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MANAGEMENT REPORT
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BUSINESS OVERVIEW
3.1
BUSINESS OVERVIEW
3.1.1
ASSYSTEM’S MARKET AND BUSINESS
SEGMENTS
3.1.1.1
Market trends
Assystem operates in the engineering market. The role of engineering is
to study, design and manufacture 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)
, engineering firms in France
performed well in 2016, with revenue up by around 3.5%. Leaders
specialised in technology consulting and which are positioned as
Tier 1 suppliers saw robust revenue growth as clients are increasingly
using outsourced technology consulting services as a way of enhancing
their cost flexibility. However price pressure remained strong against
a backdrop of weak inflation. In the first half of 2016, engineering
services prices for the industry as a whole only rose by 0.4% on a
rolling annual basis.
Demand for outsourced R&D services was particularly high in the
automotive sector. After two years of decline, the construction engineering
sector began to pick up, growing by 2% in 2016 according to Xerfi.
Design and project management needs increased and the sector also
felt the benefits of an upward trend in capital expenditure on transport
infrastructure. Conversely, the oil sector contracted as oil companies
significantly reduced their capital spending. The latest advance in the
construction engineering sector that Assystem will need to effectively
master is the increasingly generalised use of digital modelling, which
not only leads to major productivity gains (with project management
time savings of an estimated 70%) but also improves the quality of the
buildings and services delivered. To this end, in June 2016 Assystem
signed a partnership agreement with Dassault Systèmes aimed at
improving the performance management of nuclear engineering
projects through the use of digital technologies. Under this agreement
Dassault Systèmes’ 3DExpérience platform will be deployed to handle
engineering data and digitise project management processes.
ASSYSTEM’S POSITIONING
Assystem began as Atem, which was founded in 1966 by engineers of
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 aeronautics and automotive,
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. A series of international acquisitions then
followed, positioning Assystem among the top European engineering
groups.
Assystem’s teams work in two major lines of business: outsourced
R&D, operated by the Global Product Solutions division, and complex
infrastructure engineering, operated by Energy & Infrastructure. The
Group is a major player in the nuclear, automotive and aeronautics
engineering markets where it has a strong reputation for its specialist
know-how.
In the outsourced R&D market, Assystem focuses exclusively on services
for industrial clients. The vast majority of these clients are top European
corporations that rank among the world’s leading market players, to
which the Group provides services throughout the entire product life
cycle – from functional analysis to commissioning, including design,
industrialisation and supply chain management. Its main competitors in
this fragmented market are French companies such as Altran and Alten,
as well as Akka, Sogeti and Segula.
Supplier panel restrictions that have been applied at global level for
the past several years by major purchasers are still in force and have
led to a gradual general trend towards fixed-price services – a format
that large companies such as Assystem prefer. Today, roughly 60% of
Assystem’s services (excluding Staffing activities) are provided under
fixed-price contracts, reflecting clients’ high esteem for the Group’s teams
due to their capacity to lead projects, develop know-how and reliably
and consistently deliver a high level of productivity. This underlying
trend has been accompanied by a more international approach by
Assystem towards providing its services, drawing on a stronger network
of customer interface, specialised skills and production centres to ensure
that services are rendered at the best cost and are constantly in line
with client requirements.
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 participation in the nuclear industry, and therefore its
experience in restricted environments with strong safety requirements.
The main role of its experts is to help major players in the energy
industry (operators and equipment manufacturers) to manage their
industrial investments at every step of the process – from design
through to construction, commissioning, maintenance and ultimately
decommissioning. Assystem’s competitors in this market are above all
UK and North American groups such as Atkins (which is also Assystem’s
partner in the Engage and N.triple.a joint ventures), CH2MHill, Amec
Foster Wheeler (also a partner of Assystem in the Momentum joint
venture) and Jacobs Engineering, as well as French groups including
Egis, Systra and Ingérop.
During 2016 the Energy & Infrastructure division pursued its investment
drive in France and internationally, particularly in Turkey where it
(1) Source: Xerfi France, Services d’ingénierie, d’étude et de conseil technique Analyse du marché – November 2016.
ASSYSTEM
REGISTRATION DOCUMENT
2016
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