Devoteam S A : – Annual Financial Report 2020 (3 MB)

2020

Annual

Financial

Report

This Annual Financial Report was filed with the French Financial Markets Authority (Autorité des Marchés Financiers - AMF) on 30 April 2021 in accordance with Article L. 451-1-2 of the French Monetary and Financial Code. This document is available on the website www.devoteam.comand from the Company's head office located at 73 rue Anatole France - 92300 Levallois-Perret, France.

CONTENTS

1 PERSON RESPONSIBLE FOR THE ANNUAL FINANCIAL REPORT AND THE AUDIT OF THE FINANCIAL STATEMENTS	3
1.1 PERSON RESPONSIBLE FOR THE ANNUAL FINANCIAL REPORT	3
1.2 STATEMENT BY THE PERSON RESPONSIBLE FOR THE ANNUAL FINANCIAL REPORT	3
1.3 PERSON RESPONSIBLE FOR THE AUDIT OF THE FINANCIAL STATEMENTS	3
1.4 STATUTORY AUDITORS' FEES	3
1.5 RECENT EVENTS	4
2 MANAGEMENT BOARD'S REPORT ON THE GROUP'S BUSINESS AND MANAGEMENT	5
2.1 ACTIVITY OF DEVOTEAM SA AND ITS SUBSIDIARIES DURING THE FINANCIAL YEAR	5
2.2 SUBSIDIARIES AND INVESTMENTS	12
2.3 INFORMATION ON THE SHARE CAPITAL	14
2.4 INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES	17
3 DEVOTEAM GROUP CONSOLIDATED FINANCIAL STATEMENTS	28
3.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION	28
3.2 CONSOLIDATED INCOME STATEMENT	29
3.3 CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME	30
3.4 CONSOLIDATED STATEMENT OF CASH FLOWS	31
3.5 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	32
3.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	34
3.7 STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS	88
4 DEVOTEAM SA SEPARATE FINANCIAL STATEMENTS	94
4.1 DEVOTEAM SA BALANCE SHEET	94
4.2 DEVOTEAM SA INCOME STATEMENT	95
4.3 NOTES TO THE DEVOTEAM SA FINANCIAL STATEMENTS	96
4.4 STATUTORY AUDITORS' REPORT ON THE ANNUAL FINANCIAL STATEMENTS	113
5 CORPORATE SOCIAL RESPONSIBILITY REPORT	118
5.1 OBJECTIVE NO. 1: BE COMMITTED	118
5.2 OBJECTIVE NO. 2: BE RESPONSIBLE	123
5.3 OBJECTIVE NO. 3: ACHIEVE ONE'S BEST	126
5.4 OBJECTIVE NO. 4: BECOME BETTER	132
5.5 OBJECTIVE NO. 5: BALANCE	136
5.6 APPENDIX	140
5.7 AUDIT REPORT	142
6 CORPORATE GOVERNANCE	145
6.1 ORGANISATION AND DUTIES OF THE MANAGEMENT AND SUPERVISORY BODIES	146
6.2 COMPENSATION OF CORPORATE OFFICERS AND MEMBERS OF THE SUPERVISORY BOARD	152
6.3 PRESENTATION OF THE SHAREHOLDERS	156
6.4 STATUTORY AUDITORS' SPECIAL REPORT ON REGULATED AGREEMENTS	158

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1 PERSON RESPONSIBLE FOR THE ANNUAL FINANCIAL REPORT AND THE AUDIT OF THE FINANCIAL STATEMENTS

1.1 Person responsible for the annual financial report

Stanislas de Bentzmann - Chairman of the Management Board.

1.2 Statement by the person responsible for the annual financial report

I confirm that, to the best of my knowledge, the financial statements have been prepared in accordance with the applicable accounting standards and provide a true and fair view of the assets and liabilities, financial position and performance of the Company and of all consolidated Group companies, and that the Management Report, which appears on page 5 of this document, is a true reflection of the changes in the business, performance and financial position of the Company and all of the consolidated Group companies, as well as a description of the main risks and uncertainties facing these companies.

30 April 2021

Stanislas de Bentzmann

1.3 Person responsible for the audit of the financial statements

	Statutory Auditors			Date of 1st mandate		Date of expiry of current mandate
	KPMG SA,
	Tour EQHO			1999		GM ruling on the 2022 financial statements
	2 avenue Gambetta, CS 60055, 92066 Paris La Défense
	represented by Jean-Pierre Valensi
	Grant Thornton
	29 rue du Pont, 92200 Neuilly-sur-Seine		2014		GM ruling on the 2025 financial statements
	represented by Vincent Frambourt
	Alternate Auditors			Date of 1st mandate		Date of expiry of current mandate
	Salustro Reydel SA,
	Tour EQHO		2011		GM ruling on the 2022 financial statements
	2 avenue Gambetta, CS 60055, 92066 Paris La Défense
	IGEC
	22 rue Garnier, 92200 Neuilly-sur-Seine		2014		GM ruling on the 2025 financial statements

1.4 Statutory Auditors' fees

The table below presents the detailed amounts of Statutory Auditors' fees paid for the 2019 and 2020 financial years:

In thousands of

2020

2019

Grant

Grant

euros

KPMG

%

%

NSK

%

Total

KPMG

%

%

NSK

%

Total

Thornton

Thornton

Certification and half-yearly limited review of separate and consolidated financial statements

Issuer

154

32%

Fully

consolidated 214 44% subsidiaries

150	37%	0
238	59%	64

0%

304

100% 516

157

29%

193 35%

146	37%
218	55%

0

0%

303

62 100% 473

Services other than certification of financial statements

Issuer	87	18%
Fully
consolidated	31	6%
subsidiaries
Total	486	100%

13

3%

0

2	0%	0

403

100%

64

0%

0%

100%

100

33

952

200

0

550

36%

0%

100%

11	3%
24	6%
399	100%

0

0%

211

0 0% 24

62

100%

1,011

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1.5 Recent events

Conclusion of a senior credit agreement and a bank account pledge agreement

In the context of the tender offer initiated by Castillon SAS for the Company's shares, an offer support agreement was entered into between the Company and Castillon on 9 July 2020. The Support Agreement provides, in particular, for an undertaking by the Company to subscribe, at the request of Castillon SAS, to a credit facility as well as an undertaking to indemnify the Company by Castillon SAS, the terms of which will be negotiated in good faith, in the event that the terms of the senior credit agreement, assessed globally, are less favourable for the Company than its existing financing lines. A detailed description of the content of the Support Agreement can also be found in the prospectus filed by Castillon SAS with the French Financial Markets Authority (Autorité des marchés financiers - AMF) on 13 October 2020, bearing visa no. 20-504, and available on the Group's website.

On 12 March 2021, Devoteam SA (the Group's parent company) entered into a senior credit agreement and a bank account pledge agreement. The senior loan agreement, of the Revolving Credit Facility (RCF) type, is for a maximum amount of €65 million, with a maturity of 6.5 years, a maximum interest margin of 3% per year, a commitment fee of 30% of the margin and an arrangement fee of 2% of the total amount. This agreement enables the Company to cover its general financial needs and its working capital requirement, while securing financing for a longer term and at more flexible conditions than its existing financing lines. As a result of this new agreement, the Company has renounced its existing financing lines as described in Note 2.8 to the separate financial statements.

On the same day, the Company also entered into a bank account pledge agreement covering bank accounts opened in the name of the Company in France, the purpose of which is to guarantee the Company's payment obligations under the senior credit agreement.

These two agreements were authorised by the Supervisory Board on 8 March 2021.

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2 MANAGEMENT BOARD'S REPORT ON THE GROUP'S BUSINESS AND MANAGEMENT

Ladies and Gentlemen,

We have called this General Meeting to report to you on the results of our work carried out during the financial year ended 31 December 2020 and to submit for your approval the Group's separate and consolidated financial statements for the said financial year.

During this Meeting, we will read to you the reports by KPMG and Grant Thornton, our Statutory Auditors. The Statutory Auditors' reports, the Management Report, the annual separate and consolidated financial statements, in addition to other related documents, have been made available to you at the Company's head office, in accordance with the conditions and deadlines set out by law, so that you could familiarise yourselves with them.

The separate financial statements hereby presented have been prepared in compliance with the general regulations applicable in France on the preparation and presentation of annual financial statements. The consolidated financial statements have been prepared in accordance with the IFRS guidelines, as adopted by the European Union prior to 31 December 2020. All of these financial statements respect the principle of true and fair view.

2.1 Activity of Devoteam SA and its subsidiaries during the financial year

2.1.1 Highlights of the year

The year 2020 was marked and impacted from mid-March by the COVID-19 health crisis. This unprecedented crisis has upset the fundamentals of our economies and created significant uncertainties in the economic environment. Faced with this crisis, the Group reacted quickly to adapt to the different periods of lockdown and to preserve the health of its employees. The business was impacted mainly in France, Germany and the Benelux countries. In these areas, the Group has used partial activity or its equivalent to cushion the decline in activity. The Group's other geographical areas were less affected due to customer activities in less affected segments, such as telecoms, healthcare and the public sector. During this period, the Group continued to invest with its strategic partners in innovation and training in order to increase the skills of its teams in the technologies that contribute most to the acceleration of the digitalisation of the economy.

In addition to the operational resilience shown by the Group during this major crisis, the Group was also able to rely on a very solid balance sheet with a net cash position that was significantly strengthened, in particular through a strong improvement in the number of days of sales outstanding and by the decision of the Management Board, supported by the Supervisory Board, not to distribute dividends for the year 2019. This strategy enabled the Group, despite the crisis, to continue to strengthen its activities through three targeted acquisitions made in the second half of the year:

• On 10 July, the Group acquired 70% of Inviso, a Danish business intelligence and data analytics specialist, Tableau's "Gold Partner" and Alteryx's "Premier Partner". The company has approximately 60 employees and generated revenue of approximately €7 million in its last financial year (estimate after application of IFRS 15).
• On 4 August, the Group acquired 70% of Fourcast, a Belgian specialist in the integration of Google Cloud solutions present in Belgium, the Netherlands and the United Kingdom. The company has approximately 25 employees and generated revenue of approximately €3.5 million in its last financial year (estimated after application of IFRS 15).
• On 23 December, the Group acquired 100% of Ysance, a French data specialist and partner of the leading publishers of business intelligence solutions. The company has approximately 70 employees and generated revenue of approximately €5.5 million in its last financial year.

The year 2020 was also marked by the transaction on the Company's share capital, announced in July 2020, in which the founders, members of the Management Board and reference shareholders of Devoteam, Messrs Godefroy and Stanislas de Bentzmann, with the support of KKR as financial partner, jointly launched a takeover bid for Devoteam shares in order to consolidate their control.

The objective is to accelerate Devoteam's complex transformation and to deliver the strategic vision "Tech for people" within a highly demanding and competitive digital landscape. This operation allows Castillon (the holding company of the operation) to hold just over 80% of the Group's capital.

On 10 September, following the annual review of the Euronext Paris indices, the Expert Indices Committee decided to include Devoteam in the samples making up the SBF 120 and CAC Mid 60 indices. The effective date of this decision was set at Friday 18 September 2020 after the close of the market.

The Company's consolidated financial statements for the financial year ended 31 December 2020 include the Company and its subsidiaries ("the Group"), as well as the Group's share of the results of associates and jointly controlled companies.

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