MANAGEMENT REPORT OF THE PRODWARE GROUP AND …...France and the Maghreb 104,958 108,385 -3.2% Israel 10,958 9,865 11.1% Total 175,846 181,828 -3.30% 3.2. At the Prodware SA level

Management report - 2016 financial year - 1

Year ended 31 December 2016

MANAGEMENT REPORT OF THE PRODWARE GROUP AND PRODWARE SA


CONTENTSA. THE PRODWARE GROUP IN 2016

1. Highlights of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32. Presentation of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43. Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54. Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65. Events subsequent to the close . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106. Investment policy and R&D activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107. Risk factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108. Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

B. THE PRODWARE STOCK - SHARE OWNERSHIP9. General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1210. Capital and voting rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1211. Share ownership structure at 31 December 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1212. Crossing of thresholds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1213. Share buyback programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1314. Employee shareholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1315. Potential capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1416. Capital increase delegations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1417. Market price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

C. CORPORATE GOVERNANCE18. Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1519. Remuneration of corporate officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1620. Regulated agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

D. CORPORATE AND SOCIAL RESPONSIBILITY OF PRODWARE SA21. Sustainable development at the heart of Prodware SA’s values . . . . . . . . . . . . . . . . . . . 1822. Develop its human capital to meet the challenges of today and tomorrow . . . . . . . . . 1923. Carrying out operations in a responsible manner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2524. Anchor our business within the territories whilst respecting the environment. . . . . . 27

APPENDIX 1: SUBSIDIARY EARNINGS

APPENDIX 2: SUMMARY OF DELEGATIONS OF COMPETENCE FOR CAPI-TAL INCREASES AND USES


A. THE PRODWARE GROUP IN 2016

1. HIGHLIGHTS OF THE YEAR

As part of the implementation of its 2016-2021 strategic plan, the Group carried out significant actions to adapt its offering as closely as possible to the needs of its customers as well as to optimise its competitiveness.

In particular, from a commercial and operational standpoint, the Group accelerated the transition of the sales model to SaaS (+46.6% in 2016) and the development of the software vendor activity in the most dynamic sectors.

More generally, the Group focused on developing a unique and comprehensive products and services offering, based on own software solutions, ERP, CRM and innovative solutions (mobility, business intelligence, digital, etc.).

During the year, the Group subscribed to the capital of a joint venture “Retail and Digital Venture” for 45% with a view to developing its activities on a global scale, and sold the Waste and Recycling business.

From a financial point of view, a Euro PP loan was subscribed in the sum of €79m, aimed at financing the Group’s development and at refinancing current debt at the lowest cost. Similarly, the actions to control operating and staff costs were continued.

The Company also implemented a share buyback programme which resulted in the acquisition of around 700,433 securities, i.e. 8.5% of the shares composing the share capital.

Indeed, in a very unsettled economic context with strong competitive pressures which had a slight impact on the Group’s revenue (-0.8% on a like-for-like basis); these actions allowed the Group to end financial year 2016 with strong growth in results.

EBITDA grew 8.3% to €31.9 million, operating income posted a 50% rise (from €9.9m to €14.7m) and net income amounted to €9.4 million, a rise of more than 66%.

The Group aims to pursue this momentum for results.


2. PRESENTATION OF THE GROUP

2.1. Key figures

€176 MILLIONREVENUE COUNTRY

1,226EMPLOYEES

14

19,000CUSTOMERS

LISTED ON THE STOCK MARKETON ALTERNEXT (ALPRO)

2.2. Composition of the Group as at 31 December 2016

2.2.1. Simplified organisational chart of the Group

2.2.2. Changes in scope

Compared with the previous financial year, the following are noteworthy:

› A 44.9% share in a joint venture “Retail and Digital Venture Ltd”: › The sale of the company Prodware Luxembourg in March 2016; › An increased participation in Prodware Maroc to 100% (from 99.3%) in June 2016; › A reduction in the shareholding of Prodware Israel from 79.8% to 77.2%, thanks to a capital increase subscribed by a minority shareholder.

2.2.3. Subsidiary earnings

The detailed table of the subsidiaries’ revenue and earnings is presented in appendix 1.

France

ProdwareBelgium

100 %

Europe

Europe

Middle East Africa

ProdwareCzech Republic

100 %

ProdwareDeutschland

100 %

ProdwareEast Europe

100 %

ProdwareGeorgia

100 %

ProdwareNetherlands

100 %

ProdwareSpain

100 %

ProdwareUK

100 %

RentA Soft(Israël)

100 %

Prodware West and Central East Africa

51 %

ProdwareMaroc

100 %

Retail & DigitalVenture Ltd

44,9 %

ProdwareTunisie

80 %

50 %

Cap Lease

Prodware SA(France)

Prodware Israël - 77,27 %

CKL - 50 %

Oteara Spain - 5 %


3. REVENUE

3.1. At the Group level

Revenue in 2016 totalled €175.8 million compared with €181.8 million in 2015, a 3.3% decrease over one year.

Restated for the activities disposed of, the decrease is 0.8%.

The change in sales model to SaaS explains this slight fall. Sales under SaaS have indeed risen by 46.6% over the financial year and now represent just over 10% of total revenue, compared with 7% in 2015.

3.1.1. Breakdown by sector

(€k) 31/12/2016 31/12/2015

Integration of management solutions and software vendor solutions

145,693 155,498

Infrastructure and SaaS 30,153 26,330

Total 175,846 181,828

The Software vendor activity earned €61,417k in 2016 compared with €63,081k in 2015, i.e. -2.5%.The SaaS activity earned €18,470k in 2016 compared with €12,601k in 2015, i.e. +46.6%.

3.1.2. Breakdown by geographical area

Revenue is divided into 44% in the French-speaking area (including Maghreb) and 56% internationally (compared with 47.3% and 52.7% respectively in 2015).

The details of consolidated revenue (excluding intra-Group transactions) by geographical area are as follows:

€k 31/12/2016 31/12/2015 Change

Benelux 22,598 24,075 -6.1%

Spain 21,323 19,787 7.8%

Germany 11,887 13,007 -8.6%

UK 4,122 6,709 -38.6%

France and the Maghreb 104,958 108,385 -3.2%

Israel 10,958 9,865 11.1%

Total 175,846 181,828 -3.30%

3.2. At the Prodware SA level

Revenue in 2016 totalled €106.3 million compared with €109.6 million in 2015, a 3.01% decrease over one year.

The proportion of 2016 revenue generated from exports amounted to 29.1% compared with 23.7% for 2015 (€31.0 million, compared with €25.9 million).


4. RESULTS

4.1. At the Group level

4.1.1. Condensed P&L

IFRS (€k) 31/12/2016 31/12/2015 Change

Revenue 175,846 181,828 -3.3%

EBITDA 31,924 29,488 8.3%

as a % of revenue 18.15% 16.22%

Current operating income (COI) 15,773 15,372 2.6%

as a % of revenue 8.97% 8.45%

Operating profit 14,754 9,793 50.7%


Net profit 9,438 5,675 66.3%


4.1.2. Condensed balance sheet

Assets (in €k) 31/12/2016 31/12/2015 Equity and liabilities (in €k) 31/12/2016 31/12/2015

Goodwill 32,846 32,846 Shareholders' equity 118,485 110,102

Tangible and intangible assets 132,902 99,005 Equity attributable to minority interests 384 378

Other non-current and current assets 81,379 86,151 Non-current liabilities 73,510 41,423

Cash 24,482 9,062 Current liabilities 79,230 75,161

Total 271,609 227,064 Total 271,609 227,064

a. Permanent capital

The Group’s share equity amounts to €118,484k at 31 December 2016 compared with €110,102k in 2015, a 7.61% increase.

b. Cash

At the end of the financial year, the Group had €24,482k in cash compared with €9,062k at the closing of the previous financial year.

c. Bank and financial debt

Financial debt for the year is detailed as follows:

› medium/long-term debt of €69.1 million, compared with €37.2 million at 31 December 2015. › short-term debt of €23.7 million compared with €18.2 million the previous year.

In €k 31/12/2016 31/12/2015

Non-current debt 69,194 37,295

Bank loans and ordinary bonds 69,194 37,295

Current debt 23,716 18,290

Bank overdrafts and accrued interest on borrowings 23,716 18,290

Total 92,910 55,585


This rise is due to the subscription, in January 2016, of global financing of €79 million to finance the Group’s growth and refinance current debt at the lowest cost. Financial transactions carried out during the financial year can be summarised as follows:

› a bank loan repayable on a quarterly basis over five years, for €29 million, at the Euribor rate plus a margin; › three simple bond debts, redeemable at maturity, of four, six and seven years, as detailed below.

Simple bond debts Number of bonds Unit redemption

priceTotal redemption

price Interest rate Maximum maturity date

OS 01 2016 (I) 50 €100,000 €5,000k 3% 30/12/2019

OS 01 2016 (II) 200 €100,000 €20,000k 4.25% 15/01/2022

OS 01 2016 (III) 250 €100,000 €25,000k 4.50% 15/01/2023

Total 500 €50,000k

At the same time, the Company has repaid the bond and bank loans subscribed in 2014 and 2015, for a net sum of €37 million.

d. Net debt/equity ratio (gearing)

From all of the above, the overall net debt totalled €68,429k compared with 46,523k the year before.

The Group’s gearing automatically rose to 57.6% at 31 December 2016, compared with 42.2% in 2015.

4.1.3. Condensed cash flow

31/12/2016 31/12/2015

Net income of consolidated companies 9,470 5,592

Change in operating working capital -590 7,518

Net flows from operations = A 29,006 34,889

Net cash flows from investment operations = B -42,589 -37,454

Net cash flows from financing operations = C 24,246 4,343

Impact of currency fluctuations = D 6 36

Cash flow variation = A + B + C + D 10,669 1,814

4.2. At the Prodware SA level

4.2.1. Condensed income statement

Gross value in €k 31/12/2016 31/12/2015

Revenue 106,251 109,581

Operating income 3,711 3,361

Pre-tax profit on ordinary activities 459 713

Extraordinary net income -3,041 -2,948

Net income 9,362 10,379


4.2.2. Condensed balance sheet

Assets (net value in €k) 31/12/2016 31/12/2015 Equity and liabilities (in €k) 31/12/2016 31/12/2015

Fixed assets 197,925 166,878 Equity capital 141,184 131,285

Inventories 19 17 Provisions for risks 698 1,188

Receivables and miscellaneous 32,919 41,386 Financial debt 99,024 57,296

Cash 29,179 11,321 Other liabilities 25,920 32,186

Accrual accounts 6,784 2,353 Accrual accounts 0 0

Total 266,826 221,955 Total 266,826 221,955

4.2.3. Appropriation of net income

We propose that the result of €9,362k be appropriated as follows:

› A dividend distribution of €0.04 gross per share, i.e., a maximum of €328k (excluding treasury shares); › The balance of the result for the financial year will be allocated to “Retained earnings” for a minimum of €9,034; the amount of the dividend corresponding to the treasury shares on the payment date will be allocated to “Retained earnings”.

In accordance with Article 243 bis of the French general tax code, a reminder of the distributions for the last three financial years is provided:

› 2016 (financial year 2015): €243k (giving right to tax allowance), › 2015 (financial year 2014): €246k (giving right to tax allowance), › 2014 (financial year 2013): none.

4.2.4. Other information: Supplier payment terms

Invoices received but not paid at the close of the financial year, whose term has expired (Article D. 441 I.-1°).

0 days (indicative)

1 to 30 days

31 to 60 days

61 to 90 days

91 days and

above

Total (1 day and more)

(A) Late payment bands

Number of invoices concerned 419 419

Total amount of invoices concerned, excl. VAT 1,941,658 588,713 484,885 76,976 150,457 3,242,689

Percentage of the total amount of purchases, excl. tax, for the year 2016 2.93% 0.89% 0.73% 0.12% 0.23% 4.90%

4.2.5. Extravagant expenses

None.


4.2.6. Results of the last five financial years

Nature of information N-4 N-3 N-2 N-1 2016

Share capital 4,437,589 5,043,324 5,330,364 5,330,364 5,330,364

Number of existing ordinary shares 6,827,060 7,758,960 8,200,560 8,200,560 8,200,560

Number of existing shares with priority dividends (without voting rights)

Maximum number of future shares to be created

Through conversion of bonds 1,407,143 798,600 150,000 0 0

Through exercising subscription warrants 460,000 341,900 341,900 606,900 1,168,900

Through allocation of free shares 0 801500

Operations and net income for the financial year (3)

Revenue excluding taxes 94,098,727 95,883,831 96,240,402 109,581,009 13,525,900

Net income (7) before taxes, employee profit sharing and allowances for amortisation/depreciation (6) and provisions (5)

(208,669) 6,596,333 12,335,622 8,149,093

Corporate income taxes (4) -15,731,976 -14,340,219 -14,419,701 -12,614,419 -11,943,987

Employee profit-sharing due for the financial year - - -

Net income (7) after taxes, employee profit sharing and allowances for amortisation/depreciation (6) and provisions (5)

14,226,520 12,064,622 15,825,320 10,379,095 9,362,006

Distributed earnings (8) 311,275 - - 246,017 242,763

Earnings per share (9)

Net income (7) after taxes and employee profit sharing, before allowances for amortisation/depreciation and provisions (7)

2.27 2.70 3.26 2.53 3.11

Net income (7) after taxes, employee profit sharing and allowances for amortisation/depreciation (6) and provisions (5)

2.08 1.55 1.93 1.27 1.14

Distributed gross dividend for each share (a) 0.06 - 0.03 0.03

Personnel

Average number of employees during the financial year (10) 768 700 608 514 520

Payroll for the financial year (11) 32,478,008 30,359,216 28,315,223 27,295,762 25,418,774

Amounts paid for fringe benefits 14,687,470 13,316,537 12,254,756 11,616,343 11,358,278


5. EVENTS SUBSEQUENT TO THE CLOSING

The following events since 31 December 2016 are worth mentioning:

› Prodware strengthened its participation in its financing subsidiary Cap Lease, in which it now holds 90%, compared with 50% previously.

› The acquisition of the companies NEREA Belgium and Luxembourg, leader in MSCRM technologies in Belgium and Luxembourg.

› A capital increase reserved for minority shareholders in Prodware Maroc up to 34%.

6. INVESTMENT POLICY AND R&D ACTIVITY

In 2016, the Group continued its research and development activities to serve its software offering.

A research tax credit for financial year 2016 was recognised in current operating income for an amount net of fees of €11,096k versus €11,561k the previous year.

In addition, during the financial year, the Group capitalised €10,923k (6.2%) of the company’s revenue in expenditure devoted to development of the industry and role-tailored software solutions (‘verticaux”).

7. RISK FACTORS

While ensuring and speeding up the deployment of its 2016-2021 strategy, the Group is necessarily prudent about the changes in its various activities in Europe in an uncertain economic, financial, and political climate and on the potential impact of these risks on its growth and earnings.

More specifically, the Group could be affected in the following areas:

› Risk related to its external growth operations: Over the previous years, as well as in 2016, the Group has carried out operations to acquire assets or shares of companies.

External growth operations intrinsically generate risks related to: » the direct and indirect financial costs of these operations which may exceed those initially budgeted for and generate unforecasted financing needs;

» the process of integrating the activities or companies acquired, which may unveil unexpected difficulties or require more time than anticipated;

» the departure of certain customers/suppliers/key employees, etc.

and the profitability of these operations may therefore have a negative impact on the Group’s results.

The Prodware Group has, for many years, carried out numerous acquisitions on a national and international level.

Drawing from these experiences, Prodware has drawn up an “integration process”, including a team made up of key people in M&A, finance, management control and legal fields, etc.

This same team identifies potential targets upstream, which may be of interest to the Group in its external growth strategy.

For this reason, the Group is confident about the acquisition projects undertaken over recent years and in 2016, even though non-anticipated difficulties, including in economic terms, can always arise with potentially negative consequences on the Group’s financial situation and on its outlook.

› Commercial risks: customers today are looking for information systems partners who can help them to adapt to the technological, commercial or international challenges that they have to meet more and more quickly. And at the same time they must respect cost constraints and tightly controlled budgets.

The Group is addressing this competitive situation by rolling out a strategy based on the global support of its customers and by developing offers which focus on the intersection between consulting, IT systems and its customers’ business operations


This strategy should allow it to successfully meet its customers’ requests in terms of their transformation challenges and stave off fierce competition from both historical and more recent players.

› Liquidity risk:As set out above, the Group has increased its level of debt to enable it to finance the acceleration of its 2020 strategic plan and its external growth.These loans are subordinated with respect to ratios and covenants, in accordance with usual practices, particularly with reference to the level of EBITDA and shareholders' equity.At this stage we are not expecting any particular difficulties in terms of satisfying these covenants.

› Exchange rate/interest rate risk:As the Group’s debt is mostly concluded in euros at fixed rates, Prodware does not consider that there are any risks which require any specific hedging.

› Equity risk:The only equities held by the Group are those acquired within the share buyback programme implemented by Prodware in 2016.

As at 31 December, Prodware held 700,433 shares (excluding liquidity contracts), i.e. 8.5% of the shares representing the share capital on this date.

The average cost price of these treasury shares over 2016 is €6.79.

As a reminder, treasury shares are shown in the IFRS financial statements as a deduction from equity and a change in their value has no impact on the consolidated result.

› Human resources risk:In a technological environment which is constantly and rapidly changing, the Group’s capacity to serve its customers and provide them with the expected expertise and value-added depends largely on the expert resources that it can make available to them.

For this reason, and in a very tight market in terms of certain capabilities, Prodware has strengthened the actions initiated in 2015 and the financial resources dedicated to an HR policy focusing on the capacity to attract certain profiles and retain the best employees.

An attractive remuneration policy promoting investment has therefore been gradually implemented within the Group. Similarly, a bonus share allocation plan was agreed on in 2016 to align the interests of key employees with the Company’s growth (subject to the satisfaction of presence and performance criteria).

However, it remains true that in a very competitive market, the Group cannot exclude the fact that tensions may sometimes arise in terms of expert resources and/or departures of key employees, with a potential impact on the profitability of commercial projects.

8. OUTLOOK

Prodware will continue to accelerate recurring sales in SaaS and develop its Business Consulting offer with a positioning that is increasingly focused on the intersection between consulting, IT systems and its customers’ business operations.


B. THE PRODWARE STOCK - SHARE OWNERSHIP

9. GENERAL INFORMATION

The Prodware stock has been listed since 2006 on the Alternext market of NYSE Euronext under ISIN code FR0010313486 or ALPRO.

Shares can be fully traded according to the laws and regulations in force. Shareholders may choose to have them registered in pure registered form with the company, in an administered registered account with an authorised financial intermediary, or in bearer form.

Shares held for more than two years in registered form have a double voting right. There were 2,378,935 shares with a double voting right as at 31 December 2016.

Any shareholder who directly or indirectly comes to hold at least 2.5% of the capital and/or voting rights must inform the Company by registered letter with return receipt, in accordance with article 12 of the Company’s articles of association. This notification must be repeated for each additional fraction of 2.5% of the capital, both upwards and downwards, the penalty being the deprivation of the voting right, in accordance with the legal provisions.

10. CAPITAL AND VOTING RIGHTS

The capital amounts to 5,330,364 € and consists of 8,200,560 shares, without modification since 31 December 2014.

Taking account of the double voting rights conferred on certain shares held in registered form, the number of voting rights totalled 10,579,941 at 31 December 2016.

11. SHARE OWNERSHIP STRUCTURE AT 31 DECEMBER 2016

To the Company’s knowledge, the capital is distributed as follows at 31 December 2016:

Shareholders As a % of capital As a % of DVRs

Managers 28.00% 43.80%

Public & private investors 3.0% 4.90%

Employees 1.4% 2.30%

Treasury shares 8.7% 0%

Public 58.90% 49.0%

12. CROSSING OF THRESHOLDS

During financial year 2016, the Company received notifications that thresholds were crossed.

Name of the declarant Date of the declaration Time of crossing

Entrepreneur Venture 22/01/2016 Crossing down the statutory threshold of 2.5% of capital and voting rights

Public & private investors 22/01 and 23/03/2016 Crossing up the statutory threshold of 2.5% of capital and voting rights

Phast Invest 08/09/2016 Crossing up the statutory threshold of 7.5% of capital and 10.2% of voting rights (1)

Otus Capital 14/09/2016 Crossing down the statutory threshold of 2.5% of capital and voting rights

(1) with some securities in registered form


13. SHARE BUYBACK PROGRAMME

13.1. Description of the programme

The ordinary general meeting of shareholders of 20 June 2016 renewed the authorisation to the Board of Directors to acquire shares of the Company for up to 10% of the capital, for a maximum amount of 16 euros per share.

This buyback programme was implemented in particular to meet the following objectives:

› Stimulation of the market or liquidity of the share, as part of a liquidity contract; › The delivery of the shares for exchange or payment as part of all external growth operations of the Company or the Group; › The awarding and/or transfer of shares to employees and officers of the Company, particularly as part of profit sharing and incentive schemes and employee share ownership plans; › Their cancellation.

The authorisation was granted to the Board until 19/12/2017 and will be renewed at the next general meeting in June 2017.

13.2. Assessment of the share buyback programme for 2016

› Stimulation of the market: liquidity contract: » Shares appearing at 1 January 2016: 5,197 » Total number of securities purchased in 2016: 262,195 » Average purchase price: €6.739 » Total number of securities sold: 253,489 » Average sale price: €6.737 » Total number of cancelled shares: 0 » Number of Treasury shares at 31 December 2016: 13,903 » Cash account at 31 December: €49,135.45

› Other objectives: share buyback programme » Shares appearing at 1 January 2016: 0 » Total number of securities purchased in 2016: 700,433 » Average purchase price: €6.79 » Total number of securities sold: 0 » Total number of cancelled shares: 0 » Total amount of trading fees: €23,862 » Number of Treasury shares at 31 December 2016: 700,433 » Cash account at 31 December: €43,526.15

› Number of treasury shares at 31 December 2016: 714,336 » Market price at 31 December 2016: €6.48 » Market value of securities at 31 December 2016: €4,628,897.28

14. EMPLOYEE SHAREHOLDING

Employee registered shares of the company (pure and administered) represented a total of 1.39% of the capital at 31 December 2016.

As part of the single corporate savings plan put in place by the Company, employees hold collectively 14,528 Prodware shares.

In December 2016, the Company implemented a bonus share allocation plan (see below).


15. POTENTIAL CAPITAL

At 31 December 2016, a maximum number of 1,168,900 new shares could be issued, resulting exclusively from the following marketable securities:

Issue date Type of marketable securities

Maximum number of potential shares Maximum maturity

July 2012 BSA 341,900 July 2017

June 2015 BSAANE 265,000 June 2020

March 2016 BSAANE 562,000 March 2026

Total 1,168,900

All these instruments were issued for the benefit of the corporate officers, members of executive management and employees of the Prodware Group.

Note that the Board of Directors, making use of a delegation of authority from the general meeting of June 2016, issued preferred shares in December 2016: 7,130 preferred shares and 88,500 ordinary shares, for nearly 150 corporate offices and employees.

The preferred shares will be vested by the beneficiaries at the latest on 20 June 2021, depending on the extent to which the strict performance criteria assigned to the beneficiaries are met (revenue growth, EBITDA, etc.) and subject to their uninterrupted presence until this date. After their vesting date, the preferred shares may be converted by the beneficiaries until June 2027,at a rate of 1 preferred share for 100 ordinary shares.

Together, the Board allocated 88,500 ordinary bonus shares to corporate officers and employees; the vesting date is June 2021 and the definite amount of shares will depend on performance criteria and presence condition being met.

Thus, if all presence and performance conditions are fully met by all beneficiaries, this allocation could potentially result in the creation of a maximum of 801,500 shares.

16. CAPITAL INCREASE DELEGATIONS

(See table in appendix 2)

17. MARKET PRICE

At the close of the financial year, the Prodware share traded at €6.48 compared with €7.92 at 31 December 2015.

The average daily volume of securities traded over 2016 was 16,527.


C. CORPORATE GOVERNANCE

18. BOARD OF DIRECTORS

18.1. Composition of the Board - Functions

The Board of Directors consists of seven directors, including two women.

Two of these are directors are independent according to the definition of the Middlenext code.

Four representatives of the Works Council may attend Board meetings.

Members Functions within Prodware SA

End of term Functions performed within the Group in 2016 Functions performed outside the

Group in 2016

Philippe Bouaziz

Chairman of the Board 2017 GM

Member of the: » Board of Directors of Prodware Belgium (until 06/2016) » Supervisory Board of Prodware Deutschland

» Manager of SCI NEMUR and B&B » Chairman of Bouaziz Partners

Alain Conrard

Board MemberCEO 2019 GM

• Board Member/Director of: » Prodware Belgium » Prodware Spain » Prodware UK Limited » Prodware Weca (Côte d’Ivoire) » Prodware Israel

• Representative of Prodware SA, within: » Prodware Netherlands » Prodware Spain

• Manager of » Prodware Luxembourg (until 03/2016) » Prodware Maroc

• Member of the Supervisory Board of » Prodware Deutschland AG

Stéphane Conrard

Board MemberDeputy CEO 2019 GM

• Member of the Supervisory Board of » Prodware Deutschland AG

• Member of the Board of Directors of » Prodware Belgium (until 04/2016)

• Manager of » Cap Lease

» Manager of SARL S&AUDIT » Chairman of PHAST INVEST

Jean-Gérard Bouaziz Board Member 2017 GM

Viviane Neiter

Board member (independent) 2019 GM

» Board member of listed companies:

» Dolphin Intégration (01-06/15) » PAT (Plant Advanced Technologies (since 06/15)

» Vet’ Affaires » SPIR » I.CERAM

» Chairman of the Association Champagne Ardenne Place Financière » Member of NEOMIA Alumni

Klara Fouchet Board Member 2019 GM

Jacques Tordjman

Board member (independent) 2017 GM Manager of Jactor SPRL

Frédéric Zablocki (Entrepreneur Venture)

Observer Resignation Sept. 2016

» CEO of the companies Entrepreneur Venture Gestion and Entrepreneur Venture Conseil » Observer of MTD Finance.


18.2. Renewal of Directorships

Given that the terms of office of Philippe Bouaziz, Jean-Gérard Bouaziz and Jacques Tordjman are expiring at the next general meeting,

their renewal for an additional period of three years is proposed to the general meeting.

18.3. Work of the Board

The Board meets as many times as justified by the corporate interests. It met seven times during financial year 2016 and particularly deliberated on:

› The subscription in January 2016 of bank financing and a Euro PP of €79 million; › The approval of the 2015 financial statements and the 2016 semi-annual position; › The implementation and follow-up of a share buyback programme; › The implementation of a preferred and ordinary share allocation plan; › The 2017 budget; › …

18.4. Directors’ fees

The general meeting of 28 June 2013 set the payment of €30k for financial year 2013 and subsequent financial years, until a new decision.

In 2016, Prodware’s Board of Directors paid the sum of €30k to the directors for financial year 2015 according to the following distribution:

› Viviane Neiter: €5k; › Jacques Tordjman: €5k; › Other directors: €4k each.

For financial year 2016, the set payment of €30k remains unchanged.

19. REMUNERATION OF CORPORATE OFFICERS

19.1. Summary of the remuneration received by key management personnel

The details of the remuneration received by management is indicated below.

Remuneration Fixed Variable Benefits in kind Directors’ fees

Philippe Bouaziz 163,200 30,000 none 4,000

Alain Conrard 136,200 30,000 None 4,000

Stéphane Conrard (ht) 282,000 30,000 none 4,000

Total 581,400 90,000 12,000

19.2. Summary of the remuneration received by key management personnel

Alain Conrard is entitled to a severance pay equivalent to two years of gross salary at the termination date of his current functions.


20. REGULATED AGREEMENTS

20.1. New agreement

A new agreement was approved by the Board of Directors in December 2016 regarding the disposal, by three corporate officers, of their participation in the company Cap Lease, in favour of the company Prodware.

The transaction, which was concluded in January 2017, relates to a sum of €234k for the three corporate officers concerned.

20.2. Agreements previously entered into

The agreement previously entered into with SCI SYSTAR was terminated in June 2016 due to the agency’s move to other premises in La Rochelle.

The agreement with SCI B&B was continued.

The terms of these agreements are set out in the statutory auditors’ special report.


D. CORPORATE AND SOCIAL RESPONSIBILITY OF PRODWARE SA

21. SUSTAINABLE DEVELOPMENT AT THE HEART OF PRODWARE SA’S VALUES

Prodware, a publisher/integrator and host of management solutions for companies, is the partner of reference in the establishment of global IT solutions to serve large and medium-sized companies.

Prodware aspires to be an environmentally responsible group both in its words and in its deeds in all its relations with its stakeholders.

Since 2009, Prodware has chosen to voluntarily adhere to the Global Compact of the United Nations and to support its ten principles in the areas of human rights, labour, environment and anti-corruption.

Since this date, Prodware has published its human, societal, and environmental indicators, based on the guidelines of the Global Reporting Initiative (GRI).

For financial year 2016, the reporting scope covers the parent company Prodware SA (France) and its subsidiaries in Germany, Belgium and the Netherlands (hereinafter “the RSE Group”). This scope represented nearly 63% of the total workforce of the Prodware Group at the close of the financial year.

As a reminder, in 2015, the RSE scope covered Prodware SA, Belgium and the Netherlands. Indeed, Prodware is gradually expanding the Group’s scope, to anticipate the integration of each of the entities and to thereby standardise indicators. Prodware will gradually continue to deploy RSE reporting within the Group.

In order to compare the 2015 and 2016 performance levels, like-for-like information is given when possible. Given the weight of France in relation to the 2016 RSE scope, certain specific indicators are given only for this country.

Prodware’s CSR approach is based on three main challenges:

1. Develop its human capital to meet the challenges of today and tomorrow

2. Carry out operations in a responsible manner

3. Anchor its business within the territories whilst respecting the environment.


22. DEVELOP ITS HUMAN CAPITAL TO MEET THE CHALLENGES OF TODAY AND TOMORROW

Prodware assesses its social performance using Human Resources indicators aligned to the “Global Reporting Initiative”.

The indicators below are the “Core indicators” of the GRI defined in association with the United Nations Environment Programme (UNEP).

22.1. Total number of staff, number of staff by status and employment contract

22.1.1. Total number of staff

The RSE Group’s average permanent staff size for 2016 was 765 employees (compared with 842 in 2015 on a like-for-like basis), a decrease of 9%.

This change is explained by the refocusing of activities in the Netherlands and Belgium with a 14% reduction in staff. Germany remained relatively stable in terms of staff numbers.

In France, the decline amounted to 6.5%, with an average staff number of 520, compared with 565 in 2015.

0

200

400

600

800

1000

TotalEurope (excluding France)France

Evolution of RSE scope staff

556

2015842

765

520

286 246

2016

22.1.2. Staff size by status

The share of the management population fell slightly in the RSE Group scope.

Staff 2016 RSE Group scope 2015 RSE Group scope

Total number of staff 765 842

Management 70.0% 71.5%

Non-managerial staff 30.0% 28.5%

It should be noted at this point that 19% of managers are women.

22.1.3. Staff size by employment contract

In the RSE Group scope, 94% of employees are on an open-ended contract (CDI).

Fixed-term contracts (CDD) are only used in case of employee replacements or for ad-hoc needs.


22.2. New hires (excl. fixed-term contracts)

In 2016, 89 people were hired on an open-ended contract (or equivalent abroad) at the RSE Group level, thereby reflecting the Group’s momentum and its attractiveness on the market.

In line with the actions launched in 2015 with the Prodware Academy, Prodware has initiated a vast recruitment campaign, focusing essentially on technical and functional profiles.

In a market characterised by inadequate resources, Prodware was able to convince 89 new employees to participate in its development.

Nearly 70% of those recruited are managerial staff given the expertise necessary to carry out the high-added value assignments provided by the Group.

The percentage of women is growing, as this year they represented on average 27% of new hires on open-ended contracts or equivalent.

26% of women hired are in managerial roles.

In 2016, Prodware SA had 15 employees recruited on a fixed-term alternating job-study contract, including eight professional training and apprenticeship contracts, and 19 interns.

An ambitious recruitment plan, in line with market expectations, will be rolled out in 2017 with more than one hundred recruitments envisaged.

0

TotalBelgiumGermanyFrance Netherlands2015 2016 2016 2016 20162015 2015 2015 20162015

0

20

40

60

80

100Women

Men

49

1217

35

13

219

2

7

213 1

4

65

2417

69

22.3. Employee turnover

With an average staff size of 765 employees and 140 departures, the employee turnover1 of the RSE Group was 18.35%.

In the Prodware SA (France) scope, this amounted to 17.70% and remained stable compared with the previous year when it stood at 17.63%.

2016 2016 exits Average number of staff

2016 turnover - RSE scope

2016 turnover - France scope

2015 turnover - France scope

Management 97 529 18.35% 18.44% 19.54%

Non-managerial staff 43 236 18.20% 15.96% 12.96%

Managerial staff numbers traditionally have a higher turnover in a market situation with great mobility.

1Definition of employee turnover = Number of exits (excl. fixed-term contracts)/average number of staff.


22.3.1. Turnover by age group

2016 >25 years 25-34 years 35-44 years 45-54 years 55-65 years TOTAL

Exits(excl. fixed-term

contracts)4 30 43 32 31 140

Average number of staff 9 139 255 259 80 742

Employee turnover 44% 21.6% 16.9% 12.4% 39% 18.87%

22.3.1.1. In the France scope

In 2016, the largest turnover focused on the age 55-65 age group, not so much in terms of the number of departures compared with the other categories, but due to an average number of staff which is traditionally lower in this category and for this sector of activity.

The <25-34 age group also saw considerable turnover, reflecting the high level of mobility of the younger generation, who are often seeking new professional experiences and/or better wage conditions.

With respect to the other age groups, the turnover rate fell compared with 2015, and is particularly low compared with usual rates in the digital technology sector.



contracts)1 21 24 22 24 92


Employee turnover 33.3% 22.8% 13.2% 12.0% 53.3% 18.2%



contracts)1 19 38 27 13 98


Employee turnover 7.2% 17.3% 18.3% 15.17% 26% 17.5%

France scope 2016 CINOV/Syntec 2015

Average seniority 10.4 years 8 years

Within Prodware SA (France), the average seniority of 10.4 years demonstrates employees’ loyalty in a sector where mobility is traditionally strong.

Indeed, the average seniority of employees in the sector (CINOV/Syntec) is eight years in 2015. Only 25% of employees under the same collective agreement have more than 10 years’ seniority.

In 2015, Prodware SA negotiated the “generation contract” with its management and labour, aiming to better meet the legal obligations in this area. In particular, links have been set up between tutors, mostly seniors (age 53 and over) and young people under the age of 26.


22.4. Organisation of working time

For Prodware SA (France), the weekly working time is 35 hours for all employees (Syntec industry-wide agreement).

For Germany, the Netherlands and Belgium, the working time is 40 hours per week.

In 2016, 104 people were part-time employees by choice, i.e. 13.6% of the RSE scope with disparities by country.

Women represent more than 70% of those holding part-time positions in France and Germany.

2016RSE Group scope

2016 (in %)RSE Group scope

2015RSE Group

scope

France 63 12% 66

Germany 13 12% 13

Belgium 4 17% 5

Netherlands 24 22% 22

Total 104 13.6% 106

22.5. Ensure the health and safety in the workplace of all employees

In 2016, within the RSE Group, there were 6,941 working days of absence including all causes (illness, maternity, workplace accidents, miscellaneous, and personal reasons including paternity leave).

The absenteeism rate was 3.9% in 2016, which corresponds to an average of 9.06 days per employee, which is down on the previous year.

Absenteeism 2016RSE Group scope

2016France scope

2015RSE Group scope

Total days of absence (working days) 6,941 4,473 7,875

Absenteeism rate 3.90% 3.78% 4.02%

of which absences for workplace accidents 0.08% 0.12% 0.12%

of which absences for maternity leave 0.43% 0.64% 0.18%

of which absences for illness 3.17% 2.69% 3.48%

Prodware carries out a tertiary activity, and the prevention initiatives aim to reduce the number of accidents affecting its employees. The causal link of some lost-time workplace accidents is being studied and awareness initiatives are being carried out amongst those employees who travel regularly.

22.6. Developing talents through training initiatives

22.6.1. In the RSE Group scope

Various training initiatives were carried out in 2016. Due to the change in scope, the number of hours of training increased between 2015 and 2016 to 16,428 hours, i.e. an average of 32.27 hours per employee trained.

France Europe excl. France Consolidated total

Number of hours Number of hours Number of hours

Men 3,182 10,805 13,987

Women 670 1,673 2,343

Total 3,852 12,478 16,330


22.6.2. In the France scope

There were 3,852 hours of training, which demonstrates the group’s willingness to maintain a high level of professionalism in its teams.

216 employees benefited from awareness initiatives or training in 2016 (145 managers and 71 non-management staff).

The average duration of the training is 2.6 days for managers and 2.4 days for non-manage-ment staff.

Training in tools, technical and business line fields concerned 70% of overall investments.

Around 15 individual requests by employees, through their personal training account, were also taken into consideration.

During the year, Prodware SA (France) also implemented a new interview programme where employees can express their wishes in terms of training and where the key training areas to be favoured in 2017 can be determined, in particular:

› maintaining technical skills through training in new product versions; › training to update professional knowledge for employees in cross-disciplinary business lines: legal, accounting, HR, IS, etc. › accompanying employees in their internal mobility plan or professional development by using the most appropriate tools (professionalisation periods, CPF, CIF, VAE schemes etc.).

Added to these are the health and safety in the workplace training courses, i.e. training and retraining the first response staff in the branches, training new members of the Workplace Health and Safety Committee, etc.

All these training courses are conducted either face-to-face or through e-learning.

22.7. Initiating partnerships with schools

The partnerships established with engineering schools in 2015 (participation in recruiting forums, etc.) to increase awareness of the Prodware brand as an employee with young graduates were continued and strengthened by our presence on professional social networks.

These primarily involved Ecole Centrale de Lille, Ecole Centrale de Nantes, IUT de Strasbourg, and EFREI de Paris.

This resulted in the recruitment of 14 interns and 15 employees in alternating job-study programmes. The Company also allowed five high-school pupils to carry out an internship within Prodware’s teams.

22.8. Promoting diversity

22.8.1. Gender parity

22.8.1.1. Headcount

The ratio of women in the 2016 RSE Group to the overall staff is 26%, a slight rise compared with 2015 on a like-for-like basis (25.1%).

The ratio of female managers in the 2016 RSE Group is 19.2%, compared with 18.4% in 2015 on a like-for-like basis.

In France, women account for 29% of staff, which is a higher percentage than for the 2016 RSE Group but still lower than the sector (CINOV/Syntec), which represented 34% women in 2015.


22.8.1.2. Managerial staff

The majority of staff of the RSE Group are technicians and engineers. Concerning managerial staff, it is important to note that women still have little presence in the engineering schools which are our principle source of graduates (11%) (Source: Directorate for Research, Studies, and Statistics (DARES) 2014 study).

2016 Rate of women to overall staff Rate of female managers*

France 29% 22%

Germany 19% 12%

Belgium 27% 12%

Netherlands 17% 12%

RSE Group 26% 19%

* the rate of female managers represents the percentage of women among the population of managers.

22.8.1.3. Remuneration

Gender equality is monitored on the basis of the indicator of the ratio of female/male employees, which consists in calculating the salary of a woman where a man earns 1 euro.

Remuneration report Female / Male

Female/MaleManagers

Female/MaleNon-managenial

Consolidated

0,0

0,2

0,4

0,6

0,8

1,0

1,2

ConsolidatedGermany BelgiumNetherlandsFrance

0,90

0,79 0,77 0,77

0,91

0,81

1,14

0,91 0,930,88 0,92

0,70

0,92 0,90

0,80

Prodware SA continued the actions carried out as part of the “Gender Equality” agreement renewed in 2014. Similarly, the “parenting interviews” were continued in 2016; this programme enables employees to discuss departure and return conditions for maternity leave, minimise or even neutralise the effects of this leave on remuneration and to establish dialogue with employees.

22.9. Integration of workers with disabilities

At the RSE Group level, there are 18 people with the status of disabled worker, the majority of which in France, i.e. an average rate of 2.35% of staff, up slightly compared with 2015.

11 of them fall into the Senior TH category (> 45 years).

Continuing on from the actions carried out in the past, emphasis has been placed on internal communication in order to increase employee awareness of the approach towards disabilities.

Prodware SA continues to use the protected worker sector for the organisation of certain events.

22.10. Organisation of employer-employee dialogue

Within the RSE Group scope, the situations are very different due to the size of the structures and local regulations.

Employees in the Netherlands have a Works Council and a Workplace Health and Safety Committee.

In France, social dialogue is formalised with the presence of a Workplace Health and Safety Committee, a Works Council and staff delegates.


23. CARRYING OUT OPERATIONS IN A RESPONSIBLE MANNER

Since 2011, Prodware has been evaluated each year by the teams of EthiFinance in charge of the GAIA index, the extra-financial information system for intermediate-sized enterprises. Using this Gaia Index information system, the commitment of French mid-caps to extra-financial criteria (Environment, Social, Governance) can be determined. The analysis framework covers four themes: governance, social, environment, and external stakeholders.

In a universe of 400 securities, the Gaia Index panel was made up of 230 French listed companies in 2016.

The questionnaire and the rating system are controlled by an independent committee of investors, listed companies, and analysts.

In the 2016 rating, Prodware SA was given a general score of 81/100 and ranked 14th out of 81 in the category of revenue between €150 and €500 million.

23.1. Information on societal commitments in favour of sustainable development

23.1.1. Territorial, economic, and social impact of the Company’s business

Prodware has a solid establishment in France for a local service: the Prodware Group’s headquarters are located in Paris. 18 branches spread across the entire territory allow for a responsive, local service.

In 2016, activity in Holland was distributed across two sites, in Belgium across three sites and in Germany across 10 sites.

More than 19,000 customers benefit from the Group’s presence in the different countries.

23.1.2. Territorial, economic, and social impact of the Company’s business

Prodware has a solid establishment in France for a local service: the Prodware Group’s headquarters are located in Paris. 18 branches spread across the entire territory allow for a responsive, local service.

In 2016, activity in Holland was distributed across two sites, in Belgium across three sites and in Germany across 10 sites.

More than 19,000 customers benefit from the Group’s presence in the different countries.

23.1.3. Partnership and sponsorship activities

The Prodware RSE Group did not carry out any partnership or sponsorship activities in 2016 (aside from the partnerships with schools mentioned below).

23.1.4. Subcontracting and suppliers

The Company makes little use of subcontracting outside the Group in the performance of its services.

Its main suppliers are software publishers, such as Microsoft and Sage.

23.2. Fair practices

Ethics and integrity are part of Prodware’s values. These values are incorporated in the Corporate Managerial Charter, which applies to all employees. Prodware is also aware of society’s expectations in terms of the fight against corruption. Alongside its adherence to the Global Compact which integrates this subject, anti-corruption recommendations are emphasised in all major negotiations.


23.3. Information security

At a time when data security is a key issue in both the professional and private spheres, Prodware is of course concerned by the question of the security of information systems.

By hosting and processing its customers’ data, Prodware has to meet the following objectives:

› Provide its customers with guarantees regarding the way in which their information assets will be processed; › Develop within the company an organisational culture through stable and defined processes; › Develop a culture of continual improvement;

In this respect, Prodware undertook an ISO 27001 certification initiative. This standard aims to guarantee the integrity, confidentiality and availability of the information assets managed for the Group or for its customers.

In keeping with this logic, Prodware Netherlands renewed its ISO 27001 certification in 2016.

For Prodware SA (France), areas of progress are determined around a controlled improvement plan and updated every year. A structure for monitoring so-called “safety” incidents meets on a monthly basis to protect itself against any failures and external attacks.

A CNIL (Commission Nationale de l’Informatique et des Libertés - the French Data Protection Authority) correspondent was appointed within Prodware SA in 2015 to firmly establish Prodware’s ambitions in terms of transparency and management of personal data.

Prodware has also developed communication tools which are available to all employees, such as an IT charter, user documents in line with materials and a brochure of recommendations for use during travel.

23.4. Other commitments in favour of human rights

The Company engaged in no actions in this field in 2016. However, its adherence to the UN Global Compact, which is renewed every year, demonstrates its commitment to Human Rights and the International Labour Organization’s conventions.


24. ANCHOR OUR BUSINESS WITHIN THE TERRITORIES WHILST RESPECTING THE ENVIRONMENT

Prodware carries out a tertiary activity which will not be affected by climate change but it nevertheless seeks to minimise its impact on the natural environment by carrying out initiatives which aim to integrate environmental issues into its daily management.

Prodware’s environmental risks are relatively low given the Group’s business activity and do not require any provisions to be recorded. Therefore, no amount was booked in 2016.

Through its business activity, the Group does not generate any noise pollution. Water is used for sanitary purposes only. As the various entities rent their offices, these consumption figures are not always available as they are included in rental charges.

Prodware SA (France) has offices only in urbanised areas that it does not own and is therefore not concerned by the “sustainable use of soil” nor by biodiversity.

Furthermore, the RSE scope is not concerned by the issue of food waste as it does not have its own company restaurant.

24.1. Environmental organisation and approaches

Within its sustainable development initiative, Prodware wishes to report on its ecological impact. All recyclable waste is recycled. Material which may be given a second life is given to associations or to employees.

2016Total energy consumption

(kWh)

Revenue (in €m)

Consumption relative to revenue

(kWh/€m)

Paid staff

Energy consumption per employee

(kWh/employee)

Area of premises

(m²)

Energy consumption

relative to area of premises (kWh/

m²)

France 1,243,878 106.5 11,679 520 2,392 8,946 139

Germany 210,196 12.1 17,371 115 1,828 3,943 53

Belgium 1,189 4.6 258 25 48 130 9

Netherlands 732,616 20.3 36,089 107 6,816 4,025 182

RSE Group 2,187,879 143.5 15,246 767 2,852 17,044 128

The IT team of Prodware SA (France) manages all IT equipment of the RSE Group with a view to the security of IT processes and cost optimisation.

In that respect, and with the constant aim of reducing greenhouse gas emissions, the Group has chosen to virtualise its IT infrastructure. In 2016, 90% of the servers were virtual.

Prodware uses a feature called AutoShutdown on 60% of its servers dedicated to development, testing, and demonstrations. The principle is to identify the virtual machines that are not used on a daily basis in order to automatically turn them off at 10 p.m. each night. These machines are not turned on automatically the next day. Employees who wish to reconnect must connect to a Web interface in order to be able to start them on their own.

This principle makes it possible to optimise performance and the available resources according to the presence of the employees. This also makes it possible to limit material investments and therefore the electrical consumption that they would have generated, even if it is currently not possible to quantify the savings exactly.


24.2. Controlling our greenhouse gas emissions

Just like all companies with more than 500 people, Prodware SA (France) is required to prepare a greenhouse gas emissions report (BEGES) every four years.Prodware carried out a full Carbon Footprint assessment in 2011, and has therefore updated its assessment with 2016 figures.

BEGES 2011 (in teq CO2) 2011 (in %) 2016 (in teq CO2) 2016 (in %)

Scope 1 and 2 1,504 1,259

Energy 108 7% 115 9%

Travel 1,396 93% 1,144 91%

Within the same scope, greenhouse gas emissions have fallen by 16% over five years. The vehicle fleet accounts for more than 90% of emissions.

Low-emission vehicles are offered to employees and Prodware SA is anticipating regulatory changes, in particular in Greater Paris, which aim to eliminate the use of diesel in a few years.

24.3. Travel

24.3.1. Travel policy and measures taken to limit the environmental impact

The Company continued its travel policy, which is intended to minimise the environmental impact of business travel by employees.

For example, air travel is authorised only if the train ride is greater than three hours. Vehicles are rented only when no auto-sharing vehicle is available.

In addition, in order to limit travel between its different sites, Prodware has undertaken significant investments in recent years for the establishment of video-conferencing tools in the main branches in France and abroad. In addition, the messaging and telephony software Skype for Business is favoured for all intra-Group communication.

Thus, 895 video-conferences and 42,113 conferences by Skype for Business were organised in 2016, totalling more than 26,000 hours of exchanges (980 hours of video-conferences and 25,107 hours for Skype for Business).

These tools are increasingly being used by employees.

24.3.2. CO2 emissions

The CO2 emissions relating to Prodware SA’s business travel amounted to approximately 2,748 tonnes in 2016. This includes trips made by train, aeroplane and rental car.

CO2 emissions due to transportProdware 2015

Planes trip

Vehicles trip

Trains trip

12%

88%

0%


24.3.3. Pollution and waste management

Prodware SA (France) has offices only in urbanised areas that it does not own.

Prodware’s publishing activities and the integration of the sectoral and business line solutions it develops have a very limited impact on the air and ground compared with heavy industrial activities.

However, as a socially-responsible company, Prodware strives to reduce its CO2 emissions, as demonstrated by the figures above.

The main waste generated by the RSE Group is office waste (paper, computer-related consumables, etc.) as well as end-of-life computer hardware.

As an IT company, Prodware is subject to the requirements of the directive on the Waste of Electrical and Electronic Equipment and its recycling (WEEE).

Prodware SA (France) has put in place a computer hardware redeployment policy. In order to optimise the recycling of hardware, after more than four years of use, and if it is still viable, another initiative offers hardware to employees for a symbolic amount. Similarly, during mobile phone replacement phases (2-3 years), the old phones are systematically offered to employees for a low price.

This policy also applies for the main consolidated entities.


APPENDIX 1: SUBSIDIARY EARNINGS

Subsidiary earnings are shown in the table below before treatment related to consolidation operations.

In euros Share capital

Shareholders' equity Proportion Gross value

of securities

Net value of

securities

Revenue excl. tax for

the year

Profit (loss) for the year

Subsidiaries more than 50% held directly and indirectly

Cap Lease 40 000 244 809 50,00% 20 779 20 779 2 753 640 23 394

Prodware Netherlands BV 11 800 000 2 989 073 100,00% 17 565 488 17 565 488 20 361 970 -127 193

Prodware Tchequie 7 299 237 592 100,00% 1 209 887 11 917

Prodware Deutschland AG 51 150 -1 623 927 100,00% 14 227 113 14 227 113 12 098 546 -2 592 049

Prodware UK Limited 1 891 676 807 235 100,00% 3 846 890 3 846 890 4 399 375 -304 561

Prodware Belgium 2 200 000 2 231 162 100,00% 5 155 013 5 155 013 4 595 167 148 429

Prodware East Europe 807 28 719 100,00% 1 000 1 000 85 414 9 745

Prodware Spain 152 010 4 025 186 100,00% 3 800 000 3 800 000 21 592 882 662 172

Prodware Tunisie 22 167 223 437 80,00% 25 000 25 000 652 265 90 184

Prodware Maroc 45 070 51 602 100,00% 44 337 44 337 1 611 876 56 208

N2A SI 18 028 -56 100 80,00% 14 550 - - -92

Rentasoft 21 396 838 100,00% 200 000 - - 463 184

Prodware West &Central East Africa 15 245 -27 801 51,00% 7 775 7 775 326 079 -33 864

Prodware Georgie - 68 781 100,00% - - 380 619 39 244

Prodware Israel 121 543 1 884 156 77,24% - - 11 904 971 76 701

CKL 26 500 821 614 50,00% 1 869 783 -3 782

Subsidiaries less than 50% held

Cap Vision 10 000 nc 20,00% 20 000 20 000 NC NC

IRIS conseil informatique 625 920 nc 23,16% 344 990 344 900 NC NC

Retail and Digital Venture ltd 141 180 143 524 708 44,92% 60 002 000 60 002 000 3 958 459 177 108

105 274 934 105 060 384


APPENDIX 2: SUMMARY OF DELEGATIONS OF COMPETENCE FOR CAPITAL INCREASES AND USES

Authorisations and uses during 2016 GM date

Duration of

delegation

Delegation expiry date

Authorised capital increase

amount

Amount used during

2016Comments

Authorisation to buy back shares in the Company

20/06/2016 (9th

resolution)18 months 19/12/2017 10% of capital 8.54%

Renewal of authorisation of 24

June 2015

Capital reduction by cancellation of redeemed shares

20/06/2016 (10th

resolution)18 months 19/12/2017 10% of capital 0


June 2015

Capital increase reserved for qualified investors

20/06/2016 (11th

resolution)18 months 19/12/2017

€3 million / (€40 million securities giving access to

capital)

0Renewal of

authorisation of 24 June 2015

Capital increase reserved for strategic operations

20/06/2016 (12th



capital)

0Renewal of


Issuance of share subscription/purchase options to employees and corporate officers (*1)

20/06/2016 (13th


5% of shares composing the share capital (*)

0Renewal of


Creation and issue of bonus preferred shares (*1)

20/06/2016 (14th -15th resolutions)

18 months 19/12/2017 8,200 preferred

shares€533,000 (*)

7,130 preferred shares

€463,450 (*)

Bonus allocation of ordinary shares and shares resulting from the conversion of preferred shares (1*)

20/06/2016 (16th

resolution)18 months 19/12/2017 820,000 shares

(*) 801,500

shares (*)

Issuance of BSAs (stock subscription warrants) or BSAANEs to members of the Executive Management, employees, and corporate officers

20/06/2016 (18th


7% of shares composing the share capital

0

Capital increase by issuing shares reserved for employees

20/06/2016 (19th

resolution)26 months 19/12/2017 €150,000 0


June 2015

Capital increase by issuance of ordinary shares/securities giving access to ordinary shares maintaining or not maintaining the preferential subscription right, including by private placement

24/06/2015 (9th to 13th resolution)

26 months 23/08/2017


capital)

0

Issuance of BSAs (stock subscription warrants) or BSAANEs to members of the Executive Management, employees, and corporate officers

24/06/2015 (15th


7% of shares composing the share capital

6.85%

Awarded by the Board of Directors in March 2016 - 562,000 BSA

(1) common ceiling (820,000 shares)

Prodware France45, quai de la Seine, 75019 PARIS T +33 (0) 979 999 799 – www.prodware.fr – [email protected]

Documents

MANAGEMENT REPORT OF THE PRODWARE GROUP AND …...France and the Maghreb 104,958 108,385 -3.2% Israel 10,958 9,865 11.1% Total 175,846 181,828 -3.30% 3.2. At the Prodware SA level