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Annual Report/Reference Document 2002 Annual Report – SWORD GROUP ANNUAL REPORT/REFERENCE DOCUMENT 2002 FINANCIAL YEAR Registration with the Commission des Opérations de Bourse In accordance with rule No. 95-01, the Commission des Opérations de Bourse (COB) registered this annual report on 24/04/03 under the number R-03-067. It may be used to support a financial operation only if it is accompanied by a memorandum approved by the Commission des Opérations de Bourse. This annual report was drafted by the issuer and is legally binding for its signatories. This registration, which was carried out after examination of the relevance and consistency of the information given on the company’s situation, does not necessarily authenticate the accounting and financial elements it contains. Warning “The Commission des Opérations de Bourse would like to draw the public’s attention to the following elements: - the auditors have formulated a reservation on the pro forma consolidated financial statements with respect to the lack of control of 2001 accounts for the company CRONOS, which could neither be audited nor even subjected to a limited examination; - approximately 60% of the company’s pro forma turnover for 2002 is produced on a fixed price basis. Nevertheless, the company considers that it is managing the risk as described in paragraph 3.2.4”. Page 1 2002 Annual Report – SWORD GROUP 2 CONTENTS 1. PERSON IN CHARGE OF THE ANNUAL REPORT AND STATEMENTS 1.1. Person in charge of the annual report 3 1.2. Statement by the Person in charge of the annual report 3 1.3. Individuals in charge of the statement of accounts 3 1.4. Statement by the auditors 4 1.5. Individuals in charge of financial information 5 2. GENERAL INFORMATION ON THE COMPANY AND ITS CAPITAL 2.1. General information on the issuer 6 2.2. General information on capital stock 11 2.3. Dividends 18 2.4. The issuer’s share market 18 3. INFORMATION ON SWORD GROUP’S ACTIVITIES, RECENT DEVELOPMENTS AND OUTLOOK FOR THE FUTURE 3.1. Presentation of the company’s activities 19 3.2. Analysis of the company’s risks 43 3.3. Investment policy 47 3.4. Recent developments 49 3.5. Strategy and outlook for the future 49 3.6. Extraordinary events and litigation 56 3.7. Glossary 57 4. NET WORTH – FINANCIAL SITUATION – RESULTS 4.1. Consolidated financial statements 58 4.2. Corporate financial statements 88 4.3 Consolidated pro forma financial statements for 2002-2001 103 4.4. Management report on the financial year ending 31st December 2002 124 4.5. Report by the Board of Directors on stocks options 136 4.6. General reports and special reports by the auditors 138 4.7. Auditors’ fees 144 5. ADMINISTRATION - MANAGEMENT 5.1. Board of Directors 145 5.2. Management and Operations Committees 147 5.3. Management participation 148 5.4. Earnings of members of the administrative and directors’ boards 149 5.5. Operations agreed with members of the administrative and directors’ board 149 5.6. Loans and guarantees granted or set up for administrative boards 149 5.7. Employee participation 149 Annexe Timetable of publications and other SWORD Group financial events over 2003/2004 151 Page 2 2002 Annual Report – SWORD GROUP C h a p t e r 1 1. PERSON IN CHARGE OF THE REFERENCE DOCUMENT AND STATEMENTS 1.1. Person in charge of the annual report Name and position of the Person in charge: Mr. Jacques Mottard, chairman of SWORD Group Board of Directors. 1.2. Statement by the person in charge of the annual report “To my knowledge, the information provided in this document is accurate; it contains all the information required for investors to form an opinion on the net worth, activities, results and outlook of SWORD Group. There are no omissions that would significantly alter its scope”. The Chairman of the Board of Directors Jacques Mottard 1.3. Individuals in charge of the statement of accounts (A) Incumbents (1) Deloitte Touche Tohmatsu SA, Head Office: 185, avenue Charles de Gaulle, 92200 Neuilly-sur-Seine. Date appointed: 29th June 2001. Date mandate expires: the mandate will expire after the Shareholders’ General Meeting called to approve the statements of accounts for the financial year ending on 31st December 2005. (2) Cabinet Figerec, Head Office: 28, rue Jean Broquin, 69006 Lyon. Date appointed: 29th October 2001. Date mandate expires: the mandate will expire after the Shareholders’ General Meeting called to approve the statements of accounts for the financial year ending on 31st December 2006. (B) Assistants (1) Bureau d’études administratives sociales et comptables, Head Office: 7/9, Villa Houssay, 92200 Neuilly-sur-Seine. Date appointed: 29th June 2001. Date mandate expires: the mandate will expire after the Shareholders’ General Meeting called to approve the statements of accounts for the financial year ending on 31st December 2005. (2) Mr. Paul Mollin, Address: 14, rue Claude Fouilloux, 69450 Saint-Cyr-au-Mont-d’Or Date appointed: 29th October 2001. Date mandate expires: the mandate will expire after the Shareholders’ General Meeting called to approve the statements of accounts for the financial year ending on 31st December 2006. Page 3 2002 Annual Report – SWORD GROUP 1.4. Statement by the auditors OPINION OF THE AUDITORS ON THE ANNUAL REPORT FOR THE FINANCIAL YEAR 2002 As auditors of SWORD GROUP and in accordance with COB rule 95-01, we have verified the information provided in this annual report relating to the company’s financial situation and historic statements, in accordance with the auditing practices that apply in France. This annual report was drawn up under the responsibility of Mr. Jacques MOTTARD, the chairman of the SWORD GROUP Board of Directors. Our task is to issue an opinion on the honesty of the information it contains regarding the company’s financial situation and accounts. In accordance with French auditing practice, our due diligence consisted in assessing the sincerity of the information relating to the company’s financial situation and accounts, and in verifying their consistency with the statements that have been reported. It also consisted in reviewing the other information contained in the annual report, in order to identify any significant inconsistencies with the information relating to the company’s financial situation and accounts, and in pointing out any manifestly incorrect information we may have found based on our general knowledge of the company, acquired within the scope of our task. Because this report consists of isolated projected data resulting from a structured calculation process, the examination took into account the assumptions made by the company’s management and the figures they generated as a result of these assumptions. We audited the annual statements and consolidated financial statements for the financial year ending 31st December 2001 (6 months) settled by the Board of Directors in accordance with French auditing practices, and approved them with no reservations or remarks. We audited the pro forma consolidated financial statements for the financial years ending 31st December 2002 and 2001, which were drawn up under the responsibility of the Chairman of the Board of Directors and presented in the annual report, in accordance with French auditing practices. Our audit gave rise to a report, which is included with this annual report, in which we have expressed a reservation with regards to the lack of control of 2001 accounts for the company CRONOS, which could be neither audited nor even subjected to a limited examination. On the basis of such due diligence, we have no remarks to make concerning the accuracy of the financial and accounting information presented in this annual report. Lyon and Villeurbanne, 24th April 2003 The Auditors FIGEREC DELOITTE TOUCHE TOHMATSU Georges BONNEPART Jacques CONVERT Page 4 2002 Annual Report – SWORD GROUP 1.5. Individuals in charge of financial information Jacques MOTTARD Tel.: 04 72 85 37 42 Fax: 04 72 85 37 80 E-mail: [email protected] Stéphanie DESMARIS Tel: 04 72 85 37 45 Fax: 04 72 85 37 80 E-mail: [email protected] Page 5 2002 Annual Report – SWORD GROUP C h a p t e r 2 2. GENERAL INFORMATION ON THE COMPANY AND ITS CAPITAL 2.1. General information on the issuer 2.1.1. Company name SWORD Group. 2.1.2. Head Office 9, avenue Charles de Gaulle - 69370 Saint-Didier-au-Mont-d’Or. 2.1.3. Legal form and the legislation that applies Public limited company with a board of directors constituted according to French law and subject to the Commercial Code and to French law no. 67-236 of 23rd March 1967 relating to commercial companies. 2.1.4. Date of establishment and lifetime of the company SWORD Group was established as a holding company on 22nd June 2001 in the form of a public limited company and for a duration of 99 years expiring on 21st June 2100. On 30th august 2001, 144 shareholders of the company SWORD SA, formed on 17th November 2000, contributed shares to SWORD Group. 2.1.5. Business objective (article 2 of the by-laws) The company’s objectives are: - the acquisition of stakes in all companies, firms or groups, be they French or foreign, that have been or are to be formed, through any means available, in particular through the contribution, subscription or purchase of shares or stakes, or through mergers or the purchase of assets, etc… - any financial, real estate or movable property transactions relating directly or indirectly to the objective stated above or which may favour the accomplishment of the objective, - the company may provide administrative services of a consultative nature or carry out any other research, development and supervisory activities, in addition to service provision, consultative and production activities in the field of information systems.
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