ASSYSTEM_Registration_Document_2017

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MANAGEMENT REPORT

BUSINESS OVERVIEW

3.1 BUSINESS OVERVIEW

3.1.1

ASSYSTEM’S MARKET AND BUSINESS SEGMENTS

In the face of the market consolidation taking place for outsourced R&D services, in order for GPS to remain a leading player in its market, accelerate its growth, extend its geographic and sector coverage and meet the needs of its industrial clients who are now seeking to work with fewer suppliers and are looking for one-stop worldwide offerings, in 2017 Assystem decided to team up with the private equity firm Ardian (see Note 3.1.2 – Significant events of the year). Following this strategic move, Assystem’s core business is now complex infrastructure engineering, operated by the Energy & Infrastructure division. The Group is a key player in the nuclear engineering markets where it has a strong reputation for its specialist know-how. Assystem brings added value to industrial companies, utilities and contractors operating in nuclear energy, conventional energy, transport infrastructure, life sciences and other complex infrastructure thanks to its long-standing presence in the nuclear industry, and therefore its experience of operating in restricted environments with stringent safety requirements. The Group's experts help major players in the energy industry (operators and equipment manufacturers) to manage their capital expenditure at every stage of their assets' life cycles – from design through to construction, commissioning, maintenance and ultimately decommissioning. Assystem's competitors in this market are mostly UK and North American groups such as Atkins (an Assystem partner in the Engage and N.triple.a alliances), CH2MHill, Amec Foster Wheeler (a partner of Assystem in the Momentum consortium) and Jacobs Engineering, as well as French groups including Egis, Systra and Ingérop. Assystem also has another business which consists of seconding consultants specialised in Oil & Gas and Industry, essentially in the Middle East, Africa and Asia. This business – which is known as “Staffing” and accounts for 11% of the Group’s revenue – is principally inherited from an acquisition carried out in 2012 (MPH Group) to which Assystem's pre-existing staffing activities were added. Assystem’s main market for Staffing – Oil & Gas – has been hit hard by plunging oil prices since 2015 and the business is working to diversify its client portfolio in the Industry sector, which accounted for 35% of Staffing revenue in 2017. 3.1.1.2 Assystem's organisational structure On 28 September 2017, Assystem completed the transfer of control of its GPS business to Ardian (see Note 3.1.2 – Significant events of the year). Following this divestment, the Assystem Group (“the Group”) refocused on its long-standing business activities in the nuclear sector and infrastructure engineering. It is now made up of two divisions – the Energy & Infrastructure division (comprising nuclear, infrastructure, life sciences and project management activities) and the Staffing division.

3.1.1.1 Market trends Assystem operates in the infrastructure engineering market. The role of engineering is to study, design and oversee the production or construction of all or part of an industrial component or civil engineering structure. Assystem's teams assist major industrial players with reducing their project costs and lead times and optimising their development, manufacturing and marketing processes, and enable them to design and produce innovative solutions across the globe. According to an Xerfi market analysis (1) , construction engineering firms in France have embarked on 2018 with optimism and the short-term economic outlook is still positive following an upturn in 2017. Revenue growth for engineers specialised in construction is set to continue in 2018, with Xerfi estimating a 3.5% rise in absolute value terms. This trend will be particularly driven by the ramp-up of works for the Grand Paris project, in which Assystem is taking part, and the improvement in the economy should lead to better market conditions. However, the industry is facing a shortage of skills for certain profiles. In the nuclear sector, large-scale maintenance programmes and the scheduled start-ups of EPRs in Finland and France are boosting business volumes. At the same time, infrastructure engineering firms are feeling the benefits of a bullish spending cycle for transport infrastructure. And the more generalised use of digital modelling is opening up a raft of opportunities as this technology not only leads to major productivity gains but also plays a key role in enhancing the buildings and services delivered. In the field of technology consulting (in which Assystem is present through its 39.2% stake in the Assystem Technologies group – see Note 3.1.2 below), business volumes will once again be propelled by the automotive sector. ASSYSTEM’S POSITIONING Assystem began as Atem, which was founded in 1966 by engineers from the French nuclear programme in order to serve the engineering needs of the French nuclear industry. This business accounted for the majority of the Group's revenue up until the latter part of the twentieth century. Atem then merged with Alphatem, jointly owned by Dominique Louis and Cogema, to create Assystem which went public in 1995. Shortly after its stock market flotation the Company diversified, with the acquisition in 1996 of an engineering firm specialised in the aeronautics and automotive sectors, which launched the outsourced R&D business. This business drove the Group’s growth as from the year 2000, especially following its merger with Brime Technologies in 2003. The formation of Global Product Solutions (GPS) in 2014 brought all of the Group’s outsourced R&D activities together in one division.

(1) Source: Xerfi France, Les services d’ingénierie, d’études et de conseils techniques Analyse du marché – November 2017.

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ASSYSTEM

REGISTRATION DOCUMENT 2017