A NOVO SA - Cylex Interactif

Transcription

CONTENTS
I - Presentation
1.1 The company
1.1.1 History
1.1.2 Legal organisation
1.2 Business sector activities
1.2.1 Videocommunication
1.2.2 Consumer telecommunications
1.2.3 Professional telecommunications
1.2.4 Electronic payment systems
1.2.5 Information technology
1.3 Resources
1.3.1 Human resources
1.3.2 A Novo group organisation
1.4 Risks
1.4.1 Interest rate and foreign exchange risks
1.4.2 Commercial risks
1.4.3 Industrial risks
1.4.4 Technological risks
1.4.5 Manufacturer approval risks
1.4.6 Dependence on key staff
1.4.7 35-hour workweek
1.4.8 Information system / Euro Changeover
1.4.9 Legal risks
1.4.10 Insurance policies
1.5 Sales in the first quarter of 2001/02
1.6 The 2001-2004 business plan presented in early 2001
II - Business Report by the Board of Directors
2.1 Business Report
2.2 Consolidated financial statements
2.3 Parent company financial statements
2.4 Key figures in euros – Consolidated financial statements
III - Administrative and management bodies
3.1 Supervisory Board as at 30 September 2001
3.2 Board of Directors
3.2.1 Board of Directors as at 30 September 2001
3.2.2 Board of Directors following the Supervisory Board Meeting of 6 December 2001
3.3 Remuneration of members of the administrative and management bodies
3.4 Loans and guarantees granted to the Directors
3.5 Employee profit-sharing
3.6 Extraordinary events and disputes
3.7 Issue of warrants reserved for Mr Daniel Auzan
3.8 Auditors’ report on specific employee benefits
IV - General information about the company and its share capital
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12
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28
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115
4.1 General information about the company
116
4.2 General information about the share capital
119
4.2.1 Share capital as at 31 January 2002
119
4.2.2 Additional share capital authorised
by the Combined General Meeting of 19 March 2001 but not issued
119
4.2.3 Potential share capital: stock options
4.2.4 Other securities giving access to the share capital
119
120
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4.2.5 Other common stock equivalent
4.2.6 Changes in A Novo’s share capital
4.3 Share ownership and voting rights
4.3.1 Breakdown in share ownership as at 31 January 2002
4.3.2 Major changes to share ownership
4.3.3 Undertaking to maintain shareholdings
4.3.4 Shareholder’s agreements
4.3.5 Shares pledged as collateral by the company or its subsidiaries
4.4 Trading volumes, investor relations policy and dividends
4.4.1 Trading volumes
4.4.2 Investor relations policy
4.4.3 Dividends
4.5 Share buyback programme
4.5.1 Objectives of the buyback programme and intended use of the shares
4.5.2 Legal framework
4.5.3 Terms and conditions
4.5.4 Taxation rules for share buyback transactions
4.5.5 Intention of the stockhoder who controls the issuer alone or jointly
V - Reports of the Board of Directors submitted to the Combined General Meeting
of 25 March 2002
131
5.1 Report by the Board of Directors to the Combined General Meeting of 25 March 2002 regarding
shares purchased and sold during the financial year ended 30 September 2001
132
the authorisation to reduce the company’s share capital following the share buyback programme
133
authorisation of the Board to issue securities
134
the waiver of preferential subscription rights
136
5.5 Additional report by the Board of Directors regarding the use of the authorisation granted
by the Combined General Meeting of 19 March 2001 to issue debt securities (OCEANE bonds)
with waiver of preferential subscription rights
138
5.6 Report by the Board of Directors regarding the adjustment of the bond conversion ratios
141
the authorisation granted to the Board to carry out one or more capital increases reserved for
employees of the company
142
5.8 Report by the Board of Directors to the Combined General Meeting of 25 Mars 2002 regarding
the issue of share warrants reserved for Mr Daniel Auzan and the waiver of preferential subscription
rights in favour of Mr Daniel Auzan
143
VI - Resolutions for approval by the Combined General Meeting of 25 March 2002
145
VII - Persons responsible for the reference document and declarations
159
7.1 Person responsible for the reference document
7.2 Declaration by person responsible for reference document
7.3 Persons responsible for auditing the accounts
7.3.1 Official auditors
7.3.2 Substitute auditors
7.4 Declaration by auditors
7.5 Person responsible for financial information
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VIII - A NOVO 2002/03 financial release calendar
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IX - Technical glossary
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X - Contents of this document cross-referenced with sections recommended bu COB
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1
PRESENTATION
1.1 - The company
1.1.1. History
A Novo was created in 1987, and experienced very rapid growth from the outset, driven by growth in the
Canal+ decoder maintenance business.
In 1990, A Novo moved out of its Chennevières plant, which was by then too small, transferring to modern
premises of 10,000m€ in Beauvais (France). Over the years, this unit was to become one of the two major A
Novo centres in France, with a surface area of 20,000m2 and a staff of 800 professionals.
Company management quickly adopted a business diversification policy, setting up partnerships with new
operators and manufacturers in the decoder maintenance market (TPS, Philips, etc.), and extending activities
to new products, including mobile phone and infrastructure maintenance (Ericsson, Lucent Technologies,
etc.).
A Novo clearly defined its basic strategy at this time:
- to industrialise its service activities, enabling it to manage high-volume installed bases, to gain approval
for its skills, and to invest in process mechanisation and new technologies;
- to work with manufacturers and operators, adopting a B2B model favouring long-term partnerships.
1994: Creation of Demovale (France) Demovale has now taken the name of its subsidiary Triade, having
merged with it.
Triade specialises in the recycling and recovery of end-of-life electronic products. The company was set up
to handle the dismantling of old Canal+ decoders, and is 50%-owned by A Novo SA and 50%-owned by
SARM, part of the Vivendi group.
Triade represents is a key asset for the A Novo Group, due to its technical know-how in a context where
electronic consumer product manufacturers will be required to recycle and recover 75% of end-of-life
products by 2003.
In 1996, to cater for the rapid growth in its business, A Novo acquired a TRT-Philips plant of 7,500m2 in Brive
(France), manufacturing radio link equipment for infrastructure and telecommunications networks. This
operation enabled the A Novo Group to acquire valuable expertise in the professional telecommunications
domain, and more specifically in the radio link communications sector. This subsidiary, called Générale
Electronique Brive, is now 100%-owned by A Novo France.
The successful conversion of the Brive site illustrates A Novo's ability to transform a site focused purely on
production into one principally providing industrialised services, infrastructure maintenance and technical
support for new products (test facilities, etc.).
The example set in Brive has since been duplicated for new production units acquired in Malaga and Milan.
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Breakdown of the Brive site's revenues
€m
25
20
15
Services
10
Assembly
5
0
95/96
96/97
97/98
98/99
99/00
2000/01
Source: A NOVO - February 2002
In 1998, A Novo embarked on an international expansion process through a series of acquisitions.
• It acquired a 74% interest (now 100%) in the Spanish company Sadelta. Sadelta specialises in retailing,
maintaining and repairing mobile phones. The company has two subsidiaries operating in mobile phone
maintenance, i.e. Barcelona-based Tecnosoporte, which is 100%-owned, and Valencia-based Coretel,
which is 50%-owned.
This acquisition enabled A Novo to build a partnership with Airtel, which is now the Spanish subsidiary
of Vodafone.
• In Italy, A Novo acquired the monitor maintenance activity of Italian company FIMI, a wholly-owned
subsidiary of Philips, via its A Novo Italia subsidiary. Apart from its monitor maintenance activity, A Novo
Italia has expanded its business to include a decoder maintenance service for the Italian pay-TV operator
Telepiu, which is a subsidiary of Canal+.
In 1999 and 2000, A Novo implemented an aggressive organic growth and acquisitions policy in France,
Europe and America. This was possible due to the sharp increase in financial resources following the €86m
capital increase in March 2000, and the creation of a medium-term €53m credit line. This policy enabled A
Novo to expand its business portfolio and its geographical coverage.
• September 1999: creation of General Electronique UK (videocommunication).
• December 1999: acquisition of Carte SA (France), a subsidiary of France Telecom Terminaux (integration,
distribution, installation and maintenance of payment terminals and electronic payment solutions).
• December 1999: acquisition of Teli Service (Scandinavia), which is the leading telecommunications,
videocommunication and IT maintenance player in its market.
• January 2000: acquisition of Innovatron Services, France's number two player in distribution, installation
and maintenance of electronic payment solutions. Innovatron Services was merged with Carte SA in
January 2001 to form Carte & Services.
• January 2000: acquisition of Fibrosud (France), to strengthen the electronic payment service business,
as a subcontractor to Carte & Services.
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• April 2000: acquisition of ICL's maintenance centre in Denmark, along with the maintenance activities
of Mash Volume Products in Finland, Norsk Elektronik Center in Norway, and two small Swedish
companies, Migab and Signalstyrkan.
Overall, A Novo IT Services Nordic AB has 11 production sites and more than 700 staff.
• May 2000: entry into Portugal, acquiring the maintenance and renovation activities of GSM and AEC
(Porto and Lisbon).
• May 2000: creation of a unit in Chile, on signing an outsourcing contract covering after-sales service for
Bell South Comunicaciones in the country.
• June 2000: acquisition of the production activities of Fimi Srl, an Italian subsidiary of the Philips group.
This deal covered production activities on the Saronno (Milan) site, which specialised in manufacturing
dedicated monitors for professional applications in the medical and public information sectors (airports,
stations, large plasma screens, overhead projectors, etc.).
• July 2000: purchase of a majority interest in Digitec Direct Ltd, located in Manchester, England and
Larbert, Scotland (videocommunication and computer motherboard repairs).
This deal bolstered A Novo's coverage, and made it the UK's leading company in the maintenance of
videocommunication products.
• August 2000: acquisition of a majority interest (64%) in Cable Link, located in Columbus, Ohio and Fort
Lauderdale, Florida (videocommunication).
• September 2000: acquisition of Cablewise (California) via Cable Link, along with a business division of
Valsystème (Montreal).
• September 2000: acquisition of Globe Communication Spa, an Italian leader in the mobile phone service
and technical support sector. Globe Communication's main customer is TIM, which leads the Italian
mobile phone sector with 30.5m users.
In 2000/01, A Novo increased its geographical coverage and bolstered the range of services offered to
manufacturer and operator partners by acquiring new skills. The company raised a further €80m in the
market by issuing OCEANE convertible bonds (bonds exchangeable into new or existing shares) in April
2001. This enabled the company to continue building market share through acquisitions.
• October 2000: acquisition of a 50% interest in Cerplex Ltd in the United Kingdom, via A Novo UK (a
100%-owned subsidiary of A Novo SA). This company specialises in maintenance services in the
professional telecommunications and electronic payment sectors. This 50% acquisition—with the other
50% acquired by Teleplan Holding Europe BV—has enabled A Novo to improve its position in the UK and
European business telecommunication infrastructure and relay markets.
Cerplex Ltd has been renamed A Novo AT-com.
• October 2000: acquisition of Comtel SA, Chile's leading player in telecoms services. This acquisition has
enabled A Novo to develop a partnership with Nokia, by taking a position in Conosur countries.
• November 2000: acquisition of the Swisscom maintenance centre in Neuchâtel. This outsourcing centre
gives A Novo a presence in the Swiss mobile phone market, and trades under the name of A Novo
Suisse SA.
• November 2000: major agreement with the Atlinks Group, concerning Atlinks' residential telephony site
in Malaga, Spain. This operation was based on the Brive model, providing the A Novo Group with an
ultra-modern platform for industrialising the provision of services in Spain and Portugal. The acquired
business has been renamed A Novo Comlink.
• December 2000: creation of the A Novo Polska joint venture in Poland, with A Novo taking a 60%
interest. The company carries out videocommunication services on behalf of Canal+.
• December 2000: signature of a memorandum of agreement between A Novo and Prima Comunicazione
(Italy). The two companies agreed to set up a new joint company focusing exclusively on service
activities. The agreement substantially strengthens A Novo's position in Italy, and also strengthens its
partnerships with Nokia, Siemens, Mitsubishi, Omnitel, Stream and other companies.
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• January 2001: acquisition of a 25% interest in Gamma Comunicazione Srl, which owns 100% of Prima
Comunicazione Spa. In line with initial objectives, A Novo increased its stake to 60% in April 2001.
Since Prima is already Nokia and Ericsson's number one partner in Italy, this deal strengthens A Novo's
ties with these companies even further.
• January 2001: announced acquisition of a 60% controlling interest in Canal+ Logistique Belgique, which
was renamed A Novo Logitec.
• January 2001: creation of A Novo France SA, to amalgamate the assets of the group's various French
companies.
• February 2001: creation of A Novo Peru, 99%-owned by A Novo America Del Sur, the holding company
that controls A Novo activities in South America.
A Novo Peru has signed an exclusive partnership agreement with Nokia, the leading player in the Latin
American market.
Under the terms of this agreement, Nokia will outsource the maintenance of GMS and CDMA mobile
phones from A Novo Peru for the whole of the country.
A Novo will manage three technical centres in Peru's main cities, under the Nokia brand. These centres
will provide logistics services and other services in accordance with Nokia standards.
• May 2001: integration of the 100%-owned subsidiary A Novo Caraïbes, based in Guadeloupe. The aim
of this company is to work with Canal+ Caraïbes in videocommunications, and with France Télécom
Caraïbes and Bouygues in mobile phones.
• June 2001: creation of Digicom in Manchester, UK. Digicom holds a reverse logistics contract from
mobile operator mm02 (formerly BT Cellnet).
• July 2001: acquisition by A Novo UK of Radiophone Ltd, which specialises in the maintenance of mobile
phones in the UK, and in Ireland via its RCISS subsidiary, which will be renamed A Novo Services
Solutions. Radiophone is a maintenance partner of Nokia, and is also approved by Ericsson, NEC,
Panasonic, Motorola, Mitsubishi, Siemens and Samsung.
Radiophone employs 180 staff at its Norwich site, and substantially bolsters A Novo's presence in the
UK. It also makes A Novo a trusted partner of all mobile phone manufacturers in the UK.
• July 2001: creation of A Novo Maroc in Casablanca, 70%-owned by A Novo.
• September 2001: acquisition of Pace Microtechnology Plc's maintenance services business, via A Novo's
General Electronique UK subsidiary. This puts the company in charge of all of Pace's maintenance
services in the UK.
This deal strengthens GE UK's core business in the decoder market, making it ideally placed to benefit
from strong growth in digital decoders in the UK.
• August 2001: acquisition of Broadband Services Industries' Motorola decoder repair division by A Novo
Broadband.
• March 2002: A Novo makes inroads into the US telecom market by acquiring Natcom through its A Novo
Americas subsidiary. As a result, A Novo stands to benefit from the close ties Natcom has established
with a large number of operators and manufacturers, notably Motorola, the top mobile phone
manufacturer in the US.
• March 2002: To facilitate its expansion in the telecom market, A Novo decides to merge two of its
subsidiaries, GEB (Brive) and Fibrosud (Montpellier), thus combining their expertise (GEB specialises in
repair and logistic services for professional telecommunications equipment while Fibrosud provides
after-sales services to consumers).
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A Novo's acquisition policy can be summarised as follows:
• The company aims to control the companies it acquires, initially taking a majority stake, and generally
acquiring an option to buy the remaining capital, with the exception of shares that may be retained by
local or regional managers, who will always be minority shareholders.
• The only exceptions to this policy are:
1. Triade, owned on a 50/50 basis with Vivendi Environnement, as explained above.
2. At-Com, owned on a 50/50 basis with Teleplan, as explained above.
With the exception of Olivier Battesti, no shareholder in A Novo SA has an interest in any of its subsidiaries.
Olivier Battesti owns a 35% indirect stake in A Novo Chile, where he is operations director, and owns stakes
in other newly-created South American companies in which A Novo's interest is less than 100% (see
Americas structure chart in section 1.1.2).
In 2000/01, A Novo started to build and merge its businesses, and to optimise performance in its four
business areas and in its main geographical markets.
This merger between Cartes SA and Innovatron Services (France) forms part of this strategy. The resulting
company, Carte & Services, is France's leading player in the electronic payment sector.
In 2000/01, A Novo actively pursued its international development. In particular, the company achieved major
expansion in the UK, as well as bolstering its presence in South America. Revenues generated outside France
already account for almost two thirds of A Novo's overall sales.
A Novo is now a technology group with major potential. The company has achieved a unique position in
providing global services to operators and manufacturers, with five complementary and synergy-generating
business divisions, i.e. videocommunication, professional telecommunications, consumer
telecommunications, electronic payment systems and information technology. In view of technological
developments, these business divisions are likely to interact substantially in future.
A Novo's worldwide presence in December 2001: 63 sites in 22 countries
Canada
Finland
Norway
USA
Sweden
West Indies
Great Britain
Denmark
Ireland
Venezuela
Poland
Belgium
Peru
Bolivia
France
Paraguay
Switzerland
Chile
Italy
Argentina
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Spain
Portugal
Morocco
1.1.2. Legal organisation
The group's organisation is based on geographical profit centres (“operative units”). This is a crucial aspect
of the group's performance, given its presence in 22 countries via 63 service sites (as at December 2001).
A Novo has therefore set up a holding company for every country or group of countries, enabling it to
generate synergies between the various local companies (see section 1.3.2: A Novo Group organisation).
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1.2 - Business sector activities
A Novo provides services in five business areas: videocommunication, consumer telecommunications,
professional telecommunications, electronic payment systems, and information technology.
These five business areas complement each other well, and will do so increasingly in future.
- Upcoming generations of terrestrial and satellite decoders will incorporate hard drives (TV/PC
convergence) and payment terminals (e-commerce), as well as an internet connection. Future telephone
and videophone services will benefit from broadband connections.
- In future, mobile phones and PDAs will be hybrid products, combining telephone, personal assistant and
laptop computer functions.
- PCs and mobile phones will be equipped with authentication systems (smartcards etc.) allowing secure
transactions—thereby overlapping with electronic payment systems—and controlling access to
confidential data.
Many contemporary products already point the way to these products of the future. They will require expertise
in flat panel displays, hard disk drives, smartcards, and the transmission and reception of voice and data
signals..
By extending the business portfolio and acquiring new skills in IT and electronic payment systems, A Novo is
anticipating this technological convergence.
In future, global manufacturers and operators will select partners that have skills in the four key consumer
electronics technologies, combined with upstream and downstream professional expertise.
As a result, A Novo organises its services offering according to major business line:
- terrestrial and satellite videocommunication technologies and services;
- consumer telecommunications technologies and services (mobile and fixed-line);
- professional telecommunications (infrastructures and networks);
- electronic payment systems;
- IT and communication products (from laptop computers to giant plasma screens).
The following graph plots the breakdown of sales by business line in the last four financial years.
Evolution du chiffre d’affaires consolidé 1997/2001 par secteur d’activité
€m
370.1
Information technology
Electronic payment systems
188
Professional telecommunications
67.5
Consumer telecommunications
37.6
Videocommunications
97/98
12
98/99
99/00
2000/01
In 2000/01, the company achieved very strong growth in all divisions, with particularly good performance in
videocommunications (sales up 73%) and consumer telecommunications (up 164%).
A Novo's consolidated sales almost doubled in 2000/01, with a rise of 97% on 1999/00. Growth was even
stronger in the core services business (excluding the distribution and production businesses, which account
for 4.5% and 6.1% of total sales respectively), at 105%.
Of this 97% increase in revenues, 22 percentage points came from organic growth and 75 percentage points
from acquisitions.
In core business areas, organic growth was 29%, mainly due to firm growth in A Novo's traditional
videocommunications services (+28.4%) and telecommunications services (+73.7%) businesses.
€m
370
141
Acquisitions
Organic growth
188
41
Scope as at October 1
95
25
188
68
1999/2000
2000/2001
Looking at the geographical breakdown of sales, we can see that A Novo achieved genuine international
diversification in 2000/01.
In the last three financial years, the portion of sales coming from France has fallen substantially. France now
only accounts for around a third of total sales.
International breakdown of sales
€m
37.6
67.5
188
370.1
2%
40%
47%
63.2%
Outside France
France
98%
60%
53%
97/98
98/99
99/2000
36.8%
2000/01
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By 30 September 2000, Scandinavia (4 countries), Spain, Portugal and Italy were also making substantial
contributions to sales.
In 2000/01, A Novo's rapid international expansion continued, particularly in Italy, which now accounts for
23.7% of group sales, but also in the UK (8.1%) and America (6.6%).
€m
370.1
Other
South America
North America
UK
188
Scandinavia
Italy
67.5
Spain/Portugal
37.6
France
97/98
98/99
99/2000
2000/01
Sales in Spain/Portugal, Italy, the UK and North America should eventually match those currently generated
in France, i.e. €150m per zone, and possibly more in America.
A Novo's business is focused on services. Services accounted for 89.4% of consolidated sales in 2000/01. The
company also has a distribution business in Spain, which forms part of its exclusive global relationship
between its Sadelta subsidiary and Airtel-Vodafone. Some of the production business in Italy will be gradually
converted into service activities.
A Novo's aim is not to manufacture products, but to prepare, repair, maintain, refurbish and recycle them.
The acquisition of industrial sites such as the TRT Philips site in Brive, Atlinks in Malaga and Philips (FIMI) in
Milan, is intended to speed up A Novo's expansion. These acquisitions have given A Novo buildings, plant,
skills and processes, all of which are immediately available and can be adapted to service activities.
This represents a crucial competitive advantage for A Novo, which has a great deal of experience in
converting these sites.
Core business: a global services offering
€m
89.4%
330.7
Services
86.0%
Production
161.4
Distribution
54.9%
25
20.5
19
97/98
98/99
14
4.3
22
99/2000
22.7
16.7
2000/01
Inventories
Since A Novo is essentially a service provider, inventories mainly consist of supplies and spare parts. Work in
progress belongs to the customer (manufacturer or operator).
In general, inventories of spare parts and components are bought from manufacturer customers and billed
back to them when the service is provided. As a result, profit margins on these parts are low. Most of A Novo's
margin comes from the services it provides.
Indeed, manufacturers frequently give spare parts to A Novo as a returnable consignment.
Management of end-of-life products
This business is an integral part of A Novo's five major business divisions, and forms part of these business
divisions' global service offering.
Downstream of the electronic maintenance business, A Novo has since 1994 operated in the recycling,
dismantling, processing and recovering of end-of-life electronic products. The company started this business
via its Triade subsidiary (formerly Demovale), which was set up in conjunction with the Vivendi group to carry
out environmentally-friendly dismantling of Canal+ decoders. Triade has since moved into dismantling endof-life products that correspond with A Novo's areas of expertise.
Since March 1997, Triade has been in charge of recovering precious metals from end-of-life electronic
equipment via its Envie Dem subsidiary. Triade and Envie Dem collect end-of-life electronic equipment (IT,
telecoms and videocommunications) from companies in the Paris and Lyon regions. They dismantle the
equipment and separate out the ferrous metals, non-ferrous metals, plastics and electronic circuit boards. The
electronic circuit boards are processed to recover their components and to extract the precious metals they
contain (gold, platinum, palladium, silver).
This presence in end-of-life products is a natural extension of A Novo's maintenance business, and enables
the company to offer a comprehensive range of services to manufacturers and operators. This is particularly
important in view of future obligations imposed by the European Union, forcing companies in this sector to
deal with end-of-life products. Proposals for a directive of the European Parliament and of the Council on
waste electrical and electronic equipment (ref 2000/0158COD) are due to be voted on in the near future, and
will apply from January 1 2003. This can only strengthen A Novo's global offering in its five business divisions,
probably starting in 2002.
1.2.1. Videocommunication
A Novo is now world leader in the TV decoder maintenance market. This activity forms an integral part of A
Novo's history, which started with Canal+ in 1987.
A Novo has partnerships with the main TV operators and decoder manufacturers in Europe and the USA.
1.2.1.1. Products
A Novo specialises in maintaining analogue and digital decoders. This business involves:
- sorting/testing returned decoders;
- reconditioning;
- renovation (external refurbishment of equipment);
- hardware upgrades, via the systematic replacement of components;
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- software upgrades, by loading more high-performance software;
- repair of defective decoders;
- logistics: storage, inventory management, shipments etc.;
- customisation of new products;
- quality control.
A Novo's highly efficient flow management, together with its industrialisation of processes and mastery of
complex digital technologies, represent major entry barriers for companies trying to enter this market.
Transportation to and from factories is provided by an external logistics firm.
All of A Novo' operations in this field involve precise monitoring of each decoder processed, so that the
customer can receive detailed reports of the work done by the company.
Out of just over 3.5 million videocommunications products processed by A Novo in 2001, the company
estimates that only 25% required actual repair. This shows the importance of A Novo's presence in upgrading
new and used products that are working but which do not conform to new standards.
A Novo enables operators to carry out dynamic management of their installed decoder bases.
Volume effects constitute a second entry barrier to potential rivals in this market. Only major technological
centres with leading-edge industrial processes, such as those set up by A Novo, are capable of offering
attractive repair prices and of increasing processing capacity rapidly in line with the growth in operators'
installed decoder bases.
Number of decoders processed per month
Units
96/97
97/98
98/99
99/00
00/01
43 000
84 000
104 000
130 000
300 000
Videocommunication service sites
Canada
Finland
Norway
USA
Sweden
West Indies
Great Britain
Denmark
Belgium
Peru
France
Italy
Chile
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Spain
Poland
In the USA, technological change in the videocommunications sector, and the shift from analogue to digital
products in particular, is giving a major boost to A Novo's business. This is particularly important as regards
preparing new products, since each product must be prepared according to the geographical zone in which
it will be used, and according to each operator's specifications.
In 2001/02, the second generation of digital decoders, equipped with hard drives, entered the market. This
technological development, along with the appearance of digital terrestrial decoders, will lead to older
decoders being recycled and sold to markets that are less technologically-demanding and more pricefocused (Eastern Europe, Mediterranean, South America).
1.2.1.2. Key market growth factors
The decoder maintenance market is growing rapidly. This trend is being driven by a number of factors:
- very high pay-TV penetration in Western Europe, which is likely to reach 85% in 2005 according to Merrill
Lynch, as opposed to only 43% in 1999;
- rapid transition from analogue to digital;
- developments in digital products, creating demand for updating of previous-generation models. This
trend is associated with the introduction of new functions, including new interactive services requiring
greater memory capacity, hard disk recording capability and so forth.
Videocommunications installed base in Europe
The switch from analogue to digital
180
160
140
120
100
Digital
80
60
Analogue
40
20
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Source: A Novo - February 2002
1.2.1.3. Market players
The main market players are pay-TV operators (satellite, terrestrial or cable), and decoder manufacturers.
The operator category consists of international players: Canal+ (France, Italy, Spain, Belgium and Poland),
BSkyB (UK, Chile), Viasat (Denmark, Finland, Norway, Sweden), NTL (UK, France, Switzerland), DirectTV
(USA) and Echostar (USA). Consolidation is likely to continue in this fast-growing market, following recent
deals such as Vivendi/Universal, Canal+ Polska/Wizja TV and Comcast/AT&T.
17
A Novo's very strong presence in Europe and, more recently, in the USA and Canada is enabling the company
to accompany these major players in their international expansion.
Decoder equipment manufacturers also operate internationally: Grundig, Motorola, Nokia, Pace, Philips,
Pioneer, Scientific Atlanta, Sagem, Sony and Thomson Multimedia.
A Novo has devised a unique tripartite (A Novo/manufacturer/operator) contract model.
A Novo
Outsources maintenance
within warranty period
Outsources maintenance
ex-warranty period
Supplies decoder
Pay TV operator
OEM
Purchases decoder
Subsdised/free
decoder
Pay TV subscriber
1.2.1.4. Videocommunication market in 2001
A Novo's videocommunication sales in 2000/01 totalled €78.65m, an increase of 74% on the previous year.
Breakdown of videocommunication sales
€m
50
40
30
Digital
Analogue
20
10
0
1996
1997
1998
18
1999
2000
France
Decoders
At end-2001, the number of decoders in service was 9.5m on A Novo's estimates. This figure includes satellite
subscribers (Canal Satellite and TPS), cable subscribers and Canal+ terrestrial subscribers. The French digital
decoder market is still one of the fastest-growing in Europe, with an installed base of 4 million units.
A Novo has historically seen a return rate (number of decoders returned as a percentage of the installed
base) of around 18%, in line with the broad market figure (source: Merrill Lynch).
The outlook for volumes and prices means that the value of the maintenance market is likely to grow by 30%
per year in the next three years, on the company's estimates.
In France, A Novo generated videocommunication sales of €35m in 2000/01.
In the company's view, its competitive advantage arises from the following factors:
- The experience that A Novo has accumulated in the last 12 years has enabled it to raise the quality of
its service to a level that constitutes a major entry barrier.
- Close partnerships with customers (both manufacturers and operators) mean that they have less need
to look for other suppliers. The fact that A Novo is developing a number of sites provides customers with
additional security.
- A Novo's pricing policy means that customers benefit from productivity gains arising from increased
experience, and from scale effects caused by greater volumes. This represents another entry barrier for
new entrants.
- The complexity of digital technology continues to limit access to the market.
- Finally, operators must have total confidence in the ability of their service provider to maintain the
confidentiality of the information they are given. As a result, operators prefer long-standing partners.
Cable modems
The company opened a COM 21 cable modem sorting and repair workshop in 2001.
In the next few years, A Novo will try to consolidate its position as the unassailable leader in the French market
by making the most of its many strengths. The build-up in the R&D department, discussed elsewhere, will
benefit the videocommunication business most of all, by improving the company's test facilities.
UK
On A Novo's estimates, the UK digital decoder market is the fastest-growing in Europe, with 8.6m digital
subscribers at end-2001, and a forecast 13.3m by end-2003 (source: Merrill Lynch).
In 2001, the three main events in A Novo's UK business were as follows:
- GE UK opened a site in Shipley (Bradford), after winning an exclusive decoder repair contract from Pace.
- GE UK started up a Terayon cable modem sorting and testing business in Warrington.
19
- Digitec started operating as the exclusive repairer of BSkyB digital decoders. Digitec is acting in
collaboration with the UK's leading insurer Domestic & General.
A Novo's main videocommunication customers in the UK are, on the operator side, BSkyB, ITV Digital, NTL
and Telewest and, on the manufacturer side, Amstrad, Grundig, Nokia, Pace, Philips and Pioneer.
Italy
The Italian digital decoder market grew in 2001. By the end of the year, there were 2.5m decoders in service,
with around 60% of these used by subscribers of Canal+'s Italian subsidiary Tele+/D+ (A Novo estimates).
The company operates via its A Novo Italia subsidiary, based at Saronno near Milan, and its customers include
the operator Tele+ and manufacturers Nokia, Pace, Philips, Pioneer, Thomson and Sony.
Rest of Europe
A Novo was also very busy in other European countries in 2001.
- In Spain, the company set up A Novo Comlink in Malaga. This unit repairs Philips digital decoders.
- In Poland, A Novo Polska sorts and now repairs analogue and digital decoders belonging to Canal+
Polska. This subsidiary generated videocommunication revenues of €1m from Canal+ Polska and from
manufacturers Pioneer and Pace. Canal+ Polska's acquisition of rival satellite operator Wizja TV will drive
a substantial increase in A Novo's videocommunication revenues in the next few years.
- In Belgium, A Novo Logitec acquired the logistics business of Canal+ Belgique in a joint venture with
Canal+.
North America
In 2001, A Novo Broadband took control of Broadband Services, which carries out maintenance of cable
decoders (made by General Instrument and Motorola) and cable head-ends.
The switch to digital in the American decoder market, which consists of almost 80m units, is taking longer
than in the European market. The switch has been taking place gradually since 2000, and is likely to continue
for the next 7 years.
20
Installed videocommunication base in the USA
The switch from analogue to digital
Millions of units
100
90
80
70
60
Digital cable
50
40
Digital satellite
30
20
Analogue
10
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
Source: Wall Street Journal
A Novo Broadband is trying to consolidate its leading position in videocommunication maintenance, in which
it serves the following customers:
- Cable operators (which dominate the US market): AT&T, AOL Time Warner, Comcast, Adelphia Cable
and Videotron.
- Satellite operators: Direct TV, Echostar.
- Manufacturers: Motorola, Scientific Atlanta, Pace, RCA (Thomson) and Philips.
AT&T's recent acquisition of its rival Comcast (15.3m subscribers) will allow A Novo Broadband to take
advantage of its very close relationship with Comcast, and will expand its access to the USA's largest cable
network.
Consolidated videocommunication sales
€m
78.7
Americas
Poland
Belgium
UK
45
Italy
26
19
Spain/Portugal
Scandinavia
France
97/98
98/99
99/2000
2000/2001
21
1.2.2. Consumer telecommunications
1.2.2.1. Products
A Novo handles two types of product:
- residential products, mainly comprising DECT digital standard cordless telephones;
- mobile products conforming to the GSM, GPRS, TDMA and CDMA standards.
A Novo performs all maintenance and after-sales service operations for both types of product, on behalf of
manufacturers, retailers, operators and service marketing companies (SMCs). This involves reconditioning,
renovation, repair, logistics, warranty management, installed base management, management of user
technical phone queries and so forth.
Given the explosive rate of growth in the mobile phone sector in recent years, most of A Novo's consumer
telecommunications revenues come from this market.
In 2000/01, A Novo experienced very strong growth, due to the expansion in its market and the integration
of the telecoms activities of Prima Comunicazione in Italy and Radiophone in the UK.
Number of mobile phones processed per month
Thousands
420
370
70
10
97/98
25
98/99
99/00
00/01
01/02
1.2.2.2. Customers
A Novo's customer base comprises operators, manufacturers, service marketing companies and retailers.
The company's main operator customers are France Telecom (Orange), mm02, Omnitel, Bouygues Telecom,
Bell South, Stream, Swisscom, Telia, TIM, Vodafone and SFR.
The 1999/00 financial year saw an opening-up in the European and international markets, and this helped A
Novo to diversify its operator customer portfolio. In 2000/01, there was consolidation among the major players
in the market. These companies are now looking for partners able to offer maintenance services in several
countries at the same time. As a result, A Novo has benefited from its pan-European coverage, which has
enabled it to increase business levels still further with these major international operators.
22
The same is true of manufacturer customers, including Ericsson, Nokia, Philips, Siemens, Alcatel, NEC,
Sagem, Maxon, Panasonic Motorola and Sony. These customers are also looking for comprehensive, multicountry solutions that allow them to retain consistent internal structures, while continuing to ensure
outsourced maintenance of a much larger installed base of equipment under manufacturer warranty.
Maintenance contracts very often have a tripartite structure, involving A Novo, the manufacturer and the
operator, as in the videocommunication business (under warranty/outside warranty – see section 1.2.1.3.).
A Novo also has service partnerships with leading retail chains including Darty, Dixons, FNAC, Boulanger,
Auchan and Carrefour, along with distribution groups like Videlec and Debitel.
A Novo has positioned itself as the global partner of many major players in the consumer telecoms market.
By taking advantage of the quality of its processes, and by rapidly adapting its processing capacity, the
company is benefiting fully from the growth in volumes arising from the shrinking number of service providers
and the growth in the installed base.
1.2.2.3. Market
Given the rapid growth in their market, manufacturers are pursuing consolidation strategies in their core
businesses of designing and marketing mobile phones. In January 2001, Ericsson announced the sale of its
mobile phone production plants to Flextronics. Other companies like Nokia and Alcatel have decided to adopt
the same policy.
Most manufacturers currently outsource the production of their equipment. They are also hiring independent
firms to maintain their products, and even to analyse products ahead of commercial launch in order to identify
likely causes of breakdowns.
In theory, the new generation of companies specialising in outsourced manufacturing (Solectron, Celestica,
Flextronics etc.) should be seeking increased downstream integration, by providing after-sales service.
However, this model has serious drawbacks, for three main reasons:
• The structure and operational methods of a services unit are very different from those of a manufacturing
unit. This is why designers and manufacturers currently outsource their after-sales service activities.
• Integration would make manufacturers excessively dependent on subcontractor producers, and would
make it hard to determine responsibility in the event of a design or manufacturing fault.
• Manufacturers and designers need an independent and professional third party in their relationship to
manage product warranties.
Similarly, network operators are focusing on their core business of selling airtime and building customer
loyalty. As a result, we are seeing services such as maintenance, mobile phone repair, call centre management
and logistics being outsourced by companies like Orange, mm02, Swisscom and Telia.
These underlying trends, consisting of globalisation and outsourcing of peripheral services—which are
regarded as cost centres by companies—lie behind the international growth of companies like A Novo.
A Novo has developed close links with manufacturers and operators in the last few years. The company has
adopted its partners' policy of providing a global service, accompanying operators and manufacturers into
their main markets.
23
As a result, A Novo has expanded, either through acquisitions or organically, into Spain, Italy, the UK,
Scandinavia, Latin America and the USA.
Market development
CSFB predicts that the worldwide mobile phone installed base will grow by 10% per year for the next three
years, due to:
- the development of new standards (GPRS, UMTS);
- the appearance of new functions (MP3, PDA etc.) and interactive services (mobile internet);
- the build-up of embryonic markets in countries with large populations (South America and Asia);
- increasing mobile phone penetration in the USA, which surprisingly has one of the lowest penetration
rates among developed countries.
It is reasonable to expect the global mobile handset maintenance market to grow faster than the installed
base, for the following reasons:
- The need for innovative marketing means that products are being replaced increasingly quickly in the
market. This reduces research and development time, and causes a rise in faults experienced by users.
This situation is exacerbated by the increasing complexity of the software that manages a mobile
phone's various functions, which is a major factor behind factory returns.
- The mobile phone maintenance market depends directly on the installed base, and Merrill Lynch
estimates a historical return rate of 10.5%. Mobile phones are subjected to severe usage conditions
(temperature shocks, humidity, being dropped etc.), while at the same time containing highly developed
technologies and components. Inevitably, this means that frequent repairs are needed. The return rate
is likely to rise, due to the increasingly wide spread of mobile phones, and the fact that packs—in which
operators sell a phone for a reduced price in return for a long-term subscription commitment—mask the
real price of phones and the cost of repairing them, making users less careful.
- Moves to extend manufacturer warranties to 2 years will inevitably increase the return rate for
manufacturers. Previously, at the end of the first year, manufacturers only accepted returns once the
end-customer had accepted a quote for the repair. This made the customer aware of the cost which he
or she would bear.
- Finally, proposals for a directive of the European Parliament and of the Council on waste electrical and
electronic equipment (ref 2000/0158COD) are currently being voted on, and will oblige manufacturers
to make arrangements to recycle 75% of equipment sold. At the moment, A Novo's activities in the
extremely promising recycling sector are at an embryonic stage, and consist solely of a contract with
Ericsson.
1.2.2.3.1. Sites in 2000/01
Most of the companies acquired by A Novo in 1999/00 saw rapid growth in 2000/01. To cope with these
increased business levels, A Novo's local operating organisations had to adopt industrial production line
concepts, for the following reasons:
• to encourage new customers to seal partnerships with A Novo;
• to increase processing capacity while at the same time stabilising the workforce;
• to optimise usage of space;
• to ensure 100% quality control;
• to duplicate efficient organisation models.
24
All A Novo's processing centres use tried-and-tested organisation models. They guarantee short processing
times and high quality, along with consistent performance and procedures across sites.
A Novo Electrõnica e Communicações (AEC)
Before it was acquired by A Novo, AEC held around 10% of the maintenance market in Portugal. A new
1,500m€-plus site has been set up in the suburbs of Porto, where AEC is also developing a service logistics
business for its operator customers.
Due to the high penetration rate of 88%, and despite having only 10 million inhabitants, the Portuguese
maintenance market still has good growth prospects, since maintenance is still rarely outsourced in this
country.
A Novo Chile
A Novo Chile signed a mobile phone upgrade and after-sales service outsourcing contract with Bell South
Comunicaciones (subsidiary of the American operator Bell South) in May 2000. This represents a key step
in A Novo ambitions in South America.
A Novo Chile SA has 73 employees, and processed nearly 85,000 terminals in the 12-month period between
June 2000 and June 2001.
Comtel SA
SIn the Chilean market, which shows high growth potential, A Novo reinforced its position in October 2000
by acquiring a 90% stake (now 100%) in the local telecommunications service leader Comtel SA. Due to its
desire to remain focused on its core business, A Novo did not acquire Comtel's mobile phone distribution
activities, which are now carried out directly by the manufacturer.
Comtel SA was set up in 1992, and offers manufacturers and operators a full range of technical and logistics
services.
Comtel SA is Nokia’s exclusive partner in Chile for the maintenance of mobile phones under manufacturer
warranty.
By applying its business model to Nokia, A Novo has strengthened its position in Chile. This is leading to
attractive growth prospects in other Latin American countries, as shown by the recent opening of sites in Peru
and Venezuela.
Radiophone
Radiophone is based in the East of England, and was set up in 1984. The company currently processes
600,000 GSM phones per year, mostly made by the world's number one manufacturer Nokia, but also by Sony
Ericsson, Mitsubishi and Samsung.
A Novo acquired Radiophone in July 2001. This strengthens the collaboration between A Novo and Nokia,
with which Radiophone has had a partnership for several years.
As well as consolidating relations with manufacturers, being part of the A Novo group will help Radiophone
diversify its commercial policy to include distributors and operators.
As a result, Radiophone could in the near future become one of the largest telephone service centres in the
UK.
25
Digicom Ltd
A Novo Digicom was set up in October 2001 as part of an exclusive 5-year contract to process returns and
carry out repairs for mm02 (formerly BT Cellnet). The company is A Novo's largest reverse logistics platform.
All product flows are directed to this site, which handles all after-sales services required by the operator,
including management of loan phones, contract cancellation, renovation, repairs and packaging. This site
complements Radiophone's business, and has enabled Digicom to take over mm02's logistics operations, by
separating them from under-warranty work carried out for manufacturers.
After implementing new processes and taking over flows previously handled by other maintenance
companies, Digicom will process more than 50,000 products per month as of the second quarter of 2002.
This partnership with mm02 means that A Novo has opportunities to work with mm02 subsidiaries in other
European countries.
Globe Communications
The acquisition of Globe in August 2000 was a key move in building up A Novo's consumer
telecommunications activities in Italy.
Italy is Europe's leading mobile telephony market. Globe Communications estimates that it has 30% market
share in Italy, and is present over the full range of service and technical support products, including
technological activities very similar to those carried out at the Brive site in France (research laboratory, test
facilities, etc.).
Globe Communications processes over 600,000 GSM mobile phones annually.
TIM is Italy's leading mobile operator, and is also Globe Communications' largest customer. TIM's presence
in South America and Spain gives fresh opportunities to A Novo, which is also present in these countries.
Via its Mediacall subsidiary, located in Concorrezo near Milan, Globe Communications is also actively
involved in call centres (customer services, help desks etc.), working for both operators and manufacturers
(TIM, Telepiu, Sony, etc.). The subsidiary has 160 terminals and employs 265 staff.
Prima Comunicazione
During the year, A Novo increased its stake in the Atlinks fixed-line residential telephone manufacturing unit
in Malaga (held on a joint-venture basis by Thomson Multimedia and Alcatel). A Novo's 66.66% stake will be
increased to 100% by February 2003.
This deal will enable A Novo to strengthen links with Thomson Multimedia and Alcatel. It will also give the
company a high-tech production site and a workforce that is already trained in leading-edge technologies.
The partial conversion of the site into a repair centre has resulted in new contracts wins. The Malaga site
started processing Philips telephones (GSM and residential) in May 2001, and has now become a level-3
processing centre for Alcatel. Only six months after starting its repair business, A Novo Comlinks is already
carrying out repairs at a rate of 150,000 units per year, and is aiming to win a contract from Telefonica Moviles.
Prima Comunicazione
A Novo and Prima Comunicazione signed a major memorandum of agreement on 20 November 2000. This
represents a further step forward in A Novo’s plan to strengthen its position in the key Italian market.
26
A Novo now owns 60% of Prima Comunicazione.
Prima Comunicazione has been a service partner of Nokia since 1990, and has been Italy's sole Ericsson
“Advanced 5” approved centre since 1992. It is therefore the leading Italian partner of these two global
manufacturers.
Prima Comunicazione is also an approved mobile phone centre for Siemens, Mitsubishi, Omnitel and Stream.
The company employs 150 staff in its mobile phone maintenance and repair business.
Prima Comunicazione is intended to be the focus of A Novo's relations with manufacturers in Italy. Globe
Communications, meanwhile, is mainly targeting operators, by responding to their specific needs (reverse
logistics).
A Novo Caraïbes
The A Novo group recently set up A Novo Caraïbes in Guadeloupe in January 2001. This company will serve
the West Indian videocommunication and telecommunications market, against a background of rapid growth
in the mobile phone market. Since July 2001, A Novo Caraïbes has handled 100% of after-sales returns for
Orange Caraïbes, which has market share of 85% in the region.
Breakdown of consolidated consumer telecoms sales
€m
UK
6 317
South America
7 636
Nordic countries
15 008
France
40 499
Other
11 137
Distribution
Spain/Portugal
16 702
Spain/Portugal
20 603
Italy
46 577
1.2.2.3.2. Competitive position
A Novo's development strategy in mobile telephony differs from that of its main competitors.
- No other player has so far demonstrated its ability to provide services in as many countries as A Novo.
This worldwide presence is a key factor in the close relationships that A Novo is building with the leading
manufacturers.
- These leading manufacturers have a tendency to select a small number of suitable companies to act as
privileged partners in given geographical zones.
- A Novo's core business consists of industrialising service activities, which gives it a unique position. The
aim is to combine service activities within industrial platforms that possess a wide range of skills.
27
No other player in the market currently has industrial service platforms like A Novo's units in Brive and
Beauvais (France), Kristenhamn (Sweden), Milan (Italy), Norwich and Manchester (UK) and Malaga
(Spain).
With the development of new technologies, particularly UMTS, it is clear that technical skills will have to be
combined within major remote centres employing highly-qualified engineers and technicians. Only simple,
low value added after-sales service operations will be performed on-site.
A Novo is also the only player to have anticipated the EU's environmental directives, and the resulting need
to manage end-of-life products. This business will see a rapid acceleration as of 2002.
Mobile telecommunications products are now mass consumer goods. With the increasing volume of products
to be processed, it is realistic to expect further consolidation in the maintenance market, with the leading
companies seeing rapid growth in business levels.
The A Novo group is in a position to take full advantage of this trend, due to its many strengths:
- It has tried-and-tested logistics and production facilities, enabling it to guarantee its customers very
short processing times (generally less than 3 days).
- It offers high-quality services, which have been approved by many manufacturers and operators. This is
crucially important for manufacturers, since after-sales service quality has a major impact on future sales
growth.
- Its prices are attractive, and are improving further as processing volumes increase.
- It has an international presence in 22 countries.
- It is highly flexible and responsive, enabling it to make rapid changes in production capacity and to
respond immediately to unexpected demand.
- It has a wide range of manufacturer approvals, which represents a major entry barrier for new
competitors in the market. These approvals determine access to spares, diagrams and under-warranty
repair business.
A Novo is officially approved by Ericsson, Sagem, NEC, Nokia, Siemens, Philips, Alcatel and Mitsubishi, among
others.
1.2.3. Professional telecommunications
1.2.3.1. Products and customers
Professional telecommunications services involve products that are considerably more technical and costly
than consumer handsets. As a result, processing volumes are lower.
The business concerns equipment used in the infrastructure networks of telecommunications operators, such
as radio link equipment, GSM base stations, conventional or optical fibre cable transmission equipment,
digital multiplexers and ADSL modems. It also concerns equipment used in internal business networks such
as PABX exchanges and data routers.
A Novo provides maintenance and technical support services from a number of sites.
28
- The Brive site has dealt with radio link equipment and modems since 1996. Général Electronique Brive
(GEB) was previously TRT Philips' radio link production and integration plant prior to its acquisition by
A Novo. GEB has now been converted into a service unit, although the maintenance activity has been
retained, and expanded through links with manufacturers like Lucent Technologies, Harris and Alcatel.
Maintenance links have also been developed directly with operators like France Telecom, even though
manufacturers have traditionally carried out maintenance themselves in this sector.
- The London site provides radio link and transmission equipment maintenance for BT, following the 2000
acquisition of Cerplex UK, formerly BT's repair centre operator. The London unit also provides
maintenance services for Siemens, Telettra (Alcatel group) and 3Com.
- The Swedish site provides maintenance of PABXs, routers and modems for a number of manufacturers,
including Ericsson in particular, since the 2000 acquisition of Teli Service (since renamed A Novo Nordic).
- The Italian site provides maintenance of Siemens automatic switching units. This business forms part of
Globe Spa, which was acquired in 2000.
Professional telecommunications sales rose sharply during the 2000/01 financial year to €27.3m.
€m
27,312
17,495
7,218
98/99
99/00
00/01
1.2.3.2. Market
The professional telecommunications market breaks down into two segments:
- routers, hubs, PABXs, concentrators and ADSL modems;
- infrastructure (transmitters, receivers and base stations).
The first segment is expanding rapidly. This is due to the development of corporate networks (voice, data and
internet). As with mobile telephony, the logistics and equipment maintenance/repair service provided by A
Novo is aimed at both manufacturers (Alcatel, Mitel, Matra Nortel, Cisco, 3 Com, Siemens, etc.) and network
operators (France Telecom, Telia, TIM, BT, etc.). As in the mobile market, the trend is for customers to
outsource these activities and to look for worldwide service partners.
In the second segment (terrestrial network infrastructure), the maintenance market is still largely dominated
by manufacturers, mainly for reasons of technological expertise. The equipment in this market uses
microwave rather than radio-frequency technology. Nevertheless, the arrival of UMTS technology is changing
this situation. Manufacturers are having to concentrate their technical efforts on producing tens of thousands
of base stations for future 3G networks. As a result, it is in their interest to outsource the maintenance of their
existing long-distance and GSM networks.
29
This is demonstrated by the decision taken by Harris to grant a pan-European contract to GEB in 2000/01.
A Novo has high hopes as regards the potential of both these markets. The group's acknowledged expertise,
along with its technological platforms—which use the best available equipment—and its teams of highlyqualified engineers and experienced technicians—who work solely in this area—represent a major entry
barrier.
1.2.4. Electronic payment systems
Most of A Novo's electronic payment business is carried out by Carte & Services.
Three other group companies also operate in this sector:
- A Novo SA (Beauvais site): repairs of payment terminals under warranty on behalf of Thales.
- Fibrosud: repairs of payment terminals and PIN pads.
- AT Com (UK); ATM repair and spare parts logistics services for IBM Global Services.
Overall, A Novo's electronic payment systems division generated sales of €51.6m in 2000/01.
Carte & Services
Carte & Services specialises in distributing and maintaining checkout equipment, including electronic
payment terminals, POS terminals, cheque reader/printers, cash registers, computers and software for bank
and store cards.
The company works with:
- Major electronic payment systems players: BNP Paribas, Crédit Lyonnais, Société Générale, Sogenal,
Crédit du Nord, BICS Chambre Syndicale des Banques Populaires, BRED, CCF, Crédit Agricole,
American Express and Diners.
- Leading equipment manufacturers: Ingenico, Sagem, Schlumberger-Sema, Thales, Samsung, Ascom
Monetel, Moneyline, IBM and Wincor-Nixdorf.
- Major retailers and oil companies: Accor, Avis Location, Havas Voyages, LVMH, Darty, Renault SA,
Marionnaud, TotalFinaElf, BP and Shell.
Carte & Services provides a global solution to the electronic payments requirements of its customers, which
are looking for a single provider that can:
- provide services of consistent quality throughout France;
- maintain checkout systems that are becoming increasingly complex in terms of both hardware and
software (bank cards, store cards, electronic purses, loyalty cards etc.);
- act quickly (call centres, on-site services).
Carte & Services employs 700 staff, and manages an installed base of 260,000 terminals (electronic payment
terminals, POS terminals, cheque readers/printers, cash registers etc.), including 190,000 under contract.
The company has:
- a logistics platform in Rungis, which manages 1,600 movements per day;
- 3 technical assistance call centres in Rennes, Paris and Toulouse, which can handle 6,000 calls per day;
- a repair workshop that processes 40,000 products per year.
30
The on-site maintenance business employs 300 technicians, who carry out an average of 1,200 operations
per day.
1.2.4.1. Highlights of the 2000/01 financial year
Performance in 2000/01 showed that the 2000 merger between France's number one (Carte SA, acquired in
1999) and number two (Innovatron Services, acquired in March 2000) players was a major success.
As well as generating renewed growth and increased profitability, the merger enabled Carte & Services to
manage steadily rising business volumes arising from the euro changeover. The euro effect boosted sales
growth in 2000/01, and the company's operations and distribution capacity enabled it to meet demand in the
last three months of 2001.
Despite regular publicity efforts by all players in the electronic payments market (GIE Cartes Bancaires, banks
and service providers), merchants were slow to carry out crucial migration work. By September 30 2001,
almost a third of electronic payment terminals installed in local stores in France were still not euro-compatible.
Carte & Services also diversified its services offering, by maintaining POS terminals on behalf of major
equipment manufacturers (IBM, Wincor-Nixdorf etc.).
1.2.4.2. Outlook
The French electronic payment systems market will continue to grow strongly in the next few years.
Bank smartcard readers will have to adapt to new national (CB5.2) and international (EMV-Europay,
Mastercard, Visa International) standards, mainly as regards transaction security.
At the same time, the dematerialisation of payment methods is continuing. At the moment, this is affecting
cash, with the ongoing roll-out of electronic purses, and cheques, with banks now being obliged to transmit
electronic images of cheques.
Acceptance of international bank smartcards and increased security
In 1996, Europay International, Mastercard International and Visa International created a new standard for the
use of bank smartcards to provide transaction security.
This standard is called EMV.
In France, French banks have been distributing EMV cards (which also meet the French CB5.2 standard)
since July 2001.
In May 2003, all electronic payment terminals will have to be CB5.2-compatible, to enable them to accept both
French and international smartcards. This will require:
• loading CB5.2 software into all terminals;
• checking the compatibility of all terminals approved by GIE Cartes Bancaires before April 1999;
• checking the amount of memory installed in terminals (since CB5.2 software uses a large amount of
memory) and the memory usage of other applications.
In 2001/02, A Novo business levels arising from CB5.2 will be similar to those generated by the euro
changeover.
31
Electronic purses
In 2002, BMS (Billetique Monetique Systems, the company that manages the French electronic purse system)
expects that 50,000 new merchants will start to accept electronic purses, as opposed to 12,000 currently,
including 20,000 in the Paris region alone.
To accept electronic purses, merchants must either:
• load new software and attend one training session (minimum requirement);
• change their equipment, if their existing equipment does not feature a SAM (Secure Authentication
Module);
• or buy new equipment if they do not yet accept bank cards.
Cheque imaging
As of June 30 2002, the only possible interbank method for clearing cheques of under €5,000 (which account
for 98% of all cheques) will involve the transmission of electronic cheque images.
It is in the banks' interest for these images to be created at source, i.e. by the merchant, using a cheque
reader/printer.
The dematerialisation of cheques will lead to large amounts of equipment being exchanged. It will also result
in large amounts of new equipment being installed by France's 650,000 merchants that already have
electronic payment terminals and by the large chains, which have 125,000 tills.
Healthcare
Although the SESAM-Vitale card was launched almost four years ago in France, there are still more than
150,000 healthcare professionals that do not yet have a SESAM-Vitale terminal.
Carte & Services deploys and maintains these terminals, in partnership with banks and application software
companies.
1.2.5. Information technology
1.2.5.1. Customers
A Novo's main customers in this sector are Toshiba, Philips, Compaq, Sony, Epson, NEC, Canon, Mitac, IBM,
Packard Bell, Axa, Inventec, USI, Acer, Lexmark and WM-Data.
1.2.5.2. Information technology market
A Novo entered the computer maintenance market in earnest with the acquisition of Teli Service in Sweden.
A Novo acquired Digitec in the summer of 2000 in order to obtain its share of the UK decoder market.
However, more than half of Digitec's sales come from repairing laptop computers and motherboards.
At the same time, A Novo took over the monitor, plasma screen and special CRT manufacturing business of
FIMI (Philips' Italian subsidiary), having already acquired the related monitor repair business.
The reason for A Novo’s entry into this new market is essentially strategic, and relates to the convergence of
technologies, markets and manufacturers.
32
A number of decoder and mobile phone manufacturers (such as Sony) have already entered the laptop
market. Furthermore, the communications products of tomorrow could well be manufactured by large
computer groups such as Dell, Compaq, IBM and Apple. This is especially likely since the frontier between
videocommunication, telecommunications and IT products will be much less clearly defined than it is today.
This is demonstrated by the recently-announced partnership between Microsoft and Intel in mobile phones
and communications devices, following their entry into the PDA market.
The main event during 2000/01 was the signature of an exclusive critical server maintenance contract with
WM-Data in Denmark in the summer of 2001.
1.2.5.3. Breakdown of 2000/01 IT sales by country
UK
13.2%
Italy
45.9%
€55.5m
Scandinavia
35.9%
France
5.0%
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1.3 - Resources
1.3.1. Human resources
The global service concept developed by A Novo involves equipping staff with skills in all areas including
electronic component repair, logistics and R&D activities such as testing. Training is organised within the
group using integrated training structures, and outside the group through partnerships with training entities
specialising in each of the areas concerned.
Internal training structures, adapted to each of A Novo's technical and logistics activities, have been set up
at the company's largest sites. This enables A Novo to train staff rapidly and efficiently. Following this training,
staff enter an mentoring system, where expert technicians are responsible for supervising and assisting new
recruits. This responsibility-sharing approach also boosts team spirit.
To illustrate A Novo's dynamic approach to human resource management, we highlight the range of initiatives
taken at the Beauvais production site, which was A Novo's first site in France, and which remains one our
main French sites alongside Brive and Rungis.
Temporary staff
Following a tender process and negotiations with various providers, the Beauvais site has sealed a partnership
with Manpower.
- Two Manpower staff will work on-site, dealing mainly with administrative management and monitoring
of files and requests.
- A Manpower Electronique agency has been allocated almost exclusively (99%) to A Novo.
- Monthly meetings are held, and training relevant to A Novo's requirements and business areas is
arranged.
Development of local partnerships
The Beauvais site's management works hard to maintain close relations with colleges that specialise in
electronics, by paying apprenticeship tax, enabling students to gain professional charters and providing work
placement opportunities. The aim is achieve the closest possible fit between our requirements and the skills
of past and future graduates.
These partnerships have involved the following initiatives:
- Since January 2000, the company has hired 10 handicapped people, with the help of local associations
and national partners.
- The company has signed 9 employment initiative contracts.
Training contracts
Taking into account labour law incentives, the Beauvais site has signed 12 qualification and apprenticeship
contracts during the year, aimed at recruiting students from technical school to graduate level, in the fields
of IT, logistics, quality, electronic repair and human resources.
34
Human resource budget
In 1999/00, the Beauvais site's spending on training equalled 1.92% of the wage bill (3,500 hours). This
increased to 2.25% (5,000 hours) in 2000/01, as opposed to the legal minimum of 1.5%.
These figures illustrate A Novo's genuine desire to develop the skills of its employees, while enabling them
to gain positions that carry greater responsibility.
A Novo's headcount has grown as follows in the last five years:
France
30-Sep-97
30-Sep-98
30-Sep-99
30-Sep-00
30-Sep-01
28-Feb-02
347
447
661
1 349
1 810
1 865
International
210
1 824
3 159
3 523
Total
347
447
871
3 173
4 969
5 388
Adding in the average number temporary staff employed over the year, headcount totalled 5,775 at September
30 2001.
The sharp increase in staff levels is partly due to acquisitions carried out since A Novo became a listed
company in April 1999. However, the group's main industrial platforms are also seeing strong organic growth.
Since September 1998, the Beauvais site has created 315 jobs in three years, and the Brive site has created
185 jobs since it was acquired by A Novo.
The 2000/01 financial year saw further rapid international expansion. A Novo's headcount in other European
countries and in the Americas is now higher than in France.
The geographical breakdown of the workforce (employees on permanent or fixed-term contracts) reflects the
strong growth in staff levels outside France.
France
International
Total
at 30-Sep-01
Permanent contracts
Fixed-term contracts
1 503
307
2 716
443
4 219
750
Sub-total
1 810
3 159
4 969
401
405
806
2 211
3 564
5 775
Temporary staff
Total
France
International
Total
at 28-Feb-02
Permanent contracts
Fixed-term contracts
1 593
272
3 056
467
4 649
739
Sub-total
1 865
3 523
5 388
332
598
930
2 197
4 121
6 318
Temporary staff
Total
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Breakdown of headcount 1998-2001
South America
North America
5775
6318
Rest of Europe
UK
3843
Italy
Spain/Portugal
650
Scandinavia
1110
France
Oct.98
Oct.99
Sep.00
Sep.01
Feb.02
A Novo's organisation consists of a series of autonomous geographical centres. This requires the recruitment
of management staff capable of taking on full responsibility in their business areas and markets.
A Novo aims to be a model of decentralisation. The purpose of its head office is to coordinate, stimulate,
control and create functions that do not necessarily generate a direct financial return in any single country.
In concrete terms, each country has its own management structure with its own industrial, financial and
human resources management teams.
A Novo's human resources policy is defined by a set of main principles:
- The company puts the emphasis on skills in what is an increasingly technical business. As a result, it
has an active training policy for existing staff, and actively searches for new talent that meets its
requirements.
- The company has incentive schemes whereby teams and managers benefit from good performance.
- The company aims to enhance the loyalty of its skilled staff since, in A Novo's business areas, it takes a
long time to acquire expertise, and since this expertise increases the level of service provided to
customers.
- The company maintains high ethical standards, since it is responsible for the goods entrusted to it by its
customers, and since customers' brand images depend to some extent on A Novo's technological
centres.
A Novo applies its human resources policy in each country in which it operates. The policy is designed to
match requirements with resources, and makes it possible to adapt to a wide range of operating
environments, in terms of local legislation and training, recruitment methods and wage policy.
The effectiveness of this policy is highlighted each year by a very low level of staff turnover and an
absenteeism rate of less than 2%, which is substantially lower than the average seen in A Novo's business
sectors.
The career path of each employee, irrespective of qualification level, is analysed and reviewed annually
through a systematic assessment interview system.
36
1.3.2. A Novo group organisation
Strong growth in business levels has prompted A Novo to continue strengthening its functional organisation,
particularly at the business unit level.
Supervisory Board
Daniel AUZAN, Chairman
Daniel THIERIET, André KUDELSKI
Emanuele UGOLINI, Pergo Holdings
Executive Board
Henri TRIEBEL Chairman and CEO
Paul BERNARD, Luc VANCAYZEELE
Business Units
Corporate Functions
Opérative Units
Vidéocommunication
France
Italy
Finance
General admin
Vincent CAPRARESE
J.C. SAINT-JOURS
Salvatore CACCIATORE
Paul BERNARD
Luc VANCAYZEELE
Consumer telecoms
Spain/Portugal
UK
Legal and tax
R&D
Henri TRIEBEL
Juan FRAMIS
Henri TRIEBEL
Jérémie FABRE
Alain CATREVAUX
Professional telecoms
Scandinavia
South America
Investor relations
Alain CAFFIN
Thomas BIRGERSON
Sergio VERGARA
Jean-François CHUET
Information technology
NAFTA
Thomas BIRGERSON
Henri TRIEBEL
Electronic payment
Patrick GUERRIN
37
A Novo's organisation is based on three main principles:
- legally independent companies, each responsible for its own budget and customer base;
- regional holding companies that draw together operating units within a particular geographical zone,
resulting in a common vision, genuine synergies, and shared customer partnership management.
- horizontal functions for each business area, aimed at developing synergies between operating entities
and co-ordinating marketing efforts and relations with major customers.
Autonomy, initiative and responsibility are the foundations of A Novo's decentralised organisational
architecture. A corollary of this is the permanent assistance provided by the group and its demanding,
systematic reporting system.
1.3.2.1. Supervisory Board/Executive Board
A Novo's global vision, development strategy, skills acquisition policy, financial strategy and relations with
main shareholders are overseen directly by the Supervisory Board, which is chaired by Daniel Auzan, A Novo's
founder and main shareholder.
The Executive Board is chaired by Henri Triebel.
Paul Bernard and Luc Vancayzeele are the two other members of the Executive Board. Mr Bernard is in charge
of financial affairs, while Mr Vancayzeele is in charge of administrative, legal and human resources matters.
1.3.2.2. Operating units
A Novo had 7 operating units at the end of February 2001. Each of these units is responsible for coordinating
a geographical profit centre with sales of several million euros or more.
- The French operating unit is the oldest. Jean-Claude Saint-Jours is deputy managing director of A Novo
France SA, which was created in early 2001 for the purpose of co-ordinating and combining all group
activities in metropolitan France.
Poland (A Novo Polksa) is attached to the French operating unit. Daniel Thieriet is chairman of the Polish
subsidiary.
- The Italian operating unit is headed by Salvatore Cacciatore. This unit is the one that underwent the
greatest change in 2000/01, with the move to take control of Prima Comunicazione.
Italy is now A Novo's second-largest geographical source of revenues, accounting for 23.7% of the total.
- The A Novo Iberica operating unit co-ordinates group activities in Spain, Portugal and Morocco.
Business levels rose sharply in Spain and Portugal in 2000/01, and this will remain the case in 2001/02.
This was due to the integration of A Novo Comlink España, created via a transfer of assets from Atlinks
España, and the combination of all Spanish service activities.
A Novo Iberica is headed by Juan Framis.
- A Novo's UK business also experienced major changes during 2000/01, with the acquisition of Cerplex
by the A Novo/Teleplan joint venture, the purchase of Radiophone Ltd, and the acquisition of Pace
Microtechnology Plc's maintenance business. The newly-created Digicom, which has a reverse logistics
contract from mm02 (formerly BT Cellnet) joined A Novo in October 2001.
Henri Triebel is chairman of the UK operating unit, and the unit is run by Geoffrey Griffiths and Alan
Sutton.
38
- A Novo is rapidly building its presence in Scandinavia (Sweden, Denmark, Norway and Finland).
A Novo already has a strong presence in this region, following the major acquisition of Teli Service. A
Novo Nordic is the geographical holding company coordinating all group activities in the region.
The Scandinavian operating unit is headed by Thomas Birgerson.
- The South American operating unit was set up as recently as June 2000, following Bell South's move to
outsource its services requirements and the acquisition of Comtel SA in late 2000.
The South American unit has since expanded into Venezuela, Peru, Bolivia, Paraguay and Argentina.
Sergio Vergara is in charge of this geographical zone.
- The NAFTA operating unit covers the USA, Canada and Mexico. This recently formed unit is headed by
Henri Triebel. The acquisition of Cable Link in August 2000, since renamed A Novo Broadband and
headed by Bill Kelly, has opened up substantial opportunities in North America, initially in the
videocommunication field. This geographical zone represents a key growth area for A Novo in the years
to come, as shown by the after-sales service agreement between A Novo and Pace Microtechnology Plc
covering Pace's products in the NAFTA region.
The NAFTA operating unit will soon diversify into the telecoms market.
Each operating unit has full autonomy as regards management of operating finances and budget. The units
advise A Novo's head office of the investments which they view as relevant or essential, along with possible
acquisition ideas.
These regional holding companies use audit and consultancy services relevant to each country in which they
are present.
1.3.2.3. Business units
A year ago, A Novo set up the following five business units:
- vidéocommunication,
- consumer telecommunications,
- professional telecommunications,
- electronic payment systems,
- information technology.
The responsibilities of the business units include:
- defining strategy in each business sector;
- establishing synergies between the various operating units that have subsidiaries in the same business
sector;
- managing relations with major customers.
As a result of this structure, A Novo's professional telecoms partnership with Ericsson benefits its operations
in several geographical zones. This is also true of the services partnerships set up with Nokia in South
America, Italy and the UK.
This approach to major customers involves A Novo in the European and international decisions taken by the
leading manufacturers and operators.
The 5 business units represent a key component in A Novo's organisation. The company operates in 22
countries via 63 sites.
39
1.3.2.4. Corporate functions
The group relies on the following central departments to support its development.
- The finance department, headed by Paul Bernard, includes two operational auditors along with a director
and related team responsible for consolidation. This team is expected to grow substantially during
2001/02. Mergers and acquisitions activity is also handled by the finance department.
- The general administration department, which handles admin, legal and human resource matters, is
headed by Luc Vancayzeele. The legal sub-department is headed by Jérémie Fabre-Blanchet, and
employs three staff, who work mainly on acquisitions.
- The R&D department, headed by Alain Catrevaux, is in charge of actively monitoring technological
developments, enabling the company to anticipate major changes that affect or could affect A Novo's
business activities.
- The investor relations department is headed by Jean-François Chuet.
1.3.2.5. Commercial organisation
The nature of the company’s activities requires a decentralised commercial structure, based on operating
units. Each country unit is responsible for relations with its customers. The business units are also responsible
for establishing synergies between activities carried out on behalf of major customers on an international
basis.
A Novo's main commercial technique is to become an approved supplier to its manufacturer and operator
customers.
This strategy has the effect of establishing major entry barriers in A Novo's five business sectors, as no other
competitor is able to claim such a comprehensive portfolio of manufacturer and operator approvals.
The specific characteristics of A Novo's business require close monitoring of customer relations, rather than
a traditional commercial approach. Reporting plays a key part in establishing long-term customer trust, as
does the passing on of qualitative data, which enables customers to correct product defects.
With its technical resources—and particularly its test facilities—A Novo is involved in the new product
development process, enabling it to establish commercial partnership relations at a very early stage. This
results in a natural flow of business.
1.3.2.6. Key staff
The group
• Daniel Auzan, chairman of the Supervisory Board (since March 9 1999), aged 58, EEIM engineer. Before
taking control of A Novo in 1990, Mr Auzan held various posts at CFAO, including the post of managing
director at Otis Nigeria from 1973 to 1979, and subsidiary manager from 1979 to 1989.
• Daniel Thieriet, member of the Supervisory Board (since March 19 2001), age 57, holds engineering
degrees from ENAC and the Ecole Polytechnique. He joined A Novo in 1998. After holding various posts
with CNES and TRT, he joined Canal+ as assistant managing director in charge of technical and
industrial management (1991-1993), then moving to TRT Lucent Technologies as assistant manager of
the radio link department and head of the customer service department.
• Henri Triebel, chairman of the Executive Board (since June 1 2000), age 48, is a graduate of the Ecole
Polytechnique, and has a civil engineering degree and a Master of Science degree from MIT. Before
joining the A Novo Group, Mr Triebel was chairman and managing director of GEM Technologies. Before
that he spent 7 years as manager at two German companies, Stettner GmbH and Norton
Industriekeramik (St. Gobain Group). Mr Triebel also spent 6 years as a manager with the French
Industrial Development Agency (DATAR) in North America.
40
• Luc Vancayzeele, age 49, member of the Executive Board and general administration director. Before
joining A Novo in July 1999 to set up the legal and tax department, Mr Vancayzeele worked for the tax
authorities in Paris for 9 years, for Elf Atochem as a tax lawyer for 4 years, and then as a lawyer
specialising in company law and particularly tax law for 12 years. Mr Vancayzeele was appointed A
Novo's general administration director in March 2001.
• Paul Bernard, age 42, member of the Executive Board and Financial Director. Mr Bernard is a graduate
of France's Hautes Etudes Commerciales business school, has a masters degree in business law and is
a qualified accountant. Mr Bernard has career experience as an auditor (Arthur Andersen),
administrative and financial director (Metrologie and GrandVision) and as a consultant, specialising in
business administration, assessment and mergers in an international context.
• Vincent Caprarese, age 42, is a qualified engineer. He is manager of Videocom Groupe. Before joining A
Novo in 1990, he was research and development project leader at RPIC (Philips group).
• Alain Caffin, age 46, is a graduate of the Ecole Polytechnique, of the ENST telecoms academy and of the
CPA management school. He has acquired experience in the telecoms sector at Thomson CSF, and in IT
and finance (money markets and M&A) at BNP Paribas. Mr Caffin joined A Novo in January 2001 as
manager of the professional telecoms business unit.
• Thomas Birgerson, age 54, is manager of A Novo's IT business unit, and managing director of A Novo
Nordic AB. Mr Birgerson has a degree in engineering and automation, and in business economics, and
has extensive general management experience in the IT and telecoms sectors (Ericsson, Nokia, Unisys,
Telia etc.).
• Patrick Guerrin, age 52, is manager of A Novo's electronic payment business unit. He is an INSA/IAE
graduate, and has 30 years of experience in equipment retailing and maintenance in Ireland and
Singapore. He has had an international career, spent mainly with the Emerson Electric group.
• Jean-François Chuet, age 54, has experience as an economic development specialist (DATAR and
regional economic development agencies) and in the financial sector (IPOs, capital increases, take-over
bids, etc.) as founder and chairman of the Polytems group. He is adviser to Daniel Auzan for all A Novo's
financial and stock exchange operations.
France and International
• Salvatore Cacciatore, age 46, electronics engineer, held a number of posts including head of the aftersales service division at Thomson Multimedia from 1978 to 1995. He then became head of after-sales
service, logistics and sales administration at Bouygues Telecom from 1995 to 1998. He is currently
managing director of A Novo Italia.
• Juan Framis, age 44, graduate of ESADE, Barcelona, was export manager of Sadelta from 1979 to 1984,
and has been managing director of the company since 1985.
• Peter Anders, age 49, held a number of posts including service department manager with Granada
Technology, and world technical service business manager with Pace Microtechnology from 1996 to
1999. He is currently managing director of General Electronique UK.
41
• Alan Sutton, age 64, is an entrepreneur, a venture capital specialist and an electronics engineer. He
founded Digitec Direct, of which he is currently chairman and managing director, following a
management buyout in 1998. During an international career spanning 20 years, he held posts as chief
engineer, sales manager and managing director of a number of technology companies (Schlumberger,
British Aerospace and AB Electronics). He was also adviser to British government ministers for 10 years,
and a venture capital specialist in the electronics and IT fields for 15 years.
• Geoffrey Griffiths, age 58, has been managing director of Cerplex Ltd since June 1999. He was previously
sales manager at AST Transact, sales manager at Oracle Financial, managing director at Hogan Systems,
vice president in charge of communications at GE Financial and manager of the Arbat Systems (Control
Data) division. His experience covers the financial, commercial and industrial areas of the
telecommunications, information technology and electronic payment industries in the United Kingdom
and Europe.
• Sergio Vergara has a degree in commercial engineering and marketing, and attended law school In 2002,
he was appointed Director of A Novo's South American business. Before founding Comtel SA (acquired
by A Novo in October 2000) in 1992 and acting as the company's CEO, he was sales manager at Itochu & Co.
• Christophe Lienard, age 40, has an engineering degree from France's Arts et Métiers school, along with
a DEA degree in energy, and is a graduate of the Institut de Contrôle de Gestion. He became head of
the Beauvais site in 1999. Mr Lienard was previously site manager at Swedish group Atlas Copco, which
is the world leader in air compressor engineering and manufacturing (1989-1998).
• Jean-Claude Saint-Jours, age 51, is chairman of the Board of Directors at Général Electronique Brive,
having been head of the Brive site since 1996. He was previously production manager at Perrier (19721979), and head of the electronics department at Cirma (Cegelec Group).
• Alain Vachette, age 57, is a graduate of the Institut Supérieur des Sciences Economiques et
Commerciales, and has the Cambridge Certificate of Proficiency in English. He is sales manager of A
Novo's videocommunications division. He joined A Novo in 1992, having previously been export manager
at Lutrana, Manville, Testut and CFAO.
• Thierry Tokatlian, age 40, is a graduate of Ecole Centrale d'Electronique. He is head of development
within A Novo's consumer telecoms division. Mr Tokatlian joined the A Novo group in 1999, having
previously been logistics manager at Ericsson, and has had commercial and technical managerial posts
at SFR, Kenwood, Marantz and Thomson CSF.
42
1.4 - Risks
1.4.1. Interest rate and foreign exchange risks
Due to its increased presence in the UK, A Novo is more exposed to foreign exchange risks than last year.
In 1999/00, the company contracted a FF350m floating-rate loan, which was fully hedged at a fixed rate. A
Novo's other loans are fixed-rate, and only the lease finance on the Beauvais plant (FF12m outstanding) is
still on a floating rate. As a result, an increase in interest rates would have only a limited impact on A Novo's
earnings.
1.4.2. Commercial risks
A Novo's commercial risks consist of supplier, customer and competitor risks.
A Novo's supplier risk is very low, since the group's only strategic purchases consist of spare parts, which are
procured directly from the companies that make the equipment serviced by A Novo, with corresponding
manufacturer approval.
The group's largest supplier, apart from temporary staff suppliers and equipment manufacturers, represents
less than 2% of all group purchases.
All customers are internationally recognised companies.
In 2000/01, no customer accounted for 10% of A Novo's sales.
Since A Novo's business consists of maintaining an installed equipment base, and does not depend on
manufacturers' equipment sales during the year, the group has little cyclical exposure.
1.4.3. Industrial risks
Industrial risks are limited and clearly defined. The risk of fire is controlled at all sites by fire and intrusion
detection systems, combined with site surveillance outside working hours (weekends and at night).
Pollution risks are very low in the business areas in which A Novo operates. Only the paint shop at the
Beauvais site uses products that are potentially harmful to the environment. This site has a vapour trap which
complies with volatile organic compound regulations and avoids any related fire risk. Effluent is processed by
a specialist contractor, which destroys it in accordance with regulations. A Novo's business activities are not
subject to any specific regulation.
In general terms, all industrial risks, including business interruption risk, are insured in accordance with
accepted professional practice.
A Novo's management of insurance is currently being centralised at the head office level, in order to optimise
coverage and cost for all insurance risks. This strategy has already been implemented in France.
43
1.4.4. Technological risks
A Novo's technological risks are limited. Indeed, technological progress in products gives the group a
competitive advantage, since it has extensive expertise in leading-edge technologies, such as digital
technology.
The risk of disposable products appearing in the market place, doing away with maintenance requirements,
is very slim. This is due to the current cost of equipment on the one hand, and the increasing sophistication
of equipment on the other. In any case, a disposable product would only be feasible at the bottom end of the
range.
The risk of a sharp drop in maintenance requirements as a result of increased product reliability will not
materialise for several years to come, given the rapid changes and increasing sophistication of products for
which A Novo provides maintenance services. In addition, European and international regulations now oblige
manufacturers to offer 2-year warranties, and some manufacturers are even offering 1- or 2-year warranty
extensions as customer incentives. This trend will expand A Novo's market.
The company owns no patents, and requires no administrative operating authorisation for its business, with
the exception of the authorisations obtained by its Démovale and Triade subsidiaries in connection with their
recycling activities.
1.4.5. Manufacturer approval risks
A Novo requires manufacturer approval to service the products for which it provides maintenance and other
services.
As a result, if manufacturers withdrew some or all of their approvals, this could have an impact on A Novo's
sales and margins.
However, the company believes that it is protected from this risk due to the high number of approvals it has
already obtained, combined with the quality and equipment level of its industrial sites, and its proven ability
to keep up with technological change.
1.4.6. Dependence on key staff
The company is dependent on its senior management staff. The unavailability or departure of these staff could
have an adverse effect on A Novo's results. However, the strong management organisation structure directly
helps to limit this risk.
The introduction of a stock option plan for management staff, and the fact that dozens of group managers
are already shareholders in the company or its subsidiaries, bolster the stability of A Novo's workforce.
1.4.7. 35-hour workweek
A Novo completed its changeover to the 35-hour workweek in France during the 1999/00 financial year.
Given the current organisation of working practices in France, and the actual working hours resulting from
collective bargaining agreements, the framework agreement has not led to any marked increase in staff
numbers based on normal activity levels.
44
1.4.8. Information system / Euro changeover
Information system
The rapid growth in business levels and recent changes in group structure have led to a rapid upgrading of
A Novo's information system as regards accounting and purchasing/inventory management. By October 1
2001, A Novo SA, GEB Brive and A Novo Italy had switched to the SAP/R3 system.
A Novo is moving towards dedicated professional application software, which can be easily implemented
outside France. This strategy is intended to optimise the service provided to group customers, identify
precisely where productivity gains can be made, and integrate quickly any new site into the information
system.
Euro changeover
The group switched its accounting systems to the euro in December 2001.
The euro changeover took place without incident.
1.4.9. Legal risks
Given the kind of markets in which A Novo operates, and the nature of the services it provides, its commercial
contracts—particularly those with manufacturers and operators—contain strict confidentiality terms.
All these contracts contain strict confidentiality clauses, which prevent A Novo from showing the contractual
documents, or even extracts or summaries of these documents, to third parties.
1.4.10. Insurance policies
Description of the principal insurance policies taken out by A NOVO SA
1. Civil liability (CL) policy
CL in the course of operations
or works:
Any personal injury and material and economic losses: FRF 50,000,000 per occurrence
including Consequential material and economic losses: FRF 15,000,000 per occurrence
CL after delivery:
Any personal injury and consequential material and economic losses: FRF 10,000,000 per year
including Non-consequential economic losses: FRF 3,000,000 per year
Criminal defence and appeals: FRF 100,000 per occurrence; FRF 200,000 per year
2. Multi-risk master policy
Risks: Fire, criminal acts, acts of terrorism, natural disasters, water damage, storm, etc...
Property covered
- Building
FRF 15,305,583
- Machinery, tools:
FRF 44,626,480
- Merchandise (including external stocks):
FRF 295,000,000
45
Consequential costs and losses on basic cover: FRF 20,000,000
Damage to computer and office equipment, breakage of machines, principal risk: FRF 1,603,088
Theft principal risk (machinery and merchandise): FRF 2,108,504
Third party liability: FRF 5,000,000
Operating losses: FRF 306,765,404
Contractual limit of cover per occurrence: FRF 480,000,000
3. Transported merchandise policy (solely for the Beauvais site)
Means of transport: Transporter: FRF 16,000,000
4. Fleet car policy
Civil liability: Unlimited except in the case of material damage caused by fire, explosion
or pollution (FRF 10,000,000)
Legal protection: Criminal defence and civil claims: Fees limited to FRF 50,000
Damage suffered by the insured vehicle and its fitted accessories: (all accidental damage, theft, fire,
natural disasters, criminal acts, breakdown costs, etc...): market or
replacement value of the vehicle, or the cost of repairs, as the case
may be.
Damage suffered by the driver: Death: FRF 100,000 – Invalidity: FRF 200,000
5. Company car policy (solely for the Beauvais site)
Damage caused or suffered by a personal vehicle used for business purposes.
Civil liability, Damage suffered by the insured vehicle and Legal protection: see § 4.
6. Legal protection and tax disputes policy
Claim threshold: FRF 10,265
Excess: FRF 7,268
7. Company representatives’ civil liability policy
Cover: FRF 20,000,000 per year
46
1.5 - Sales in the first quarter of 2001/02
Sales by business area
In millions of euros
First quarter
2000/01**
(Oct-Dec 2001)
First quarter
2001/02*
(Oct-Dec 2002)
20.1
27.5
+ 36.6 %
33.1
4.4
37.5
59.6
3.9
63.5
+ 79.7 %
(9.3 %)
+ 69.4 %
31.3
6.2
52.8
10.7
+ 68.6 %
+ 73.6 %
ELECTRONIC PAYMENT SYSTEMS
11.2
20.0
+ 79.4 %
TECHNOLOGIES DE L’INFORMATION
Non-production
Production
SUB-TOTAL
8.9
6.0
14.9
9.5
4.9
14.4
+6.7 %
(18.2 %)
(3.7 %)
Total
83.1
125.6
+ 49.8 %
50.9
78.5
+ 54.2 %
VIDEOCOMMUNICATION SERVICES
Telecommunications
Telecom services
Distribution
Sub-total
of which:
consumer
professional
of which outside France
* :
** :
% change
includes companies acquired or created since 1 October 2001, i.e. Digicom (01/10/01), A Novo Paraguay
(01/10/01), A Novo Argentina (01/10/01) and A Novo Venezuela (01/10/01).
includes companies acquired or created since 1 October 2000, i.e. Comtel (01/10/00), AT-COM (01/10/00 – 50%
of sales), A Novo Polska (01/12/00), A Novo Suisse (01/11/00) and A Novo Logitec (01/11/00).
A Novo's consolidated sales for the first quarter of the 2001/02 financial year (three months ended
31 December 2001) totalled €125.6m, an increase of 49.8% with respect to the same period of 2000/01.
Growth in the core services business (excluding distribution and production activities) was even stronger at
58.9%.
Organic growth in the services business was 24.2%.
Sales generated outside France accounted for 62.5% of the total during the quarter.
In the videocommunications services business, sales rose by 36.6% to €27.5m. Organic growth remained firm
at 23.3%, despite the expected limited contribution from the recently-signed contract with Pace in the UK.
US subsidiary A Novo Broadband generated sales of €5.9m during the quarter.
In the telecoms services business, sales totalled €59.6m in the first quarter, an increase of 79.7%. This growth
is mainly due to the integration of the telecoms businesses of Prima Comunicazione in Italy and Radiophone
in the UK. A Novo moved into Italy and the UK in 2000/01, and these two countries now show the highest
mobile phone penetration rates in Europe. 74% of A Novo's telecoms sales now come from outside France.
In the electronic payment systems business, the final three months before the full introduction of the euro was
a particularly busy period. Continuing the positive trend set in early 2001, business volumes rose by 79.4% at
constant scope compared with the first quarter of 2000/01.
Sales in the IT business (excluding production) rose by 6.7% during the quarter.
47
1.6 - The 2001-2004 business plan presented in early 2001
The 1999/00 reference document, registered by the COB under number R-01-052, featured a business plan
on pages 58-61, which is summarised below (forecast columns). Figures taken from the final 1999/00 and
2000/01 accounts are also included in the table.
Actual
99/00
Forecast
00/01
Actual
00/01
Forecast
01/02
Forecast
02/03
Forecast
03/04
188 045
43 861
14 662
(564)
14 098
12 637
(2 431)
10 206
377 428
89 260
33 501
(6 140)
27 360
18 914
(4 602)
14 312
370 103
82 479
30 338 (*)
(5 412)
24 926 (*)
17 109
(7 113)
9 996
574 883
145 578
73 557
(4 995)
68 562
46 086
(6 246)
39 840
726 151
195 908
98 310
(4 544)
93 766
63 319
(6 474)
56 845
903 749
257 699
130 506
(4 357)
126 148
86 594
(6 714)
79 880
143 633
145 804
120 105
7 016
11 451
60 699
90 166
192 698
175 015
132 984
13 844
11 606
94 423
114 857
264 458
200 478
119 281
7 863
7 308
130 735
199 749
214 912
256 305
167 888
19 348
16 276
114 149
153 555
210 527
344 605
215 989
21 424
16 731
112 501
188 487
205 307
452 923
278 848
38 445
17 123
103 737
220 078
16 722
55 384
81 242
12 846
120 295
20 207
27 908
33 724
16 599
94 521
(2 659)
270
141 755
(32 602)
65 157
19 726
78 816
(1 648)
104 220
(8 764)
11 664
54 822
18 386
4 865
23 799
48 504
3 495
18 651
73 310
P&L ACCOUNT
Sales
Gross profit
Operating profit
Net financial items
Underlying pre-tax profit
Net profit before goodwill amortisation
Amortissement des écarts d’acquisition
Goodwill amortisation
Net profit after goodwill amortisation (**)
SIMPLIFIED BALANCE SHEET
Fixed assets
Current assets
Shareholders' equity after minority interests
Minority interests
Provisions for contingencies and liabilities
Medium- and long-term debts
Current liabilities
CASH FLOW STATEMENT
Cash flow
Change in debt
Increase in shareholders' equity minus dividends
Change in WCR
Operating and financial investments
Change in cash position
7 659
72 049
(18 076)
(*) restated for employee profit-sharing, which is included within income tax, in line with the presentation of the
business plan;
(**) profit including minority interests
We make the following comments on A Novo's actual performance in 2000/01 by comparison with the
projections made in the business plan. The business plan was drawn up a year ago, and was based on the
company's scope at the start of the 2000/01 financial year, which was much smaller than it is now.
Sales doubled from €188m in 1999/00 to €370m in 2000/01, as a result of both organic growth (€41m) and,
more importantly, acquisitions (€141m or 75% of 1999/00 sales).
As a result, the base from which 2000/01 forecasts were calculated was only half the actual level of sales
achieved during the year.
If it had traded for the full year with its current scope, A Novo would have generated sales of €436.5m.
Acquisitions added around €100m to sales in 2000/01, after a similar amount in 1999/00. This has
completely transformed the company's structure, product mix and profit mix.
48
400
In millions of euros
Acquisitions
350
Organic growth
250
Scope of consolidation at 1 Oct. of financial year
200
150
100
50
0
1999/2000
2000/2001
Taking into account the extent of changes in A Novo's structure, along with the resulting changes in the profit
mix, the comparison between these 2000/01 forecasts and actual results is not meaningful.
This discrepancy with the business plan is likely to become more pronounced in the next few years.
Due to changes in group structure and further alterations in the business mix in the next few years, A Novo
believes that the business plan presented in the 1999/00 reference document is now null and void. The
company does not plan to issue a new business plan in future, for the same reasons.
49
50
2
BUSINESS REPORT
BY THE BOARD OF
DIRECTORS
2.1 - Business Report by the Board of Directors
A Novo’s consolidated sales for the year ended 30 September 2001 amounted to €370.1m, up 96.8% from
the previous year.
Growth was even stronger in the Group’s core services business (excluding distribution and production),
which recorded a 105.3% increase in sales.
Services activities posted organic growth of 29%, with sales rising to €207.8m at 30 September 2001,
compared with €161.1m at 30 September 2000. This performance was mainly driven by robust growth in A
Novo’s original business lines:
• Videocommunication: up 28.4% (or 31.4% excluding A Novo Broadband)
• Telecoms: up 73.7%
professional telecom
services
7.4%
Videocoms services
21.2%
Consumer telecom
services
37.9%
IT
8.9%
Electronic payment
services
14%
Distribution
4.5%
Production
6.1%
International sales now account for 63.2% of overall Group sales, compared to 46.8% at end-September 2000.
Other
2.0%
UK
8.0%
North America
4.5%
France
36.8%
South America
2.1%
Italy
23.7%
Spain/Portugal
10.2%
52
Scandinavia
12.7%
In videocom services, the Group recorded a 73.8% increase in sales to €78.7m, despite a €12.8m shortfall
in the budget of the US subsidiary, A Novo Broadband, which has now been restructured.
Sales in the telecom services division amounted to €167.5m.
The volume of sales has more than tripled (up 223.8%), bolstered by strong organic growth of 62% in
France and 86.3% internationally. International business now accounts for 74% of sales in the telecom
division.
Overall sales in the electronic payment systems division rose by 36.9%. As expected, the approaching euro
switchover continued to fuel robust organic growth, which amounted to +46.5% in the fiscal fourth
quarter. This trend is set to continue through the first half of 2002, with growth subsequently driven by a
campaign to promote the adoption of electronic purses and the gradual implementation of EMVcompliant electronic payment software.
Full-year sales in the IT division remained virtually unchanged on a like-for-like consolidation basis.
SALES (€K)
Sales.*
2000/01
Sales**
1999/00
% change
VIDEOCOM SERVICES
78 657
45 252
+ 73,8 %
167 496
16 702
184 198
51 724
22 701
74 425
+ 223,8 %
(26,4) %
+ 147,5 %
156 886
27 312
59 539
14 886
+ 163,5 %
+ 83,4%
ELECTRONIC PAYMENT SYSTEMS
51 707
37 762
+ 36,9 %
INFORMATION TECHNOLOGY
Non-production
Production
SUB-TOTAL
32 848
22 693
55 541
25 122
4 250
29 372
NS
OTHER
0
1 232
NS
TOTAL
370 103
188 043
+ 96,8 %
234 087
88 041
+ 165,9 %
TELECOMMUNICATIONS
Telecom services
Distribution
SUB-TOTAL
Of which:
Consumer
Professional
Of which international
(*) including companies acquired from 1 October 2000: Comtel (1 Oct 2000), AT-COM (1 Oct 2001 - 50% of sales),
A Novo Polska (1 Dec 2000), A Novo Suisse (1 Nov 2000), A Novo Logitec (1 Nov 2000), Globe America Del
Sur (1 Mar 2001), A Novo Caraibes (1 Mar 2001), Prima (1 Apr 2001), A Novo Peru (1 Mar 2001), Radiophone
(1 Jul 2001), A Novo Service Solutions (1 Jul 2001), A Novo Maroc (1 Jul 2001).
(**) including Innovatron Services (from 1 Jan 2000), Cartes SA (from 1 Dec 1999), Fibrosud (from 1 Jan 2000),
Triade (change in consolidation method from 1 Oct 1999: 50% of sales now proportionally consolidated),
A Novo Nordic (from 1 Dec 1999), Cedro (from 1 Feb 2000), Digitec (from 1 Jul 2000), Globe Group (from
1 Sep 2000), A Novo Broadband (from 1 Aug 2000), A Novo Chili (from 1 May 2000), A Novo E&C (from
1 Jun 2000).
53
The 2000/01 financial year saw various changes to the Group’s scope of consolidation, with the addition of
the following companies:
• From 1 October 2000: Comtel, a company established in Chile, which specialises exclusively in mobile
phones, and AT-COM (50%-owned), a spin-off of British Telecom’s professional telecom business.
• From 1 November 2000: A Novo Suisse, which was originally the mobile phone repair department of
Swisscom, and A Novo Logitec, Canal+’s former logistics platform in Belgium.
• From 1 December 2000: A Novo Polska, a company set up to cater for Canal+ customers in Poland.
• From 1 March 2001: Globe America Del Sur, a company set up to support TIM’s expansion in Chile, and
A Novo Caraïbes, a company created from scratch in Guadeloupe to cater for Canal+, France Telecom
Caraïbes and Bouygues Telecom.
• From 1 April 2001: Prima Comunicazione, an Italian company specialising exclusively in mobile phone
repairs (mainly Nokia and Ericsson brands).
• From 1 July 2001: the UK company Radiophone and Irish company RCSS, which have changed their
name to A Novo Service Solutions and both specialise in mobile phone services.
Operating income amounted to €30.31m (8.2% of sales), compared with €14.66m (7.8% of sales) the previous
year.
France and Italy made the strongest contribution, followed by Scandinavia and Spain/Portugal.
In France, the merger between Cartes & Services and Innovatron has started to pay off. Meanwhile, the
Group’s original companies have recorded a slight upturn in margins as a result of productivity gains, notably
in the professional telecom business.
In Italy, the partial six-month contribution made by Prima Comunicazione still managed to enhance overall
earnings in this region, where we can expect further progress due to the full-year impact of this acquisition
in 2001/02.
This improvement in the Group’s operating income was achieved despite the fact that some regions were
undergoing restructuring or were in the start-up phase.
For example, earnings from the Scandinavian business fell short of expectations as the small subsidiaries in
Norway, Denmark and Finland struggled to break even.
Earnings from Spain & Portugal were also weak due to the impact of the phone distribution business.
However, the US performance was particularly disappointing due to problems in implementing the repair
lines for Scientific Atlanta digital decoders (faulty test software), which generated substantial losses for A
Novo.
Below the operating income line, the Group’s financial expenses rose sharply during the year to €5.41m,
compared with €0.56m the previous year. Goodwill amortisation also showed a considerable increase due to
the Group’s recent acquisition policy.
Despite these factors, A Novo’s consolidated net income rose from €9.75m to €10.1m.
54
In accordance with article L. 233-13 of the French Commercial Code, and taking into account the information
received pursuant to articles L. 233-7 and L. 233-12 of said Code, we reveal below the identities of
shareholders holding more than one-twentieth, one-tenth, one-fifth, one-third, one-half or two-thirds of A
Novo’s share capital or voting rights as at 30 September 2001:
Daniel Auzan holds over 20% of the share capital.
Pergo Holdings Ltd owns over 5% of the share capital.
Jean-Pascal Battesti holds over 5% of the voting rights.
We also submit, for approval by the General Meeting, the resolutions relating to agreements between Group
companies, as governed by articles L. 225-38 and L. 225-86 of the French Commercial Code.
Outlook for the 2001/02 financial year:
Due to the significant changes to the Group’s scope of consolidation during the 2000/01 financial year,
together with the resulting shift in the margin mix, A Novo believes that the Business Plan presented on pages
58-61 of the previous 1999/2000 Reference Document, and filed with the Commission des Opérations de
Bourse under registration no. R-01-052, no longer applies.
The current financial year is proving to be a transitional period. The Group needs to digest the acquisitions it
made during the two previous financial years, while its customers, both manufacturers and operators alike,
are facing tough market conditions.
A Novo expects to generate €575m in sales during the current financial year.
Based on its current scope of consolidation, the Group would have generated €436.5m in sales during the
previous financial year. On this basis, sales should rise by €84m this year as a result of organic growth. After
factoring in the first-time consolidation of Comlinks (over nine months), we obtain the above target of €575m.
This new target does not take into account the closure or sale of any sites unconnected with A Novo’s core
business, which could occur during the year.
Overall operating income and margins are set to improve as a result of the full-year consolidation of
businesses acquired in the UK and Italy in 2000/01, together with efforts made in both Scandinavia and North
America.
55
2.2 - Consolidated financial statements
General Statutory Auditors’ Report
Financial statements for year ended 30 September 2001
Dear Shareholders,
In accordance with the terms of our appointment by your General Meeting, we have audited the consolidated
financial statements of A Novo SA, drawn up in euros, for the financial year ended 30 September 2001, as
attached to this report.
The consolidated financial statements were drawn up by the Board of Directors on 17 December 2001. Our
responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with French auditing standards. These standards require the auditor to
perform such tests and procedures as give reasonable assurance that the financial statements are free from
material misstatement. An audit includes examination, on a test basis, of evidence relevant to the information
contained in the financial statements. It also includes an assessment of the accounting principles used and any
significant estimates made in the preparation of the financial statements, as well as an evaluation of their overall
presentation. We believe that our audit provides a reasonable basis for the opinion expressed below
In our opinion, the financial statements have been properly prepared and fairly represent the assets, financial
position and results of the consolidated Group.
We also verified the details provided in the Group’s Business Report.
We have no comments to make on the fair presentation of this information or on its consistency with the
consolidated financial statements.
Signed in Paris on 7 March 2002
The Statutory Auditors
Jean François SERVAL
CONSTANTIN ASSOCIES
56
Patrick MAUPARD
CONSOLIDATED FINANCIAL STATEMENTS
€K (at 30 September)
2001
2000
1999
370 103
188 045
67 593
738
105
107
895
1 082
199
(781)
316
239
11 997
4 101
503
Transferred charges
6 175
1 432
Other income
6 205
500
558
Cost of sales
(137 780)
(63 672)
(26 726)
(88 706)
(43 592)
(11 609)
Sales
Production for inventory
Capitalised production
Operating subsidy
Reversal of provisions
Other purchases and external charges
Income taxes and other taxes
(3 875)
(2 182)
(796)
(118 625)
(1 305)
(65 342)
(1 149)
(19 174)
(467)
Fixed assets depreciation expenses
Provisions for current assets and operating liabilities
Other charges
(10 449)
(4 768)
(2 194)
(4 153)
(2 968)
( 831)
(1 552)
(616)
(37)
Operating income
29 033
13 514
7 918
Financial income
Reversal of provisions for financial expenses
Financial expenses
Provisions for financial expenses
2 705
114
(7 664)
(567)
1 004
117
(1 685)
271
(397)
Net financial income/(expenses)
(5 412)
(564)
(126)
Consolidated income before tax and exceptional items
23 621
12 950
7 792
Exceptional income
Reversal of provisions for exceptional charges
Exceptional charges
Provisions for exceptional charges
1 529
4 163
(6 023)
(3 468)
432
1 210
(1 315)
(109)
213
(951)
(159)
(3 799)
218
(897)
Income taxes and employee profit-sharing
(4 097)
(530)
(1 496)
Net income from consolidated companies
15 725
12 638
5 399
Income from companies consolidated by the equity method
1 384
(7 113)
(2 431)
181
(208)
Consolidated net income
9 996
10 206
5 372
(114)
458
363
10 110
9 748
5 009
10 110
9 748
Personnel expenses
(including employee profit sharing)
Net exceptional income/(charges)
Minority interests
Net income (Group share)
Résultat net (part du Groupe)
57
CONSOLIDATED BALANCE SHEET - ASSETS
€K (At 30 September)
2001
2000
Uncalled share capital
Goodwill
Intangible fixed assets
Tangible fixed assets
Long-term investments
Equity-accounted securities
51
153 375
46 254
54 250
4 971
5 557
76 941
30 722
31 579
4 391
2 061
668
9 536
569
264 458
143 633
12 834
37 137
2 609
113 226
3 397
15 428
7 691
17 266
21 798
291
65 221
3 043
10 807
30 932
12 715
3 699
16
12 630
945
2 696
18 980
196 754
144 807
38 966
3 724
996
170
464 936
289 436
51 970
2001
2000
1999
Share capital
Issue premiums
Reserves
Translation adjustment
Current-year consolidated income
67 283
35 796
7 838
(1 746)
10 110
67 283
35 796
6 274
1 004
9 748
2 185
18 015
2 930
119 281
120 105
28 139
Non-Group interest
Non-Group income
7 977
(114)
6 558
458
526
363
Minority interests
7 863
7 016
889
Provisions for contingencies
Provisions for losses
Provisions for deferred income taxes
3 977
3 261
70
9 155
1 334
961
15
726
286
7 308
11 451
1 027
9 031
121 704
9 658
51 041
4 005
439
130 735
60 699
4 444
2 566
114 010
13 739
6 836
62 598
1 201
58 765
10 746
4 3015
15 153
101
14 526
56
5
2 783
464 936
289 436
51 970
20 941
7 027
2 567
FIXED ASSETS
Inventories
Down payments on orders
Trade receivables
Deferred income taxes
Non-trade receivables
Marketable securities
Cash and equivalents
CURRENT ASSETS
Deferred expenses
Total assets
1999
CONSOLIDATED BALANCE SHEET – LIABILITIES
Group shareholders’ equity
Provisions for contingencies and losses
Long-term bank borrowings
Other long-term debt
Long-term debt
Down payments received
Trade payables
Deferred income
Other liabilities
Short-term debt (*)
Total liabilities
(*) Of which bank overdrafts
58
5 009
CASH FLOW STATEMENT
2001
2000
Cash flow
16 599
16 722
7 543
Change in inventories and WIP
Change in receivables
Change in trade payables
Change in working capital requirements
(12 858)
(16 322)
28 910
(270)
(4 317)
(21 747)
13 218
(12 846)
(143)
(6 584)
3 604
(3 123)
Operating cash flow
16 329
3 877
4 420
Net change in consolidated investments
Net change in intangible fixed assets
Net change in tangible fixed assets
Net change in long-term investments
Change in deferred expenses
Income from sale of fixed assets
(96 766)
(17 098)
(22 005)
(2 375)
(3 511)
(99 412)
(1 817)
(15 401)
(2 359)
(980)
(327)
(2 466)
(566)
(6 067)
(117)
(204)
105
(141 755)
(120 295)
(9 315)
Capital increase
Change in bank and other debts
Dividends
94 521
(2 659)
82 880
55 384
(1 638)
16 249
2 280
(1 401)
Cash flow allocated to financing
91 862
136 626
17 128
Cash flow allocated to investments
Variation in exchange rates & changes to accounting standards
Net cash flow
Of which newly acquired companies
Closing cash position at year-end
Opening cash position at beginning of year
Net cash flow
962
1999
445
(32 602)
20 207
12 678
(11 527)
4 018
36 620
(32 602)
3 500
36 620
16 413
20 207
121
16 413
3 735
12 678
The €96,766K cash outflow relating to consolidated investments breaks down as follows:
Acquisition goodwill
(65,137)
Fixed assets
Working capital requirement
Shareholders' equity acquired
Shareholders' equity not acquired
Provisions for contingencies and liabilities
Gross debt
Acquisition of minority interests
Shares in equity-accounted companies
Other
(20,992)
(18,208)
1,624
2,798
1,033
10,972
(6,043)
(2,709)
(104)
TOTAL
(96,766)
59
60
4 763
Consolidated reserves
Minority interests
127 121
0
Capital
increase
(2 400)
0
(2 400)
(2 400)
Dividends
paid
(96)
(96)
(96)
0
Dividends
received
0
0
(458)
458
0
(9 748)
1 864
5 460
2 183
241
Earnings
appropriation
Sep 00
9 996
(114)
(114)
10 110
10 110
Income for
year ended
Sep 01
(3 595)
(103)
(103)
(3 492)
(3 492)
Translation
adjustment
(5 042)
0
(5 042)
(5 042)
Other
(1) (2)
1 160
1 160
1 160
127 144
7 863
(114)
7 977
119 281
10 110
(2 488)
(536)
5 181
3 464
471
35 796
67 283
Changes in %
Shareholders’
stakes held or
equity at
consolidation scope 30 Sep 01
(1) : ‘Other’ includes €64,643K solely of treasury shares held to finance part of A Novo’s acquisitions during the 2000/01 financial year.
(2) : “Other” includes €399K in adjustments to finance leases in connection with the addition of a subsidiary to the scope of consolidation during the previous financial year
Total shareholders’ equity
7 016
458
Minority income
Shareholders’ equity –
6 558
Minority interests
120 105
9 748
Group income
Shareholders’ equity – Group share
1 004
Group translation adjustment
0
1 281
Other reserves
Retained earnings
230
35 796
Issue premiums
Legal reserves
67 283
Share capital
Shareholders’
equity at
30 Sep 00
Changes in shareholders’ equity (€K)
61
(47)
154
Earnings
appropriation
Sep 99
Minority interests
29 026
889
363
Minority income
Shareholders’ equity –
526
28 137
5 008
Minority interests
Shareholders’ equity – Group share
Group income
Group translation adjustment
Retained earnings
82 880
(1 638)
(1 638)
(47)
(47)
0
0
(363)
363
0
(5 008)
1 638
1 935
82 880
Dividends
received
Consolidated reserves
(1 638)
Dividends
paid
1 281
2 854
17 782
65 098
Capital
increase
Other reserves
76
18 014
Issue premiums
Legal reserves
2 185
Share capital
Shareholders’
equity at
0 Sep 99
Changes in shareholders’ equity (€K) (continued)
10 206
458
458
9 748
9 748
Income for
year ended
Sep 00
1 004
1 004
1 004
Translation
adjustment
Other
5 690
5 716
5 716
(26)
(26)
127 121
7 016
458
6 558
120 105
9 748
1 004
4 763
1 281
230
35 796
67 283
Changes in %
Shareholders’
stakes held or
equity at
consolidation scope 30 Sep 00
CONSOLIDATED FINANCIAL STATEMENTS
Notes
Note 1
ACCOUNTING PRINCIPLES AND VALUATION METHODS
Note 2
INTANGIBLE FIXED ASSETS
Note 3
TANGIBLE FIXED ASSETS
Note 4
LONG-TERM INVESTMENTS
Note 5
INVENTORIES AND WORK IN PROGRESS
Note 6
TRADE RECEIVABLES AND OTHER RECEIVABLES
Note 7
CASH & EQUIVALENTS
Note 8
DEFERRED EXPENSES
Note 9
PROVISIONS FOR CONTINGENCIES AND LOSSES
Note 10
BORROWINGS AND LONG-TERM AND SHORT-TERM DEBT
Note 11
OPERATING LIABILITIES
Note 12
SALES
Note 13
DIRECTORS’ FEES
Note 14
FINANCIAL INCOME/EXPENSES
Note 15
EXCEPTIONAL INCOME/CHARGES
Note 16
INCOME TAXES AND EMPLOYEE PROFIT-SHARING
Note 17
EARNINGS PER SHARE
Note 18
ENGAGEMENTS FERMES AU 30 SEPTEMBRE 2001 PRIS PAR
A NOVO SUR ACQUISITIONS DE TITRES
Note 19
HEADCOUNT (PERMANENT AND TEMPORARY STAFF)
All figures are in thousands of euros (€K)
62
NOTE 1 - Accounting principles and valuation methods
The individual financial statements of A Novo Group companies are prepared in accordance with accounting
standards applicable in each country.
These statements are restated for harmonisation with the accounting principles used to prepare the
consolidated financial statements, in accordance with Act No. 85-11 of 3 January 1985, and the
corresponding decree of 17 February 1986.
1.1 - Consolidation scope and accounting methods
Companies included for consolidation purposes are those in which A Novo SA controls 20% of voting rights,
whether directly or indirectly, excluding companies of a negligible size, or those whose inclusion within the
Group is only temporary.
63
64
Consolidation
A NOVO
A NOVO France
SCI ROBERT
SCI Les Cailloux
CARTE & SERVICES
GENERAL ELECTRONIQUE BRIVE
EASY REPAIR
FIBROSUD
INNOVATRON SERVICES
TRIADE
CITEEL
A NOVO CARAIBES
GLOBE SPA
GLOBE SUD
MEDIACALL
GLOBE HELLAS COMMUNICATION
A NOVO ITALIA (formerly GE ITALIA)
PRIMA
GAMMA
GENERAL ELECTRONIQUE UK
DIGITEC
AT-COM (formerly CERPLEX)
RADIOPHONE
A NOVO SERVICES SOLUTIONS
A NOVO UK
Company Countr
France
France
France
France
France
France
France
France
France
France
France
France
Italy
Italy
Italy
Italy
Italy
Italy
Italy
UK
UK
UK
UK
UK
UK
%
100 %
93 %
99.83 %
100 %
99,9 %
49,92 %
53 %
53 %
53 %
53 %
99.81 %
80 %
50.01%
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Parent company
30 Sep 00
Change in Consolidation
method
control
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Proportional consolidation
%
Consolidation scope at 30 September 2001
80 %
50.01%
52,90 %
52,90 %
52,90 %
52,90 %
99.81 %
100 %
93 %
99.83 %
100 %
99,9 %
49,92 %
%
%
holding
method
Parent company
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Increased stake
Full consolidation
Full consolidation
Full consolidation
Merger with CARTE & SERVICES
Company acquired
Full consolidation
Company established
Full consolidation
Stake increased
Full consolidation
Stake increased
Full consolidation
Stake increased
Full consolidation
Sold
Full consolidation
Company acquired
Full consolidation
Company acquired
Full consolidation
Increased stake
Full consolidation
Full consolidation
Company acquired
Company acquired
Full consolidation
Company acquired
Full consolidation
Company established
Full consolidation
Company established
Company acquired
Company acquired
consolidation scope
FY 00/01
100 %
100 %
100 %
100 %
100 %
99.83 %
100 %
49,92 %
100 %
100 %
99,81 %
99,81 %
99,81 %
99.81 %
59,89 %
59,89 %
100 %
50.01%
50%
100 %
100 %
100 %
49,92 %
100 %
100 %
100 %
100 %
100 %
99.81 %
100 %
60,01 %
100 %
50.01%
50%
100 %
100 %
100 %
holding
100 %
100 %
100 %
100 %
100 %
99.83 %
100 %
control
30 Sep 01
65
Consolidation
%
Change in
method
US
US
US
Chile
Chile
Chile
Chile
Peru
Switzerland
Switzerland
Poland
Belgium
Belgium
Morocco
52 %
Full consolidation
52 %
34.57 %
34.57 %
34.57 %
54 %
54 %
64,02 %
64,02 %
64,02 %
100 %
100 %
100 %
100 %
99.99 %
74 %
74 %
37 %
74 %
100 %
100 %
100 %
100 %
99.99 %
74 %
74%
50 %
74%
30 Sep 00
Consolidation
%
control
holding
Full consolidation
Full consolidation
Full consolidation
Sweden
Full consolidation
Finland
Full consolidation
Norway
Full consolidation
Denmark
Full consolidation
Portugal
Full consolidation
Spain
Full consolidation
Spain
Full consolidation
Spain
Spain
Full consolidation
Spain
Spain
US
Full consolidation
%
Company acquired
Création
Création
Company acquired
Création
Création
Company acquired
Company acquired
Company established
Company established
Stake increased
Stake increased
Stake increased
Stake increased
Company acquired
Company acquired
FY 00/01
%
consolidation scope
method
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Equity accounted
Equity accounted
Full consolidation
64,02 %
64,02 %
64,02 %
100 %
52 %
90 %
99 %
99,51 %
100 %
100 %
100 %
100 %
60 %
69,95 %
100 %
100 %
100 %
100 %
99.99 %
100 %
100 %
50 %
100 %
33,35 %
35 %
54 %
control
30 Sep 01
Globe Hellas Communication had no impact on this year’s net income (for information, its contribution to consolidated sales for the year to 30 September 2000 was €59K)
A NOVO NORDIC (formerly TELI SERVICE)
A NOVO FINLAND
A NOVO NORWAY
A NOVO DENMARK
A NOVO Portugal (formerly AEC)
SADELTA
CEDRO
CORETEL
TECNOSOPORTE
A NOVO COMLINK
EUROTERMINAL TELECOM
A NOVO AMERICAS LLC
A NOVO BROADBAND
(formerly CABLE °LINK)
VALSYSTEM
CABLEWISE
A NOVO AMERICA DEL SUR
A NOVO CHILE
COMTEL
GLOBE AMERICA DEL SUR
A NOVO PERU
A NOVO SUISSE
A NOVO INTERNATIONAL
A NOVO POLSKA
A NOVO SERVITEC
A NOVO LOGITEC
A NOVO MAROC
Compan Country
Consolidation scope at 30 September 2001 (continued)
34.57 %
34.57 %
34.57 %
100 %
52 %
90 %
99 %
99,51 %
100 %
100 %
100 %
100 %
60 %
69,95 %
100 %
100 %
100 %
100 %
99.99 %
100 %
100 %
50 %
100 %
33,35 %
35 %
54 %
holdin
Unconsolidated companies
Company
GENERAL ELECTRONIQUE Asia
CTAV
CESI
ENVIE-DEM
DIGICOM
GLOBE COMMUNICATION UK
EUROTEL
GLOBE HELLAS COMMUNICATION
Location
Hong Kong
France
France
France
UK
Italy
Italy
Italy
% control
% holding
50 %
11 %
100 %
38,5 %
100 %
100 %
100 %
100 %
50 %
11 %
100 %
38,5 %
100 %
100 %
100 %
100 %
Reason
No business activity
Holding < 20%
Minimal business activity
Minimal business activity
Company acquired on 30 Sep 2001
Company for sale
Basis for consolidating companies acquired during the financial year
The full consolidation method is used for all companies over which the Group has exclusive control (over 50%
of voting rights held directly or indirectly).
Companies controlled jointly (by several shareholders) are consolidated by the equity method.
For companies acquired during the financial year, the accounting principle adopted is as follows. The share
of sales and related expenses generated since the acquisition date are included in the consolidated income
statement. This acquisition date is set at the beginning or end of the month of acquisition, depending on the
accounting information that the acquired company is able to supply. During the 2000/01 financial year, the
following companies were included in the consolidation scope as from the following dates: 1 October 2000
for Comtel, AT-COM and Euroterminal (equity accounted); 1 November 2000 for A Novo Suisse, A Novo
Logitec and A Novo Servitec; 1 December 2000 for A Novo Polska; 1 January 2001 for A Novo Comlink;
1 March 2001 for Globe America Del Sur, A Novo Peru and A Novo Caraibes, 1 April 2001 for Gamma and
Prima (both these companies were consolidated on an equity-accounted basis between January and March
2001, then fully consolidated as from 1 April 2001); and 1 July 2001 for Radiophone, A Novo Service Solutions,
A Novo Maroc and Citeel.
Financial year-end
The consolidation is conducted on the basis of the annual financial statements as at 30 September 2001.
Business breakdown
By geographical zone
€K
France
Northern Europe
Southern Europe
Americasq
66
Sales
136 017
84 352
125 430
24 304
Operating profit
including employee profit-sharing
14 600
2 845
11 872
-284
Capital employed
74 586
97 214
98 900
32 132
By business area
€K
Sales
Videocommunications
Telecommunications
Professional products
IT
78 657
156 886
27 312
55 541
51 707
A Novo's assets are used in one or more business areas, and as a result cannot be broken down by business
area.
1.2 - Translation of financial statements of foreign subsidiaries
The financial statements of foreign subsidiaries are converted into euros based on the following method:
- Balance sheet items are converted at the effective exchange rate at the year-end, apart from
shareholders' equity items which are reported at the historic rate;
- Income statement items and cash flow figures are converted at the average exchange rate during the
financial year.
The following exchange rates have been applied:
x currency = 1 euro
USD
CHF
MAD
PLZ
SEK
GBP
CLP
Start-of-year
1.14273
0.66733
0.10440
0.25170
0.11746
1.67504
0.00203
Average rate
Year-end rate
1.12551
0.65758
0.10090
0.26845
0.11090
1.62262
0.00187
1.09940
0.67640
0.09790
0.25910
0.10300
1.61680
0.00163
Resulting exchange differences are included in consolidated reserves under "Translation adjustment".
For euro zone countries, the conversion rate used for the balance sheet and income statement is that adopted
by the European authorities on 1 January 1999.
1.3 - Goodwill
Goodwill represents the difference recorded, on the date that a company is initially included in the
consolidation scope, between the acquisition cost of the shares and related ancillary expenses, and the
corresponding proportion of shareholders' equity, after valuation of items relating to this proportion and their
allocation to intangible or tangible assets.
After allocation to tangible or intangible assets, goodwill is generally amortised over a period of ten to twenty
years on the basis of business-related assumptions. The net goodwill value is calculated at the end of each
financial year.
Goodwill totalled €83.5m at the end the financial year.
67
1.4 - Intangible fixed assets
Intangible fixed assets are reported on the balance sheet at their historical acquisition cost, plus amounts
resulting from allocation of goodwill.
Project development costs are reported as assets provided all the following criteria are met:
- the product or process is clearly defined, and costs which can be allocated to the product or process
can be identified and measured reliably;
- the technical feasibility of the product or process can be demonstrated;
- the product or process is to be designed and marketed or used by the company;
- the existence of a potential market for the product or process, or its usefulness for the company if it is
not intended to be sold, can be demonstrated;
- adequate resources exist, or their availability can be demonstrated, for successful conclusion of plans to
market or use the product or process.
Development costs are depreciated over a maximum period of five years.
Software is depreciated by the straight-line method over a period of two to five years.
Assets involving an allocation to the goodwill reserve can include non-amortisable patents, brands and
market shares in particular. These items can only be shown separately in the consolidated balance sheet
where they can be valued according to objective and relevant criteria, essentially based on the future
economic benefits which they can generate, and market value where this exists
1.5 - Tangible fixed assets
Tangible fixed assets are valued at acquisition cost (purchase price plus ancillary expenses).
The useful value of tangible fixed assets is reviewed at the end of each financial year, and compared with
historical cost less aggregate depreciation. Provisions for impairment of value are recorded where necessary.
Capitalised lease contracts for French companies are restated to show the acquisition value of the assets, and
the amount borrowed as a liability. The corresponding depreciation charges are recorded.
1.6 - Depreciation
Depreciation is spread systematically over each financial year throughout the useful life of the asset.
Depreciation periods are defined according to foreseeable physical wear, obsolescence and legal or other
restrictions relating to the use of the asset.
By default, depreciation is calculated by the straight-line method over the anticipated useful life of the asset:
Buildings
15 to 20 years
Fixtures and improvements to buildings
4 to 10 years
Plant and machinery
2 to 10 years
Vehicles
2 to 4 years
General installations
4 to 10 years
Office equipment, computers and furniture
4 to 10 years
Adjustments have been made to the consolidated financial statements to harmonise depreciation methods
for the most significant items.
68
1.7 - Long-term investments
Unconsolidated equity investments are measured at historical cost. A provision may be recorded if the going
concern value of an equity investment is less than its acquisition cost. The going concern value is based
principally on shareholders' equity and profit forecasts.
1.8 - Inventories and work in progress
Manufactured products and work in progress are measured at the lower of historical cost and net realisable
value. Historical cost is defined as the sum of acquisition cost plus transformation cost.
Acquisition cost includes the purchase price (net of sales allowances), non-recoverable taxes, transport,
customs duty and handling costs, and other direct purchase costs. Transformation cost comprises direct
production costs, and a percentage of fixed and variable production overheads, but excluding the cost of
subnormal capacity usage.
Stocks of interchangeable items are measured using the weighted average cost method. Net realisable value
is determined using an obsolete stock provision method common to the Group companies, for which the
depreciation rate depends on inventory turnover.
Margins on sales between consolidated companies are eliminated where material amounts are involved.
1.9 - Receivables and debts
Receivables are measured at face value. A provision for impairment is recorded where inventory value is less
than book value. Receivables are analysed individually, and a provision is recorded according to the estimated
credit risk. In the case of electronic payment activities, where the number of customers is very high, a
statistical method based on the age of the receivables is applied to assess the credit risk.
Foreign currency receivables and debts:
Unrealised currency gains and losses are recorded under consolidated income.
1.10 - Marketable securities
Inventory values are determined on the basis of probable market value.
1.11 - Deferred income taxes
Deferred income taxes, calculated using the liability method, principally result from the restatement of taxrelated provision, timing differences between accounting income and taxable income, and restatements for
consolidation.
Timing differences stem from charges that are deductible the year after they are recorded, such as employee
profit-sharing, organic growth investments, building expenses or charges deducted the previous year and
recorded during the current year as deferred charges.
Deferred income tax liabilities determined in this way are accrued on the balance sheet. Deferred income tax
assets are not reported on the balance sheet, unless their allocation to future tax profits is sufficiently likely.
69
1.12 - Pension costs
For French business corporations, payments provided for by the French collective agreement are calculated
on the basis of three criteria:
- length of service, according to the scale set out in the agreement,
- age factor, reflecting the probability of staff turnover and the risk of death before age 60,
- average undiscounted salary for the financial year for each employee with the company at 30 September
2001.
For foreign companies, pension costs are recorded in accordance with the national legislation applicable to
each company.
1.13 - Investment subsidies/Government grants
Investment subsidies are reported in income at the same rate as the depreciation to which these assets relate,
subject to the subsidies having been effectively received, and provided there is no doubt as to their allocation.
These subsidies are reported under "Deferred income" for an amount of €417K, including €82K which
relates to a property lease.
1.14 - . Earnings per share (EPS) and diluted EPS
Earnings per share (EPS) is calculated on the basis of the Group share of net income.
1.15 - Events taking place after the end of the financial year
A Novo negotiated a buy-out of minority interests for €11m in early 2002. Some of this commitment will be
paid for in shares held as treasury stock.
70
NOTES TO THE BALANCE SHEET
NOTE 2 - Intangible fixed assets
Gross
Sep
1999
Start-up costs
30
R&D expenses
666
Goodwill
2 269
Concessions,
374
patents, licences
Business assets
Other intangible
362
fixed assets
Advances on intangible 22
fixed assets
Gross total
3 723
Acquisitions Disposals Additions to
99/00
99/00 consolidation
scope
23
226
77 238
439
19 287
301
97 514
317
3
7
18
341
83 547
3 918
3
67
43
511
56
582
79 507
1 306
156
13
118
9 495
1 056
28 782
1 601
3 573
1 859
1 851
1 045
6 026
4 963
22
32
32
163
32
475
11 104
111 866
93 401
3 154
Amortisation
Sep
1999
99/00
99/00 consolidation
scope
Start-up costs
R&D expenses
Goodwill
Concessions,
patents, licences
Business assets
Other intangible
fixed assets
Advances on intangible
fixed assets
25
279
208
216
2
49
2 358
223
22
134
1
23
266
81
994
2 729
Total amortisation
Net total
Sep Acquisitions Disposals Additions to Removal from Sep
2000
00/01
00/01 consolidation consolidation 2001
scope
scope
Sep
2000
Acquisitions
00/01
19
7
34
899
163 054
5 081
36 530
7 371
163
11 045
26
213 132
Disposals Additions to Removal from Sep
scope
scope
325
6
194
2 566
741
4
90
7 113
817
2
5
11
91
58
382
58
638
675
742
58
191
54
5
4
729
1 190
2 713
270
766
4 203
9 441
254
120
6
13 504
94 801
205
10 338
107 663
83 960
2 900
10 925
20
199 628
50
8
334
9 679
1 564
GOODWILL BREAKDOWN
Gross
(€K)
France
Spain & Portugal
Italy
Scandinavia
UK
North America
South America
Other
Gross total
Balance at
30 Sep 99
364
1 330
575
2 269
Acquisitions
99/00
Balance at
30 Sep 00
Acquisitions
00/01
Balance at
30 Sep 01
21 018
7 675
36 798
3 667
8 010
21 382
1 330
8 250
36 798
3 667
8 010
70
70
4 187
916
46 823
2 443
18 076
609
7 093
3 400
25 569
2 246
55 073
39 241
21 743
8 619
7 093
3 470
77 238
79 507
83 547
163 054
71
Amortisation
Amortisation
period (years)
France
Spain & Portugal
Italy
Scandinavia
UK
North America
South America
Other
10 to 20
10 to 20
20
20
20
20
20
20
Balance at
30 Sep 99
Amortisation
charges
99/00
Balance at
30 Sep 00
Amortisation
charges
00/01
878
59
65
1 269
47
37
905
192
113
1 269
47
37
3
3
1 333
210
1 842
2 328
432
457
354
157
2 238
402
1 955
3 597
479
494
354
160
2 358
2 566
7 113
9 679
27
133
48
Total
208
Net
Balance at
30 Sep 99
France
Spain & Portugal
Italy
Sweden
UK
North America
South America
Other
Net total
Change
99/00
Balance at
30 Sep 00
Change
00/01
Balance at
30 Sep 01
Balance at
30 Sep 01
337
1 197
527
20 140
(59)
7 610
35 529
3 620
7 973
0
67
20 477
1 138
8 137
35 529
3 620
7 973
0
67
2 854
706
44 981
115
17 644
152
6 739
3 243
23 331
1 844
53 118
35 644
21 264
8 125
6 739
3 310
2 061
74 880
76 941
76 434
153 375
NOTE 3 - Tangible fixed assets
Valeurs brutes
Land
99/00
99/00 consolidation
scope
Sep
2000
Acquisitions
00/01
scope
scope
77
1 291
93
1 461
1 592
352
3 405
Buildings
6 562
2 048
0
3 659
12 269
4 814
2
5 240
22 321(1)
Technical
installations
4 364
6 303
176
5 797
16 288
9 022
1 446
14 101
37 965(2)
Other tangible
fixed assets
Current assets
Down payments
3 596
6 324
321
6 933
16 532
7 460
2 240
7 923
502
0
1 154
0
502
0
0
0
1 154
0
1 409
185
1 095
0
0
0
15 101
17 120
999
16 482
47 704
24 482
4 783
27 616
Gross total
72
Sep
1999
61
29 614(3)
1 468
185
61
94 958
Depreciation
Sep
1999
99/00
99/00 consolidation
scope
Land
0
Buildings
1 725
Technical installations 2 370
Other tangible
1 470
fixed assets
Current assets
0
0
472
1 393
1 934
0
32
154
355
2 541
4 051
Sep
2000
0
2 552
6 272
7 301
Acquisitions
00/01
728
3 459
2 589
scope
scope
2
267
1 154
1 349
11 944
5 963
2
25
0
4 627(1')
21 406(2')
14 674(3')
0
0
0
Total depreciation
5 565
3 799
186
6 947
16 125
6 776
1 423
19 256
27
40 707
Net total
9 536
13 320
813
9 535
31 579
17 706
3 360
8 360
34
54 251
(1)
(2)
(3)
(1')
(2')
(3')
including €5.5m in leased assets
including €229K in leased assets
including €229K in leased assets
NOTE 4 - Long-term investments
Net
Sep 01
Equity-accounted securities
Unconsolidated equity investments
Equity investment receivables
Other capital assets
Deposits and guarantees paid
Loans
Total
Sep 00
Sep 99
5 557
543
0
0
2 934
1 494
0
226
3 673
43
449
310
118
0
0
141
10 528
4 391
569
As at 30 September 2001, equity interest receivables included:
- A down payment for the acquisition of the business sold by Atlinks Espana (transaction finalised on
31 December 2000 and equity-accounted since 30 September 2001).
- Receivables for companies in the Globe Group (not consolidated as at 30 September 2000 and due to
be sold off in the near future).
Equity-accounted companies
Sep 00
Acquisitions
during
the year
Spain
Italy
2,709
Total
2,709
Down payments
in previous year
2,290
2,290
Net income
for the year
Fully
consolidated
company
558
826
(826)
1,384
(826)
Sep 01
5,557
5,557
A Novo acquired two Spanish companies during the financial year:
A Novo Comlink on 1 January 2001 (331/3% acquired each year). This company was consolidated by the
equity method during 2001 and has been fully consolidated since 1 January 2002 (the date when the second
331/3% stake was acquired).
Euroterminal, acquired through A Novo’s Globe subsidiary. A Novo owns a 35% stake in this company and
currently has no plans to increase its interest.
73
A Novo also acquired the Italian company, Prima, in two stages. Prima was consolidated by the equity method
between 1 January 2001 and 31 March 2001 (25% stake), then fully consolidated during the second half of
the year (60% stake as from 1 April 2001).
NOTE 5 - Inventories and work in progress
Net
Raw materials
Goods in progress
Services in progress
Semi-finished and
finished products
Goods for resale≤
Total
Gross
30 Sep 01
Depreciation
30 Sep 01
Gross
30 Sep 00
Depreciation
30 Sep 00
Gross
30 Sep 99
Depreciation
30 Sep 99
26 264
317
1 159
3 496
0
0
18 011
1 071
124
2 631
0
2 570
402
709
3
5 141
13 382
1 100
4 530
1 134
6 598
389
2 120
527
1 303
387
4
46 263
9 126
26 938
5 140
4 802
1 103
The substantial increase in inventories results from the inclusion of new companies in the consolidation
scope, which contributed €6m, and a €3m increase in the electronic payment systems business, due to the
euro changeover.
NOTE 6 - Trade receivables and other receivables
Net
Trade receivables
Other receivables
Owed by government
Positive translation adjustments
Deferred expenses
Total
Gross
30 Sep 01
Depreciation
30 Sep 01
2 609
116 086
3 397
7 247
5 365
2 860
22
2 838
137 542
2 882
Gross
30 Sep 00
291
66 657
3 043
5 497
3 947
53
1 326
80 814
Depreciation
30 Sep 00
1 436
16
Gross
30 Sep 99
16
13 096
945
2 469
Depreciation
30 Sep 99
466
13
240
1 452
16 766
479
€26m of the increase in trade receivables results from the inclusion of new companies in the consolidation scope.
Other receivables are essentially tax-related.
NOTE 7 - Cash and equivalents
Net
Cash
Total
30 Sep 01
30 Sep 00
330 Sep 99
7 691
17 266
30 932
12 715
18 980
24 957
43 647
18 980
The cash balance includes €2.912m in cash from companies acquired.
Marketable securities are valued at the year-end price for money market unit trusts.
A €522K provision has been booked for treasury shares such that the net value reflects the average share
price during the last month of the financial year.
74
NOTE 8 - Deferred expenses
30 Sep 01
Deferred expenses
30 Sep 00
3 724
30 Sep 99
996
170
A Novo’s deferred expenses break down as follows:
Gross
Investment acquisition costs
OCEANE bond issue expenses
Misc. expenses relating to medium-term transactions
Other
TOTAL
298
3 605
329
21
Amortisation period
5 ans
5,5 & 7 ans
3 ans
4 253
Gross
Net
84
292
148
5
214
3 313
181
16
529
3 724
The €2.6m in OCEANE bond issue expenses have been amortised over 5.5 years (including €234K over the
2000/01 financial year) to coincide with the redemption date of 30 September 2006. These expenses are
recorded under ‘Other debt’.
NOTE 9 - Provisions for contingencies and losses
Provisions for contingencies and losses break down as follows:
Retirement severance pay
Tax risk
Restructuring costs
Other
Total provisions for contingencies and losses
Sep 01
Sep 00
Sep 99
2 334
70
1 626
1 956
1 322
1 961
961
2 012
2 571
3 946
565
286
7 308
11 451
1 027
176
The new French regulations on the treatment of liabilities were not implemented in advance by A Novo.
NOTE 10 - Borrowings and long-term and short-term debt
Sep 01
Other debt – Bonds
- less than 1 year
- 1 to 5 years
- over 5 years
Borrowings from credit inst. (1)
- less than 1 year
- 1 to 5 years
- over 5 years
Misc. borrowings (2) (3)
- less than 1 year
- 1 to 5 years
- over 5 years
Sep 00
Sep 99
17 718
8 060
6 592
3 066
58 134
7 093
32 366
18 675
6 572
2 567
4 005
79 019
79 019
19 135
10 104
7 102
1 929
95 179
52 494
33 081
9 604
655
216
439
(1) including €6.992m in floating rate capital lease loans at 30 September 2001. Other borrowings are at a fixed rate.
(2) including a floating rate loan with the Royal Bank of Scotland (€48.555m outstanding at year-end). 40% of this
loan is covered by an interest rate hedging transaction.
(3) including €3.192m in bank overdrafts or factoring, and €13.896m in vendor loans.
75
Breakdown of fixed vs. floating rate borrowings:
Sep 01
Fixed or capped rate loans
Floating rate loans
TOTAL
Sep 00
Sep 99
154,591
38.,742
59,264
16,588
2,154
5,073
193,333
75,852
7,227
Sep 00
Sep 99
172,935
16,199
1,035
2,582
557
25
72,579
1,140
1,482
630
21
7,227
193,333
75,852
7,227
Breakdown by currency:
Sep 01
Euro
GBP
USD
SEK
CLP
PLZ
TOTAL
OCEANE bonds: the annual interest rate payable is 1.5%, compared with 5.75% in the event that the bonds
are not converted by the maturity date (September 2006). Given the remaining period to maturity and the
recent issue date (April 2001), the risk of non-conversion was low as at 30 September 2001.
As a result, no provisions have been recorded for redemption premiums.
The estimated redemption premium amounts to €20.940m as at the year-end of 30 September 2006.
NOTE 11 - Operating liabilities
Trade payables and related accounts
Tax and social security
Fixed assets
Deferred income
Other debt
Total
76
Sep 01
Sep 00
Sep 99
2 566
70 121
41 405
2 484
13 739
6 836
0
1 201
39 133
18 987
645
10 746
4 154
147
101
7 096
7 330
100
56
137 154
75 013
14 688
5
NOTES TO THE INCOME STATEMENT
NOTE 12 - Sales
Sep 01
%
136 017
234 086
370 103
36,75 %
63,25 %
100,00 %
78 657
156 886
27 312
55 541
51 707
0
370 103
21,25 %
42,39 %
7,38 %
15,01 %
13,97 %
0,00 %
100,00 %
Sep 00
%
Sep 99
%
97 208
90 837
188 045
51,69 %
48,31 %
100,00 %
40 760
26 833
67 593
60,30 %
39,70 %
100,00 %
45 031
59 221
17 495
28 727
37 292
279
188 045
23,95 %
31,49 %
9,30 %
15,28 %
19,83 %
0,15 %
100,00 %
26 084
33 022
5 068
2 048
145
1 226
67 593
38,59 %
48,85 %
7,50 %
3,03 %
0,21 %
1,81 %
100,00 %
By geographical region
France
Export
By business
Videocommunication
Telecommunication
Professional products
IT
Other (businesses sold/to be sold)
In all the Group’s business divisions, sales are booked once the service is completed or, in the case of IT
projects, once the product’s delivery has been accepted by the customer.
For multi-year contracts (electronic payment and IT activities), sales are pro rated.
NOTE 13 - Directors’ fees
For the 2000/01 financial year, members of the Board of Directors received a total of €477K in remuneration
(including wages, compensation and various benefits).
Members of the Supervisory Board received a total of €213K in remuneration for the 2000/01 financial year
NOTE 14 - Financial income/expenses
Libellés
30 Sep 01
Financial income
Interest expenses (1)
Provisions
Financial income excl. forex
Foreign exchange gains
Foreign exchange losses
Net foreign exchange gains/(losses)
1 678
(7 108)
114
(567)
(5 883)
1 027
(556)
471
975
(1 596)
117
203
(351)
36
(504)
29
(89)
(60)
(112)
32
(46)
(14)
(5 412)
(564)
(126)
Total
30 Sep 00
30 Sep 99
(1) including €306K of financial expenses on leasing contracts.
77
NOTE 15 - Exceptional income/charges
30 Sep 01
Exceptional income from management transactions
Exceptional income from capital transactions
Reversal of exceptional provisions
Total exceptional income
Exceptional charges on management transactions
Exceptional charges on capital transactions
Exceptional provisions
Total exceptional charges
30 Sep 00
30 Sep 99
1 021
508
4 163
5 692
(5 407)
(616)
(3 468)
(9 491)
105
327
1 210
1 642
(942)
(373)
( 109)
(1 424)
72
141
213
(717)
(234)
(159)
(1 110)
(3 799)
218
(897)
The main exceptional items were as follows:
€1.452m in legal and financial costs incurred on a financial transaction that was not completed.
€1.923m in restructuring expenses.
NOTE 16 - Income taxes and employee profit-sharing
30 Sep 01
Income taxes
Total
30 Sep 00
30 Sep 99
(5 759)
1 662
(1 975)
1 445
(1 678)
182
(4 097)
(530)
(1 496)
The income tax calculation breaks down as follows:
€K
Pre-tax net income
Theoretical tax at a rate of 351/3%
Income from equity-accounted associates
Current-year non-trading losses
Previous-year non-trading losses
Tax rate differential
Non-deductible expenses
Actual income tax charge
Year to Sep 2001
14,093
(4,979)
(2,514)
489
(1,052)
2,848
684
427
(4,097)
Deferred income taxes break down as follows:
€K
Tax-loss carry-forwards
Timing differences
Restatement
Total
Deferred tax
721
694
247
1 662
The main tax-loss carry-forward results from a loan written off by A Novo SA during the financial year. Future
earnings will enable A Novo to offset its losses within the statutory deadlines.
78
NOTE 17 - Earnings per share (EPS)
Net earnings per share
€
30 Sep 01
30 Sep 00
30 Sep 99
Number of shares
Net income (Group share)
Earnings per share
19 536 015
10 109 961
0,52
19 703 060
9 747 934
0,49
17 911 875
5 009 000
0,28
The 167,045 treasury shares offset against consolidated shareholders’ equity have been subtracted from the
number of shares used in the calculation.
The recalculated number of shares as at 30 September 2000 and 1999 takes into account the five-for-one
stock split carried out in June 2001 to make it easier to compare the different financial years.
Diluted earnings per share
€
30 Sep 01
30 Sep 00
Number of shares
Net income (Group share),
assuming full dilution
Diluted earnings per share
21 687 533
19 703 060
10 876 488
0,50
9 747 934
0,49
To calculate the maximum dilution, the number of shares includes the conversion of OCEANE bonds. The
treasury shares offset against consolidated shareholders’ equity have been subtracted from the number of
shares used in the calculation.
Net income (Group share) takes into account the financial expenses saved on the OCEANE bonds, net of
income tax and calculated on a full-year basis.
The recalculated number of shares as at 30 September 2000 takes into account the five-for-one stock split
carried out in June 2001 to make it easier to compare the different financial years.
NOTE 18 - Firm commitments made by A NOVO in respect of additional
payments due and minority purchases, as at 30 September 2001
These commitments break down as follows:
En K€
Cash commitments
Spain
Belgium
UK
Cash due within one year
12,735
1,524
7,559
7,754
This table does not include similar commitments identified after the year-end.
A Novo has several payment options for the cash commitment relating to the minority interests in one of its
subsidiaries. A Novo’s commitment is calculated by applying a given ratio to the subsidiary’s EBIT figure.
NOTE 19 - Headcount (Permanent and temporary staff)
30 Sep 01
30 Sep 00
30 Sep 99
4 969
3 173
871
79
Additional note on consolidated financial statements (pro forma)
€K
Pro forma
30 Sep 01
Actual
30 Sep 00
247 035
188 045
(209)
105
64
10 786
3 795
895
1 082
199
5 533
500
Operating revenues
261 576
196 254
Purchases and change in inventory
External services
Income taxes and other taxes
Personnel expenses
Provisions for current assets and operating liabilities
(90 576)
(56 497)
(2 804)
(81 677)
(7 084)
(3 120)
(63 672)
(44 423)
(2 182)
(64 193)
(4 153)
(2 968)
(241 758)
(181 591)
Operating income
19 818
14 663
Financial income
Provisions for financial expenses
Other financial expenses
10
2 025
(567)
(5 106)
117
1 004
0
(1 685)
Net financial expenses
(3 638)
(564)
Income before tax and exceptional items
16 180
14 099
Exceptional income
Exceptional charges
3 791
(6 222)
1 642
(1 424)
(2 431)
218
Income taxes and employee profit-sharing
(2 470)
(1 679)
Net income from consolidated companies
11 279
12 638
Net goodwill amortisation
Income from companies consolidated by the equity method
(3 468)
0
(2 431)
0
7 811
10 207
Net sales
Operating subsidy
Reversal of depreciation and transferred charges
Other income
Operating expenses
Full-year net income
80
Comments on pro forma financial statements
Due to the significant increase in the number of Group companies during the year, A Novo has drawn up a
pro forma income statement to 30 September 2001, based on the consolidation scope as at 30 September
2000 in order to make it easier to compare the two financial years.
For companies that were included in the 1999/2000 consolidated financial statements for a period of less than
12 months (i.e. 10 months for Carte & Services and A Novo Nordic, 9 months for Fibrosud, 5 months for A
Novo Chile, 3 months for Digitec, 2 months for A Novo Broadband and 1 month for Globe), the 2000/01 pro
forma statements also reflect these consolidation periods.
The different margins in the pro forma income statements were affected by the following factors.
The reinforcement of various divisions within the Group (e.g. creation of an R&D department and a Mergers
& Acquisitions unit) and the initial implementation of SAP applications by the different subsidiaries increased
operating expenses by €2m, i.e. 0.88% of sales.
The cost of the OCEANE bond issue also had a one-off impact on operating income, amounting to 1% of
sales. In terms of financial expenses, these OCEANE bonds also generated an additional cost equivalent to
0.23% of sales.
Charges incurred on the RBS loan taken out the previous year also increased financial expenses by the
equivalent of 1.16% of sales.
81
2.3 - Parent company financial statements
General Statutory Auditors Report
Financial year ended 30 September 2001
Dear Chairman and shareholders,
In accordance with the terms of our appointment by your General Meetings, we hereby present our report for
the financial year ended 30 September 2001, on:
- The audit of the full-year financial statements of A NOVO SA, drawn up in euros, as attached to this
report.
- The specific procedures and disclosures required by law.
The full-year financial statements were drawn up by the Board of Directors on 17 December 2001. Our
responsibility is to express an opinion on these financial statements based on our audit.
1. OPINION ON THE FULL-YEAR FINANCIAL STATEMENTS
We conducted our audit in accordance with French auditing standards. These standards require the auditor
to perform such tests and procedures as give reasonable assurance that the financial statements are free
from material misstatement. An audit includes examination, on a test basis, of evidence relevant to the
information contained in these financial statements. It also includes an assessment of the accounting
principles used and any significant estimates made in the preparation of the financial statements, as well as
an evaluation of their overall presentation. We believe that our audit provides a reasonable basis for the
opinion expressed below.
In our opinion, the financial statements have been properly prepared and fairly present the company’s results
for the financial year ended 30 September 2001, and its net assets and financial position as at that date.
2. SPECIFIC PROCEDURES AND DISCLOSURES
We have also performed the specific procedures required by law, in accordance with French auditing
standards.
We have no comments to make on the fair presentation or on the consistency with the financial statements
of the information given in the Board of Directors’ Business Report and in the documents on the company’s
financial position and annual statements sent to shareholders.
In accordance with French law, we have ensured that the Business Report includes details of any minority
and controlling interests acquired in other companies.
Signed in Paris on 7 March 2002
The Statutory Auditors
Jean François SERVAL
CONSTANTIN ASSOCIES
82
Patrick MAUPARD
A NOVO S.A.
OCT 00 - SEP 01
Parent company financial statements to 30 September 2001
Income statement to 30 September 2001 (€K)
2001
2000
790
52 190
803
2
38 568
52 980
39 374
(27)
409
45
4 606
10
27
117
1 023
9
58 023
40 549
693
706
Raw materials purchased
Variation in raw materials
8 242
(1 382)
6 092
(401)
Other purchases and external charges
23 770
11 972
1 240
845
12 928
4 343
9 681
3 772
3 429
569
1 623
412
179
84
4 012
5 765
Sales of merchandise
Sales of production
Sales of services
Sales
Operating subsidy
Reversal of depreciation and transferred charges
Other income
Total operating income
Merchandise purchased
Variation in merchandise inventories
Taxes
Salaries
Social security charges
Provisions for current assets
Other charges
Operationg income
83
A NOVO S.A.
OCT 00 - SEP 01
Parent company financial statements to 30 September 2001
Income statement – continued (€K)
2001
2000
Operating income
4 012
5 765
Financial income
Other income and interest
Positive translation adjustments
Net income on sales of marketable securities
4 450
25
815
6
534
1 022
4
82
6
592
Financial income
5 830
1 706
Provisions
Interest and related charges
Negative translation adjustments
Net charges on sales of marketable securities
3 240
13 643
19
11
815
949
64
16 913
1 828
(11 083)
(122)
(7 071)
5 642
(53)
25 873
194
15
245
10
26 014
270
Exceptional charges on management transactions
Exceptional charges on capital transactions
Exceptional provisions
2 806
18 259
7
59
246
2
Exceptional charges
21 072
307
4 942
(37)
603
631
147
(2 732)
4 827
Financial expenses
Exceptional income on management transactions
Exceptional income on capital transactions
Exceptional income
Employee profit-sharing
Corporate income tax
Net income
84
85
A NOVO S.A.
OCT 00 – SEP 01
Parent company financial statements
Balance sheet to 30 September 2001 (€K)
ASSETS
2001
2000
Intangible fixed assets
3 997
658
Tangible fixed assets
6 714
5 026
123 627
65
93 161
73
Total long-term investments
123 692
93 234
FIXED ASSETS
134 403
98 918
Gross value of inventories
Provision for inventories
3 255
(454)
1 903
(411)
Net value of inventories
2 801
1 492
53
18
Trade receivables
Provision for trade receivables
Trade receivables net of provisions
22 638
(266)
22 372
14 321
(193)
14 127
Non-trade receivables
89 603
30 481
Cash and equivalents
6 719
30 261
156
122
4 897
2 841
261 004
178 259
Equity interests and related debts
Other long-term investments
Advances and down-payments on orders
Pre-paid expenses
Deferred charges
Total Assets
86
A NOVO S.A.
OCT 00 – SEP 01
Parent company financial statements
Balance sheet to 30 September 2001 (€ K)
LIABILITIES
Share capital
Issue premiums
Reserves
Retained earnings
Current year net income
Investment subsidies
Shareholders’ equity
2001
2000
67 283
35 796
3 936
2
(2 732)
9
67 283
35 796
1 511
104 294
109 428
Loss and contingency provisions
Convertible bond loans
Owed to credit institutions
Other miscellaneous debts
4 827
11
194
79 019
9 421
51 443
1 791
55 897
Trade payables
9 154
5 564
Tax and social security liabilities
6 996
5 249
83
20
Advances and down payments received
Debts on fixed assets
Other debts
361
233
116
261 004
178 259
Total Liabilities
87
A NOVO S.A.
oct-00/sep-01
Proposed profit allocation
The Board will seek approval from the General Meeting to allocate all the company’s full-year net income to
retained earnings.
88
A NOVO S.A.
oct-00/sep-01
Notes
Note 1
ACCOUNTING PRINCIPLES AND METHODS
Note 2
FIXED ASSETS
Note 3
TRADE RECEIVABLES AND OTHER RECEIVABLES
Note 4
SHAREHOLDERS’ EQUITY
Note 5
LIABILITIES
Note 6
BALANCE SHEET PROVISIONS
Note 7
EMPLOYEE BREAKDOWN
Note 8
SUBSIDIARIES AND PARTICIPATING INTERESTS
Note 9
LEASING COMMITMENTS
Note 10
FINANCIAL COMMITMENTS
Note 11
KEY EVENTS
Note 12
DOMESTIC VS EXPORT SALES
Note 13
TAX LOSS CARRY FORWARDS
Note 14
PENSION COMMITMENTS
Note 15
DIRECTORS’ FEES
Note 16
RESULTS OVER THE PAST FIVE FINANCIAL YEARS
89
Note 1 - Accounting principles and methods
General accounting conventions have been applied, in accordance with the principle of prudence and the
fundamental accounting concepts of:
- going concern;
- consistency of accounting methods from one period to the next;
- matching of costs and revenues;
and with the general rules for the presentation and preparation of annual accounts.
The basic valuation rule applied to items recorded in the accounts is the historic cost method.
The main accounting methods used are as follows:
1.1 - Intangible fixed assets
As at end-September 2001, research & development costs broke down as follows:
Gross value in €K
Duration
741
5 ans
Development
€305K in costs were recorded as at 30 December 2001.
Parents, concessions and licences and other intangible fixed assets have been recorded at their acquisition
cost, less any ancillary expenses.
These items are depreciated over their anticipated useful life within the company:
Gross value in €K
Concessions, parents and other licences 1
Concessions, parents and other licences 2 (SAP)
Other intangible fixed assets
1 697
2 704
63
Duration
2 ans
5 ans
3 ans
At 30 September 2001, the company recorded €175K in advances and down payments on intangible fixed
assets.
1.2 - Tangible fixed assets
Tangible fixed assets are recorded:
- either at their acquisition cost (purchase price and ancillary expenses, excluding acquisition fees).
- or at their production cost, excluding interest on loans taken out specifically for the production of these
fixed assets.
Depreciation is calculated by the straight-line method over the anticipated useful life of the asset:
- Buildings
90
15
to 20 years
- Fixtures and improvements to buildings
4
to 10 years
- Plant and machinery
4
to 10 years
- Office equipment, computers and furniture
4
to 10 years
- Vehicles
2
to
4 years
1.3 - Equity interests and other long-term investments
Equity interests and other long-term investments (including treasury shares) are recorded at their purchase
cost, less any related expenses.
In the event of the sale of a given class of securities, carrying the same rights, the entry value of the
transferred securities is estimated based on the FIFO (first in-first out) method.
For listed securities, a provision for impairment of value is recorded to reflect the average share price during
the last month of the financial year.
A Novo holds 167,045 treasury shares valued at €4.731m (historic cost).
1.4 - Inventories
Inventories are recorded at their weighted average unit cost.
The gross value of merchandise and supplies includes the purchase price and related expenses.
Repair work in progress in valued at the average cost price recorded over the past ten months. This includes
consumables, direct and indirect production costs and depreciation of goods used in the production process.
The provision for depreciation of inventories is based on the inward and outward movements of each item
over the last six months of the financial year.
An obsolete stock provision is calculated on the basis of items with no inward or outward movements over
the last six months of the financial year.
1.5 - Receivables
Receivables are shown at face value. A provision for impairment of value is recorded where inventory value
is less than book value.
Provisions for impairment are also recorded against receivables with a risk of total or partial non-recovery.
The following provisioning rates are applied:
- 100% for customers under compulsory administration.
- 30 to 50% for outstanding receivables that are more than one year past their due date
1.6 - Bond redemption premiums
Bond redemption premiums are amortised pro rata of accrued interest and in equal instalments over the term
of the loan.
1.7 - Statutory provisions
None
91
1.8 - Currency transactions
Foreign currency income and expenses are translated using the exchange rate prevailing on the date of the
relevant transaction. Foreign currency debts, receivables and cash are converted using the exchange rate
prevailing at the close of the financial year.
For debts and receivables, any translation differences between the latest exchange rate and the financial
year-end exchange rate are recorded under ‘Translation Adjustment’.
At the year-end, this translation adjustment amounted to €233K on the liability side vs €100K at
30 September 2000.
1.9 - Share capital
At the year-end, the share capital comprised 19,703,060 shares.
On 26 June 2001, the company carried out a five-for-one stock split to enhance the shares’ liquidity on the
SRD Deferred Settlement System.
1.10 - Marketable securities
Marketable securities are recorded at their acquisition cost, less any related expenses.
In the event of the sale of a given class of securities, carrying the same rights, the entry value of the
transferred securities is estimated based on the FIFO (first in-first out) method.
A provision for impairment of value is recorded for these marketable securities to reflect:
- For listed shares: the average share price during the last month of the financial year,
- For unlisted shares, the expected disposal value at the year-end.
Note 2 - Fixed assets
Gross values
Start-up and research costs
Land
Buildings
Technical installations
Other tangible fixed assets
Current assets
Advances and down payments
Equity interests and financial receivables
Other long-term investments
Total gross value
92
Sep 00
Acquisitions
00-01
Disposals
00-01
407
730
1
229
1 487
4 479
1 066
94 068
73
334
3 942
1 189
492
1 165
894
202
11
50 258
3
17 889
11
741
4 639
1 190
721
2 652
5 311
202
11
126 437
65
102 540
58 490
19 061
141 969
33
62
1 066
Sep 01
Depreciation/provisions
Sept 00
Set-up and research costs
Land
Buildings
Technical installations
Other tangible fixed assets
Current assets
Equity interests and financial receivables
Current assets
Total
Total net value
Allocations
00-01
151
328
67
841
786
1 450
Reversals
00-01
Sept 01
4
218
1 165
35
362
792
53
35
1 148
2 190
907
2 718
815
2 810
3 622
4 814
872
7 566
98 918
53 674
18 189
134 403
Note 3 - Trade receivables and other debts
Doubtful accounts
Other trade receivables
Sept 00
Within one year
370
22 268
370
22 268
6
6
1 801
87 452
365
1 801
87 452
365
112 262
112 262
Personnel
State and other public authorities
Group companies and partners
Other debts
Total
Over one year
Note 4 - Shareholders’ equity
Shareholders’
equity
Sep 00
Share capital
Issue premiums
Legal reserves
Other reserves
Retained earnings
Operating subsidy
Total
Dividends
paid
67 283
35 796
230
1 281
(2 400)
4 827
11
109 428
(2 400)
Earnings
appropriation
Sep 00
241
2 184
2 402
(4 827)
(2)
(2)
Income for
year ended
Sep 01
(2 732)
(2 732)
Shareholders’
equity
Sep 01
67 283
35 796
471
3 465
2
(2 732)
9
104 294
93
Note 5 - Liabilities
Sep 01
Convertible bonds
Owed to credit institutions
Other loans and debts
Trade payables
Personnel
Social security organisations
State and other public authorities
Group companies and partners
Other liabilities
Total
Within one year
Over one year
Over five years
79 019
9 421
49 597
9 154
2 205
1 690
3 101
1 846
444
9 215
6 911
9 154
2 205
1 690
3 101
1 846
444
206
33 081
79 019
9 605
156 477
34 566
33 287
88 624
On 11 April 2001, A Novo decided to issue 396,040 Bonds Convertible or Exchangeable for New or Existing
shares (OCEANE bonds) with a face value of €202 per bond and a nominal rate of 1.5%. These bonds are
fully redeemable on 1 October 2006.
4,855 of these bonds were converted during the 2000/01 financial year.
As a result of the five-for-one stock split in June 2001, the ratio for converting these bonds into shares was
multiplied by 5.
Note 6 - Balance sheet provisions (excluding provisions on fixed assets)
Type of provisions
2000
Contingencies and losses
194
Inventories and work in progress
Trade receivables
411
193
477
91
13
8
522
811
1 098
Other receivables
Total
Allocations 2001
Reversals 2001
2001
194
434
18
454
266
21
522
646
1 263
The provision recorded following a theft at the company’s Montrouge offices was fully reversed during the
2000/01 financial year.
Note 7 - Employee breakdown
Category
94
No of employees
Manual workers
Office staff
Technicians and supervisors
Engineers and managers
425
44
77
41
Total staff
587
95
France
France
France
Morocco
France
South America
SCI ROBERT
SCI LES CAILLOUX
A NOVO INTER.
A NOVO MAROC
A NOVO UK
A NOVO ADS
Total
France
France
A NOVO France
A NOVO CARAïBES
Spain
COMLINK
Switzerland
Belgium
A NOVO SERVITEC
Poland
France
CARTE & SERVICES
A NOVO POLSKA
US
A NOVO AMERICAS
A NOVO SUISSE
Italy
Sweden
A NOVO NORDIC
Spain
Portugal
A NOVO Portugal
SADELTA
Hong Kong
GE ASIA
A NOVO ITALIA
France
TIRADE
Location
Subsidiaries (ownership interest >50%)
Mar-01
Oct-00
Jun-01
May-01
Oct-00
Oct-00
Feb-01
Oct-00
Nov-00
Dec-00
Sep-00
Nov-00
Dec-99
Jul-00
Nov-98
Dec-98
Dec-99
May-00
Apr-95
Jun-93
Month
acquired
Note 8 - Subsidiaries and participading interest
106 486
8 256
13 204
34
981
237
160
305
93
5 339
9 344
4 894
2 300
7 165
125
759
5 413
47 342
250
266
19
600
259
250
91
8 256
13 204
34
981
237
160
46
93
5 339
9 344
4 894
2 300
7 165
125
759
5 413
47 342
0
175
19
Net
105 886
Book value as at 30 September 2001
Gross
Provisions
100 %
100 %
70 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
33 %
100 %
100 %
54 %
100 %
100 %
100 %
100 %
50 %
50 %
% de
holding
(422)
(475)
(14)
5
12
71
(256)
148
(1 517)
46
187
9
7 057
(13)
964
(163)
(1 537)
(584)
1 084
(357)
12 846
85
1 019
100
121
48
236
3 851
9 390
2 425
2 309
1 705
213
1 251
5 329
5 341
(379)
2 154
Key data
Net income Shareholders’ equity
43
174
1 007
2 631
60 364
3 626
50 388
16 472
25 678
33 827
2 534
3 547
Sales
A NOVO S.A.
Year ended 30 September 2001 (€ K)
Participating interests
Location
CTAV
France
Book value as at 30 September 2001
Gross
Gross
Provisions
Net
(€)
(orig. currency)
15
Information
Book value of shares held:
Gross
Net
Amount of loans and advances granted
Amount of guarantees and endorsements granted
Amount of dividends received
Month
acquired
% de
holding
15
11 %
Subsidiaries
France
Foreign
31 415
31 156
75 071
74 730
0
15 204
569
150
Note 9 - Leasing commitments
Property finance leasing: original value €5.500m.
€4.027m in outstanding lease payments and €800K residual purchase price.
96
Key data
Net
Shareholders’
income
equity
22
221
Participating interests
France
Foreign
15
1
-
A NOVO S.A.
Position as at 30 September 2001 (€K)
Note 10 - Off-balance sheet commitments as at 30 September 2001 (€K)
Type of
guarantee
Beneficiary
Purpose
Maximum amount
of capital pledged (€ K)
SURETIES/SECURITIES
16 572
Collateral security
Bankinter
Bank overdraft facility granted to Spanish
subsidiary Sadelta and counter-guarantee
for bank surety granted to one of Sadelta’s
suppliers
Collateral security
Banque Centrale d'Espagne
Banco central Hispano
Guarantee for discount line granted to
Sadelta and counter-guarantee for bank
surety granted to one of Sadelta’s suppliers.
Surety
BNP PARIBAS
Bank overdraft for Carte & Services
Bank surety
SWISSCOM IMMEUBLES SA
Guarantee for commercial lease payments
Personal surety
Crédit Lyonnais
Surety for first demand guarantees given
by Crédit Lyonnais for payment of
Radiophone acquisition by A Novo UK
GUARANTEES
457
640
2 286
48
13 141
82 389
First demand
guarantee
BOSS
Guarantee for equipment financing
payments by GE UK
143
First demand
guarantee
Lessor of Digitec
Guarantee for lease payments
483
First demand
guarantees
FIMI.
Guarantees covering:
a) the liability guarantee connected with the
acquisition contract for the FIMI business division.
b) the successful execution of both the
outsourcing/supply contract signed with
lFIMI and GE Italia’s non-competition agreement.
c) the undertaking to retain the workforce
First demand
guarantee
Digitec managers
Guarantee covering payment of the outstanding
balance on the Digitec shares purchased
Liability guarantees
Royal Bank of Scotland
Guarantee covering the refinancing of the acquisitions
of A Novo Nordic and Innovatron Services
500
1 000
no limit
5 690
53 357
Pledge of
1 026 676 A Novo
Nordic shares
97
Type of
guarantee
Beneficiary
Purpose
Maximum amount
of capital pledged (€K)
First demand
guarantee
Banca Populare Di Milano
Guarantee for A Novo Italia’s bank
overdraft (50%) and discount line (50%)
First demand
guarantee
City Invoice Finance Limited
Factoring line
First demand
guarantee
ATLINKS ESPAÑA
Guarantee for payment of 66.66% of shares
in A Novo Comlink España SL
First demand
guarantee
GE Capital Equipement Finance Guarantee for equipment financing
payments owed to Carte & Services by
its customers
2 498
Guarantee
FPG Pensionsgaranti
Guarantee covering outstanding pension
entitlements of A Novo Nordic AB employees
1 661
Comfort letter
WM DATA
Guarantee covering payment by A Novo Denmark
Denmark for inventories and products purchased
from WM DATA and invoiced in advance
Total off balance sheet commitments
2 073
724
14 260
98 961
Note 11 - Key events during the year
Launch of in-house technical logistics activities in the new third building at the Beauvais site.
A number of participating interests were sold to various new regional holding companies set up to supervise
these companies locally.
Since 1 October 2000, the information system has been based around an integrated SAP R/3 application.
Note 12 - Domestic vs export sales
Sales split
France
Export
Amount
50 096
2 884
Note 13 - Tax-loss carry forwards
Description
LT losses - 1998
LT losses - 1997
Outstanding tax loss carry-forwards
Deferred depreciation carried over
Capital gains subject to deferred taxation under
art. 210A/210B of the French General Tax Code
98
Amount (€K)
233 K€
2 543 K€
12 096 K€
2 759 K€
8 739 K€
Note 14 - Pension commitments
Under the collective agreement for the French metal industry, pensions are calculated on the basis of three
criteria:
- length of service, according to the scale set out in the agreement,
- age factor, reflecting the probability of personnel turnover and the risk of death before age 60,
- average undiscounted salary during the financial year for each employee of the company as at 30
September 2001.
Pension costs are not provisioned in the company’s accounts and amounted to €159K at 30 September 2001
compared with €110K at 30 September 2000.
Note 15 - Directors’ fees
For the 2000/01 financial year, members of the Board of Directors received a total of €477K in remuneration
Members of the Supervisory Board received a total of €213K in remuneration for the 2000/01 financial year
Note 16 - Results over the past five financial years
Description
1996/97
1997/98
762
50 000
1 403
92 000
50 000
17 048
3 756
(69)
1998/99
1999/00
2000/01
Share capital at financial year-end (€K)
Share capital
Ordinary shares
Shares with double voting rights
Total shares
92 000
2 185
2 056 922
1 525 453
3 582 375
67 283
2 600 229
1 340 383
3 940 612
67 283
13 277 840
6 425 220
19 703 060
27 134
5 178
(87)
(26)
5 033
1 315
29 834
4 836
(765)
(233)
3 073
1 638
39 374
5 642
(147)
(631)
4 827
2 403
52 980
(7 071)
(63,02)
46,66
12,20
0,85
0,46
1,22
0,30
(0,14)
180
3 776
1 533
300
5 917
2 260
343
7 352
2 777
488
9 681
3 772
587
12 928
4 343
Results for financial year (€K)
Net sales
Pre-tax income
Income tax
Employee profit-sharing
Income after tax and employee profit-sharing
Dividend payments
(5 798)
(603)
(2 732)
-
Earning per share
EPS after tax and employee profit-sharing
Dividend per share
Personnel
Average workforce
Payroll charges
Employee benefits
99
STATUTORY AUDITORS’ REPORT
ON REGULATED AGREEMENTS
FINANCIAL YEAR ENDED 30 SEPTEMBER 2001
Patrick MAUPARD
CONSTANTIN ASSOCIES
18, rue Jean Mermoz
26, rue de Marignan
75 008 Paris
75 008 Paris
In our capacity as Statutory Auditors for A Novo, we hereby present our report on your company’s regulated
agreements
1. In accordance with article L 225-88 of the French Commercial Code, we have been informed of
the agreements requiring prior authorisation by your Board of Directors.
Our assignment does not involve seeking out the potential existence of other such agreements but consists
of informing you, based on the information provided to us, of the main characteristics and terms and
conditions of those agreements brought to our attention, without having to express an opinion on their
usefulness or appropriateness. Pursuant to article 92 of the decree of 23 March 1967, it is your responsibility
to assess the benefits to the company of signing these agreements with a view to their approval.
We conducted our audit in accordance with professional accounting standards. These standards require the
application of procedures to provide reasonable assurance that the information supplied to us is consistent
with the source documents on which it is based.
1.1. Transfer of shares in General Electronique Brive to A Novo France
Directors concerned: Messrs Vincent Caprarese, Daniel Thieriet and Henri Triebel.
When establishing the local holding company A Novo France, A Novo SA transferred all the shares it held in
Général Electronique Brive for a total amount of €9,306,250. The net book value of these shares in A Novo
SA’s accounts was €567,095. The capital gains generated on these shares benefit from deferred taxation.
This agreement was authorised by the Supervisory Board on 1 December 2000.
1.2. Sale of shares in Easy Repair to A Novo France
Directors concerned: Messrs Vincent Caprarese, Daniel Thieriet and Henri Triebel.
When establishing the local holding company A Novo France, A Novo SA sold A Novo France all the shares
it held in Easy Repair. Due to the net worth of this subsidiary, the shares were sold for a token value of FF1.
The net book value of these shares in A Novo SA’s accounts was €815,524.
100
1.3. Transfer of shares in GE UK to A Novo UK
Director concerned: Mr Henri Triebel.
When establishing the holding company A Novo UK, A Novo SA transferred all the shares it held in GE UK
to A Novo UK. The transfer was valued at €1,382,954. The net book value of these shares in A Novo SA’s
accounts was €1,494,173.
This agreement was authorised by the Supervisory Board on 2 October 2000.
1.4. Transfer of shares in Digitec to A Novo UK
Director concerned: Mr Henri Triebel.
When establishing the holding company A Novo UK, A Novo SA transferred all the shares it held in Digitec
to A Novo UK. The transfer was valued at €4,137,268. The net book value of these shares in A Novo SA’s
accounts was €4,418,059.
This agreement was authorised by the Supervisory Board on 2 October 2000.
1.5. Sale of shares in Innovatron Services to Carte SA
Directors concerned: Messrs Daniel Auzan, Jean François Dermagne and Daniel Thieriet.
As part of the merger between the two companies, A Novo SA sold Carte SA all the shares it held in
Innovatron
Services at their net book value of €9,755,936.
2. Furthermore, in accordance with the decree of 23 March 1967, we have been informed that the
following agreements, approved during previous fiscal years, were still in effect during the last
fiscal year.
2.1. Cash advance granted by A Novo to its subsidiary A Novo Americas LLC
Director concerned: Mr Daniel Auzan.
A Novo advanced $12m to its subsidiary A Novo Americas LLC to finance the acquisition of the US company
Cable Link Inc.
This agreement was authorised by the Board of Directors on 27 July 2000.
2.2. Oz Consulting contract with A Novo
Director concerned: Mr Daniel Auzan.
Oz Consulting, a company established under Swiss law, was commissioned by A Novo to develop an
international expansion strategy and seek out new market opportunities. In France, the company is
responsible for identifying target companies with a view to new acquisitions or participating interests. For the
financial year ended 30 September 2001, A Novo received a €457,347 invoice for fees.
3. We also present our report on the agreements covered by article L 225-90 of the French
Commercial Code
In accordance with article L 225-240 of the French Commercial Code, we inform you that these agreements
have not obtained prior authorisation from your Supervisory Board.
101
We are required to inform you, based on the information provided to us, of the main characteristics and terms
and conditions of these agreements, as well as the reasons why the authorisation procedure was by-passed.
3.1. Cancellation of a debt owed by Carte & Services
Directors concerned: Messrs Daniel Auzan, Daniel Thieriet and Jean-François Dermagne.
During the financial year ended 30 September 2001, A Novo wrote off a commercial debt of €10,175,352
owed to it by its subsidiary Carte & Services.
Signed in Paris on 7 March 2002.
THE STATUTORY AUDITORS
CONSTANTIN ASSOCIES
Patrick MAUPARD
102
Jean-François SERVAL
2.4 - Key figures in euros – Consolidated financial statements
Year ended
30 Sep 99
Year ended
330 Sep 00
Year ended
30 Sep 01
67 593
7 918
(126)
7 792
(897)
5 009
188 045
13 514
(564)
12 950
217
9 748
370 103
29 033
(5 412)
23 621
(3 799)
10 110
Share capital
Shareholders’ equity
Debt
Net fixed assets
Net current assets
2 185
28 139
7 227
12 834
38 966
67 283
120 105
75 852
143 633
144 807
67 283
119 281
193 333
264 458
196 754
Total assets
51 970
289 436
464 936
INCOME STATEMENT
Turnover
Operating income
Net income
BALANCE SHEET
103
104
3
ADMINISTRATIVE
AND MANAGEMENT
BODIES
3.1 - Supervisory Board as at 30 September 2001
As part of A Novo’s corporate governance policy, the General Meeting of 19 March 2001 voted to extend the
Supervisory Board to include members from outside the Group.
Following his nomination by the Supervisory Board, the above General Meeting approved the appointment of
André Kudelski as member of this Board.
As a result, the Group will benefit from André Kudelski’s international business experience as Chairman of
Kudelski SA and NAGRA+, two companies specialising in digital technologies, notably video encryption.
Members of the Supervisory Board since the General Meeting of 19 March 2001
Daniel Auzan
Chairman
Emanuele Ugolini
Vice-Chairman
André Kudelski
Board Member
Daniel Thieriet
Board Member
Pergo Holdings Ltd.
Board Member
- Daniel Auzan, residing at 13 Route Zaehringen, Fribourg (1700), Switzerland.
Date appointed as Chairman of the Supervisory Board: 9 March 1999
Positions held in French companies:
Chairman of Supervisory Board
Director
Director
Director
Director
Chairman of Board of Directors
A Novo SA
GEB
Carte & Services
A Novo Caraïbes
Easy Repair
Triade Electronique
Positions held in international subsidiaries:
Europe:
Sadelta
Company established in Spain
Director
Director
Director
Tecnosoporte
Coretel
A Novo Electronica e Comunicaçoes SA
A Novo Italia SpA
A Novo International SA
A Novo Maroc
A Novo Nordic AB
DigiTec-Direct Ltd
Company established in Portugal
Company established in Italy
Company established in Switzerland
Company established in Morocco
Company established in Sweden
Company established in the UK
Americas:
106
Director
A Novo America Llc
Company established in the US
Director
Director
A Novo Broadband Inc
A Novo America del Sur
Comtel
Company established in Panama
Company established in Chile
Rest of world:
Director
GE (Asia) Co. Ltd
Company established in Hong Kong
OZ Consulting
Daniel Auzan is not a member of any other administrative, management or supervisory bodies belonging to
any other French or foreign companies.
- Emmanuel Ugolini, residing at Douala, BP 1217 Cameroon.
Date appointed to Supervisory Board: AGM of 9 March 1999.
Vice-Chairman of Supervisory Board
A Novo SA
- André Kudelski, residing at Route de Genève No.22, 1033 CHESEAUX, LAUSANNE, Switzerland
Date appointed to Supervisory Board: AGM of 19 March 2001
Chairman of KUDELSKI SA, a company established in Switzerland and listed on the Zurich Stock Exchange.
Chairman of NAGRA+, a company established in Switzerland (owned 50-50 by KSA and Canal+).
- Pergo Holdings Ltd, headquartered at PO Box 3720, Nassau, Bahamas.
Represented by Claude Perillard (official representative) or Cyrus Maybud.
Member of Supervisory Board
A Novo SA
Claude Perillard is not a member of any other administrative, management or supervisory bodies belonging
to any other French or foreign companies.
- Daniel Thieriet, residing at 6 rue du 8 Mai 1945, 91510 Lardy.
Chairman of the Board of Directors from 9 March 1999 to 19 March 2001
Director
Director
Director
Manager
A Novo SA
A Novo France
Easy Repair
CITEEL
GEB
Carte & Services
Fibrosud
CESI (SARL)
- Europe:
A Novo Electronica e Comunicaçoes SA
Company established in Portugal
Chairman of Management Board
Director
A Novo Polska
A Novo Comlink Espana SL
Company established in Poland
107
- South America:
Director
A Novo Chile
Company established in Chile
Daniel Thieriet is not a member of any other administrative, management or supervisory bodies belonging to
The mandates held by Mr Kudelski and Mr Thieriet will expire at the General Meeting called to approve the
financial statements for the year ending 30 September 2003.
The mandates held by Mr Auzan, Mr Ugolini and the company Pergo Holdings will expire at the General
Meeting called to approve the financial statements for the year ending 30 September 2004.
3.2 - Board of Directors
3.2.1. Board of Directors as at 30 September 2001
- Henri Triebel, residing at 8 rue de la Paroisse, 78000 Versailles.
Date appointed as Chairman of Board of Directors: 8 March 2001
Chairman of A Novo’s Board of Directors
Director
A Novo Caraïbes
A Novo France
SEFRAM
- Europe:
A Novo Suisse
Vice-Chairman of Board of Directors
Director
Director
Director
Director
Director
A Novo International SA
A Novo Servitec
A Novo Logitec
A Novo UK
DigiTec-Direct Ltd
GE UK Ltd
A Novo Teleplan Communication UK Ltd
Radiophone Ltd
A Novo Nordic AB
Gamma Comunicazione srl
Prima Comunicazione
Company established in Belgium
Company established in Sweden
Managing Director
A Novo America Llc
Director
A Novo Broadband Inc
- North America:
108
- South America:
Director
A Novo America del Sur
Company established in Panama
Henri Triebel is not a member of any other administrative, management or supervisory bodies belonging to
- Luc Vancayzeele, residing at 1 place de la Brèche, 78000 Versailles
Date appointed to the Board: 8 March 2001
A Novo SA Board Member
Director
Director
Director
Joint Manager
GEB SA
A Novo Caraïbes
Fibrosud
SECA Domaine du Souviou
Director
A Novo Servitec
Director
Member of Management Committee
A Novo Logitec
A Novo Polska
Company established in Poland
Luc Vancayzeele is not a member of any other administrative, management or supervisory bodies belonging
to any other French or foreign companies.
- Jean-François Dermagne, residing at 10 rue Martray, 95240 Cormeille en Parisis.
Date appointed to Board of Directors: 29 September 1999
Member of A Novo SA’s Board of Directors
Financial and Administrative Director of A Novo SA.
On 17 December 2001, Mr Dermagne resigned from his position as member of A Novo SA’s Board of
Directors.
Jean-François Dermagne is not a member of any other administrative, management or supervisory bodies
belonging to any other French or foreign companies.
3.2.2. Board of Directors following the Supervisory Board Meeting
of 6 December 2001
The Supervisory Board has appointed Mr Paul Bernard as member of the Board of Directors.
Mr Paul Bernard was born in Boulogne Billancourt, France, on 11 January 1960. He currently resides at 51
Rue Greneta, 75002 Paris. His appointment will expire when the Board of Directors is next renewed on 8
March 2003.
Date appointed to Board of Directors: 6 December 2001.
109
Other positions held in French companies:
Chairman of Board of DirectorsNSX Numerical Systems & Communication
Board Member
Audiosmartcard International
Director NAF NAF
Director Medigis SA
Director Gilles Leroux SA
Chairman of Board of DirectorsSAS Wintec Partners
Paul Bernard is not a member of any other administrative, management or supervisory bodies belonging to
Members of the Board of Directors since 17 December 2001
- Henri Triebel
Chairman
- Luc Vancayzeele Board Member
- Paul Bernard
Board Member
During the financial year ended 30 September 2001, the Board of Directors held 19 meetings, while the
Supervisory Board held 8 meetings.
To date, no committees have been set up comprising members of the administrative, management and
supervisory bodies.
3.3 - Remuneration of members of the administrative and management
bodies
In accordance with article L 225-102-1 of the French Commercial Code, the following table shows the total
amount of salaries and benefits paid by the company and its subsidiaries to the directors of A Novo SA during
the financial year ended 30 September 2001:
Directors
Nature of appointment
Henri Triebel
Luc Vancayzeele
J-F Dermagne
Daniel Auzan
Daniel Thieriet
André Kudelskli
Cyrus Maybud
Emanuele Ugolini
Vincent Caprarese
205,348
Board Member
108,459
Board Member
140,588
Chairman of Supervisory Board
209,603
Member of Supervisory Board/Permanent Representative
Vice-Chairman of Supervisory Board
Board Member (until March 2001)
152,571
Gross salary (€)
Benefits in kind
Other
Total
Company car
Company car
Company car
Company car
Company car
205,348
108,459
140,588
Company car
152,571
209,603
The directors listed in the above table benefit from the full range of stock options described in 4.2.3 (page
107).
Directors
Jean-François Dermagne
Paul Bernard
Paul Bernard
Henri Triebel
Date stock
options
granted
18 Aug 1999
13 Nov 2000
17 Sep 2001
17 Sep 2001
* Options granted under conditions precedent
(1) Options purchased in July 1999
110
Options
expiry date
18 Aug 2002
13 Nov 2004
17 Sep 2005
17 Sep 2005
Number of
options
granted
Option
price
Number of
options
purchased
75,000
15,000*
50,000*
155,000
€6.29
€30.11
€15.02
€15.02
50,000 (1)
0
0
0
Employees (non-directors)
Date
stock options
granted
Geoffrey Griffiths*
Alain Catrevaux
Jean-Claude Teissedre
Delphim Maya
Christian Benardeau
Thomas Bigerson
Geoffrey Griffiths
Jean-Luc Bouin
Bernard Guillon
Alain Catrevaux
Geoffrey Griffiths
13 Nov 2000
13 Nov 2000
13 Nov 2000
13 Nov 2000
8 Jan 2001
22 May 2001
22 May 2001
22 May 2001
22 May 2001
17 Sep 2001
17 Sep 2001
Options
expiry date
13 Nov 2004
13 Nov 2004
13 Nov 2004
13 Nov 2004
8 Jan 2005
22 May 2005
22 May 2005
22 May 2005
22 May 2005
17 Sep 2005
17 Sep 2005
Number
of options
granted
Option price
15,000
25,000
750
4,000
12,500
5,000
15,000
2,500
2,500
25,000
10,000
€30.11
€30.11
€30.11
€30.11
€33.01
€27.13
€27.13
€27.13
€27.13
€15.02
€15.02
Number
of options
purchases
0
0
0
0
0
0
0
0
0
0
0
* Options granted under conditions precedent
3.4 - Loans and guarantees granted to the Directors
None
3.5 - Employee profit-sharing
Employees of A Novo’s French companies benefit from profit-sharing agreements.
Proceeds from profit-sharing activities are allocated to the company savings scheme set up for this purpose.
3.6 - Extraordinary events and disputes
As far as the company is aware, there are currently no extraordinary events or disputes that have had, or will
have, a significant impact on the company’s business activities, results or assets.
3.7 - Issue of warrants reserved for Mr Daniel Auzan
In return for the personal contributions made by Daniel Auzan to the A Novo Group, and to enable Mr Auzan
to maintain his stake in the company, if he wishes or if he is required to do so by financial partners (see
section 1.b below), the General Meeting of 25 March 2002 voted in favour of issuing 450,000 warrants
reserved exclusively for Mr Auzan (see Chapter 7, 14th resolution). These warrants entitle Mr Auzan to
subscribe to 900,000 shares at the prevailing market price for a period of five years. The conditions for issuing
and exercising these warrants are described in the following ‘Auditors’ Report on Specific Employee Benefits’.
3.8 - Auditors’ report on specific employee benefits
In accordance with the terms of my appointment as ‘Auditor for Specific Employee Benefits’ by the President
of the Beauvais Commercial Court on 26 February 2002, pursuant to article L. 225-147 of the French
Commercial Code, I hereby present my report on your company’s issue of straight warrants reserved for Mr
Daniel Auzan.
111
1. OVERVIEW OF THE TRANSACTION
a. Description
Your company plans to issue 450,000 straight warrants reserved for Mr Daniel Auzan, Chairman of the
Supervisory Board.
The main characteristics of these warrants are as follows:
- Registered warrants;
- Conversion ratio: two new shares per warrant;
- Not eligible for trading on any stock market;
- Not transferable;
- Issue price: €0.01 per warrant;
- Exercise price: the price of each share issued as a result of exercising the warrants will be equal to A Novo’s
average share price during 20 consecutive trading days chosen from the 40 trading days preceding the day
when the Group receives notification that the warrants have been exercised;
- Exercise period: five years from the issue date;
- Conditions: the warrants may be fully or partially exercised under the following conditions: (i) if, during the
warrant exercise period, A Novo SA carries out a public issue of securities giving immediate or future access
to a portion of the company’s share capital, with or without waiver of preferential subscription rights; and (ii)
in proportion to the immediate or potential dilution of Mr Auzan’s stake resulting from these various issues.
Under this transaction, shareholders will automatically waive their preferential subscription rights to these
warrants and, subsequently, to any shares issued as a result of exercising these warrants.
To comply with prevailing legislation:
- The Group undertakes not to redeem its share capital or alter the allocation of this share capital, during the
period when the warrants are likely to be exercised.
- If the company decides to reduce its share capital as a result of financial losses, the rights of warrant holders
will be scaled down accordingly.
In addition, in the event that the Group carries out one of the following transactions, warrant holders’ rights
will be maintained by adjusting the terms for exercising the warrants: (i) share issue with preferential
subscription rights; (ii) bonus issue of any type of financial instrument other than shares in the company; (iii)
capital increase by incorporating reserves, earnings or share premiums; (iv) distribution of reserves or
premiums; (v) takeover, merger or demerger; or (vi) share buy-back transaction. These adjustments will be
determined by your Board Of Directors
b. Motivations behind the transaction
During the year ended 30 September 2001, Mr Daniel Auzan pledged 633,285 of his own shares as a first
demand guarantee. This guarantee covered payment obligations for the remaining 40% stake in Gamma
Communicazione, following the 60% stake acquired by A Novo the previous year. In addition, following a
request by the lead managers, Mr Auzan agreed to subscribe personally to 36,139 of the 396,040 OCEANE
bonds (Bonds Convertible or Exchangeable for New or Existing Shares). Based on a nominal value of €202
per bond, the cost of subscribing to these bonds was €7.3m, which Mr Auzan financed through a personal
loan.
Your Board of Directors feels that these commitments have prevented Mr Daniel Auzan from participating
fully in any public or private share issues. However, the Board believes it is essential that Mr Auzan should
continue to play a pivotal role in the company, particularly given the requirements imposed by your company’s
financial partners.
112
2. IMPACT OF THE ISSUE
As at 30 September 2001, Mr Daniel Auzan owned 4,726,025 of the 19,703,060 outstanding shares in A Novo,
i.e. 23.99% of the share capital. 4,657,170 of these shares carry double voting rights, giving Mr Auzan 35.95%
of overall voting rights.
As at the above date, the maximum potential number of shares in the company, after conversion of the
OCEANE bonds, amounted to 21,687,533. If Mr Daniel Auzan were to convert all his OCEANE bonds into
shares, he would own a total of 4,906,720 shares or 22.63% of the share capital.
On this basis, if Mr Auzan exercised all his straight warrants, he would own 5,806,720 out of a total of
22,587,533 shares, raising his stake in the share capital to 25.71%. Consequently, these warrants could
potentially increase Mr Auzan’s stake by a maximum of 3.08%.
However, given that the Group has yet to determine the terms of the financial transactions that would enable
Mr Auzan to exercise his warrants, it is not possible to calculate the actual percentage by which his stake will
eventually increase as a result of converting these warrants.
3. CHECKS CONDUCTED
I have conducted the checks I considered necessary to verify the legitimacy of the specific benefits granted
to Mr Daniel Auzan and to determine their potential impact on the shareholders’ position, in accordance with
the standards of the ‘Compagnie Nationale des Commissaires aux Comptes’ (French Institute of Auditors).
In particular, I am satisfied that these benefits do not give the recipient preferential rights to profits and
liquidating dividends.
4. CONCLUSION
I have no comments or observations to make on the terms of this warrant issue reserved for Daniel Auzan,
with waiver of preferential subscription rights, as submitted for your approval.
Signed in Boulogne-Billancourt on 15 March 2002
Patrick Polle
Auditor for Specific Employee Benefits
113
114
4
GENERAL
INFORMATION
ABOUT THE
COMPANY AND ITS
SHARE CAPITAL
4.1 - General information about the company
Corporate name
A Novo
Registered office
16, rue Joseph Cugnot, Z.I. de Bracheux, 60000 Beauvais, France.
Administrative headquarters: 31, rue des Peupliers, 92660 Boulogne, Cedex – France.
Legal form
A Novo is a Société Anonyme (public limited company governed by French law) with a Board of Directors and
Supervisory Board governed by articles L225-57 to L225-95 of the French Commercial Code and by decree
no. 67-236 of 23 March 1967 on commercial undertakings.
Date of establishment and duration of the company
The company was established for a term of 99 years as from 20 May 1987, the date when it was registered
on the French Companies Register. This term is subject to extension or termination by law.
Companies Register number
RCS BEAUVAIS 341 125 540
Financial year
The company’s financial year runs from October 1 to September 30.
Registered purpose (article 3 of the memorandum and articles)
The company was established with the following objects in France and in all other countries:
- Undertaking all types of services, maintenance operations, technical assistance and upgrading of video
communications and telecommunications equipment and, more generally, of all electronic and/or IT
equipment.
- Designing, developing, manufacturing, acquiring and marketing all video communications and
telecommunications equipment and, more generally, all electronic and/or IT products.
- All research activities aimed at developing, registering and operating patents, processes and industrial
or intellectual property rights, as well as all operations pertaining to these patents and rights.
- All participating interests and capital interests in other existing or future companies, in any form
whatsoever, notably by transferring assets, subscribing to or purchasing securities or holdings, forming
partnerships, creating new companies, merging with other companies, establishing alliances, setting up
joint ventures or otherwise.
116
- Owning, enhancing and developing these participating interests or investments, notably by providing
services, financing and contributing business to its subsidiaries.
- Generally, all financial, commercial, industrial, personal property and real estate transactions relating
directly or indirectly to the registered purpose outlined above or likely to facilitate its development.
Distribution of profits (article 32 of the memorandum and articles)
5% of the profit for the year, less any brought-forward losses, must be transferred to the legal reserve if this
is less than one-tenth of the share capital. This withdrawal ceases to be compulsory once the said fund
reaches one-tenth of the share capital but becomes effective again when, for any reason, the legal reserve
falls below this level.
The company’s distributable profit comprises its net profit for the financial year, less any loss carry forwards
transferred to the legal reserves, plus any retained earnings.
The General Meeting may appropriate any sums it thinks fit to one or more extraordinary, general or special
reserves, or to retained earnings.
Any remaining balance must be distributed proportionally between all shares based on their paid-up nonredeemed value.
However, barring a capital reduction, no dividends may be distributed to shareholders if this were to reduce
the amount of shareholders’ equity to less than the amount of share capital plus any reserves that cannot be
distributed under the law or memorandum and articles.
The General Meeting may decide to distribute any sums drawn from the reserves available to it, either to pay
out or supplement a dividend, or make an exceptional dividend payment. In this case, it must specify the
reserve accounts from which the payment is made. However, dividends must initially be drawn from the profit
for the year.
Following approval of the accounts by the General Meeting, any losses must be carried forward into a special
account and offset against any profit recorded in subsequent years until these losses are eliminated. The
General Meeting may decide to grant shareholders the option to receive all or part of their final or interim
dividend in cash or in shares.
General Meetings – voting rights (articles 26 to 29 of the memorandum and articles)
All shareholders may participate in General Meetings, regardless of the number of shares they own.
General meetings take place and deliberate on the terms stipulated by law. Meetings take place at the
registered office or at any other place designated in the invitation to the meeting.
Attendance and participation at General Meetings is subject to the following conditions:
- For holders of registered shares: the holder’s name must appear on the company’s registers.
- For holders of bearer shares: a certificate issued by an authorised intermediary must be sent to the
address designated in the invitation.
These formalities must be carried out at least five days prior to the meeting. However, the Board or General
Meeting may decide to shorten the above deadline for registered shareholders and those sending certificates.
Each participant at the meeting has one vote for each share owned or represented, with no maximum limit.
117
However, shareholders are entitled to double voting rights for all fully paid up shares which have been
registered in the same name for a continuous period of four years.
In the event of a capital increase by incorporating reserves, earnings or issue premium accounts, double
voting rights are also assigned to any bonus shares granted to shareholders in respect of existing shares with
double voting rights.
Identification of shareholders (article 11 of the memorandum and articles)
At any time and at its own expense, the company is entitled to request from the organisation responsible for
clearing shares the name of holders of shares granting immediate or future voting rights at its own
shareholder meetings, as well as the quantity of shares held by each one of them and, where appropriate, any
restrictions that may apply to these shares.
118
4.2 - General information about the share capital
4.2.1. Share capital as at 31 January 2002
The company’s share capital currently amounts to €67,453,652 divided into 19,753,060 fully paid-up shares of
the same type.
4.2.2. Additional share capital authorised by the Combined General
Meeting of 19 March 2001 but not issued
In its ninth and tenth resolutions, the Combined General Meeting of shareholders held on 19 March 2001
authorised the Board to increase the share capital on one or more occasions by a maximum nominal amount
of €80 million by issuing securities giving immediate or future access to a portion of the company’s share
capital, with the option to waive shareholders’ preferential subscription rights.
To date, the Board has not used any of these authorisations. As a result, the remaining additional share capital
authorised by the General Meeting of 19 March 2001 still stands at €80 million.
The Combined General Meeting of 25 March 2002 is expected to replace these different authorisations by
new authorisations, which are described in chapters V and VI of this Reference Document.
4.2.3. Potential share capital: stock options
The Extraordinary General Meeting of Shareholders held on 19 March 2001 authorised the Board to grant
stock options, within a period of five years, to designated employees and, potentially, directors of the Group
and its related companies.
The stock options granted under this authorisation and previous authorisations give entitlement to a
maximum nominal amount of 10% of the total share capital.
To date, a total of 1,167,250 new shares may be issued as a result of exercising the options granted. This would
dilute existing shareholdings by approximately 5.8%.
Using this authorisation, the Board decided to grant several employees of the Group options entitling them
to subscribe to new shares in the company, whose characteristics are set out in the table below:
119
Plan 1
Plan 2
Plan 3
Date of General Meeting
9 Mar 1999 9 Mar 1999 9 Mar 1999 15 Mar 2000 15 Mar 2000 15 Mar 2000 15 Mar 2000 19 Mar 2001
Date of Board Meeting
6 Apr 1999 18 Aug 1999 4 Nov 1999 21 Apr 2000 13 Nov 2000
Total number
of shares that can be
subscribed to
425,000
202,500
65,000
177,500
69,750
Total
8 Jan 2001 22 May 2002 17 Sep 2001
12,500
25,000
240,000
1,217,250
Of which: number of
shares than can be
subscribed to or
purchased by directors
Number of directors concerned
Start date for
exercising options
8 Jan 2001 22 May 2002 17 Sep 2001
Expiry date
8 Jan 2005 22 May 2005 17 Sep 2005
€5.00
Subscription price
Exercise method
€6.292
€8.74
€39.92
€30.118
€33.016
€27.136
€15.02
Subscription Subscription Subscription Subscription Subscription Subscription Subscription Subscription
Number of options subscribed to
50,000
Number of options outstanding
Number of share issued
Maximum potential dilution
50,000
1,167,250
19,753,060
5.80%
The figures shown in the above table take into account the five-for-one stock split carried out on 18 June 2001.
A Novo plans to maintain this policy of giving its employees a vested interest in the company’s share capital,
as reflected by the resolutions proposed at the Combined General Meeting of 19 March 2001.
4.2.4. Other securities giving access to the share capital
In its ninth and tenth resolutions, the Combined General Meeting of shareholders held on 19 March 2001
authorised the Board to issue securities giving immediate or future access to a portion of the company’s share
capital, with the option to maintain or waive shareholders’ preferential subscription rights. The maximum
amount of debt securities issued under the aforementioned authorisation cannot exceed €200 million.
In its meeting of 19 March 2001, the Board used this authorisation to issue 396,040 bonds (before the fivefor-one stock split) with a total nominal value of €80,000,080. Each of these OCEANE bonds (Bonds
Convertible or Exchangeable for New or Existing Shares) had a nominal value of €202 (before the five-forone stock split). Details of this issue appear in Chapter 5 (Reports by the Board of Directors to the General
Meeting).
To date, 5,340 of the 396,040 OCEANE bonds issued have been exchanged for existing shares. As a result,
390,700 OCEANE bonds (before the five-for-one stock split) are still outstanding.
The outstanding nominal amount of debt securities that can still be issued under the above authorisation
currently stands at €119,999,920.
4.2.5. Other common stock equivalent
None
120
4.2.6. Changes in A Novo’s share capital
Date
9 Apr 1987
20 Aug 1988
11 Jul 1989
22 Feb 1991
18 Mar 1991
7 Sep 1992
9 Jun 1997
Nature
of transaction
Company established
Incorporation of reserves
Capital increase for cash
(FF3m) and capital increase
for cash (FF1.2m)
27 Nov 1997 Capital increase for cash at par
31 Dec 1997 Capital increase for cash
9 Mar 1999 25-for-1 stock split
12 Apr 1999 Capital increase for cash
12 Apr 1999
Bond conversion
16 Mar 2000 Capital increase for cash
28 Apr 2000 Incorporation of issue
premium account
18 Jun 2001 Five-for-one stock split
17 Dec 2001 Capital increase
following exercise of
50,000 stock options
17 Dec 2001 Conversion of share
capital into euros and
elimination of face value
Nominal
amount of capital
increase
Premium
Total share
capital
Total number
of shares
outstanding
Face
value
FF100,000
FF100,000
FF800,000
FF1,000,000
FF2,000,000
FF1,000,000
FF4,200,000
-
FF100,000
FF200,000
FF1,000,000
FF2,000,000
FF4,000,000
FF5,000,000
FF9,200,000
1,000
2,000
10,000
20,000
40,000
50,000
92,000
FF100
FF100
FF100
FF100
FF100
FF100
FF100
FF800,000
FF783,600
FF14,216,071
FF2,840,000
FF89,658,173
FF10,000,000
FF10,783,600
FF10,783,600
FF13,623,600
100,000
107,836
2,695,900
3,405,900
FF100
FF100
FF4
FF4
FF705,900
FF1,432,948
FF425,586,096
FF14,293,769
FF562,538,414
-
FF14,329,500
FF15,762,448
FF441,348,544
3,582,375
3,940,612
3,940,612
FF4
FF4
FF112
€170,500
€144,100
FF441,348,544
€67,453,652
19,703,060
19,753,060
FF22.40
€3.41
-
-
€67,453,652
19,753,060
-
12 February 1999: listing on the Nouveau Marché (COB authorisation no. 99-240 of 16 March 1999)
16 March 2000: capital increase for cash (COB authorisation no. 00-348 of 20 March 2000)
The share capital has not changed since 17 December 2000.
121
4.3 - Share ownership and voting rights
4.3.1. Breakdown in share ownership as at 31 January 2002
A Novo’s share capital is divided into 19,753,060 shares. These shares are listed on the Nouveau Marché of
the Paris Stock Exchange. The face value was eliminated following a Board decision on 17 December 2001,
which was authorised by the Combined General Meeting of 19 March 2001. The free float currently amounts
to 45.10% of the company’s share capital.
Shareholders
Daniel AUZAN
Daniel Auzan
Pergo Holdings
Jean-Pascal Battesti
Olivier Battesti
François Courde
Vincent Caprarese
Alain Vachette
Number of shares held
Registered Single Voting
Right
Registered –
Double Voting
Rights
68 855
68,855
4 657 170
4,657,170
31,195
943,965
505,765
95,000
129,270
Total
shares
% of share
capital
Number of
Voting rights
% of voting
rights
4 726 025
4,726,025
1,400,860
975,160
505,765
95,000
129,270
166,947
23,93%
23.93%
7.09%
4.94%
2.56%
0.48%
0.65%
0.85%
9 383 195
9,383,195
1,400,860
1,919,125
1,011,530
190,000
258,540
166,947
36,22%
36.22%
5.41%
7.41%
3.90%
0.73%
1.00%
0.64%
194,745
0.99%
0
0.00%
Bearer
1,400,860
166,947
Treasury shares
194,745
Sub-total
Other Shareholders
100,050
318,575
6,331,170
19,050
1,762,552
11,221,663
8,193,772
11,559,288
41.48%
58.52%
14,330,197
11,578,338
55.31%
44.69%
418,625
6,350,220
12,984,215
19,753,060
100.00%
25,908,535
100.00%
Total
Pergo Holdings Ltd is a non-resident financial company that has existed alongside the individual shareholders
since the company was listed. No shareholders’ agreement has been signed between these different parties.
Pergo Holdings Ltd is owned by the following individual shareholders: Mr Cyrus Maybud, Mr Claude Perillard
and Mr Joseph Battesti.
The company has not been informed of any exceeded thresholds that need to be declared in accordance with
article L 233-7 of the French Commercial Code.
For the record, the details on share ownership and voting rights, provided in the two tables below, have been
taken from A~Novo‚s Reference Documents for the 2000/01 and 1999/2000 financial years. (Note that a fivefor-one stock split was carried out on 18 June 2001, multiplying the number of shares outstanding by 5.)
Shareholders at 31 January 2001
Shareholders
Number
of shares
Daniel Auzan
Olivier Battesti
J-P Battesti
Pergo Holdings Ltd
Employees & public
Total
122
% of share
capital
Number of
voting rights
% of voting
rights
945,205
101,292
194,893
290,622
2,408,600
23.98
2.57
4.94
7.37
61.14
1,876,639
202,584
383,686
290,622
2,408,600
36.35
3.92
7.43
5.63
46.67
3,940,612
100
5,162,131
100
Shareholders at 31 December 1999
Shareholders (1)
Daniel Auzan
Olivier Battesti
J.-P. Battesti
Pergo Holding Ltd
CFI
Employees and public
Total
Number
of shares
% of share
capital
Number of
voting rights
% of voting
rights
1 014 944
206 695
200 695
334 795
265 341
1 559 905
28,33
5,77
5,60
9,35
7,41
43,54
2 021 322
406 695
395 488
334 795
265 341
1 719 928
39.30
7.91
7.69
6.51
5.16
33.43
3 582 375
100
5 143 569
100
(1) Registered shareholders who owned more than 5% of the share capital and/or voting rights.
4.3.2. Major changes to share ownership
None
4.3.3. Undertaking to maintain shareholdings
None
4.3.4. Shareholder’s agreements
None
4.3.5. Shares pledged as collateral by the company or its subsidiaries
To enable A Novo SA to complete the strategic acquisition of Gamma Comunicazioni in Italy, Mr Daniel Auzan
agreed to pledge 633,285 personal shares to the sellers of Gamma Comunicazioni as a guarantee of payment
for the remaining 40% stake in Gamma Comunicazioni still held by these sellers.
Shares in subsidiaries pledged by A Novo SA are summarised in the table of off-balance sheet commitments
as at 30 September 2001 (see Note 10).
To our knowledge, the company has not pledged any other collateral.
123
4.4 - Trading volumes, investor relations policy and dividends
4.4.1. Trading volumes
Performance of the shares, including monthly highs and lows for share price and traded volumes:
Month
High
Low
Latest
price
Ave. 09/2000
Ave. 10/2000
Ave. 11/2000
Ave. 12/2000
Ave. 01/2001
Ave. 02/2001
Ave. 03/2001
Ave. 04/2001
Ave. 05/2001
Ave. 06/2001
Ave. 07/2001
Ave. 08/2001
Ave. 09/2000
Ave. 10/2001
Ave. 11/2001
Ave. 12/2001
Ave. 01/2002
Ave. 02/2002
45.19
40.97
37.41
40.96
45.21
42.99
36.37
32.34
35.17
30.67
20.93
21.68
15.66
14.69
16.62
18.72
17.54
16.59
43.43
39.20
35.55
38.58
43.55
41.09
34.72
31.09
34.29
28.65
19.69
20.91
14.30
13.97
15.87
17.93
17.09
16.08
44.36
40.14
36.64
40.01
44.68
42.13
35.64
31.80
34.84
29.58
20.40
21.33
15.10
14.31
16.33
18.26
17.33
16.31
Average
daily
turnover
Daily share
capital
traded (€ m)
39808
21,734
42,163
50,875
23,159
21,966
25,022
30,006
22,913
43,260
44,074
19,971
47,543
73,525
81,176
56,957
27,503
28,929
No.
of trading
days
1.77
0.86
1.54
2.04
1.04
0.90
0.88
0.95
0.79
1.17
0.89
0.42
0.69
1.05
1.33
1.04
0.48
0.47
21
22
22
19
22
20
22
19
22
20
22
23
20
23
22
18
22
20
Source : Euronext Mars 2002
A Novo shares: volumes traded
1 800 000
1 400 000
1 000 000
600 000
200 000
O
N
D
J
2000
Source: Bloomberg, March 2002
124
F
M
A
M
J
J
A
2001
S
O
N
D
J
F
Average
weighted
price
44.34
39.42
36.44
40.15
44.78
40.86
35.07
31.70
34.67
27.09
20.25
21.12
14.53
14.34
16.38
18.26
17.33
16.31
Performance of A Novo share relative to IT CAC 50 and SBF 250 (euros)
60
50
A NOVO
IT CAC 50
40
30
20
10
0
S
O
N
D
J
2000
F
M
A
M
J
J
A
S
O
N
D
J
F
M
2002
2001
Source: Bloomberg, December 2001
Performance of A Novo share relative to adjusted benchmark indices (euros)
60
50
A NOVO
IT CAC 50
40
SBF 250
30
20
10
0
A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M
2000
2001
2002
Source: Bloomberg March 2002
125
Comments on A Novo’s share price performance
During the 2000/01 financial year, A Novo’s share price was affected by the market’s flagging enthusiasm for
TMT stocks. The share price picked up sharply in December, after the company published its 1999/2000
results, which were in line with its announced targets. However, this gain was cancelled out by a more
widespread slump in telecom stocks from early 2001.
The A Novo shares continued to waver due to the markets’ major disappointment with the performances by
the flagship stocks of yesterday’s new economy. Consequently, when A Novo released its interim results in
July 2001, showing that its margins has been impacted by the consolidation of businesses acquired in 2000,
the shares started to fall sharply.
In September 2001, A Novo’s management launched a major promotional campaign to highlight the strengths
of its core business to a wide range of financial investors. After a series of roadshows, the stock regained its
losses and Schroder Investment Management Limited, a major London-based investment fund, announced
in early October that it had acquired a 5.17% stake in A Novo.
Shortly afterwards, in November, the company published its 2000/01 sales, which were in line with the targets
announced in March, triggering a major wave of buying in the stock. Many investors took advantage of the
summer discount to rebuild their positions in the stock, generating a 30% rebound in the share price
compared with its October 2001 low. Following the publication of encouraging 2001 results, the share price
stabilised at around €18.
Despite the general downturn, the A Novo stock distinguished itself during the last financial year by
exceeding the volume of shares traded during the previous year (in value terms).
Aware of investors’ appetite for the shares, the Board of Director decided on 18 June 2001 to carry out a fivefor-one stock split effective 26 June 2001. This transaction helped enhance the liquidity of the shares, whose
price had risen sharply since the IPO in April 1999, making it harder to attract individual investors.
OCEANE bond issue
On 27 March 2001, A Novo decided to carry out an OCEANE bond issue (Bonds Convertible or Exchangeable
for New or Existing Shares) in order to meet the needs of its large customer base of operators and
manufacturers and cater for the many institutional investors who have shown an interest in the Group and
confidence in its business model. These bonds were listed on 10 April 2001.
The final characteristics of the OCEANE bonds (approved by COB authorisation no. 01-295 of 29 March 2001)
are summarised in section 5.5.
Performance of the OCEANE bonds (Euroclear code: 18117), including monthly highs and lows for
price and traded volumes
Date
30 Apr 01
31 May 01
29 Jun 01
31 Jul 01
31 Aug 01
28 Sep 01
31 Oct 01
30 Nov 01
31 Dec 01
31 Jan 02
28 Feb 02
High
Low
Weighted
average (€)
Average
monthly
turnover
Average
monthly traded
capital (€ m)
202
203
202
184.5
178.9
178.5
169
178
175
177
177.99
180
192,1
167
151
166
167
151
150
159
164
163
196.9
194.9
180
172.5
178.9
167
166.9
165
175
171.95
170
26,310
3,840
4,295
2,357
2,279
40
6,251
3,705
1,205
1,339
907
5.18
0.75
0.77
0.41
0.41
0.01
1.04
0.61
0.21
0.23
0.15
Source: Bloomberg, March 2002
126
4.4.2. Investor relations policy
A Novo also took advantage of the 2000/01 financial year to significantly expand its analyst coverage. At endSeptember 2001, over 12 analysts from a combination of French, UK, US and German financial institutions
had published reports on the company.
To support the Group’s international expansion, the management actively organises regular roadshows to
coincide with key events in its financial calendar. These roadshows are targeted at major investment funds in
Europe (including the UK) and America.
As well as instant personalised news, sent by e-mail or fax to any shareholders requesting this service, all
press releases and financial reports have been available on the Group’s web site (www.a-novo.com), in both
French and English, since 2001. Furthermore, in line with recommendation R-98-01 of the Commission des
Opérations de Bourse (French Securities and Exchange Commission), all major press releases also appear in
the leading French business and financial publications, including La Tribune, Les Echos, Investir, Le Figaro
and Le Journal des Finances.
Similarly, at each key milestone in the Group’s development, Daniel Auzan and Henri Triebel discuss and
explain the Group’s strategy through occasional interviews in these publications and other more specialist
titles, such as Newsbourse. A Novo has been part of the IT CAC50 since its listing. On 2 March 2001, the
Index Committee of Euronext Paris agreed to include A Novo in the SBF 250, which comprises the largest
market capitalisations on the Paris stock market.
A Novo’s shares have been eligible for the SRD Deferred Settlement System (Service à Règlement Différé)
since 29 January 2001. On 1 January 2002, A Novo also became part of the NextEconomy segment of
Euronext, which covers high-growth companies with a proven track record of transparency and quality in the
financial information they provide. This deliberate policy is a vital first step in raising the company’s profile
among international investors, who are increasingly selective.
4.4.3. Dividends
Dividends paid over the past five years
Financial year ended
30 September 1996
30 September 1997
30 September 1998
30 September 1999
30 September 2000
30 September 2001
Total net amount distributed
Dividend per share
Net dividend
Tax credit
3,800,000
76.00
38.00
8,626,880 (1)
564,720 (2)
10,747,125
15,762,448
0
80.00
80.00
3.00
4.00
0
1.20 or 1.50 (3)
1.60 and 2.00 (3)*
0
(1) Existing shares at 30 September 1998
(2) Shares generated by bond conversions
(3) First figure: individual investors
Second figure: legal entities
Dividends not claimed within a period of five years from their due date are handed over to the French
government.
127
Future dividend policy
A Novo’s future dividend policy will depend on its earnings and its financing needs. The Group has
maintained its dividend payout target of 25%, barring any exceptional transactions.
4.5 - Share buyback programme
In accordance with current French laws and regulations, the Combined General Meeting of 19 March 2001
authorised the company to buy back up to 10% of its share capital for the purposes of adjusting its share
price.
4.5.1. Objectives of the buyback programme and intended use of the
shares
A Novo is listed on the Nouveau Marché and has decided to launch a share buyback programme involving
up to 10% of its total share capital.
A Novo plans to use the shares it repurchases for several purposes, in the following order of priority:
- To manage its share capital based on financial and economic objectives.
- To build up a reserve of shares to cover the exercise of rights attached to securities or financial
instruments giving entitlement to shares in the company through redemption, conversion, exchange,
presentation of warrants or any other means.
- To adjust the share price by trading the stock in the event of adverse market movements.
- To buy and sell shares depending on market conditions.
- To exchange shares as payment for acquisitions.
- To implement share purchase schemes and/or grant stock options to employees.
- To transfer the shares acquired, by any means, notably by selling them on the stock market, over-thecounter, in blocks, or through a public tender, exchange or sale offer.
- To retain or cancel the shares acquired.
Note that a previous share buyback programme was authorised by the General Meeting of 15 March 2000,
involving a maximum of 10% of the capital and based on the following terms:
- Purchase price of up to €300 per share (before five-for-one stock split).
- Selling price of at least €120 per share (before five-for-one stock split).
As a result of this authorisation, the company held 165,935 treasury shares (after the stock split) with an
average price of €28.32 as at 15 September 2001, the expiry date for this share buyback programme.
4.5.2. Legal framework
The share buyback programme, authorised by the General Meeting of 19 March 2001, pursuant to articles L
225-209 et seq of the French Commercial Code, was implemented following a decision by Board of Directors
on 17 September 2001. A Notice has been filed with the COB (French Securities and Exchange Commission),
which issued authorisation no. 01-1322 on 19 November 2001, pursuant to COB regulation no. 98-02. This
Notice was published in Les Echos on 22 November 2001.
This authorisation is subject to the following conditions:
- It can only involve a number of shares representing a direct or indirect holding of 10% of the company’s
share capital.
128
- The purchase price must not exceed €350 per share.
- The selling price must not be less than €150 per share.
- The company cannot devote more than €137,921,350 in funds to the transaction.
4.5.3. Terms and conditions
1 – Maximum percentage of capital acquired and maximal amount payable by A Novo
A Novo plans to buy back its own shares at an average price of €250 per share.
The company expects to acquire a maximum of 10% of its share capital based on its performance during the
term of the buyback programme. As at 10 February 2002, this percentage amounted to 1,975,306 shares with
a theoretical maximum value of €98,765,300, based on an average price calculated at €50 (arithmetic mean
of the €30-70 price range to be validated by the Combined General Meeting of 19 March 2001). However, in
view of A Novo’s current share price (below €20), the theoretical maximum value would be less than
€39,506,120.
A Novo undertakes to maintain a direct and indirect holding of less than 10% in the company’s share capital.
2 – Maximum percentage of capital acquired through block shares
A Novo can acquire up to 10% of its share capital through block shares, which coincides with the maximum
limit set for the share buyback programme.
3 – Duration and timetable for the share buyback programme
The authorisation granted by the Combined General Meeting of 19 March 2001 will expire on 19 September
2002 at the latest. However, the General Meeting called to approve the 2001 financial statements could end
this authorisation earlier. This intervention could take place at any time, subject to approval from the
Commission des Opérations de Bourse (French Securities and Exchange Commission).
4 – Financing the share buyback programme
As part of its overall financing policy, the company reserves the right to use part of its free cash to finance
these share buybacks and rely on short and medium-term borrowings to fund any additional requirements
in excess of its own cash flow.
5 – Accounting treatment of repurchased shares
Any shares bought back by the company are recorded in the parent company financial statements under
‘Marketable securities’ and are valued at the financial year-end based on their latest closing price.
129
4.5.4. Taxation rules for share buyback transactions
For the buyer (i.e. A Novo)
A Novo’s share buyback transactions do not affect its taxable earnings. In particular, the difference in value
between the purchase date and the financial year-end does not give rise to any capital gains from a tax
viewpoint. Furthermore, these transaction are not subject to withholding tax. These share buyback
transactions will only have an impact on A Novo’s taxable earnings if it subsequently transfers these shares
at a different price to the purchase price.
For the seller
Capital gains tax rules apply to all share buyback transactions, whatever their purpose, with the exception of
shares repurchased with a view to their cancellation under a public repurchase offer.
If A Novo buys back its own shares without launching a public repurchase offer, any capital gains made by
legal entities are classed as business gains under article 39 duodecies of the French General Tax Code.
Under article 150-OA of the French General Tax Code, gains realised by private individuals will be taxed at
16% (in addition to any other special taxes currently applicable) only if the total value of securities sold by the
shareholder during the corresponding tax year exceeds FF50,000.
1 – Potential impact of the buyback program on the company’s financial position and shareholders
The potential impact of the share buyback programme on A Novo’s financial statements has been assessed
based on the following assumptions:
- Pro-forma (1):
a) repurchase of 3% of the share capital (i.e. 1,975,306 shares as at 10 February 2002, less the
165,935 shares already owned at 30 September 2001);
b) full-year calculations based on consolidated financial statements to 30 September 2001;
c) a share price of €17, giving a total amount of €33.58m;
d) a marginal financing cost of 5% before tax.
- Pro-forma (2): same assumptions as pro-forma (1), but with a price of €35 per share.
(€ K)
Total number of shares
Attributable shareholders’ equity
Net debt
Net debt/Attributable equity (%)
Attributable net profit
ROE (%)
EPS (€)
% impact on EPS
Consolidated
financial statements
to 30 Sep 2001
Pro-forma (1)
19,753,060
119,281
181,606
152%
10,110
8.48%
€ 0.51
19,160,468
118,087
215,186
182%
8.534
7.23%
€ 0.45
(13.0%)
Pro-forma (2)
19,160,468
116,037
250,741
216%
6.866
5.92%
€ 0.36
(30.0%)
2 - Intention of the stockholder who controls the issuer
A Novo’s share capital is controlled by Mr Daniel Auzan, who, as at 31 January 2001, held 4,726,025 shares,
i.e. 23.93% of the capital and 35.95% of voting rights. Mr Auzan has not expressed any intention to sell the
company’s shares.
4.5.5. Intention of the stockholder who controls the issuer alone or
jointly
A Novo’s share capital is controlled by Mr Daniel Auzan. Mr Auzan has not expressed any intention to sell
the company’s shares.
130
5
REPORTS OF THE
BOARD OF DIRECTORS
SUBMITTED TO THE
COMBINED GENERAL
MEETING OF
25 MARCH 2002
5.1 - Report by the Board of Directors to the Combined General
Meeting of 25 March 2002 regarding shares purchased and sold
during the financial year ended 30 September 2001 (pursuant to
articles L 225-209 et seq. of the French Commercial Code)
The Board of Directors informs the General Meeting that, during the previous financial year, 193,745
shares in the company were purchased as part of the share buyback programme authorised by the
Combined General Meeting of 15 March 2000 in its fourth resolution.
Given that the authorisation granted to the Board of Directors by the fifth resolution of the General
Meeting of 19 March 2001 expires on 19 September 2002, the Board seeks approval from the General
Meeting for a new authorisation to buy back the company’s shares for a period of 18 months and bring
the current authorisation to an early end with effect from the start date of this new share buyback
programme.
132
Meeting of 25 March 2002 regarding the authorisation to reduce
the company’s share capital following the share buyback
programme (pursuant to articles L 225-209 et seq. of the French
Commercial Code)
Subject to the approval of the new share buyback programme, the Board seeks authorisation from the
General Meeting to cancel the shares repurchased based on the following conditions:
- Up to 10% of the company’s share capital may be cancelled during each 24-month period.
- The difference between the repurchase value of the cancelled shares and their nominal value would
be offset against the premium account and available reserves.
- The Board would have full powers to set the terms and conditions of these share cancellations and
alter the company’s memorandum and articles accordingly.
This authorisation would be given for a period of 18 months from the date of the present General Meeting.
133
Meeting of 25 March 2002 regarding authorisation of the Board to
issue securities giving immediate or future access to a portion of
the company’s share capital, with preferential subscription rights
maintained for shareholders (pursuant to article L 225-129 III and
IV of the French Commercial Code)
You have been called to this Combined General Meeting to grant the Board authority (pursuant to article
L 225-129 III, paragraph 3, of the French Commercial Code) to issue securities giving immediate or future
access to a portion of the company’s share capital up to a maximum nominal amount of €80m, with
preferential subscription rights maintained for shareholders. These securities may be issued in France or
in foreign markets, either in euros or in foreign currencies..
Motivations for the authorisation granted to the Board
At the General Meeting, the Board will seek authorisation to issue securities giving immediate or future
preferential subscription rights maintained for shareholders. This issue will reinforce the company’s
shareholders’ equity and finance its expansion, notably through the acquisition of target companies
involved in businesses that are similar, complementary or offer a sound strategic fit with the companies
in the A Novo Group.
Maximum amount of the proposed issues
The following maximum nominal amounts have been set for the issues of securities giving immediate or
future access to a portion of the company’s share capital, with preferential subscription rights maintained:
- For capital increases: €80m, in addition to the nominal value of any additional shares issued to
protect the rights of existing holders of securities giving entitlement to shares, in accordance with
prevailing legislation;
- For debt securities: €200m or the equivalent value if the securities are issued in a foreign currency
or a multi-currency unit.
These limits will be offset against those set by the General Meeting under the seventh resolution
(authorisation to the Board to issue debt securities) and tenth resolution (authorisation to the Board to
issue securities with waiver of preferential subscription rights).
Terms of the preferential subscription rights
Under the terms of current legislation, shareholders are entitled to exercise their pre-emptive subscription
rights. The General Meeting may authorise the Board to grant shareholders non pre-emptive preferential
rights which can be exercised in proportion to their rights and within the limits of their applications.
In the event that some of the securities issued are not taken up under the shareholders’ pre-emptive
rights and any preferential rights, the Board can adopt one or more of the following solutions, in any order
that it chooses:
- Limit the amount of the issue to the amount of applications received, provided that this comes to at
least 75% of the authorised value of the issue.
134
- Freely distribute all or part of the unsubscribed shares.
- Publicly offer all or part of the unsubscribed shares.
Terms of the issue
In accordance with the law, the Board seeks full powers from the General Meeting to implement this
authorisation and carry out the following procedures:
- Set the amounts and terms of the issue and determine the form of the securities to be issued.
- For debt securities, decide whether they will have a subordinate status, set their interest rates, their
term, their fixed or variable redemption value, their premium (if applicable), their redemption terms
based on market conditions, and the circumstances under which these securities entitle holders to
shares in the company.
The application of this authorisation would not give rise to a capital increase within the meaning of article
L. 225-129 VII of the French Commercial Code.
Duration of the authorisation
The above authorisation would be valid for a period of 26 months from the date of the General Meeting
approving it.
135
Meeting of 25 March 2002 regarding the waiver of preferential
subscription rights (pursuant to articles L 225-135 of the French
Commercial Code, and articles 155 and 174-19 of the decree of
23 March 1967)
L 225-129 III, paragraph 3, of the French Commercial Code) to issue securities giving immediate or future
waiver of shareholders’ preferential subscription rights.
Motivations for the authorisation granted to the Board
At the General Meeting, the Board will seek authorisation to issue securities giving immediate or future
waiver of preferential subscription rights for shareholders. This issue will reinforce the company’s
shareholders’ equity and finance its expansion, notably through the acquisition of target companies
involved in businesses that are similar, complementary or offer a sound strategic fit with the companies
in the A Novo Group.
Maximum amount of the proposed issues
The following maximum nominal amounts have been set for the issues of securities giving immediate or
future access to a portion of the company’s share capital, with preferential subscription rights maintained:
- For capital increases: €80m, in addition to the nominal value of any additional shares issued to
protect the rights of existing holders of securities giving entitlement to shares, in accordance with
prevailing legislation;
- For debt securities: €200m or the equivalent value if the securities are issued in a foreign currency
or a multi-currency unit.
These limits will be offset against those set by the General Meeting under the seventh resolution
(authorisation to the Board to issue debt securities) and tenth resolution (authorisation to the Board to
issue securities with waiver of preferential subscription rights).
Waiver of preferential subscription rights – Reasons for waiving preferential rights – Terms of the
share placing
To facilitate the public placing of the company’s shares and broaden the shareholder base, it may be
advisable to waive preferential subscription rights.
The securities issued would be part of a public placing organised by banks acting as lead managers or
any other suitable intermediary. Furthermore, the issue may be underwritten by a banking pool and/or
group of investment firms.
If the authorised issues are carried out, the Board may reserve a priority subscription period for
shareholders. The duration and terms of this priority period would be set in accordance with applicable
legislation.
The application of this authorisation would not give rise to a capital increase within the meaning of article
L 225-129 VII of the French Commercial Code.
136
Basis for setting the issue price
The General Meeting may grant the Board full powers to set the nominal values, prices and issue
premiums for the securities to be issued. The issue price could be set by the banks acting as lead
managers using the pre-placing technique. These lead managers would establish the number of shares
that institutional investors intend to apply for and the corresponding subscription price. The Board would
then set the issue price based on this information, which would enable it to match supply against demand
and carry out the bookbuilding process.
If preferential subscription rights are waived, the amount received by the company for each share issued
as a result of a subscription, conversion, exchange, redemption, warrant exercise or other means, should
be at least equal to the average of the opening market price of the shares during ten consecutive trading
days selected from the twenty last trading days preceding the first day of the issue period for these
securities.
approving it.
137
5.5 - Additional report by the Board of Directors regarding the use of
the authorisation granted by the Combined General Meeting of 19
March 2001 to issue debt securities (OCEANE bonds) with waiver
of preferential subscription rights (pursuant to article 155-2 of the
1967 Decree and article 225-129 of the French Commercial Code)
The tenth resolution of the Combined General Meeting of 19 March 2001 authorised the Board of
Directors to issue debt securities up to a maximum nominal amount of €200 million.
Using this authorisation, the Board of Directors decided to issue 396,040 Bonds Convertible or
Exchangeable for New or Existing shares (OCEANE bonds), with no preferential subscription rights or
priority period, at a nominal value of €202 (before the five-for-one stock split) and a total nominal amount
of €80,000,080.
As at 30 January 2002, 4,855 OCEANE bonds had been converted and exchanged into existing shares.
As a result, 391,185 OCEANE bonds are still outstanding.
The characteristics of the OCEANE bonds are as follows:
1. General characteristics
Effective date and settlement date: 10 April 2001
Nominal rate: 1,5 %
Annual interest rate: 1.5 % of nominal value, i.e. €3.03 euros per bond payable in arrears on 1 October
of each year.
Interest will cease to accrue on the bond redemption date.
Gross yield to maturity: 5.75% on redemption (assuming no conversion and/or exchange of the bonds into
shares and no early redemption).
Duration of loan: 5 years and 174 days
Maturity date: 1 October 2006
Normal redemption: full repayment on 1 October 2006 at €255.53 per bond, i.e. 126.5% of the nominal
value.
Purpose of the issue: given the major trend towards outsourcing of service activities and the fastexpanding videocom and telecom installed base, A Novo needs to act quickly to seize a number of
opportunities, either by: i) pursuing organic growth; ii) acquiring competitors; or iii) acquiring
manufacturers’ industrial platforms and rapidly converting them into services platforms.
This bond issue aims to reinforce the Group’s long-term resources so that it can:
- Finance the acquisition of Prima Comunicazione in Italy.
- Fund its organic growth in the UK and Spain.
- Expand organically and make further acquisitions in North and South America in order to extend its
coverage in high-potential markets.
138
Entitlement of bond holders to interest on the bonds and dividends on the shares received:
If the bonds are exchanged for shares, interest will cease to be payable to the bondholder as from the
date of the last interest payment prior to the bond conversion date.
2. Converting and/or exchanging the bonds into shares
- Entitlement to convert and/or exchange bonds: as from 10 April 2001, bondholders may, at any time
and at A Novo’s discretion, elect to exchange their bonds for new and/or existing shares in the
company. These shares will be paid for by clearing settlement against the outstanding balance on
the bonds.
The company may, at its discretion, grant newly issued shares and/or existing shares.
- Exercise period and conversion ratio: during the period from 10 April 2001 (settlement date) to
30 September 2003, the conversion ratio will be 1.1 A Novo shares per bond.
From 1 October 2003 up to the 7th business day preceding 30 September 2006, the conversion ratio will
be 1 A Novo share per bond.
Any bondholder that has not exercised the right to exchange the bonds for shares by this date will receive
the redemption price, based on the terms defined for normal or early redemption, as applicable.
3. Shares allocated on conversion of the bonds
Rights attached to the shares allocated: the shares issued as a result of a bond conversion will be subject
to all the conditions stipulated by the memorandum and articles and will qualify for dividends as from the
first day of the financial year in which the bonds are converted. During the aforementioned financial year
and subsequent years, the shares will entitle the holder to the same dividend as all other shares with the
same nominal value and dividend eligibility.
Rights attached to existing shares exchanged for the bonds: the shares granted as a result of exchanging
the bonds will be existing ordinary shares, automatically eligible for dividends. Once allocated, the shares
will entitle the holder to all the rights attached to them.
Prospectus: to accompany the issue and admission to the Nouveau Marché of Euronext Paris SA of the
bonds described above, together with any new shares resulting from the conversion of these bonds, a
prospectus has been made available to the public. This prospectus comprises a Reference Document filed
with the Commission des Opérations de Bourse (COB) on 20 March 2001 under registration no. R01-052
and a Notice approved by the COB under authorisation no. 01-295 dated 29 March 2001.
4. Reasons for waiving preferential subscription rights
Due to the general downturn in the stock markets, A Novo’s share price has fallen, although not as
sharply as the overall market. A Novo appears to have maintained investor confidence in its growth and
earnings outlook, despite the major disillusionment with high-growth TMT stocks, particularly in the
telecoms sector.
Against this backdrop, A Novo felt it would be wise to take advantage of the market situation to use the
authorisation granted to the Board of Directors by the Combined General Meeting and issue securities
without preferential subscription rights. By eliminating these preferential rights, this issue will be
accessible to the widest possible range of investors, potentially broadening the company’s shareholder
base.
139
5. Terms of the issue and price fixing
The issue price of €202 per bond was obtained by applying a premium of 8% to the average share price
over the days preceding the issue, i.e. around €170 per share.
It was felt that a premium of 8% to this average price would be acceptable to investors. Given the Group’s
growth outlook and the normal redemption date for the bonds (1 October 2006), subscribers to the issue
can reasonably expect the share price to be higher than the bond redemption price.
6. Impact on the position of existing shareholders
The fact that the OCEANE bonds can be converted or exchanged into existing shares reduces the dilutive
impact for existing shareholders.
7. Impact of the issue on the stake held by shareholders
A shareholder that owns 1% of the share capital before the transaction and chooses not to subscribe to
the OCEANE bonds would see his/her stake decrease to 0.9% of the new share capital if all the bonds
are converted into new shares.
In this case, the shareholders’ stake in consolidated equity would fall from €31.110 to €28.013 per share
based on a conversion ratio of 1.1 shares per bond.
8. Potential impact on the share price (based on average price over the 20 preceding trading
days)
The OCEANE bonds are not expected to have an impact on the share price (based on the average price
over the 20 preceding trading days).
140
5.6 - Report by the Board of Directors regarding the adjustment of the
bond conversion ratios (pursuant to article 174-1 of the 1967 Decree
and article 225-162 para. 4 of the French Commercial Code)
On 18 June 2001, the Board of Directors implemented the decision by the Combined General Meeting to
carry out a five-for-one stock split.
At that date, 396,040 Bonds Convertible or Exchangeable for New or Existing shares (OCEANE bonds)
were outstanding. Initially, the bond conversion ratios were as follows:
- 1.1 A Novo share per bond, up to 30 September 2003,
- 1 A Novo share per bond, from 1 October 2003 up to the seventh business day preceding
30 September 2006.
Following the five-for-one stock split, the conversion ratios for exchanging the OCEANE bonds into A
Novo shares were readjusted as follows:
Basis for calculating the adjustment:
As a result of the five-for-one stock split, each share with a nominal value of FF112 entitled the holder to
5 shares with a nominal value of FF22.40. Consequently, the OCEANE bond conversion ratio was adjusted
by multiplying the number of shares allocated per OCEANE bond by a factor of five (5x).
Result of the adjustment:
Following these adjustments, the OCEANE bonds are convertible based on the following ratios:
- 5.5 A Novo shares per bond, up to 30 September 2003
- 5 A Novo shares per bond, from 1 October 2003 up to the seventh business day preceding
30 September 2006.
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5.7 - Report by the Board of Directors to the Combined General Meeting
of 25 March 2002 regarding the authorisation granted to the Board
to carry out one or more capital increases reserved for employees of
the company (pursuant to articles L. 225-129 VII of the French
Commercial Code and L.443-5 of the French Labour Code)
L 225-129 III, paragraph 3, of the French Commercial Code) to carry out one or more capital increases
reserved for employees of the company.
Motivations for the capital increase and for the authorisation granted to the Board
The Board draws attention to article L. 225-129 VII of the French Commercial Code, which requires the
Extraordinary General Meeting to vote on any decision to carry out a capital increase reserved for
employees subscribing to a company savings scheme.
The Board therefore seeks approval from the General Meeting to carry out a capital increase reserved for
employees of the Group, and its related companies within the meaning of article L. 225-180 of the French
Commercial Code. Furthermore, for added flexibility, the Board seeks full authorisation to increase the
share capital by issuing securities on one or more occasions, to officially complete these operations and
to amend the memorandum and articles accordingly.
Maximum amount of the proposed capital increase
The maximum nominal amount of the securities issued as part of the capital increase reserved for
employees of the Group, and its related companies within the meaning of article L. 225-180 of the French
Commercial Code, cannot exceed 1% of the share capital on the date that the Board effectively
implements the authorisation.
Placing procedure for the new shares
The Extraordinary General Meeting would grant the Board full powers, with the option to delegate these
powers to the Chairman, or to any director with the appropriate authority, in accordance with prevailing
legislation, to determine whether the subscription procedure for these shares must be carried out through
an investment trust or directly.
Procedure for fixing the issue price of the new shares
The subscription price of the shares issued under this authorisation will be determined pursuant to article
L. 43-5 of the French Labour Code.
approving it.
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5.8 - Report by the Board of Directors to the Combined General Meeting of
25 Mars 2002 regarding the issue of share warrants reserved for Mr
Daniel Auzan and the waiver of preferential subscription rights in
favour of Mr Daniel Auzan (pursuant to article 155-1 of the 1967
Decree)
1. Motivations behind the transaction and reasons for waiving preferential subscription rights:
During the 2000/01 financial year, from 1 October 2000 to 30 September 2001, Mr Daniel Auzan, A Novo’s
founder and major shareholder, owned 23.93% of the company’s share capital and 35.95% of its voting
rights as at 1 January 2002. As in the past, Mr Auzan made a personal contribution to the Group’s
development during this period by supporting two major transactions: the acquisition of the company
Gamma Comunicazione and the issue of Bonds Convertible or Exchangeable for New or Existing shares
(hereafter ‘OCEANE bonds’).
- Personal contribution made by Mr Daniel Auzan to the acquisition of Gamma Comunicazione.
The acquisition of Prima Comunicazione, Nokia’s No.1 partner in Italy, through the takeover of the
company Gamma Comunicazione, was one of the key factors that helped strengthen the Group’s
partnership with Nokia.
When A Novo acquired 60% of the shares in Gamma Comunicazione, the takeover deal was subject to A
Novo SA providing a first demand bank guarantee to cover payment for the remaining 40% stake in
Gamma Comunicazione. Due to the maximum potential amount represented by this off-balance sheet
commitment, it was not possible to provide this guarantee within the required deadline. To enable the
Group to make this acquisition, Mr Auzan agreed to pledge 633,285 of his own shares (126,657 before
the five-for-one stock split) as a guarantee that A Novo would pay for the remaining shares in Gamma
Comunicazione.
- Personal contribution made by Mr Daniel Auzan to the OCEANE bond issue
Following a request by the lead managers, and to ensure the success of the bond issue for A Novo, Mr
Daniel Auzan agreed to personally subscribe to €7.3m of the OCEANE bonds during the first half of 2001.
Due to a lack of immediately available funds, Mr Auzan had to take out a personal loan to finance this
transaction.
To support future developments and finance its growth, the company may decide to take out long-term
financing, restructure its debt and/or make acquisitions.
In view of the support provided to the Group by Mr Daniel Auzan during the 2000/01 financial year, as in
previous years, and the pivotal role he may still be required to play, the Group would like to introduce a
mechanism whereby Mr Auzan can maintain his stake in the company, if he wishes or if he is required to
do so by financial partners. This mechanism would involve the issue of straight warrants.
This reserved issue, which waives any preferential subscription rights, in favour of Mr Auzan, is justified
by the fact that the above-mentioned personal contributions made by Mr Auzan to A Novo may have
prevented him from participating fully in any public or private share issues carried out by the Group to
finance its growth and restructure its debt.
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2. Procedure for converting warrants into underlying shares, prices and exercise dates
Number of warrants to issue: 450,000
Conversion ratio: two new ordinary shares per warrant.
Issue price: token price of € 0.01 per warrant as these warrants will not be eligible for trading on the
stock exchange.
Exercise price: the exercise price for each share issued as a result of exercising the warrants will be
equal to A Novo’s average share price during 20 consecutive trading days chosen from the 40 trading
days preceding the day when the Group receives notification that the warrants have been exercised. This
price cannot be less than the nominal value of the shares subscribed to.
Conditions and dates for exercising the warrants: the warrants can only be fully or partially exercised
under the following conditions: i) if, during the warrant exercise period, A Novo SA carries out a public
issue of securities giving immediate or future access to a portion of the company’s share capital, with or
without waiver of preferential subscription rights, and with or without priority rights; and (ii) in proportion
to the immediate or potential dilution of Mr Auzan’s stake as a result of these public issues of securities
giving immediate or future access to a share in A Novo SA’s capital during the warrant exercise period.
Warrant exercise period: the warrants may be exercised, according to the above conditions, for a period
of five years from their issue date.
Transferability of warrants: the warrants will not be transferable.
3. Impact of the issue on the stake held by shareholders and the position of existing shareholders
A shareholder that owns 10% of the share capital before the transaction would see his/her stake decrease
to 9.56% of the new share capital in the event that Mr Daniel Auzan exercises all 450,000 warrants under
the terms outlined above.
In this case, the shareholders’ stake in consolidated equity would fall from €6.03 to €5.77 per share.
4. Potential impact on the share price (based on average price over the 20 preceding trading days)
This impact cannot be measured until Mr Daniel Auzan finishes exercising his rights. In any case, this
impact should be negligible as the exercise price is equal to the average share price during 20
consecutive trading days chosen from the 40 trading days preceding the day when the Group receives
notification that the warrants have been exercised.
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6
RESOLUTIONS FOR
APPROVAL BY THE
COMBINED GENERAL
MEETING OF
25 MARCH 2002
ORDINARY BUSINESS
FIRST RESOLUTION: Approval of parent company financial statements
Having considered the Business Report by the Board of Directors, the Supervisory Board’s report and the
Statutory Auditors’ report, the General Meeting approves the parent company financial statements for the
financial year ended 30 September 2001, as presented, showing a reported net loss of €2,732,020.
The General Meeting also approves the transactions reflected in these financial statements or outlined in
these reports.
Total non tax-deductible charges and expenses, pursuant to article 39-4 of the French General Tax Code
and subject to approval by the General Meeting, amounted to €53,515. The corresponding tax charge
amounts to €17,847.
As a result, the General Meeting gives all members of the Board of Directors, the Supervisory Board and
the Statutory Auditors final discharge for their duties during the year ended 30 September 2001.
SECOND RESOLUTION: Approval of consolidated financial statements
Having considered the Business Report by the Board of Directors, the Supervisory Board’s report and the
Statutory Auditors’ report, the General Meeting approves A Novo’s consolidated financial statements for
the financial year ended 30 September 2001, as presented, showing sales of €370,130,000 and an
attributable net profit of €10,110,000.
THIRD RESOLUTION: Approval of regulated agreements
The General Meeting Committee notes that, for approval of the agreements governed by article L 225-86
of the French Commercial Code, the quorum reached by the General Meeting is greater than one quarter
of the shares with voting rights.
As a result, the General Meeting can lawfully deliberate on the approval of these agreements.
After reviewing the Special Report by the Statutory Auditors on agreements governed by article L 225-86
of the French Commercial Code, the General Meeting successively approves each of the agreements
mentioned in this report pursuant to article L 225-88 of said Code.
FOURTH RESOLUTION: Profit allocation
The General Meeting resolves to allocate the company’s full-year net losses of €2,732,020 to retained
earnings:
The General Meeting notes that the following dividends were paid during the past three financial years:
Financial year
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1997/1998
*shares outstanding as at 30 September 1998
*shares resulting from the bond conversion
1998/1999
Dividend
(€)
/
1,315,159
86,091
1,638,329
1999/2000
2,402,970
Tax credit
/
€0.23 per share for individuals and
€0.18 per share for legal entities
€0.30 per share for individuals and
€0.24 per share for legal entities
FIFTH RESOLUTION: Appointment of a joint statutory auditor and
reappointment of a joint substitute auditor
Having been informed that Mr Patrick Maupard, joint statutory auditor, no longer seeks the renewal of his
appointment, which expires at the end of this meeting, the General Meeting appoints the following
company as joint statutory auditor for a period of six years until the end of the Ordinary General Meeting
called to approve the financial statements for the year ending 30 September 2007:
Maupard Fiduciaire,
A French limited company (‘Société Anonyme’) with a share capital of €300,050,
Headquartered at 18, rue Jean Mermoz 75008 Paris.
The General Meeting also renews the appointment of Mr Manuel Ibanez as joint substitute auditor for a
period of six years until the end of the Ordinary General Meeting called to approve the financial
statements for the year ending 30 September 2007.
Mr Manuel Ibanez has informed the company in advance that he accepts the renewal of his appointment.
SIXTH RESOLUTION: Authorisation for the company to buy back its own shares
The Ordinary General Meeting notes that the authorisation granted to the Board by the fifth resolution of
the Combined General Meeting of 19 March 2001, allowing the company to buy back its own shares,
expires on 19 September 2002.
As a result the Ordinary General Meeting resolves to cancel this authorisation with effect from the date
of the new share buyback programme authorised below.
In accordance with article L 225-209 of the French Commercial Code, the General Meeting once again
authorises the Board to buy back its own shares for the following purposes:
- To manage its share capital based on financial and economic objectives.
- To build up a reserve of shares to cover the exercise of rights attached to securities or financial
instruments giving entitlement to shares in the company through redemption, conversion, exchange,
presentation of warrants or any other means.
- To adjust its share price, particularly in the event of adverse market movements
- To buy and sell shares depending on market conditions.
- To transfer, exchange or dispose of shares in connection with a financial transaction and/or
acquisition made by the company.
- To implement share purchase schemes and/or grant stock options to employees.
- To transfer the shares acquired, by any means, notably by selling them on the stock market, overthe- counter, in blocks, or through a public tender, exchange or sale offer.
- To retain its own shares.
This authorisation is subject to the following conditions:
- It can only involve a number of shares representing a direct or indirect holding of 10% of the
company’s share capital.
- The purchase price must not exceed €60 per share.
147
- The selling price must not be less than €1 per share.
- The company cannot devote more than €118,218,360 in funds to the transaction.
Subject to French legislation, the General Meeting authorises the Board to readjust the purchase and selling
price per share to reflect any transactions applied to the share capital during the term of the current
authorisation.
This authorisation is given for a period of eighteen months from the date of the present General Meeting.
The General Meeting grants the Board full powers to place any stock market orders, enter into any
agreements, especially with a view to maintaining share purchase and sale registers, perform all depositions
and generally carry out any other formalities that may be required.
The Board will report to the Ordinary General Meeting on any transactions carried out in connection with this
authorisation.
SEVENTH RESOLUTION: Authorisation for the Board to issue debt securities
Having reviewed the Board’s report, the General Meeting grants the Board full powers to issue debt securities,
bonds or similar securities on one or more occasions, at the dates and according to the terms and conditions
set by the Board. These securities may be issued either inside or outside France and may be denominated in
euros, in a foreign currency or in a multi-currency unit, subject to a maximum nominal amount of €200m, or
the equivalent value if the securities are issued in a foreign currency or multi-currency unit.
The Board may issue subordinate bonds with a fixed or floating term. This subordinate status may apply to
the bonds’ principal and/or interest payments.
The Board may also combine these bonds with any type of security or warrant giving an entitlement to receive
or purchase other securities. If these securities give access to a portion of the company’s share capital, issued
through a simultaneous or subsequent primary issue, they must comply with the terms and conditions set out
by the resolutions of the Extraordinary General Meeting that authorised or will authorise the Board to carry
out the issue.
Consequently, in accordance with the law, the General Meeting grants the Board full powers to define the
characteristics of these securities (particularly their maturity and redemption terms based on market
conditions), which may carry a fixed or floating interest rate, a fixed or variable additional interest payment
and a fixed or variable redemption premium, or only one of these characteristics, bearing in mind that the
additional interest payment and variable redemption premium will be calculated based on the relevant criteria
selected by the Board.
The nominal value of any redemption premiums will be added to the nominal value of any bonds that may be
issued.
The Board will also have full powers to decide whether a guarantee will be provided for the securities issued
and, if applicable, define and provide this guarantee, select potential bond holders and carry out any other
tasks connected with these issues. The Board may also enter into any agreements required with financial
institutions to ensure the successful completion of the issue and/or placing of the debt securities covered by
this resolution and carry out all formalities required for the issue, trading and financial servicing of these debt
securities.
Under this authorisation, the Board can delegate all powers to its Chairman, or any other designated person
in accordance with French law, to complete the operations connected with this resolution.
This authorisation is valid for a period of five years from the date of this General Meeting and cancels the
previous authorisation granted by the sixth resolution of the General Meeting of 19 March 2001.
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EXTRAORDINARY BUSINESS
EIGHTH RESOLUTION: Amendments to the memorandum and articles following
the introduction of the Law on New Economic Regulations
Having reviewed the Board’s report, the Extraordinary General Meeting notes that law no. 2001-420 of 15
May 2001 relating to the New Economic Regulations has amended various legal and regulatory
requirements under French company law.
In view of the options provided by the Law on New Economic Regulations, and having considered the
Board’s report, the General Meeting resolves to:
- Allow Supervisory Board meetings to take place by videoconference,
- Grant the Supervisory Board powers to dismiss the Chairman of the Board of Directors as well as
other Board members.
As a result, having reviewed the Board’s report, the General Meeting resolves to amend article 21-2 para.
7 and article 23, as follows:
Article 21-2 para. 7- the following text has been inserted after this paragraph:
"In addition, Supervisory Board meetings may take place by videoconference. Members will be considered
as present for calculating the quorum and majority, in accordance with the conditions stipulated by law."
Article 23 para. 2 - the following text has been appended to the paragraph:
"Powers are also granted to the Supervisory Board to dismiss the Chairman and/or other members of the
Board of Directors, in accordance with the conditions stipulated by law."
Paragraph 5 of article 19 of the memorandum and articles has been deleted.
NINTH RESOLUTION: Authorisation to the Board to issue securities with
preferential subscription rights for shareholders
Having considered the report by the Board and the Special Report by the Statutory Auditors, drawn up in
accordance with French law, the Extraordinary General Meeting authorises the Board to issue securities,
including straight warrants, giving immediate or future access to a portion of the company’s share capital,
through redemption, conversion, exchange, presentation of warrants or any other means authorised by
law, with preferential subscription rights maintained for shareholders, pursuant to paragraph 3 of article
L225-129-III of the French Commercial Code. These securities may be issued on one or more occasions,
either through a public or private offer in France or on international markets, and may either be
denominated in euros or in foreign currencies.
These securities can take any form, provided that they are compatible with prevailing legislation. This
includes the issue of straight share warrants, which may either be subscribed to in cash or allocated to
shareholders through a bonus issue.
149
The General Meeting:
- Confirms that the total nominal amount of capital increases to be carried out immediately and/or
subsequently under the aforementioned authorisation cannot exceed €80m, in addition to the
nominal value of any additional shares issued to protect the rights of existing holders of securities
giving entitlement to shares, in accordance with prevailing legislation.
- Also confirms that the total nominal amount of any debt securities to be issued under the
aforementioned authorisation cannot exceed €200m or the equivalent value if the securities are
issued in a foreign currency or in a multi-currency unit.
The General Meeting has decided that these amounts will be deductible from the limits set by the seventh
and ninth resolutions of this General Meeting.
As a result of this authorisation, shareholders will automatically waive their preferential subscription rights
to any shares to which they are entitled through the above-mentioned securities, thus protecting the
interests of holders of securities giving future access to a portion of the company’s share capital.
In the event of a capital increase, merger, demerger or any other financial transaction granting
preferential subscription rights or reserving a priority subscription period for shareholders, the Board may
suspend the exercise of rights attached to the aforementioned securities for a period of up to three
months.
The Extraordinary General Meeting confirms that the implementation of this authorisation would not give
rise to a capital increase within the meaning of article L 225-129 VII of the French Commercial Code.
The General Meeting confirms that, under the terms of current legislation, shareholders are entitled to
exercise their pre-emptive subscription rights. The General Meeting authorises the Board to grant
shareholders non pre-emptive preferential rights which can be exercised in proportion to their rights and
within the limits of their applications.
In the event that some of the securities issued are not taken up under the shareholders’ pre-emptive
rights and any preferential rights, the Board can adopt one or more of the following solutions, in any order
that it chooses:
- Limit the amount of the issue to the total amount of applications received, provided that this comes
to at least 75% of the authorised value of the issue.
In accordance with the law, the General Meeting grants the Board full powers to implement this
authorisation and carry out the following procedures
- Set the amounts and terms of the issue and determine the form of the securities to be issued,
together with the conditions for paying up these securities, potentially suspend the exercise of share
allocation rights attached to these securities for a period of up to three months and, generally, take
all necessary measures and enter into any agreements required to ensure the proper completion of
the issues envisaged, maintaining compliance at all times with prevailing legislation and regulations.
- Whenever necessary, incorporate earnings, reserves, issue premiums and other capitalizable items
into the share capital, on one or more occasions, by increasing the nominal value of existing shares
and/or by issuing new, fully paid-up shares allocated to shareholders through a bonus issue. In the
latter case, the General Meeting authorises the Board to determine, based on circumstances,
whether: i) fractional rights will not be tradable and the corresponding shares will be sold; or ii)
whether these rights will be tradable in accordance with common law.
150
- Enter into any agreements required with financial institutions to ensure the successful completion of
the issue and/or placing of the debt securities covered by this resolution and carry out all formalities
required for the issue, trading and financial servicing of these debt securities
- Ensure the proper completion of these issues and make the appropriate changes to the
memorandum and articles.
- Deduct, where appropriate, any relevant charges from issue premiums, particularly the costs
incurred by the issue process, and generally, take all necessary measures and enter into any
agreements required to ensure the proper completion of the issues envisaged.
- Generally, take all measures and carry out all the formalities required for these operations.
In the event of a debt security issue, the Board will have full authority to decide whether the securities will
have a subordinate status, to set their interest rates, their term, their fixed or variable redemption value,
their premium (if applicable), their redemption terms based on market conditions, and to determine the
circumstances under which these securities entitle holders to shares in the company.
The above authorisation granted to the Board is valid for a period of 26 months from the date of this
General Meeting and cancels the previous authorisation granted by the ninth resolution of the General
Meeting of 19 March 2001.
TENTH RESOLUTION: Authorisation to the Board to issue securities with waiver
of preferential subscription rights for shareholders
Having considered the report by the Board and the Special Report by the Statutory Auditors, drawn up in
accordance with French law, the Extraordinary General Meeting authorises the Board to issue securities,
including straight warrants, giving immediate or future access to a portion of the company’s share capital,
through redemption, conversion, exchange, presentation of warrants or any other means authorised by
law, with waiver of preferential subscription rights for shareholders, pursuant to article L225-129-III of the
French Commercial Code. Subject to the following conditions, these securities may be issued on one or
more occasions, through a public offer in France or on international markets, and may either be
denominated in euros or in foreign currencies.
The General Meeting:
- Confirms that the total nominal amount of capital increases to be carried out immediately and/or
subsequently under the aforementioned authorisation cannot exceed €80m, in addition to the
nominal value of any additional shares issued to protect the rights of existing holders of securities
giving entitlement to shares, in accordance with prevailing legislation.
- Also confirms that the total nominal amount of any debt securities to be issued under the
aforementioned authorisation cannot exceed €200m or the equivalent value if the securities are
issued in a foreign currency or in a multi-currency unit.
The General Meeting has decided that these amounts will be deductible from the limits set by the seventh
and ninth resolutions of this General Meeting.
The General Meeting confirms that the implementation of this authorisation would not give rise to a
capital increase within the meaning of article L 225-129 VII of the French Commercial Code.
151
In accordance with article L 225-136 of the French Commercial Code, the amount received by the company
for each share issued as a result of a subscription, conversion, exchange, redemption, warrant exercise or
other means, should be at least equal to the average of the opening market price of the shares during ten
consecutive trading days selected from the twenty last trading days preceding the first day of the issue period
for these securities, after correcting this average, if required, to reflect the dividend eligibility date.
The General Meeting agrees that, if the authorised issues are carried out on the French market, the Board
may reserve a priority subscription period for existing shareholders. The duration and terms of this priority
period would be set in accordance with legal requirements.
The General Meeting confirms that, if any of the securities resulting from the above-mentioned issues are not
taken up, the Board can adopt one or more of the following solutions, in any order that it considers
appropriate, subject to prevailing laws and regulations:
- The amount of the issue to the total amount of applications received, provided that this comes to at least
75% of the authorised value of the planned issue.
The General Meeting confirms that, where necessary, the above authorisation may require shareholders to
automatically waive their preferential subscription rights to any shares to which they are entitled through the
above-mentioned securities, thus protecting the interests of holders of securities giving future access to
shares in the company. It also removes shareholders’ preferential subscription rights to shares issued as result
of bond conversions or exercised warrants.
The General Meeting grants the Board authority to use this authorisation in the event of a public takeover bid
or exchange offer launched by the company pursuant to article 225-148 of the French Commercial Code.
For this purpose, and subject to legal requirements, the General Meeting grants the Board full powers to:
- Set the exchange parity and, if applicable, determine the amount of cash payable.
- Determine the number of shares tendered to the offer.
In accordance with prevailing legislation, the General Meeting grants full authority to implement this above
authorisation and carry out the following procedures:
- Set the amounts and terms of the issue and determine the form of the securities to be issued, together
with the conditions for paying up these securities, potentially suspend the exercise of share allocation
rights attached to these securities for a period of up to three months and, generally, take all necessary
measures and enter into any agreements required to ensure the proper completion of the issues
envisaged, maintaining compliance at all times with prevailing legislation and regulations.
- Enter into any agreements required with financial institutions to ensure the successful completion of the
issue and/or placing of the debt securities covered by this resolution and carry out all formalities
required for the issue, trading and financial servicing of these debt securities
- Ensure the proper completion of these issues and make the appropriate changes to the memorandum
and articles.
- Deduct, where appropriate, any relevant charges from issue premiums, particularly the costs incurred
by the issue process, and generally, take all necessary measures and enter into any agreements required
to ensure the proper completion of the issues envisaged.
- Generally, take all measures and carry out all the formalities required for these operations.
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In the event of a debt security issue, the Board will have full authority to decide whether the securities will
have a subordinate status, to set their interest rates, their term, their fixed or variable redemption value,
their premium (if applicable), their redemption terms based on market conditions, and to determine the
circumstances under which these securities entitle holders to shares in the company.
The above authorisation granted to the Board is valid for a period of 26 months from the date of this
General Meeting and cancels the previous authorisation granted by the tenth resolution of the General
Meeting of19 March 2001.
ELEVENTH RESOLUTION: Authorisation to the Board to use the above
authorisation during a public takeover bid or
exchange offer
After considering the report by the Board and the Special Report by the Statutory Auditors, the
Extraordinary General Meeting confirms that the authorisations granted to the Board to increase the
company’s capital within the terms of the seventh, ninth and tenth resolutions of this General Meeting
may be used under any circumstances, even during a public takeover bid or exchange offer involving the
company’s own shares.
In accordance with the law, this authorisation is valid until the end of the company’s next General Meeting
called to approve the financial statements for year ending 30 September 2002.
TWELFTH RESOLUTION: Authorisation to the Board to carry out one or more
capital increases reserved for employees
Having considered the report by the Board and the Special Report by the Statutory Auditors, pursuant to
articles L. 225-129 VII of the French Commercial Code and L. 443-5 of the French Labour Code, the
Extraordinary General Meeting authorises the Board to increase the share capital, on one or more
occasions, up to a maximum nominal amount of 1% of the share capital as calculated on the date that
the Board effectively implements this authorisation. In accordance with applicable legislation, this capital
increase will be reserved for employees of the Group, and of its related companies, within the meaning
of article L. 225-180 of the French Commercial Code.
The subscription price of the shares issued under this authorisation will be determined pursuant to article
L. 43-5 of the French Labour Code. As a result of this authorisation, shareholders will automatically waive
their preferential subscription rights in favour of employees of the Group, and of its related companies, in
accordance with applicable legislation.
The Extraordinary General Meeting grants full powers to Board, which can delegate these powers to its
Chairman, to or any other designated person in accordance with French law, to implement this
authorisation, notably:
- To determine the companies or departments whose employees will be entitled to subscribe to the
shares issued under this authorisation; to define the length of service conditions that must be
fulfilled by potential beneficiaries of the new shares and, in accordance with statutory deadlines,
determine the period granted to subscribers to pay up the shares issued.
- To determine whether the subscription procedure for these shares must be carried out through an
investment trust or directly.
- To decide on the amount to be issued, the subscription price, the subscription period, the date from
which the new shares will qualify for dividends and, more generally, all procedures relating to each
issue.
153
- To confirm the amount of each capital increase based on the amount of shares actually taken up, to
carry out the necessary formalities, and to amend the memorandum and articles accordingly,
- More generally, to take all necessarily measures to complete each capital increase in accordance
with the prevailing laws and regulations.
This authorisation is valid for a period of twenty-four (24) months from the date of this General Meeting.
THIRTEENTH RESOLUTION: Authorisation to the Board to cancel shares acquired
as a result of the share buyback programme
After considering the Report by the Board and the Special Report by the Statutory Auditors, the
Extraordinary General Meeting:
- Authorises the Board, in accordance with legal requirements, to reduce the company’s share capital
by cancelling, on one or more occasions and at its own discretion, all or part of the shares acquired
through the company’s share buyback programme, described in the sixth resolution, subject to a
maximum limit of 10% of the company’s share capital in any given 24-month period.
- Authorises the Board to offset the difference between the share repurchase price and the nominal
value of the shares against available share premium accounts and reserves.
- Grants the Board full powers to set the terms and conditions of such cancellations, modify the
memorandum and articles accordingly, if required, and carry out any other formalities that may be
necessary.
This authorisation is given for a period of 18 months from the date of this General Meeting and cancels
the previous authorisation granted by the fifteenth resolution of the General Meeting of 19 March 2001.
FOURTEENTH RESOLUTION: Issue of warrants reserved for Mr Daniel Auzan
and waiver of shareholders’ preferential
subscription rights to these warrants in favour of
Mr Auzan
A/ Issue of warrants reserved for Mr Auzan
Having considered the reports by the Board and the Statutory Auditors, and the Auditors’ Report on
Specific Employee Benefits, in accordance with article L. 228-95 of the French Commercial Code, and
voting under the quorum and majority conditions required to conduct extraordinary business, the General
Meeting authorises the Board to issue 450,000 warrants reserved for Mr Daniel Auzan during a period of
three months from the date of this General Meeting, subject to approval of the waiver of preferential
subscription rights by shareholders. Each warrant will be priced at €0.01 and will entitle the holder to
subscribe to two shares.
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As a result of the warrant issue, the General Meeting authorises the Board to carry out a capital increase
up to a maximum nominal amount of €3,078,000 for each issue of 900,000 shares with a face value of
€3.42, excluding any adjustments that may be made to maintain the rights of warrant holders.
Pursuant to article L. 228-95 of the French Commercial Code, to protect the interest of warrant holders, this
decision requires shareholders to automatically waive their preferential subscription rights to any shares
that may be issued as a result of exercising the subscription rights attached to the warrants taken up.
The General Meeting sets the following terms and conditions for the warrant issue:
Warrant subscription procedure
- Subscription period: subscription forms must be received by the head office no later than 30 days
from the actual issue date of the warrants.
- Issue price and payment: lthe warrants will be issued at a price of €0.01 euro each.
- The warrants will be fully paid-up on subscription subject to payment of the issue price, either by
cash or clearing settlement.
Warrant characteristics
- Type: registered warrants.
- Transferability: the warrants will not be transferable.
- Conditions and subscription period: the warrants may be exercised in whole or in part, on one
or more occasions, for a period of five years from their issue date, but not until one day after the
Company carries out an initial issue of securities giving immediate or future access to a portion of
the company’s share capital, following the public issue of warrants, with or without waiver of
preferential subscription rights and with or without priority rights.
The warrants may only be exercised in proportion to the immediate or potential dilution of Mr Auzan’s
stake as a result of the various public issues of securities giving immediate or future access to a
portion of A Novo SA’s capital during the warrant exercise period
- Subscription price: the exercise price of the warrants will be equal to the average share price
during 20 consecutive trading days chosen from the 40 trading days preceding the day when the
Group receives notification that the warrants have been exercised. This subscription price cannot be
lower than the face value of the shares subscribed to.
- Dividend eligibility of the shares resulting from the exercise of the warrants: the new shares
will be subject to all the conditions stipulated by the memorandum and articles and will qualify for
dividends as from the first day of the financial year in which the warrants are converted. After
payment of the dividend relating to the previous year or, in the absence of a dividend, after the
Annual General Meeting called to approve the accounts for the previous year, the new shares will
have the same characteristics as the existing shares.
- Trading: the warrants will not be admitted for trading on the stock exchange.
155
Protection of warrant holders’ rights
Impact of the issue
As French legislation currently stands:
- Since the company has issued warrants, it cannot redeem its share capital or alter the way it
allocates its profit. However, the company may issue non-voting priority dividend shares provided
that it maintains warrant holders’ rights, in accordance with the conditions outlined in this section,
entitled “Protection of warrant holders’ rights”.
- If, as a result of financial losses, the company decides to reduce its share capital by decreasing the
face value or number of its shares, the rights of warrant holders will be scaled down accordingly,
based on the assumption that they have been shareholders from the date when the warrants were
issued.
Should this legislation change, the company will comply with any new requirements.
Impact of financial transactions
Assuming that the company carries out one of the following transactions after the warrant issue:
- Share issue with preferential subscription rights.
- Bonus issue of any type of financial instrument other than shares in the company.
- Capital increase by incorporating reserves, earnings or share premiums; bonus share issue; stock
split/reverse stock split.
- Incorporation of reserves, earnings or share premiums into the capital by increasing the nominal
value of the shares.
- Distribution of reserves in cash or in paper.
- Takeover, merger or demerger.
- Share buy-back transaction at a higher price than the current share price.
warrant holders’ rights will be maintained by adjusting the terms for exercising the warrants in
accordance with articles L. 225-154 and 225-156 of the French Commercial Code and articles 174-1A and
174-1 (2° and 3°) of the decree of 23 March 1967 (option ‘a’ of §1 of para 3).
The General Meeting grants the Board full authority to determine various terms of the issue contract, such
as the procedure for adjusting the warrant exercise terms, as described in the Board’s report.
Share subscription applications: applications to subscribe for shares by exercising warrants must be sent
to the company’s head office or to its designated representative. The share application form sent by the
warrant holder must be accompanied by a payment covering the subscription price.
The General Meeting grants full powers to Board, which can delegate these powers in accordance with
the law, to carry out this issue and define any conditions and characteristics of the warrants, including
those not expressly mentioned here.
156
B/ Waiver of preferential subscription rights in favour of Mr Daniel Auzan
Having considered the Statutory Auditors’ Special Report, the Board’s report and the Auditors’ Report on
Specific Employee Benefits, in accordance with article L. 225-138 of the French Commercial Code, and
voting under the quorum and majority conditions required to conduct extraordinary business, the General
Meeting resolves to waive shareholders’ preferential subscription rights in respect of the entire warrant
issue described above and reserve these warrants exclusively for subscription by Mr Daniel Auzan, who
will not participate in the vote, as required by law.
FIFTEENTH RESOLUTION: Powers granted to the Chairman of the Board to
carry out legal formalities
The Extraordinary General Meeting grants full powers to the Chairman of the Board, who has the option
to delegate responsibilities, in order to carry out all necessary formalities resulting from the resolutions
adopted by the present General Meeting, notably:
- Tasks required following approval of the financial statements for the year ended 30 September 2001.
- Tasks required prior to or following general authorisations.
- Updating the company’s memorandum and articles, making all depositions and declarations, and
generally carrying out all tasks required to enforce the resolutions approved above.
157
158
7
PERSONS
RESPONSIBLE FOR
THE REFERENCE
DOCUMENT AND
DECLARATIONS
7.1 - Person responsible for the reference document
Henri TRIEBEL
Chairman of the Board
7.2 - Declaration by person responsible for reference document
“To the best of our knowledge, the information given in this reference document is in accordance with the
facts; it contains all the information required by investors to reach a judgement on the assets and
liabilities, activities, financial position, results and prospects of A Novo and its subsidiaries. There are no
omissions likely to affect the import of the reference document.
The opinions expressed by the Statutory Auditors do not cover the legal information included in this
reference document or the business information appearing in Chapter 1, which are denoted by two
asterisks (**). This information is provided under the sole responsibility of the company’s management.”
Signed in Paris on 9 April 2002
Henri Triebel
Chairman of the Board
7.3 - Persons responsible for auditing the accounts
7.3.1. Official auditors
M. Patrick MAUPARD
18, rue Jean Mermoz
75008 PARIS
Appointment renewed on 29 March 1996
Appointment expires: at General Meeting called to approve the financial statements for the year ending
30 September 2001
CONSTANTIN Associés
114, rue Marius Aufan
92300 LEVALLOIS PERRET
Represented by Jean-François SERVAL
Appointed 19 March 2001
30 September 2002.
160
7.3.2. Substitute auditors
Manuel IBANEZ
31, rue Saint Sébastien
13006 MARSEILLE 06
30 September 2001
Jean-Claude SAUCE
114, rue Marius Aufan
92300 LEVALLOIS PERRET
Appointment expires: General Meeting called to approve the financial statements for the year ending 30
September 2002
7.4 - Declaration by auditors
In our capacity as Statutory Auditors of A Novo, and pursuant to COB regulation 95-01, we have verified
the financial and accounting data provided in this reference document in accordance with auditing
standards.
This reference document has been prepared under the responsibility of the Board of Directors. Our
responsibility is to express an opinion on the accounting and financial data contained herein, bearing in
mind that any company-specific information, denoted by two asterisks (**), does not fall into this category
and is not therefore covered by our opinions.
Our checks, described below, ensured that the financial and accounting data in this report are consistent
with the company’s published accounts and that all other historic information provided is fair and truthful.
We also conducted checks on other forecast data for the period covered to ensure that the various
assumptions made provide a sound basis for these projections and that the various calculations made are
consistent with the assumptions described in the reference document.
Historic financial and accounting data
We have reviewed the annual accounts and consolidated financial statements for the year ended 30
September 2001, prepared under the responsibility of the Board of Directors. Our review was conducted
in accordance with auditing standards. We have no comments or observations to make on the fair
presentation of these figures.
Our checks also ensured that the other historic financial and accounting information provided in this
document is fair and truthful and, where relevant, consistent with the consolidated financial statements
presented in the reference document. These checks were conducted in accordance with auditing
standards.
We also verified the conversion into euros of the information previously certified in French francs.
Conclusions regarding the reference document
As a result of these checks we have no comments to make on the fair presentation of the financial and
accounting data provided in this reference document.
161
As regards the projected financial and accounting information in this reference document, we should
point out that, given the inherently uncertain nature of forecasts, actual results could differ significantly
from the forecasts presented herein.
Signed in Paris on 9 April 2002
THE STATUTORY AUDITORS
Constantin Associés
Représenté par Jean-François Serval
7.5 - Responsable de l'information financière
M. Paul BERNARD
Tél. 01 58 17 00 70
Fax. 01 58 17 00 99
E-mail : pbernard@a-novo.com
162
Maupard Fiduciaire
Représenté par Patrick Maupard
8
A NOVO 2002/03 FINANCIAL
RELEASE CALENDAR
Excluding acquisitions, new contracts and exceptional events
Friday 8 February 2002
Release of first quarter sales
Week of 11-15 February 2002
First quarter sales filed with BALO (French Bulletin for Mandatory Legal Announcements)
Week of 18-22 February 2002
Invitation to AGM filed with BALO (French Bulletin for Mandatory Legal Announcements)
Week of 25 February–1 March 2002
FY 2000/2001 interim results filed with BALO (French Bulletin for Mandatory Legal Announcements)
Monday 25 March 2002
Combined General Meeting
Friday 19 April 2002
Final 2000/01 results filed with BALO (French Bulletin for Mandatory Legal Announcements)
Wednesday 15 May 2002
Release of first half 2001/02 sales
Week of 13-17 May 2002
Second quarter sales filed with BALO (French Bulletin for Mandatory Legal Announcements)
Tuesday 2 July 2002
Release of interim results and half-yearly information meeting
Week of 22-26 July 2002
Interim report, revenue summary and consolidated earnings for first half 2001/02 filed with BALO (French
Bulletin for Mandatory Legal Announcements)
Monday 5 August 2002
Release of first nine-month sales
164
Week of 5-9 August 2002
Third quarter sales filed with BALO (French Bulletin for Mandatory Legal Announcements)
Wednesday 13 November 2002
Release of 2001/02 full-year sales
Week of 12-15 November 2002
Fourth quarter sales filed with BALO (French Bulletin for Mandatory Legal Announcements)
Tuesday 17 December 2002
Release of 2001/02 full-year results and annual information meeting
Week of 13-17 January 2003
Provisional 2001/02 results filed with BALO (French Bulletin for Mandatory Legal Announcements).
165
166
9
TECHNICAL GLOSSARY
3G
See UMTS
Advanced (5)
Refers to the highest level of maintenance (and hence the most complex) for mobile phones. The lowest
level is Standard (1).
Analogue
Refers to generally older techniques that use non-digital signals which vary continuously in amplitude and
time.
CB 5.1
Protocol used by smart-card software. This is the minimum version that supports the euro changeover.
CB 5.2
Secure protocol based on the EMV standard.
Digital
Techniques that use and process binary signals, i.e. those which solely comprise the logical values 0 and 1.
Directional radio links
Equipment used to transmit point-to-point telecommunications signals (voice, data or video) by radio.
EDI
Electronic data interchange.
EMV
Secure smart-card software standard shared by Eurocard, Mastercard and Visa.
EPT
Electronic Payment Terminal enabling remote payments to be made by bank card (typically smart cards
in France).
Flat screen
Flat display using LCD or plasma technology.
GPRS
Intermediate mobile telecommunications standard supporting much faster data transmission than GSM.
168
GSM
European digital cellular standard for public mobile telecommunications. GSM is commonly used
worldwide, except in Japan and the US, although this standard is now gaining ground in the latter country
Hard disk
Recording device used to store large quantities of data on a magnetic disk rotating at high speed. Hard
disks are commonly used in today’s PCs. In the future, they will be built into second-generation digital
decoders.
Hyperfrequency
Part of the radio spectrum covering very high frequencies, typically above 1 GHz (i.e. one billion hertz)
MP3
Audio data compression standard, commonly used for downloading music via the Internet.
Multiplexer
A telecommunications device that merges multiple input channels.
Network infrastructures
Backbone networks used by telecoms operators. These infrastructures are made up of nodes (public
switching systems), transmission paths (e.g. fibre-optic cables and radio links) and terminal equipment,
such as base station for mobile telecoms.
PABX
Private automatic branch exchange (telephone switching system used within an enterprise).
POST
Point-of-Sale Terminal. Generic term used to describe equipment that registers and invoices sales (e.g.
electronic cash register).
Professional telecommunications
Network infrastructures used by telecommunications operators as well as private corporate networks.
Radio relay
Transmits signals between two radio hops (directional radio links).
Test bed
An automated testing system comprising measurement devices controlled by computer and designed to
test the features of a product.
169
UMTS
Third generation (3G) mobile telecommunications standard which supports faster data transmission (up
to a theoretical maximum of 2 million bits per second).
XDSL
Compression standard for transmitting data over twisted pair cables (standard telephone lines). This
system can transfer data at 1 to 10 million bits per second over an ordinary subscriber line.
170
10
CONTENTS OF THIS
DOCUMENT
(CROSS-REFERENCED WITH
SECTIONS RECOMMENDED
BY COB)
This document acts as a Reference Document. To make it easier to use, the table of contents below refers
to the main document sections defined by regulation no. 98-01 of the Commission des Opérations de
Bourse (French Securities and Exchange Commission).
Regulation
Reference
document
COB 95-01
I - Persons responsible for the prospectus and for auditing the accounts
Names and posts held by persons responsible for the document
Declarations by the persons responsible
Names, addresses and certifications of statutory auditors
Information policy - information release calendar
III - General information about the issuer and the share capital
General information about the issuer
General information about the share capital
Current breakdown of the share capital and voting rights
Trading of shares
Dividends
IV - Information about the issuer’s business activities
Presentation of the company and the Group
Dependence on key staff
Exceptional events and disputes
Workforce
Investment policy
Group data
V - Assets - Financial position - Results
Financial statements of the issuer
Companies not included in the scope of consolidation
Companies included in the scope of consolidation
Principles of consolidation
VI - Administration, management and governing bodies
Composition
Management’s interests in the company’s share capital
Employee profit - sharing scheme
page
1.1
1.2
1.3
1.4
3.1
3.2
3.3
3.4
3.5
4.1
4.2
4.3
4.4
4.5
4.6
5.1
5.2
5.3
5.4
6.1
6.2
6.3
COB
__________
▲
COMMISSION DES OPERATIONS DE BOURSE
The French Securities and Exchange Commission.
The French original version of this report was registered with the COB* on 9 April 2002 under registration no. R02-051,
pursuant to COB regulation no. 95-01.
It can only be used to support a financial transaction if it is accompanied by a specific notice also registered by the
COB*. This reference document has been drawn up by the issuer, whose signatories are responsible for its contents.
The registration approval for this document is based on a review of the fairness and consistency of the information
provided regarding the Company’s financial position but does not guarantee the authenticity of the accounting and
financial data presented herein.
172

A NOVO SA - Cylex Interactif

Transcription

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