management of the Group and appointed jointly by the limited partners and the general partner on the proposal of the Supervisory Board for a renewable period of six years, is no longer a general partner;
2.1.5 Research and Development
The company did not conduct any research and development activities, the Group’s products and services are recognised in the financial as defined in Article L. 232-1 of the Code de commerce, during financial statements for the year in which they are incurred. year 2006. Expenses related to innovation and the development of
2.2 Groupe Steria SCA Business Activity
Groupe Steria SCA is a non-operational holding company. It is not Operating expenses stood at €325,000. The financial profit/(loss) directly involved in any employee-related or environment matters. amounted to €6,438,000, due partly to the dividends paid by the Steria SA subsidiary and partly to income from short-term Presentation rules and valuation methods chosen to draw up the investments. financial statements comply with current French regulations and are the same as those used in prior financial years. The holding company posted a net loss of €2,127,000.
2.3 Subsidiaries and Investments
The table of subsidiaries and equity investments is appended to the balance sheet in the consolidated financial statements (Note 2.2). For more information, refer to Section 2.1, «Overall Business of the Group».
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FINANCIAL STATEMENTS OF GROUPE STERIA SCA
3.1 Consolidated Financial 3.4 Statutory Auditor’s Report Statements for the year ended on the annual financial statements p. 78 31 December 2006 p. 30 I. Opinion on the annual financial statements p. 78 Consolidated income statement p. 30 II. Justification of assessments p. 79 Consolidated balance sheet p. 31 III. Specific verifications and information p. 79 Consolidated cash flow statement p. 32 Consolidated statement of changes in equity p. 33 3.5 Statutory Auditors’ Report on related party agreements Notes to the Consolidated Financial and commitments p. 80 Statements p. 34 3.6 Statutory Auditors p. 82 3.2 Statutory Auditors’ Report 3.6.1 Terms of Office p. 82 on the consolidated financial 3.6.2 Statutory Auditors’ Fees 2006 p. 82 statements p. 60
I. Opinion on the consolidated financial statements p. 60 II. Justification of assessments p. 61 III. Specific verification p. 61
3.3 Parent Company Financial Statements for the Year Ended 31 December 2006 p. 62 Groupe Steria SCA Balance Sheet at 31/12/2006 p. 62
Groupe Steria SCA income statement p. 64 OF GROUPE STERIA SCA FINANCIAL STATEMENTS Groupe Steria SCA income statement p. 65
Notes to the Parent Company Financial Statements p. 66
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Consolidated Financial Statements for the year ended 31 December 2006
3.1 Consolidated Financial Statements for the year ended 31 December 2006 1 2
Consolidated income statement 3 4 For the year ended For the year ended (in thousands of euros) Note 31/12/06 31/12/05 5 Revenue 4.15 1,262,046 1,174,929 Cost of sales and sub-contracting costs (286,594) (293,606) 6 Personnel costs (669,959) (606,065) External costs (172,320) (171,205) Taxes and duties other than income tax (20,925) (17,344) Change in inventories 326 (1,886) Other current operating income and expenses 4,806 4,116 Net charges to depreciation and amortisation (24,046) (24,105) Net charges to provisions 4.16 (2,953) 1,942 Impairment of current assets 4.16 (809) (1,289) OPERATING MARGIN 89,572 65,488 % of Revenue 7.1% 5.6% Other operating income and expenses 4.17 (8,485) (19,997) OPERATING PROFIT 81,087 45,491 Income from cash and cash equivalents 73 44 Gross financial debt cost (4,250) (3,614) Net financial debt cost 4.18 (4,177) (3,570) Other financial income and expenses 4.18 1,013 (4,988) FINANCIAL PROFIT/(LOSS) (3,164) (8,558) Income tax expense 4.7 (23,632) 662 Share in profit of associates 4.4 603 914 NET PROFIT 54,894 38,509 ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 54,332 38,286 Attributable to minority interests 562 224 Earnings per share (in euros) 4.19 2.96 2.12 Diluted earnings per share (in euros) 4.19 2.87 2.06
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SSTE008_DRF06GB_Livre1.indbTE008_DRF06GB_Livre1.indb 3030 66/06/07/06/07 14:34:1514:34:15 ❮ contents ❯ 03 Consolidated Financial Statements for the year ended 31 December 2006
Consolidated balance sheet
ASSETS (in thousands of euros) Note As at 31/12/06 As at 31/12/05 1 Goodwill 4.1 241,241 240,625 2 Intangible assets 4.2 14,260 11,924 Property, plant and equipment 4.3 68,403 65,540 3 Investments in associates 4.4 2,976 2,631 Available-for-sale assets 4.5 2,360 2,374 4 Other financial assets 4.6 969 8,240 Deferred tax assets 4.7 39,262 43,668 5 NON-CURRENT ASSETS 369,471 375,002 Inventories 4.8 11,392 4,938 6 Net trade receivables and related accounts 4.9 279,396 257,693 Amounts due from customers 4.9 121,522 123,410 Other current assets 4.9 12,567 14,151 Short-term portion of non-current assets 4.9 1,538 2,212 Current tax assets 4.9 6,163 2,901 Prepaid expenses 4.9 17,921 17,425 Cash and cash equivalents 4.10 58,308 65,693 CURRENT ASSETS 508,807 488,423 TOTAL ASSETS 878,278 863,425
LIABILITIES & EQUITY (in thousands of euros) Note As at 31/12/06 As at 31/12/05 Issued share capital 18,623 18,122 Share premium 164,361 149,662 Treasury shares (1,582) (1,817) Exchange differences 2,924 2,377 Other reserves 83,795 53,408 Net profit 54,332 38,286 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 322,453 260,038 Minority interests 1,041 520 TOTAL EQUITY 323,494 260,558 Long-term borrowings 4.11 48,948 63,752 Retirement benefit obligations 4.12 74,852 84,197 Provisions for long-term liabilities and charges 4.13 5,680 11,432 Deferred tax liabilities 4.7 2,068 1,484 Other non-current liabilities 19 19 NON-CURRENT LIABILITIES 131,567 160,884 Short-term borrowings 4.11 8,535 40,224 Provisions for current liabilities and charges 4.13 15,527 15,781 Net trade payables and related accounts 4.14 135,355 127,171 Gross amounts due to customers 4.14 46,674 61,152 FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS Customer deposits and advances 4.14 12,184 21,633 Current tax liabilities 4.14 15,865 3,116 Other current liabilities 4.14 189,076 172,906 CURRENT LIABILITIES 423,217 441,983 TOTAL LIABILITIES AND EQUITY 878,278 863,425
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Consolidated Financial Statements for the year ended 31 December 2006
Consolidated cash flow statement
(in thousands of euros) Note 31/12/06 31/12/05 1 NET CONSOLIDATED PROFIT (INCLUDING MINORITY INTERESTS) 54,894 38,509 Adjustments: 2 Elimination of profit/(loss) of associates (603) (914) Net charges to depreciation, amortisation and provisions 3 (excluding current assets) 15,778 19,399 Calculated expenses and income related to share options and equivalent 1,974 1,085 4 Disposal gains and losses (271) 1,787 Dividends (non-consolidated investments) (2) 5 CASH FLOW FROM OPERATING ACTIVITIES AFTER NET FINANCIAL DEBT COST AND TAXES 71,770 59,866 Net financial debt cost 4,177 3,570 6 Income tax expense (including deferred taxes) 23,632 (662) CASH FLOW FROM OPERATING ACTIVITIES BEFORE NET FINANCIAL DEBT COST AND TAXES 99,579 62,774 Income tax paid (6,162) (6,950) Change in working capital requirement (29,541) (9,217) NET CASH FROM OPERATING ACTIVITIES 63,876 46,607 Purchases of intangible assets (6,546) (3,092) Purchases of property, plant and equipment (19,300) (14,822) Proceeds from disposals from property, plant and equipment 316 315 Purchases of long-term financial investments (non-consolidated investments) 8 (16) Proceeds from disposal of long-term financial investments (non-consolidated investments) Loans and advances granted (442) (3,032) Repayments received on loans and advances granted (including factoring) 8,480 518 Impact of changes in Group structure Acquisition of consolidated companies, net of cash acquired (73,097) Disposal of consolidated companies, net of cash transferred 374 - Impact of other changes in Group structure 36 Short-term borrowing for Mummert acquisition Other flows related to investing activities 372 (125) Dividends received (associates, non-consolidated investments) 193 16 NET CASH USED IN INVESTING ACTIVITIES (16,545) (93,299) Amounts received from shareholders as part of a share capital increase 11,575 3,026 Dividends paid during the year: Dividends paid to shareholders of the parent company (5,614) (4,494) Dividends paid to minority interests of consolidated companies (74) Disposals of treasury shares under the liquidity contract 294 Proceeds from new borrowings 15,831 55,289 Repayment of borrowings (including finance leases) (62,657) (7,034) Disbursements relating to retirement benefit obligations Note 1.14 (10,231) (10,002) Interest paid (including finance leases) (4,567) (5,917) NET CASH FROM (USED IN) FINANCIAL ACTIVITIES (55,369) 30,794 Impact of changes in exchange rates 131 736 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (7,907) (15,162) Cash and cash equivalents at the beginning of the year 63,585 78,747 Cash and cash equivalents at the end of the year Note 4.10 55,678 63,585
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Consolidated statement of changes in equity
Shareholders’ equity attributable Consolidated 1 to equity holders of the parent Number reserves Total of existing and reclassi- Exchange attributable (in thousands of euros) shares Share capital Share premium fications differences Net profit equity 2 As at 1 January 2005 (attributable 3 to equity holders of the parent) 17,952,873 17,953 146,803 11,829 282 29,994 206,861 Appropriation of prior year profit 29,994 (29,994,) 4 Dividends paid (4,494) (4,494) Share capital increase 168,779 169 2,859 3,028 5 Change in exchange rates 2,095 2,095 Net profit attributable to equity holders 6 of the parent 38,286 38,286 Valuation of share-based payments 14,263 14,263 As at 31 December 2005 (attributable to equity holders of the parent) 18,121,652 18,122 149,662 51,592 2,377 38,286 260,038 Appropriation of prior year profit 38,286 (38,286) 0 Dividends paid (5,614) (5,614) Share capital increase 501,605 502 14,699 15,201 Change in exchange rates 547 547 Net profit attributable to equity holders of the parent 54,332 54,332 Valuation of share-based payments and cash instruments (2,101) (2,101) Miscellaneous 50 50 As at 31 December 2006 (attributable to equity holders of the parent) 18,623,257 18,624 164,361 82,213 2,924 54,332 322,453
At 1 January 2005 (attributable to minority interests) 403 (2) (40) 360 Appropriation of prior year profit (40) 40 0 Dividends paid (75) (75) Share capital increase Change in exchange rates 11 11 Net profit attributable to minority interests 224 224 Other movements (transfer of negative results to the Group) As at 31 December 2005 (attributable to minority interests) 288 9 224 520 Appropriation of prior year profit 224 (224) 0 Dividends paid Share capital increase Change in exchange rates 99 Net profit attributable to minority interests 562 562
Various adjustments (50) (50) OF GROUPE STERIA SCA FINANCIAL STATEMENTS As at 31 December 2006 (attributable to minority interests) 462 18 562 1,041 TOTAL EQUITY AS AT 31 DECEMBER 2006 18,624 164,361 82,675 2,942 54,894 323,494
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements 1 ■ Note 1 Accounting policies 2 3 4 1.1 Standards Applied 5 The Groupe Steria SCA consolidated financial statements for the These different options and positions break down as follows: 6 year ended 31 December 2006 include Groupe Steria SCA and its subsidiaries (designated as «The Group» and the Group’s share in The Group adopted the following standards, standard amendments associates or jointly controlled companies). Pursuant to the application and interpretations, applicable as of 1 January 2006: of EC regulation no.1606/2002 of 19 July 2002, the 2006 consolidated ■ amendment to IAS 21 “Net Investment in a Foreign Operation” financial statements of Groupe Steria SCA are prepared in accordance published on 15 December 2005 by the IASB; with International Financial Reporting Standards (“IFRS”) applicable ■ amendment to IAS 39 “Cash Flow Hedges of Forecast Intragroup as at 31 December 2006, as adopted by the European Union. Transactions”; ■ The consolidated financial statements and the notes thereto for amendment to IAS 19 “Actuarial Gains and Losses, Group Plans financial year 2006 were approved by the General Manager on and Disclosures”, with the exception of the option concerning the 27 February 2007 after consulting the Supervisory Board. immediate recognition of actuarial gains and losses in equity; ■ IFRIC 4 “Determining whether an Arrangement contains a The IFRS standards and interpretations applicable as of 1 January 2006 Lease.” had no impact on the Group’s consolidated financial statements. None of these standards, standard amendments or interpretations had The policies used for the preparation of this financial information arise an impact on the consolidated financial statements. from the application of: ■ all the standards and interpretations adopted by the European In addition, the Group elected: Union and the mandatory application as at 31 December 2006; ■ not to apply IFRS 7 “Financial Instruments: Disclosures” in advance, ■ standards which the Group decided to adopt early; the date for first-time adoption being 1 January 2007; ■ ■ accounting positions used in the absence of provisions in the not to apply the amendment to IAS 39 concerning the fair value standards. option applicable as of 1 January 2006.
1.2 Consolidation Methods
The annual consolidated financial statements include the financial Companies over which the Group exercises joint control with a limited statements of Groupe Steria SCA and its subsidiaries as at number of shareholders are consolidated using the proportional 31 December of each year. Subsidiaries are consolidated as soon as method. the Group exercises control and up until the date on which this control is transferred outside the Group. Companies over which the Group exercises a significant influence are consolidated using the equity method. Companies over which Groupe Steria SCA exercises, directly or indirectly, exclusive control are fully consolidated. All inter-company transactions are eliminated on consolidation.
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1.3 Business Combinations and Goodwill
1 Business combinations are recognised using the purchase method: the they are probable and their amount can be measured reliably) and the assets, liabilities and contingent liabilities of the acquired company acquired share of the fair value of the assets, liabilities and contingent 2 are recognised at their fair value. The residual difference between liabilities identified at the acquisition date. the cost and the share in the net assets measured at their fair value 3 is recognised in goodwill. Goodwill recognised in the balance sheet is not amortised but is subject to annual impairment tests. 4 Goodwill represents the difference between the cost of the shares (including any possible price adjustments which are recognised when 5 6 1.4 Impairment of Intangible Assets, Property, Plant and Equipment and Goodwill
The impairment test is performed on the cash-generating unit or units using an estimated 2.5% perpetual growth rate. All of these cash flows (CGU) to which the goodwill has been allocated by comparing the are discounted using a discount rate of 8.91% corresponding to the recoverable amount and the carrying amount of the cash-generating weighted average cost of capital of Groupe Steria after tax. units. The cash-generating unit is the country. The assumptions used for these calculations include, as for all The recoverable amount of a cash-generating unit is the higher of estimates, an element of uncertainty and thus are likely to be adjusted the fair value (generally the market price), net of costs to sell, and the during subsequent periods. value in use. The value in use is determined based on the net present value of future cash flows after taxes. These calculations are based If the carrying amount of a cash-generating unit exceeds the recoverable on 5-year plans prepared by the management of the country and amount, the assets of the cash-generating unit are reduced to their reviewed by Executive Management and Financial Management of recoverable amount. The impairment loss is deducted in priority from the Group. Cash flows arising after the 5-year period are extrapolated goodwill and recognised in the income statement.
1.5 Foreign Currency Translation
The consolidated financial statements of the Group are prepared All goodwill and fair value adjustments arising from the acquisition of in euro. a foreign entity are recognised as an asset or liability of the acquired company and are therefore denominated in the currency of the foreign The assets and liabilities of foreign entities whose functional currency business and translated at the closing rate. is not the euro are translated into euro at the closing exchange rate. Income and expense items and cash flows are translated into euro at Transactions denominated in a currency other than the functional the average rate for the period. currency are translated at the exchange rate prevailing on the transaction date. At the year-end, assets and liabilities denominated in All resulting gains and losses are recognised as a separate component foreign currencies are translated at the closing exchange rate. Resulting of shareholders’ equity (“Exchange differences”). When a foreign
exchange differences are recognized in the income statement (in Other OF GROUPE STERIA SCA FINANCIAL STATEMENTS entity leaves the Group structure, cumulative exchange differences financial income and expenses). are recognised in the income statement as a component of the profit or loss generated on the removal of this entity.
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
1.6 Intangible Assets
1 In accordance with IAS 38, intangible assets acquired separately Development costs are recognised in intangible assets when the are recognised at cost as soon as the future economic benefits criteria set forth in IAS 38 are satisfied, notably: 2 attributable to their capitalisation flow to the Group and if this cost ■ the technical feasibility of completing the intangible asset so that can be measured reliably. it will be available for use or sale; 3 ■ the Group’s intention to complete the intangible asset and use Intangible assets acquired as part of business combinations are 4 recognised at their fair value at the date of the transaction, and or sell it; separately from goodwill if they satisfy the conditions set forth in ■ how the intangible asset will generate probable future economic 5 IFRS 3. benefits. If it is to be used internally, its usefulness must be acknowledged; 6 Intangible assets whose useful lives are finite are amortised on a ■ the availability of adequate technical, financial and other resources straight-line basis over their respective useful lives. to complete the development and to use or sell the intangible Intangible assets with indefinite useful lives are not amortised but are asset, is assured; subject to annual impairment tests which compare their recoverable ■ costs attributable to the intangible asset during its development amount to their net carrying amount. Any impairment losses are are measured reliably. recognised in the income statement. Intangible assets which may be amortised are also subject to impairment tests when there is an Development costs which do not satisfy these criteria are expensed indication that an impairment loss is likely. in the period in which they are incurred.
The impairment test of an intangible asset is based upon the discounted Capitalised production costs in respect of the development of software future cash flow method. to be used internally include only the costs related to the detailed design of the application, programming and testing and the drafting of technical documentation.
1.7 Property, Plant and Equipment
Property, plant and equipment are recognised at cost less accumulated ■ Vehicles 5 years - straight-line depreciation and impairment losses. ■ Office furniture and equipment 5 to 10 years - straight-line
Where necessary, the total cost of an asset is broken down between its ■ Computer equipment 3 to 8 years - straight-line various components when their estimated useful lives are different and Items of property, plant and equipment held under finance leases each component is therefore depreciated over a different period. are recognised under capitalised assets on the balance sheet and Depreciation is calculated using the straight-line method based on depreciated in accordance with their useful lives. the estimated useful life of the asset as follows: The debt corresponding to the principal to be repaid is recorded under ■ Buildings 20 to 50 years - straight-line liabilities on the balance sheet in the line item “Borrowings”. Interest ■ Fittings and fixtures 7 to 10 years - straight-line paid on this debt is recognised in financial expenses.
1.8 Investments in Associates
Investments over which the Group exercises a significant influence appears under assets in the balance sheet. Movements over the (associates) are recognised using the equity method. They are initially period are recognised in the income statement (Share in profit/(loss) recognised at cost and then adjusted to take into account changes of associates). in the Group’s share in their net assets. The balance of this share
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1.9 Financial Assets
1 All investments are initially recognised at cost which corresponds to Equity investments in non-consolidated companies, whose fair value the fair value of the price paid, including transaction costs relating may not be determined reliably (unquoted equity investments) are 2 to the investment. recognised at cost. 3 Available-for-sale assets Loans and Receivables 4 In accordance with IAS 39, available-for-sale assets comprise financial Loans and receivables are recognised at amortised cost. Where 5 assets other than loans and receivables originated by the enterprise necessary, provisions for impairment loss may be raised. Such (other financial assets), held-to-maturity investments or financial impairment corresponds to the difference between the net carrying 6 assets held for trading (marketable securities). This includes all equity amount and the recoverable amount and is recognised in profit or loss. investments in non-consolidated companies. After initial recognition, This provision may be reversed in the event of a favourable change in investments classified in “Available-for-sale assets” are recognised the recoverable amount. at fair value at the balance sheet date. Gains and losses on available- for-sale assets are recognised in equity under a specific line item, until the investment is sold or until it has been demonstrated that Financial Assets Held for Trading the investment is impaired. The date at which the cumulative gain Marketable securities are included in financial assets held for trading or loss was previously recognised in equity shall be recognised in and are therefore recognised at their fair value. Gains and losses are profit or loss. recognised in profit or loss.
1.10 Deferred tax
Deferred taxes are recognised for all temporary differences between Tax assets and liabilities are measured by using prevailing tax rates the tax value and the accounting value of assets and liabilities on and rules in effect as at 31 December 2006, i.e.: consolidation. Germany 40.38% Deferred tax assets are only recognised if it is probable that the Austria 25.00% enterprise will recover them as a result of taxable income expected Belgium 33.99% in future financial years. Denmark 28.00% Spain 30.00% The accounting value of deferred tax assets is reviewed at each balance France 34.43% sheet date and reduced when it is no longer probable that sufficient Norway 28.00% taxable income will be available to use the benefit of all or part of this United Kingdom 30.00% deferred tax asset. Deferred tax assets not recognised are assessed Singapore 20.00% at each balance sheet and are recognised if it becomes probable that Sweden 28.00% future taxable income will enable recovery. Switzerland 25.00%
Deferred tax assets and liabilities, regardless of their expiration, are
offset when they relate to the same tax entity. OF GROUPE STERIA SCA FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
1.11 Inventories and Work-In-Progress
1 Inventories are recognised at the lower of cost (on a first-in-first-out The costs incurred in the start-up phase of a contract may be recognised (FIFO) basis) and net realisable value. on the balance sheet as work-in-progress when they are related to 2 future activities of the contract and provided it is probable that they will generate future economic benefits. 3 4 1.12 Cash and Cash Equivalents 5
Cash and cash equivalents include cash at bank and in hand, short-term deposits and all money market investments with a negligible risk of 6 change in value.
1.13 Treasury Shares
Treasury shares, regardless of their utilisation, are deducted from equity.
1.14 Contract Revenue Recognition
Service contracts break down into three types: More generally, revenue is recognised at the fair value of the ■ technical assistance and maintenance contracts which are invoiced consideration received or receivable. based on the time actually spent, and purchases and expenses If the re-estimated result of a contract is a loss, provisions for losses effectively incurred: revenue equals the invoice issued and the to completion are systematically recorded in Provisions for liabilities margin is generated pro rata to the costs incurred; and charges. ■ fixed-price contracts which are invoiced at various predefined stages and whose revenue and margin are generated using the Services invoiced by the Group to its customers but not yet realised percentage of completion method. This principle results in the are recognised for the gross amount in Gross amounts due to recognition of deferred income or sales invoice accruals which customers. are not in line with the progress of the work. If uncertainties exist Partial payments received on contracts, before the corresponding work with respect to customer acceptance, revenue is only recognised has begun, are recognised in Customer deposits and advances under up to recoverable incurred costs. Work-in-progress is recognised at liabilities on the balance sheet. production cost and does not include administrative or commercial costs; Services invoiced to the Group by external service providers are ■ fixed-price contracts which are invoiced at various predefined recognised in Prepaid expenses under assets on the balance sheet if stages and whose revenue and margin are generated based on they have not yet been realised. services rendered. This principle results in the recognition of deferred income or sales invoice accruals which are not in line Revenue determined using the percentage of completion method is with the services rendered. Moreover, the costs incurred in the based on an estimate of the cost to completion of a contract. This start-up phase of a contract may be recognised on the balance estimate is likely to be modified in subsequent periods and lead to sheet as work-in-progress when they are related to future activities adjustments to revenue and possibly the recording of provisions for of the contract and provided it is probable that they will generate losses to completion. future economic benefits. Moreover, the Group recognises revenue on sales of computer hardware and software provided all the conditions for recognition of sales of goods are satisfied, as recommended by IAS 18.
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1.15 Post-employment Benefits
1 Depending on the country, the Group has defined contribution and ■ the expense representing changes in net obligations with respect defined benefit plans. to pensions and other post-employment benefits is recognised in 2 the Operating margin as personnel costs, except for interest paid For defined contribution plans, the Group expenses the contributions on debt less the return on financial assets, which is recognised in 3 to be paid when they are due and no provision is recognised, since Other financial expenses. the Group is not responsible for amounts beyond the contributions 4 paid. Contributions made to defined benefit plans are considered as personnel costs for the portion corresponding to past service cost 5 For defined benefit plans, the provisions are determined as follows: and financial provisions for the difference between the return on ■ the actuarial valuation method used is the projected unit credit plan assets and the interest on obligations towards employees. Any 6 method, which stipulates that each period of service gives rise to additional contribution to service cost is treated as a cash outflow an additional unit of benefit entitlement, and measures each unit related to financing activities. separately to obtain the final obligation; The actuarial calculation of defined benefit retirement obligations ■ these calculations include assumptions of life expectancy, employee includes uncertainties which may affect the value of financial assets turnover and projected future salary increases; and obligations towards employees. Assumptions are reviewed ■ the corridor method is applied. Accordingly, only actuarial annually and may result in accounting adjustments. differences representing more than 10% of the amount of obligations or the market value of plan assets are recognised and amortised over the average remaining working life of the employees who are included in the plan;
1.16 Provisions
Present obligations resulting from past events involving third parties or vacant and is not intended to be used in connection with main are recognised in provisions only when it is probable such obligations activities. will give rise to an outflow of resources to third parties, without consideration from the latter that is at least equivalent. Scrapped assets, impairment of inventories and other assets directly related to the restructuring measures are also recognised in Contingent liabilities are not recognised and are described in the notes restructuring costs. to the financial statements when they are material, except in the case of business combinations where they are considered as identifiable items. Provisions for Litigation
The Group recognises a provision each time a risk related to a legal Provisions for restructuring proceeding or litigation of any type (business, regulatory, tax or employee-related) is identified, that it is probable that an outflow In the specific case of restructuring, an obligation is recognised as soon of resources will be necessary to extinguish this risk and that the as the restructuring has been publicly announced and a detailed plan cost related to this risk can be reliably estimated. In such cases, the
presented or the plan has been implemented. amount of the provision is determined based on the best estimate of OF GROUPE STERIA SCA FINANCIAL STATEMENTS the probable costs related to the proceedings or litigation. This cost mainly corresponds to severance payments, early retirement, costs related to notice periods not worked, training costs for departing As provisions are estimated based on future risks and expenses, such employees and other costs relating to site closures. A provision is amounts include a share of uncertainty and are likely to be adjusted recognised for the rent and related costs to be paid, net of estimated in subsequent periods. sub-leasing income, in respect of any property if the asset is sub-leased
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
1.17 Borrowings
1 Borrowings are initially recognised at cost which corresponds to the Subsequent to the initial recognition, borrowings are recognised fair value received, net of borrowing costs. at amortised cost using the effective interest rate method, which 2 takes into account all borrowing costs and repayment discounts or premiums. 3 4 1.18 Share options and Free Shares 5
The fair value of options and free shares granted to employees is their fair value. Where appropriate, the uncollectability of dividends 6 recognised in Other operating income and expenses over the vesting is also taken into account in the fair value calculation. period. The annualised volatility adopted is 30% for plans taken into In order to measure the fair value of options and free shares granted, consideration at 31 December 2006. the binomial valuation model has been used, under which exercisable options can be measured at any time during the term of the option. In accordance with IFRS 1, only plans subsequent to 7 November 2002 When these equity instruments are subject to conditions of non- are measured and recognised in other operating expenses. transferability, the cost of non-transferability is taken into account in
1.19 Presentation of the Financial Statements
The Group presents its financial statements in accordance with IAS 1, ■ operating profit is determined by deducting the estimated fair the conceptual framework of IFRS and recommendation no. 2004- value of share-based payments, the impact of goodwill impairment R.02 of the French National Accounting Council (Conseil National de tests and other non-current operating income and expenses of la Comptabilité) dated 27 October 2004 on the presentation of the the Group (disposal of activities, restructurings, etc.) from the income statement, cash flow statement and statement of changes operating margin; in equity. Accordingly, the following principles have been adopted ■ financial profit presents the Group’s financial debt cost separately by the Group: from other financial income and expenses; ■ the income statement is presented by nature of income and expense ■ the balance sheet shows a breakdown of current and non-current in order to best represent the Group’s type of business activity; assets and liabilities. ■ the Group’s main financial performance indicator is the operating margin which is defined as the difference between the revenues and expenses related to current activities;
1.20 Diluted Earnings per Share
Earnings per share is calculated by dividing net profit attributable Diluted earnings per share is calculated by adjusting net profit to equity holders of the parent by the number of ordinary shares attributable to equity holders of the parent and the weighted average outstanding during the year. number of ordinary shares outstanding to include the impacts of all potentially dilutive shares.
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1.21 Derivative Instruments
1 The Group uses derivative instruments such as interest rate swaps any gains or losses on the hedged item which modify its carrying to hedge its exposure to interest rate risk. Derivative instruments are amount are recognised as an offsetting entry to the impact on the 2 recognised at their fair value. income statement. 3 As soon as derivatives qualify as hedges from an accounting viewpoint, Concerning hedges of future cash flows, the portion of the gain or it is important to make a distinction between: loss realised on the hedging instrument which is determined to be an 4 ■ fair value hedges, which hedge exposure to changes in the fair effective hedge is recognised directly in equity. The ineffective portion value of recognised assets and liabilities; and is recognised immediately in profit or loss. Gains and losses which have 5 been recognised in equity are taken to the income statement during the ■ cash flow hedges, which hedge exposure to changes in future period in which the hedged firm commitment impacts profit or loss. cash flows. 6 For derivatives which do not satisfy the qualification criteria for hedge Concerning fair value hedges, any gains or losses arising from the accounting, any profit or loss resulting from changes in fair value are re-measurement of the hedging instrument at its fair value are recognised directly in profit or loss of the period. immediately recognised in the income statement. Simultaneously,
■ Note 2 Scope of Consolidation
2.1 Changes in Scope of Consolidation and Legal Restructurings
■ Steria Mummert GmbH was absorbed on 1 January 2006 in a The payment terms and conditions of the transaction are as follows: merger with Steria Mummert AG. − Cash payment of €66,977 thousand in the first half of 2005, ■ The shares in Assekurata held by Steria Mummert Consulting and − Cash payment of €27,049 thousand in the second half representing 25.10% of the company’s share capital were sold in of 2005, the first half of 2006. − Payment in the form of 452,876 share subscription warrants of Recap of the changes in scope of consolidation that occurred in Groupe Steria SCA. the 2005 financial year. The fair value of the 452,876 share subscription warrants was ■ Acquisition of the Mummert Consulting Group: valued at €13,176 thousand as at 31 December 2005. Some of these Finalised on 11 January 2005, with retroactive effect to conditional share subscription warrants were cancelled in 2006 as 1 January 2005, the transaction involved the acquisition of 99.07% the conditions for exercising the options were no longer satisfied of the share capital of the German company Mummert Consulting following the departures of certain employee beneficiaries at the A.G. The remaining shares were acquired during the 2005 financial company’s request. The related goodwill therefore decreased year. in 2006 by €858,000, equivalent to the value of the cancelled share subscription warrants. The transaction price of €94,026 thousand corresponding to an OF GROUPE STERIA SCA FINANCIAL STATEMENTS enterprise value of €71,559 thousand and a net financial value In addition, acquisition costs in the amount of €1,149 thousand were of €22,467 thousand, plus a maximum of 452,876 shares of incurred. Groupe Steria SCA, resulting from the exercise of share subscription warrants, was subject to certain objectives enabling validation of The total acquisition price was therefore €108,351 thousand with the Mummert group value at the date of taking control. goodwill amounting to €78,114 thousand. The Group did not recognise any assets or liabilities or contingent liabilities at the date of acquisition.
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
Moreover, the acquisition was accompanied by the vendor ■ Solinsa was absorbed on 1 January 2005 in a merger with Steria warranties described below: Iberica; A warranty to cover liabilities was given to Groupe Steria SCA ■ Vecteur Conseil was dissolved on 1 January 2005 via an upstream 1 under normal business conditions. merger with BSGL Conseil; The warranty will expire in January 2007, except for those falling ■ BSGL Conseil was dissolved on 26 November 2005 via an upstream 2 within the scope of (i) provisions of company law, for whom it will merger with Steria SA; 3 expire in January 2015 and (ii) those dealing with taxation, for ■ UCM was dissolved on 1 December 2005 via an upstream merger whom it will expire six months after the statutory time limits. with Steria SA; 4 The Mummert shares are held by Steria SA which is subrogated in ■ Strader was dissolved on 30 December 2005 via an upstream all rights and obligations subscribed by Groupe Steria as part of merger with Stepar SARL; 5 the share purchase agreement. Groupe Steria SCA is jointly and ■ Steria NV was dissolved on 31 December 2005 by liquidation. severally liable with respect to the obligations which henceforth 6 are borne by Steria SA;
2.2 Scope of consolidation as at 31 December 2006
Consolidation Consolidation method % interest % control method % interest % control as at 31/12/06 as at 31/12/06 as at 31/12/06 as at 31/12/05 as at 31/12/05 as at 31/12/05 Address as at 31/12/06 HOLDING (FRANCE) GROUPE STERIA SCA 12, RUE PAUL DAUTIER – 78140 VÉLIZY FRANCE DIAMIS PM 40.00 40.00 PM 40.00 40.00 6/8, boulevard Haussmann – 75009 Paris IMELIOS FC 65.00 65.00 FC 65.00 65.00 12, rue Paul Dautier – BP 58 – 78142 Vélizy INTEST EM 43.99 43.99 ME 43.99 43.99 Le Norly 2 – 39, rue des Peupliers – 69570 Dardilly STERIA FC 100.00 100.00 FC 100.00 100.00 12, rue Paul Dautier – 78140 Vélizy STERNET FC 100.00 100.00 FC 100.00 100.00 12, rue Paul Dautier – 78140 Vélizy STEPAR FC 100.00 100.00 FC 100.00 100.00 12, rue Paul Dautier – 78140 Vélizy SYSINTER FC 100.00 100.00 FC 100.00 100.00 94, rue Saint Lazare – 75009 Paris U-SERVICES FC 100.00 100.00 FC 100.00 100.00 12, rue Paul Dautier – 78140 Vélizy GERMANY STERIA MUMMERT CONSULTING GmbH (fusion avec Steria Mummert Consulting AG) NC - - FC 100.00 100.00 Robert-Bosch-Strasse 52 – 63225 Langen ASSEKURATA NC - - ME 25.10 25.10 STERIA MUMMERT CONSULTING GmbH VIENNA FC 100.00 100.00 FC 100.00 100.00 Obere Donausstrasse 63 – A 1020 Wien STERIA MUMMERT ISS GmbH FC 100.00 100.00 FC 100.00 100.00 Hans Henny Jahnn Weg 29 – 22 085 Hamburg STERIA MUMMERT CONSULTING.AG FC 100.00 100.00 FC 100.00 100.00 Hans Henny Jahnn Weg 29 – 22 085 Hamburg MUMMERT LOGISTIC SOLUTIONS FC 100.00 100.00 FC 100.00 100.00 Hans Henny Jahnn Weg 29 – 22 085 Hamburg MUMMERT PARTNER MANAGEMENT CONSULTING FC 100.00 100.00 FC 100.00 100.00 Hans Henny Jahnn Weg 29 – 22 085 Hamburg Jeremy Rees, Radwinter House, Radwinter, MUMMERT PARTNER UK LIMITED FC 100.00 100.00 FC 100.00 100.00 Saffron Walden Essex CB10 2TF SOLTR’X EM 49.00 49.00 ME 49.00 49.00 Hafenstrasse 51 - D-60327 Frankfurt am Main
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Consolidation Consolidation method % interest % control method % interest % control as at 31/12/06 as at 31/12/06 as at 31/12/06 as at 31/12/05 as at 31/12/05 as at 31/12/05 Address as at 31/12/06 UNITED KINGDOM 1 Three Cherry Trees Lane, Hemel Hempstead STERIA Limited FC 100.00 100.00 FC 100.00 100.00 Hertfordshire HP2 7AH 2 Three Cherry Trees Lane, Hemel Hempstead STERIA HOLDING Limited FC 100.00 100.00 FC 100.00 100.00 Hertfordshire HP2 7AH 3 Three Cherry Trees Lane, Hemel Hempstead STERIA UK Limited FC 100.00 100.00 FC 100.00 100.00 Hertfordshire HP2 7AH 4 Three Cherry Trees Lane, Hemel Hempstead CABOODLE FC 51.00 51.00 FC 51.00 51.00 Hertfordshire HP2 7AH 5 BELGIUM/LUXEMBOURG Boulevard du Souverain 36 Vorstlann 6 STERIA BENELUX FC 100.00 100.00 FC 100.00 100.00 1170 Bruxelles Rue du Kiem, 163 - L8030 – Strassen STERIA LUXEMBOURG FC 100.00 100.00 FC 100.00 100.00 Luxembourg DENMARK STERIA A/S FC 100.00 100.00 FC 100.00 100.00 16/18 Tonsbakken – 2740 Skovlunde SPAIN SKILLSOFT FC 100.00 100.00 FC 100.00 100.00 Calle Zurbano n° 71 – 28010 Madrid Paseo Doce Estrellas, n° 2 STERIA IBERICA FC 100.00 100.00 FC 100.00 100.00 Campo de las Naciones – 28042 Madrid NORWAY STERIA A/S FC 100.00 100.00 FC 100.00 100.00 Fyrstikkalleen 3A – 0602 Oslo SINGAPORE STERIA ASIA FC 100.00 100.00 FC 100.00 100.00 78 Shenton Way # 26-02A C/o Ras Singapour SWEDEN STERIA A.B. FC 100.00 100.00 FC 100.00 100.00 Karlsroevaegen 2, BOX 544 – S-182 15 Danderyd IOCORE FC 100.00 100.00 FC 100.00 100.00 Storgatan 16, SE-852 30 Sundsvall SWITZERLAND STERIA Schweiz AG FC 100.00 100.00 FC 100.00 100.00 Steinackerstrasse 47 – CH 8902 Urdorf POLAND STERIA Poland FC 100.00 100.00 FC 100.00 100.00 Ul.Prusa2 – 00-493 Warsaw-Poland FC: Full Consolidation. PM: Proportional Method. EM: Equity Method. NC: Not Consolidated. FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
■ Note 3 Segment Reporting 1 3.1 Business Activity by Geographical Area 2 3 Groupe Steria SCA conducts its business activity in three main These activities of an immaterial size have been maintained in their 4 countries: France, the United Kingdom and Germany. The other management’s geographical area. countries comprised of Spain, Norway, Sweden, Denmark, and Belgium. 5 Luxembourg and Switzerland are included in the geographical area known as “Other Europe”. Group companies carry out their activities 6 in their own countries except for: ■ Steria SA which owns businesses in Africa and Asia through its subsidiary located in Singapore; ■ Steria Mummert Consulting AG which owns businesses in Austria.
Financial Year 2006
United (in thousands of euros) France Kingdom Germany Other Europe Eliminations Group costs Total Group External revenue 533,216 289,662 203,210 235,958 1,262,046 % of revenue 42.2% 23% 16.1% 18.7% 100% Inter-segment sales 3,401 1,591 1,324 3,634 (9,950) Total revenue 536,617 291,253 204,534 239,592 (9,950) 1,262,046 Operating margin 49,404 27,791 16,096 9,891 (13,609) 89,572 % revenue 9.3% 9.6% 7.9% 4.2% 1.1% 7.1% Operating profit/(loss) 48,208 26,562 14,789 7,111 (15,583) 81,087 Net financial debt cost (4,177) Other financial income and expenses 1,013 Income tax expense (23,632) Share in profit/(loss) of associates 603 NET PROFIT/(LOSS) 54,894 ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 54,332
United (in thousands of euros) France Kingdom Germany Other Europe Total Group Expenses with no cash impact: Net charges to depreciation, amortisation and provisions excluding current assets (10,235) (3,854) 4,746 (6,435) (15,778) Other expenses with no cash impact (15,898) (5,338) 5,219 (2,554) (18,570)
United (in thousands of euros) France Kingdom Germany Other Europe Not allocated Total Group Segment assets 293,174 219,611 160,747 153,293 51,731 878,554 Segment liabilities 234,573 140,854 38,947 65,271 398,909 878,554 Investments 6,749 13,280 3,945 6,266 30,240
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In accordance with IAS 14, certain assets and liabilities are not allocated by segment (in thousands of euros):
■ Deferred and current tax assets: 45,425 ■ Deferred and current tax liabilities: 17,932 1 ■ Financial assets: 6,306 ■ Financial liabilities: 57,483 ■ Equity: 323,494 2 ■ Total non-allocated assets: 51,731 ■ Total non-allocated liabilities: 398,909 3
Financial Year 2005 4
United 5 (in thousands of euros) France Kingdom Germany Other Europe Eliminations Group costs Total Group External revenue 483,100 262,742 185,391 243,696 1,174,929 6 % of revenue 41.1% 22.4% 15.8% 20.7% 100.0% Inter-segment sales 3,666 1,380 3,478 189 (8,713) Total revenue 486,766 264,122 188,869 243,885 (8,713) 1,174,929 Operating margin 41,990 23,047 9,676 5,543 (14,768) 65,488 % revenue 8.7% 8.8% 5.2% 2.3% -1.3% 5.6% Operating profit/(loss) 41,356 20,762 (2,960) 2,186 (15,853) 45,491 Net financial debt cost (3,570) Other financial income and expenses (4,988) Income tax expense 662 Share in profit/(loss) of associates 914 NET PROFIT/(LOSS) 38,509 ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 38,286
United (in thousands of euros) France Kingdom Germany Other Europe Total Group Expenses with no cash impact: Net charges to depreciation, amortisation and provisions excluding current assets (6,065) 1,469 (9,094) (5,709) (19,399) Other expenses with no cash impact (7,962) (1,444) 12,819 2,241 5,654
United (in thousands of euros) France Kingdom Germany Other Europe Not allocated Total Group Segment assets 263,787 195,642 179,283 164,897 59,816 863,425 Segment liabilities 214,223 137,748 65,749 76,571 369,134 863,425 Investments 5,048 6,457 3,368 3,055 17,928
In accordance with IAS 14, certain assets and liabilities are not allocated by segment (in thousands of euros):
■ Deferred and current tax assets: 46,570 ■ Deferred and current tax liabilities: 4,600 FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS ■ Financial assets: 13,246 ■ Financial liabilities: 103,976 ■ Equity: 260,558 ■ Total non-allocated assets: 59,817 ■ Total non-allocated liabilities: 369,134
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
3.2 Business Activity by Sector
Steria conducts its activity in two businesses: Managed Services and Systems Integration (SI) which includes Third-party Applications Maintenance 1 and Consulting. The respective economic importance of these two businesses is summarised below: 2 (in thousands of euros) For the year ended 31.12.06 For the year ended 31.12.05 SI revenue 725,508 686,903 3 Managed Services revenue 536,537 488,026 TOTAL REVENUE 1,262,046 1,174,929 4 SI operating margin 52,044 33,412 5 Managed Services operating margin 51,136 46,844 Group costs (13,609) (14,768) 6 TOTAL OPERATING MARGIN 89,572 65,488
■ Note 4 Explanations on the Consolidated Financial Statements
Preliminary comment: all amounts are expressed in thousands of euros, unless stated otherwise.
4.1 Goodwill
(in thousands of euros) Goodwill as at 31/12/05 Exchange differences Other Goodwill as at 31/12/06 France 10,396 10,396 United Kingdom 88,445 1,821 205 90,471 Germany 89,360 (858) 88,502 Norway 21,817 (669) 21,148 Sweden 8,142 313 8,455 Denmark 2,201 2,201 Spain 8,598 8,598 Benelux 5,581 5,581 Switzerland 6,085 (196) 5,889 TOTAL GOODWILL 240,625 1,269 (653) 241,241
Conditional share subscription warrants, granted in order to finance No additional impairment loss on the Group goodwill was recognised the Steria Mummert Consulting acquisition, were cancelled in 2006 during financial year 2006. Impairment losses recognised in previous as the conditions for exercising the options were no longer satisfied financial years amounted to €1,422 thousand. following the departures of certain employee beneficiaries at the company’s request. The related goodwill therefore decreased Sensitivity tests regarding changes in assumptions were performed: in 2006 by €858,000, equivalent to the value of the cancelled share a 1% increase in the discount rate and a 1% decrease in the growth subscription warrants. rates applied in the assumptions used for value tests did not give rise to additional impairment.
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4.2 Other Intangible Assets
Concessions, patents, Other 1 (in thousands of euros) Total Development costs licences, software intangible assets GROSS VALUE AS AT 31/12/05 30,505 1,384 28,723 398 2 Changes in Group structure 0 Purchases 6,574 981 3,045 2,548 3 Disposals – scrapping (1,108) (1,096) (12) Other movements 79 80 (1) 4 GROSS VALUE AS AT 31/12/06 36,050 2,365 30,752 2,933 5 AMORTISATION AS AT 31/12/05 18,581 666 17,768 147 Changes in Group structure 6 Charges 4,207 475 3,682 50 Reversals – removals (1,069) (1,063) (6) Other movements 71 69 2 Amortisation as at 31/12/2006 21,790 1,141 20,456 193 NET VALUE AS AT 31/12/05 11,924 718 10,955 251 NET VALUE AS AT 31/12/06 14,260 1,224 10,296 2,740
Intangible assets have finite useful lives.
The impact of exchange differences on intangible assets is not material and is included in other movements.
4.3 Property, plant and equipment
Office and computer Fittings, fixtures equipment, furniture, Technical facilities Land and buildings held and facilities including vehicles and other items (in thousands of euros) Total including finance leases under finance leases finance leases of PP&E GROSS VALUE AS AT 31/12/05 162,701 17,205 20,271 25,353 99,872 Changes in Group structure Purchases 22,425 273 3,248 18,904 Disposals – scrapping (12,956) (42) (6) (1,722) (11,186) Other movements 751 (8,258) (723) 8,286 GROSS VALUE AS AT 31/12/2006 172,921 9,178 20,265 27,602 115,876 Depreciation as at 31/12/05 97,161 12,433 4,601 13,616 66,511 Changes in Group structure Charges 19,814 1,046 317 2,845 15,606 Reversals (12,740) (51) (6) (1,690) (10,993) Other movements 283 (5,997) (11) 6,269 Depreciation as at 31/12/06 104,518 7,430 4,912 14,783 77,393 NET VALUE AS AT 31/12/05 65,540 4,772 15,670 11,737 33,361 FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS NET VALUE AS AT 31/12/06 68,403 1,747 15,353 12,820 38,483
The net impact of exchange differences on property, plant and equipment is included in other movements for €516 thousand.
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
4.4 Investments in Associates
Value of shares Changes Net profit Value of shares 1 (in thousands of euros) as at 31/12/05 in Group structure for the period Distribution as at 31/12/06 Assekurata 66 (66) 0 2 Intest 181 20 (15) 186 Soltr’x 2,384 583 (177) 2,790 3 TOTAL 2,631 (66) 603 (192) 2,976 4 The shares held in Assekurata were sold by Steria Mummert investment of Steria Mummert Consulting AG. Intest is 43.99% 5 Consulting AG in June 2006. Soltr’x (49% owned) is an equity owned by Steria SA. 6 4.5 Available-for-sale Assets
Non-consolidated equity investments are classified under the IFRS balance sheet category of Available-for-sale assets independently of the Group’s desire to sell these investments.
(in thousands of euros) Total Aspheria Travelsoft Other shares GROSS VALUE AS AT 31/12/05 3,065 774 1,781 510 Additions Decreases (14) (14) GROSS VALUE AS AT 31/12/06 3,051 774 1,781 496 Impairment of shares as at 31/12/05 691 378 313 Additions Decreases Impairment of shares as at 31/12/06 691 378 0 313 NET VALUE AS AT 31/12/05 2,374 396 1,781 197 NET VALUE AS AT 31/12/06 2,360 396 1,781 183
Groupe Steria does not exercise any significant influence over these investments.
4.6 Other Financial Assets
Other loans to equity Deposits, guarantees (in thousands of euros) Total investments Loans and other financial assets GROSS VALUE AS AT 31/12/05 9,485 3 1,595 7,887 Additions 404 404 Decreases (7,675) (41) (7,634) GROSS VALUE AS AT 31/12/06 2,214 3 1,554 657 Impairment as at 31/12/05 1,245 1,245 Impairment as at 31/12/06 NET VALUE AS AT 31/12/05 8,240 3 350 7,887 NET VALUE AS AT 31/12/06 969 3 309 657
The Group terminated a factoring contract which resulted in the The impacts of exchange differences on other financial assets are repayment of the guarantees for €7,625 thousand. immaterial and are included in other movements.
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4.7 Income Tax
1 Reconciliation Between the Total Income Tax Charge Recognised and the Theoretical Charge:
(in thousands of euros) 31/12/06 31/12/05 2 Net consolidated profit 54,894 38,509 3 Income tax charge 23,632 (662) NET PROFIT BEFORE TAX 78,526 37,847 4 APPLICABLE TAX RATE 34.43% 34.43% THEORETICAL TAX CHARGE 27,037 13,031 5 Effect of tax losses carried forward (5,692) (9,324) Effect of permanent differences 2,463 (2,862) 6 Effect of profit/(loss) of associates (208) (315) Effect of changes in tax rates (354) (578) Other including tax consolidation 385 (614) EFFECTIVE TAX CHARGE 23,631 (662) EFFECTIVE TAX RATE 30.09% (1.75)%
As at 31 December 2006, the effective Group tax rate was 30.09% closed, except for the tax treatment of the provision for write-down of equity investments in Integris Italia SpA that was still under discussion The inclusion of tax losses from previous years mainly concerns in 2006. Steria believes it has solid arguments to effectively challenge Germany. the stance adopted by the French tax authorities. Nevertheless, a provision was recognised under the principle of prudence. The impact In 2004, certain French entities within the tax group were subject to of this provision on the effective income tax expense represents most a tax inspection covering financial years 2001, 2002 and 2003. All of the permanent differences. matters reviewed and discussed with the French tax authorities are now
Breakdown Between Current and Deferred Taxes in the Income Statement
France for the year International for the year Total for the year Total for the year (in thousands of euros) ended 31/12/06 ended 31/12/06 ended 31/12/06 ended 31/12/05 Current tax (14,933) (3,472) (18,405) 3,533 Deferred tax (771) (4,456) (5,227) (4,195) TAX (15,704) (7,928) (23,632) (662)
Deferred Taxes Recognised as at 31 December 2006
For the year For the year (in thousands of euros) ended 31/12/2005 Profit or loss impact Exchange difference ended 31/12/2006 Intangible assets (270) (185) (455) Property, plant and equipment 54 146 (4) 196 Finance leases on property, plant and equipment (4,032) (504) (4,536) FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS Non-current financial assets (530) (883) (20) (1,432) Inventories, services in progress and invoicing in progress (3,063) 2,183 (882) Other current assets (25) (61) (86) Retirement benefit obligations 17,989 (3,679) 217 14,527 Provisions 4,432 (739) 54 3,747 Other current liabilities 2,129 (1,919) (1) 209 Tax loss carry-forwards 25,499 416 (8) 25,907 TOTAL NET DEFERRED TAX ASSETS 42,183 (5,226) 237 37,194 DEFERRED TAX ASSETS RECOGNISED 43,668 (4,645) 239 39,262 DEFERRED TAX LIABILITIES RECOGNISED (1,485) (581) (2) (2,068)
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
Deferred tax assets not recognised as at 31 December 2006
The total amount of deferred tax assets not capitalised as at 31 December 2006 amounts to €11,088 thousand: 1 ■ on tax loss carry-forwards: €5,681 thousand ■ on temporary differences: €5,407 thousand 2 Breakdown of deferred tax assets not recognised by country Total as at 31/12/06 Expiration date < 2 years Expiration date > 2 years 3 Austria 702 702 Denmark 5,125 5,125 4 Sweden 3,971 3,971 United Kingdom 1,024 1,024 5 France 266 266 6 TOTAL DEFERRED TAX ASSETS NOT RECOGNISED 11,088 11,088
4.8 Inventories
(in thousands of euros)
Gross value as at 31/12/05 5,623 Net changes during the period 6,587 GROSS VALUE AS AT 31/12/06 12,210 Impairment of inventories as at 31/12/05 685 Net changes during the period 133 Impairment of inventories as at 31/12/06 818 Net value as at 31/12/05 4,938 NET VALUE AS AT 31/12/06 11,392
The increase in inventories is mainly due to the services in progress undertaken during the start-up phase of major managed services contracts initiated in the United Kingdom in 2006 and spread over several financial years.
4.9 Trade Receivables and Other Debtors
(in thousands of euros) As at 31/12/05 As at 31/12/06 Trade receivables - Gross value 260,439 281,525 Provisions (2,746) (2,129) TRADE RECEIVABLES AND RELATED ACCOUNTS 257,693 279,396 AMOUNTS DUE FROM CUSTOMERS 123,410 121,521 Customer deposits and advances 724 754 Receivables from employees and social security and tax authorities 11,120 9,069 Current accounts 1,825 1,859 Debtors – Gross value 648 939 Provisions (166) (54) OTHER CURRENT ASSETS 14,151 12,567 Current loans and guarantees 2,212 1,538 SHORT-TERM PORTION OF NON-CURRENT ASSETS 2,212 1,538 CURRENT TAX ASSETS 2,901 6,163 PREPAYMENTS 17,425 17,921 TRADE RECEIVABLES AND OTHER DEBTORS 417,791 439,106
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4.10 Net cash
(in thousands of euros) As at 31/12/05 As at 31/12/06 1 Other marketable securities 15,790 21,640 2 Cash in hand and at bank 49,903 36,668 CASH AND CASH EQUIVALENTS 65,693 58,308 3 Current bank loans (Note 4.11) (2,035) (2,530) Accrued interest on bank overdrafts (Note 4.11) (75) (101) 4 NET CASH 63,585 55,678 5 4.11 Short-Term and Long-Term Borrowings 6
Net change Long-term borrowings As at 31/12/05 during the period As at 31/12/06 Bank borrowings 55,540 (12,187) 43,353 Borrowings – property-related finance leases 6,108 (1,660) 4,448 Borrowings – other finance leases 1,360 (932) 428 Employee profit-sharing 639 (135) 504 Other borrowings 105 110 215 TOTAL 63,752 (14,804) 48,948
Net change Short-term borrowings As at 31/12/05 during the period As at 31/12/06 Current bank loans 2,035 495 2,530 Bank borrowings 4,234 (1,059) 3,175 Factoring borrowings and equivalent 31,017 (31,017) 0 Borrowings in respect of property and other finance leases 2,774 (82) 2,692 Employee profit-sharing 89 (52) 37 Interest due on bank overdrafts 75 26 101 TOTAL 40,224 (31,689) 8,535
The Group’s total bank indebtedness as at 31 December 2006 is Should the Group fail to comply with these ratios, repayment of €287 million, comprising €37 million in current bank credit lines borrowings may fall due. The following ratios must be complied with: (including €3 million utilised as at 31 December 2006) and a ■ net financial debt/EBITDA < 2.5 €250 million medium-term credit facility (including €41 million utilised ■ EBITDA/net financial debt cost > 5 as at 31 December 2006). Net financial debt designates, on a consolidated basis, all borrowings The credit facility was renegotiated in 2006 and its amount increased and equivalent, less available cash. from €200 million to €250 million (the factoring agreement was however cancelled). It has a 5-year maturity with two options for EBITDA is the consolidated operating margin plus charges to extension until 2013 and a floating rate indexed on the Euribor. depreciation and amortisation and current provisions. OF GROUPE STERIA SCA FINANCIAL STATEMENTS
This credit facility is matched by a commitment to comply with certain As at 31 December 2006, these ratios were respected: financial ratios calculated using the published financial statements. ■ net financial debt/EBITDA = (0.01) Compliance with ratios (net financial debt/EBITDA and EBITDA/net ■ EBITDA/net financial debt cost = 25.5 financial debt cost) is assessed twice yearly on a rolling 12-month basis for the periods ended 31 December and 30 June. No pledges or guarantees have been given in respect of the credit line.
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
Management of Interest Rate Risk Management of Exchange Rate Risk
The Group uses derivative products. Exchange rate fluctuations have a limited impact on the Group’s 1 performance insofar as over 66% of its business is conducted in the In order to limit its exposure to interest rate risk, the Group took out Euro zone. Furthermore, Group subsidiaries usually issue their invoices 2 three swap contracts (interest rate swaps): one standard swap and in their own functional currency and therefore do not have to bear two “zero-cost” collars. The notional amount of these contracts is exchange rate risks. Their assets, liabilities and off-balance sheet 3 €35 million with a maturity date of November 2007. commitments are generally denominated in their functional currency. However, outside the Euro zone, the Group has set up an exchange rate The standard swap has a fixed rate of 2.80%. One of the tunnel swaps 4 hedging policy based on forward currency purchases and sales. is a floating Euribor 12 months with a floor rate of 2.81% and a capped 5 rate of 3.00%. The other swap is a floating Euribor 3 months with a Regarding export contracts, as a rule the currency is the euro, and if the floor rate of 2.49% and a capped rate of 3.29%. invoicing currency is different from the functional currency, the Group’s 6 policy is to set up a specific exchange hedge for each of these contracts. The gross financial debt subject to interest rate risk stood at €22 million Such contracts are not a material part of the Group’s business. as at 31 December 2006.
If interest rates were higher by 100 points on average compared to 2006 rates, the additional cost for the Group would have been €225 thousand (excluding the impact of interest rate hedges) compared to the actual interest expense of €4,250 thousand.
4.12 Retirement Benefit Obligations
Provisions for retirement benefit obligations mainly cover the The amounts recognised in the income statement and the balance obligations of Groupe Steria towards its employees with respect to sheet are based on 2006 forecasts: service cost, interest cost on the retirement benefit termination payments in France and defined benefit liability and the expected return on the assets. plans in the UK. Germany, Benelux and Norway. Most of the Group’s retirement benefit obligations concern the UK. Assets and obligations are valued annually on 31 December. Movements in retirement obligations and plan assets in the previous three financial years are presented in the following table:
31/12/06 31/12/05 31/12/04 Present value of the obligation at the beginning of the period 532,317 442,445 404,878 Exchange difference 11,142 12,594 (1,614) Cost of services rendered 5,013 4,833 6,934 Past service cost 561 Interest 26,123 23,592 22,737 Employee contributions 3,219 2,689 2,964 Actuarial gains and losses (6,198) 60,472 30,323 Benefits provided (15,020) (14,307) (24,337) PRESENT VALUE OF THE OBLIGATION AT THE END OF THE PERIOD 556,596 532,317 442,445 Fair value of plan assets at the beginning of the period 441,602 366,927 342,594 Exchange difference 9,702 10,444 (1,075) Expected return 29,022 22,285 22,993 Actuarial gains and losses 8,853 38,995 17,538 Employer contributions 14,686 14,569 6,251 Employee contributions 3,219 2,689 2,964 Benefits provided (15,020) (14,307) (24,337) FAIR VALUE OF PLAN ASSETS AT THE END OF THE PERIOD 492,064 441,602 366,927
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Movements in the net liabilities arising from the main retirement benefit obligations in 2005 and 2006 are presented in the following table.
31/12/2006 Defined benefit Defined benefit Retirement termination 1 (in thousands of euros) pension funds-UK pension funds-Germany benefits-France CALCULATION ASSUMPTIONS FOR ACTUARIAL LIABILITIES 2 Discount rate 5.10% 4.50% 4.50% Average return on assets 6.44% - - 3 Inflation rate 2.80% 2.00% 2.00% Salary increase 3.80% N/A 2.00% 4 Retirement age Floating 60/63 years old 63 years old AMOUNTS RECOGNISED IN THE BALANCE SHEET 5 Present value of the obligation financed including the corridor 556,596 15,888 9,803 Fair value of plan assets 492,064 - - 6 Difference 64,532 15,888 9,803 Unrecognised actuarial (gains)/losses 19,512 155 Unrecognised past service cost (3,032) Net liabilities on the balance sheet (provision after charge for the year) 45,020 15,888 6,926 Amounts on the balance sheet: Liabilities 45,020 15,888 6,926 Assets - Net obligation on the balance sheet 45,020 15,888 6,926 AMOUNTS RECOGNISED IN THE INCOME STATEMENT Service cost rendered in the period 5,013 24 961 Interest cost on obligation 26,123 866 404 Expected return on plan assets (29,022) Recognised net losses for the period - 141 - Past service cost - 219 Losses(gains) on curtailments and settlements for the period - (26) Total expenses 2,113 1,031 1,558 MOVEMENTS IN LIABILITIES Net liability at the beginning of the period (with corridor) 56,622 15,353 5,997 Net expense recognised in the income statement 2,113 1,031 1,558 Contributions (14,686) (496) (629) Exchange rate movements 970 Liabilities acquired as part of business combinations - Changes in method - Net liability at the end of the period 45,020 15,888 6,926
The Group recognised long-term retirement obligations in Belgium obligations with respect to early retirement obligations are and Norway in the respective amounts of €2,732 thousand and also recognised in Germany and Belgium for a total amount of €2,393 thousand as at 31 December 2006. Short or medium-term €1,131 thousand. FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
Movements in net retirement benefit obligations in 2005 are presented below:
31/12/2005 Defined benefit Defined benefit Retirement termination 1 (in thousands of euros) pension funds-UK pension funds-Germany benefits-France CALCULATION ASSUMPTIONS FOR ACTUARIAL LIABILITIES 2 Discount rate 4.90% 5.50% 4.00% Average return on assets 6.90% - - 3 Inflation rate 2.70% 2.00% 2.00% Salary increase 3.70% N/A 2.00% 4 Retirement age Floating Floating 63 years old AMOUNTS RECOGNISED IN THE BALANCE SHEET 5 Present value of the obligation financed including the corridor 532,315 16,081 10,135 Fair value of plan assets 441,600 - - 6 Difference 90,715 16,081 10,135 Unrecognised actuarial (gains)/losses 34,093 (292) Unrecognised past service cost (3,846) Net liabilities on the balance sheet (provision after charge for the year) 56,622 15,354 5,997 Amounts on the balance sheet: Liabilities 56,622 15,354 5,997 Assets - Net obligation on the balance sheet 56,622 15,354 5,997 AMOUNTS RECOGNISED IN THE INCOME STATEMENT Service cost rendered in the period 4,832 23 884 Interest cost on obligation 23,592 845 440 Expected return on plan assets 22,285 Recognised net losses for the period - - - Past service cost 303 Losses(gains) on curtailments and settlements for the period (120) Total expenses 6,139 868 1,507 MOVEMENTS IN LIABILITIES Net liability at the beginning of the period (with corridor) 63,333 14,787 5,216 Net expense recognised in the income statement 6,140 868 1,507 Contributions (14,569) (301) (726) Exchange rate movements 1,718 Liabilities acquired as part of business combinations Changes in method Net liability at the end of the period 56,622 15,354 5,997
As at 31 December 2005, long-term retirement obligations in Belgium and Norway totalled €3,174 thousand and €1,959 thousand respectively.
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4.13 Provisions for Liabilities and Charges
2006 1 Provisions for long-term liabilities Changes in Other Exchange and charges (in thousands of euros) Opening Group structure Charges Reversals movements differences Closing 2 Provisions for litigation 1,364 699 (75) 31 20 2,039 Provisions for losses on contracts 916 (916) 0 3 Other provisions for liabilities 1,991 500 (30) 94 47 2,602 Provisions for restructuring 7,161 421 (5,641) (920) 18 1,039 4 Provision for taxes TOTAL PROVISIONS FOR LONG- 5 TERM LIABILITIES AND CHARGES 11,432 1,620 (5,746) (1,711) 85 5,680 6
2006 Provisions for current liabilities Changes in Other Exchange and charges (in thousands of euros) Opening Group structure Charges Reversals movements differences Closing Provisions for litigation 2,146 3,108 (1,454) 3,800 Provisions for losses on contracts 1,263 1,099 (1,949) 916 3 1,332 Other provisions for liabilities 3,217 1,659 (1,714) (514) 40 2,687 Provisions for restructuring 8,982 1,400 (6,641) 513 29 4,283 Provision for taxes 173 3,294 (43) 3,424 TOTAL PROVISIONS FOR CURRENT LIABILITIES AND CHARGES 15,781 10,560 (11,801) 915 72 15,527
2006 Changes in Other Exchange Total Provisions (in thousands of euros) Opening Group structure Charges Reversals movements differences Closing Provisions for litigation 3,510 3,807 (1,529) 31 20 5,839 Provisions for losses on contracts 2,179 1,099 (1,949) 3 1,332 Other provisions for liabilities 5,208 2,159 (1,744) (420) 87 5,290 Provisions for restructuring 16,143 1,821 (12,282) (407) 47 5,322 Provision for taxes 173 3,294 (43) 3,424 TOTAL PROVISIONS FOR LIABILITIES AND CHARGES 27,213 12,180 (17,547) (796) 157 21,207
The change in provisions for restructuring is mainly due to a net Reversals of non-utilised provisions for liabilities and charges amount reversal of €9,273 thousand with respect to the Germany restructuring to €2,590 thousand. including reversals of restructuring provisions following the acquisition of Mummert. for €2,501 thousand.
4.14 Trade payables and other creditors
(in thousands of euros) As at 31/12/06 As at 31/12/05 SUPPLIERS OF GOODS AND SERVICES AND RELATED ACCOUNTS 135,355 127,171 FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS GROSS AMOUNTS DUE TO CUSTOMERS 46,674 61,152 PREPAYMENTS AND ADVANCES RECEIVED 12,184 21,633 CURRENT TAX LIABILITIES, CORPORATE INCOME TAX 15,865 3,116 Employee-related liabilities 114,447 109,105 Tax-related liabilities 71,509 63,578 Other sundry liabilities 3,120 223 TOTAL OTHER CURRENT LIABILITIES 189,076 172,906 TOTAL TRADE PAYABLES AND OTHER CREDITORS 399,155 385,978
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
4.15 Sales and Provision of Services
(in thousands of euros) For the year ended 31/12/06 For the year ended 31/12/05 1 Sales of goods 39,717 50,920 2 Provision of services 1,222,329 1,124,009 SALES AND PROVISION OF SERVICES 1,262,046 1,174,929 3 4 4.16 Net Charges to Provisions 5 (in thousands of euros) For the year ended 31/12/06 For the year ended 31/12/05 6 Charges to provisions (7,014) (3,867) Reversals of provisions 4,061 5,809 NET CHARGES TO OPERATING PROVISIONS (2,953) 1,942 Charges to current assets (873) (1,435) Reversals of current assets 64 146 NET CHARGES TO CURRENT ASSETS (809) (1,289) NET CHARGES TO PROVISIONS (3,762) 653
4.17 Other Operating Income and Expenses
(in thousands of euros) For the year ended 31/12/06 For the year ended 31/12/05 Share options and other share-based payments (2,974) (1,085) Disposals of businesses 235 (10) Net restructuring costs (5,201) (16,530) Other (544) (2,372) OTHER OPERATING INCOME AND EXPENSES (8,485) (19,997)
Share options and free shares
Four plans have been taken into account as at 31 December 2006: number of shares will depend on performance criteria which are not ■ on 11 April 2003, 227,000 options were granted at a price of related to the share price. These shares may not be transferred until €13.00 per share. These options may be exercised only after the 13 September 2010 during which time the employee will receive expiration of a 3-year holding period and during a period of 4 years dividends on these non-transferable shares. The fair value of the beginning 12 April 2006 and ending 11 April 2010. The fair value free shares at the grant date amounts to €37.3 and the expense of these options at the grant date amounted to €5.07 and the for 2006 totalled €739 thousand; expense for 2006 totalled €81 thousand; ■ on 13 September 2006, the Group set up a free shares plan ■ on 20 April 2004, 197,000 options were granted at a price of in favour of its employees pursuant to which a maximum of €28.50 per share. These options may be exercised only after the 85,500 shares will be granted to employees present in the Group expiration of a 3-year holding period and during a period of 4 years at the end of the vesting period. i.e.. 19 September 2009. The final beginning 21 April 2007 and ending 20 April 2011. The fair value number of shares will depend on performance criteria which are not of these options at the grant date amounted to €9.63 and the related to the share price. These shares may not be transferred until expense for 2006 totalled €537 thousand; 19 September 2011 during which time the employee will receive dividends on these non-transferable shares. The fair value of the ■ on 13 September 2005, the Group set up a free shares plan free shares at the grant date amounts to €36.51 and the expense in favour of its employees pursuant to which a maximum of for 2006 totalled €263 thousand. 70,000 shares will be granted to employees present in the Group at the end of the vesting period. i.e., 13 September 2008. The final
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Other characteristics of share option and free shares plans: 2006 Free shares 2005 Free shares 2004 Share options 2003 Share options Share price €39.36 €42.10 €29.10 €14.03 1 Strike price - - €28.50 €13 Risk-free rate 3.57% 3% 3% 3.50% 2 Shareholding dividends 1% 1% 1% 1% Volatility 30% 30% 30% 30% 3
In accordance with IFRS 1, only plans subsequent to 7 November 2002 31 December 2006. Changes in all of the share option and free shares 4 are measured and recognised in other operating expenses. Five plans are summarised in the table below: other share option plans previous to 7 November 2002 existed as at 5 6 2006 2005 (1) (2) (1) (2) Number of shares which can be subscribed at the beginning of the period 1,396,235 32.03 1,504,988 32.50 Number of options cancelled during the period 14,250 38.19 106,475 34.14 Number of shares subscribed during the period 30,210 21.14 72,278 7.62 Number of options or conditional free shares created during the period 107,500 - 70,000 - Number of shares which can be subscribed at the end of the period 1,459,275 26.55 1,396,235 32.03 (1) Number of shares or options. (2) Average strike price.
In addition, following a decision on 3 April 2006, 334,556 shares were Restructuring Costs subscribed to by Group employees in respect of the Group Savings Plan and under preferential terms and conditions. These shares may The Group’s restructuring efforts as at 31 December 2006 mainly not be transferred until 25 August 2011. The fair value of the benefit covered: granted with respect to this subscription amounts to €1.05 and the ■ the continuation of restructuring efforts in Germany with a net total cost to be expensed in 2006 is €352 thousand. impact of €1,538 thousand; ■ the reorganisation of activities in Scandinavia with an impact of €2,922 thousand.
4.18 Financial Profit/(Loss)
For the year ended For the year ended (in thousands of euros) 31/12/06 31/12/05 Income generated from cash and cash equivalents 73 44 Income from cash and cash equivalents 73 44 Interest expense on financing operations (4,250) (3,614) Gross financial debt cost (4,250) (3,614) NET FINANCIAL DEBT COST (4,177) (3,570)
Net gains and losses on cash management operations (267) (1,693) OF GROUPE STERIA SCA FINANCIAL STATEMENTS Discounts granted (599) (692) Disposal of equity investments (non-consolidated) (128) (60) Other movements 279 177 Total other financial income and expenses excluding provisions (715) (2,268) Financial provisions (pensions) 1,609 (2,780) Financial provisions (securities) 120 60 TOTAL OTHER FINANCIAL INCOME AND EXPENSES 1,013 (4,988) FINANCIAL PROFIT/(LOSS) (3,164) (8,558)
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Consolidated Financial Statements
4.19 Earnings Per Share
1 Potential dilutive ordinary shares include share options and share Share subscription warrants, which have an anti-dilutive effect on net subscription warrants issued on the acquisition of Mummert (share profit, are not included in the diluted earnings per share calculation. 2 subscription warrants as part of an incentive scheme). 3 (in thousands of euros) For the year ended 31/12/06 For the year ended 31/12/05 Numerator 4 Net profit attributable to equity holders of the parent (A) 54,332 38,286 Denominator 5 Average weighted number of shares outstanding (B) 18,357,865 18,019,876 6 Dilutive effect of share options 266,389 141,657 Dilutive effect of Mummert share subscription warrants 280,348 440,236 Dilutive effect of free shares reserved for employees 56,647 14,125 Theoretical average weighted number of shares (C) 18,961,248 18,615,893 EARNINGS PER SHARE (IN EUROS) (A/B) 2.96 2.12 DILUTED EARNINGS PER SHARE (IN EUROS) (A/C) 2.87 2.06
■ Note 5 Employees
In 2006, the average number of Group employees stood at 9,940, As at 31 December 2006, total Group employees amounted to 10,484, including 4,454 in foreign subsidiaries. including 4,607 in foreign subsidiaries.
■ Note 6 Off-Balance Sheet Commitments
Group off-balance sheet commitments given and received are as follows:
As at 31/12/06 As at 31/12/2005 As at 31/12/06 As at 31/12/05 COMMITMENTS GIVEN COMMITMENTS RECEIVED Endorsements, pledges and guarantees 5,054 14,343 Endorsements Bank guarantees on contracts (joint Bank counter-guarantees on contracts 150,281 54,829 venturer) Vendor liabilities warranties 2,389 2,357 Overdraft facilities (current bank loans) Individual legal right to training 1,538 711 - authorised 37,116 37,158 - utilised (balance sheet) 2,499 1,340 - not utilised (off-balance sheet) 34,617 35,818 Medium-term loan - authorised 250,000 200,000 - utilised (balance sheet) 41,000 50,000 - not utilised (off-balance sheet) 209,000 150,000 Factoring - authorised - 60,000 - utilised (balance sheet) - 31,018 - not utilised (off-balance sheet) - 28,982 TOTAL COMMITMENTS GIVEN 159,262 72,240 TOTAL COMMITMENTS RECEIVED 243,617 214,800
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6.1 Other off-balance sheet commitments:
1 The nominal value of future rental payments under operating lease Difference in limits) regarding local policies, with a contractual general contracts amounts to €66,550 thousand with respect to real property indemnity limit of €55,000,000 per claim and per insurance year. 2 contracts and €15,808 thousand with respect to moveable property contracts. Similarly, all Group companies are covered by a Master property 3 damages and business interruption (PDBI) policy on a DIC/DIL basis Risks regarding the repayment of borrowings are described in (Difference in conditions/Difference in limits) regarding local policies, 4 Note 4.11. with a contractual general indemnity limit (all damages and business interruption losses combined) amounting to €106,714,310 per year 5 All Group companies are covered by a Master civil and professional and per claim. liability insurance policy on a DIC/DIL basis (Difference in conditions/ 6
6.2 Complex commitments
Commitments Related to the Sale of Companies: Warranties received by Steria AB (Swedish Warranties company) as part of the acquisition of Iocore Business consulting AB Warranties received by Groupe Steria SCA and Steria as part of the acquisition of Mummert Steria AB benefits from a bank guarantee in the amount of SEK Consulting 5,000,000 for tax and employee-related notices until 9 July 2009.
A warranty to cover liabilities was given to Groupe Steria SCA under normal business conditions. Commitments Related to Shareholders’ Agreements
The warranty will expire on 11 January 2007, except for subjects covered Commitments given and received by Stepar by French company law for whom it will expire in January 2015. in connection with Travelsoft
Groupe Steria SCA designated Steria SA as a nominee. Hence, Various commitments have been given to guarantee the valuation Mummert securities are now held by Steria SA, which is subject to of the interest held by Stepar in Travelsoft (currently 23.3% of share all the rights and obligations underwritten by Groupe Steria in the capital) notably in the event of a share capital increase and to enable acquisition agreement. Groupe Steria SCA remains jointly liable in Stepar to withdraw from the company. respect of the obligations now incumbent upon Steria SA. Other commitments given or received are immaterial.
■ Note 7 Remuneration of S enior E xecutives (1)
Nature of the remuneration Amounts in € Remuneration with respect to a corporate office held 36,000
Attendance fees 70,000 OF GROUPE STERIA SCA FINANCIAL STATEMENTS Remuneration under employment agreement 1,137,998 Bonus, incentive scheme, and profit-sharing 696,881 Benefits in-kind 4,904 Travel expenses 119,246 Share options 116,023 Free shares 165,592
No hiring bonuses have been paid and no severance payments have been contractually provided for, other than those pursuant to ordinary rules and laws or applicable collective bargaining agreements. No specific supplementary retirement plan is currently in force. (1) The term “Senior Executive” includes: General Manager, the Members of the Supervisory Board of Groupe Steria SCA, the Chairman and Chief Executive Officer and the Joint Chief Executive Officer of Steria SA.
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Statutory Auditors’ Report on the consolidated fi nancial statements
3.2 Statutory Auditors’ Report on the consolidated financial statements 1 2
PIMPANEAU & ASSOCIÉS ERNST & YOUNG 3 NEXIA INTERNATIONAL et Autres 23, rue Paul-Valéry 41, rue Ybry 4 75116 Paris 92576 Neuilly-sur-Seine Cedex SAS with capital of €120,000 SAS with variable capital 5
Statutory Auditors Statutory Auditors 6 Member of the Compagnie régionale de Paris Member of the Compagnie régionale de Versailles
Groupe Steria SCA
Year ended December 31, 2006 Statutory Auditors’ Report on the consolidated financial statements
To the Shareholders,
Following our appointment as Statutory Auditors by your Shareholders’ general meetings, we have audited the accompanying consolidated financial statements of Groupe Steria for the year ended December 31, 2006.
The consolidated financial statements have been approved by the Manager. Our role is to express an opinion on these financial statements based on our audit.
I. Opinion on the consolidated financial statements
We conducted our audit in accordance with professional standards financial statements presentation. We believe that our audit provides applicable in France; Those standards require that we plan and a reasonable basis for our opinion. perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An In our opinion, the consolidated financial statements give a true and audit includes examining, on a test basis, evidence supporting the fair view of the assets and liabilities and of the financial position of the amounts and disclosures in the financial statements. An audit also group as December 31, 2006 and of the results of its operations for the includes assessing the accounting principles used and significant year then ended in accordance with IFRSs as adopted by the EU. estimates made by the management, as well as evaluating the overall
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1 2
II. Justification of assessments 3 4 In accordance with the requirements of Article L. 823-9 of French ■ impairment tests on goodwill are performed using mainly future Company Law (Code de commerce) relating to the justification of our discounted cash-flows based on estimates, as described in Note 1.4 5 assessments, we bring to your attention the following matters: of the notes to the financial statements. Within the framework 6 ■ your company applies the «percentage of completion» accounting of the justification of our assessments, we made sure, based on method in the recognition of its revenue and profit from fixed-price information available, of the reasonableness of these estimates contracts, as set out in Note 1.14 of the notes to the financial and the resulting valuation of goodwill; statements. We made sure of the proper application of this ■ your company accounts for deferred tax assets based upon method by reviewing existing procedures within your company estimates, as set out in Note 1.10 of the notes to the financial and implementing reviews of contracts together with financial statements. Within the framework of the justification of our and operational managers; assessments, we made sure, based on information available as ■ your company accrues for provisions to cover business risks, in today, of the reasonableness of these estimates and the resulting particular risks relating to contracts. Upon available information valuation of deferred tax assets. as of today, our assessment on these provisions is based upon an The assessments were made in the context of our audit of the analysis of the processes implemented by management to identify consolidated financial statements taken as a whole, and therefore and evaluate risks, a thorough review of those risks identified and contributed to the opinion we formed which is expressed in the first evaluations made, and an examination of subsequent events which part of this report. corroborates these evaluations;
III. Specific verification
In accordance with professional standards applicable in France, we report. We have no matters to report as to its fair presentation and its have also verified the information given in the group’s management consistency with the consolidated financial statements.
Paris and Neuilly-sur-Seine, March 21, 2007
The Statutory Auditors
PIMPANEAU & ASSOCIÉS ERNST & YOUNG NEXIA INTERNATIONAL et Autres
French original signed by Olivier Juramie French original signed by François Rochmann FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS
This is a free translation into English of the Statutory Auditors’ Report issued in French language and is provided solely for the convenience of English-speaking readers. This report includes information specifically required by French law in all audit reports, whether qualified or not, and this is presented below the opinion on the financial statements. This information includes an explanatory paragraph discussing the auditors’ assessment of certain significant accounting matters. These assessments were made for the purpose of issuing an opinion on the financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated financial statements. The report also includes information relating to the specific verification of information in the group management report. This report should be read in conjunction with, and is construed in accordance with French law and professional auditing standards applicable in France.
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Parent Company Financial Statements for the Year Ended 31 December 2006
3.3 Parent Company Financial Statements for the Year Ended 31 December 2006 1
Groupe Steria SCA Balance Sheet at 31/12/2006 2 3 ASSETS 4 Depreciation, (in thousands of euros) Gross amortisation, provisions 31/12/06 31/12/05 5 Capital subscribed but not called INTANGIBLE FIXED ASSETS 6 Start-up expenses Research & development expenditure Concessions, patents and similar rights Purchased goodwill Other intangibles Payments on account TANGIBLE FIXED ASSETS Land Buildings Industrial and technical plant Other tangible fixed assets Tangible fixed assets under construction Payments on account LONG-TERM INVESTMENTS Equity investments 305,729 0 305,729 225,358 Other investments Loans to investments Other long-term investment securities Loans Other long-term investments 2,701 2,701 0 TOTAL NON-CURRENT ASSETS 308,430 0 308,430 225,358 STOCK AND WORK-IN-PROGRESS Raw materials & supplies Work-in-progress - goods Work-in-progress - services Semi-finished and finished goods Bought-in goods Payments on account of orders OPERATING RECEIVABLES Trade receivables and related accounts Other operating receivables 34,883 34,833 16,891 Other sundry receivables Capital subscribed and called, but not paid CASH AND CASH EQUIVALENT Marketable securities (including treasury shares: 1,876) 1 1 1,876 Cash at bank and in hand PREPAYMENTS AND ACCRUED INCOME Prepaid expenses TOTAL CURRENT ASSETS 34,884 0 34,884 18,768 Deferred charges Bond redemption premiums Unrealised foreign exchange losses TOTAL ASSETS 343,314 0 343,314 244,126
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1 2 3 LIABILITIES AND SHAREHOLDERS’ EQUITY 4 (in thousands of euros) 31/12/06 31/12/05 Share or individual capital of which paid up: 18,623 18,623 18,122 5 Share premium 164,361 149,662 Revaluation reserve of which equity accounting revaluation: 134,961 54,590 6 Legal reserve 2,027 2,027 Reserves recognised under the Articles of Assoc.or contractually Regulated reserves 240 240 Other reserves 3,262 3,262 Retained earnings 9,956 9,741 NET PROFIT/(LOSS) FOR THE YEAR (2,127) 5,828 Investment grants Regulated provisions SHAREHOLDERS’ EQUITY 331,303 243,472 Proceeds from issues of participating securities Subordinated loans EQUITY EQUIVALENTS 00 Provisions for liabilities Provisions for charges 078 PROVISIONS FOR LIABILITIES AND CHARGES 078 BORROWINGS Convertible bonds Other bonds Bank borrowings 13 3 Other borrowings Payments received on account for work-in-progress OPERATING LIABILITIES Trade creditors and related accounts 75 87 Tax and employee-related liabilities 10,266 80 Other operating liabilities SUNDRY Amounts payable in respect of fixed assets and related accounts 1,657 404 Tax liabilities - corporate income tax Other sundry liabilities ACCRUALS AND DEFERRED INCOME FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS Deferred income TOTAL LIABILITIES 12,011 575 Unrealised foreign exchange gains TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 343,314 244,126 Net profit for the year (in eurocentimes) (2,126,896.93) Total balance sheet (in eurocentimes) 343,314,465.43
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Parent Company Financial Statements for the Year Ended 31 December 2006
Groupe Steria SCA income statement
For the year ended 31 December 2006 1
(in thousands of euros) France Export 31/12/06 31/12/05 2 Sales of bought-in goods SALES OF OWN GOODS AND SERVICES 3 Sales of bought-in goods Works 4 Services 5 NET SALES 0000 CHANGE IN STOCK OF OWN PRODUCTION OF GOODS AND SERVICES 6 Work-in-progress - goods Work-in-progress - services Income Own production of goods and services capitalised Operating grants Reversals of depreciation, amortisation and provisions 35 43 Expense reclassifications -6 Other income OPERATING INCOME 35 37 COST OF GOODS SOLD 00 Purchases of bought-in goods (including customs duties) Change in stock of bought-in goods CONSUMPTION OF GOODS AND MATERIALS 201 252 Purchases of raw materials Purchases of other supplies Change in stock of raw materials and supplies Other purchases and external charges Sub-contracting purchases Purchases of raw materials and supplies not included in stock External services 201 252 External personnel Equipment finance leases Property finance leases Other external services 201 252 TAXES, DUTIES AND RELATED AMOUNTS 12 23 Income tax 11 16 Other taxes and duties 17 EMPLOYEE EXPENSES 112 235 Wages and salaries 111 191 Social security contributions 144 DEPRECIATION, AMORTISATION AND PROVISIONS 00 Depreciation and amortisation of fixed assets Provisions for write-down of fixed assets Provisions for current assets Provisions for liabilities and charges OTHER CHARGES 68 OPERATING EXPENSES 325 577 OPERATING LOSS (290) (540)
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Groupe Steria SCA income statement
For the year ended 31 December 2006 (consolidated) 1
(in thousands of euros) 31/12/06 31/12/05 2 Profits transferred in or losses transferred out Profits transferred out or losses transferred in 3 Financial income from equity investments 5,504 5,327 Revenues from other marketable securities and long-term loans 4 Other interest and similar income 882 498 5 Reversals of provisions and expense reclassifications 0 180 Foreign exchange gains 6 Net proceeds from sale of marketable securities 52 25 FINANCIAL INCOME 6,438 6,030 Amortisation and charges to provisions for financial items Interest and similar charges 1 Foreign exchange losses Net charges on sales of marketable securities FINANCIAL EXPENSES 01 FINANCIAL RESULT 6,438 6,029 PROFIT/(LOSS) FROM ORDINARY ACTIVITIES BEFORE TAX 6,148 5,503 EXCEPTIONAL INCOME FROM NON-CAPITAL TRANSACTIONS EXCEPTIONAL INCOME FROM CAPITAL TRANSACTIONS 90 0 Proceeds from disposals of non-current assets 90 Investments grants released to profit Other REVERSALS OF PROVISIONS AND EXPENSE RECLASSIFICATIONS 43 176 EXCEPTIONAL INCOME 133 176 EXCEPTIONAL CHARGES ON NON-CAPITAL TRANSACTIONS EXCEPTIONAL CHARGES ON CAPITAL TRANSACTIONS 00 Net book value of assets sold Other EXCEPTIONAL DEPRECIATION, AMORTISATION AND PROVISIONS 0 0 Regulated provisions Depreciation, amortisation and other provisions 00 EXCEPTIONAL CHARGES 00 NET EXCEPTIONAL ITEMS 133 176 Statutory employee profit-sharing scheme Corporate income tax 8,408 (164) TOTAL INCOME 6,606 6,243 TOTAL EXPENSES 8,733 415 NET PROFIT/(LOSS) FOR THE YEAR (2,127) 5,828 FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Parent Company Financial Statements
Notes to the Parent Company Financial Statements 1
Notes to the balance sheet before appropriation of earnings for the The accounts have been prepared for a 12-month period extending 2 year ended 31 December 2006, showing total assets of €343,314,465 from 1 January 2006 to 31 December 2006. and to the income statement, presented in list format, showing total 3 The notes presented below represent an integral part of the financial income of €6,607,033, total expenses of €8,733,930 and a net loss 4 of €2,126,897. statements. 5 6 ■ Note 1 Accounting Policies and methods
1.1 Accounting Policies
The financial statements have been prepared in accordance with Items are recorded in the accounts in accordance with the historical the fundamental accounting principles of prudence, going concern, cost convention, with the exception of equity investments. consistency and accruals and the general financial statement preparation and presentation rules defined by Law 83-353 of 30 April A consolidated balance sheet and income statement have been 1983, Decree 83-102 of 29 November 1983 and the 1999 French prepared for Groupe Steria SCA. General Chart of Accounts approved by the Order of 22 June 1999.
1.2 Accounting Methods
The main accounting methods used are as follows: ■ to assess a subsidiary, the shares held in the company over which the Group has exclusive control are valued using the same method. 1.2.1 Investments Investments in companies over which the Group does not have To harmonise the parent company and consolidated financial exclusive control are stated on the balance sheet at the lower of statements of Groupe Steria SCA, the investments in companies acquisition cost or value in use. over which the Group has exclusive control are recorded for the percentage shareholding they represent. 1.2.2 Receivables The option for this equity method of accounting is provided by Article L.232-5 of the French Commercial Code, introduced by the Law Receivables are stated at nominal value. A provision for write-down of 3 January 1985 and the application decree of 17 February 1986: is recorded where the receivables’ recoverable value is less than its ■ the method applies to fully consolidated companies; balance sheet value. ■ the shareholders’ equity of these companies is calculated using the accounting policies adopted for consolidation;
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1.2.3 Financial Income 1.2.4 Marketable Securities
Subsidiary dividends are recorded in financial result once the Marketable securities are stated at their balance sheet value. Provisions 1 shareholders of these companies have met and decided on the for write-down are set aside for any unrealised capital losses. payment of a dividend prior to the Groupe Steria SCA year-end. 2 The balance sheet value of listed securities and treasury shares is determined using the average closing share price of the last month 3 preceding the closing date. 4 5 6 ■ Note 2 Additional Information and Financial Commitments
All tables are presented in thousands of euros and the mandatory No add-backs were recorded for the general expense categories as tables are only included insofar as they provide additional significant stipulated in Article 27 of the Law of 12 July 1965. disclosures compared to the balance sheet and income statement.
■ Note 3 Balance Sheet and Income Statement
The balance sheet and income statement are expressed in € thousands unless otherwise stated.
Major Events
Capital increases reserved for employees maximum of 452,876 Groupe Steria shares were issued that could in France and the rest of Europe be exercised upon the fulfilment of certain objectives.
■ 7,650 shares were created on 16 January 2006; In June 2006, 35 subscription warrant holders exercised and fully paid ■ 146,989 shares were created on 16 June 2006; up in cash their subscription rights for 136,839 new shares. ■ 336,466 shares were created on 4 October 2006; This transaction resulted in the creation of 136,839 new shares on ■ 10,500 shares were created on 23 October 2006. 16 June 2006, together with an issue premium, totalling €3,626,233, in consideration for an increase in Steria’s current account which raised the value of Mummert’s shares by the same amount. Tax consolidation unit OF GROUPE STERIA SCA FINANCIAL STATEMENTS Warranties received by Groupe Steria SCA and Steria SA with Groupe Steria SCA is the head of a tax consolidation unit including respect to the acquisition of the German company, Mummert Steria SA, Stepar, U-Services, Sysinter and Sternet. Consulting AG, concluded on 30 December 2004 and effective as of 1 January 2005:
Mummert Consulting AG Group A warranty to cover liabilities was given to Groupe Steria SCA under normal business conditions. In connection with the acquisition of the Mummert Consulting A.G. Group, share subscription warrants granting entitlement to a
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Parent Company Financial Statements
The warranty will expire in January 2007, except for subjects covered liquidity, share price consistency and the subsequent reduction by French company law for whom it will expire in January 2015. in share price volatility on the market and to avoid price differences not justified by market trends. Accordingly, the issuer “Groupe Steria SCA” 1 Groupe Steria SCA designated Steria SA as a nominee. Hence, provided the broker “Société Générale Securities SAS” with an amount Mummert securities are now held by Steria SA, which is subject to of €735,000 and 17,500 shares. all the rights and obligations underwritten by Groupe Steria in the 2 acquisition agreement. Groupe Steria SCA remains jointly liable in As at 31 December 2006, the following resources featured in the 3 respect of the obligations now incumbent upon Steria SA. liquidity account: ■ 11,012 Groupe Steria shares; 4 Liquidity contract with Société Générale ■ €1,029,231. Securities SAS 5 The treasury shares held by Groupe Steria SCA and recognised until 31 December 2005 in account 50200000 were reclassified to account 6 On 31 October 2006, Groupe Steria SCA signed a liquidity contract 27710000, as they were no longer intended for employees. with Société Générale Securities SAS in order to promote transaction
■ Note 4 Explanations to the Financial Statements
4.1 Fixed assets
Movements in fixed assets break down as follows:
As at 31/12/2005 Additions Decreases As at 31/12/2006 Intangible assets Tangible assets Equity investments 225, 358 80, 371 305, 729 Loans to investments Loans GROSS VALUES 225, 358 80, 371 305, 729
4.2 Receivables
4.2.1 Operating Receivables
As at 31 December 2006, all operating receivables are due in less than one year.
As at 31/12/2006 Current accounts 34, 882 State and local authorities 0 TOTAL 34, 882
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4.2.2 Accrued Income
As at 31/12/2006 1 Accrued credit notes 1 Accrued interest receivable 8 2 TOTAL 9 3
4.3 Fungible Assets 4 5 In accordance with CNC notice 98-D concerning short-term The Group did not perform any transactions involving treasury shares transactions, the treasury shares held by Groupe Steria SCA in order in 2006. 6 to adjust its share price are recorded as investment securities. A total of 53,177 treasury shares were held by the Group as at 31 December 2006.
As at 31/12/2006 Market value Acquisition cost Treasury shares 2,391 1,672 Marketable securities TOTAL 2,391 1,672
4.4 Breakdown of Share Capital
As at 31/12/2006 Number of shares Nominal value Ordinary shares 18,623,257 1 euro
4.5 Changes in Shareholders’ Equity
Shareholders’ equity as at 31/12/2005 243,472 Increase in capital and related premiums 15,200 Statutory dividends (5,614) Equity accounting reserve 80,371 Shareholders’ equity before net profit/(loss) for the year 333,429 Net profit/(loss) for the year ended 31/12/06 (2,127) SHAREHOLDERS’ EQUITY AS AT 31/12/2006 331,302 FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Parent Company Financial Statements
4.6 Provisions for Liabilities and Charges
All material provision reversal amounts were utilised. 1 Provisions Decreases/ Provisions 2 as at 01/01/06 Increases Utilisation as at 31/12/06 Provision for 2004 minimum annual tax 3 charge 43 43 0 Pension provision 35 35 0 4 TOTAL 78 0 78 0 5
4.7 Liabilities 6
4.7.1 Borrowings
Gross Less than 1 year Bank borrowings initially maturing within 1 year 13 13 initially maturing in more than 1 year 00 TOTAL 13 13
4.7.2 Operating Liabilities
Gross Less than 1 year Trade creditors and related accounts 75 75 Personnel and related accounts 00 Social security contributions and other social welfare organisations 0 0 Amounts payable in respect of fixed assets and related accounts 0 0 French State: corporate income tax 10,265 10,265 French State: other taxes and similar duties 00 Group and Partners 11 Other sundry liabilities 1,656 1,656 TOTAL 11,997 11,997
4.7.3 Accrued Expenses
Gross Less than 1 year Purchase invoice accruals 65 65 Tax liabilities 11 Employee-related liabilities 00 TOTAL 66 66
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4.8. Taxation
1 4.8.1 Allocation of Corporate Income Tax Based would have had to pay the Public Treasury had there been no tax on Group Earnings consolidation. The terms and conditions of payment and the due 2 dates of this receivable are the same as those adopted by the To determine the corporate income tax liability of a subsidiary vis-à-vis Public Treasury; 3 Groupe Steria SCA, the profit-sharing and the special investment ■ to determine and monitor the benchmark profit, the tax loss and reserve set forth in Articles 7 to 21 of Order no. 86-114 of 21 October the deferred tax depreciation generated by the subsidiary, both 4 1986, the subsidiary’s taxable profit shall be calculated under the prior to and during the tax consolidation period, may be carried French legal regime and that for long-term capital gains, as if it had forward under the same conditions under French law and charged 5 been taxed separately, i.e. under the same conditions as if it had not against future tax profits. been included in the tax consolidation scope. 6 The terms and conditions governing profit or loss and corporate For this purpose, the figures reported in the 2058-A bis and 2058-B bis income tax apply without distinction to transactions liable to the tax returns prepared by the subsidiary shall be referred to. normal corporate income tax rate and those subject to a reduced rate (reserve for long-term capital gains or losses). As a result: ■ this benchmark taxable profit and the resulting theoretical income In 2004, certain French entities within the tax group were subject tax shall not be impacted by any restatements made in respect of to a tax inspection covering financial years 2001, 2002 and 2003. the Group’s tax regime; All matters reviewed and discussed with the French tax authorities ■ the subsidiary shall pay and record only the tax charge it would are now closed, except for the tax treatment of the provision for have incurred had there been no tax consolidation, after posting write-down of equity investments in Integris Italia SpA that is still the tax credits and amounts receivable from the Public Treasury under discussion. However, Steria believes it has solid arguments to arising from tax loss carry-backs; effectively challenge the stance adopted by the French tax authorities. Nonetheless , Steria recognised a provision for taxes, penalties and ■ Groupe Steria SCA shall benefit from a receivable from the interest in 2006 regarding this €3,174,013 write-down. subsidiary equal to the theoretical corporate income tax and the minimum annual corporate income tax charge that the subsidiary
4.8.2 Allocation of Corporate Income Tax Between Profit from Ordinary Activities and Exceptional Items
Total Ordinary Exceptional Profit/(loss) before tax 6 281 6 148 133 Employee profit-sharing SUB-TOTAL 6 281 6 148 133 GROUPE STERIA SCA gross tax Tax liability with respect to tax loss carryforwards Provision for taxes Impact of tax consolidation on taxes (8 408) (8 408) SUB-TOTAL CORPORATE INCOME TAX (8 408) 0 (8 408) NET PROFIT/(LOSS) (2 127) 6 148 (8 275) FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS
4.8.3 Deferred Taxes
Base Tax Provisions for liabilities and charges 0 Pension provisions 0 TOTAL 00 Long-term capital losses 0
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Parent Company Financial Statements
4.8.4 Income Tax Saving
The net corporate income tax saving, arising from the application of the Group tax regime for a given year, shall be acquired immediately by 1 Groupe Steria SCA at the year-end. 2 Tax Income tax saving (2,817) 3 19% income tax saving 0 1.5% contribution saving (68) 4 TOTAL INCOME TAX SAVING (2,885) 5
4.8.5 Difference Between Reported Income Tax and Income Tax Incurred in the Absence 6 of Tax Consolidation
Tax Tax reported following tax consolidation 10,983 Tax incurred in the absence of tax consolidation 0 TOTAL DIFFERENCE 10,983
4.8.6 Tax Loss Carryforwards
Amount 31/12/2005 year-end 1,667 31/12/2006 year-end (1,667) TOTAL TAX LOSS CARRYFORWARDS 0
4.9 List of Subsidiaries and Affiliates
Share capital Shareholding Gross value of shares/ Loans, Advances, Net sales/ Name Shareholders’ equity dividends Equity value Guarantees Net profit/(loss) SUBSIDIARIES (+50% SHAREHOLDING) - STERIA SA 13,317 99.99% 169,626 30,705 533,483 12 rue Paul Dautier 78140 VELIZY 296,221 192,000 32,612 - STEPAR 950 99.99% 1,141 2,150 0 12 rue Paul Dautier 78140 VELIZY 228 935 0
4.10 Remuneration of Management Bodies
The remuneration of management and administrative bodies, and attendance fees totalled €60 thousand and €70 thousand, respectively.
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4.11 Cash Flow From Operating Activities
31/12/06 31/12/05 1 Net profit/(loss) for the year (2,127) 5,828 2 Depreciation and amortisation, net 00 Provisions for financial items, net (78) (399) 3 CASH FLOW FROM OPERATING ACTIVITIES (2,205) 5,429 4 5 4.12 Statement of Source and Application of Funds 6 APPLICATIONS 31/12/06 31/12/05 Sources 31/12/06 31/12/05 Dividends paid during the year 5,614 4,495 Cash flow from operating activities (2,205) 5,429 Purchases of non-current assets Disposals of non-current assets - Intangible fixed assets 0 - Intangible fixed assets - Tangible fixed assets 0 - Tangible fixed assets - Long-term investments 103 - Long-term investments Deferred charges Gross value Gross value - Share capital or share premium - Share capital or share premium 502 169 - Equity equivalents 5,827 71 - Equity equivalents 12,211 2,860 Repayments of borrowings Increases in borrowings - Medium/long-term borrowings - Medium/long-term borrowings - Group current accounts 18,529 3,498 - Group current accounts 5,614 162 TOTAL APPLICATIONS 29,970 8,167 TOTAL SOURCES 16,122 8,620 NET SOURCES 453 NET APPLICATIONS 13,848
Change in total net working capital Increases (b) Decreases (d) 31/12/06 (d) - (b) 31/12/05 CHANGES IN OPERATIONS CHANGES IN OPERATING ASSETS Stock and work-in-progress Payments on account for orders Trade debtors, related accounts & other debts 297 CHANGES IN OPERATING LIABILITIES Payments received on account for work-in-progress Trade creditors, related accounts and other liabilities 10,174 TOTAL OPERATIONS 10,471 A - NET CHANGE IN OPERATIONS 10,471 ( 319) CHANGES IN NON-OPERATING ACTIVITIES Changes in other debtors
Changes in other creditors 1,493 131 OF GROUPE STERIA SCA FINANCIAL STATEMENTS TOTAL NON-OPERATING ACTIVITIES 1,493 131 B - NET CHANGE IN NON-OPERATING ACTIVITIES 1,493 ( 131) TOTAL (A ) - (B ) NET DECREASE IN WORKING CAPITAL CHANGES IN CASH Changes in cash at bank and in hand 1,875 Changes in current bank loans, credit bank balances 9 TOTAL CASH 1,884 3 C - NET CHANGES IN CASH 1,884 (3) CHANGE IN TOTAL NET WORKING CAPITAL (A+B+C): NET SOURCES 13,848 ( 453)
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Parent Company Financial Statements
4.13 Employee Share Allocations as at 31 December 2006
1
Share Subscription Warrants The General Manager shall determine the beneficiaries in addition to 2 the terms and conditions, and where necessary, the criteria for share The General Shareholders’ Meeting of 30 December 2004 decided to allocation. This authorisation has been granted until 30 June 2008. 3 issue a maximum of 522,000 share subscription warrants for allocation by the Groupe Steria General Manager with respect to the acquisition Pursuant to this authorisation, the General Manager decided: 4 of the German company Mummert. The General Manager allocated ■ to allocate on 13 September 2005 a maximum of 70,000 shares to 490,566 warrants, each warrant granting entitlement to one share. the beneficiaries, the list of whom was approved by the General 5 Manager present in the Group at the end of the 3-year vesting The first tranche corresponding to 150,553 share subscription warrants period, i.e. 13 September 2008, and subject to performance criteria. 6 was exercised between 1 and 30 June 2006 under the stipulated terms These shares shall be retained for 2 years until 13 September 2010. and conditions. After taking into account cancellations, a total of 65,800 free shares remain outstanding as at 31 December 2006; Hence, after taking into account cancellations, a total of 286,930 ■ warrants remain outstanding as at 31 December 2006. to allocate on 13 September 2006 a maximum of 100,000 shares to the beneficiaries, the list of whom was approved by the General Manager present in the Group at the end of the 3-year vesting period Free shares beginning 19 September 2006 and ending 19 September 2009, and subject to performance criteria. These shares shall be retained The General Shareholders’ Meeting of 15 June 2005 authorised the for 2 years until 19 September 2011. After taking into account General Manager to allocate to the Group’s salaried employees and cancellations, a total of 74,600 free shares remain outstanding corporate officers, such as these beneficiaries are defined by the as at 31 December 2006; General Manager, free shares, to be issued or resulting from a prior ■ to allocate on 15 December 2006 a maximum of 7,500 shares takeover of the Company under the terms and conditions provided to the beneficiaries, the list of whom was approved by the by law. General Manager present in the Group at the end of the 3- The total number of shares may not exceed 2% of the Company’s share year vesting period, i.e. 15 September 2009, and subject to capital, at the date on which share allocation was decided. The performance criteria. These shares shall be retained for 2 years allocation of these shares shall be definitive after a minimum period until 15 December 2011. of 2 years and the beneficiaries shall retain their shares for a minimum period of 2 years as from the definitive allocation of such shares. Share Subscription Options
There are no share purchase options or option-based instruments.
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■ SHARE SUBSCRIPTION OPTION INFORMATION
Date of General Meeting 18/12/1998 28/05/2002 9/06/2004 Plan no. 1 Plan no. 2 Plan no. 3 Plan no. 4 Plan no. 5 Plan no. 6 Plan no. 7 / 1 Allocation date 29.01.1999 07.02.2000 05.09.2000 10.04.2001 13.05.2002 11.04.2003 20.04.2004 / 2 Total number of shares available for subscription 300,600(1) 249,570(1) 23,700(1) 236,640(1) 741,100 230,000 200,000 / Number of shares available for subscription by 3 corporate officers(2) / 10,350 / 10,950 48,000 14,500 11,000 / first ten employee allottees(3) / 24,795 7,950 25,500 143,000 77,500 75,200 / 4 End of vesting period 30.01.2002 08.02.2003 06.09.2003 11.04.2004 14.05.2005 12.04.2006 21.04.2007 / ExpirY date 29.01.2006 07.02.2007 05.09.2007 10.04.2008 13.05.2009 11.04.2010 20.04.2011 / 5 Subscription price in € 7.62(1) 43.33(1) 53.33(1) 43.33(1) 36 13 28.50 / Exercise terms and conditions 6 (when the plan contains several tranches) / / / / / / / / Number of shares subscribed to as at 31 December 2006 5,850 58,560 none 5,550 62,267 13,800 none / Share subscription options cancelled as at 31 December 2006 20,250 54,720 9,000 45,405 213,500 37,900 22,000 / Outstanding share subscription options / 136,290 14,700 185,685 465,333 178,920 178,000 / (1) Taking into account the division in the share’s nominal value by 3. (2) Groupe Steria SCA corporate officers. (3) Of the Group.
No other shares grant entitlement to share capital.
4.14 Transactions Completed with Group Companies
31/12/06 31/12/05 Long-term investments 225,358 225,358 Debit balance current accounts 34,882 16,560 Trade creditors 04 Credit balance current accounts 1 240 Financial income (including dividends received) 6,387 5,825 Financial expenses 01 FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Notes to the Parent Company Financial Statements
4.15 Five-Year Summary
1 FIVE YEAR SUMMARY (IN €) (GROUPE STERIA SCA PARENT COMPANY FINANCIAL STATEMENTS) 2 Year-end date 31/12/06 31/12/05 31/12/04 31/12/03 31/12/02 Financial year (months) 12 12 12 12 12 3 CAPITAL AT THE YEAR-END Share capital 18,623,257 18,121,652 17,952,872 17,742,194 17,408,670 4 Number of ordinary shares 1,862,325 18,121,652 17,952,872 17,742,194 17,408,670 5 MAXIMUM NUMBER OF SHARES OUTSTANDING 1,458,713 1,918,585 2,698,096 2,225,339 2,093,264 6 Summary of operating results Profit/(loss) before income tax, profit-sharing, depreciation, amortisation and provisions 6,203,226 5,265,239 (163,562) 620,087 13,300,280 Corporate income tax 8,408,209 (164,019) (200,441) (3,836,770) (1,092,593) Depreciation, amortisation and provisions (78,086) (398,648) 205,245 (876,717 ) 9,401,465 NET PROFIT/(LOSS) (2,126,897) 5,827,906 (168,365) 5,333,574 4,991,408 Earnings per share data Profit/(loss) after income tax, profit-sharing, but before depreciation, amortisation and provisions (0.12) 0.30 0.00 0.25 0.83 Profit/(loss) after income tax, profit-sharing, 0.29 depreciation, amortisation and provisions (0.11) 0.32 (0.01) 0.30 PERSONNEL Total payroll charges 111,278 191,089 202,944 178,676 197,922 Social security charges 987 44,289 46,944 36,811 43,674
4.16 Marketable Securities
Number of shares Gross value Net book value Market value Treasury shares 53,177 1,672 1,672 2,391 Steria SA 887,784 169,626 192,000 0 Stepar 126,631 1,141 935 0 TOTAL 1,067,592 172,439 194,607 2,391
The market value is calculated using the average closing share price of the month preceding the closing date.
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4.17 Off-balance Sheet Commitments
1 All Group companies are covered by a Master civil and professional Similarly, all Group companies are covered by a Master property liability insurance policy on a DIC/DIL basis (Difference in conditions/ damages and business interruption (PDBI) policy on a DIC/DIL basis 2 Difference in limits) regarding local policies, with a contractual general (Difference in conditions/Difference in limits) regarding local policies, indemnity limit of €55,000,000 per claim and per insurance year. with a contractual general indemnity limit (all damages and business 3 interruption losses combined) amounting to €106,714,310 per year and per claim for 2006. 4 5 4.18 Complex Commitments 6
Commitments Related to the Sale of Companies: The warranty will expire in January 2007, except for subjects covered Warranties by French company law for which it will expire in January 2015.
Warranties received by Groupe Steria SCA and Groupe Steria SCA designated Steria SA as a nominee. Hence, Steria as part of the acquisition of Mummert Mummert securities are now held by Steria SA, which is subject to Consulting all the rights and obligations underwritten by Groupe Steria in the acquisition agreement. Groupe Steria SCA remains jointly liable in A warranty to cover liabilities was given to Groupe Steria SCA under respect of the obligations now incumbent upon Steria SA. normal business conditions. FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Statutory Auditor’s Report on the annual fi nancial statements
3.4 Statutory Auditor’s Report on the annual financial statements 1
PIMPANEAU & ASSOCIÉS ERNST & YOUNG 2 NEXIA INTERNATIONAL et Autres 23, rue Paul-Valéry 41, rue Ybry 3 75116 Paris 92576 Neuilly-sur-Seine Cedex 4 SAS with capital of €120,000 SAS with variable capital
Statutory Auditors Statutory Auditors 5 Member of the compagnie régionale de Paris Member of the compagnie régionale de Versailles 6 Groupe Steria SCA
Year ended December 31, 2006 Statutory Auditor’s Report on the annual financial statements
To the Shareholders,
In compliance with the assignment entrusted to us by your Shareholders general meetings, we hereby report to you, for the year ended December 31, 2006, on:
the audit of the accompanying annual financial statements of Groupe Steria,
the justification of our assessments,
the specific verifications and information required by law.
These annual financial statements have been approved by the «Gérant». Our role is to express an opinion on these financial statements based on our audit.
I. Opinion on the annual financial statements
We conducted our audit in accordance with professional standards In our opinion, the annual financial statements present fairly, in all applicable in France; those standards require that we plan and material respects, the financial position of the Company at December perform the audit to obtain reasonable assurance about whether the 31, 2006 and the results of its operations for the year then ended, annual financial statements are free of material misstatement. An in accordance with the accounting rules and principles applicable audit includes examining, on a test basis, evidence supporting the in France. amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
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1
II. Justification of assessments 2 3 In accordance with the requirements of Article L. 823-9 of French on the group consolidated accounts as of December 31, 2006. Company Law (Code de commerce) relating to the justification of our Our diligences allowed us to ensure the proper application of this 4 assessments, we bring to your attention the following matters: accounting method. 5 Your company applies the equity method valuation, provided for The assessments were thus made in the context of the performance in Article L. 232-5 of French Company Law (Code de commerce) to of our audit of the annual financial statements taken as a whole and 6 assess its equity interest, as set out in note 1.2.1 of the notes to the therefore contributed to the formation of our audit opinion expressed financial statements. Valuation of its equity interest is performed using in the first part of this report. the consolidation accounting policies and methods. To review the valuation, we relied on results of our consolidation testing performed
III. Specific verifications and information
We have also performed the specific verifications required by law in ■ the fair presentation of the information given in the Management’s accordance with professional standards applicable in France. We have Report in respect of remunerations and benefits granted to the no matters to report regarding: relevant directors and any other commitments made in their ■ the fair presentation and the conformity with the annual financial favour in connection with, or subsequent to, their appointment, statements of the information given in the Management’s Report termination or change in current function. and in the documents addressed to the Shareholders with respect In accordance with French law, we have ensured that the required to the financial position and the annual financial statements; information concerning the names of the principal Shareholders has been properly disclosed in the Management’s Report.
Paris and Neuilly-sur-Seine, March 21, 2007
The Statutory Auditors
PIMPANEAU & ASSOCIÉS ERNST & YOUNG NEXIA INTERNATIONAL et Autres
French original signed by Olivier Juramie French original signed by François Rochmann FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS
This is a free translation into English of the Statutory Auditors’ Report issued in French language and is provided solely for the convenience of English-speaking readers. This report includes information specifically required by French law in all audit reports, whether qualified or not, and this is presented below the opinion on the financial statements. This information includes an explanatory paragraph discussing the auditors’ assessment of certain significant accounting matters. These assessments were made for the purpose of issuing an opinion on the financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated financial statements. The report also includes information relating to the specific verification of information in the group management report.
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Statutory Auditors’ Report on related party agreements and commitments
3.5 Statutory Auditors’ Report on related party agreements and commitments 1 2
PIMPANEAU & ASSOCIÉS ERNST & YOUNG 3 NEXIA INTERNATIONAL et Autres 23, rue Paul-Valéry 41, rue Ybry 4 75116 Paris 92576 Neuilly-sur-Seine Cedex SAS with capital of €120,000 SAS with variable capital 5
Statutory Auditors Statutory Auditors 6 Member of the compagnie régionale de Paris Member of the compagnie régionale de Versailles Groupe Steria SCA
Year ended December 31, 2006 Statutory Auditors’ Special Report on related party agreements and commitments
To the Shareholders,
In our capacity as Statutory Auditors of your Company, we hereby report to you on the agreements and commitments with related parties.
We are not required to ascertain whether any agreements and commitments exist, but to inform you, on the basis of the information provided to us, of the terms and conditions of those agreements and commitments indicated to us. We are not required to comment as to whether they are beneficial or appropriate. It is your responsibility, under the terms of Article 92 of the March 23, 1967 Decree, to evaluate the benefits resulting from these agreements and commitments prior to their approval.
We hereby inform you that we have not been advised of any agreements and commitments covered by Article L. 226-10 of French Company Law (Code de commerce). In addition, in accordance with the March 23, 1967 Decree, we have also been advised that the following agreements and commitments, approved in prior years, remained current in the year ended December 31, 2006.
1. With Steria SA 2. With Steria S.A., Stepar S.A., U-Services, Sternet, Sysinter Director concerned Mr. Jean Carteron. Director concerned Mr. Jean Carteron. Nature and purpose Sub-leasing agreement of an office in Vélizy granted by Steria. Nature and Purpose Tax consolidation agreement. Conditions This sub-leasing is granted for free for the year ended December 31, Conditions 2006. Your company perceives income taxes from its subsidiaries as if they were separately taxed. At last, your company benefits from taxes savings which are the difference between the taxes perceived from its subsidiaries and the group income tax it pays to the tax administration without compensating subsidiaries.
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1 2
3. With Tecnet Participations Nature and purpose 3 Domicile agreement between Steria (wholly owned by your company) Director concerned and Tecnet Participations. 4 Mr. Jacques Bentz, member of the Supervisory Board. Conditions 5 Nature and purpose In 2006, this agreement was granted for free. 6 Services agreement according to which Mr. Jacques Bentz assists We conducted our work in accordance with French professional Steria (wholly owned by your company) and its subsidiaries with their standards. These standards require that we perform the necessary development, notably at international level during acquisitions and procedures to verify that the information provided to us is consistent partnership agreements. with the documentation from which it has been extracted.
Conditions In 2006, Tecnet Participations invoiced Steria for € 34,466.47 (before tax).
Paris and Neuilly-sur-Seine, March 21, 2007
The Statutory Auditors
PIMPANEAU & ASSOCIÉS ERNST & YOUNG NEXIA INTERNATIONAL et Autres
French original signed by Olivier Juramie French original signed by François Rochmann FINANCIAL STATEMENTS OF GROUPE STERIA SCA FINANCIAL STATEMENTS
This is a free translation into English of the special report of the Statutory Auditors’ report issued in the French language and is provided solely for the convenience of English-speaking readers.
This report should be read in conjunction with, and is construed in accordance with French law and professional auditing standards applicable in France.
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FINANCIAL STATEMENTS 03 OF GROUPE STERIA SCA Statutory Auditors
3.6 Statutory Auditors 1 2 3.6.1 Terms of Office 3 End of term of office (ORDINARY GENERAL MEETING TO APPROVE THE FINANCIAL 4 First appointed STATEMENTS FOR THE FISCAL YEAR ENDING) PRINCIPAL STATUTORY AUDITORS 5 Pimpaneau & Associés 18 December 1998 31 December 2011 Represented by Mr Olivier Juramie 6 23, rue Paul Valéry 75016 Paris Ernst & Young et Autres(1) 17 June 1993 31 December 2010 Ernst & Young Represented by Mr François Rochmann 11, allée de l’Arche 92037 La Défense cedex DEPUTY STATUTORY AUDITORS Mr Roger Pihet 14 June 2006 31 December 2011 23, rue Paul Valéry 75016 Paris Mrs Brigitte Geny 4 June 2003 31 December 2010 Tour Franklin 92042 Paris-La Défense cedex (1) Continuation of the corporate office granted on 17 June 1993 to PGA under the name of Barbier Frinault & Associés then under the name of Barbier Frinault & Cie, then Barbier Frinault et Autres and finally Ernst & Young et Autres.
3.6.2 Statutory Auditors’ Fees 2006
Ernst & Young Pimpaneau & Associés Amount % Amount % (in thousands of euros) 2006 2005 2006 2005 2006 2005 2006 2005 AUDIT ■ Statutory audit, certification, review of annual and half-year parent company and consolidated financial statements 1,082(1) 1,084(2) 100 96 152 161 100 100 SUB-TOTAL 1,082 1,084 100 96 152 161 100 100 ■ Services directly related to the Statutory Audit: Due diligence procedures performed in respect of acquisitions 23(3) 2 SUB-TOTAL OF SERVICES DIRECTLY RELATED TO THE STATUTORY AUDIT - 23 - 2 OTHER SERVICES Assistance with expatriation 17(3) 2 SUB-TOTAL 17 2 TOTAL 1,082 1,124 100 100 152 161 100 100 (1) Including the audit of European subsidiaries: €714K. (2) Including the audit of European subsidiaries: €704K. (3) Performed at the European subsidiaries.
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4.1 Report by the Chairman of the Supervisory Board p. 85 4.1.1 Conditions Related to the Preparation and Organisation of the Supervisory Board’s Work p. 85 4.1.2 Internal Control Procedures p. 98
4.2 Statutory Auditors’ Report on the Chairman’s Report p. 103 CORPORATE GOVERNANCE AND INTERNAL CONTROL CORPORATE
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CORPORATE GOVERNANCE 04 AND INTERNAL CONTROL
In 1996 Groupe Steria, the Group’s listed holding company, adopted To ensure that management and control functions are properly the legal status of a Société en Commandite par Actions (SCA separated, Steria’s governance system can be broken down as – partnership limited by shares under French law) whereby two types follows: 1 of partner co-exist: limited partners (the Shareholders) and general ■ The General Manager partners (the Group’s employee shareholders). The General Manager is in charge of Groupe Steria SCA but is not a 2 G eneral P artner. He/she is responsible for managing the Group and For Steria, the legal framework provided by the SCA status is a means 3 of setting up a participative governance system to boost the Group’s acting in the best interest of the company, within the confines of its appeal and develop entrepreneurial spirit among its employees. corporate purpose and in compliance with the powers granted by law and/or the Articles of Association to the Supervisory Board, the 4 The originality of the Group’s organisation structure stems in particular General Meetings of Shareholders and the General Partner. 5 from the presence of: ■ The Supervisory Board ■ a General Manager, who is not a General Partner and is appointed The Supervisory Board exercises continuous control over the 6 by the General Meeting of shareholders for a maximum period of management of the company on behalf of the shareholders. It 6 years, which can be renewed on the proposal of the Supervisory currently has 8 members. Jacques Bentz was appointed Chairman Board and subject to approval from the G eneral P artner. He/she of the Supervisory Board on 1 February 2007. may be dismissed according to the procedure set forth in the Articles ■ The Soderi Board of Directors, General Partner of Association, as described here in Section 5. Group strategy and major decisions involving the General Manager, as defined in the The capital of Soderi SAS is owned by the Group’s employee Articles of Association (see Section 5), are subject to the prior shareholders. approval of the Supervisory Board and the General Partner. Jean Carteron, founder of the Group, is Honorary Chairman of the François Enaud was appointed General Manager of the Group on Company. 1 February 2007. ■ a General Partner, Soderi SAS, a simplified joint-stock company Regarding corporate governance, Groupe Steria SCA complies with the with variable capital owned by the Group’s employee shareholders. governance rules applicable in France, as defined in the AFEP/MEDEF Soderi SAS is managed by a Board of Directors with 15 members (at reports. present) who are elected by the Soderi General Meeting. The Board As such, the following are presented below and in the Report by the of Directors elects one of its members as Chairman to represent Chairman of the Supervisory Board: the Board. Yves Rouilly was appointed Chairman of Soderi on ■ the structure, duties and organisation of the Supervisory Board; 1 February 2007. ■ a presentation of the corporate officers and information regarding the remuneration of said corporate officers and senior managers. ■ internal control.
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4.1 Report by the Chairman of the Supervisory Board 1
Pursuant to Article L. 621-18-3 of the Code monétaire et financier This report was prepared by the Chairman of the Supervisory Board in 2 (French monetary and financial code), we present the Chairman’s association with the concerned functional Directions. 3 Report. Its purpose is to report on the conditions related to the preparation and organisation of the Board’s work and internal control 4 procedures set up by the Company. 5 4.1.1 Conditions Related to the Preparation and Organisation 6 of the Supervisory Board’s Work
4.1.1.1 Structure of the Board
On 31 December 2006, the Supervisory Board members were as follows:
First appointed End of term of office Number of shares held Age Eric Hayat (Chairman) Director of Syntec Informatique 03/1999 06/2008 161,878 66 Patrick Boissier** Chairman and CEO of Chantiers de l’Atlantique 06/2004 06/2010 200 57 Élie Cohen** Director of Research at CNRS-Sciences-PO-CAE 05/2000 06/2008 7,570(1) 57 Pierre-Henri Gourgeon** CEO of Groupe Air France 06/2004 06/2010 150 61 Charles Paris De Bollardière** Treasurer at Groupe Total 05/2000 06/2008 150 51 Jacques Bentz Manager of Tecnet Participations 08/2000 06/2008 6,752 65 Yves Rouilly Director of Strategy at Steria 05/1999 06/2007 36,370 65 Jacques Lafay Chairman of the Group FCPE (mutual fund) 06/2006 06/2008 2,584 59 ** Independent members. (1) Mr and Mrs.
CORPORATE GOVERNANCE AND INTERNAL CONTROL CORPORATE
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CORPORATE GOVERNANCE 04 AND INTERNAL CONTROL Report by the Chairman of the Supervisory Board
Following the General Meeting of 1 February 2007 and the subsequent Supervisory Board meeting, the Board members are currently as follows:
First appointed End of term of office Number of shares held Age 1 Jacques Bentz (Chairman) Manager of Tecnet Participations 08/2000 06/2008 6,752 65 Eric Hayat (Vice Chairman) 2 Director of Syntec Informatique 03/1999 06/2008 161,878 66 Patrick Boissier** 3 Chairman and CEO of Chantiers de l’Atlantique 06/2004 06/2010 200 57 Élie Cohen** 4 Director of Research at CNRS-Sciences-PO-CAE 05/2000 06/2008 7,570(1) 57 Pierre-Henri Gourgeon** 5 CEO of Groupe Air France 06/2004 06/2010 150 61 Charles Paris De Bollardière** Treasurer at Groupe Total 05/2000 06/2008 150 51 6 Séverin Cabannes Director of Resources and member of the Société Générale Executive Committee 02/2007 06/2011 150 48 Jacques Lafay Chairman of the Group FCPE (mutual fund) 06/2006 06/2008 2,584 59 ** Independent members. (1) Mr and Mrs.
Mr Jean Carteron was appointed Honorary Chairman on There is no limit set forth in the Articles of Association to the number 1 February 2007. of times a term of office can be renewed.
Of the eight members of the Supervisory Board, four are independent, In accordance with the provisions set forth in the Articles of Association, pursuant to the criteria laid down below, and one, a Steria employee, the members of the Board must hold a minimum of 150 shares in the represents the Group FCPE (mutual fund). company. At least half of its members must be under 65 years of age. Members of the Supervisory Board are considered to be independent when they have no connection of any sort with the company, its The Supervisory Board is comprised of persons providing complementary group or management that could compromise the free exercise of skills. their judgement. The terms of office held by each member are listed in the section The criteria applied are the following: entitled «4.1.1.4 Terms of Office and Remuneration» of this report. ■ not to be an employee or a corporate officer of the company or parent company, or a company within its consolidation and not to 4.1.1.2 Duties have been in such a position in the last five years; The Supervisory Board exercises continuous control over the ■ not to be a corporate officer of a company in which the company management of the company. directly or indirectly holds a seat on the Board of Directors, or in which an employee or a corporate officer of the company (at present To accomplish this, it may call on the General Manager to provide or in the last five years) holds a seat on the Board of Directors; any information or document of use in carrying out its mission of ■ not to be directly or indirectly linked or have been linked during overall control. the last financial year to a customer, supplier, merchant banker, financing banker, important to the company or its group, or for At the Ordinary General Meeting, it gives an annual report on the whom the company or its group represents a significant portion management of corporate affairs and on the financial statements of the activity; for the period. It also gives a report at any Extraordinary General Meetings. ■ not to have close family ties (as defined by article R 621-43-1 of the Code monétaire et financier) with a corporate officer; It may convene the General Meeting of Shareholders. ■ not to have been the company’s statutory auditor in the last five years; It also acts in the following circumstances: ■ ■ not to have been a director of the company for more than it examines the parent company financial statements and the 12 years. consolidated financial statements, as well as the budget; it receives the report from the Statutory Auditors;
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■ it issues a report on any proposals for an increase or reduction in 4.1.1.3 Operations capital submitted by the General Manager to the shareholders; The Supervisory Board functions according to a set of well-established ■ it may propose, during the term of the company and except in the 1 practices. case of vacancy, the appointment or renewal of the term of office of a general manager, which will be decided by the Ordinary General In 2006 the Board met seven times. To enable each Board member to 2 Meeting following approval from the General Partner; be available as far ahead as possible, the meeting schedule is set at ■ it may initiate a request to dismiss a general manager. The the end of the year for the following year, and a reminder is given of 3 General Partner must be notified of any such requests, which must the date of the following meeting at every Board meeting. comply with the rules and procedures set forth in the Articles of 4 Association; Invitations to attend are sent out at least eight days before each meeting. 5 ■ it submits a proposal, on the advice of the Remuneration Committee, regarding the remuneration of the General Manager The attendance rate in 2006 was 92% in total and 86% for independent 6 to the Ordinary General Meeting of Shareholders, which approves members. The identities of any absent members are given in the or rejects the proposal; minutes of each meeting. ■ it sets, on the advice of the Remuneration Committee, the The Statutory Auditors also attend Supervisory Board meetings, remuneration of the members of the Executive Committee; specifically those held to examine annual and half-year financial ■ it gives an opinion to the General Manager concerning: statements. a) the Company’s major strategic directions: medium and long- term plans, consolidated budgets, acquisitions policy, significant Since 13 October 2005, when Groupe Steria SCA joined the Group’s acquisitions, major investments, Economic and Social Union (U.E.S.), the Works Council has been invited to each meeting, in accordance with the regulations in force. b) operations having a noticeable impact on the capital, financing and cash position of the Company and its subsidiaries, In 2006, minutes of previous meetings were sent to Board members c) operations having a significant effect on the allocation of the before each subsequent meeting, along with all the relevant Company’s corporate capital; information as regards the proposed agenda. Confidential information ■ it gives prior approval to all major commitments, as listed below: is given at the meeting.
a) any company borrowing once the total amount of borrowings A standard minimum agenda is scheduled for each meeting, depending exceeds 50% of the total consolidated net accounting position on the time of year it is held. In 2006, the Board mainly handled the of Groupe Steria SCA, as resulting from consolidated financial following subjects: statements drawn up from the last approved financial statements ■ examination and approval of the parent company and consolidated (the “Net Assets”), financial statements; b) the setting up of any securities, preconditions or guarantees, or any ■ examination of the half-year consolidated financial statements; pledges or mortgages on the company’s assets, once the total of the ■ secured debt represents more than 50% of the total Net Assets, review of business; ■ c) the founding of any company, or any acquisition of holdings, in forecasts; any commercial, industrial, financial, securities, property or other ■ budget; operation, in any form whatsoever, once the total amount of the ■ strategy; investment in kind represents more than 20% of the total Net ■ financial situation; Assets, ■ new governance system, alterations to the Articles of GOVERNANCE AND INTERNAL CONTROL CORPORATE d) any decision whose purpose or impact entails, immediately or Association. in the future, the loss of the majority holding in a subsidiary’s capital, directly or indirectly, of the company representing more The Supervisory Board pays particular attention to the results, progress than 10% of the consolidated revenue of Groupe Steria SCA, where of the treasury and cash position, budget preparation, external growth this revenue results from the Group’s last consolidated financial projects and Group strategy. statements. The Supervisory Board is governed by its own set of rules. An updated It verifies that the conditions set forth in Article 1 of the Articles of version of the rules (following the alterations to the Articles of Association, to ensure that Soderi is and shall remain the General Association) is currently undergoing validation by the Board. Partner of Groupe Steria SCA, are fulfilled.
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CORPORATE GOVERNANCE 04 AND INTERNAL CONTROL Report by the Chairman of the Supervisory Board
Strategic Committee The Remuneration and Appointments Committee has no decision- making power and reports to the Supervisory Board alone, making To facilitate its work, the Board set up a Strategic Committee on recommendations and providing information. It meets as often as 1 8 April 2002. required. It may convoke the General Manager, any member of the Executive Committee, any member of the subsidiary management On 31 December 2006, the Strategic Committee included the following 2 teams and, in particular, the Group Human Resources Director. To Supervisory Board members: enable it to perform its mission effectively, it may also convoke any 3 ■ Eric Hayat, Committee Chairman; other party. It reports to the Supervisory Board in due time to allow ■ Jacques Bentz; the latter to deliberate effectively and presents its opinions, proposals 4 ■ Élie Cohen. and recommendations. It may not incur any external costs without prior approval from the General Manager and approval from the 5 This Committee reviews the assumptions presented by the General Supervisory Board. Management pertaining to the Group’s medium and long-term 6 development, focusing on its strategic directions and on the nature The duties of the Committee are as follows: of services offered in different customer segments. It also reviews any i) to inform the Supervisory Board of global remuneration packages other possibilities or alternatives that it deems relevant. and any related benefits granted to the members of the Group Executive Committee and issue useful recommendations that can This review takes into consideration assumptions regarding the be transmitted to the General Manager; development of the competition and the outlook for markets insofar as this information is available or can be estimated. It reviews and ii) to clarify and submit proposals to the Supervisory Board regarding assesses the financial consequences of the assumptions studied. the remuneration of the General Manager; iii) to review applications to sit on the company’s Supervisory Board, The Strategic Committee has no decision-making power and reports to ensure that the candidate is competent, available and honourable the Supervisory Board alone, making recommendations and providing and provide opinions and recommendations to the Board; information. iv) to make proposals to the Supervisory Board on the structure and The Strategic Committee met several times in 2006 and discussed operations of other Committees; the following issues: v) to review the Company’s stock option or share plans and issue ■ the vision, objectives and position of the Group; any proposals, recommendations and opinions to the Supervisory Board. ■ strategy; ■ external growth. The Company provides the Remuneration and Appointments Committee with the resources required to organise the meetings and The minutes of Strategic Committee meetings are submitted to the provides (if necessary) the assistance of various Group departments. Chairman of the Supervisory Board. The Committee met twice in 2006 and dealt with the following Remuneration and Appointments Committee issues: ■ the allocation of free shares; The Remuneration and Appointments Committee was set up by ■ remuneration of the General Manager in 2007; Groupe Steria SCA during the Supervisory Board meeting held on 9 June 2004. ■ the review of applications for the positions of Group Human Resources Director and Group Finance Director; There are three Committee members, appointed for a three-year ■ determining the variable remuneration of the Group Chief Executive period with the option of renewal, ending at the General Meeting Officer. convened to approve the financial statements for the financial year ending 31 December 2006. The minutes of Remuneration and Appointments Committee meetings are submitted to the Chairman of the Supervisory Board. On 31 December 2006, the Committee members were: ■ Pierre-Henri Gourgeon; ■ Patrick Boissier; ■ Charles Paris De Bollardière.
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Audit Committee ii) to verify that the internal procedures for collecting and controlling information ensure that the information is reliable; to review the The Supervisory Board decided to set up an Audit Committee on Group’s internal audit programme and the intervention plan of the 1 5 April 2004. Statutory Auditors; Its structure and operations were determined at the Supervisory Board iii) to enhance the Supervisory Board’s knowledge regarding the 2 meeting held on 9 June 2004. identification, processing and reasonable assessment of the risks incurred by the Group and review risks and significant off-balance 3 On 31 December 2006, the Committee members were: sheet commitments; ■ Charles Paris De Bollardière, with the status of Chairman; iv) to provide an opinion on the renewal or nomination of the 4 ■ Jacques Bentz. Statutory Auditors and their fees, propose applicants and ensure 5 the application of rules intended to ensure the Statutory Auditors’ Members are appointed for a three-year period with the option of independence; obtain information about the amount of all fees of 6 renewal, ending at the General Meeting convened to approve the any type paid to the Statutory Auditors and, if applicable, to the financial statements for the year ending 31 December 2006. networks to which they belong.
The General Manager is invited to every Committee meeting. The Company provides the Audit Committee with the resources required to hold and organise meetings as well as (if necessary) the The Audit Committee has no decision-making power and reports to support of various Group departments. the Supervisory Board alone, making recommendations and providing information. The Audit Committee met twice in 2006 and dealt with the following issues: The Audit Committee meets as often as required, on the initiative of its Chairman, with at least two meetings a year to review the annual ■ review of the financial statements for the financial year ended and half-year financial statements before they are submitted to the 31 December 2005 and the half-year financial statements; Supervisory Board. ■ the financial communication project; ■ the amount of dividends to be distributed for financial The Audit Committee may convoke the General Manager, as well as year 2005; the members of the Executive Committee, the Financial Director and the members of the finance department, the treasury department ■ review of the Statutory Auditors’ mandates; and the internal audit department of Steria or the Group’s main ■ review of a draft memo on the duties and obligations of insiders; subsidiaries. It may also convoke any member of management from ■ review of new internal audit and risk management procedures. the Groupe Steria SCA subsidiaries. It gathers observations from the Statutory Auditors without necessarily consulting the General The minutes of Audit Committee meetings are submitted to the Manager or the subsidiary directors. It may request and discuss with Chairman of the Supervisory Board. them their programme for verifying the corporate and consolidated financial statements. 4.1.1.4 Terms of Office and Remuneration
The Audit Committee reports to the Supervisory Board concerning its Following the Groupe Steria SCA General Meeting of 1 February 2007 work in due time to enable the latter to review the financial statements and in light of the change of governance, François Enaud was appointed and presents the Supervisory Board with its opinions, proposals and General Manager of the company in lieu of Jean Carteron, (Group recommendations. founder) and Soderi SAS (represented by Claude Lacour). Soderi SAS
The Audit Committee may not incur any external costs without prior remains General Partner of the company. GOVERNANCE AND INTERNAL CONTROL CORPORATE approval from the General Manager and approval from the Supervisory Consequently, the following is a list of all Groupe Steria SCA corporate Board. officers subsequent to the change of governance on 1 February 2007 The main duties of the Committee are as follows: and those corporate officers in office at 31 December 2006, as this Reference Document relates to financial year 2006, as well as their i) to ensure the relevance and permanence of the accounting methods respective remunerations. used to prepare the parent company and consolidated financial statements and to ensure the appropriate handling of major operations at Group level, review the scope of the consolidated financial statements and, if appropriate, the reasons for not including some companies;
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CORPORATE GOVERNANCE 04 AND INTERNAL CONTROL Report by the Chairman of the Supervisory Board
Corporate Officers
a) The General Manager 1 ■ The General Manager (from 1 February 2007) 2 François ENAUD 47 3 General Manager of Groupe Steria SCA (from 1 February 2007) Chairman and Chief Executive Officer of Steria SA since 1998 4 ■ Chief Executive Officer of Steria in 1997 ■ Director of the Telecoms Division 5 ■ Director of the Transport Division 6 ■ Technical Director ■ Joined Steria in 1983 as an Engineer for the banking market Graduate of the École Polytechnique and the École des Ponts et Chaussées (civil engineering)
Current corporate offices Corporate offices held over the last five years
■ Chairman and CEO and director of Steria SA ■ Chairman and Director of Steria Solinsa (Spain) ■ Director of Steria Holdings Limited (United Kingdom) ■ Co-manager of Steria GmbH Langen (Germany) ■ Director of Steria Limited (United Kingdom) ■ Chairman and CEO and Director of Steria Infogérance ■ Director of Steria UK Limited (United Kingdom) ■ Permanent representative of Steria on the Steria Infogérance Board of Directors ■ Chairman and Director of Steria Iberica (Spain) ■ Permanent representative of Steria on the Imelios Board of Directors ■ Member of the Supervisory Board of Steria Mummert Consulting AG (Germany) ■ Permanent representative of Steria on the Steria Iota Board of Directors ■ Director of Diamis (investment) OUTSIDE THE STERIA GROUP: OUTSIDE THE STERIA GROUP: Director of Arkema Director of Harrison & Wolf SA
■ The General Manager (on 31 December 2006)
Jean CARTERON 81 ■ Founder and Chairman and Chief Executive Officer of the Société de Réalisations en Informatique et Automatisme (Steria from 1969 to 1992) - General Manager and General Partner of Groupe Steria SCA (from 1996) ■ Co-Chairman of the Steria – Institut de France Foundation Board of Directors (from 2001) Former student of the École Polytechnique and a qualified Telecommunications Engineer
Current corporate offices Corporate offices held over the last five years
■ Honorary Chairman of Steria SA ■ General Manager and General Partner of Groupe Steria SCA (to 1/02/2007) OUTSIDE THE STERIA GROUP: ■ Chairman of Soderi (to 25/01/2007) ■ Director of Dictis SA ■ Director of Steria SA ■ Director of Dictao SA ■ Co-manager of Strader ■ Chairman of Steria SA/NV (Belgium) ■ Chairman and Director of Soberi Belgium ■ Director of Steria Benelux (Belgium)
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Claude LACOUR 66 Since joining the Steria group in 1989, Claude Lacour has occupied the following functions: 1 ■ Deputy Director of Regions ■ Administrative and Financial Director (1989-1998) 2 ■ Steria Group deputy CEO and Administrative and Financial Director (1998 – 2002) ■ And from 2003 to January 2007: Vice Chairman of Soderi, managing company of Groupe Steria SCA, listed holding company 3 Before 1989: ■ Director of the Regional Planning Department at SEMA (1966 – 1973) 4 ■ He held the positions of Management Controller at Schneider holding company, Director of Sipac (property division), and Strategy Director for the Civil Engineering and Building division at Spie Batignolles (1980 – 1989) 5 Graduate of the École Centrale de Paris (1964) and INSEAD (1978) 6 Current corporate offices Corporate offices held over the last five years
■ CEO and member of the Board of Directors at Soderi (from 25/01/2007) ■ Vice Chairman and CEO of Soderi SAS ■ Director of Steria Iberica SA (Spain) ■ Permanent representative of Soderi SAS, co-Managing Company ■ Permanent representative of Steria SA on the In Test SA Board of Directors and General Partner of Groupe Steria SCA (investment) ■ Permanent representative of Groupe Steria SCA on the Steria SA Board of Directors ■ Chairman and member of the Supervisory Board at Travelsoft SA (investment) ■ Chairman of the Board of Directors and Director of Steria Infogerance ■ Chairman and CEO of Steria Iota ■ Chairman and CEO and Director of Sternet SA ■ Director of Imelios ■ Director of U-Services ■ Director of Steria Solinsa (Spain) ■ Director of GIE Telco Solutions ■ Director of Diosi (investment) ■ Manager of Stepar ■ Co-manager of Strader ■ Permanent representative of Stepar SARL on the Cieria Board of Directors (Ivory Coast) ■ Permanent representative of Stepar on the Steria UCM Board of Directors ■ Permanent representative of Stepar on the BSGL Conseil Board of Directors ■ Permanent representative of Stepar on the BSGL SA Board of Directors ■ Permanent representative of Stepar on the Clearsy Board of Directors ■ Permanent representative of Stepar on the Groupe Eqip Board of Directors ■ Permanent representative of Stepar on the Eqip Ingéfi Board of Directors ■ Permanent representative of Stepar on the Steria Infogerance Board of Directors ■ Permanent representative of Steria on the SRPB Board of Directors ■ Official permanent representative of Steria SA at GIE Eurocis General Meetings CORPORATE GOVERNANCE AND INTERNAL CONTROL CORPORATE
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CORPORATE GOVERNANCE 04 AND INTERNAL CONTROL Report by the Chairman of the Supervisory Board
b) The Supervisory Board (from 1 February 2007)
Jacques BENTZ 64 1 ■ Chief Executive Officer (1986-1993), Chairman (1993-1995) of Générale de Service Informatique (GSI) 2 ■ Chairman of the Danet Gmbh Supervisory Board (from 1995) ■ Chairman of Tecsi (1996-2000), Manager of Tecnet Participations (from 1996) 3 ■ Chairman of the Linedata Services Supervisory Board (from 1999) Former student of the École Polytechnique 4 Current corporate offices Corporate offices held over the last five years 5 ■ Chairman and member of the Supervisory Board at Groupe Steria SCA ■ Member of the Steria Mummert Consulting AG Supervisory Board (Steria Group) 6 OUTSIDE THE STERIA GROUP: OUTSIDE THE STERIA GROUP: ■ Manager of Tecnet Participations ■ Member of the Danet SA Board of Directors ■ Chairman of the Danet GmbH Supervisory Board (Germany) ■ Director of TDF SA ■ Manager of SAI-Danet GmbH (Danet group) ■ Director of SVP Management & Participations (until July 2005) ■ Chairman of the Danet Partner GbR Supervisory Board (Danet group) ■ Chairman of the Line Data Services Supervisory Board ■ Director of Ipanema Technologies ■ Vice Chairman and member of the Board at Ineum Conseil et Associés
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Éric HAYAT, Vice-Président de Groupe Steria SCA 65 ■ Co-founder (1969), Sales Director (1976), Deputy Chief Executive Officer (1979), Vice Chairman (from 1997) of Steria, Vice Chairman of the Groupe Steria SCA 1 Supervisory Board (from February 2007) ■ Vice Chairman (1989), Chairman (1991 – 1997) of Syntec Informatique, Chambre Syndicale des Sociétés de service et d’ingénierie informatique (SSII), 2 Vice Chairman (1991-1997) ■ Chairman (from 1997) of the Fédération Syntec (consulting, management, engineering, training, IT) 3 ■ Director (1991) then Proctor (1996) of France Télécom ■ Member of the Chambre de Commerce et d’Industrie de Paris (1995) 4 ■ Chairman of the innovation taskforce (from 1999) of the Conseil National du Patronat Français (CNPF), which became the Mouvement des entreprises de France (Medef) in 1998 5 ■ Chairman of the Groupement d’Intérêt Public (GIP – public interest grouping) on «Modernisation des déclarations sociales» (from 2000) at the Centre d’observation 6 économique (COE) (from 2001) Engineering graduate from the École Supérieure d’Aéronautique – Master’s degree in Economics
Current corporate offices Corporate offices held over the last five years
■ Vice Chairman and Member of the Supervisory Board at Groupe Steria SCA ■ Chairman of the Groupe Steria SCA Supervisory Board (to 1/02/2007) ■ Chairman of the Strategic Committee at Groupe Steria SCA ■ Director of Steria SA ■ Permanent representative of Steria SA on the Medsoft Board of Directors (Tunisia) ■ Chairman and Director of Steria Sud America (Argentina) OUTSIDE THE STERIA GROUP: OUTSIDE THE STERIA GROUP: ■ Director of Syntec Informatique, representing Steria SA ■ Chairman of the Fédération Syntec ■ Chairman of the Groupement d’Intérêt Public on «Modernisation des ■ Chairman of the Medef «Innovation Recherche et nouvelles technologies» déclarations sociales» taskforce ■ Elected member of the Chambre de Commerce et d’Industrie de Paris (CCIP) ■ Member of the Medef Executive Committee ■ Chairman of the Centre d’Observation Economique of the CCIP ■ Chairman of I-Space (association promoting innovation and development for the ■ Director of Rexecode use of space) ■ Vice Chairman of CODIL (Comité d’habilitation) of the FNTC (Fédération ■ Proctor on the France Télécom Board of Directors Nationale des Tiers de Confiance) ■ Member of the ACOSS Supervisory Board ■ Director of the Agence Nationale des Services à la Personne CORPORATE GOVERNANCE AND INTERNAL CONTROL CORPORATE
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CORPORATE GOVERNANCE 04 AND INTERNAL CONTROL Report by the Chairman of the Supervisory Board
Patrick BOISSIER 56 ■ Vice Chairman and Chief Executive Officer of Tréfimétaux (1987-1993) 1 ■ Chairman and Chief Executive Officer of Chantiers de l’Atlantique (from 1997) ■ Chief Executive Officer of the Elfi heating and air conditioning division (1994-1997) 2 ■ Chairman of the Chaffoteaux & Maury Supervisory Board (1994-1997) Former student of the École Polytechnique 3
Current corporate offices Corporate offices held over the last five years 4 ■ Member of the Groupe Steria SCA Supervisory Board 5 OUTSIDE THE STERIA GROUP: OUTSIDE THE STERIA GROUP: ■ Chairman and CEO of Chantiers de l’Atlantique ■ Member of the Board of Directors at the Société Nationale de Sauvetage en Mer, 6 ■ Chairman and CEO of three Groupe Alstom companies: recognised as a public interest organisation by the decree of 30/04/1970 − Chantiers de l’Atlantique ■ Member of the Board of Directors at the École des Mines de Nantes − Alstom Leroux Naval − Ateliers de Montoir ■ Chairman of the Chambre Syndicale des Constructeurs de Navires ■ Member of the Supervisory Board at Vallourec, SA with a Management Board and a Supervisory Board ■ Member of the Board of Directors at the Institut Français de la Mer, recognised as a public interest organisation by the decree of 15/06/1979 ■ Member of the AKER YARD SA Board of Directors ■ Member of the Bacou Dalloz Board of Directors
Charles PARIS DE BOLLARDIÈRE 50 ■ Treasurer at Groupe Total Engineering graduate from the École Supérieur d’Électricité
Current corporate offices Corporate offices held over the last five years
■ Member of the Groupe Steria SCA Supervisory Board OUTSIDE THE STERIA GROUP: OUTSIDE THE STERIA GROUP: ■ Chairman of Total Treasury SAS ■ Deputy CEO of Elf Impex ■ Chairman of Financière Haussmann Messine SAS ■ Chairman and CEO of Valorisation et Gestion Financière SAS ■ Chairman of Total Finance SAS ■ Director of Sogelfa ■ Chairman and CEO of Sofax Banque SA ■ Director of Total Finance Nederland (Netherlands) ■ Chairman and CEO of Total Capital SA ■ Director of Fina Life (Belgium) ■ Chairman of Socap SAS (from 21/12/2006) ■ Director of Socap Ltd (Jersey) ■ Manager of Rouvray Immobilier SARL ■ Director of Société Financière d’Auteuil SA ■ Chairman of Petrofina International Group (Belgium) ■ Director of Petrofina (Belgium) ■ Director of Total Pensions Belgium (Belgium) ■ Attorney General Constance International Ltd (British Virgin Islands) ■ Regional Advisor to the Banque de France (Hauts-de-Seine)
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Pierre-Henri GOURGEON 60 ■ Chief Executive Officer of Groupe Air France 1 ■ Director of Military Programmes (1985-1988) at the Société Nationale d’Études et de Constructions de Moteurs d’Avions (Snecma) ■ Civil Aviation Advisor to Michel Delebarre’s Office (French minister of equipment, housing, transport and sea) (1988-1990) 2 ■ Chief Executive Officer of civil aviation (CEAC) (1993) ■ Within the Air France group: Chairman and Chief Executive Officer of Servair (1993-1996), Esterel (1996-1997); Advisor to the Chairman and Chief Executive Officer 3 (1996-1997); Deputy Chief Executive Officer, in charge of international affairs and development (1997-1998); Executive CEO (from 1998) Former student of the École Polytechnique and engineering graduate from the École Nationale Supérieure de l’Aéronautique 4
Current corporate offices Corporate offices held over the last five years 5 ■ Member of the Groupe Steria SCA Supervisory Board ■ Director of Steria SA 6 OUTSIDE THE STERIA GROUP: OUTSIDE THE STERIA GROUP: ■ CEO of the Air France group ■ Chairman of the Amadeus France SNC Supervisory Board ■ Joint CEO of the Air France-KLM group ■ Chairman and CEO and Director of Amadeus de France Service SA ■ Representative of Air France-KLM on the Air France Board of Directors ■ Director of Thales ■ Vice Chairman of Amadeus GTD (Spanish company) ■ Director of Autoroutes du Sud de la France
Jacques LAFAY 59 ■ Currently Business Development Director for the Transport Sector at Steria; employee of the Steria Group since 1973 ■ Electronic Engineer (ISEP) – 1970 ■ Specialised Engineering qualification from ENSAE (École Supérieure Nationale de l’Aéronautique et de l’Espace) – 1971 ■ Master of Science, Engineering Economics Systems Dept, Stanford University (USA) – 1973
Current corporate offices Corporate offices held over the last five years
■ Member of the Groupe Steria SCA Supervisory Board OUTSIDE THE STERIA GROUP: ■ Chairman of the Steria FCPE ■ Chairman of PROAVIA (French Airport & ATC Technology Trade Association) (Fond Commun de Placement Entreprise – mutual fund) Supervisory Board (from March 2006)
Élie COHEN 56 ■ Scientific researcher, Director of Research at CNRS ■ Professor at Sciences-PO ■ Director of Research (1991) for the Groupe d’Analyse des Politiques Publiques then for Cevipof at the Centre National de la Recherche Scientifique (CNRS) ■ Member of the France Télécom Board of Directors (1991-1995) ■ Vice Chairman of the Haut Conseil du Secteur Public (1996) ■ Member of the Conseil d’Analyse Economique du Premier Ministre [economic analysis council for the French prime minister] (1997) CORPORATE GOVERNANCE AND INTERNAL CONTROL CORPORATE Graduate of the Institut Politique de Paris – Doctor of Management, Doctor of Political Science
Current corporate offices Corporate offices held over the last five years
■ Member of the Groupe Steria SCA Supervisory Board OUTSIDE THE STERIA GROUP: OUTSIDE THE STERIA GROUP: ■ Director of A.R.E.S. ■ Director of Orange ■ Director of Vigeo ■ Director of Pages Jaunes ■ Director of EDF Energies Nouvelles
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CORPORATE GOVERNANCE 04 AND INTERNAL CONTROL Report by the Chairman of the Supervisory Board
Séverin CABANNES 48 Member of the Société Générale Executive Committee 1 ■ Director of Group Resources at the Société Générale ■ Joint Chief Executive Officer of Steria SA and Finance Director of Groupe Steria (2002 to end 2006) 2 ■ Finance Director and member of the General Management Board at Groupe Société Générale (2001-2002) ■ Strategy Director, then Finance Director, then Joint Chief Executive Officer of Groupe La Poste (1997 to end 2000) 3 ■ Various functions at Elf and Crédit National Graduate of the École Polytechnique; Civil Engineering qualification from the École des Mines 4
Current corporate offices Corporate offices held over the last five years 5 ■ Member of the Groupe Steria SCA Supervisory Board ■ Joint CEO of Steria SA 6 ■ Director of Steria SA ■ Chairman and Director of Steria Iberica (Spain) ■ Member of the Steria Mummert Consulting AG Supervisory Board ■ Chairman and Director of Steria Solinsa (Spain) ■ Director of Steria Holdings Limited ■ Chairman and Director of Steria Suisse ■ Director of Steria Limited ■ Director of Steria SA/NV (Belgium) OUTSIDE THE STERIA GROUP: ■ Director of Steria Benelux SA/NV (Belgium) ■ Member of the Komercni Banca Supervisory Board (Czech Republic) ■ Director of Steria Infogerance ■ Director of Imelios ■ Director of Steria A/S (Denmark) ■ Director of Steria A/S (Norway) ■ Director of Steria A/B (Sweden) ■ Permanent representative of Steria SA on the Imelios Board of Directors ■ Permanent representative of Steria SA on the BSGL CONSEIL Board of Directors ■ Official representative of Steria SA at GIE EUROCIS General Meetings OUTSIDE THE STERIA GROUP: Director of NAPAC SA
On 31 December 2006, the Supervisory Board comprised the same members as those listed above with the exception of Séverin Cabannes, who joined the Board on 1 February 2007, and Yves Rouilly, who resigned from the Board on 1 February 2007 following his election to the position of Chairman of Soderi.
Yves ROUILLY 64 Within the Steria Goup: ■ Currently Chairman of Soderi SAS ■ Head of the Telecoms department (1978) ■ then International Director and Strategy Director ■ then Director of Strategy and Alliances ENSAIS engineer
Current corporate offices Corporate offices held over the last five years
■ Chairman and member of the Soderi SAS Board of Directors ■ Chairman of U Services ■ Member of the Steria FCPE (Fond Commun de Placement Entreprise – mutual ■ Member of the Groupe Steria SCA Supervisory Board fund) Supervisory Board ■ Member of the Second Collège FCP at Soderi SAS ■ Director of Steria Infogérance ■ Director of Soberi Belgium (Belgium) OUTSIDE THE STERIA GROUP: Director of SIMIANE – investment company with variable capital (SICAV)
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To the best of the company’s knowledge, neither the General Manager nor any of the members of the Supervisory Board: ■ has been convicted of fraud in the last 5 years; ■ has been linked to a bankruptcy, sequestration or liquidation; 1 ■ has been incriminated and/or received an official public sanction from the statutory or regulatory authorities. 2 To the best of the company’s knowledge, at 31 December 2006, neither the General Manager nor any of the members of the Supervisory Board had a potential conflict of interests. 3
François Enaud and Patrick Boissier are first cousins. 4
Remuneration and Benefits Granted to the Group’s Corporate Officers and Main Senior Managers 5
Below are the details of the remuneration packages paid to the corporate officers in 2006 (this Reference Document relates to financial 6 year 2006).
The following payments were made in financial year 2006:
a) General Manager
J. Carteron C. Lacour 2006 2005 2006 2005 Fixed remuneration(1) €71,527 €76,777 €36,000 €108,366 Variable remuneration(2) - - - €74,850 Benefits in kind - - €2,136 - Other €11,277(3) €10,884(3) - €39,411(4) TOTAL €71,527 €76,777 €38,136 €222,627 (1) Remuneration from the company or controlled or controlling companies. (2) Based partly on Group results and partly on personal targets. (3) Pension payments (not included in the total). (4) Retirement indemnity.
b) Supervisory Board Members ■ Members receiving a salary from the Group
E. Hayat Y. Rouilly J. Lafay 2006 2005 2006 2005 2006 2005 Fixed remuneration(1) €35,619 €144,080 €70,379 €113,204 €99,578 €92,804 Variable remuneration(2) €39,496 €30,000 €70,209 €48,150 €28,131 €25,445 Paid holiday indemnities €25,415 - €20,879 - - - Retirement indemnities €87,523 - €55,123 - - - Travel costs €2,617 - €3,599 - €39,344 €44,134 TOTAL €190,670 €174,080 €220,189 €161,354 €167,053 €162,383 Free shares - - - 1,000 - - CORPORATE GOVERNANCE AND INTERNAL CONTROL CORPORATE (1) Remuneration from the company or controlled or controlling companies. (2) Based partly on Group results and partly on personal targets. ■ Members not receiving a salary from the Group Attendance fees were paid to members of the Supervisory Board from outside the Group.
Charles Paris Élie Cohen de Bollardière Noël Talagrand* Patrick Boissier Pierre-Henri Gourgeon Jean-Claude Boulet* 2006 2005 2006 2005 2006 2006 2005 2005 2006 2005 2006 2005 €20,500 €20,500 €13,000 €11,500 €10,500 €11,500 €7,500 €7,500 €8,500 €8,500 €10,000 €7,500 * Term of office ended on 14 June 2006.
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CORPORATE GOVERNANCE 04 AND INTERNAL CONTROL Report by the Chairman of the Supervisory Board
In addition, the following remuneration packages were paid to main Steria SA senior managers:
F. Enaud S. Cabannes 1 2006 2005 2006 2005 (1) Fixed remuneration €318,000 €288,000 €288,000 €264,000 2 Variable remuneration(2) €136,297 €94,642 €422,748 €92,174 Benefits in kind €1,384 €1,206 €1,384 €1,206 3 Other(3) €38,703 €31,758 €27,252 €22,326 Travel costs €42,104 €49,509 €31,582 €46,330 4 TOTAL €536,488 €465,606 €770,966 €426,036 Free shares 7,500 6,500 - 6,000 5 (1) Remuneration paid by the company or controlled or controlling companies. (2) Based partly on Group results and partly on personal targets. (3) Other aspects of gross remuneration (holiday bonus, expatriation bonus, etc.). 6
No hiring bonuses were paid and no severance pay, other than pursuant to ordinary rules or applicable collective bargaining agreements, was contractually provided for.
No specific supplementary pensions plan is currently in force.
4.1.2 Internal Control Procedures
4.1.2.1 Foreword Internal control, as defined by the COSO, is a process implemented by all company executives and is intended to provide reasonable This report describes the Group’s internal control system (including assurance that the following objectives will be achieved: Groupe Steria SCA, the holding company, and the companies it ■ optimisation of operations; controls and that are fully consolidated) resulting from these various ■ actions. As for any internal control system, it cannot provide an accuracy of financial information; absolute guarantee that the risks are completely eliminated. ■ compliance with the laws and regulations in force.
It is made up of five interdependent elements: 4.1.2.2 Steria Group Objectives Regarding ■ control environment; Internal Control ■ risk assessment; The purposes of the Group’s current internal control procedures are : ■ control activities; ■ firstly, to ensure that the management or performance of ■ information and communication; operations and employee conduct are part of the framework of the ■ coordination. business orientations defined for the company by its representative bodies, applicable laws and regulations, and by its internal values, standards and rules; 4.1.2.3 Summary Description of Implemented Internal Control Procedures ■ secondly, to verify that the accounting, financial and management information given to the company’s representative bodies is an accurate portrayal of the company’s activity and situation. Entities Involved in Internal Control
The Steria Group upholds a definition and an approach to internal In line with the Steria organisation structure, the entities involved in control compatible with the international benchmark known as the internal control within the Group are as follows: “Internal Control Framework” or “COSO Report” (Committee of ■ the General Manager, assisted by the Group Executive Committee. Sponsoring Organisation). The Executive Committee oversees the implementation of internal control procedures within the Group;
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■ first-level operational entities or “Area Units”, responsible for Internal Control Environment implementing Steria’s core businesses (consulting, systems This is based on corporate culture and practices and comprises the integration, managed services) in their own countries and/or 1 markets and for applying the corresponding internal control following three basic elements: procedures. Today, there are six such Areas, grouped into three ■ a decentralised operational organisation (see above «Entities 2 regions: Involved in Internal Control») assisted by central functional − Southern Europe: entities; 3 ■ • France, collectively drawing up the Corporate Mission Statement, then distributing it to all Group entities. This mission statement can be 4 • Spain, broken down according to customers, shareholders and employees. − Northern Europe: It relies on a set of clearly defined «Core Values», a benchmark 5 • United Kingdom, for company actions; 6 • Scandinavia (Denmark, Norway and Sweden), ■ a set of procedures and directives that define the Group’s operating − Central Europe: methods for all its processes, and in particular the development of the “CORE” defining all the Group’s key processes with their • Germany, implementation rules and mandatory checkpoints. It should be • Belgium, Luxembourg and Switzerland. noted at this point that all of the Group’s companies (Steria and The Area Units are themselves organised into “Sector Units”. its European subsidiaries) are ISO 9001:2000 certified. Each Sector is responsible for its activity in a particular market Risk Identification and Assessment sector or geographical sector. The Sector Units are themselves organised into “Profit Centres”; Several years ago, the Group incorporated risk management into its ■ functional entities responsible, in their respective fields, for operating systems. coordinating the implementation of the policy defined by the Executive Committee within the Group and for ensuring that issues As part of the Risk & Control Assessment Project, the Group maps and concerning their entities are consistent with the policy. updates risk according to the following process: ■ These functional entities are as follows: a questionnaire based on: − Human Resources Department, − the description of Group processes (CORE), and − Communications and Marketing Department, − the analysis of risks observed in the past, − Strategy Department, is sent to all Area Unit Departments and all Group Functional Departments; − Finance Department, ■ each Department adds any new risks it has identified to the − Management Control and Consolidation Department, questionnaire; − Legal Department, ■ the new risks are then assessed on a qualitative basis in terms of − Information Systems Department, their probability, impact and level of control by the Group; − Audit, Risk & Capitalisation Department. ■ the information gathered via the questionnaires is consolidated by the Group’s Internal Audit Department; The Audit, Risk & Capitalisation Department, whose director reports to the General Management, oversees the Quality, Internal Audit and ■ the Executive Committee then selects the risks to be dealt with Risk Management departments. It is also responsible for defining, in the next three years and approves the corresponding action communicating, implementing and coordinating this system. plans. GOVERNANCE AND INTERNAL CONTROL CORPORATE
The main risks identified in 2005 applied to the following areas: Summary Information on Internal Control ■ human resources: Procedures Implemented by Steria − level of motivation, The description of the internal control procedures implemented by − how employee skills match customer needs; the Group is based on five elements or viewpoints recommended in the COSO report.
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CORPORATE GOVERNANCE 04 AND INTERNAL CONTROL Report by the Chairman of the Supervisory Board
■ sales and offers: The key processes of the CORE benchmark are organised by “Family”. − their scope for innovation, They cover the following fields: ■ − technological developments, Management family; 1 − the correct positioning of offers and selectivity of responses; The processes in this family concern: 2 ■ information system: − promoting the mission statement within the entities, − accessibility of information, − organising strategic thinking, 3 − back-up and continuity plan. − drawing up budgets for the entities, − entity reporting, 4 In terms of risks related to human resources, as described in section 1.8 − risk management, of this Reference Document, the Group’s efforts in 2006 focused on: 5 − internal audit, ■ selection and induction, via a recruitment policy with a greater 6 focus on young graduates; − external communication; ■ assessing and developing talent, via a number of new training ■ Business families for drawing up offers and carrying out projects; programmes. ■ families concerning functions: Human Resources, External Communication, Marketing, Sales and Supplier Management; In terms of sales and offers, the Business Strategic Reviews made Legal, Finance, Consolidation and Information System functions the latter their priority on an individual Area Unit basis. A Corporate are dealt with in an Appendix and have specific rules; department dedicated to Offers was created in early 2007 in order to ■ a specific family for the ongoing improvement of CORE, including coordinate and manage all of the Group’s offers. mandatory annual reviews to improve practices. In terms of the information system, the following actions were Information and Communication taken: ■ the development process for a Group Security Policy was launched There are specific processes designed for information and to define the minimum level of security to be applied by all Group communication within the Group, particularly concerning “cascading” entities in line with existing policies in certain Areas, which have information (i.e. from the top down). already received ISO 27001 certification; The Group also has an intranet, which is broken down into individual ■ the development process for an internal Business Continuity Plan: a country systems. census of all information systems used by the Group, an assessment of the criticality of each system and the application of a suitable Control System solution; ■ the establishment of a collaborative space at Group level to facilitate In terms of auditing the internal control system itself, the Group has synergies between the Areas and the sharing of information. two specialised bodies: ■ the ARM (Area Risk Management) Departments of the various Control Activities entities, which are also responsible for periodic inspections on compliance with procedures, milestones and mandatory The Group’s control activities comprise the procedures and resources checkpoints. These inspections mainly apply to business processes established to control its activity. that generate basic financial data concerning sales and revenue; The CORE project defined the Group’s control activities and ■ the Internal Audit department, a component of the Audit, formalised all its key processes and implementation rules, with a Risk & Capitalisation Department (see above «Entities Involved particular emphasis on mandatory milestones and checkpoints (i.e. in Internal Control»), which manages: the “Essentials”). − the consolidation of audit plans carried out by the ARMs, This benchmark is now incorporated into the Quality Systems of the − internal audits on projects, processes or organisations. various entities (ISO 9001).
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Internal Control Relating to the Preparation General References of Financial and Accounting Information on the Steria Group The companies incorporated within the Group structure use a common manual for accounting procedures and principles drawn up by the 1 Organisation of the Accounting Function Management Control and Consolidation Department. The chart of accounts used in the information system is also common to the whole 2 The accounting function is decentralised with a unit in each country. It Group, with the exception of German subsidiary Steria Mummert reports to the Financial Director of the country who him/herself reports 3 Consulting AG. However, the latter uses in its ERP system a chart of to the Area Unit Chief Financial Officer (CFO). It is coordinated on a accounts and accounting rules compatible with the IFRS data used functional level by the Group Accounting and Consolidation Director 4 for reporting and consolidation. The consistency of financial and reporting to the Group Control and Consolidation Department. accounting information is therefore assured. All of the subsidiaries 5 Organisation of the Accounting and Financial Information close their accounts on a monthly and six-monthly basis. The schedule System for these actions is the same for all subsidiaries. Every six months, 6 at the closing of accounts, the Group makes an inventory of its off- The accounting and financial information system is based on standard balance sheet commitments and an estimation of the fair value of its software packages: main assets and liabilities. ■ an Enterprise Resource Planning (ERP) system, common to all Group entities with the exception of German subsidiary Steria Budget and Management Control Mummert Consulting AG, for entering, calculating and retrieving Internal budget and management control is based on a process of accounting and management data. This system processes data monthly “Reporting Reviews” produced at each operational level in relating to projects, customers and suppliers. This solution allows the organisation: unique parameters to be set for all the Group management rules, ■ controls and reports. Only parameters for tax or legal rules remain at Sector Unit level, organised by the Sector manager with the specific to each country; Sector management controller to analyse the situation in their entity with the Profit Centre managers; ■ German subsidiary Steria Mummert Consulting AG, which was ■ incorporated into the Group in 2005, uses another ERP system at Area Unit level, organised by the Area CEO with the Area Unit available on the market that applies the same management and CFO to analyse the situation in their entity with the Sector Unit revenue recognition rules in its configuration as the system used managers; in the other entities; ■ at Group level, organised by the Group Management Control and ■ a reporting application that summarises ERP data. This application Consolidation Director, in the presence of the Area CEO and CFO, is a communication tool between Group managers. the Regional Manager, the Group CFO and the General Manager, in order to review the situation in each Area Unit; Identification of the Main Internal Control Players Involved in ■ the situation of the various Area Units is summarised each month Auditing this Information at Group level in a report prepared by the Group Management Accounting, Consolidation, Management Control: Control Director. ■ the various participants involved in these processes are firstly During the Reporting Reviews, the major indicators used for guiding those responsible for producing the financial information in each the Group’s activity are analysed systematically: legal entity, i.e. the Area Unit CFOs, who are fully responsible for ■ the details of the financial situation of the entity in question and complying with Group procedures and with local accounting, legal comparison with the budget; and tax regulations;
■ changes to sales prices and margins; GOVERNANCE AND INTERNAL CONTROL CORPORATE ■ they are also responsible, as in any financial organisation, for ■ the rate at which billable resources are used and the structure setting up audit processes to ensure that the information provided rate; is accurate. ■ the summary of commercial activity; Financial information from each entity, which is processed by the ■ risk monitoring; Group accounting and financial information system, is available and ■ the situation of receivables, cash position and balance sheet accessible to all duly authorised Group players. indicators. All of these elements may be checked and audited at any time by the group Risk, Audit & Capitalisation Department.
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CORPORATE GOVERNANCE 04 AND INTERNAL CONTROL Report by the Chairman of the Supervisory Board
Procedures for the Consolidation of the Accounts ■ It monitors the external audit carried out by the Statutory Auditors, ■ The Management Control and Consolidation Department draws up coordinates the work of local auditors and examines the report on the quarterly consolidated accounts and monthly reporting. this work. It coordinates any additional duties. 1 ■ Using a standardised information system, common accounting ■ The Management Control and Consolidation Department centralises procedures for all of the integrated subsidiaries and a single chart the locally-negotiated Statutory Auditors’ budgets. 2 of accounts ensures that financial and accounting information is ■ The General Management negotiates the Statutory Auditors’ accurate and consistent. budget based on consolidated financial statements and authorises 3 the budgets of local auditors. ■ Consolidated information is submitted and processed using 4 commercially available IT solutions. The Group subsidiaries complete their own consolidation packages. Using a standard 4.1.2.4 Continuation of the Work 5 package makes it possible to check that their financial statements are consistent, provides details of the financial year’s accounting In terms of risk management, the recurring method of risk assessment 6 flows and also provides additional Group information (payment – action plans – risk assessment is now systematic. It is part of an schedules, off-balance sheet commitments, workforce, tax objective of continuous improvement in risk control, related internal information, etc.). auditing resources and measurement. ■ Consolidation instructions are sent every quarter: they give details Chairman of the Supervisory Board of the work to be carried out by the subsidiaries during the closing of accounts and an overview of how the consolidation package Jacques Bentz works. The activities to be carried out by the consolidation service are detailed in the guide to consolidating procedures.
Liaison with the Statutory Auditors ■ The Management Control and Consolidation Department confirms the schedule and the audit plan (procedure and audit scope) to be provided by the Group’s Statutory Auditors.
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4.2 Statutory Auditors’ Report on the Chairman’s Report 1 2
PIMPANEAU & ASSOCIÉS ERNST & YOUNG 3 NEXIA INTERNATIONAL et Autres 23, rue Paul-Valéry 41, rue Ybry 4 75116 Paris 92576 Neuilly-sur-Seine Cedex SAS with capital of €120,000 SAS with variable capital 5
Statutory Auditors Statutory Auditors 6 Member of the compagnie régionale de Paris Member of the compagnie régionale de Versailles Groupe Steria SCA
Financial year ended 31 December 2006
Statutory Auditors’ report on the report prepared by the Chairman of the Groupe Steria SCA Supervisory Board on the internal control procedures relating to the preparation and processing of financial and accounting information.
To the Shareholders,
In our capacity as Statutory Auditors to Groupe Steria SCA and at your request, we hereby present our report on the report prepared by the Chairman of your company relating to internal control procedures for the financial year ending 31 December 2006.
In his report, the Chairman is required to report on the conditions related to the preparation and organisation of the Supervisory Board’s work and the internal control procedures implemented within the company pursuant to Article L. 621-18-3 of the Code monétaire et financier.
Our responsibility is to provide you with our comments on the information contained in the Chairman’s report on the internal control procedures relating to the preparation and processing of financial and accounting information.
We performed our work in accordance with the professional guidelines applicable in France. These require us to perform procedures to assess the fairness of the information set out in the Chairman’s report on the internal control procedures relating to the preparation and processing of financial and accounting information. These procedures included, in particular: ■ obtaining an understanding of the objectives and general organisation of internal control, as well as the internal control procedures relating to the preparation and processing of financial and accounting information, as set out in the Chairman’s report; ■ obtaining an understanding of the work performed to support the information given in the report.
Based on our procedures referred to above, we have nothing to report on the description of the company’s internal control procedures relating to the preparation and processing of financial and accounting information, as given in the Chairman’s report.
Paris and Neuilly-sur-Seine, 21 March 2007 CORPORATE GOVERNANCE AND INTERNAL CONTROL CORPORATE
The Statutory Auditors
PIMPANEAU & ASSOCIÉS ERNST & YOUNG NEXIA INTERNATIONAL et Autres
Olivier Juramie François Rochmann
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1 2 3 4 5 6
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5.1 Corporate Legal Information p. 106 5.2 Information Registered Name and Head Office p. 106 on the Corporate Capital p. 113 Legal Form p. 106 5.2.1 Share Capital at 31/03/07 p. 113 Date of Incorporation p. 106 5.2.2 Changes to the Groupe Steria SCA Corporate Capital over the Last 5 Years p. 114 Term p. 106 5.2.3 Current Distribution of Capital and Voting Trade and Company Register p. 106 Rights; Changes over the Last Three Years p. 115 Code Ape – Code Naf p. 106 5.2.4 Potential Capital p. 116 Purpose of the Company 5.2.5 Authorised but Non-Issued Capital p. 120 (Article 2 of the Articles of Association) p. 107 5.2.6 Share Redemption Programme p. 120 Shareholders’ Meetings (Article 17 of the Articles of Association) p. 107 5.3 Groupe Steria SCA Fiscal Year – Parent Company Financial Statements and the Stock Market p. 122 – Earnings (Article 19 of the Articles of Association) p. 108 5.3.1 Stock Market Information p. 122 Transmission of Shares (Article 8 of the Articles of Association) p. 109 5.3.2 Dividend Distribution Policy p. 125 Double Voting Rights 5.3.3 Financial Information p. 125 (Article 9 of the Articles of Association) p. 109 Crossing of Thresholds 5.4 Person Responsible (Article 10 of the Articles of Association) p. 109 for the Reference Document p. 126
Identification of Bearer Security Holders: Person Responsible for the Reference Document p. 126 INFORMATION GENERAL COMPANY CONCERNING GROUPE STERIA SCA AND ITS CAPITAL Identifiable Bearer Securities Declaration from the Person Responsible (Article 7 of the Articles of Association) p. 109 for the Reference Document p. 126 General Manager (Article 11 of the Articles of Association) p. 110 The Supervisory Board (Article 13 of the Articles of Association) p. 111 General Partner (Article 14 of the Articles of Association) p. 112
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GENERAL COMPANY INFORMATION 05 CONCERNING GROUPE STERIA SCA AND ITS CAPITAL Corporate Legal Information
5.1 Corporate Legal Information 1 2 Registered Name and Head Office 3 Groupe Steria SCA 12, rue Paul Dautier - 78140 Vélizy-Villacoublay. 4 5 Legal Form 6
Partnership limited by shares under French law (SCA – Société en Head Office is at 46 rue Camille-Desmoulins – 92130 Issy-les- Commandite par Actions). Moulineaux registered under no. 404 390 486 RCS Nanterre, represented, in accordance with its Articles of Association, either The company exists as a partnership limited by shares under French by its Chairman or by its CEO. Soderi’s partners undertake to own law (société en commandite par actions) between: directly or through the medium of the company mutual fund a ■ its Limited Partners (referred to in this document as the number of Groupe Steria SCA shares representing at least 5% of “Shareholders”); and the capital of the company Groupe Steria SCA. If this condition ■ its General Partner (referred to in this document as the “General ceases to be respected, the procedures set forth in clause 14.2 of Partner”), the Soderi company, a société par actions simplifiée à the Articles of Association shall be applied. capital variable (a French simplified open-stock company), whose
Date of Incorporation
Groupe Steria was founded on 18 February 1988 as a public limited liability company (société anonyme). It was transformed into a partnership limited by shares (société en commandite par actions) following the decision taken at the Extraordinary General Meeting of 18 July 1996.
Term
The company has been created for a period of 99 years from the date of its incorporation, unless it is dissolved beforehand or the term is extended.
Trade and Company Register
RCS Versailles 344 110 655 (88 B 00 665)
Code Ape – Code Naf
741J
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Purpose of the Company (Article 2 of the Articles of Association)
1 The company’s direct or indirect purposes worldwide are as follows: ■ participation in all commercial and industrial operations that ■ promotion, management, research and the implementation of may be connected to the aforementioned purpose through the 2 projects and services in the field of information technology and creation of new companies, equity interests, general partnerships, company management, as well as the acquisition and management subscriptions or purchase of securities or corporate rights, mergers, 3 of all stakes in companies of the same nature; alliances, associations through investment or otherwise; ■ the management and leadership of the group, including providing ■ and, in general, all commercial, industrial, financial, securities 4 or real estate transactions which are related, even indirectly, to advisory and support services, particularly of a legal, corporate, 5 financial or administrative nature; the aforementioned purposes, and which can contribute to its development. 6
Shareholders’ Meetings (Article 17 of the Articles of Association)
The provisions applicable to Meetings of Shareholders are those Admission - Organisation of Meetings established for public limited liability companies (sociétés anonymes). With the exception of cases expressly provided for by law, all shareholders have the right to attend General Meetings and participate Invitation to Attend - Agenda in discussions, in person, through a duly authorised representative or The Shareholders meet every year, within six months of the closing of by postal vote, regardless of the number of shares they own, upon the fiscal year, at an Ordinary General Meeting. proof of their identity and the ownership of their securities, either with a nominative registration, or the deposit of their bearer shares Furthermore, General Meetings, either Ordinary General Meetings at the place mentioned in the notification to attend the meeting. The convened extraordinarily or Extraordinary General Meetings, may be timeframe within which these formalities must be fulfilled expires called at any time of the year. 5 days prior to the General Meeting.
General Meetings are held at the Registered Office or in any other place This timeframe may be shortened by the Supervisory Board. indicated on the invitation to attend sent out by the General Manager, Supervisory Board, the General Partner or, by default, the Statutory Shareholders may only be represented by their spouse or by another Auditors, or an authorised agent appointed by the presiding judge of shareholder holding proof of mandate. the Tribunal de Commerce (commercial court) hearing in chambers at Any person invited by the General Manager, the Chairman of the the request either of any interested party in the event of an emergency, Supervisory Board or the General Partner may also take part in or by one or more Shareholders holding the minimum legal quota of Meetings. the corporate capital, or by an association of Shareholders that meets the relevant legal conditions. The General Manager attends and participates in General Meetings. GENERAL COMPANY INFORMATION INFORMATION GENERAL COMPANY CONCERNING GROUPE STERIA SCA AND ITS CAPITAL The invitation to attend will be sent out fifteen days before the meeting The General Meeting is chaired by the Chairman of the Supervisory date, either by a normal or a registered letter addressed to each Board. When the Chairman of the Supervisory Board is absent, the shareholder, or by a notice in a legal journal for the French administrative Meeting participants designate their own Chairman. region in which the Registered Office is located. In the latter case, each shareholder must be notified to attend by letter or, upon the shareholder’s However, if the meeting is convened by another person duly authorised request and at the shareholder’s costs, by registered mail. by the law, the meeting is chaired by the person who issued the invitation to attend. The agenda is established by the person issuing the invitation. The minutes recording the deliberations of the Meeting are signed by One or more shareholders, representing at least the required share the executive committee. capital quota and acting under the conditions and within the timeframe established by law, may request that draft resolutions be added to the Copies or extracts from the minutes are certified by a General Manager meeting agenda by means of a registered letter with acknowledgement or a member of the Supervisory Board. of receipt.
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Quorum, Majority and Vote This quorum is calculated based on the voting forms that the Company receives by post before the General Meeting, in accordance with the The Ordinary General Meeting convened following the first invitation to terms and conditions and the timeframe set forth in the regulations 1 attend may only deliberate in a valid manner if the shareholders present in force. or represented own the minimum number of shares with voting rights 2 stipulated by article L. 225-98 of the Code de commerce. This quorum is Decisions are validated if two-thirds of the votes are obtained for the calculated based on the voting forms that the Company receives by post shareholders present or represented, or by postal votes. In the case of 3 before the General Meeting, in accordance with the terms and conditions postal votes, distance voting forms returned without giving a specific and the timeframe set forth in the regulations in force. choice or an express abstention will be considered as negative votes. 4 If a capital increase by incorporation of reserves, earnings or share For the second invitation to attend, no quorum is required. premiums has to be decided or an authorisation to do so has to be 5 granted to the General Manager, the necessary quorum is only a Decisions are taken on the basis of the majority vote of those quarter on receipt of the first invitation to attend. The deliberation is shareholders present or represented. In the case of postal votes, 6 valid on receipt of the second invitation to attend regardless of the distance voting forms returned without giving a specific choice or an number of shares represented. express abstention will be considered as negative votes. A deliberation can only be adopted during an Extraordinary General With the exception of those relating to decisions governed by article 14, Meeting with the prior, unanimous agreement of the general partner(s). deliberations at Ordinary General Meetings may only be adopted with However, when there are several general partners, the deliberations to the prior, unanimous agreement of the General Partner(s). The General decide to convert the company into a société anonyme (French public Manager must obtain this agreement prior to the Ordinary General limited company) or société à responsabilité limitée (French limited Meeting. liability company) only require the prior agreement of the majority of The Extraordinary General Meeting convened following the first and the general partners. second invitation to attend may only deliberate in a valid manner if The General Manager must obtain the agreement of the General the shareholders present or represented own the minimum number Partner(s) prior to the Extraordinary General Meeting. of shares with voting rights stipulated by article L. 225-96 of the Code de commerce.
Fiscal Year – Parent Company Financial Statements – Earnings (Article 19 of the Articles of Association)
Each fiscal year begins on the first of January and ends on the thirty-first Allocation of Earnings of December. The earnings available for distribution comprises the earnings for the At the close of each fiscal year, the annual financial statements and the fiscal year less retained earnings, plus accumulated earnings and, associated notes are agreed upon and drawn up pursuant to the terms where necessary, less any amounts required to constitute the statutory and conditions set forth in the legal and regulatory provisions in force. reserve as required by law.
Of these earnings available for distribution, the sum belonging to the Partners’ Rights General Partner in their official capacities as defined in article 19.3 In terms of the earnings available for distribution, as defined above is first deducted. below, the General Partner is entitled to a deduction equal to 1% of The balance is divided between the Shareholders pro-rata to the Groupe Steria SCA consolidated net earnings (Group share) for the last number of their shares. fiscal year until this deduction reaches six hundred thousand euros (€600,000) and to 0.5% of these net earnings above this figure. The Each Shareholder, for all or part of the dividend or of the interim shareholders’ rights apply to the balance of earnings for the fiscal year dividend available for distribution, can be granted an option between that is available for distribution after this deduction. payment of said dividends in cash or in shares under the terms and conditions required by law. The balance is divided between the Shareholders pro-rata to the number of their shares.
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The General Meeting may, on the General Manager’s proposal, decide to This distribution will be carried out insofar as the reserves distributed deduct from the part to be paid to Shareholders in the earnings balance, have been constituted by means of deductions from the share of any amounts it deems suitable to be carried forward in favour of the said earnings coming to the Shareholders only in proportion to the number 1 Shareholders into the following fiscal year, or to be carried over to one or of shares they own. more extraordinary, general or special, non-interest bearing reserve funds, 2 on which the General Partner, in this capacity, does not have any rights. Other than the case of capital reduction, no distribution can be made to the Shareholders when the shareholders’ equity is, or will be after 3 Moreover, it may be decided at the General Meeting to distribute all this reduction, less than the amount of capital, increased by the amounts deducted from the reserve available, by expressly indicating reserves, which the law or Articles of Association do not allow to be 4 the reserve items on which the deductions are carried out. distributed. The revaluation variance cannot be distributed. It can either be incorporated in full or in part into the capital. 5 6 Transmission of Shares (Article 8 of the Articles of Association)
Shares are transferred freely under the conditions and according to the procedures required by law.
Double Voting Rights (Article 9 of the Articles of Association)
A double voting right is attributed to all the fully paid-up shares Furthermore, in the event of capital increase by incorporation of documented by a nominative registration for at least two years in reserves, earnings or share premiums, the double voting right may be the name of the same shareholder, either of French nationality or from granted, on their issue, to registered shares attributed free of charge to a Member State of the European Union. a shareholder for existing shares for which he/she holds this right.
The share loses the aforementioned double voting right if it is converted Except where voting rights or expiry date are concerned, all new shares to a bearer share, if its ownership is transferred or if its owner should created during the company’s corporate term will be entirely assimilated lose his/her status as a European Union member. into existing shares of the same class. The different taxes that may become due in the event of total or partial reimbursement of capital carried out Nevertheless, a transfer following succession, liquidation of communal during the Company’s corporate term or on its liquidation must be borne estate by married couple or donation to spouse or relative as inheritance uniformly, taking into account their respective nominal value, by all shares does not entail the loss of the acquired right and does not interrupt existing at the time of reimbursement and participating in it, so that the aforementioned time limits. each share receives, for the same nominal value, the same net amount from the Company, regardless of its origin or date of creation.
Crossing of Thresholds (Article 10 of the Articles of Association) GENERAL COMPANY INFORMATION INFORMATION GENERAL COMPANY CONCERNING GROUPE STERIA SCA AND ITS CAPITAL
The Articles of Association contain no specific provisions concerning obligations to report the crossing of certain shareholding interest thresholds.
Identification of Bearer Security Holders: Identifiable Bearer Securities (Article 7 of the Articles of Association)
In accordance with the legal and regulatory provisions in force, the the future, the right to vote at General Meetings, as well as the total Company may at any time request information from the central number of securities held by each of them, and if the case arises, the securities depository, or from any organisation responsible for securities restrictions that could be imposed on the securities. clearing, to identify owners of securities conferring, immediately or in
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General Manager (Article 11 of the Articles of Association)
1 In accordance with the Articles of Association, the Company is If there is still disagreement forty days after notification of the proposed administered and managed by one or more General Managers, who dismissal, the final decision will be the General Partner’s. 2 may be a private individual or a corporate entity, a General Partner or from outside the Company. General Manager Vacancy 3
Term of Office In all cases where a General Manager vacancy arises as a result of 4 the cases referred to in clause 11.4 of the Articles of Association, the The General Manager is appointed for a maximum period of six years, General Partner, by operation of law, assumes the role of General 5 finishing at the end of the Ordinary General Meeting called to approve Manager and may then delegate all or part of the powers needed the financial statements for the previous fiscal year and held in the to manage the Company until one or more new General Manager 6 year during which the term of office expires. can be appointed. Upon assuming the role of General Manager of the company, the General Partner must instigate the appointment Appointment, Reappointments and/or reappointment process set forth in clause 11.3 of the Articles of Association as soon as possible. During the company’s existence, and except in cases of vacancy, the Ordinary General Meeting, on the Supervisory Board’s proposal and Compensation after agreement by the General Partner, decides upon the appointment or reappointment of any General Manager. The Ordinary General Meeting of Shareholders, on the Supervisory Board’s proposal, sets the compensation paid to the General Termination of the Appointment, Dismissal Manager(s). General Managers are also entitled to compensation for their expenses and disbursements and business expenses. The General Manager leaves office in the event of the expiry of his/her term of office, death, invalidity, prohibition, court-supervised Authority liquidation or bankruptcy, dismissal, resignation or by reaching the age of 65. Relations with Third Parties The company will not be dissolved in the event of the General Manager The General Manager is vested with the broadest of powers to act leaving office, regardless of the reason. on behalf of the company in all circumstances. These powers are Should a General Manager decide to resign, he/she must notify the exercised within the limits of the purpose of the company and subject General Partner and the Supervisory Board at least six months in to those matters expressly reserved by law to the Supervisory Board advance, by registered letter, unless the General Partner agrees, after and the General Meetings of Shareholders, and also subject to the consultation of the Supervisory Board, to reduce the timeframe of the necessary opinions or agreement from the General Partner and/or the notice period. Supervisory Board according to the provisions set forth in the Articles of Association. The dismissal of any General Manager may be requested at the initiative of the Supervisory Board, the General Partner or an association of Relations between Partners shareholders pursuant to article 17.3 of the Articles of Association. With regard to relations between partners, the General Manager holds Where this is an initiative of the General Partner, the latter cannot make the broadest of powers to perform all the acts of management but a decision without obtaining the Supervisory Board’s opinion, which solely in the company’s interest and respecting the powers reserved by must be given within twenty days of the General Partner notifying the the Articles of Association to the General Partner and the Supervisory Chairman of the Supervisory Board of the proposed dismissal. Board. Where this is an initiative of the Supervisory Board, the latter informs In particular, the General Manager must obtain the prior opinion the General Partner. and/or agreement of the General Manager and the Supervisory Board In the event of disagreement, the Congress, as defined in article 18 for the decisions referred to below. of the Articles of Association, must be convened in order to reach an agreement.
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The Supervisory Board (Article 13 of the Articles of Association)
1 Structure Dismissal 2 The company has a Supervisory Board with at least three members, Supervisory Board members can be dismissed at any time by decision who may be private individuals or corporate entities. of the Ordinary General Meeting, acting either at the initiative of 3 Shareholders under the terms and conditions set forth in clause 17 of No General Partners, General Manager or legal representatives of the Articles of Association, or on proposal made by the Supervisory 4 a General Partner company of Groupe Steria SCA may sit on the Board. The dismissal may be decided upon even if it is not included Supervisory Board. in the meeting agenda. Shareholders with General Partner status 5 may not participate in the election or dismissal of Supervisory Board At least half of the members of the Supervisory Board must be under members. 65 years of age on the date of the Ordinary General Meeting held to 6 approve the financial statements of the latest fiscal year. Authority of the Supervisory Board Each member of the Supervisory Board must own at least one hundred and fifty company shares. Supervisory Board members’ shares must The Supervisory Board exercises continuous control over the be registered shares. management of the company.
For this purpose, it can have the General Manager communicate any Appointment – Term of Office information or any document of use in carrying out its general mission of control. Supervisory Board members are appointed by the Ordinary General Meeting for a maximum period of six years, finishing at the Ordinary Draft resolutions and the Management Report that must be submitted General Meeting called to approve the financial statements for the and presented to the General Meetings must first be submitted to the previous fiscal year and held in the year during which the term of Supervisory Board, which compiles a Report that is presented to the office expires. Any member of the Supervisory Board is eligible for General Meeting of Limited Partner Shareholders. re-election without restrictions.
Any corporate entity appointed Supervisory Board member must, upon Prior Opinions appointment, designate a permanent representative. These permanent representative are subject to the same conditions and obligations The Supervisory Board, through its role of control, issues a prior opinion and incur the same responsibilities as if they were Supervisory Board to the General Manager concerning: members in their own name, without prejudicing the joint and several a) the Company’s main strategic orientations: medium and long- liabilities of the corporate entity that they represent. If the corporate term plans, consolidated budgets, acquisitions policy, significant entity revokes the corporate office of its own representative, it is bound acquisitions, major investments; to notify the company of this revocation, without delay, as well as b) operations having a significant impact on the capital, financing the identity of its new permanent representative. This is also the case and cash position of the Company and its subsidiaries; in the event of the permanent representative’s death, resignation or c) operations significantly affecting the allocation of the Company’s prolonged inability to perform his/her functions. corporate capital. INFORMATION GENERAL COMPANY CONCERNING GROUPE STERIA SCA AND ITS CAPITAL
Vacancies Prior Agreement on Certain Decisions: If one or more seats of Board members become vacant, the Supervisory In addition to obtaining the prior agreement of the General Partner, Board can temporarily appoint new members; this must be done within the General Manager must obtain that of the Supervisory Board before fifteen days if the number of its members falls below three. These entering into any significant commitments such as those described provisional appointments are to be ratified at the next Ordinary General below: Meeting. Failing ratification, the deliberations made and the acts d) any company borrowing once the total amount of borrowings accomplished by the Supervisory Board remain valid nevertheless. exceeds 50% of the total consolidated net accounting position Interim members only remain in the position during the time remaining of the Steria group, as resulting from consolidated financial on their predecessor’s corporate office. statements drawn up from the last approved financial statements (the “Net Assets”);
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e) the setting up of any securities, preconditions or guarantees, or any At the annual Ordinary General Meeting, it gives an annual report on the pledges or mortgages on the company’s assets, once the total of the management of corporate dealings and on the financial statements for the secured debt represents more than 50% of the total Net Assets; period. It also makes a report at each Extraordinary General Meeting. 1 f) the founding of any company, or any acquisition of holdings, in It can convene the General Meeting of Shareholders. any commercial, industrial, financial, securities, property or other 2 operation, in any form whatsoever, once the total amount of the It verifies the terms and conditions set forth in article 1 of the Articles investment in kind represents more than 20% of the total Net of Association to ensure that Soderi is or remains the General Partner 3 Assets; of Groupe Steria SCA. g) any decision whose purpose or impact entails, immediately or 4 in the future, the loss of the majority holding in a subsidiary’s Remuneration of the Supervisory Board 5 capital, directly or indirectly, of the company representing more than 10% of the consolidated revenue of Groupe Steria SCA, where The General Meeting may allocate an annual payment of directors’ 6 this revenue results from the group’s last consolidated financial fees to the Supervisory Board; this amount is chargeable to general statements. expenses. The Board decides upon the distribution of the directors’ fees between the Supervisory Board members.
General Partner (Article 14 of the Articles of Association)
Structure they can obtain any information and documents considered necessary from the General Manager. The General Partner is the company Soderi SAS, whose partners must at all times, as the prerequisite for the status of General Partner, Power to Appoint and Dismiss General Manager respect (i) all the terms and conditions set forth in article 1 of the Articles of Association of Soderi SAS and (ii) the condition set forth The General Partner gives its agreement to the appointment of the in article 1 of the Articles of Association of holding directly or via General Manager in accordance with the provisions set forth in the company mutual fund a number of Groupe Steria SCA shares article 11 of the Articles of Association. The General Partner has representing in total at least 5% of the capital of Groupe Steria SCA, the power to dismiss any General Manager, under the terms and failing which it shall lose, by the sole operation of the law, the status conditions set forth in the same article. of General Partner. General Manager Vacancy Appointment If the General Manager position falls vacant, the General Partner The appointment of one or more new General Partners is decided upon who is not a General Manager becomes, by the sole operation of the by the Extraordinary General Meeting of Shareholders on the General law, the General Manager of the company during the time required Partner’s proposal, except for the cases provided for in article 23, when to appoint the new General Manager(s), as provided for in article 11 there are no more General Partners. of these Articles of Association.
Withdrawal Collective Decisions
All General Partners can withdraw at any time from the Company and A deliberation in the General Meeting of the Company cannot come thereby lose their status of general partner, without prejudicing any into force without the agreement of the General Partner. rights as a limited partner. To do this, they must give three months’ notice of their decision to the General Manager and to the Chairman In this context, the General Partner gives its agreement, if possible of the Supervisory Board. in advance, to any decision issuing from a General Meeting of Shareholders, whether Ordinary or Extraordinary, as set forth in General Partners who are not General Manager do not take a direct article 17 of the Articles of Association, except for those relating to role in the management of the company. They exercise the prerogatives the appointment of Supervisory Board members, the appointment granted to them by law and by the Articles of Association. In particular, of Statutory Auditors, their dismissal, or to setting or changing the General Manager’s compensation.
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Prior Opinions Prior Agreement on Certain Decisions
The General Partner: In addition to the agreement of the Supervisory Board, the General 1 a) can issue opinions to the General Manager on any issues of general Manager must receive the agreement of the General Partner prior to interest for the Group; entering into any significant commitments as referred to above for 2 the Supervisory Board. b) is the General Manager’s contact for everything concerning the Group’s employee shareholders; 3 c) issues a prior opinion to the General Manager concerning the same General Partner’s Right in terms of Earnings 4 issues as referred to above for the Supervisory Board. As a result of its tasks and responsibilities, the General Partner receives the share of the corporate earnings established in article 19 of these 5 Articles of Association. 6
5.2 Information on the Corporate Capital
5.2.1 Share Capital at 31/03/07
At 31 Marc h 2007, the corporate capital totalled €18,623,257 with Articles of Association do not include any specific provisions in terms 18,623,257 shares with a nominal value of €1 each. Any modifications of threshold crossing. to the corporate capital are subject to legal prescriptions as the GENERAL COMPANY INFORMATION INFORMATION GENERAL COMPANY CONCERNING GROUPE STERIA SCA AND ITS CAPITAL
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GENERAL COMPANY INFORMATION 05 CONCERNING GROUPE STERIA SCA AND ITS CAPITAL Information on the Corporate Capital
5.2.2 Changes to the Groupe Steria SCA Corporate Capital over the Last 5 Years
Total 1 Date Operation Number Number of General Premium of Securities of Company Cumulative Meeting Date Completed Type of Operation Nominal per Share Created Shares Capital 2 18 December 1998 26 June 2002 Capital increase, exercising the stock options issued €1 €6.62 73,800 16,278,990 €16,278,990 3 to employees 28 December 2001 26 June 2002 Capital increase, Bull exercising the UK stock €1 nominal 1,122,930 17,401,920 €17,401,920 purchase warrants 4 18 December 1998 20 December 2002 Capital increase, exercising the stock options issued €1 €6.62 6,750 17,408,670 €17,408,670 to employees 5 18 December 1998 Capital increase, exercising the stock options issued €1 €6.62 17,450 17,426,120 €17,426,120 to employees 31 July 2003 6 28 May 2002 Capital increase by company mutual fund (FCPE) €1 €10.50 310,224 17,736,344 €17,736,344 subscriptions and direct employee subscription 18 December 1998 6 October 2003 Capital increase, exercising the stock options issued €1 €6.62 5,850 17,742,194 €17,742,194 to employees 18 December 1998 16 February 2004 Capital increase, exercising the stock options issued €1 €6.62 19,450 17,761,644 €17,761,644 to employees 18 December 1998 21 June 2004 Capital increase, exercising the stock options issued €1 €6.62 40,100 17,801,744 €17,801,744 to employees 28 May 2002 Capital increase by company mutual fund (FCPE) €1 €22 119,957 17,921,701 €17,921,701 subscriptions and direct employee subscription 10 August 2004 18 December 1998 Capital increase, exercising the stock options issued €1 €6.62 1,600 17,923,301 €17,923,301 to employees 18 December 1998 20 October 2004 Capital increase, exercising the stock options issued €1 €6.62 29,572 17,952,873 €17,952,873 to employees 18 December 1998 7 January 2005 Capital increase, exercising the stock options issued €1 €6.62 25,500 17,978,373 €17,978,373 to employees 18 December 1998 15 June 2005 Capital increase, exercising the stock options issued €1 €6.62 17,050 17,995,423 €17,995,423 to employees 18 December 1998 Capital increase by company mutual fund (FCPE) €1 €24 96,501 18,091,924 €18,091,924 subscriptions and direct employee subscriptions 12 August 2005 18 December 1998 Capital increase, exercising the stock options issued €1 €6.62 3,150 18,095,074 €18,095,074 to employees 18 December 1998 17 October 2005 Capital increase, exercising the stock options issued €1 €6.62 26,578 18,121,652 €18,121,652 to employees 18 December 1998 16 January 2006 Capital increase, exercising the stock options issued €1 €6.62 7,650 18,129,302 €18,129,302 to employees 18 December 1998 Capital increase, exercising the stock options issued €1 €6.62 5,850 18,139,452 €18,139,452 to employees €1 €42.33 300 16 June 2006 €1 €35 4,000 30 December 2004 Capital increase, exercising the stock purchase €1 Nominal 136,839 18,276,291 €18,276,291 warrants issued to certain bearers 18 December 1998 Capital increase, exercising the stock options issued €1 €42.33 138 18,278,201 €18,278,201 to employees €1 €35 1,772 25 August 2006 15 June 2005 Capital increase reserved for Group employees €1 €31.70 334,556 18,612,757 €18,612,757 (via the company mutual fund (FCPE) and by direct subscription) 18 December 1998 Capital increase, exercising the stock options issued €1 €35 7,500 18,623,257 €18,623,257 23 October 2006 22 May 2002 to employees €1 €12 3,000
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5.2.3 Current Distribution of Capital and Voting Rights; Changes over the Last Three Years
Situation at 31/03/2007 Situation at 31/03/2006 Situation at 31/03/2005 Situation at 28/02/2004 1 % of % of % of % of Number % of Voting Number % of Voting Number % of Voting Number % of Voting 2 Shareholding of Shares Capital Rights(1) of Shares Capital Rights of Shares Capital Rights of Shares Capital Rights FCPE (Mutual Fund) 2,091,865 11.23 17.19 2,034,065 11.22 17.92 2,514,328 13.99 20.65 2,585,071 14.55 21.90 3 Jean CARTERON (Founder)(2) 1,414,870 7.60 12.38 1,414,870 7.80 12.47 1,426,070 7.93 11.79 1,626,070 9.16 14.06 4 Financière de l’Échiquier 1,009,367(3) 5.42 4.42 983,000(4) 5.42 4.33 981,066(5) 5.46 4.06 - - - 5 BULL(6) ------1,067,930 6.01 4.61 Groupe Steria SCA 6 (treasury shares) 42,336 0.23 0 59,665 0.33 0 59,665 0,33 0 59,665 0.33 0 Public 14,064,819 75.52 66.01 13,637,702 75.23 65.28 12,997,244 72.29 63.50 12,422,908 69.94 53.70 TOTAL 18,623,257 100 100 18,129,302 100 100 17,978,373 100 100 17,761,644 100 100 (1) Total voting rights: 22,855,557. (2) Full ownership and beneficial ownership (family). (3) Source: Thomson Financial July 2006. (4) Source: Thomson Marsh 2006. (5) According to crossing of thresholds declaration dated 22/10/2004. (6) Bull sold its entire stake in Groupe Steria SCA in January 2005, at the end of the vesting period applied to its shares in the scope of the acquisition by Groupe Steria of the bulk of Bull’s services businesses in Europe.
Double voting rights are allocated to shares registered in the name of the same shareholder for at least 2 years. The total number of voting rights at 31 March 2007 was 22,855,557.
To the Company’s knowledge, there are no other shareholders owning Shareholders’ Agreement either directly, indirectly or jointly 5% or more of the corporate capital or the voting rights. None.
The Company has no knowledge of any instance in 2006 where the Senior Managers’ Interests in the Corporate threshold was crossed. Capital At 31 March 2007, the nominal value of Groupe Steria SCA’s At 31 March 2007, the Company’s senior managers (General Manager treasury shares was €42,336 for a net book value of €1,333,917.30. and members of the Supervisory Board) owned a combined total of 1.42% of the corporate capital and 2.19% of the voting rights. Pledge of Company and Subsidiary Shares
The Company’s shares were not pledged by either the Company or its subsidiaries, nor were any other guarantees granted against the shares. GENERAL COMPANY INFORMATION INFORMATION GENERAL COMPANY CONCERNING GROUPE STERIA SCA AND ITS CAPITAL
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GENERAL COMPANY INFORMATION 05 CONCERNING GROUPE STERIA SCA AND ITS CAPITAL Information on the Corporate Capital
Transactions Carried Out by Senior Managers Involving Company Shares
In accordance with article L. 621-18-2 of the Code monétaire et financier (French monetary and financial code), the Company hereby informs you 1 of the transactions of which we are aware, carried out by senior managers involving their shares during fiscal year 2006.
Senior Managers Concerned Date of Transaction Type of Transaction Number of Shares Price Amount 2 Jacques Lafay (member of the Supervisory Board) 15/12/2006 Acquisition 1,500 €43.33 €64,995 3 Yves Rouilly (member of the Supervisory Board to 01/02/2007) 4/12/2006 Sale 250 €45.01 €11,252 4 Eric Hayat 20/11/2006 Sale 427 €47.65 €20,346.55 (Chairman of the Supervisory Board to 01/02/2007) 14/11/2006 Sale 73 €47.65 €3,478,45 5 21/09/2006 Sale 1,000 €43.29 €43,290 14/09/2006 Sale 1,000 €41.68 €41,680 6 9/01/2006 Sale 1,000 €45 €45,000 Claude Lacour 29/11/2006 Sale 1,000 €45.04 €45,040 (Representative of Soderi, the General Manager company, 2,380 mutual fund to 01/02/07) 23/10/2006 Sale units €44.19 €104,961.86 31/10/2006 Subscription of Shares 7,000 €13 €91,000
For transparency’s sake, the following table list the transactions carried out by senior managers at Steria SA, the operating parent company, of which the Company is aware.
Senior Managers Concerned Date of Transaction Type of Transaction Number of Shares Price Amount François Enaud 27/12/2006 Subscription 6,000 €45.17 €271,020 27/12/2006 Sale 6,000 €45.17 €271,020 10/08/2006 Acquisition 50 €33.96 €1,698 10/08/2006 Acquisition 175 €33.96 €5,943
Assets Belonging to Senior Managers
None.
No loans or guarantees have been granted to the senior managers.
5.2.4 Potential Capital
5.2.4.1 Stock Options 5.2.4.2 Stock Option Transactions in Fiscal Year 2006 History of the Allocation of Stock Options to The following table lists the number, due dates and prices of stock Employees options, which, during the fiscal year in question and, for corporate Historical information on the allocation of stock options to employees is offices held and duties carried out within the Company: provided in note 4.13 to the parent company financial statements. ■ were granted to the corporate officers by the Company or affiliated companies pursuant to the provisions set forth in article L. 225-180 of the Code de commerce;
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■ were exercised by the corporate officers:
Number of Options Stock Options Granted to Corporate Officers and Options Corporate Granted/ Shares 1 Exercised Officer Subscribed or Purchased Price Exercise Period Plan No. Options granted during the fiscal year to the corporate officers 2 by the issuer and by any Group company (nominative list) / / / / Options exercised during the fiscal year by the corporate officers From 12/04/2006 to 3 (nominative list) C. Lacour 7,000 €13.00 11/04/2010 6 J. Lafay 1,500 €43.33 From 8/02/2003 to 7/02/2007 2 4 ■ The following table lists: the options granted by the issuer and the aforementioned 5 ■ the options granted during the fiscal year, by the Company or companies that were exercised during the fiscal year by the ten its affiliated companies or groups pursuant to the conditions set employees of the issuer and said companies; 6 forth in article L. 225-180 of the Code de commerce to each of This information concerns the issuer’s non-corporate officer employees the ten employees of the Company and the companies included who were granted the highest number of options and purchased the in this structure; highest number of shares as a result.
Total Number of Options Stock Options Granted to the First Ten Non-Corporate Officer Employees Granted/ Shares Subscribed and Options Exercised or Purchased Average Weighted Price Plan No. Options granted, during the fiscal year, by the issuer and by any company within the share allocation scope, to the ten employees of the issuer and any company included in this structure, with the highest number of options thus granted (overall information) / / / 2,700 €7.62 1
Options granted by the issuer and the aforementioned companies that were exercised during 23,160 €43.33 2 the fiscal year by the ten employees of the issuer and said companies, with the highest number 3,450 €43.33 4 of options thus granted (overall information) 42,000 €36 5 2,500 €13 6
5.2.4.3 Stock Purchase Warrants 5.2.4.4 Free Shares
The General Meeting of 30 December 2004 decided to issue a The General Meeting of 15 June 2005 authorised the General Manager maximum of 522,000 stock purchase warrants to be awarded by to award Group staff members and corporate officers, as defined by the General Manager as part of the acquisition of German company the General Manager, with free shares which are to be issued or which Mummert. come from a prior purchase made by the Company in accordance with the provisions required by law. It should be noted that in the scope of his assignment, the independent expert judged the evaluation process selected to determine the The total number of these shares shall not exceed 2% of the Company’s
acquisition price of Mummert and the financial conditions of the corporate capital on the date of the decision to allocate them. The INFORMATION GENERAL COMPANY CONCERNING GROUPE STERIA SCA AND ITS CAPITAL acquisition were fair as concerns the situation of the Groupe Steria SCA allocation of these shares shall be considered as definitive following a limited partner. period of not less than 2 years and the beneficiaries shall hold them for a minimum period of 2 years from the date on which their allocation The General Manager awarded 490,566 warrants each giving the will have become definitive. right to one share. The General Manager will have full powers to determine the identity The first tranche of 150,553 stock purchase warrants was of the beneficiaries as well as the conditions and, if necessary, the exercised between 1 and 30 June 2006 in accordance with the criteria for allocating the shares. This authorisation will run until terms and conditions thus provided and resulted in the creation of 30 June 2008. 136,839 new shares.
As a result, and taking cancellations into account, at 31 December 2006 a total of 286,930 warrants remained outstanding.
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GENERAL COMPANY INFORMATION 05 CONCERNING GROUPE STERIA SCA AND ITS CAPITAL Information on the Corporate Capital
In light of this authorisation, the General Manager decided: (until 19 September 2011). Taking cancellations into account, ■ on 13 September 2005 to allocate a maximum of 70,000 shares at 31 December 2006, there remained 74,600 free shares to those beneficiaries, the list of whom has been approved by the outstanding; 1 General Manager, that are present in the Group at the end of the ■ on 15 December 2006 to allocate a maximum of 7,500 shares to determined acquisition period of 3 years (until 13 September 2008) those beneficiaries, the list of whom has been approved by the 2 and subject to the performance criteria being satisfied. These shares General Manager, that are present in the Group at the end of the must then be held for 2 years (until 13 September 2010). Taking determined acquisition period of 3 years (until 15 December 2009) 3 cancellations into account, at 31 December 2006, there remained and subject to the performance criteria being satisfied. These shares 65,800 free shares outstanding; must then be held for 2 years (until 15 December 2011). 4 ■ on 13 September 2006 to allocate a maximum of 100,000 shares The following table lists the number and value of the shares that, 5 to those beneficiaries, the list of whom has been approved by the during the last fiscal year and for corporate offices held and duties General Manager, that are present in the Group at the end of the carried out within the Company, were allocated free of charge to each 6 determined acquisition period of 3 years (from 19 September 2006 of the corporate officers by the Company and its affiliated Companies to 13 September 2009) and subject to the performance criteria pursuant to the conditions set forth in article L. 225-197-2 of the Code being satisfied. These shares must then be held for 2 years de commerce:
Corporate Officers Number of Free Shares Allocated Value of the Free Shares Allocated on the Date of Allocation None None None
The following table lists the number and value of the shares that were of the ten non-corporate officer employees of the company and the allocated free of charge during the last fiscal year, by the company companies included in this structure and to whom the highest number or by its affiliated companies or groups pursuant to the conditions of free shares were allocated. set forth in article L. 225-197-2 of the Code de commerce, to each
Total Number of Free Shares Allocated to the First Ten Non-Corporate Officer Employees (overall information) Value of the Free Shares Allocated on the Date of Allocation 32,100 including: - 24,600 as a result of the General Manager’ decision dated 13 September 2006 €43.10 (on 19/09/2006) - 7,500 as a result of the General Manager’ decision dated 15 December 2006 €45.20 (on 15/12/2006)
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SUMMARY OF INFORMATION CONCERNING POTENTIAL DILUTED CAPITAL AT 31 DECEMBER 2006 CAPITAL: €18,623,257
Potential 1 dilution resulting 2 from the Balance exercise of shares of these 3 Price for remaining and instruments Date granted/issued (a)/ the fiscal Identity authorised As % of Type of potentially date authorised (A) year of parties holding Timeframe for exercising for these current 4 diluted instruments if not yet granted (euros) the instruments instruments instruments(*) capital 5 1. Stock options granted 07/02/2000 (a) 43.33 Employees From 8/2/2003 to 7/2/2007 136,290 0.73 05/09/2000 (a) 53.33 Employees From 6/9/2003 to 5/9/2007 14,700 0.08 6 10/04/2001 (a) 43.33 Employees From 11/4/2004 to 10/4/2008 185,685 1.00 13/05/2002 (a) 36 Employees From 14/5/2005 to 13/5/2009 465,333 2.50 11/04/2003 (a) 13 Employees From 12/04/2006 to 11/04/2010 178,920 0.96 20/04/2004 (a) 28.5 Employees From 21/04/2007 to 20/04/2011 178,000 0.96 TOTAL 1 1,158,928 2. Stock Purchase Warrants 30/12/2004 €1 per Mummert Employees From 01/06/2007 to 30/06/2007 133,400 1.54 option From 01/01/2008 to 31/01/2008 153,530 3. Free Shares 13/09/2005 (a) Free Certain Group - Allocation date: 13/09/2008 (**) 65,800 0.35 (conditional allocation) employees and - Holding period: 2 years corporate officers (stock available from 13/09/2010) 13/09/2006 (a) - Allocation date: 19/09/2009 (**) 74,600 0.40 (conditional allocation) - Holding period: 2 years (stock available from 19/09/2011) 15/12/2006 (a) - Allocation date: 15/12/2009 (**) 7,500 0.04 (conditional allocation) - Holding period: 2 years (stock available from 15/12/2011) TOTAL POTENTIAL 8.56 DILUTION(***) (*) Total taking into account cancelled options and deduction of already exercised options. (**) Subject to presence in the Group and earnings. (***) The amount is a maximum amount that does not account for the assumptions applied to calculate the earnings per share under IFRS (note 4.19 of the appendices to the consolidated financial statements). These assumptions result in a reduction of the dilutive nature of these instruments. GENERAL COMPANY INFORMATION INFORMATION GENERAL COMPANY CONCERNING GROUPE STERIA SCA AND ITS CAPITAL
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GENERAL COMPANY INFORMATION 05 CONCERNING GROUPE STERIA SCA AND ITS CAPITAL Information on the Corporate Capital
5.2.5 Authorised but Non-Issued Capital
1 The following table summarises the delegations of authority and and indicates the use to which these delegations were put during powers granted by the General Meeting of Shareholders to the General the fiscal year. 2 Manager with regard to capital increases and that are currently valid 3
Use or Allocation Residual Amount of Percentage Made During Authorisation 4 Decisions Expiry Date of Authorised Capital the Year at 31/12/2006 5 Combined GM of 15/06/2005 30/06/2008 2% of capital 107,500 1.05% Delegation granted to the General Manager to allocate free shares free shares 6 Combined GM of 14/06/2006 14/08/2008 €13,000,000 (nominal value) None All Delegation granted to the General Manager to call for capital for issue of securities with pre-emptive subscription right €325,000,000 (nominal value) for issue of borrowed securities Combined GM of 14/06/2006 14/08/2008 €5,400,000 (nominal value) None All Delegation granted to the General Manager to call for capital for issue of securities with no pre-emptive subscription right €250,000,000 (nominal value) for issue of borrowed securities Combined GM of 14/06/2006 14/08/2008 10% of capital None All Authorisation granted to the General Manager to increase the company’s capital in order to remunerate contributions in kind Combined GM of 14/06/2006 From 1/09/2006 €550,000 (nominal) None All Delegation granted to the General Manager to decide to 31/08/2007 on capital increases for employees
There are no other securities giving access to the capital.
5.2.6 Share Redemption Programme
5.2.6.1 Description of the Share Redemption Programme
Date of the General Meeting that authorised the redemption programme
Programme authorised during the Combined General Meeting of 14 June 2006 (12th resolution).
Number of shares and share of the capital owned directly or indirectly by the company
Percentage of the capital owned directly or indirectly by the company 0.32% – of which shares owned directly 0.32% – of which shares owned indirectly 0 Number of shares cancelled in the last 24 months None Number of shares in the portfolio 59,665 shares Book value of the portfolio €1,875,934.78 Market value of the portfolio €2,552,859.50 at 29/09/2006 (opening price)
No shares have been purchased, sold or transferred since 22 April 2005, The company used no derivative products during the last programme. the day after the review of the previous programme was carried out, The Group uses derivative products only in the scope of handling and since 05/10/2006, the day when the description of the new treasury management risk. programme was published.
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Breakdown of treasury shares (shares purchased before 13 October 2004)
With a view to signing the liquidity contract referred to in paragraph the market. Following this operation, the breakdown of treasury shares 5.2.6.2 below, 17,500 treasury shares were reallocated from the between the different objectives is as follows: 1 objective concerning external growth operations to that concerning 2
Implementation, for the employees and/or corporate officers, of any stock option plans pursuant to the provisions set forth articles L. 225-177 3 and following of the Code de commerce, any Group savings plan pursuant to articles L. 443-1 and following of the Code de commerce or any allocation of free shares pursuant to the provisions set forth in articles L. 225-197-1 and following of the Code de commerce / 4 Allocation of shares to the holders of convertible debt securities 6,507 Purchase of shares by Groupe Steria SCA for holding purposes to be redeposited on the market at a later date or used for payment in the scope 5 of any future external growth operations 35,658 Operation concerning the secondary market or the liquidity of Groupe Steria SCA stock via the intermediary of an investment services provider acting 6 independently in the scope of a liquidity contract in accordance with the AFEI Code of Conduct and approved by the AMF 17,500 Cancellation (if any) of purchased shares / TOTAL 59,665
Purpose of the Redemption Programme Groupe Steria SCA would be authorised to purchase a maximum of 10% of its own capital, i.e. 1,862,326 shares. Groupe Steria SCA intends to use the share redemption programme to fulfil the following objectives, ranked in order of importance: Taking into account the shares already owned by the company ■ to implement, for the employees and/or corporate officers, any (59,665 shares) and supposing that these shares are to be retained, stock option plans, pursuant to the provisions set forth in articles 1,802,661 shares would therefore be redeemed, i.e. 9.68% of the L. 225-177 and following of the Code de commerce, any Group capital. savings plan, pursuant to articles L. 443-1 and following of the The maximum total amount invested by Groupe Steria SCA to purchase Code de commerce, or any allocation of free shares, pursuant to its own shares in the scope of the share redemption programme may the provisions set forth in articles L. 225-197-1 and following of not exceed €131,000,000 (excluding costs), on the basis of a maximum the Code de commerce; purchase price per share of €75. ■ to allocate shares to the holders of convertible debt securities (into Company shares); Share Characteristics ■ for the purchase of shares by Groupe Steria SCA for holding Type: Stock purposes to be redeposited on the market at a later date or used for payment in the scope of any future external growth operations; Listing market: Euronext Paris, Eurolist (Compartment B) ■ for operations concerning the secondary market or the liquidity Euroclear: 7291 PA of Groupe Steria SCA stock via the intermediary of an investment services provider acting independently in the scope of a liquidity ISIN: FR 0000072910 contract in accordance with the AFEI Code of Conduct and approved by the AMF; Mnemo: RIA GENERAL COMPANY INFORMATION INFORMATION GENERAL COMPANY CONCERNING GROUPE STERIA SCA AND ITS CAPITAL ■ to cancel (if necessary) any of the purchased shares. 5.2.6.2 Implementation of the Share Redemption Maximum share of the capital, maximum number Programme and characteristics of the shares that the issuer proposes to purchase, maximum purchase price Liquidity Contract
The maximum share of the capital authorised for redemption by the On the basis of a contract dated 30 October 2006 and tacitly renewable Combined General Meeting of 14 June 2006 amounts to 10% of the after one year, Groupe Steria SCA called on SG Securities (Paris) SAS, Groupe Steria SCA corporate capital in existance at the time of use a simplified joint-stock company with capital of €2,400,000 euros, of the redemption programme. whose registered office is at Tour Société Générale, 17 cours Valmy, On the date on which the share redemption programme was initiated, 92987 Paris La Défense Cedex, and registered with the Nanterre Trade the capital amounted to €18,623,257 divided into 18,623,257 shares and Company Register under the number 784 198 483, to implement with a nominal value of €1 each. Based on these figures, a liquidity contract for ordinary shares in accordance with the AFEI
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GENERAL COMPANY INFORMATION 05 CONCERNING GROUPE STERIA SCA AND ITS CAPITAL Groupe Steria SCA and the Stock Market
Code of Conduct as approved by the AMF (French financial markets 48,559 shares were purchased and 37,547 sold during the fiscal year authority) by its decision of 22 March 2005, published in BALO on ending 31 December 2006. 1 April 2005. At 31 December 2006, the liquidity account held the following 1 To implement this contract, the following assets were deposited in assets: 2 the liquidity account: ■ 11,012 Groupe Steria shares; ■ 17,500 Groupe Steria shares; ■ €1,029,230.87. 3 ■ €735,000. 4 5 6 5.3 Groupe Steria SCA and the Stock Market
5.3.1 Stock Market Information Principal Steria Tickers
Euronext: RIA Groupe Steria SCA has been a listed company since 4 June 1999 and Bloomberg: RIA FP is currently listed on Euronext Paris, Eurolist (Compartment B). Reuters: TERI.PA
Codes and Classification of Steria Stock Principal Indices ISIN: FR 0000072910 CAC ALL SHARES, Euronext: FR 0000072910 CAC MID&SMALL 190, MEP: Paris CAC MID 100, Local: 7291 CAC Soft&CS, Mnemo: RIA CAC Technology, Type: Stock – Ordinary Stock – Continuous EURONEXT FAS IAS, Market: Euronext Paris - Eurolist – Local Securities/Compartment B (Mid-Caps) Indice Général SBF 120, SBF 250, Characteristics of Steria Stock SBF 80, IT CAC, Industry: 9000, Technology NEXT 150 SuperSector: 9500, Technology Sector: 9530, Software and Computer Services SubSector: 9533, Computer Services Personal equity savings plan eligibility: Yes Deferred Settlement Service: Yes
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The changes in the Groupe Steria SCA quoted market price since 1 January 2004 are detailed in the following table.
2004 01 02 03 04 05 06 07 08 09 10 11 12 1 Average volume traded/day 35,102 47,829 53,781 72,107 41,982 38,757 28,211 19,305 49,356 41,724 35,342 26,478 High € 33.78 32.07 31.90 30.92 28.50 29.45 29.00 26.50 25.70 30.00 30.20 29.53 2 Low € 30.00 28.29 24.22 26.90 24.73 26.57 23.53 21.73 20.45 25.25 28.01 27.90 Capital in millions of euros(1) 23.29 29.07 34.29 41.67 23.77 24.34 16.38 10.31 25.59 24.07 22.81 17.47 3
2005 01 02 03 04 05 06 07 08 09 10 11 12 4 Average volume traded/day 45,577 145,965 48,238 71,328 30,031 75,103 66,839 62,480 91,471 58,095 60,816 41,301 5 High € 32.17 34.30 32.11 33.00 31.00 32.33 35.71 39.50 46.50 46.19 43.85 44.05 Low € 29.70 31.12 28.41 28.85 29.32 28.62 31.71 36.00 38.00 39.41 39.75 40.20 6 Capital in millions of euros(1) 29.43 94.24 31.19 46.76 20.15 49.77 47.58 54.60 86.02 53.03 56.57 36.31
2006 01 02 03 04 05 06 07 08 09 10 11 12 Average volume traded/day 62,383 50,451 56,998 36,784 67,928 55,815 64,894 59,416 48,429 49,928 60,879 46,734 High € 48.05 47.33 50.65 50.45 48.74 43.99 41.71 40.95 43.45 46.25 48.38 45.99 Low € 42.10 44.50 45.25 45.00 40.27 39.10 31.37 31.33 38.01 40.20 43.51 43.80 Capital in millions of euros(1) 62.77 46.29 63.18 32.50 66.85 50.86 50.27 49.32 41.64 47.80 61.33 39.83
2007 01 02 03 04 05 06 07 08 09 10 11 12 Average volume traded/day 70,119 85,106 High € 49.67 52.15 Low € 45.51 47.00 Capital in millions of euros(1) 74.39 85.61 Source: EURONEXT. (1) Capital traded in the month.
STERIA SHARE PRICE (GROUP) IN EUR (FIXED) AT 02/04/07
55
50
45 GENERAL COMPANY INFORMATION INFORMATION GENERAL COMPANY CONCERNING GROUPE STERIA SCA AND ITS CAPITAL
40
35
30
Nov. 05 Dec. 05 Jan. 06 Feb. 06 March 06 April 06 May 06 June 06 July 06 Aug. 06 Sept. 06 Oct. 06 Nov. 06 Dec. 06 Jan. 07 Feb. 07 March 07 April.07
Steria (Group)
Source: JCF
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GENERAL COMPANY INFORMATION 05 CONCERNING GROUPE STERIA SCA AND ITS CAPITAL Groupe Steria SCA and the Stock Market
CHANGE IN AVERAGE VOLUME TRADED PER DAY (IN €)
4, 000, 000 1 3, 500, 000 2 3, 000, 000 3 2, 500, 000 4 2, 000, 000
1, 500, 000 5
1, 000, 000 6
500, 000
0 Fev-04 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Apr-03 Apr-04 Apr-05 Apr-06 Feb-03 Feb-05 Feb-06 Feb-06 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 June-02 June-03 June-04 June-05 June-06
GROUPE STERIA SCA STOCK MARKET CAPITALISATION SINCE JUNE 1999 (IN €M)
1000
800
600
400
200
0 Dec-06 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 June-99 June-00 June-01 June-04 June-02 June-03 June-05 June-06
Source: JCF
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5.3.2 Dividend Distribution Policy
1 5.3.2.1 Dividends Paid Over the Last Three Fiscal Years 2 AMOUNTS PAID TO LIMITED PARTNER SHAREHOLDERS (IN EUROS) 3 Fiscal Year Net Dividend per Share Tax Credit/Allowance 2003 €0.22 €0.11 (tax credit) 4 2004 €0.25 Allowance at applicable rate 2005 €0.30 Allowance at applicable rate 5
AMOUNT PAID TO GENERAL PARTNERS PURSUANT TO ARTICLE 19 OF THE ARTICLES OF ASSOCIATION (IN EUROS) 6
Fiscal Year Dividend Tax Credit/Allowance 2003 €155,286 €77,643 2004 0 Allowance at applicable rate 2005 €174,837.17 Allowance at applicable rate
5.3.2.2 Dividend Proposal for Fiscal Year Ended 31 December 2006
AMOUNT PROPOSED TO LIMITED PARTNERS DURING THE COMBINED GENERAL MEETING OF 5 JUNE 2007 (IN EUROS)
Fiscal Year Net Dividend per Share Allowance 2006 €0.42 Allowance at applicable rate
AMOUNT PROPOSED TO GENERAL PARTNERS DURING THE COMBINED GENERAL MEETING OF 5 JUNE 2007 PURSUANT TO ARTICLE 19 OF THE ARTICLES OF ASSOCIATION (IN EUROS)
Fiscal Year Dividend Allowance 2006 543,320.45 Allowance at applicable rate
5.3.3 Financial Information
Financial Information Manager Financial Information Calendar
Mr Olivier Psaume 28/02/2007 (at market close): 2006 annual results. GENERAL COMPANY INFORMATION INFORMATION GENERAL COMPANY CONCERNING GROUPE STERIA SCA AND ITS CAPITAL Strategy and Investor Relations Department 2/05/2007 (at market close): Q1 2007 revenue. Steria 5/06/2007: Annual General Meeting. 46, rue Camille-Desmoulins 92130 Issy-les-Moulineaux 30/07/2007 (at market close): Q2 2007 revenue. Tel.: +33 1.34.88.55.60 30/07/2007 (at market close): H1 2007 revenue. Fax: +33 1.34.88.62.00 29/10/2007 (at market close): Q3 2007 revenue. E-mail: [email protected] Website: www.steria.com
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GENERAL COMPANY INFORMATION 05 CONCERNING GROUPE STERIA SCA AND ITS CAPITAL Person Responsible for the Reference Document
5.4 Person Responsible for the Reference Document 1 2 Person Responsible for the Reference Document 3 Mr François Enaud General Manager of Groupe Steria SCA. 4 5 Declaration from the Person Responsible for the Reference Document 6 «I hereby declare that having taken all reasonable steps in my power, the information contained in this Reference Document is, to my knowledge, correct and does not include any omission that might alter its meaning.
I have obtained a letter from our statutory auditors marking the end of their work on this report and in which they declare that they have verified the information relating to the financial position and the financial statements presented in this Reference Document and have read the entire document.»
18/04/2007
François Enaud General Manager of Groupe Steria SCA
126 3 Financial R eport 2006 - Steria
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DOCUMENTS AVAILABLE TO THE PUBLIC DOCUMENTS AVAILABLE TO THE PUBLIC DOCUMENTS AVAILABLE
Steria - Financial Report 2006 7 127
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DOCUMENTS AVAILABLE 06 TO THE PUBLIC
Legal documents (articles of association, minutes of general meetings, auditors’ reports, etc.) can be consulted at the Group Legal Department, 46 rue Camille-Desmoulins - 92130 Issy-les-Moulineaux. 1 ANNUAL INFORMATION DOCUMENT
Date 2 Documents of Publication Source Financial Communication 3 Financial Report 2005 21/04/2006 Steria website/ AMF website Press release on 2005 revenue 13/02/2006 Steria website/AMF website 4 Publication of 2005 revenue 17/02/2006 BALO/Steria Administrative Headquarters 5 Press release on 2005 annual results 15/03/2006 Steria website/AMF website Press release on Q1 2006 revenue 10/05/2006 Steria website/AMF website/ BALO 6 Publication of Q1 2006 revenue in BALO (French govt. journal) 17/05/2006 BALO/Steria Administrative Headquarters Press release on H1 2006 revenue 9/08/2006 Steria website Publication of Q2 2006 revenue 14/08/2006 BALO/Steria Administrative Headquarters Press release on H1 2006 results 13/09/2006 Steria website/AMF website Presentation of 2006 half-yearly results 14/09/2006 Steria website Publication of H1 2006 results 23/10/2006 BALO/Steria Administrative Headquarters Press release on Q3 2006 revenue 13/11/2006 Steria website Publication of Q3 2006 revenue 15/11/2006 BALO/Steria Administrative Headquarters Press release on 2006 revenue 5/02/2007 Steria website/AMF website Publication of 2006 revenue in BALO 14/02/2007 Steria Administrative Headquarters Press release on 2006 annual results 28/02/2007 Steria website/AMF website Presentation of 2006 annual results 01/03/2007 Steria website Financial Statements 28/04/2006 Steria Administrative Headquarters/Office of the Registrar 2005 Consolidated Financial Statements 07/07/2006 - Tribunal de Commerce/Financial Report 28/04/2006 Steria Administrative Headquarters/Office of the Registrar 2005 Corporate Financial Statements 07/07/2006 - Tribunal de Commerce/Financial Report Auditors’ Reports Auditors’ Report on the 2005 Consolidated Financial Statements 21/04/2006 Steria Administrative Headquarters/Financial Report Auditors’ Report on the 2005 Corporate Financial Statements 21/04/2006 Steria Administrative Headquarters/Financial Report Special Auditors’ Report on Regulated Agreements in Fiscal Year 2005 21/04/2006 Steria Administrative Headquarters/Financial Report Special Auditors’ Report on the Report by the Chairman of the Supervisory Board on Internal Control in Fiscal Year 2005 21/04/2006 Steria Administrative Headquarters/Financial Report Other Documents Half-yearly review of the liquidity contract 2/01/2007 Steria website/AMF website Press release on the implementation of a liquidity contract 31/10/2006 AMF website Description of the share redemption programme 5/10/2006 Steria website/AMF website Press release on the capital increase reserved for employees 19/06/2006 AMF website/ Steria Administrative Headquarters Declaration of securities transactions made by management 2/02/2007 Steria website/AMF website Declaration of securities transactions made by management 31/01/2007 Steria website/AMF website Declaration of securities transactions made by management 23/01/2007 Steria website/AMF website Declaration of securities transactions made by management 19/01/2007 Steria website/AMF website Declaration of securities transactions made by management 5/01/2007 Steria website/AMF website
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Date Documents of Publication Source Declaration of securities transactions made by management 4/01/2007 Steria website/AMF website 1 Declaration of securities transactions made by management 12/12/2006 Steria website/AMF website Declaration of securities transactions made by management 9/11/2006 AMF website/Steria Administrative Headquarters 2 Declaration of securities transactions made by management 3/11/2006 AMF website/Steria Administrative Headquarters Declaration of securities transactions made by management 3/10/2006 AMF website/Steria Administrative Headquarters 3 Declaration of securities transactions made by management 14/04/2006 AMF website/Steria Administrative Headquarters Declaration of securities transactions made by management 11/01/2006 AMF website/Steria Administrative Headquarters 4 Monthly voting rights February 2007 6/03/2007 Steria website Monthly voting rights January 2007 6/02/2007 Steria website 5 Monthly voting rights December 2006 3/01/2007 AMF website/Steria website/BALO Monthly voting rights November 2006 30/11/2006 AMF website/Steria website/BALO 6 Monthly voting rights October 2006 31/10/2006 AMF website/Steria website/BALO Press release on the results of the General Meeting of 01/02/2007 15/02/2007 Steria website Publication of voting rights from the General Meeting of 01/02/2007 12/02/2007 BALO/Steria website/AMF website Correction of the invitation to attend/notice of meeting for the General Meeting of 01/02/2007 26/01/2007 Steria website/Les Echos/journal of legal notices Publication of the invitation to attend/notice of meeting for the General Meeting of 01/02/2007 29/12/2006 BALO/journal of legal notices/Steria website Press release on the results of the General Meeting of 14/06/2006 29/06/2006 AMF website/Steria website Publication of voting rights from the General Meeting of 14/06/2006 26/06/2006 BALO/AMF website/Steria Administrative Headquarters Publication of the invitation to attend/notice of meeting for the General Meeting BALO/journal of legal notices/Steria Administrative of 14/06/2006 17/05/2006 Headquarters Press release on changes to Steria Group governance 25/09/2006 Steria website/AMF website DOCUMENTS AVAILABLE TO THE PUBLIC DOCUMENTS AVAILABLE
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Cross-Reference Table 1
In order to facilitate the reading of this Annual Report, submitted as a Reference Document, the following table provides the main information 2 dealt with by Appendix 1 of Regulation (EC) No. 809/2004. 3
Annual report Annual report Information Pages Information Pages 4 PERSONS RESPONSIBLE 126 REMUNERATION AND BENEFITS 97 and fol. 5 STATUTORY AUDITORS 82 BOARD PRACTICES 84 and fol. SELECTED FINANCIAL INFORMATION 2, 26 and fol. 16 and fol., 74 and fol., 6 RISK FACTORS 19 and fol. EMPLOYEES 116 and fol. INFORMATION ABOUT THE ISSUER 105 and fol. MAJOR SHAREHOLDERS 115 History and development of the issuer 6 RELATED PARTY TRANSACTIONS 80 and fol. Investments 13 FINANCIAL INFORMATION CONCERNING THE ISSUER’S BUSINESS OVERVIEW 11 and fol ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFITS AND LOSSES Principal activities 11 and fol 30 and fol., PRINCIPAL MARKETS 10 Historical financial information 62 and fol. ORGANISATIONAL STRUCTURE 7, 9 Pro forma financial information N/A PROPERTY, PLANTS AND EQUIPMENT N/A Report prepared by independent accountants Information regarding any existing or planned material or statutory auditors N/A tangible fixed assets, including leased properties, Annual consolidated financial statements 30 and fol. and any major encumbrances thereon N/A 60 and fol., Environmental issues that may affect the issuer’s utilisation Auditing annual historical financial information 78 and fol. of the tangible fixed assets N/A Age of latest financial information 26 and fol. OPERATING AND FINANCIAL REVIEW 26 and fol. Interim and other financial information N/A CAPITAL RESOURCES 19 and fol. Dividend policy 125 RESEARCH AND DEVELOPMENT, PATENTS AND LICENCES N/A Legal and arbitration proceedings 21 TREND INFORMATION 27 Significant change in the issuer’s financial or trading position N/A PROFIT FORECASTS OR ESTIMATES N/A ADDITIONAL INFORMATION ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY 7 and fol., BODIES AND SENIOR MANAGEMENT 89 and fol. Share capital 113 and fol. Information concerning managing partners and supervisory Memorandum and Articles of Association 106 and fol. board members 89 and fol. MATERIAL CONTRACTS N/A Family links between these members 97 THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS Mandates over the last five financial years 90 and fol. AND DECLARATIONS OF ANY INTEREST N/A Declarations over the last five years 97 DOCUMENTS AVAILABLE TO THE PUBLIC 128 Conflicts of interest in administrative, management INFORMATION ON HOLDINGS 26 and fol. and supervisory bodies and senior management 97
130 3 Financial Report 2006 - Steria
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01 GROUP PRESENTATION 3.4 Statutory Auditor’s Report AND ACTIVITIES p. 5 on the annual financial statements p. 78
1.1 Historical Highlights p. 6 3.5 Statutory Auditors’ Report on related party agreements and commitments p. 80 1.2 The Group Governance System p. 7 3.6 Statutory Auditors p. 82 1.3 Markets - Positioning p. 10 1.4 Steria Group Core Businesses Investment and Innovation p. 11 1.5 Corporate Social Responsibility 04 (CSR) p. 13 CORPORATE GOVERNANCE 1.6 The Corporate Mission Statement AND INTERNAL CONTROL p. 83 and its Governance p. 14 4.1 Report by the Chairman 1.7 Human resources: Commitment of the Supervisory Board p. 85 to Respect for our Employees p. 16 4.2 Statutory Auditors’ Report 1.8 Risks and Risk Management p. 19 on the Chairman’s Report p. 103 02 05 FINANCIAL YEAR 2006, RECENT DEVELOPMENTS GENERAL COMPANY AND OUTLOOK p. 25 INFORMATION CONCERNING GROUPE STERIA SCA 2.1 Overall Business of the Group p. 26 AND ITS CAPITAL p. 105
2.2 Groupe Steria SCA Business Activity p. 28 5.1 Corporate Legal Information p. 106
2.3 Subsidiaries and Investments p. 28 5.2 Information on the Corporate Capital p. 113 5.3 Groupe Steria SCA and the Stock Market p. 122 5.4 Person Responsible 03 for the Reference Document p. 126 FINANCIAL STATEMENTS OF GROUPE STERIA SCA p. 29 3.1 Consolidated Financial Statements for the year ended 31 December 2006 p. 30 06 Notes to the Consolidated Financial DOCUMENTS AVAILABLE Statements p. 34 TO THE PUBLIC p. 127 3.2 Statutory Auditors’ Report on the consolidated financial statements p. 60 Design and compilation: Steria, Direction de la Communication 3.3 Parent Company Financial Creation and production: Statements for the Year Ended 31 December 2006 p. 62 CROSS-REFERENCE TABLE p. 130 Notes to the Parent Company
Financial Statements p. 66
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www.steria.com 46, rue Camille-Desmoulins 92782 Issy-les-Moulineaux Cedex 9 – France Téléphone : +33 1 34 88 60 00
Télécopie : + 33 1 34 88 69 69 Financial Report 2005
Steria -
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