CONTENTS Person responsible 3 1 Presentation of the Group 5 5 Corporate governance 161 1.1 Key Figures 6 5.1 Report of the Chairman on Corporate Governance 1.2 History 8 and Internal Control 162 1.3 Group Organization 13 5.2 Report of the Statutory Auditors on Corporate Governance and Internal Control 183 1.4 Business Activities 14 5.3 Summary of the Compensation and Benefi ts Due 1.5 Research and Development 29 to Corporate Offi cers (mandataires sociaux) 184 1.6 Risk factors 30 5.4 Transactions in the Company’s Shares by the Management of the Company 194 5.5 Statutory Auditors 196 Social, Societal and Environmental 2 Responsibility 39 2.1 Social and Societal Responsibility 40 Information about 6 Dassault Systèmes SE, the share capital 2.2 Environmental Responsibility 60 and the ownership structure 197 2.3 Independent Verifi er’s Report on Consolidated Social, Environmental and Societal Information Presented 6.1 Information about Dassault Systèmes SE 198 in the Management Report 72 6.2 Information about the Share Capital 202 2.4 Statutory Auditors’ Attestation on the information 6.3 Information about the Shareholders 207 relating to the Dassault Systèmes SE’s total amount paid for sponsorship 75 6.4 Stock Market Information 212 Financial Review and prospects 77 7 General Meeting 213 3 7.1 Presentation of the resolutions proposed 3.1 Operating and Financial Review 78 by the Board of Directors to the General Meeting 3.2 Financial Objectives 89 on May 23, 2017 214 3.3 Interim and Other Financial Information 90 7.2 Draft resolutions proposed by the Board of Directors to the General Meeting on May 23, 2017 223 Financial Statements 91 4 Cross-reference tables 232 4.1 Consolidated Financial Statements 92 4.2 Parent Company Financial Statements 133 4.3 Legal and Arbitration Proceedings 160 ANNUAL REPORT 2016 ANNUAL FINANCIAL REPORT This document is an English-language translation of Dassault Systèmes’ Document de référence (Annual Report), which was filed with the AMF (French Financial Markets Authority) on March 22 , 2017, in accordance with Articles 212-13 of the AMF General Regulation. DASSAULT SYSTÈMES ANNUAL REPORT 2016 1 Only the French version of the Document de référence is legally binding GENERAL This Annual Report also includes: In compliance with Article 28 of European Regulation no. 809/2004 of the Commission, the following information is the annual financial report to be prepared and published by incorporated by reference in this Annual Report: every listed company within four months of the end of its fiscal year, pursuant to Article L. 451-1-2 of the Monetary the consolidated financial statements on pages 86 to 121 and Financial Code and Article 222-3 of the French Financial (inclusive), the parent company financial statements on Markets Authority (“AMF”) General Regulation; and pages 124 to 145 (inclusive), and the related audit reports on pages 122 to 123 and, 146 to 149 (inclusive) of the Annual the annual management report of Dassault Systèmes SE’s Report (Document de référence) for the year 2015 filed Board of Directors, which must be provided to the General with the AMF on March 23, 2016, under no. D. 16- 0197; Meeting of Shareholders approving the financial statements for each completed fiscal year, pursuant to Articles the financial information on pages 72 to 84 (inclusive) of L. 225-100 et seq. of the French Commercial Code. the Annual Report (Document de référence) for the year The index set forth on pages 232 and 233 provides 2015 filed with the AMF on March 23, 2016, under no. cross-references to the relevant portions of these two reports. D.16-0197; All references to “euro” or to the symbol “€” refer to the legal the consolidated financial statements on pages 84 to 120 currency of the French Republic and certain countries of the (inclusive), the parent company financial statements on European Union. All references to the “U.S. dollar” or to the pages 123 to 143 (inclusive), and the related audit reports on symbol “$” refer to the legal currency of the United States. pages 121 to 122 and, 145 to 148 (inclusive) of the Annual Report (Document de référence) for the year 2014 filed As used herein, “Dassault Systèmes”, the “Company” or the with the AMF on March 24, 2015, under no. D. 15-0195; “Group” refers to Dassault Systèmes SE and all the companies included in the scope of consolidation. the financial information on pages 70 to 82 (inclusive) of the Annual Report (Document de référence) for the “Dassault Systèmes SE” refers only to the European parent year 2014 filed with the AMF on March 24, 2015, under company of the Group, which is governed by French law. no. D. 15-0195; The portions of these documents which are not incorporated herein are either not relevant for current investors, or are covered in another section of this Annual Report. 2 ANNUAL REPORT 2016 DASSAULT SYSTÈMES PERSON RESPONSIBLE Person Responsible for the Annual Report Bernard Charlès – Vice-Chairman and Chief Executive Officer. Certification by the Person Responsible for the Annual Report Vélizy-Villacoublay, March 22 , 2017. I have received a completion letter (lettre de fin de travaux) from I hereby certify, after having taken all reasonable measures the auditors stating that they have verified the information for this purpose, that the information contained in this Annual regarding the financial situation and the financial statements included in this Annual Report and that they have read this Report (Document de référence) is, to my knowledge, in document in its entirety. accordance with the facts and that no information liable to affect its significance has been omitted. Bernard Charlès I certify that, to my knowledge, the financial statements Vice-Chairman and Chief Executive Officer have been prepared in accordance with applicable accounting standards and give a faithful representation of the assets, financial situation and results of Dassault Systèmes SE and all the companies included in the scope of consolidation, and that the “management report” the content of which is cross- referenced in a table at page 233 , included in this Annual Report, presents a faithful representation of the business trends, results and financial situation of Dassault Systèmes SE and all the companies included in the scope of consolidation as well as a description of the principal risks and uncertainties which they face. DASSAULT SYSTÈMES ANNUAL REPORT 2016 3 4 ANNUAL REPORT 2016 DASSAULT SYSTÈMES 1 PRESENTATION OF THE GROUP 1.1 Key Figures 6 1.5 Research and Development 29 1.5.1 Overview 29 1.2 History 8 1.5.2 Intellectual Property 29 1.2.1 History and Development of the Company 8 1.2.2 Investments 11 1.6 Risk factors 30 1.6.1 Risks Related to the Company’s Business 30 1.3 Group Organization 13 1.6.2 Financial and Market Risks 37 1.3.1 Dassault Systèmes SE’s Position within the Group 13 1.6.3 Insurance 38 1.3.2 Principal Subsidiaries of the Company 13 1.4 Business Activities 14 1.4.1 Principal Activities 14 1.4.2 Dassault Systèmes' offering 18 1.4.3 Material Contracts 28 DASSAULT SYSTÈMES ANNUAL REPORT 2016 5 Presentation of the Group 1 Key Figures 1.1 Key Figures The selected financial information set forth below has been A financial review including a comparison of 2016 and 2015 prepared in accordance with International Financial Reporting can be found in Chapter 3, “Financial review and prospects”. Standards (“IFRS”) as adopted in the European Union, unless otherwise indicated. Year ended December 31, (in millions of euros, except percentages and per share data) 2016 2015 2014 Total revenue €3,055.6 €2,839.5 €2,294.3 Software revenue 2,694.7 2,502.8 2,035.0 Operating income 672.0 633.2 430.8 As a percentage of total revenue 22.0% 22.3% 18.8% Net income attributable to equity holders of the Company 447.2 402.2 291.3 Diluted net income per share €1.74 €1.57 €1.14 Dividend per share €0.53 (1) €0.47 €0.43 Supplemental non-IFRS financial information (2) Total revenue €3,065.6 €2,876.7 €2,346.7 Software revenue 2,704.3 2,537.9 2,078.6 Operating income 957.7 884.9 699.2 As a percentage of total revenue 31.2% 30.8% 29.8% Net income attributable to equity holders of the Company 640.3 576.6 465.5 Diluted net income per share €2.49 €2.25 €1.82 (1) To be proposed for approval at the General Meeting of Shareholders scheduled for May 23, 2017. (2) Readers are cautioned that the supplemental non-IFRS financial information is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered in isolation from or as a substitute for IFRS measurements. The supplemental non-IFRS financial information should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with IFRS. Furthermore, the supplemental non-IFRS financial information may not be comparable to similarly titled adjusted measures used by other companies. For a reconciliation of this non-IFRS financial information with the Company’s audited financial statements, see paragraph 3.1.1.2 “Supplemental Non-IFRS Financial Information”. 6 ANNUAL REPORT 2016 DASSAULT SYSTÈMES Presentation of the Group Key Figures 1 Year ended December 31, (in millions of euros) 2016 2015 2014* 1 ASSETS Cash, cash equivalents and short-term investments €2,492.8 €2,351.3 €1,175.5 Trade accounts receivable, net 820.4 739.1 627.7 Other assets 3,629.9 3,221.0 3,159.2 TOTAL ASSETS 6,943.1 6,311.4 4,962.4 LIABILITIES AND EQUITY Unearned revenue 853.1 778.0 636.8 Borrowings 1,000.0 1,000.0 360.1 Other liabilities 1,229.8 1,064.9 1,022.0 Parent shareholders’ equity 3,860.2 3,468.5 2,943.5 TOTAL LIABILITIES AND EQUITY €6,943.1 €6,311.4 €4,962.4 * The consolidated balance sheet as of December 31, 2014 has been restated to reflect the finalized purchase price allocation for prior year business combinations.